QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction | (I.R.S. Employer Identification No.) | |||||||
of incorporation or organization) |
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||||||||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | |||||
September 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Utility plant: | |||||||||||
Utility plant | $ | $ | |||||||||
Less accumulated depreciation and amortization | ( | ( | |||||||||
Net utility plant | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Receivables: | |||||||||||
Customers, net | |||||||||||
Regulatory balancing accounts | |||||||||||
Other, net | |||||||||||
Unbilled revenue, net | |||||||||||
Materials and supplies at weighted average cost | |||||||||||
Taxes, prepaid expenses, and other assets | |||||||||||
Total current assets | |||||||||||
Other assets: | |||||||||||
Regulatory assets | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Total other assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
CAPITALIZATION AND LIABILITIES | |||||||||||
Capitalization: | |||||||||||
Common stock, $ | $ | $ | |||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Noncontrolling interests | |||||||||||
Total equity | |||||||||||
Long-term debt, net | |||||||||||
Total capitalization | |||||||||||
Current liabilities: | |||||||||||
Current maturities of long-term debt, net | |||||||||||
Short-term borrowings | |||||||||||
Accounts payable | |||||||||||
Regulatory balancing accounts | |||||||||||
Accrued interest | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Total current liabilities | |||||||||||
Deferred income taxes | |||||||||||
Pension | |||||||||||
Regulatory liabilities and other | |||||||||||
Advances for construction | |||||||||||
Contributions in aid of construction | |||||||||||
Commitments and contingencies (Note 10) | |||||||||||
TOTAL CAPITALIZATION AND LIABILITIES | $ | $ |
For the three months ended | September 30, 2022 | September 30, 2021 | ||||||||||||
Operating revenue | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||
Operations: | ||||||||||||||
Water production costs | ||||||||||||||
Administrative and general | ||||||||||||||
Other operations | ||||||||||||||
Maintenance | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Income taxes | ||||||||||||||
Property and other taxes | ||||||||||||||
Total operating expenses | ||||||||||||||
Net operating income | ||||||||||||||
Other income and expenses: | ||||||||||||||
Non-regulated revenue | ||||||||||||||
Non-regulated expenses | ( | ( | ||||||||||||
Other components of net periodic benefit credit | ||||||||||||||
Allowance for equity funds used during construction | ||||||||||||||
Income tax expense on other income and expenses | ( | ( | ||||||||||||
Net other income | ||||||||||||||
Interest expense: | ||||||||||||||
Interest expense | ||||||||||||||
Allowance for borrowed funds used during construction | ( | ( | ||||||||||||
Net interest expense | ||||||||||||||
Net income | ||||||||||||||
Net (loss) income attributable to noncontrolling interests | ( | |||||||||||||
Net income attributable to California Water Service Group | $ | $ | ||||||||||||
Earnings per share of common stock: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
For the nine months ended | September 30, 2022 | September 30, 2021 | ||||||||||||
Operating revenue | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||
Operations: | ||||||||||||||
Water production costs | ||||||||||||||
Administrative and general | ||||||||||||||
Other operations | ||||||||||||||
Maintenance | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Income taxes | ||||||||||||||
Property and other taxes | ||||||||||||||
Total operating expenses | ||||||||||||||
Net operating income | ||||||||||||||
Other income and expenses: | ||||||||||||||
Non-regulated revenue | ||||||||||||||
Non-regulated expenses | ( | ( | ||||||||||||
Other components of net periodic benefit credit | ||||||||||||||
Allowance for equity funds used during construction | ||||||||||||||
Income tax expense on other income and expenses | ( | ( | ||||||||||||
Net other income | ||||||||||||||
Interest expense: | ||||||||||||||
Interest expense | ||||||||||||||
Allowance for borrowed funds used during construction | ( | ( | ||||||||||||
Net interest expense | ||||||||||||||
Net income | ||||||||||||||
Net loss attributable to noncontrolling interests | ( | ( | ||||||||||||
Net income attributable to California Water Service Group | $ | $ | ||||||||||||
Earnings per share of common stock: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
For the nine months ended | September 30, 2022 | September 30, 2021 | ||||||||||||
Operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Change in value of life insurance contracts | ( | |||||||||||||
Allowance for equity funds used during construction | ( | ( | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Receivables and unbilled revenue | ( | ( | ||||||||||||
Water Arrearages Payment Program cash received | ||||||||||||||
Water Arrearages Payment Program cash returned | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Other current assets | ||||||||||||||
Other current liabilities | ||||||||||||||
Other changes in noncurrent assets and liabilities | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
Investing activities: | ||||||||||||||
Utility plant expenditures | ( | ( | ||||||||||||
Life insurance proceeds | ||||||||||||||
Purchase of life insurance contracts | ( | ( | ||||||||||||
Business acquisition, net of cash acquired | ( | |||||||||||||
Asset acquisition | ( | |||||||||||||
Return of investment | ||||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing activities: | ||||||||||||||
Short-term borrowings | ||||||||||||||
Repayment of short-term borrowings | ( | ( | ||||||||||||
Issuance of long-term debt, net of debt issuance costs of $ | ||||||||||||||
Repayment of long-term debt | ( | ( | ||||||||||||
Advances and contributions in aid of construction | ||||||||||||||
Refunds of advances for construction | ( | ( | ||||||||||||
Repurchase of common stock | ( | ( | ||||||||||||
Issuance of common stock, net | ||||||||||||||
Dividends paid | ( | ( | ||||||||||||
Distribution to noncontrolling interest | ( | |||||||||||||
Net cash provided by financing activities | ||||||||||||||
Change in cash, cash equivalents, and restricted cash | ||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||||||||
Supplemental information: | ||||||||||||||
Cash paid for interest (net of amounts capitalized) | $ | $ | ||||||||||||
Supplemental disclosure of non-cash activities: | ||||||||||||||
Accrued payables for investments in utility plant | $ | $ | ||||||||||||
Utility plant contribution by developers | $ | $ |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Revenue from contracts with customers | $ | $ | |||||||||
Regulatory balancing account revenue | |||||||||||
Total operating revenue | $ | $ |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Revenue from contracts with customers | $ | $ | |||||||||
Regulatory balancing account revenue | |||||||||||
Total operating revenue | $ | $ |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Residential | $ | $ | |||||||||
Business | |||||||||||
Multiple residential | |||||||||||
Industrial | |||||||||||
Public authorities | |||||||||||
Other (a) | |||||||||||
Total revenue from contracts with customers | $ | $ |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Residential | $ | $ | |||||||||
Business | |||||||||||
Multiple residential | |||||||||||
Industrial | |||||||||||
Public authorities | |||||||||||
Other (a) | |||||||||||
Total revenue from contracts with customers | $ | $ |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Operating and maintenance revenue | $ | $ | |||||||||
Other non-regulated revenue | |||||||||||
Non-regulated revenue from contracts with customers | |||||||||||
Lease revenue | |||||||||||
Total non-regulated revenue | $ | $ |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Operating and maintenance revenue | $ | $ | |||||||||
Other non-regulated revenue | |||||||||||
Non-regulated revenue from contracts with customers | |||||||||||
Lease revenue | |||||||||||
Total non-regulated revenue | $ | $ |
Allowance for credit losses | September 30, 2022 | December 31, 2021 | |||||||||
Beginning balance | $ | $ | |||||||||
Provision for credit loss expense | |||||||||||
Write-offs | ( | ( | |||||||||
Recoveries | |||||||||||
Total ending allowance balance | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows | $ | $ |
Number of RSA Shares | Weighted-Average Grant-Date Fair Value | ||||||||||
RSAs at January 1, 2022 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
RSAs at September 30, 2022 | $ |
Number of RSU Shares | Weighted-Average Grant-Date Fair Value | ||||||||||
RSUs at January 1, 2022 | $ | ||||||||||
Granted | |||||||||||
Performance criteria adjustment | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
RSUs at September 30, 2022 | $ |
Nine months ended September 30, 2022 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||
Issuance of common stock | — | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | — | ( | ||||||||||||||||||||||||||||||||
Investment in business with noncontrolling interest | ( | — | |||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | |||||||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||
Issuance of common stock | |||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | ( | |||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | ( | |||||||||||||||||||||||||||||||||
Investment in business with noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||
Distribution to noncontrolling interest | ( | ( | |||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | |||||||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||
Issuance of common stock | |||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | ( | |||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | ( | |||||||||||||||||||||||||||||||||
Investment in business with noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ |
Nine months ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net loss | ( | — | ( | ||||||||||||||||||||||||||||||||
Issuance of common stock | |||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | ( | |||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | |||||||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||
Issuance of common stock | |||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | ( | |||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | — | ( | ||||||||||||||||||||||||||||||||
Acquisition of business with noncontrolling interest | — | — | |||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | |||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||
Issuance of common stock | |||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | ( | |||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | ( | ( | |||||||||||||||||||||||||||||||||
Investment in business with noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
(In thousands, except per share data) | |||||||||||
Net income | $ | $ | |||||||||
Net (loss) income attributable to noncontrolling interests | $ | ( | $ | ||||||||
Net income attributable to California Water Service Group | $ | $ | |||||||||
Weighted average common shares outstanding, basic | |||||||||||
Weighted average common shares outstanding, dilutive | |||||||||||
Earnings per share of common stock - basic | $ | $ | |||||||||
Earnings per share of common stock - diluted | $ | $ |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
(In thousands, except per share data) | |||||||||||
Net income | $ | $ | |||||||||
Net loss attributable to noncontrolling interests | $ | ( | $ | ( | |||||||
Net income attributable to California Water Service Group | $ | $ | |||||||||
Weighted average common shares outstanding, basic | |||||||||||
Weighted average common shares outstanding, dilutive | |||||||||||
Earnings per share of common stock - basic | $ | $ | |||||||||
Earnings per share of common stock - diluted | $ | $ |
Three Months Ended September 30 | |||||||||||||||||||||||
Pension Plan | Other Benefits | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization of prior service cost | |||||||||||||||||||||||
Recognized net actuarial loss | ( | ( | |||||||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ | ( |
Nine Months Ended September 30 | |||||||||||||||||||||||
Pension Plan | Other Benefits | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization of prior service cost | |||||||||||||||||||||||
Recognized net actuarial loss | ( | ( | |||||||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Income tax expense | $ | $ |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Income tax expense | $ | $ |
Recovery Period | September 30, 2022 | December 31, 2021 | |||||||||||||||
Regulatory Assets | |||||||||||||||||
Pension and retiree group health | Indefinitely | $ | $ | ||||||||||||||
Property-related temporary differences (tax benefits flowed through to customers) | Indefinitely | ||||||||||||||||
Other accrued benefits | Indefinitely | ||||||||||||||||
Net WRAM and MCBA long-term accounts receivable | |||||||||||||||||
Asset retirement obligations, net | Indefinitely | ||||||||||||||||
Interim rates memorandum account (IRMA) long-term accounts receivable | |||||||||||||||||
Tank coating | |||||||||||||||||
Recoverable property losses | Various | ||||||||||||||||
PCBA | |||||||||||||||||
Other components of net periodic benefit cost | Indefinitely | ||||||||||||||||
General district balancing account receivable | |||||||||||||||||
Customer assistance program (CAP) and Rate support fund (RSF) accounts receivable | |||||||||||||||||
Other regulatory assets | Various | ||||||||||||||||
Total Regulatory Assets | $ | $ | |||||||||||||||
Regulatory Liabilities | |||||||||||||||||
Future tax benefits due to customers | $ | $ | |||||||||||||||
Retiree group health | |||||||||||||||||
HCBA | |||||||||||||||||
CEBA | |||||||||||||||||
Net WRAM and MCBA long-term payable | |||||||||||||||||
Other components of net periodic benefit cost | |||||||||||||||||
Other regulatory liabilities | |||||||||||||||||
Total Regulatory Liabilities | $ | $ |
September 30, 2022 | |||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Cost | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Long-term debt, including current maturities, net | $ | $ | $ |
December 31, 2021 | |||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Cost | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Long-term debt, including current maturities, net | $ | $ | $ | $ | $ |
Net change due to WRAM, rate changes, usage, and other (1) | $ | 18,097 | |||
MCBA Revenue (2) | (3,929) | ||||
Other balancing account revenue (3) | (799) | ||||
Deferral of revenue (4) | (3,785) | ||||
Net operating revenue increase | $ | 9,584 |
Escalation rate increases | 7,187 | ||||
Purchased water and pump tax offsets | 5,028 | ||||
Rate base offsets | 112 | ||||
Total increase in rates | $ | 12,327 |
Three Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Well production | 50 | % | 49 | % | |||||||
Purchased | 46 | % | 48 | % | |||||||
Surface | 4 | % | 3 | % | |||||||
Total | 100 | % | 100 | % |
Three Months Ended September 30 | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Purchased water | $ | 69,931 | $ | 67,604 | $ | 2,327 | |||||||||||
Purchased power | 15,088 | 13,122 | 1,966 | ||||||||||||||
Pump taxes | 3,731 | 4,225 | (494) | ||||||||||||||
Total | $ | 88,750 | $ | 84,951 | $ | 3,799 |
Net change due to WRAM, rate changes, usage, and other (1) | $ | 24,867 | |||
MCBA Revenue (2) | (6,985) | ||||
Other balancing account revenue (3) | (728) | ||||
Deferral of revenue (4) | 10,757 | ||||
Net operating revenue increase | $ | 27,911 |
Escalation rate increases | 16,180 | ||||
Purchased water and pump tax offsets | 8,063 | ||||
Rate base offsets | 207 | ||||
Total increase in rates | $ | 24,450 |
Nine Months Ended September 30 | |||||||||||
2022 | 2021 | ||||||||||
Well production | 49 | % | 48 | % | |||||||
Purchased | 47 | % | 48 | % | |||||||
Surface | 4 | % | 4 | % | |||||||
Total | 100 | % | 100 | % |
Nine Months Ended September 30 | |||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Purchased water | $ | 174,653 | $ | 174,508 | $ | 145 | |||||||||||
Purchased power | 34,630 | 28,796 | 5,834 | ||||||||||||||
Pump taxes | 11,912 | 11,384 | 528 | ||||||||||||||
Total | $ | 221,195 | $ | 214,688 | $ | 6,507 |
Summarized Statement of Operations | |||||||||||||||||||||||
(in thousands) | Nine Months Ended September 30, 2022 | Twelve Months Ended December 31, 2021 | |||||||||||||||||||||
Issuer | Guarantor | Issuer | Guarantor | ||||||||||||||||||||
Net sales | $ | 591,105 | $ | — | $ | 727,149 | $ | — | |||||||||||||||
Gross profit | $ | 382,559 | $ | — | $ | 462,301 | $ | — | |||||||||||||||
Income from operations | $ | 98,679 | $ | 179 | $ | 121,231 | $ | 181 | |||||||||||||||
Equity in earnings of guarantor | $ | 74,954 | $ | — | $ | 99,912 | |||||||||||||||||
Net income | $ | 72,962 | $ | 75,792 | $ | 94,313 | $ | 100,979 |
Summarized Balance Sheet Information | |||||||||||||||||||||||
(in thousands) | As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||
Issuer | Guarantor | Issuer | Guarantor | ||||||||||||||||||||
Current assets | $ | 260,451 | $ | 16,582 | $ | 251,573 | $ | 20,077 | |||||||||||||||
Intercompany receivable from Non-guarantors | $ | 1,211 | $ | 43,319 | $ | 3,810 | $ | 31,449 | |||||||||||||||
Other assets | $ | 435,157 | $ | 1,073,882 | $ | 431,137 | $ | 991,173 | |||||||||||||||
Long-term intercompany receivable from Non-issuers | $ | — | $ | 32,970 | $ | — | $ | 34,216 | |||||||||||||||
Net utility plant | $ | 2,745,839 | $ | — | $ | 2,625,092 | $ | 24 | |||||||||||||||
Total assets | $ | 3,442,658 | $ | 1,166,753 | $ | 3,311,612 | $ | 1,076,939 | |||||||||||||||
Current liabilities | $ | 236,625 | $ | 70,327 | $ | 211,915 | $ | 35,019 | |||||||||||||||
Intercompany payable to Non-guarantors and Guarantor | $ | 5,094 | $ | — | $ | 361 | $ | — | |||||||||||||||
Long-term debt | $ | 1,053,445 | $ | — | $ | 1,055,538 | $ | — | |||||||||||||||
Other liabilities | $ | 1,068,611 | $ | 2,485 | $ | 1,046,647 | $ | 2,146 | |||||||||||||||
Total Liabilities | $ | 2,363,775 | $ | 72,812 | $ | 2,314,461 | $ | 37,165 |
Exhibit | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
4.0 | The Company agrees to furnish upon request to the Securities and Exchange Commission a copy of each instrument defining the rights of holders of long-term debt of the Company. | |||||||
31.1 | ||||||||
31.2 | ||||||||
32 | ||||||||
101 | The following materials from this Quarterly Report on Form 10-Q formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements. | |||||||
104 | The cover page from this Quarterly Report on Form 10-Q formatted in iXBRL (included as exhibit 101) |
CALIFORNIA WATER SERVICE GROUP | ||||||||
Registrant | ||||||||
October 27, 2022 | By: | /s/ Thomas F. Smegal III | ||||||
Thomas F. Smegal III | ||||||||
Vice President, | ||||||||
Chief Financial Officer and Treasurer | ||||||||
(Principal Financial Officer) |
Date: October 27, 2022 | By: | /s/ Martin A. Kropelnicki | ||||||
MARTIN A. KROPELNICKI | ||||||||
President and Chief Executive Officer | ||||||||
Date: October 27, 2022 | By: | /s/ Thomas F. Smegal III | ||||||
THOMAS F. SMEGAL III | ||||||||
Vice President, Chief Financial Officer and Treasurer | ||||||||
Date: October 27, 2022 | By: | /s/ Martin A. Kropelnicki | ||||||
MARTIN A. KROPELNICKI | ||||||||
President and Chief Executive Officer | ||||||||
California Water Service Group | ||||||||
Date: October 27, 2022 | By: | /s/ Thomas F. Smegal III | ||||||
THOMAS F. SMEGAL III | ||||||||
Vice President, Chief Financial Officer and Treasurer | ||||||||
California Water Service Group | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2022 |
Jul. 26, 2022 |
Jul. 25, 2022 |
Dec. 31, 2021 |
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Statement of Financial Position [Abstract] | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 136,000,000 | 136,000,000 | 68,000,000 | 136,000,000 |
Common stock, shares outstanding (in shares) | 54,824,000 | 53,716,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Income Statement [Abstract] | ||||
Operating revenue | $ 266,307 | $ 256,723 | $ 645,494 | $ 617,583 |
Operations: | ||||
Water production costs | 88,750 | 84,951 | 221,195 | 214,688 |
Administrative and general | 33,328 | 30,712 | 99,425 | 92,837 |
Other operations | 26,676 | 24,686 | 81,945 | 63,318 |
Maintenance | 8,433 | 7,739 | 23,389 | 21,118 |
Depreciation and amortization | 28,844 | 27,232 | 86,387 | 81,516 |
Income taxes | 5,890 | 1,705 | 5,927 | 3,576 |
Property and other taxes | 9,440 | 8,546 | 25,853 | 24,213 |
Total operating expenses | 201,361 | 185,571 | 544,121 | 501,266 |
Net operating income | 64,946 | 71,152 | 101,373 | 116,317 |
Other income and expenses: | ||||
Non-regulated revenue | 4,573 | 5,813 | 16,772 | 16,759 |
Non-regulated expenses | (6,905) | (5,779) | (22,432) | (12,354) |
Other components of net periodic benefit credit | 3,737 | 1,853 | 11,516 | 7,520 |
Allowance for equity funds used during construction | 1,004 | 898 | 3,021 | 2,290 |
Income tax expense on other income and expenses | (353) | (207) | (1,210) | (1,077) |
Net other income | 2,056 | 2,578 | 7,667 | 13,138 |
Interest expense: | ||||
Interest expense | 11,891 | 11,737 | 34,972 | 33,165 |
Allowance for borrowed funds used during construction | (572) | (506) | (1,724) | (1,253) |
Net interest expense | 11,319 | 11,231 | 33,248 | 31,912 |
Net income | 55,683 | 62,499 | 75,792 | 97,543 |
Net (loss) income attributable to noncontrolling interests | (189) | 70 | (650) | (79) |
Net income attributable to California Water Service Group | $ 55,872 | $ 62,429 | $ 76,442 | $ 97,622 |
Earnings per share of common stock: | ||||
Basic (in dollars per share) | $ 1.03 | $ 1.20 | $ 1.41 | $ 1.91 |
Diluted (in dollars per share) | $ 1.03 | $ 1.20 | $ 1.41 | $ 1.91 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 54,007 | 51,823 | 54,063 | 51,119 |
Diluted (in shares) | 54,042 | 51,823 | 54,104 | 51,119 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Cash Flows [Abstract] | ||
Payments of debt issuance costs | $ 0 | $ 1,064 |
Organization and Operations and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations and Basis of Presentation | Organization and Operations and Basis of Presentation California Water Service Group (Company) is a holding company that provides water utility and other related services in California, Washington, New Mexico, Hawaii, and Texas through its wholly-owned and non-wholly owned subsidiaries. California Water Service Company (Cal Water), Washington Water Service Company (Washington Water), New Mexico Water Service Company (New Mexico Water), and Hawaii Water Service Company, Inc. (Hawaii Water), provide regulated utility services under the rules and regulations of their respective state’s regulatory commissions (jointly referred to as the Commissions). CWS Utility Services and HWS Utility Services LLC provide non-regulated water utility and utility-related services. TWSC, Inc. (Texas Water) holds regulated and contracted wastewater utilities. The Company operates in one reportable segment, providing water and related utility services. Basis of Presentation The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. Interim financial information includes the Company's accounts and those of its wholly and non-wholly owned subsidiaries. The non-wholly owned subsidiary was consolidated using the voting interest model as the Company owns a majority of the voting interests in the non-wholly owned subsidiary and includes the Company's accounts and those of its wholly and non-wholly owned subsidiaries. The interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on February 24, 2022. The preparation of the Company’s unaudited condensed consolidated interim financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. These include, but are not limited to, estimates and assumptions used in determining the Company’s regulatory asset and liability balances based upon probability assessments of regulatory recovery, revenues earned but not yet billed, asset retirement obligations, allowance for credit losses, pension and other employee benefit plan liabilities, and income tax-related assets and liabilities. Actual results could differ from these estimates. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring transactions that are necessary to provide a fair presentation of the results for the periods covered. Due to the seasonal nature of the water business, the results for interim periods are not indicative of the results for a 12-month period. Revenue and income are generally higher in the warm, dry summer months when water usage and sales are greater. Revenue and income are generally lower in the winter months when cooler temperatures and rainfall curtail water usage and sales. Noncontrolling Interests Noncontrolling interests in the Company’s condensed consolidated financial statements represents an 8.3% interest not owned by Texas Water in a consolidated subsidiary. Texas Water obtained control over the subsidiary on May 1, 2021. Since the Company controls this subsidiary, its financial statements are consolidated with those of the Company, and the noncontrolling owner’s 8.3% share of the subsidiary’s net assets and results of operations is deducted and reported as noncontrolling interests on the condensed consolidated balance sheet and as net income or loss attributable to noncontrolling interests in the condensed consolidated statement of operations. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. The Company’s net income attributable to California Water Service Group excludes a net (loss) income attributable to the noncontrolling interests.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Operating revenue The following tables disaggregate the Company’s operating revenue by source for the three and nine months ended September 30, 2022 and 2021:
Revenue from contracts with customers The Company principally generates operating revenue from contracts with customers by providing regulated water and wastewater services at tariff-rates authorized by the Commissions in the states in which they operate and non-regulated water and wastewater services at rates authorized by contracts with government agencies. Revenue from contracts with customers reflects amounts billed for the volume of consumption at authorized per unit rates, for a service charge, and for other authorized charges. The Company satisfies its performance obligation to provide water and wastewater services over time as services are rendered. The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has a right to invoice for the volume of consumption, for the service charge, and for other authorized charges. The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized. The estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage). Contract terms are generally short-term and at will by customers and, as a result, no separate financing component is recognized for the Company's collections from customers, which generally require payment within 30 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay. Certain customers are not billed for volumetric consumption, but are instead billed a flat rate at the beginning of each monthly service period. The amount billed is initially deferred and subsequently recognized over the monthly service period, as the performance obligation is satisfied. The deferred revenue balance or contract liability, which is included in "accrued expenses and other liabilities" on the unaudited condensed consolidated balance sheets, is inconsequential. In the following tables, revenue from contracts with customers is disaggregated by class of customers for the three and nine months ended September 30, 2022 and 2021:
(a) Other includes accrued unbilled revenue. Regulatory balancing account revenue The Company’s ability to recover revenue requirements authorized by the California Public Utilities Commission (CPUC) in its triennial general rate case (GRC) is decoupled from the volume of the sales. Regulatory balancing account revenue is revenue related to rate mechanisms authorized in California by the CPUC, which allow the Company to recover the authorized revenue and are not considered contracts with customers. These mechanisms include the following: The Water Revenue Adjustment Mechanism (WRAM) allows the Company to recognize the adopted level of volumetric revenues. The variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts is recorded as regulatory balancing account revenue. Cost-recovery rates, such as the Modified Cost Balancing Account (MCBA), Conservation Expense Balancing Account (CEBA), Pension Cost Balancing Account (PCBA), and Health Cost Balancing Account (HCBA), generally provide for recovery of the adopted levels of expenses for purchased water, purchased power, pump taxes, water conservation program costs, pension, and health care. Variances between adopted and actual costs are recorded as regulatory balancing account revenue. Each district's WRAM and MCBA regulatory assets and liabilities are allowed to be netted against one another. The Company recognizes regulatory balancing account revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months. To the extent that regulatory balancing account revenue is estimated to be collectible beyond 24 months, recognition is deferred. The CPUC issued a decision effective August 27, 2020 requiring that Class A companies submitting GRC filings after the effective date to be (i) precluded from proposing the use of a full decoupling WRAM in their next GRCs and (ii) allowed the use of Monterey-Style Water Revenue Adjustment Mechanisms (MWRAM). Incremental Cost Balancing Accounts (ICBA), which are authorized by statute, would replace the MCBA. The MWRAM tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate would have been in effect. The ICBA tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Cal Water has complied with this decision in its recent 2021 GRC filing. Non-regulated Revenue The following tables disaggregate the Company’s non-regulated revenue by source for the three and nine months ended September 30, 2022 and 2021:
Operating and maintenance services are provided for non-regulated water and wastewater systems owned by private companies and municipalities. The Company negotiates formal agreements with the customers, under which they provide operating, maintenance and customer billing services related to the customers’ water system. The formal agreements outline the fee schedule for the services provided. The agreements typically call for a fee-per-service or a flat-rate amount per month. The Company satisfies its performance obligation of providing operating and maintenance services over time as services are rendered; as a result, the Company employs the invoice practical expedient and recognizes revenue in the amount that it has the right to invoice. Contract terms are generally short-term and, as a result, no separate financing component is recognized for its collections from customers, which generally require payment within 30 days of billing. Other non-regulated revenue primarily relates to services for the design and installation of water mains and other water infrastructure for customers outside the regulated service areas and insurance program administration. During the first nine months of 2022, the Company recorded a gain of $2.7 million related to company owned life insurance. Lease revenue is not considered revenue from contracts with customers and is recognized following operating lease standards. The Company is the lessor in operating lease agreements with telecommunications companies under which cellular phone antennas are placed on the Company's property. Allowance for credit losses The Company measures expected credit losses for Customer Receivables, Other Receivables, and Unbilled Revenue on an aggregated level. These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less. The expected credit losses for Other Receivables and Unbilled Revenue are inconsequential. Customer receivables include receivables for water and wastewater services provided to residential customers, business, industrial, public authorities, and other customers. The expected credit losses for business, industrial, public authorities, and other customers are inconsequential. The overall risks related to the Company’s receivables are low as water and wastewater services are seen as essential services. The estimate for the allowance for credit losses is based on a historical loss ratio, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if the allowance for credit losses should be further adjusted in accordance with the accounting guidance for credit losses. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, payment options and programs available to customers, and the methods that the Company is able to utilize to ensure payment. The Company reviewed its allowance for credit losses utilizing a quantitative assessment, which included trend analysis of customer billing and collection, aging by customer class, and unemployment rates since the outbreak of COVID-19 in the first quarter of 2020. The Company also utilized a qualitative assessment, which considered the future collectability on customer outstanding balances, management's estimate of the cash recovery, and a general assessment of the economic conditions of the locations the Company serves due to the outbreak of COVID-19. The Company has resumed shutoffs for non-payment in all of the Company's regulated utilities. The Company also received and applied funds to customer accounts from the California Water and Wastewater Arrearage Payment Program (Program). The Program was created by the California Legislature, is administered by the State Water Resources Control Board and provided relief to community water and wastewater systems for unpaid bills – arrearages – related to the COVID-19 pandemic. Based on the above assessments, the Company adjusted its allowance for credit losses accordingly. The following table presents the activity in the allowance for credit losses for the 9-month period ended September 30, 2022 and 12-month period ended December 31, 2021:
Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown on the Condensed Consolidated Statements of Cash Flows (see Note 10 for further details on restricted cash):
Accounting Standards Issued But Not Yet Adopted In October of 2021, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In a business combination, an acquirer generally recognizes assets acquired and liabilities assumed, including contract assets and contract liabilities, at their respective fair value on the acquisition date. ASU 2021-08 requires that in a business combination, an acquirer should recognize and measure contract assets acquired and contract liabilities assumed in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The guidance provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts with customers in a business combination. The guidance is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 should be applied prospectively for acquisitions occurring on or after the effective date of the amendments, and early adoption is permitted. The Company will adopt the standard prospectively and does not expect that the guidance will have a material impact on the Company's financial statements and footnote disclosures upon adoption.
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Stock-based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation The Company's equity incentive plan was approved and amended by stockholders on April 27, 2005 and May 20, 2014, respectively. The Company is authorized to issue awards up to 2,000,000 shares of common stock. During the first nine months of 2022, the Company granted Restricted Stock Awards (RSAs) to Officers and to members of the Board of Directors. An RSA share represents a restricted share of the Company's common stock and is valued based on the fair market value of the Company's common stock at the date of grant. RSAs granted to Officers vest over 36 months with the first year cliff vesting. In general, RSAs granted to Board members vest at the end of 12 months. The RSAs are recognized as expense evenly over 36 months for the shares granted to Officers and 12 months for the shares granted to Board members. As of September 30, 2022, there was approximately $2.2 million of total unrecognized compensation cost related to RSAs. The cost is expected to be recognized over a weighted average period of 1.7 years. A summary of the status of the outstanding RSAs as of September 30, 2022 is presented below:
During the first nine months of 2022, the Company granted performance-based Restricted Stock Units (RSUs) to Officers. An RSU represents the right to receive a share of the Company's common stock. Each award reflects a target number shares of common stock that may be issued to the award recipient. The 2022 awards may be earned upon the completion of a 3-year performance period. Whether RSUs are earned at the end of the performance period will be determined based on the achievement of certain performance objectives set by the Organization and Compensation Committee of the Board of Directors in connection with the issuance of the RSUs. The performance objectives are based on the Company's business plan covering the performance period. The performance objectives include achieving the budgeted return on equity, budgeted investment in utility plant, customer service standards, employee safety standards and water quality standards. Depending on the results achieved during the 3-year performance period, the actual number of shares that a grant recipient receives at the end of the performance period may range from 0% to 200% of the target shares granted, provided that the grantee is continuously employed by the Company through the vesting date. If prior to the vesting date employment is terminated by reason of death, disability or normal retirement, then a pro rata portion of this award will vest. The RSUs are recognized as expense ratably over the 3-year performance period using a fair market value of the Company's common share at the date of grant and an estimated number of RSUs earned during the performance period. As of September 30, 2022, there was approximately $2.7 million of total unrecognized compensation cost related to RSUs. The cost is expected to be recognized over a weighted average period of 1.5 years. A summary of the status of the outstanding RSUs as of September 30, 2022 is presented below:
The Company has recorded compensation costs for the RSAs and RSUs that are included in administrative and general operating expenses in the amount of $1.6 million and $1.9 million for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company has recorded compensation costs for the RSAs and RSUs in the amount of $3.5 million and $4.5 million, respectively.
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity On April 29, 2022, the Company entered into an equity distribution agreement to sell shares of its common stock having an aggregate gross sales price of up to $350.0 million from time to time depending on market conditions through an at-the-market equity program over the next three years. The Company intends to use the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, which may include working capital, construction and acquisition expenditures, investments and repurchases, and redemptions of securities. The Company sold 461,034 shares of common stock through its at-the-market equity program and raised proceeds of $26.9 million net of $0.3 million in commissions paid under the equity distribution agreement during the three months ended September 30, 2022. During the nine months ended September 30, 2022, the Company sold 1,035,668 shares of common stock through its at-the-market equity program and raised proceeds of $57.1 million net of $0.6 million in commissions paid under the equity distribution agreement. The Company also incurred $0.1 million of equity issuance costs during the nine months ended September 30, 2022. As approved by the Company's stockholders at the 2022 Annual Meeting, effective July 26, 2022, the aggregate number of common shares of stock which the corporation shall have authority to issue was increased from 68.0 million common shares to 136.0 million common shares. All of said 136.0 million common shares shall be of one and the same series, namely common shares with par value of $0.01 per common share. The Company’s changes in total equity for the nine months ended September 30, 2022 and 2021 were as follows:
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Earnings Per Share of Common Stock |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share of Common Stock | Earnings Per Share of Common Stock The computations of basic and diluted earnings per share of common stock are noted in the table below. Basic earnings per share of common stock is computed by dividing the net income attributable to California Water Service Group by the weighted average number of common shares outstanding during the period. RSAs are included in the weighted average common shares outstanding because the shares have all the same voting and dividend rights as issued and unrestricted common stock.
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Pension Plan and Other Postretirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plan and Other Postretirement Benefits | Pension Plan and Other Postretirement Benefits The Company provides a qualified, defined-benefit, non-contributory pension plan for substantially all employees. The Company makes annual contributions to fund the amounts accrued for in the qualified pension plan. The Company also maintains an unfunded, non-qualified, supplemental executive retirement plan. The costs of the plans are charged to expense or are capitalized in utility plant as appropriate. The Company offers medical, dental, vision, and life insurance benefits for retirees and their spouses and dependents. Participants are required to pay a premium, which offsets a portion of the cost. Cash contributions made by the Company to the pension plans were $12.4 million and $18.9 million for the nine months ended September 30, 2022 and 2021, respectively. Cash contributions made by the Company to the other postretirement benefit plans were $0.5 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively. The total 2022 estimated cash contribution to the pension plans and other postretirement benefits plans are expected to be approximately $16.1 million and $0.7 million, respectively. The following tables list components of net periodic benefit costs for the pension plans and other postretirement benefits. The data listed under “pension plan” includes the qualified pension plan and the non-qualified supplemental executive retirement plan. The data listed under “other benefits” is for all other postretirement benefits.
Service cost portion of the pension plan and other postretirement benefits is recognized in "administrative and general" expenses within the Condensed Consolidated Statements of Operations. Other components of net periodic benefit costs include interest costs, expected return on plan assets, amortization of prior service costs, and recognized net actuarial loss and are reported together as "other components of net periodic benefit cost" within the Condensed Consolidated Statements of Operations.
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Short-term and Long-term Borrowings |
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Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Short-term and Long-term Borrowings | Short-term and Long-term Borrowings On May 11, 2021, Cal Water completed the sale and issuance of $280.0 million in aggregate principal amount of First Mortgage Bonds (the Bonds) in a private placement. The Bonds consist of $130.0 million of 2.87% bonds, series ZZZ, maturing May 11, 2051, and $150.0 million of 3.02% bonds, series 1, maturing May 11, 2061. Interest on the bonds will accrue semi-annually and be payable in arrears on May 11 and November 11 of each year, commencing on November 11, 2021. The Bonds will rank equally with all of Cal Water’s other First Mortgage Bonds and will be secured by liens on Cal Water’s properties, subject to certain exceptions and permitted liens. Cal Water used the net proceeds from the sale of the Bonds to refinance existing indebtedness and for general corporate purposes. The Bonds were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. On March 29, 2019, the Company and Cal Water entered into certain syndicated credit agreements, which provide for unsecured revolving credit facilities of up to an initial aggregate amount of $550.0 million for a term of five years. The Company and subsidiaries that it designates may borrow up to $150.0 million under the Company’s revolving credit facility. Cal Water may borrow up to $400.0 million under its revolving credit facility. Additionally, the credit facilities may be increased by up to an incremental $150.0 million under the Cal Water facility and $50.0 million under the Company facility, subject in each case to certain conditions. The revolving credit facilities contain affirmative and negative covenants and events of default customary for credit facilities of this type including, among other things, limitations and prohibitions relating to additional indebtedness, liens, mergers, and asset sales. Also, these unsecured credit agreements contain financial covenants governing the Company and its subsidiaries' consolidated total capitalization ratio and interest coverage ratio. As of September 30, 2022, the Company is in compliance with all of the covenant requirements and is eligible to use the full amount of the undrawn portion of the Company's unsecured revolving credit facilities. The outstanding borrowings on the Company line of credit were $70.0 million and $35.0 million as of September 30, 2022 and December 31, 2021, respectively. There were no borrowings on the Cal Water line of credit as of September 30, 2022 and December 31, 2021, respectively. The average borrowing rate for borrowings on the Company and Cal Water lines of credit during the nine months ended September 30, 2022 was 2.18% compared to 0.98% for the same period last year.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company adjusts its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. The Company also records the tax effect of unusual or infrequently occurring discrete items. The provision for income taxes is shown in the tables below:
Income tax expense increased $4.3 million to $6.2 million in the third quarter of 2022 primarily due to a decrease in the refunds of excess deferred income taxes. Income tax expense increased $2.5 million to $7.1 million in the first nine months of 2022 primarily due to a decrease in the refunds of excess deferred income taxes. The Company’s effective tax rate was 11.4% before discrete items as of September 30, 2022 and 4.3% as of September 30, 2021. The increase in the effective tax rate was primarily due to a decrease in the refunds of excess deferred income taxes. The Company had unrecognized tax benefits of approximately $16.9 million and $14.9 million as of September 30, 2022 and 2021, respectively. Included in the balance of unrecognized tax benefits as of September 30, 2022 and 2021, is $4.2 million and $3.9 million, respectively, of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next 12 months.
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Regulatory Assets and Liabilities |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Assets and Liabilities | Regulatory Assets and Liabilities Regulatory assets and liabilities were comprised of the following as of September 30, 2022 and December 31, 2021:
Short-term regulatory assets and liabilities are excluded from the above table. The short-term regulatory assets were $54.7 million as of September 30, 2022 and $78.6 million as of December 31, 2021. The short-term regulatory assets as of September 30, 2022 and December 31, 2021 primarily consist of net WRAM and MCBA, IRMA, and PCBA receivables. The short-term portions of regulatory liabilities were $9.7 million as of September 30, 2022 and $17.5 million as of December 31, 2021. The short-term regulatory liabilities as of September 30, 2022 primarily consist of TCJA liabilities. As of December 31, 2021, short-term regulatory liabilities primarily consist of TCJA and HCBA liabilities.
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Commitments and Contingencies |
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Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments The Company has significant commitments to purchase water from water wholesalers. The Company also has operating and finance leases for water systems, offices, land easements, licenses, equipment, and other facilities. These commitments and leases are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. On August 16, 2022, BVRT Utility Holding Company (BVRT), a majority owned subsidiary of Texas Water, entered into a long-term water supply agreement with the Guadalupe Blanco River Authority (GBRA) through its wholly owned subsidiary, Camino Real Utility (Camino Real). The Company has provided a limited guarantee to GBRA for the agreed upon obligations. GBRA is a water conservation and reclamation district established by the Texas Legislature that oversees water resources for 10 counties. Under the terms of the agreement with GBRA, Camino Real will receive up to 2,419 acre-feet of potable water annually. The GBRA agreement involves four off-takers, including Camino Real, and GBRA plans to extend a potable water pipeline from the City of Lockhart to the City of Mustang Ridge and surrounding areas. Camino Real will be the utility service provider in this fast-growing area of the Austin metropolitan region and will provide potable water, recycled water, and wastewater services to portions of the City of Mustang Ridge and surrounding areas. Camino Real expects to invest over $40 million in capital in the first phase of the water supply pipeline project as one of four off-takers. In the third quarter of 2022, Camino Real committed $21.5 million for the pipeline project. As of September 30, 2022, this committed cash has not been transferred to GBRA and is classified as part of restricted cash on the Condensed Consolidated Balance Sheets. The Company currently expects this committed cash to be transferred to GBRA in the fourth quarter of 2022. Contingencies Groundwater Contamination The Company has undertaken litigation against third parties to recover past and anticipated costs related to groundwater contamination in our service areas. The cost of litigation is expensed as incurred and any settlement is first offset against such costs. The CPUC’s general policy requires all proceeds from groundwater contamination litigation to be used first to pay transactional expenses, then to make customers whole for water treatment costs to comply with the CPUC’s water quality standards. The CPUC allows for a risk-based consideration of contamination proceeds which exceed the costs of the remediation described above and may result in some sharing of proceeds with the shareholder, determined on a case by case basis. The CPUC has authorized various memorandum accounts that allow the Company to track significant litigation costs and to request recovery of these costs in future filings. Other Legal Matters From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. The status of each significant matter is reviewed and assessed for potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount of the range of loss can be estimated, a liability is accrued for the estimated loss in accordance with the accounting standards for contingencies. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. While the outcome of these disputes and litigation matters cannot be predicted with any certainty, management does not believe when taking into account existing reserves the ultimate resolution of these matters will materially affect the Company’s financial position, results of operations, or cash flows. As of September 30, 2022 and December 31, 2021, the Company recognized a liability of $6.0 million and $3.5 million, respectively, for known legal matters. The cost of litigation is expensed as incurred and any settlement is first offset against such costs. Any settlement in excess of the cost to litigate is accounted for on a case by case basis, dependent on the nature of the settlement.
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Fair Value of Financial Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance. The three levels in the hierarchy are as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2 - Inputs to the valuation methodology include: •Quoted market prices for similar assets or liabilities in active markets; •Quoted prices for identical or similar assets or liabilities in inactive markets; •Inputs other than quoted prices that are observable for the asset or liability; and •Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Specific valuation methods include the following: Cash, Accounts receivable, short-term borrowings, and accounts payable carrying amounts approximated the fair value because of the short-term maturity of the instruments. Long-term debt fair values were estimated using the published quoted market price of similar securities, if available, or the discounted cash flow analysis, based on the current rates available using a risk-free rate (a U.S. Treasury securities yield curve) plus a risk premium of 0.60%.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. Interim financial information includes the Company's accounts and those of its wholly and non-wholly owned subsidiaries. The non-wholly owned subsidiary was consolidated using the voting interest model as the Company owns a majority of the voting interests in the non-wholly owned subsidiary and includes the Company's accounts and those of its wholly and non-wholly owned subsidiaries. The interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on February 24, 2022. The preparation of the Company’s unaudited condensed consolidated interim financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. These include, but are not limited to, estimates and assumptions used in determining the Company’s regulatory asset and liability balances based upon probability assessments of regulatory recovery, revenues earned but not yet billed, asset retirement obligations, allowance for credit losses, pension and other employee benefit plan liabilities, and income tax-related assets and liabilities. Actual results could differ from these estimates. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring transactions that are necessary to provide a fair presentation of the results for the periods covered. Due to the seasonal nature of the water business, the results for interim periods are not indicative of the results for a 12-month period. Revenue and income are generally higher in the warm, dry summer months when water usage and sales are greater. Revenue and income are generally lower in the winter months when cooler temperatures and rainfall curtail water usage and sales.
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Revenue | Revenue from contracts with customers The Company principally generates operating revenue from contracts with customers by providing regulated water and wastewater services at tariff-rates authorized by the Commissions in the states in which they operate and non-regulated water and wastewater services at rates authorized by contracts with government agencies. Revenue from contracts with customers reflects amounts billed for the volume of consumption at authorized per unit rates, for a service charge, and for other authorized charges. The Company satisfies its performance obligation to provide water and wastewater services over time as services are rendered. The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has a right to invoice for the volume of consumption, for the service charge, and for other authorized charges. The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized. The estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage). Contract terms are generally short-term and at will by customers and, as a result, no separate financing component is recognized for the Company's collections from customers, which generally require payment within 30 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay. Certain customers are not billed for volumetric consumption, but are instead billed a flat rate at the beginning of each monthly service period. The amount billed is initially deferred and subsequently recognized over the monthly service period, as the performance obligation is satisfied. The deferred revenue balance or contract liability, which is included in "accrued expenses and other liabilities" on the unaudited condensed consolidated balance sheets, is inconsequential. In the following tables, revenue from contracts with customers is disaggregated by class of customers for the three and nine months ended September 30, 2022 and 2021:
(a) Other includes accrued unbilled revenue. Regulatory balancing account revenue The Company’s ability to recover revenue requirements authorized by the California Public Utilities Commission (CPUC) in its triennial general rate case (GRC) is decoupled from the volume of the sales. Regulatory balancing account revenue is revenue related to rate mechanisms authorized in California by the CPUC, which allow the Company to recover the authorized revenue and are not considered contracts with customers. These mechanisms include the following: The Water Revenue Adjustment Mechanism (WRAM) allows the Company to recognize the adopted level of volumetric revenues. The variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts is recorded as regulatory balancing account revenue. Cost-recovery rates, such as the Modified Cost Balancing Account (MCBA), Conservation Expense Balancing Account (CEBA), Pension Cost Balancing Account (PCBA), and Health Cost Balancing Account (HCBA), generally provide for recovery of the adopted levels of expenses for purchased water, purchased power, pump taxes, water conservation program costs, pension, and health care. Variances between adopted and actual costs are recorded as regulatory balancing account revenue. Each district's WRAM and MCBA regulatory assets and liabilities are allowed to be netted against one another. The Company recognizes regulatory balancing account revenues that have been authorized for rate recovery, are objectively determinable and probable of recovery, and are expected to be collected within 24 months. To the extent that regulatory balancing account revenue is estimated to be collectible beyond 24 months, recognition is deferred. The CPUC issued a decision effective August 27, 2020 requiring that Class A companies submitting GRC filings after the effective date to be (i) precluded from proposing the use of a full decoupling WRAM in their next GRCs and (ii) allowed the use of Monterey-Style Water Revenue Adjustment Mechanisms (MWRAM). Incremental Cost Balancing Accounts (ICBA), which are authorized by statute, would replace the MCBA. The MWRAM tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate would have been in effect. The ICBA tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Cal Water has complied with this decision in its recent 2021 GRC filing.
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Non-regulated Revenue | Non-regulated Revenue The following tables disaggregate the Company’s non-regulated revenue by source for the three and nine months ended September 30, 2022 and 2021:
Operating and maintenance services are provided for non-regulated water and wastewater systems owned by private companies and municipalities. The Company negotiates formal agreements with the customers, under which they provide operating, maintenance and customer billing services related to the customers’ water system. The formal agreements outline the fee schedule for the services provided. The agreements typically call for a fee-per-service or a flat-rate amount per month. The Company satisfies its performance obligation of providing operating and maintenance services over time as services are rendered; as a result, the Company employs the invoice practical expedient and recognizes revenue in the amount that it has the right to invoice. Contract terms are generally short-term and, as a result, no separate financing component is recognized for its collections from customers, which generally require payment within 30 days of billing. Other non-regulated revenue primarily relates to services for the design and installation of water mains and other water infrastructure for customers outside the regulated service areas and insurance program administration. During the first nine months of 2022, the Company recorded a gain of $2.7 million related to company owned life insurance.
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Lease revenue | Lease revenue is not considered revenue from contracts with customers and is recognized following operating lease standards. The Company is the lessor in operating lease agreements with telecommunications companies under which cellular phone antennas are placed on the Company's property. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | Allowance for credit losses The Company measures expected credit losses for Customer Receivables, Other Receivables, and Unbilled Revenue on an aggregated level. These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less. The expected credit losses for Other Receivables and Unbilled Revenue are inconsequential. Customer receivables include receivables for water and wastewater services provided to residential customers, business, industrial, public authorities, and other customers. The expected credit losses for business, industrial, public authorities, and other customers are inconsequential. The overall risks related to the Company’s receivables are low as water and wastewater services are seen as essential services. The estimate for the allowance for credit losses is based on a historical loss ratio, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if the allowance for credit losses should be further adjusted in accordance with the accounting guidance for credit losses. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, payment options and programs available to customers, and the methods that the Company is able to utilize to ensure payment. The Company reviewed its allowance for credit losses utilizing a quantitative assessment, which included trend analysis of customer billing and collection, aging by customer class, and unemployment rates since the outbreak of COVID-19 in the first quarter of 2020. The Company also utilized a qualitative assessment, which considered the future collectability on customer outstanding balances, management's estimate of the cash recovery, and a general assessment of the economic conditions of the locations the Company serves due to the outbreak of COVID-19. The Company has resumed shutoffs for non-payment in all of the Company's regulated utilities. The Company also received and applied funds to customer accounts from the California Water and Wastewater Arrearage Payment Program (Program). The Program was created by the California Legislature, is administered by the State Water Resources Control Board and provided relief to community water and wastewater systems for unpaid bills – arrearages – related to the COVID-19 pandemic.
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Accounting Standards Issued But Not Yet Adopted | Accounting Standards Issued But Not Yet Adopted In October of 2021, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In a business combination, an acquirer generally recognizes assets acquired and liabilities assumed, including contract assets and contract liabilities, at their respective fair value on the acquisition date. ASU 2021-08 requires that in a business combination, an acquirer should recognize and measure contract assets acquired and contract liabilities assumed in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The guidance provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts with customers in a business combination. The guidance is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 should be applied prospectively for acquisitions occurring on or after the effective date of the amendments, and early adoption is permitted. The Company will adopt the standard prospectively and does not expect that the guidance will have a material impact on the Company's financial statements and footnote disclosures upon adoption.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables disaggregate the Company’s operating revenue by source for the three and nine months ended September 30, 2022 and 2021:
In the following tables, revenue from contracts with customers is disaggregated by class of customers for the three and nine months ended September 30, 2022 and 2021:
(a) Other includes accrued unbilled revenue. The following tables disaggregate the Company’s non-regulated revenue by source for the three and nine months ended September 30, 2022 and 2021:
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Schedule of Allowance for Credit Losses | The following table presents the activity in the allowance for credit losses for the 9-month period ended September 30, 2022 and 12-month period ended December 31, 2021:
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Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown on the Condensed Consolidated Statements of Cash Flows (see Note 10 for further details on restricted cash):
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Stock-based Compensation (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock and Restricted Stock Unit Activity | A summary of the status of the outstanding RSAs as of September 30, 2022 is presented below:
A summary of the status of the outstanding RSUs as of September 30, 2022 is presented below:
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Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Total Common Stockholders' Equity | The Company’s changes in total equity for the nine months ended September 30, 2022 and 2021 were as follows:
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Earnings Per Share of Common Stock (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule basic and Diluted Earnings Per Share | The computations of basic and diluted earnings per share of common stock are noted in the table below. Basic earnings per share of common stock is computed by dividing the net income attributable to California Water Service Group by the weighted average number of common shares outstanding during the period. RSAs are included in the weighted average common shares outstanding because the shares have all the same voting and dividend rights as issued and unrestricted common stock.
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Pension Plan and Other Postretirement Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit costs for the pension plans and other postretirement benefits | The following tables list components of net periodic benefit costs for the pension plans and other postretirement benefits. The data listed under “pension plan” includes the qualified pension plan and the non-qualified supplemental executive retirement plan. The data listed under “other benefits” is for all other postretirement benefits.
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | The provision for income taxes is shown in the tables below:
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Regulatory Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Assets and Liabilities | Regulatory assets and liabilities were comprised of the following as of September 30, 2022 and December 31, 2021:
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Fair Value of Financial Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Long-term Debt |
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Organization and Operations and Basis of Presentation (Details) |
9 Months Ended |
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Sep. 30, 2022
segment
| |
Noncontrolling Interest [Line Items] | |
Number of reportable segments | 1 |
BVRT Water Company | |
Noncontrolling Interest [Line Items] | |
Noncontrolling interest | 8.30% |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 238,268 | $ 238,352 | $ 595,860 | $ 597,337 |
Insurance Programs | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 2,700 |
Summary of Significant Accounting Policies - Allowance for Credit Losses (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 3,743 | $ 5,246 |
Provision for credit loss expense | 3,725 | 1,088 |
Write-offs | (2,253) | (3,113) |
Recoveries | 295 | 522 |
Total ending allowance balance | $ 5,510 | $ 3,743 |
Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 90,458 | $ 78,380 | ||
Restricted cash | 22,984 | 2,273 | ||
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows | $ 113,442 | $ 80,653 | $ 141,394 | $ 45,129 |
Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 29, 2022 |
Sep. 30, 2022 |
Sep. 30, 2022 |
Jul. 26, 2022 |
Jul. 25, 2022 |
Dec. 31, 2021 |
|
Equity [Abstract] | ||||||
Maximum consideration on transaction | $ 350.0 | |||||
Sale of stock, agreement term | 3 years | |||||
Sale of stock, number of shares issued in transaction (in shares) | 461,034 | 1,035,668 | ||||
Issuance of common stock, net | $ 26.9 | $ 57.1 | ||||
Payments for commissions | 0.3 | $ 0.6 | ||||
Stock issuance costs | $ 0.1 | |||||
Common stock, shares authorized (in shares) | 136,000,000 | 136,000,000 | 136,000,000 | 68,000,000 | 136,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Equity - Changes in Equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance at beginning of period (in shares) | 53,716,000 | 53,716,000 | ||||||
Balance at beginning of period | $ 1,207,306 | $ 1,169,878 | $ 1,182,980 | $ 1,002,263 | $ 929,802 | $ 921,344 | $ 1,182,980 | $ 921,344 |
Net income (loss) | 55,683 | 19,215 | 894 | 62,499 | 38,076 | (3,032) | $ 75,792 | 97,543 |
Issuance of common stock | 29,038 | 32,124 | 1,107 | 67,830 | 40,902 | 24,486 | ||
Repurchase of common stock | (105) | (111) | (1,674) | (69) | (109) | (1,415) | ||
Dividends paid on common stock | (13,590) | (13,452) | (13,429) | (11,863) | (11,702) | (11,581) | ||
Investment in business with noncontrolling interest | $ 0 | 0 | 0 | 0 | ||||
Acquisition of business with noncontrolling interest | 5,294 | |||||||
Distribution to noncontrolling interest | (348) | |||||||
Balance at end of period (in shares) | 54,824,000 | 54,824,000 | ||||||
Balance at end of period | $ 1,278,332 | $ 1,207,306 | $ 1,169,878 | $ 1,120,660 | $ 1,002,263 | $ 929,802 | $ 1,278,332 | $ 1,120,660 |
Dividends paid on common stock (in dollars per share) | $ 0.2500 | $ 0.2500 | $ 0.2500 | $ 0.2300 | $ 0.2300 | $ 0.2300 | ||
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance at beginning of period (in shares) | 54,356,000 | 53,773,000 | 53,716,000 | 51,535,000 | 50,835,000 | 50,334,000 | 53,716,000 | 50,334,000 |
Balance at beginning of period | $ 544 | $ 538 | $ 537 | $ 515 | $ 508 | $ 503 | $ 537 | $ 503 |
Issuance of common stock (in shares) | 470,000 | 585,000 | 85,000 | 1,075,000 | 702,000 | 528,000 | ||
Issuance of common stock | $ 4 | $ 6 | $ 1 | $ 11 | $ 7 | $ 5 | ||
Repurchase of common stock (in shares) | (2,000) | (2,000) | (28,000) | (2,000) | (2,000) | (27,000) | ||
Balance at end of period (in shares) | 54,824,000 | 54,356,000 | 53,773,000 | 52,608,000 | 51,535,000 | 50,835,000 | 54,824,000 | 52,608,000 |
Balance at end of period | $ 548 | $ 544 | $ 538 | $ 526 | $ 515 | $ 508 | $ 548 | $ 526 |
Additional Paid-in Capital | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance at beginning of period | 682,353 | 650,499 | 651,121 | 512,484 | 471,698 | 448,632 | 651,121 | 448,632 |
Issuance of common stock | 29,034 | 32,118 | 1,106 | 67,819 | 40,895 | 24,481 | ||
Repurchase of common stock | (105) | (111) | (1,674) | (69) | (109) | (1,415) | ||
Investment in business with noncontrolling interest | (278) | (153) | (54) | 526 | ||||
Balance at end of period | 711,004 | 682,353 | 650,499 | 580,760 | 512,484 | 471,698 | 711,004 | 580,760 |
Retained Earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance at beginning of period | 519,625 | 513,593 | 525,936 | 484,119 | 457,596 | 472,209 | 525,936 | 472,209 |
Net income (loss) | 55,872 | 19,484 | 1,086 | 62,429 | 38,225 | (3,032) | ||
Dividends paid on common stock | (13,590) | (13,452) | (13,429) | (11,863) | (11,702) | (11,581) | ||
Balance at end of period | 561,907 | 519,625 | 513,593 | 534,685 | 484,119 | 457,596 | 561,907 | 534,685 |
Noncontrolling Interests | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Balance at beginning of period | 4,784 | 5,248 | 5,386 | 5,145 | 0 | 0 | 5,386 | 0 |
Net income (loss) | (189) | (269) | (192) | 70 | (149) | |||
Investment in business with noncontrolling interest | 278 | 153 | 54 | (526) | ||||
Acquisition of business with noncontrolling interest | 5,294 | |||||||
Distribution to noncontrolling interest | (348) | |||||||
Balance at end of period | $ 4,873 | $ 4,784 | $ 5,248 | $ 4,689 | $ 5,145 | $ 0 | $ 4,873 | $ 4,689 |
Earnings Per Share of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Earnings Per Share [Abstract] | ||||||||
Net income | $ 55,683 | $ 19,215 | $ 894 | $ 62,499 | $ 38,076 | $ (3,032) | $ 75,792 | $ 97,543 |
Net (loss) income attributable to noncontrolling interests | (189) | 70 | (650) | (79) | ||||
Net income attributable to California Water Service Group | $ 55,872 | $ 62,429 | $ 76,442 | $ 97,622 | ||||
Weighted average common shares outstanding, basic (in shares) | 54,007 | 51,823 | 54,063 | 51,119 | ||||
Weighted average common shares outstanding, diluted (in shares) | 54,042 | 51,823 | 54,104 | 51,119 | ||||
Earnings per share of common stock - basic (in dollars per share) | $ 1.03 | $ 1.20 | $ 1.41 | $ 1.91 | ||||
Earnings per share of common stock - diluted (in dollars per share) | $ 1.03 | $ 1.20 | $ 1.41 | $ 1.91 |
Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 6,243 | $ 1,913 | $ 7,137 | $ 4,654 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Increase in income tax expense | $ 4,300 | $ 2,500 | ||
Income tax expense | 6,243 | $ 1,913 | $ 7,137 | $ 4,654 |
Effective tax rate estimate | 11.40% | 4.30% | ||
Unrecognized tax benefits | 16,900 | 14,900 | $ 16,900 | $ 14,900 |
Tax benefits that, if recognized, would affect the effective tax rate | $ 4,200 | $ 3,900 | $ 4,200 | $ 3,900 |
Regulatory Assets and Liabilities - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Regulated Operations [Abstract] | ||
Short-term portion of the regulatory assets | $ 54,654 | $ 78,597 |
Short-term portion of the regulatory liabilities | $ 9,684 | $ 17,547 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Aug. 16, 2022 |
Dec. 31, 2021 |
|
Lessee, Lease, Description [Line Items] | |||
Contingency loss recognized liability | $ 6.0 | $ 3.5 | |
Camino Real | Supply Commitment | |||
Lessee, Lease, Description [Line Items] | |||
Amount to be invested under supply commitment | $ 40.0 | ||
Payments for other commitments | $ 21.5 |
Fair Value of Financial Assets and Liabilities - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Risk premium (as a percent) | 0.60% |
Fair Value of Financial Assets and Liabilities - Schedule of Long Term Debt at Fair Value (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Cost | ||
Fair Value of Financial Assets and Liabilities | ||
Long-term debt, including current maturities, net | $ 1,059,734 | $ 1,060,986 |
Fair Value | ||
Fair Value of Financial Assets and Liabilities | ||
Long-term debt, including current maturities, net | 1,001,637 | 1,338,831 |
Fair Value | Level 1 | ||
Fair Value of Financial Assets and Liabilities | ||
Long-term debt, including current maturities, net | 0 | 0 |
Fair Value | Level 2 | ||
Fair Value of Financial Assets and Liabilities | ||
Long-term debt, including current maturities, net | 1,001,637 | 1,338,831 |
Fair Value | Level 3 | ||
Fair Value of Financial Assets and Liabilities | ||
Long-term debt, including current maturities, net | $ 0 | $ 0 |
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