CWT

A month has gone by since the last earnings report for Essential Utilities (WTRG). Shares have added about 5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Essential Utilities due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. WTRG Q2 Earnings Meet Estimates, Revenues Beat on Water GrowthEssential Utilities Inc. reported second-quarter 2026 adjusted earnings of 38 cents per share, in line with the Zacks Consensus Estimate and reflecting no surprise. GAAP earnings were 37 cents per share, down 2.6% from 38 cents a year ago, as merger-related costs weighed on results. Quarterly revenues of $530.9 million rose 3.1% year over year and beat the consensus estimate of $502 million by 5.76%. Regulated water segment revenues totaled $357.5 million, up from $332.3 million in the second quarter of 2025. Regulatory recoveries and increased volume were the largest contributors to the growth.Regulated natural gas revenues declined to $169.3 million from $177.3 million a year ago. Higher rates and surcharges provided support, but lower purchased gas costs and reduced volumes due to warmer weather pressured the segment. Operations and maintenance expenses increased 3.5% year over year to $153.6 million in the second quarter of 2026 from $148.5 million a year earlier. The rise was mainly due to higher employee-related costs, including annual merit increases and increased medical claims, along with higher water and wastewater production expenses. Operating income reached $193.3 million, up 4.3% from $185.3 million a year earlier. Net income, however, declined 1.9% to $105.7 million from $107.8 million, reflecting higher interest expense and other cost pressures. Essential invested $662.2 million in regulated water and natural gas infrastructure during the first six months of 2026. The company remains on track to invest $1.7 billion in infrastructure for the full year.Rate awards and infrastructure surcharges secured so far in 2026 are expected to increase annual water revenues by $43.9 million and natural gas revenues by $12.7 million. Pending water and wastewater cases seek $79.7 million in incremental annual revenues, while a Pennsylvania natural gas case requests a $163.2 million increase.WTRG’s Balance Sheet Supports Investment PlansAs of June 30, 2026, net property, plant and equipment totaled $14.75 billion, up from $14.26 billion at the end of 2025. Long-term debt, excluding the current portion, increased to $8.42 billion from $8.11 billion.The company had $960 million available under its credit lines, while the weighted average cost of fixed-rate long-term debt was 4.16%. Essential also raised its quarterly dividend 5.25% to 36.06 cents per share, payable on Sept. 1, 2026, to shareholders of record as of Aug. 11. The company reaffirmed its expectation for adjusted earnings growth of 5% to 7% annually from adjusted 2024 earnings of $1.97 per share through 2027. Its guidance continues to incorporate signed municipal water and wastewater acquisitions, excluding the pending DELCORA transaction. The Zacks Consensus Estimate for earnings is currently pegged at $2.21 per share.Essential also continues to expect its merger with American Water to close in the first quarter of 2027. The transaction has received regulatory approvals in Kentucky, Ohio and Virginia, while shareholders of both companies approved the merger-related proposals in February 2026. Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. At this time, Essential Utilities has a subpar Growth Score of D, a score with the same score on the momentum front. Following the exact same course, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. Essential Utilities has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months. Essential Utilities belongs to the Zacks Utility - Water Supply industry. Another stock from the same industry, California Water Service Group (CWT), has gained 0.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. California Water Service Group reported revenues of $308.6 million in the last reported quarter, representing a year-over-year change of +16.5%. EPS of $0.93 for the same period compares with $0.71 a year ago. California Water Service Group is expected to post earnings of $1.22 per share for the current quarter, representing a year-over-year change of +18.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -8.7%. California Water Service Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Essential Utilities Inc. (WTRG) : Free Stock Analysis Report California Water Service Group (CWT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Essential Utilities WTRG is benefiting from customer-base growth driven by organic expansion and water and wastewater acquisitions. This expansion broadens its service footprint, increases demand for essential utility services and supports infrastructure expansion across its regulated operations.The company added more than 138,000 customers or equivalent dwelling units since 2015, while pending acquisitions are expected to serve more than 200,000 additional customers. It also completed the acquisition of Integra Water Texas’ wastewater system, adding approximately 1,100 customers, while its active municipal acquisition pipeline represents about 400,000 potential customers.The company’s signed purchase agreements cover more than 200,000 customers for about $282 million.  WTRG’s customer expansion is also supported by infrastructure spending, and it plans to invest about $1.7 billion in 2026 while targeting 5-7% annual EPS growth through 2027.Overall, acquisitions and infrastructure investments are expected to support WTRG’s long-term expansion and customer growth. Growing customer numbers can benefit water utilities by increasing demand for essential services and creating opportunities to expand infrastructure. A broader customer base can also help utilities generate stable revenues while enabling continued investments in water systems, treatment facilities and network upgrades.American Water Works AWK added about 52,700 customer connections through acquisitions in the first half of 2026, supporting expansion across its regulated water footprint. California Water Service Group CWT serves about 2 million people through 497,600 California connections, while acquisitions and infrastructure investments provide additional opportunities for customer and rate-base growth. The Zacks Consensus Estimate for 2026 and 2027 EPS indicates a year-over-year increase of 0.45% and 9.73%, respectively. Image Source: Zacks Investment Research WTRG is trading at a premium to the industry, with a forward 12-month price-to-earnings ratio of 17.45 versus the industry average of 17.34X. Image Source: Zacks Investment Research In the past month, the company’s shares have risen 5.9% compared with the industry’s 0.7% growth. Image Source: Zacks Investment Research WTRG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Essential Utilities Inc. (WTRG) : Free Stock Analysis Report American Water Works Company, Inc. (AWK) : Free Stock Analysis Report California Water Service Group (CWT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Consolidated Water Co. Ltd. CWCO reported second-quarter 2026 earnings of 25 cents per share, beating the Zacks Consensus Estimate of 22 cents by 13.64%. Earnings declined 21.9% from 32 cents in the year-ago quarter. Revenues of $32.9 million missed the Zacks Consensus Estimate of $35 million by 6.07%. The top line also decreased 2.1% from the year-ago figure of $33.6 million. Manufacturing weakness weighed on the top line, while bulk water revenues advanced 20%. Consolidated Water Co. Ltd. price-consensus-eps-surprise-chart | Consolidated Water Co. Ltd. Quote Retail revenues were $8.66 million, up 0.3% year over year. Water sales volume declined 2% amid slightly wetter weather in Grand Cayman, but this was offset by higher rates and increased sales volume to a major non-potable water customer.Bulk revenues increased 20.1% to $9.93 million. Growth primarily reflected higher energy-related revenues in the Bahamas and contributions from two new seawater desalination plants on Cat Island, commissioned in 2026.Manufacturing revenues plunged 48.6% to $2.69 million due to the lower dollar amount of new purchase orders.Services revenues increased 1.2% to $11.59 million. Construction revenues surged 88.9% to $5.34 million, driven by projects involving a drinking water plant expansion in Colorado and a wastewater recycling plant in California. Both projects are scheduled for completion in 2026. Gross profit declined 14.6% year over year to $10.96 million from $12.83 million in the prior-year quarter.Total general and administrative expenses decreased nearly 4.4% to $7.24 million.The company secured a 25-year exclusive concession and water utility license to produce and supply water to Seven Mile Beach and West Bay, two of Grand Cayman’s three most populated areas.The company commissioned a second seawater desalination plant on Cat Island, The Bahamas, in 2026, expanding its supply of potable water to the Water and Sewerage Corporation of The Bahamas. As of June 30, 2026, cash and cash equivalents totaled $132.6 million compared with $123.8 million as of Dec. 31, 2025.As of June 30, 2026, total debt was $0.016 million, down from $0.074 million at Dec. 31, 2025.Net cash provided by operating activities totaled $18.57 million in the first six months of 2026 compared with $20.52 million a year earlier. Capital spending on property, plant and equipment and construction in progress was $5.19 million in the first six months of 2026 compared with $4.22 million a year earlier. Consolidated Water currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. American Water Works Company Inc. AWK reported second-quarter 2026 adjusted earnings of $1.61 per share, which beat the Zacks Consensus Estimate of $1.59 by 1.3%. The bottom line increased 8.1% from $1.49 in the year-ago quarter.The Zacks Consensus Estimate for 2026 and 2027 EPS is pinned at $6.09 and $6.59, indicating year-over-year growth of 7.98% and 8.35%, respectively.American States Water Company AWR reported second-quarter 2026 earnings of $1.09 per share, up 25.3% year over year and beating the Zacks Consensus Estimate of 93 cents by 17.2%. Higher earnings at the water utility, driven largely by CPUC-approved rate increases, supported the gain.The Zacks Consensus Estimate for 2026 and 2027 EPS is pinned at $3.68 and $3.80, indicating year-over-year growth of 9.20% and 3.13%, respectively.California Water Service Group CWT reported second-quarter 2026 earnings of 93 cents per share, up 31% year over year. The figure beat the Zacks Consensus Estimate of 79 cents by 17.72%.The Zacks Consensus Estimate for 2026 and 2027 EPS is pinned at $2.55 and $2.73, indicating year-over-year growth of 18.60% and 7.06%, respectively. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report American Water Works Company, Inc. (AWK) : Free Stock Analysis Report California Water Service Group (CWT) : Free Stock Analysis Report American States Water Company (AWR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Five Dividend Kings with 50+ consecutive years of dividend increases beat Q2 earnings, making them defensive picks in a frothy, overbought market. Warren Buffett's KO beat Q2 EPS and upgraded full-year guidance, while FRT posted 96% occupancy and its 59th straight annual dividend increase. AWR raised its quarterly dividend 8% after Q2 EPS jumped to $1.09, extending its remarkable 70-year streak of consecutive dividend increases. It sounds nuts, but SoFi1 is giving new Active Invest users up to $3,000 in stock for a limited time, and all it takes is a $50 deposit to get started.2 See for yourself (Sponsor) Investors seeking defensive companies that pay substantial dividends are drawn to the Dividend Kings, and for good reason. The 58 companies that made the cut for the 2026 Dividend Kings list have increased their dividends (not just maintained them) for 50 consecutive years. Companies that have raised dividends for 50 or more consecutive years are exactly the kinds of investments passive income investors need to own. Dependability is crucial for individuals seeking to increase their annual income through dividend stock investments. With the second-quarter earnings season winding down, we wanted to see which companies in the legendary group posted the best results, and we were not disappointed. Some of the top companies, including a Warren Buffett favorite, posted stellar results and some outstanding forward-looking guidance. These are companies that make sense for growth and income investors seeking timely ideas in an overbought, frothy stock market. Companies that have paid and raised dividends for 50 years or more are the kinds of stocks growth and income investors want to buy and hold in stock portfolios forever. These stocks are mostly conservative, and should we see a dramatic market correction, they will likely hold their ground much better than volatile technology names. SoFi Active Invest is offering a limited-time promotion. Open an account, fund it with $50 or more, and you could receive up to $3,000 in complimentary stock for Active Invest accounts. See for yourself by clicking here now. (Sponsor) When you have products that everyone depends on and pays a very reliable 2.35% dividend that has been raised for 70 years, your investors will likely do well. American States Water (NYSE: AWR) is a holding company with segments in water, electric, and contracted services. The company reported strong Q2 EPS of $1.09 (up from $0.87 year over year) and raised its quarterly dividend by 8.2% following strong execution in utility and contracted services. Within the segments, the company has three principal business units: water and electric service utility operations conducted through its regulated utilities, Golden State Water Company (GSWC) and Bear Valley Electric Service (BVES), respectively, and contracted services conducted through American States Utility Services (ASUS) and its subsidiaries. GSWC is a public water utility that purchases, produces, distributes, and sells water in 11 counties in the state of California. It provides wastewater collection and treatment services. BVES is a public electric utility that distributes electricity in several San Bernardino County Mountain communities in California. ASUS operates, maintains, and performs construction activities (including renewal and replacement capital work) on water and/or wastewater systems at various United States military bases. This company has raised its dividend for an impressive 77 years, yielding 2.57%. California Water Service (NYSE: CWT) is a holding company that provides water utility and other related services in California, Washington, New Mexico, Hawaii, and Texas. The company reported that net income rose to $56.5 million ($0.93 per share), up from $42 million in the prior year, backed by new rate case recognitions and infrastructure investments. Its business is conducted through its operating subsidiaries and provides utility services. The business consists of the production, purchase, storage, treatment, testing, distribution, and sale of water for domestic, industrial, public, and irrigation uses, as well as domestic and municipal fire protection services. The company provides wastewater collection and treatment services, including treatment that allows water recycling. It also provides non-regulated water-related services under agreements with municipalities and other private companies. The non-regulated services include full water system operation, meter reading, and billing services. Non-regulated operations also include the lease of communication antenna sites, lab services, and promotion of other non-regulated services. Coca-Cola (NYSE: KO) is an American multinational corporation founded in 1892. This company remains a long-time top holding of Warren Buffett, who owns a massive 400 million shares, or 9.3% of the float and 9.3% of the portfolio. The stock comes with a dependable 2.39% dividend, which was raised to $0.53 per share in May 2026, marking the 64th straight year of dividend increases. The company reported second-quarter revenue of $13.37 billion and comparable EPS of $0.97, beating expectations, and raised its full-year earnings growth forecast. Coca-Cola is the world's largest beverage company, offering consumers more than 500 sparkling and still brands. Led by Coca-Cola, one of the world's most valuable and recognizable brands, the company's portfolio features 20 billion-dollar brands, including: Diet Coke Coca-Cola Light Coca-Cola Zero Sugar Caffeine-free Diet Coke Cherry Coke Fanta Orange Fanta Zero Orange Fanta Zero Sugar Fanta Apple Sprite Sprite Zero Sugar Simply Orange Simply Apple Simply Grapefruit Fresca Schweppes Dasani Fuze Tea Glacéau Smartwater Glacéau Vitaminwater Gold Peak Ice Dew Powerade Topo Chico Minute Maid Globally, it is the top provider of sparkling beverages, ready-to-drink coffees, juices, and juice drinks. Through the world's most extensive beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of over 1.9 billion servings per day. Plus, the company owns 19.5% of Monster Beverage (NASDAQ: MNST), which continues to deliver strong financial results. Founded in 1962, Federal Realty Investment Trust (NYSE: FRT) continues to deliver long-term, sustainable growth by investing in densely populated, affluent communities and pays a strong 3.83% dividend. Real estate demand is still growing, and hard assets are generally considered prudent investments during periods of inflation. Federal Realty is a recognized leader in the ownership, operation, and redevelopment of high-quality retail-based properties in major coastal markets from the District of Columbia and Boston to San Francisco and Los Angeles. The company posted Q2 funds from operations of $1.88 per share (beating mid-guidance expectations), alongside strong 96% occupancy and its 59th consecutive annual dividend increase. Federal Realty's mission is to deliver long-term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like: Santana Row in San Jose, California Pike & Rose in North Bethesda, Maryland Assembly Row in Somerville, Massachusetts Federal Realty's portfolio comprises approximately 3,500 tenants across 27 million square feet of space and 3,100 residential units. Federal Realty has increased its quarterly dividend for 57 consecutive years, the longest streak in the REIT industry. Procter & Gamble (NYSE: PG) was founded more than 185 years ago as a soap-and-candle company, and it currently pays a 2.92% dividend. The company is focused on providing branded consumer packaged goods to consumers worldwide. The consumer staples giant posted earnings per share of $1.43, beating estimates of $1.41, on steady revenue, and it continued its 70-year streak of dividend increases, raising it 3% in April. The company’s segments include: Beauty Grooming Health Care Fabric & Home Care Baby Feminine & Family Care Its products are sold in approximately 180 countries and territories primarily through mass merchandisers, e-commerce, including social commerce channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores, including airport duty-free stores, high-frequency stores, pharmacies, electronics stores, and professional channels. It also sells directly to individual consumers. It has operations in approximately 70 countries. Procter & Gamble offers products under such brands as: Head & Shoulders Herbal Essences Pantene Rejoice Olay Old Spice Safeguard Secret SK-II Braun Gillette Venus Crest Oral-B Ariel Downy Gain Tide Always Always Discreet Tampax Bounty Looking to grow your money but unsure where to begin? SoFi Active Invest is offering a limited-time promotion—open a new Active Invest account, fund it with $50 or more, and you could receive up to $3,000 in complimentary stock. From $0 commission trading3 to fractional shares4 and automated investing, this app is designed to simplify investing for everyone, whether you’re just starting or already experienced. Its easy to sign up and secure your bonus.(Sponsor) Contact [email protected] for any questions or corrections.

American States Water Company AWR reported second-quarter 2026 earnings of $1.09 per share, up 25.3% year over year and beating the Zacks Consensus Estimate of 93 cents by 17.2%. Higher earnings at the water utility, driven largely by CPUC-approved rate increases, supported the gain. Operating revenues rose 11.2% to $181.29 million from $163.07 million. Water consumption increased about 4%, while contracted services revenues advanced 20.3%, adding to the quarter’s growth.Water segment revenues increased 9.5% year over year to $131.05 million. The increase mainly reflected second-year customer rate increases effective Jan. 1, 2026, additional revenues tied to approved capital projects and higher water consumption. Lower billed surcharges partly offset these gains.Contracted Services revenues rose 20.3% to $36.61 million, while Electric segment revenues increased 5.4% to $13.63 million. The Electric revenues were $13.6 million, up 5.4% year over year, and the surge reflects authorized 2026 rate increases and additional recovery on completed capital projects, partly offset by lower billed surcharges. American States Water Company price-consensus-eps-surprise-chart | American States Water Company Quote Operating expenses increased 4.6% to $117.32 million. ASUS construction expense climbed 29.9% to $16.75 million, while depreciation and amortization rose 9.1% to $12.75 million. Administrative and general expenses declined 2.8% to $24.52 million.Operating income increased 25.5% to $63.97 million. Interest expense was $12.17 million, up 0.5%, while other income, net, increased 41.8% to $5.07 million. Net income rose 28.4% to $43.27 million. Cash provided by operating activities totaled $116.6 million in the first six months of 2026, compared with $109.6 million a year earlier. The improvement reflected new regulated utility rates, various surcharges, about $4 million of proceeds from PFAS contamination litigation and working-capital timing.The regulated utilities invested $91.7 million in company-funded capital work year to date. American States Water expects regulated utility capital expenditures of $185-$220 million in 2026. Cash and cash equivalents stood at $21.66 million at June 30, up from $18.82 million at year-end 2025. Golden State Water filed its 2028-2030 general rate case on July 1, seeking nearly $1 billion of capital budgets for the three-year cycle. It also requested reinstatement of the WRAM and MCBA regulatory mechanisms. A decision is scheduled for the fourth quarter of 2027, with new rates targeted for Jan. 1, 2028.Bear Valley Electric filed its 2027-2030 rate case in January. The application seeks about $133 million of capital budgets, plus roughly $17 million, along with allowance for funds used during construction, for projects to be recovered through advice letters. It also requests an 11.30% return on equity. The board approved an 8.2% increase in the third-quarter dividend to 54.55 cents per share from 50.40 cents. This increase marks the 72nd consecutive calendar year in which AWR has raised annual dividends to its shareholders.AWR also completed its at-the-market equity offering program in June after reaching the $200 million maximum aggregate offering capacity. The company said no further shares will be sold under that program and it has no plans to issue additional equity through at least the end of 2029 to support current operations. American States Water’s capital expenditures for 2026 are expected to be $185-$220 million.Contracted Services (“ASUS”) is projected to contribute 63-67 cents per share in 2026. American States Water currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. American Water Works Company Inc. AWK reported second-quarter 2026 adjusted earnings of $1.61 per share, which beat the Zacks Consensus Estimate of $1.59 by 1.3%. The bottom line increased 8.1% from $1.49 in the year-ago quarter.Revenues of $1.36 billion surpassed the Zacks Consensus Estimate of $1.28 billion by 6.2% and rose 6.2% year over year. The company added nearly 52,000 customer connections through acquisitions in the first half.California Water Service Group CWT reported second-quarter 2026 earnings of 93 cents per share, up 31% year over year. The figure beat the Zacks Consensus Estimate of 79 cents per share by 17.72%.Quarterly revenues rose 16.5% to $308.6 million and surpassed the Zacks Consensus Estimate of $277 million by 11.41%. Results benefited from regulatory catch-up revenues, rate changes and higher customer consumption, while infrastructure investment reached a record $147 million.Essential Utilities Inc. WTRG reported second-quarter 2026 adjusted earnings of 38 cents per share, in line with the Zacks Consensus Estimate and reflecting no surprise. Quarterly revenues of $530.9 million rose 3.1% year over year and beat the consensus estimate of $502 million by 5.76%. Regulatory recoveries and purchased gas costs supported the top line, while regulated water revenues advanced 7.6%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American States Water Company (AWR) : Free Stock Analysis Report American Water Works Company, Inc. (AWK) : Free Stock Analysis Report California Water Service Group (CWT) : Free Stock Analysis Report Essential Utilities Inc. (WTRG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Essential Utilities Inc. WTRG reported second-quarter 2026 adjusted earnings of 38 cents per share, in line with the Zacks Consensus Estimate and reflecting no surprise. GAAP earnings were 37 cents per share, down 2.6% from 38 cents a year ago, as merger-related costs weighed on results. Quarterly revenues of $530.9 million rose 3.1% year over year and beat the consensus estimate of $502 million by 5.76%. Regulatory recoveries and purchased gas costs supported the top line, while regulated water revenues advanced 7.6%. Regulated water segment revenues totaled $357.5 million, up from $332.3 million in the second quarter of 2025. Regulatory recoveries and increased volume were the largest contributors to the growth.Regulated natural gas revenues declined to $169.3 million from $177.3 million a year ago. Higher rates and surcharges provided support, but lower purchased gas costs and reduced volumes due to warmer weather pressured the segment. Essential Utilities Inc. price-consensus-eps-surprise-chart | Essential Utilities Inc. Quote Operations and maintenance expenses increased 3.5% year over year to $153.6 million in the second quarter of 2026 from $148.5 million a year earlier. The rise was mainly caused by higher employee-related costs, including annual merit increases and increased medical claims, along with higher water and wastewater production expenses. Operating income reached $193.3 million, up 4.3% from $185.3 million a year earlier. Net income, however, declined 1.9% to $105.7 million from $107.8 million, reflecting higher interest expense and other cost pressures. Essential invested $662.2 million in regulated water and natural gas infrastructure during the first six months of 2026. The company remains on track to invest $1.7 billion in infrastructure for the full year.Rate awards and infrastructure surcharges secured so far in 2026 are expected to increase annual water revenues by $43.9 million and natural gas revenues by $12.7 million. Pending water and wastewater cases seek $79.7 million in incremental annual revenues, while a Pennsylvania natural gas case requests a $163.2 million increase. As of June 30, 2026, net property, plant and equipment totaled $14.75 billion, up from $14.26 billion at the end of 2025. Long-term debt, excluding the current portion, increased to $8.42 billion from $8.11 billion.The company had $960 million available under its credit lines, while the weighted average cost of fixed-rate long-term debt was 4.16%. Essential also raised its quarterly dividend 5.25% to 36.06 cents per share, payable on Sept. 1, 2026, to shareholders of record as of Aug. 11. The company reaffirmed its expectation for adjusted earnings growth of 5% to 7% annually from adjusted 2024 earnings of $1.97 per share through 2027. Its guidance continues to incorporate signed municipal water and wastewater acquisitions, excluding the pending DELCORA transaction. The Zacks Consensus Estimate is currently pegged at $2.21 per share.Essential also continues to expect its merger with American Water to close in the first quarter of 2027. The transaction has received regulatory approvals in Kentucky, Ohio and Virginia, while shareholders of both companies approved the merger-related proposals in February 2026. Essential currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. American Water Works Company Inc. AWK reported second-quarter 2026 adjusted earnings of $1.61 per share, which beat the Zacks Consensus Estimate of $1.59 by 1.3%. The bottom line increased 8.1% from $1.49 in the year-ago quarter.Revenues of $1.36 billion surpassed the Zacks Consensus Estimate of $1.28 billion by 6.2% and rose 6.2% year over year. The company added nearly 52,000 customer connections through acquisitions in the first half.California Water Service Group CWT reported second-quarter 2026 earnings of 93 cents per share, up 31% year over year. The figure beat the Zacks Consensus Estimate of 79 cents per share by 17.72%.Quarterly revenues rose 16.5% to $308.6 million and surpassed the Zacks Consensus Estimate of $277 million by 11.41%. Results benefited from regulatory catch-up revenues, rate changes and higher customer consumption, while infrastructure investment reached a record $147 million. American States Water AWR is slated to report second-quarter 2026 results on Aug. 5, after market close. The Zacks Consensus Estimate for AWR’s second-quarter EPS is pegged at 93 cents, implying an increase of 6.9% from the prior-year figure. The company has a dividend yield of 2.29%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Essential Utilities Inc. (WTRG) : Free Stock Analysis Report American Water Works Company, Inc. (AWK) : Free Stock Analysis Report California Water Service Group (CWT) : Free Stock Analysis Report American States Water Company (AWR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026, at 11 a.m. ET Senior Vice President and Chief Financial Officer - James Patrick Lynch Chairman and Chief Executive Officer - Martin A. Kropelnicki Operator: Ladies and gentlemen, Until that time, your lines again will be placed on music hold. Thank you for your patience. Thank you for standing by. And welcome to the 26 Second Quarter California Water Service Group earnings call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press *1 on your touch tone phone. And to withdraw your question, please press *1 again. It is now my pleasure to turn the call over to Mr. James Patrick Lynch, senior vice president and chief financial officer. You may begin. James Patrick Lynch: Thank you, Janine. Welcome, everyone, to the second quarter 26 results call for California Water Service Group. With me today is Martin A. Kropelnicki, our Chairman and CEO. Replay dial in information for the call can be found in our quarterly results earnings release which was issued earlier today. The call replay will be available until September 28, 2026. As a reminder, before we begin, the company has a slide deck to accompany today's earnings call. The slide deck was furnished with an 8-K and is also available on the company's website at www.calwatergroup.com. Before looking at our second quarter 2026 results, I would like to cover some forward looking statements. During the call, we may make certain forward looking statements. And because these statements deal with future events, they are subject to various risks and uncertainties. Our actual results could differ materially from the company's current expectations. As a result, we strongly advise all current shareholders and interested parties to carefully read the company's disclosures on risks, and uncertainties found in our Form 10-K, Form 10-Qs, press releases, and the other reports we file with the Securities and Exchange Commission. And now, I will turn the call over to Martin to provide a brief overview. Martin A. Kropelnicki: Thanks, Jim. Good morning, everyone. Consistent with our past earnings call, I am going to give you a quick overview of the agenda and then Jim and I are going to jump into some of the details for the quarter. There are only kind of 6 items on the agenda today that we want to go through. Starting obviously in the in the second quarter, the end of April, we received a decision on our California general rate case As part of that decision, during the quarter, we recognized our IRMA, which is the balancing account that takes the retroactive portion of the rate case back to January 1. So this rate case was close to being on time, which was very good news. It was, you know, approximately 90 to 100 days delayed, but we are made whole back to the original date of January 1. That was recognized in the quarter as well as other items that we will be talking about. In addition, during the quarter, we reached this full settlement in our rate case up in Washington. I will provide some more details about that when we get to that slide. During the second quarter, we had record capital. We invested a record $270 million in new plant for the first 6 months of the year. That continues to move ahead, especially as we start to invest in our PFAS treatment programs throughout our service territory. And to partially offset that growth, we did raise about $88.8 million through our ATM or at the market stock program and the company declared its 326th quarterly consecutive dividend of $0.335 per share. In addition to the quarter, we continue to work on our nexus integration plans. And Nexus has been great to work with and things are progressing there. We will give you some more details on that. And then lastly, those of you that like to look at some of the numbers on sustainability and some of our numbers. We did publish our water quality and sustainability reports as well as receive a number of awards during the quarter. And later on towards the end, I will introduce the 2 new officers As some of you may know, Greg Milleman is not here. As you remember at the last call, that was his last call with us, and he retired and officially retired from the company. And I will be talking a little bit about his replacement as well as 1 other promotion, a key promotion we had. during the quarter. So that is the agenda for today. Jim, why do not I turn it over to you? We will go through the numbers. James Patrick Lynch: Thanks, Martin. As Martin mentioned, the Q2 results reflect the decision we received in our 2024 California GRC and also the retroactive application of the decision through the IRMA to the beginning of 2026. The net income for the quarter was $56.5 million or $0.93 per diluted share. That compares to Q2 2025 net income of $42.2 million or 71¢ per diluted share. Revenue for the quarter was $309 million compared to $265 million in the second quarter of 2025. The primary earnings drivers included $15.3 million of IRMA revenue related to the delayed 2024 California GRC, and of which about $9.2 million of that was related to the first quarter. So that was the look back portion that was recognized in Q2. We also had $15 million that was due to rate changes and changes in regulatory mechanisms. And $9.3 million of remaining deferred RAM revenue that is now expected to be collected over the next 2 years. If you remember when we stopped decoupling, we still had some residual RAM balances that were deferred until we reached the proper accounting guidance that would allow us to report the revenue. So we have now reached that place. And at this point, we have recognized the remaining deferred balances. These increases were partially offset by $6.3 million in higher per unit water supply costs about $7.9 million in costs related to the deferred RAM revenue, and $7 million in higher income taxes that was due primarily to higher income and the increase and an increase in our effective tax rate. If we move on to slide 6, you can see the impact of the activity of our second quarter on our diluted earnings per share. The primary drivers were customer rate changes, the IRMA the deferred RAM revenue, each of which contributed $0.20, $0.15, and $0.11 per diluted share, respectively. And these increases were partially offset by the water production cost and deferred RAM related expenses of $0.08 and $0.10 per diluted share, respectively. If we turn to slide 7, on a year to date basis, net income through the end of the quarter was $60.5 million or $1.00 per diluted share and that compared to year to date net income in the prior year of $55.5 million or $0.93 per diluted share. Revenue was $523 million compared to $469 million year to date in 2025. The primary earnings drivers were largely the same as those we experienced for the quarter And so turning to slide 8, you can see the impact on the year to date drivers with regards to our diluted earnings per share. Customer rate changes, the IRMA and deferred RAM revenue contributed $0.30, $0.20, and $0.11 per diluted share, respectively, and these were partially offset by higher water production costs and the deferred RAM related expenses of $0.19 and $0.10 per diluted share. So that is kind of a summary of the financial performance so now I will turn the call back over to Martin to walk us through some capital some of our capital activities. Martin A. Kropelnicki: Great. Thanks, Jim. I am on slide 9 for everyone on the call. So looking at our infrastructure investment through the second quarter, for the quarter, CapEx was $147 million. That was up from $119 million the prior year. that is about a 23.1% increase year over year. Our 10 year compound annual growth rate increasing capital or growth capital is hovering right around 11.4% right now. As a reminder, the capital estimates for 2026 and going out now until they complete the projects, include an estimated net $155 million that is been budgeted for PFAS. And I am saying that because we have approximately $60 million of recovery from polluters that is being used, so the sum of the 2 numbers will get you back close to the original estimates that we provided. About a year and a half ago, 2 years ago, and we started looking at that PFAS. I will say the PFAS numbers will still tend to move around a little bit as our legal team has continued to do an outstanding job at getting recoveries to offset the cost of the PFAS treatment on behalf of our customers from the polluters. So they continue to get more dollars coming in as well as some grant dollars are coming in. But kind of the main theme is being consistent with what we have had the last 20 years which is our compound growth rate on the capital investment or our growth capital is holding in, you know, a little north of 10%. And our internal target that we try strive for is 10%. So it is up a little bit by the PFAS assessment. I think as everyone knows, when you go to the next slide, when you are increasing your rate base at 10%+ a year, your CapEx, excuse me, you are growing your rate base, And right now, we have a compound annual growth rate of almost 12% on our rate base growth. The slides that you see here today have all been trued up for the California decision based on the numbers that were in that decision. So we anticipate having approximately $3.5 billion in rate base by the end of 2028, assuming we can get all the capital in the ground on time. So, obviously, the company remains very capital focused. So obviously, CapEx continues to be strong. The company continues to the capital plans well. We are able to get that capital built into rates in California. it is preapproved. So I think it is a little bit easier in California for earnings modeling because it is a prospective state The other states we have are all historical. But overall, we are very happy kind of with the CapEx growth and the rate base growth that we have as we move through this next rate cycle. On the West Coast. So but, Jim, why do not I turn it back to you to cover liquidity and some of our capital plans for the second half of 2026? James Patrick Lynch: Greg. Thanks, Martin. So we do continue to maintain a really strong liquidity profile to execute the capital plan and also as we continue to pursue tuck in M&A, and look to integrate Nevada, Oregon, and the BVRT acquisitions. As of June 30, 2026, we had $43.4 million in unrestricted cash, and about $45.7 million in restricted cash. Along with approximately $395 million available on our bank line of credit. Just as a reminder, that restricted cash is really earmarked for a project we have in Texas with a water agency there, GVRA, in building a pipeline into 1 of the new areas that we hope to be delivering potable water in here in the near term in Texas. So it is our first potable water system in Texas and we are really looking forward to that initiative. In addition, we maintain credit facilities totaling $600 million. Those credit facilities are expandable up to $800 million and they have maturities that extend into March 2028. So we are really well positioned with regards to our existing credit facilities We also renewed our ATM stock program in May 2025, with $350 million on the shelf registration. During the second quarter, we did raise $88 million in proceeds from stock sales under the ATM program. We believe the balance sheet is in pretty good shape and that additional any additional financing we raise in the second half of 2026 will be primarily tied to growth and that growth is really earmarked for constructing the remainder of our 2026 capital program. And closing of Nevada and Oregon in terms of those acquisitions. And we also will look to pay down our line of credit in California as we head towards the end of the year and begin to prepare for our activities in 2027. Importantly, both group and Cal Water maintain a strong credit rating of A plus stable from S&P Global. And I think that really just serves to underscore the strength of our balance sheet. And finally, yesterday, we did declare our 326 consecutive quarterly dividend of $0.335 per share and that represents about a 7.6% CAGR growth in our 5 year dividend. So really pleased and happy with our ability to deliver that to the shareholders. Martin A. Kropelnicki: Thanks, Jim. I am now on slide 12. And I wanna talk a little bit about what is happening on the regulatory front. Again, just to recap the major components of the approved 2024 general rate case in the state of California, The approved rate case will drive significant infrastructure investment from 2024 to 2027. I know that is a little confusing, but it is 2024, 2025, 2026, and 2027. You have to include kind of a stub year of the year that you file your general rate case. So in total, in California, prospective years, the capital gets approved in advance We got about $1.45 billion of preapproved capital In addition, the commission approved approximately $229 million of advice letter projects, and that gets us to just shy of $1.7 billion over that 4-year period. In addition, in the rate case, the commission also affirmed the Monterey style RAM. We have continued to have in the past and has continued through this next cycle, a pension balancing account a healthcare balancing account, a conservation expense balancing account, and an incremental cost balancing account for water production cost. In addition, what is new in the settlement that was authorized is we have a sales adjustment mechanism, which I think really is a big deal. Since we did not get full decoupling. But we got the Monterrey-style RAM, the sales adjustment mechanism allows us to adjust our sales forecast the following year if the sales numbers are out of out a certain percent from what the forecast was. So previously, when we decoupled, we did not have that option. And that tended to set up growing balances uncollected balances from customers as the decoupling mechanism would balance from month to month, quarter to quarter. So having a sales just mechanism, I think, is a big deal that will help smooth out the revenue forecast and actual revenue in the second, third year of the rate case. In addition, a new thing that we got this year that we asked for was a liability balancing account. And I think, you know, we are well into wildfire season for all of you that have studied trying to procure insurance as a homeowner or as a consumer out on the West Coast. I think it is harder even as a company. So the commission did authorize us to have an insurance balancing account for the state of California, which I think is a good thing. So overall, you know, it is nice to have the 24 rate case wrapped up We started recognizing the revenue from that rate case in the actual billings on July 1, so it is live. And now we are moving on to fully implement that capital. In addition, during the quarter, we reached a settlement on the Washington Water General rate case. Now keep in mind, Washington is a historic test year for capital purposes. We filed our rate case on September 25, 2025. We asked for just under $4.3 million. $4.29 was the actual filing number. And it was for increases across 2 of our largest washing systems that we have requested a 10.2% ROE. And the final settlement that we reached with the commission we reached a full all party settlement of $4.12 million as well as ROE of 10.18%. So overall, pretty close to the ask. So very happy with the with the outcome. With the all parties settlement, it is been filed, and it has not been approved yet by the commission, but we expect it to get approved here sometime in the third quarter, and we will start recognizing that revenue for Washington And the third quarter. So overall, good news on the rate case front. Going to the next slide, talking about our strategic initiatives. The other big thing that company's working on in addition to the capital is really the acquiring the NEXUS assets in Oregon and Washington. Change and fill applications have been filed. Integration planning with Nexus and Cal Water has been moving very, very well. Nexus is a great partner to work with. We are very happy with the level of support we are getting from them. And we are continuing to move forward for a close or year end, excuse me, I anticipate with Nevada, we will likely get there decision first. They have a statutory timeline to approve the merger and we have been in discussions with them and answering their questions. Oregon does not have a statutory timeline but we are in the process of answering their questions and working with them as well. So our goal would be to try to close the acquisition before the end of the year and moving forward. In addition with the BVRT joint venture, as you may recall, we have submitted an application to buy out the rest of that partnership to become the sole owner of that BVRT. That change of control application was deemed, it was reviewed by the commission, they go through a review process. It was deemed quote unquote complete. Meaning it goes to the commission for approval. So we are waiting to hear back from them. In addition, we also have a consolidator rate case that was settled and we are waiting for final commission approval in Texas. So Texas has been very busy between the rate case settlement as well as the application. In addition, during the quarter, the team connected an additional 200 new connections to our wastewater systems in that South Austin market. So that market kind of continues to grow. Excuse me. Looking at slide 14, looking at some of our other highlights for the quarter, Obviously, we have been celebrating that the company's 100-year, 100 years of service, essentially. And we set up a number of regional events, so we are halfway through that process. Those have been well received by our employees and a lot of the government officials in the areas that we serve. So we are trying to make it a highly visible well branded, we are in your community, here's what we do type of event. So that process continues to go very, very well. The company has a lot of pride in the fact we have been around for a hundred years and the fact that we were started by 3 World War I veterans back in 1.93 thousand. In addition, we are seeing a lot of customer engagement We have had tens of thousands of customers visit our website. that is been dedicated to our 100-year anniversary. And likewise, I encourage you to look at that if you wanna see some of the history of the company how we have grown from 3 small districts in Northern California to now being the largest investor-owned water utility in the state of California. As well as, in Hawaii and Washington. During the quarter, we won a number of awards. Which is great recognition. We tend not to talk about that a lot, but it is something the company takes a lot of pride in. You know, we recently won the Alliance for Water Efficiency Award. We have been named the top workplace by USA Today, and been noted by Time as being 1 of the world's most impactful companies for our continued work on sustainability and renewability So, all really good stuff, all happening around our 100-year anniversary, and we will be ringing the bell on the NYSE on November 30 with our board and a number of employees to celebrate our 100 years of service as we would like to say. As you may recall, at the end of the last conference call, we did a little tribute to Greg Milleman. For those of you who work with Greg Milleman, he is a big personality. And before the call, Jim and I were joking around about it is kind of hard not having Greg in the room with us. Because he is he is a fun person to work with. So Greg has officially retired. He is consulting on some of our rate projects for us and still available to help us, but I think he is actually in the Caribbean this week, which, really, as Jim and I worked a lot of hours the last couple weeks, I wish we were with Greg, actually, and we could razz him up a little bit. Having said that, we had a great internal candidate ready to replace Greg, and it is Greg, another Greg, so the last name changes. first name does not. But Greg Shemansky, was, named vice president of rates by our board of directors. And Greg has a long history in the rate. And regulatory world, starting way back working with San Diego Gas and Electric. He worked for American Water for a number of years. And joined us a few years ago. Very, very well qualified as an undergraduate degree from UCLA, in economics as well as an MBA in finance from Purdue University. So Greg has officially taken over leading our rates team, and he is certainly well qualified to do so. In addition, given the growth of the company, we added, a VP of operations who just runs the California entity. We have had a senior vice president of operations who is run all of our operations. In all 5 of our states. And given the growth that we have been experiencing, we thought it was time to have, a vice president of operations just for California who reports to the senior VP of operations. So very, very happy to announce the promotion of Tammy Johnson, Tammy is no stranger to the water business. She has 40 years of experience. Tammy started as a field worker in the union back in the eighties. And I say that because she started in the field at a time when there was not a lot of female utility workers in the field, and she started in Bakersfield which I think was a great place to start, but I would imagine it was a pretty rough group to break into being a female. And she's just done a fabulous job. She continued to move up through the union ranks. She was a union officer. She's got-- she has all our sort of-- She's actually a D5, so she has the highest level operating license you can have in the state of California. She went back to school after she had kids and completed her bachelor's degree. And then went on to complete her MBA as well. And just knows operations very, very well. And for those of you that know me, I am very big about having someone who is been an actual operator operating our system. So we are very happy that we have both Tammy Johnson and Greg Shemansky joining the officer team here effective July 1. So with that, looking ahead into the second half of 2026, the agenda is really simple. Right? We have got to continue to get the capital in the ground, including our PFAS program. Year to date, we spent about $30 million on that program. And we will give you an update every quarter on where the spending is on that program. We have a couple new officers. We have a lot of rate case stuff going on. and, of course, then our goal is to get the NEXUS deal closed before the end of the year. So we have plenty to do, a lot of capital to get into the ground, the company remains very, very focused on executing on those tasks. So with that, Janine, we will take a pause and why do not we open it up for questions, please? Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press *1 on your touch tone phone. And to withdraw your question, please press *1 again. If you are using a speakerphone, please lift the handset before pressing any keys. 1 moment, please. We gather questions. We have a question from Davis Sunderland from Baird. Please go ahead. Davis Sunderland: Hi, it is Good morning, guys. Sure. Good morning, Davis. Maybe if I could start off, Martin, would just be curious to get your thoughts on affordability. And I know there is been a lot of rhetoric around utility bills, pushback against rate increases, just some different things happening in different parts of the country. And just would love to hear any of this has changed your guys' strategy or how you guys think about this. Martin A. Kropelnicki: Yeah. Well, I and, Davis, you have been following us for a while, and, we have been out on a number of non deal roadshows with Baird. So affordability has always been on the forefront for us. There are 2 broad measures. You know, that you use for affordability. 1 is the EPA generally looks at water bills and the average household budget As long as you are below 2%, you are considered affordable. We are below 2% in all in all of our districts, And then in the state of California, before we can actually file a rate case, we have to do this affordability test and file it, review it with the commission. And in the 24 rate case, we passed the affordability test really in all of our districts but 1, but in that 1 district was a very small district that had a lot of capital needs. And in California, we have a couple tools. We have a rate support fund. And we have a low income rate assistance fund. And so we work with the commission through the rate case process to apply some of those things to make sure the rates are affordable for this 1 small district. So we have not had any big issues with that. As you may recall, prior to filing a large rate case, we always meet with our customers. We hire a third party firm We do a number of focus groups and interview literally thousands of customers. To get their ideas, their thoughts, their perceptions on things. And part of that discussion in those focus groups is really affordability. So for us, we have not had really any major issues with affordability. And even when you look at things is that what I think what you are seeing back East is you are seeing a lot of government agencies, not just the commissions, but governors, etcetera, push back on rates, especially electrical rates because they have been raising so high and then the fear with data centers are rising those costs and passing those costs on to customers as they build out new infrastructure. We have not had any of those problems. And you know, the we have that 10.27% ROE in California. We just got through a rate case. The rate case was approved. If we did not have really any major interveners in California. Rate case up in Washington, that is pending approval. that is a 10.18% ROE. that is in that settlement. And so we are not seeing any signs. We are not getting any feedback from the commission that we have affordability issues as of right now. But, again, there is a lot of care and nurturing that goes in when we prepare the rate case. To make sure we are not tripping some of those trip wires. And I think the rates team and our government affairs team and our community affairs team have done an outstanding job at navigating the headwaters on that. And I think, you know, we are gonna continue to keep doing what we are doing and trying to balance affordability with the needs of the capital investment. And, you know, the best thing I can say to you or any of the analysts covering our stock is go back and look at our 20 year history. We have been able to do this 10% kind of growth rate on CapEx, which is growing rate base. We have been able to do it and be successful at getting rate recovery. And again, not trip these affordability things that are popping up. So am I concerned about it? I am. I am concerned about it because you have things like the, you know, Democratic Socialists of America popping up, and it is an agenda item for them. We have certainly seen our electric rates, you know, increase. You know, California has a second highest electric rate increase that electric rates in The US, so that affects our cost of production. But we are not driving the affordability crisis in America. It is not water it is driven by the rate side. And so continuing to differentiate ourselves on that front, I think, is part of the process when we meet with regulators and lawmakers and the state at the federal government level. So watching it, concerned about it, Obviously, I think we have been navigating the waters around affordability quite well. Davis Sunderland: Awesome. Greg details, and thank you for all that, Martin. Maybe if I could ask another 1. Lots of, I guess, forecast now calling for a higher interest rate environment looking forward, maybe as soon as a couple months from now, if not sooner. Just wondering any impact this might have on willingness to pursue other M&A or liquidity outlook or just any other facets of the business, I guess, that might be impacted by this? Sure. Martin A. Kropelnicki: And, you know, you are asking a question. This is a subject of great debate with our board We spent a lot of time talking about the economic landscape, in particular, the instability of some of your major macroeconomic indicators, that are out there. Now, inflation was down. You saw the inflation numbers that came out this morning. They continue to trend down, so I think that gives the Fed a little bit more breathing room. I think that was a good sign, but concurrently, you have a whole bunch of government spending given the conflict with Iran. And government spending especially with military spending, tends to be a boom for the economy but not when it is deficit spending. And so that is the piece that kinda gives me a little bit of concern on the interest rate side. Just to remind everyone, especially in California, which our largest entity, we do have this cost of capital adjustment mechanism that, frankly, it is a 2-way mechanism. it is good for stockholders. it is also good for rate payers. And so if Moody's AA utility bond index swings by more than 50 basis points, up or down we can apply to adjust our ROE with that mechanism. And so I do not think that mechanism gets a lot of PR But frankly, you know, 1 of the reasons why we have 1 of the highest ROEs in the country is because we have had this mechanism. And that mechanism triggered upward during this last cycle. And so I think we have to watch and see. I am glad I am not Jerome Powell as I told the board. You know, I know his boss is demanding lower interest rates, and I am always looking at the Fed consensus of the board, and he had consensus in his first meeting that he had not seen the minutes for the second meeting. They will not be out for a couple weeks. They met yesterday. But there is some instability in the economy. And interest rates, if you look at the mix, as of yesterday, about 38% of the economists were calling for an increase and about 62% were calling them for to be flat or maybe trend down. So depending on what inflation does, you may see a tick up in interest rates here in the short term, i.e., the next 6 months. But I think as you go through 2027, if you can get the conflict in The Middle East resolved, those interest rates. Ultimately start trending down. And I think, as an economist, I think this is a real important point. Economists tend to talk about it in their circles, but you do not hear a lot of coverage about it. Broadly speaking, in the finance community. But if you think about from the subprime crisis, until COVID, you had an ultra low interest rate environment. And changing economics, a big part of the economy is interest rates. And you model the economic effects of GDP given those changes in interest rates. But what that period of ultra low interest rates showed to some extent, is that interest rates have a much smaller effect on the economy I think, than what John Maynard Keynes thought about when he was developing his classic you know, economic theories. And so it could have a little bit of effect on us, but obviously our capital program, especially in California, is preapproved. The cost of debt is a pass through cost, you know, as we do our cost of capital act. Applications. And then we have this cost of capital adjustment mechanism, which I think is a very good thing to help protect our stockholders in the event of rapid increases in interest rates. So that is a long answer and a lot of economic jargon, but I do love this stuff, and it was a source of discussion with our board. Over dinner on Tuesday night as well as into the boardroom yesterday. And then Jim's been adding Yeah. James Patrick Lynch: Davis, 1 other thing. Just a reminder. We are on, I think, our third extension on our cost of capital in California. And remember that the cost of capital is separate from the that proceeding is separate from the general rate case proceeding. So we will be filing or asking if we are unsuccessful in getting another extension, we would need to file in May for new rates of in 2027 for new rates to begin January 1, 2028. And so that does provide an opportunity not only for a relook at ROE, but also for a recasting of our average cost of debt. So any debt that we raise that is higher than our current average cost of debt recovery we will have an opportunity to kind of right size or get into that calculation when we go through that proceeding. Martin A. Kropelnicki: Yeah, I would add 1 thing, Davis, on that. 1 of the things that is been nice in the western half of the U.S. We have not had any pushback from the commission about the need to invest in infrastructure I think given the fact we have been dealing with climate change and wildfires and going into an El Nino, super El Nino year, you know, readiness of the infrastructure has been important. So as we have gone through our rate cases, affordability has not been a big discussion with the commission. They have been very focused on our expansion capital, which replacing infrastructure in our existing model. And understanding the reasons why we need to do that. And based on the results of the rate case, I think the commission's, you know, understanding the mission at hand and supporting it From an M&A side to the last part of your question, our primary growth engine is this replacement capital. it is doing great. it is above 10%. Strategic M&A is a secondary growth engine, but let me make sure I am, like, clear about this. there is no gun to our head to go out and buy anyone because we need growth. We have plenty of growth. Internally in the states that we operate in, which is with the replacement capital that we have. So we will continue to be opportunistic. Like we were with the Nexus acquisition. It gets us in Oregon. It gets us into Nevada. it is a good sized acquisition. The valuation we thought was fair. But, you know, we are not gonna go out on a buying spree and buy at multiples of book because we need we need, you know, kind of rate base growth. We do not need rate based growth. We have plenty of rate based growth. In our existing book of business. Super, super helpful. Lots of great details, and thank you both. Davis Sunderland: Maybe if I could just be greedy and sneak in 1 more quick 1, I guess more of a housekeeping than anything potentially for you, Jim, But just having not seen the queue, I am sure there will be more details. But the big step up in other ops expenses and then the step-down in D&A. Wondering if this is IRMA related or if there is just any other color you could give on the dynamics there. And thank you both very much. James Patrick Lynch: Yes. I think the big increase in other ops is really related to the deferred RAM revenue that we recorded. So rather than presenting those 2 net, we had to show the change in the revenue line item, but then there was also associated costs with that revenue. So net, recognition of the RAM, deferred revenue was about $1.2 million to $1.3 million. But when we presented on line items, it is $7.9 million in terms of cost and about $9.2 million to $9.3 million in terms of the revenue. Davis Sunderland: Great. Thanks, guys. Okay. Martin A. Kropelnicki: Thanks, Davis. Operator: Thank you. And, again, should you have a question, please press *1. There are no further questions at this time. This concludes our question and answer session. I will now turn the call over to the management. Martin A. Kropelnicki: Great. Thanks, Janine. Thanks, everyone, for joining us. it is nice to have the 2024 general rate case done in California. We are just about done with the general rate case in Washington. Second half of the year is going to be busy with a lot of capital investment and, obviously, closing on the NEXUS transaction as well, so celebrating our 100-year anniversary. So thank you all for joining us today and your support of our endeavors. We will look forward to updating everyone on these major programs. At the end of the third quarter in 2026. So thank you very much, and everyone have a great day. Bye. Operator: Thank you for participating for today's call. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. California Water Service (CWT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

California Water Service Group CWT reported second-quarter 2026 earnings of 93 cents per share, up 31% year over year. The figure beat the Zacks Consensus Estimate of 79 cents by 17.72%. Quarterly revenues rose 16.5% to $308.6 million and surpassed the Zacks Consensus Estimate of $277 million by 11.41%. Results benefited from regulatory catch-up revenues, rate changes and higher customer consumption, while infrastructure investment reached a record $147 million.Operating revenues in the second quarter increased $43.6 million from the prior-year quarter. Interim Rates Memorandum Account revenues tied to the delayed 2024 California General Rate Case added $15.3 million, including $9.2 million related to the first quarter of 2026.Rate changes and regulatory mechanisms contributed another $15 million. Higher customer consumption added $4.1 million due to climate variability, while deferred revenues tied to prior-year regulatory mechanisms added $9.3 million. California Water Service Group price-consensus-eps-surprise-chart | California Water Service Group Quote Total operating expenses rose 11.5% year over year to $237.7 million. Water production costs increased 7.4% to $91.8 million, mainly because of higher wholesale water rates.Other operations expenses climbed 42.4% to $45.1 million. The increase included $7.9 million associated with recognized deferred revenues and $2.1 million of conservation program costs. Net operating income advanced 36.8% to $70.9 million as revenue growth outpaced the increase in operating costs. Net income attributable to California Water Service Group rose 33.9% to $56.5 million.Income tax expense doubled to $13.9 million, reflecting lower amortization of excess deferred taxes under the Tax Cuts and Jobs Act and higher pretax income. Net interest expense increased 19.5% to $19.8 million as financing needs remained elevated. The California Public Utilities Commission's final decision on the 2024 general rate case authorized revenue increases of $90.5 million in 2026, $43.2 million in 2027 and $48.9 million in 2028. New rates took effect July 1, 2026.The decision also authorized about $1.45 billion of pre-approved infrastructure investments through 2027, plus as much as $229 million of projects eligible for recovery through the advice letter process. It also renewed key revenue stabilization mechanisms and established a new Sales Reconciliation Mechanism. Second-quarter infrastructure investment increased 23.5% year over year to $147 million from $119 million. For the first half of 2026, investment reached $276.4 million compared with $229.5 million a year earlier.The company expects to invest up to $627 million in 2026 based on the final California rate case decision. Its earnings presentation projects a rate base of more than $3.45 billion by 2028, excluding anticipated Nevada and Oregon capital investments. California Water plans to invest $667 million and $700 million in 2027 and 2028, respectively. Cash and cash equivalents were $43.4 million at June 30, 2026, while restricted cash totaled $45.7 million. The company had about $395 million available under revolving credit facilities that total $600 million and can be expanded to $800 million.CWT raised $88 million net through its at-the-market equity program during the quarter. The company also declared a quarterly dividend of 33.5 cents per share, marking its 326th consecutive quarterly dividend. California Water currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. American States Water AWR is slated to report second-quarter 2026 results on Aug 5, after market close. The Zacks Consensus Estimate for AWR’s second-quarter EPS is pegged at 93 cents, implying an increase of 6.9% from the prior-year figure. The company has a dividend yield of 2.29%.Essential Utilities Inc. WTRG is scheduled to report its second-quarter 2026 results on Aug 4, after the market opens. The Zacks Consensus Estimate for WTRG’s second-quarter EPS is pegged at 38 cents, on par with the prior-year figure. The company has a dividend yield of 3.37%.Consolidated Water Co. Ltd CWCO is set to report its second-quarter 2026 results on Aug 11. The Zacks Consensus Estimate for CWCO’s first-quarter EPS is pegged at 22 cents, implying a decrease of 31.25% from the prior-year figure. The company has a dividend yield of 1.9%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report California Water Service Group (CWT) : Free Stock Analysis Report American States Water Company (AWR) : Free Stock Analysis Report Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report Essential Utilities Inc. (WTRG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was primarily driven by the resolution of the 2024 California General Rate Case (GRC), which included $15.3 million in retroactive revenue recognized through the Interim Rates Memorandum Account (IRMA). Management achieved a record $270 million in capital investment for the first half of the year, maintaining a 10-year compound annual growth rate of 11.4% for growth capital. The company successfully recognized $9.3 million in remaining deferred Revenue Adjustment Mechanism (RAM) revenue after reaching the accounting guidance required to report these previously stalled balances. Strategic positioning in California was bolstered by the approval of a new sales adjustment mechanism, which management believes will reduce uncollected balances by allowing annual forecast adjustments. Operational focus has shifted toward PFAS treatment programs, with $155 million budgeted for net investment, partially offset by aggressive legal recoveries from polluters. The company is transitioning its leadership team following the retirement of the VP of Rates, promoting internal candidates with deep operational and regulatory expertise to maintain execution continuity. Management anticipates reaching approximately $3.5 billion in rate base by the end of 2028, contingent on the timely execution of preapproved capital projects in California. The company aims to close the Nexus assets acquisition in Oregon and Nevada by year-end 2026, with Nevada following a statutory timeline and Oregon currently in the inquiry phase. Future earnings stability in California is expected to improve due to the new liability balancing account, which provides a regulatory mechanism to manage rising wildfire insurance costs. Capital allocation for the second half of 2026 will prioritize the completion of the annual construction program and the integration of the BVRT, Nevada, and Oregon acquisitions. Management indicated that while they are monitoring interest rate volatility, the California cost of capital adjustment mechanism provides a two-way protection for stockholders if bond indices shift by more than 50 basis points. A full all-party settlement was reached in the Washington Water GRC, requesting a 10.18% ROE, with final commission approval expected in the third quarter of 2026. The company raised $88.8 million through its At-The-Market (ATM) stock program to support infrastructure growth and maintain a strong balance sheet. Management highlighted a $7.9 million increase in other operating expenses specifically tied to the accounting recognition of deferred RAM revenue, rather than a shift in core operational efficiency. The Texas BVRT joint venture buyout application was deemed complete by the commission, moving the company toward sole ownership of those wastewater assets. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated they remain below the 2% EPA affordability threshold in all districts and utilize rate support funds for smaller, capital-intensive systems. They differentiated water utilities from electric utilities, noting that water is not driving the current 'affordability crisis' seen in other sectors. The CEO emphasized that their 20-year history of 10% capital growth has been achieved without significant regulatory pushback on affordability. Management clarified that they do not feel pressured to pursue M&A for growth because their internal infrastructure replacement program already provides sufficient rate base expansion. They highlighted the 'cost of capital adjustment mechanism' in California as a critical shield that allows for ROE adjustments if market rates swing significantly. The CFO noted that the upcoming 2027 cost of capital filing provides an opportunity to recast the average cost of debt recovery to match current market environments. The CFO explained that the spike in 'other operations' expenses was a technical accounting requirement related to the $9.3 million deferred RAM revenue recognition. Net impact of the RAM recognition was approximately $1.2 million to $1.3 million, despite the larger gross numbers appearing on separate line items.

Interested in California Water Service Group? Here are five stocks we like better. Second-quarter results improved sharply: Net income rose to $56.5 million, or $0.93 per diluted share, from $42 million a year earlier, while revenue increased to $308.6 million. Results benefited from $15.3 million in retroactive IRMA revenue, California rate changes and deferred WRAM revenue. Infrastructure and PFAS investment accelerated: Capital expenditures reached a record $276 million in the first half of 2026, including $147 million in the second quarter. The company expects approximately $155 million in net PFAS treatment spending for the full year and projects its rate base could reach $3.5 billion by 2028. Regulatory and acquisition activity remains active: California Water Service reached a Washington rate-case settlement, continued pursuing the Nexus acquisition in Oregon and Washington, and is awaiting decisions on Texas regulatory matters. Management aims to close the acquisitions before year-end while maintaining strong liquidity and an A+ stable credit rating. Top 3 Utilities Stocks Powering Up as Recession Fears Rise California Water Service Group (NYSE:CWT) reported higher second-quarter earnings as the company recognized revenue tied to its California general rate case, continued a record pace of infrastructure investment and advanced regulatory and acquisition initiatives. Net income for the second quarter of 2026 was $56.5 million, or $0.93 per diluted share, compared with $42 million, or $0.71 per diluted share, in the prior-year period. Quarterly revenue rose to $308.6 million from $265 million a year earlier. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Dividend Aristocrats or Dividend Kings: Which Is Best for You? For the first six months of 2026, net income totaled $60.5 million, or $1.01 per diluted share, compared with $55.5 million, or $0.93 per diluted share, in the first half of 2025. Year-to-date revenue increased to $523.2 million from $468.9 million. Senior Vice President and CFO James Lynch said second-quarter results reflected the California Public Utilities Commission’s decision in the company’s 2024 California general rate case, including retroactive application to Jan. 1 through the company’s IRMA balancing account. → Microsoft Just Flipped the AI Spending Narrative Overnight The company recorded $15.3 million of IRMA revenue associated with the delayed rate case, including approximately $9.2 million related to the first quarter. Lynch said rate changes and regulatory mechanisms added $15 million, while recognition of remaining deferred Water Revenue Adjustment Mechanism, or WRAM, revenue added $9.3 million. Those benefits were partly offset by $6.3 million in higher per-unit water supply costs, $7.9 million in costs associated with deferred WRAM revenue and $7 million in higher income taxes. On a per-share basis, customer rate changes, IRMA revenue and deferred WRAM revenue contributed $0.20, $0.15 and $0.11, respectively, during the quarter, Lynch said. → Carrier Earnings Could Send the Stock to a New All-Time High CEO Marty Kropelnicki said the California rate case was approximately 90 to 100 days delayed but allows the company to be made whole retroactively to the beginning of the year. Billing under the approved rates began July 1. California Water Service invested $147 million in capital expenditures during the second quarter, up 23% from $119.4 million a year earlier. Capital investment reached a record $276 million during the first half of 2026, according to Kropelnicki. The company’s growth capital compound annual growth rate over 10 years is about 11%, while its rate base is growing at a nearly 12% compound annual rate, he said. The company expects to have approximately $3.5 billion in rate base by the end of 2028, assuming planned investment is completed on schedule. Its 2026 capital plans include an estimated net $155 million for PFAS treatment programs. Kropelnicki said the net figure accounts for roughly $60 million in expected recoveries from polluters, with further legal recoveries and grant funding potentially affecting the program’s costs. The company had spent about $30 million on PFAS efforts year to date. The California rate-case decision included approximately $1.45 billion in pre-approved capital investment for the 2024 through 2027 period, plus about $229 million of advice-letter projects. The California decision retained the company’s Monterey-style WRAM and several balancing accounts, including mechanisms for pensions, health care, conservation expenses and incremental water-production costs. The settlement also authorized a sales adjustment mechanism that can modify the following year’s sales forecast when actual sales differ from forecasts by a specified percentage. The company also received authorization for an insurance balancing account in California. During the quarter, the company reached an all-party settlement in its Washington water general rate case. The settlement calls for a $4.12 million increase and a 10.18% return on equity, compared with the company’s original request of $4.29 million and a 10.2% return on equity. The Washington commission had not yet approved the settlement as of the call, but Kropelnicki said the company expects a decision during the third quarter and expects to begin recognizing associated revenue then. The company also continued work on its acquisition of Nexus assets in Oregon and Washington. Change-in-control applications have been filed, and integration planning is progressing, management said. The company expects Nevada’s decision may arrive first because that state has a statutory merger-review timeline. Management said its goal is to close the acquisition before year-end. In Texas, the company is awaiting commission action on its application to become sole owner of the BVRT joint venture and on a consolidated rate case settlement. The company added 200 new wastewater connections during the quarter in the South Austin market. As of June 30, California Water Service had $43.4 million in unrestricted cash, $45.7 million in restricted cash and about $395 million available under bank credit lines. Its credit facilities total $600 million and can be expanded to $800 million, with maturities extending to March 2028. The company raised $88 million through its at-the-market equity program during the second quarter. Lynch said additional financing in the second half would primarily support the remainder of the 2026 capital program and the closing of the Nevada and Oregon acquisitions, as well as efforts to reduce California line-of-credit borrowings. Both the parent company and Cal Water maintain an A+ stable credit rating from S&P Global, Lynch said. The board also declared its 326th consecutive quarterly dividend of $0.335 per share. Management said affordability remains a focus, with Kropelnicki stating that the company’s water bills are below the U.S. Environmental Protection Agency’s 2% household-budget affordability benchmark in all districts. He said the company has not encountered major affordability issues in its current California or Washington rate proceedings. California Water Service Group (NYSE: CWT) is a publicly traded holding company that provides regulated water utility services through its subsidiaries. The company delivers safe, reliable drinking water and wastewater management to residential, commercial, industrial and municipal customers across California, Hawaii and New Mexico. Its principal operating units include California Water Service, New Mexico Water Service and Hawaii Water Service, each responsible for end‐to‐end water supply operations—from source development and treatment to distribution and customer service. Founded in 1926 as the California Water Service Company, the group has grown to become one of the largest investor‐owned water utilities in the United States by customer count. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "California Water Service Group Q2 Earnings Call Highlights" was originally published by MarketBeat. 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Image source: The Motley Fool. Thursday, July 30, 2026, at 11 a.m. ET Senior Vice President and Chief Financial Officer - James Patrick Lynch Chairman and Chief Executive Officer - Martin A. Kropelnicki Operator: Ladies and gentlemen, Until that time, your lines again will be placed on music hold. Thank you for your patience. Thank you for standing by. And welcome to the 26 Second Quarter California Water Service Group earnings call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press *1 on your touch tone phone. And to withdraw your question, please press *1 again. It is now my pleasure to turn the call over to Mr. James Patrick Lynch, senior vice president and chief financial officer. You may begin. James Patrick Lynch: Thank you, Janine. Welcome, everyone, to the second quarter 26 results call for California Water Service Group. With me today is Martin A. Kropelnicki, our Chairman and CEO. Replay dial in information for the call can be found in our quarterly results earnings release which was issued earlier today. The call replay will be available until September 28, 2026. As a reminder, before we begin, the company has a slide deck to accompany today's earnings call. The slide deck was furnished with an 8-K and is also available on the company's website at www.calwatergroup.com. Before looking at our second quarter 2026 results, I would like to cover some forward looking statements. During the call, we may make certain forward looking statements. And because these statements deal with future events, they are subject to various risks and uncertainties. Our actual results could differ materially from the company's current expectations. As a result, we strongly advise all current shareholders and interested parties to carefully read the company's disclosures on risks, and uncertainties found in our Form 10-K, Form 10-Qs, press releases, and the other reports we file with the Securities and Exchange Commission. And now, I will turn the call over to Martin to provide a brief overview. Martin A. Kropelnicki: Thanks, Jim. Good morning, everyone. Consistent with our past earnings call, I am going to give you a quick overview of the agenda and then Jim and I are going to jump into some of the details for the quarter. There are only kind of 6 items on the agenda today that we want to go through. Starting obviously in the in the second quarter, the end of April, we received a decision on our California general rate case As part of that decision, during the quarter, we recognized our IRMA, which is the balancing account that takes the retroactive portion of the rate case back to January 1. So this rate case was close to being on time, which was very good news. It was, you know, approximately 90 to 100 days delayed, but we are made whole back to the original date of January 1. That was recognized in the quarter as well as other items that we will be talking about. In addition, during the quarter, we reached this full settlement in our rate case up in Washington. I will provide some more details about that when we get to that slide. During the second quarter, we had record capital. We invested a record $270 million in new plant for the first 6 months of the year. That continues to move ahead, especially as we start to invest in our PFAS treatment programs throughout our service territory. And to partially offset that growth, we did raise about $88.8 million through our ATM or at the market stock program and the company declared its 326th quarterly consecutive dividend of $0.335 per share. In addition to the quarter, we continue to work on our nexus integration plans. And Nexus has been great to work with and things are progressing there. We will give you some more details on that. And then lastly, those of you that like to look at some of the numbers on sustainability and some of our numbers. We did publish our water quality and sustainability reports as well as receive a number of awards during the quarter. And later on towards the end, I will introduce the 2 new officers As some of you may know, Greg Milleman is not here. As you remember at the last call, that was his last call with us, and he retired and officially retired from the company. And I will be talking a little bit about his replacement as well as 1 other promotion, a key promotion we had. during the quarter. So that is the agenda for today. Jim, why do not I turn it over to you? We will go through the numbers. James Patrick Lynch: Thanks, Martin. As Martin mentioned, the Q2 results reflect the decision we received in our 2024 California GRC and also the retroactive application of the decision through the IRMA to the beginning of 2026. The net income for the quarter was $56.5 million or $0.93 per diluted share. That compares to Q2 2025 net income of $42.2 million or 71¢ per diluted share. Revenue for the quarter was $309 million compared to $265 million in the second quarter of 2025. The primary earnings drivers included $15.3 million of IRMA revenue related to the delayed 2024 California GRC, and of which about $9.2 million of that was related to the first quarter. So that was the look back portion that was recognized in Q2. We also had $15 million that was due to rate changes and changes in regulatory mechanisms. And $9.3 million of remaining deferred RAM revenue that is now expected to be collected over the next 2 years. If you remember when we stopped decoupling, we still had some residual RAM balances that were deferred until we reached the proper accounting guidance that would allow us to report the revenue. So we have now reached that place. And at this point, we have recognized the remaining deferred balances. These increases were partially offset by $6.3 million in higher per unit water supply costs about $7.9 million in costs related to the deferred RAM revenue, and $7 million in higher income taxes that was due primarily to higher income and the increase and an increase in our effective tax rate. If we move on to slide 6, you can see the impact of the activity of our second quarter on our diluted earnings per share. The primary drivers were customer rate changes, the IRMA the deferred RAM revenue, each of which contributed $0.20, $0.15, and $0.11 per diluted share, respectively. And these increases were partially offset by the water production cost and deferred RAM related expenses of $0.08 and $0.10 per diluted share, respectively. If we turn to slide 7, on a year to date basis, net income through the end of the quarter was $60.5 million or $1.00 per diluted share and that compared to year to date net income in the prior year of $55.5 million or $0.93 per diluted share. Revenue was $523 million compared to $469 million year to date in 2025. The primary earnings drivers were largely the same as those we experienced for the quarter And so turning to slide 8, you can see the impact on the year to date drivers with regards to our diluted earnings per share. Customer rate changes, the IRMA and deferred RAM revenue contributed $0.30, $0.20, and $0.11 per diluted share, respectively, and these were partially offset by higher water production costs and the deferred RAM related expenses of $0.19 and $0.10 per diluted share. So that is kind of a summary of the financial performance so now I will turn the call back over to Martin to walk us through some capital some of our capital activities. Martin A. Kropelnicki: Great. Thanks, Jim. I am on slide 9 for everyone on the call. So looking at our infrastructure investment through the second quarter, for the quarter, CapEx was $147 million. That was up from $119 million the prior year. that is about a 23.1% increase year over year. Our 10 year compound annual growth rate increasing capital or growth capital is hovering right around 11.4% right now. As a reminder, the capital estimates for 2026 and going out now until they complete the projects, include an estimated net $155 million that is been budgeted for PFAS. And I am saying that because we have approximately $60 million of recovery from polluters that is being used, so the sum of the 2 numbers will get you back close to the original estimates that we provided. About a year and a half ago, 2 years ago, and we started looking at that PFAS. I will say the PFAS numbers will still tend to move around a little bit as our legal team has continued to do an outstanding job at getting recoveries to offset the cost of the PFAS treatment on behalf of our customers from the polluters. So they continue to get more dollars coming in as well as some grant dollars are coming in. But kind of the main theme is being consistent with what we have had the last 20 years which is our compound growth rate on the capital investment or our growth capital is holding in, you know, a little north of 10%. And our internal target that we try strive for is 10%. So it is up a little bit by the PFAS assessment. I think as everyone knows, when you go to the next slide, when you are increasing your rate base at 10%+ a year, your CapEx, excuse me, you are growing your rate base, And right now, we have a compound annual growth rate of almost 12% on our rate base growth. The slides that you see here today have all been trued up for the California decision based on the numbers that were in that decision. So we anticipate having approximately $3.5 billion in rate base by the end of 2028, assuming we can get all the capital in the ground on time. So, obviously, the company remains very capital focused. So obviously, CapEx continues to be strong. The company continues to the capital plans well. We are able to get that capital built into rates in California. it is preapproved. So I think it is a little bit easier in California for earnings modeling because it is a prospective state The other states we have are all historical. But overall, we are very happy kind of with the CapEx growth and the rate base growth that we have as we move through this next rate cycle. On the West Coast. So but, Jim, why do not I turn it back to you to cover liquidity and some of our capital plans for the second half of 2026? James Patrick Lynch: Greg. Thanks, Martin. So we do continue to maintain a really strong liquidity profile to execute the capital plan and also as we continue to pursue tuck in M&A, and look to integrate Nevada, Oregon, and the BVRT acquisitions. As of June 30, 2026, we had $43.4 million in unrestricted cash, and about $45.7 million in restricted cash. Along with approximately $395 million available on our bank line of credit. Just as a reminder, that restricted cash is really earmarked for a project we have in Texas with a water agency there, GVRA, in building a pipeline into 1 of the new areas that we hope to be delivering potable water in here in the near term in Texas. So it is our first potable water system in Texas and we are really looking forward to that initiative. In addition, we maintain credit facilities totaling $600 million. Those credit facilities are expandable up to $800 million and they have maturities that extend into March 2028. So we are really well positioned with regards to our existing credit facilities We also renewed our ATM stock program in May 2025, with $350 million on the shelf registration. During the second quarter, we did raise $88 million in proceeds from stock sales under the ATM program. We believe the balance sheet is in pretty good shape and that additional any additional financing we raise in the second half of 2026 will be primarily tied to growth and that growth is really earmarked for constructing the remainder of our 2026 capital program. And closing of Nevada and Oregon in terms of those acquisitions. And we also will look to pay down our line of credit in California as we head towards the end of the year and begin to prepare for our activities in 2027. Importantly, both group and Cal Water maintain a strong credit rating of A plus stable from S&P Global. And I think that really just serves to underscore the strength of our balance sheet. And finally, yesterday, we did declare our 326 consecutive quarterly dividend of $0.335 per share and that represents about a 7.6% CAGR growth in our 5 year dividend. So really pleased and happy with our ability to deliver that to the shareholders. Martin A. Kropelnicki: Thanks, Jim. I am now on slide 12. And I wanna talk a little bit about what is happening on the regulatory front. Again, just to recap the major components of the approved 2024 general rate case in the state of California, The approved rate case will drive significant infrastructure investment from 2024 to 2027. I know that is a little confusing, but it is 2024, 2025, 2026, and 2027. You have to include kind of a stub year of the year that you file your general rate case. So in total, in California, prospective years, the capital gets approved in advance We got about $1.45 billion of preapproved capital In addition, the commission approved approximately $229 million of advice letter projects, and that gets us to just shy of $1.7 billion over that 4-year period. In addition, in the rate case, the commission also affirmed the Monterey style RAM. We have continued to have in the past and has continued through this next cycle, a pension balancing account a healthcare balancing account, a conservation expense balancing account, and an incremental cost balancing account for water production cost. In addition, what is new in the settlement that was authorized is we have a sales adjustment mechanism, which I think really is a big deal. Since we did not get full decoupling. But we got the Monterrey-style RAM, the sales adjustment mechanism allows us to adjust our sales forecast the following year if the sales numbers are out of out a certain percent from what the forecast was. So previously, when we decoupled, we did not have that option. And that tended to set up growing balances uncollected balances from customers as the decoupling mechanism would balance from month to month, quarter to quarter. So having a sales just mechanism, I think, is a big deal that will help smooth out the revenue forecast and actual revenue in the second, third year of the rate case. In addition, a new thing that we got this year that we asked for was a liability balancing account. And I think, you know, we are well into wildfire season for all of you that have studied trying to procure insurance as a homeowner or as a consumer out on the West Coast. I think it is harder even as a company. So the commission did authorize us to have an insurance balancing account for the state of California, which I think is a good thing. So overall, you know, it is nice to have the 24 rate case wrapped up We started recognizing the revenue from that rate case in the actual billings on July 1, so it is live. And now we are moving on to fully implement that capital. In addition, during the quarter, we reached a settlement on the Washington Water General rate case. Now keep in mind, Washington is a historic test year for capital purposes. We filed our rate case on September 25, 2025. We asked for just under $4.3 million. $4.29 was the actual filing number. And it was for increases across 2 of our largest washing systems that we have requested a 10.2% ROE. And the final settlement that we reached with the commission we reached a full all party settlement of $4.12 million as well as ROE of 10.18%. So overall, pretty close to the ask. So very happy with the with the outcome. With the all parties settlement, it is been filed, and it has not been approved yet by the commission, but we expect it to get approved here sometime in the third quarter, and we will start recognizing that revenue for Washington And the third quarter. So overall, good news on the rate case front. Going to the next slide, talking about our strategic initiatives. The other big thing that company's working on in addition to the capital is really the acquiring the NEXUS assets in Oregon and Washington. Change and fill applications have been filed. Integration planning with Nexus and Cal Water has been moving very, very well. Nexus is a great partner to work with. We are very happy with the level of support we are getting from them. And we are continuing to move forward for a close or year end, excuse me, I anticipate with Nevada, we will likely get there decision first. They have a statutory timeline to approve the merger and we have been in discussions with them and answering their questions. Oregon does not have a statutory timeline but we are in the process of answering their questions and working with them as well. So our goal would be to try to close the acquisition before the end of the year and moving forward. In addition with the BVRT joint venture, as you may recall, we have submitted an application to buy out the rest of that partnership to become the sole owner of that BVRT. That change of control application was deemed, it was reviewed by the commission, they go through a review process. It was deemed quote unquote complete. Meaning it goes to the commission for approval. So we are waiting to hear back from them. In addition, we also have a consolidator rate case that was settled and we are waiting for final commission approval in Texas. So Texas has been very busy between the rate case settlement as well as the application. In addition, during the quarter, the team connected an additional 200 new connections to our wastewater systems in that South Austin market. So that market kind of continues to grow. Excuse me. Looking at slide 14, looking at some of our other highlights for the quarter, Obviously, we have been celebrating that the company's 100-year, 100 years of service, essentially. And we set up a number of regional events, so we are halfway through that process. Those have been well received by our employees and a lot of the government officials in the areas that we serve. So we are trying to make it a highly visible well branded, we are in your community, here's what we do type of event. So that process continues to go very, very well. The company has a lot of pride in the fact we have been around for a hundred years and the fact that we were started by 3 World War I veterans back in 1.93 thousand. In addition, we are seeing a lot of customer engagement We have had tens of thousands of customers visit our website. that is been dedicated to our 100-year anniversary. And likewise, I encourage you to look at that if you wanna see some of the history of the company how we have grown from 3 small districts in Northern California to now being the largest investor-owned water utility in the state of California. As well as, in Hawaii and Washington. During the quarter, we won a number of awards. Which is great recognition. We tend not to talk about that a lot, but it is something the company takes a lot of pride in. You know, we recently won the Alliance for Water Efficiency Award. We have been named the top workplace by USA Today, and been noted by Time as being 1 of the world's most impactful companies for our continued work on sustainability and renewability So, all really good stuff, all happening around our 100-year anniversary, and we will be ringing the bell on the NYSE on November 30 with our board and a number of employees to celebrate our 100 years of service as we would like to say. As you may recall, at the end of the last conference call, we did a little tribute to Greg Milleman. For those of you who work with Greg Milleman, he is a big personality. And before the call, Jim and I were joking around about it is kind of hard not having Greg in the room with us. Because he is he is a fun person to work with. So Greg has officially retired. He is consulting on some of our rate projects for us and still available to help us, but I think he is actually in the Caribbean this week, which, really, as Jim and I worked a lot of hours the last couple weeks, I wish we were with Greg, actually, and we could razz him up a little bit. Having said that, we had a great internal candidate ready to replace Greg, and it is Greg, another Greg, so the last name changes. first name does not. But Greg Shemansky, was, named vice president of rates by our board of directors. And Greg has a long history in the rate. And regulatory world, starting way back working with San Diego Gas and Electric. He worked for American Water for a number of years. And joined us a few years ago. Very, very well qualified as an undergraduate degree from UCLA, in economics as well as an MBA in finance from Purdue University. So Greg has officially taken over leading our rates team, and he is certainly well qualified to do so. In addition, given the growth of the company, we added, a VP of operations who just runs the California entity. We have had a senior vice president of operations who is run all of our operations. In all 5 of our states. And given the growth that we have been experiencing, we thought it was time to have, a vice president of operations just for California who reports to the senior VP of operations. So very, very happy to announce the promotion of Tammy Johnson, Tammy is no stranger to the water business. She has 40 years of experience. Tammy started as a field worker in the union back in the eighties. And I say that because she started in the field at a time when there was not a lot of female utility workers in the field, and she started in Bakersfield which I think was a great place to start, but I would imagine it was a pretty rough group to break into being a female. And she's just done a fabulous job. She continued to move up through the union ranks. She was a union officer. She's got-- she has all our sort of-- She's actually a D5, so she has the highest level operating license you can have in the state of California. She went back to school after she had kids and completed her bachelor's degree. And then went on to complete her MBA as well. And just knows operations very, very well. And for those of you that know me, I am very big about having someone who is been an actual operator operating our system. So we are very happy that we have both Tammy Johnson and Greg Shemansky joining the officer team here effective July 1. So with that, looking ahead into the second half of 2026, the agenda is really simple. Right? We have got to continue to get the capital in the ground, including our PFAS program. Year to date, we spent about $30 million on that program. And we will give you an update every quarter on where the spending is on that program. We have a couple new officers. We have a lot of rate case stuff going on. and, of course, then our goal is to get the NEXUS deal closed before the end of the year. So we have plenty to do, a lot of capital to get into the ground, the company remains very, very focused on executing on those tasks. So with that, Janine, we will take a pause and why do not we open it up for questions, please? Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press *1 on your touch tone phone. And to withdraw your question, please press *1 again. If you are using a speakerphone, please lift the handset before pressing any keys. 1 moment, please. We gather questions. We have a question from Davis Sunderland from Baird. Please go ahead. Davis Sunderland: Hi, it is Good morning, guys. Sure. Good morning, Davis. Maybe if I could start off, Martin, would just be curious to get your thoughts on affordability. And I know there is been a lot of rhetoric around utility bills, pushback against rate increases, just some different things happening in different parts of the country. And just would love to hear any of this has changed your guys' strategy or how you guys think about this. Martin A. Kropelnicki: Yeah. Well, I and, Davis, you have been following us for a while, and, we have been out on a number of non deal roadshows with Baird. So affordability has always been on the forefront for us. There are 2 broad measures. You know, that you use for affordability. 1 is the EPA generally looks at water bills and the average household budget As long as you are below 2%, you are considered affordable. We are below 2% in all in all of our districts, And then in the state of California, before we can actually file a rate case, we have to do this affordability test and file it, review it with the commission. And in the 24 rate case, we passed the affordability test really in all of our districts but 1, but in that 1 district was a very small district that had a lot of capital needs. And in California, we have a couple tools. We have a rate support fund. And we have a low income rate assistance fund. And so we work with the commission through the rate case process to apply some of those things to make sure the rates are affordable for this 1 small district. So we have not had any big issues with that. As you may recall, prior to filing a large rate case, we always meet with our customers. We hire a third party firm We do a number of focus groups and interview literally thousands of customers. To get their ideas, their thoughts, their perceptions on things. And part of that discussion in those focus groups is really affordability. So for us, we have not had really any major issues with affordability. And even when you look at things is that what I think what you are seeing back East is you are seeing a lot of government agencies, not just the commissions, but governors, etcetera, push back on rates, especially electrical rates because they have been raising so high and then the fear with data centers are rising those costs and passing those costs on to customers as they build out new infrastructure. We have not had any of those problems. And you know, the we have that 10.27% ROE in California. We just got through a rate case. The rate case was approved. If we did not have really any major interveners in California. Rate case up in Washington, that is pending approval. that is a 10.18% ROE. that is in that settlement. And so we are not seeing any signs. We are not getting any feedback from the commission that we have affordability issues as of right now. But, again, there is a lot of care and nurturing that goes in when we prepare the rate case. To make sure we are not tripping some of those trip wires. And I think the rates team and our government affairs team and our community affairs team have done an outstanding job at navigating the headwaters on that. And I think, you know, we are gonna continue to keep doing what we are doing and trying to balance affordability with the needs of the capital investment. And, you know, the best thing I can say to you or any of the analysts covering our stock is go back and look at our 20 year history. We have been able to do this 10% kind of growth rate on CapEx, which is growing rate base. We have been able to do it and be successful at getting rate recovery. And again, not trip these affordability things that are popping up. So am I concerned about it? I am. I am concerned about it because you have things like the, you know, Democratic Socialists of America popping up, and it is an agenda item for them. We have certainly seen our electric rates, you know, increase. You know, California has a second highest electric rate increase that electric rates in The US, so that affects our cost of production. But we are not driving the affordability crisis in America. It is not water it is driven by the rate side. And so continuing to differentiate ourselves on that front, I think, is part of the process when we meet with regulators and lawmakers and the state at the federal government level. So watching it, concerned about it, Obviously, I think we have been navigating the waters around affordability quite well. Davis Sunderland: Awesome. Greg details, and thank you for all that, Martin. Maybe if I could ask another 1. Lots of, I guess, forecast now calling for a higher interest rate environment looking forward, maybe as soon as a couple months from now, if not sooner. Just wondering any impact this might have on willingness to pursue other M&A or liquidity outlook or just any other facets of the business, I guess, that might be impacted by this? Sure. Martin A. Kropelnicki: And, you know, you are asking a question. This is a subject of great debate with our board We spent a lot of time talking about the economic landscape, in particular, the instability of some of your major macroeconomic indicators, that are out there. Now, inflation was down. You saw the inflation numbers that came out this morning. They continue to trend down, so I think that gives the Fed a little bit more breathing room. I think that was a good sign, but concurrently, you have a whole bunch of government spending given the conflict with Iran. And government spending especially with military spending, tends to be a boom for the economy but not when it is deficit spending. And so that is the piece that kinda gives me a little bit of concern on the interest rate side. Just to remind everyone, especially in California, which our largest entity, we do have this cost of capital adjustment mechanism that, frankly, it is a 2-way mechanism. it is good for stockholders. it is also good for rate payers. And so if Moody's AA utility bond index swings by more than 50 basis points, up or down we can apply to adjust our ROE with that mechanism. And so I do not think that mechanism gets a lot of PR But frankly, you know, 1 of the reasons why we have 1 of the highest ROEs in the country is because we have had this mechanism. And that mechanism triggered upward during this last cycle. And so I think we have to watch and see. I am glad I am not Jerome Powell as I told the board. You know, I know his boss is demanding lower interest rates, and I am always looking at the Fed consensus of the board, and he had consensus in his first meeting that he had not seen the minutes for the second meeting. They will not be out for a couple weeks. They met yesterday. But there is some instability in the economy. And interest rates, if you look at the mix, as of yesterday, about 38% of the economists were calling for an increase and about 62% were calling them for to be flat or maybe trend down. So depending on what inflation does, you may see a tick up in interest rates here in the short term, i.e., the next 6 months. But I think as you go through 2027, if you can get the conflict in The Middle East resolved, those interest rates. Ultimately start trending down. And I think, as an economist, I think this is a real important point. Economists tend to talk about it in their circles, but you do not hear a lot of coverage about it. Broadly speaking, in the finance community. But if you think about from the subprime crisis, until COVID, you had an ultra low interest rate environment. And changing economics, a big part of the economy is interest rates. And you model the economic effects of GDP given those changes in interest rates. But what that period of ultra low interest rates showed to some extent, is that interest rates have a much smaller effect on the economy I think, than what John Maynard Keynes thought about when he was developing his classic you know, economic theories. And so it could have a little bit of effect on us, but obviously our capital program, especially in California, is preapproved. The cost of debt is a pass through cost, you know, as we do our cost of capital act. Applications. And then we have this cost of capital adjustment mechanism, which I think is a very good thing to help protect our stockholders in the event of rapid increases in interest rates. So that is a long answer and a lot of economic jargon, but I do love this stuff, and it was a source of discussion with our board. Over dinner on Tuesday night as well as into the boardroom yesterday. And then Jim's been adding Yeah. James Patrick Lynch: Davis, 1 other thing. Just a reminder. We are on, I think, our third extension on our cost of capital in California. And remember that the cost of capital is separate from the that proceeding is separate from the general rate case proceeding. So we will be filing or asking if we are unsuccessful in getting another extension, we would need to file in May for new rates of in 2027 for new rates to begin January 1, 2028. And so that does provide an opportunity not only for a relook at ROE, but also for a recasting of our average cost of debt. So any debt that we raise that is higher than our current average cost of debt recovery we will have an opportunity to kind of right size or get into that calculation when we go through that proceeding. Martin A. Kropelnicki: Yeah, I would add 1 thing, Davis, on that. 1 of the things that is been nice in the western half of the U.S. We have not had any pushback from the commission about the need to invest in infrastructure I think given the fact we have been dealing with climate change and wildfires and going into an El Nino, super El Nino year, you know, readiness of the infrastructure has been important. So as we have gone through our rate cases, affordability has not been a big discussion with the commission. They have been very focused on our expansion capital, which replacing infrastructure in our existing model. And understanding the reasons why we need to do that. And based on the results of the rate case, I think the commission's, you know, understanding the mission at hand and supporting it From an M&A side to the last part of your question, our primary growth engine is this replacement capital. it is doing great. it is above 10%. Strategic M&A is a secondary growth engine, but let me make sure I am, like, clear about this. there is no gun to our head to go out and buy anyone because we need growth. We have plenty of growth. Internally in the states that we operate in, which is with the replacement capital that we have. So we will continue to be opportunistic. Like we were with the Nexus acquisition. It gets us in Oregon. It gets us into Nevada. it is a good sized acquisition. The valuation we thought was fair. But, you know, we are not gonna go out on a buying spree and buy at multiples of book because we need we need, you know, kind of rate base growth. We do not need rate based growth. We have plenty of rate based growth. In our existing book of business. Super, super helpful. Lots of great details, and thank you both. Davis Sunderland: Maybe if I could just be greedy and sneak in 1 more quick 1, I guess more of a housekeeping than anything potentially for you, Jim, But just having not seen the queue, I am sure there will be more details. But the big step up in other ops expenses and then the step-down in D&A. Wondering if this is IRMA related or if there is just any other color you could give on the dynamics there. And thank you both very much. James Patrick Lynch: Yes. I think the big increase in other ops is really related to the deferred RAM revenue that we recorded. So rather than presenting those 2 net, we had to show the change in the revenue line item, but then there was also associated costs with that revenue. So net, recognition of the RAM, deferred revenue was about $1.2 million to $1.3 million. But when we presented on line items, it is $7.9 million in terms of cost and about $9.2 million to $9.3 million in terms of the revenue. Davis Sunderland: Great. Thanks, guys. Okay. Martin A. Kropelnicki: Thanks, Davis. Operator: Thank you. And, again, should you have a question, please press *1. There are no further questions at this time. This concludes our question and answer session. I will now turn the call over to the management. Martin A. Kropelnicki: Great. Thanks, Janine. Thanks, everyone, for joining us. it is nice to have the 2024 general rate case done in California. We are just about done with the general rate case in Washington. Second half of the year is going to be busy with a lot of capital investment and, obviously, closing on the NEXUS transaction as well, so celebrating our 100-year anniversary. So thank you all for joining us today and your support of our endeavors. We will look forward to updating everyone on these major programs. At the end of the third quarter in 2026. So thank you very much, and everyone have a great day. Bye. Operator: Thank you for participating for today's call. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. California Water Service (CWT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

SAN JOSE, Calif., July 29, 2026 (GLOBE NEWSWIRE) -- California Water Service Group (Group or the Company, NYSE: CWT), a leading publicly traded water utility serving California, Hawaii, New Mexico, Washington, and Texas, today reported strong second quarter 2026 results. Second Quarter 2026 Results Reflect Resolution of the 2024 California General Rate Case (2024 CA GRC) The Company reported that second-quarter 2026 results were in line with expectations as the Company received a final decision on the 2024 CA GRC at the end of April. The Company recognized the decision retroactively to January 1, 2026, as provided for in its California Interim Rates Memorandum Account (IRMA). Q2 2026 net income was $56.5 million, or $0.93 per diluted share, compared to net income of $42.2 million, or $0.71 per diluted share, in Q2 2025. Q2 2026 revenue was $308.6 million, compared to revenue of $265.0 million in Q2 2025. IRMA revenue related to the delayed 2024 CA GRC and implementation of new rates added $15.3 million, $9.2 million of which related to Q1 2026. Rate changes and changes in regulatory mechanisms added $15.0 million. Increased customer consumption increased revenue by $4.1 million due to variability in climate conditions between the two quarters. Deferred revenue expected to be collected within the next 24 months related to prior year regulatory mechanisms added $9.3 million of revenue. Q2 2026 operating expenses were $237.7 million, compared to operating expenses of $213.1 million in Q2 2025. Water production costs increased by $6.3 million, primarily due to increases in wholesale water rates. Other operations expenses increased by $13.4 million, of which $7.9 million related to recognized deferred revenue related to prior year’s regulatory mechanisms and $2.1 million related to conservation program activities. Depreciation and amortization expenses decreased by $6.5 million due to lower depreciation rates in California approved in the 2024 CA GRC. Income taxes increased by $7.0 million as a result of a reduction in the Tax Cuts and Jobs Act (TCJA) deferred accrued income tax amortization and higher pre-tax income. YTD 2026 Financial Results Also Reflect Resolution of the 2024 CA GRC YTD 2026 net income was $60.5 million, or $1.01 per diluted share, compared to YTD 2025 net income of $55.5 million, or $0.93 per diluted share. YTD 2026 revenue was $523.2 million, compared to YTD 2025 revenue of $468.9 million. IRMA revenue related to the delayed 2024 CA GRC and implementation of new rates added $15.3 million. Rate changes and changes in regulatory mechanisms added $29.5 million. Deferred revenue expected to be collected within the next 24 months related to prior year regulatory mechanisms added $8.5 million of revenue. YTD 2026 operating expenses were $434.1 million compared to YTD 2025 operating expenses of $394.8 million. Water production costs increased by $14.7 million, primarily due to increases in wholesale water rates. Other operations expenses increased by $15.8 million, of which $8.0 million related to recognized deferred revenue related to prior year’s regulatory mechanisms and $2.6 million related to conservation program activities. Depreciation and amortization expenses decreased by $2.5 million due to lower depreciation rates in California approved in the 2024 CA GRC. Income taxes increased by $6.0 million as a result of a reduction in the TCJA deferred accrued income tax amortization and higher pre-tax income. “Receiving the final decision in our 2024 CA GRC provides the regulatory framework needed to continue investing in the infrastructure our customers depend on, while supporting long-term earnings and cash flow visibility,” said Chairman and Chief Executive Officer Martin A. Kropelnicki. “The decision authorizes meaningful rate adjustments through 2028, approximately $1.68 billion of infrastructure investments through 2027, and new revenue stabilization mechanisms that better align cost recovery with our investment profile and help mitigate the impacts of changes in customer water usage.” “During the quarter, we also achieved a record level of infrastructure investment as we continue modernizing and strengthening our water systems across our service territories. In addition, we made meaningful progress on our planned acquisition of Nexus Water Group's systems in Nevada and Oregon, including filing Change of Control applications with the applicable regulatory agencies. Finally, we declared our 326th consecutive quarterly dividend,” Kropelnicki added. “These actions reflect our disciplined approach to investing in our business, growing our regulated footprint, and creating long-term value for our customers, communities, and stockholders.” Cal Water Receives Final Decision on the 2024 CA GRC Subsidiary California Water Service Company (Cal Water) received a final decision from the CPUC on its 2024 CA GRC and Infrastructure Improvement Plan on April 30, 2026. The decision authorizes rate adjustments expected to increase company-wide revenue by $90.5 million, or 10.9%, in 2026; $43.2 million, or 4.7%, in 2027; and $48.9 million, or 5.1%, in 2028. In addition, the decision authorizes approximately $1.45 billion of pre-approved infrastructure investments through 2027 to support continued delivery of safe, clean, and reliable water service, with up to an additional $229 million of projects eligible for recovery through the CPUC's advice letter process. The decision also renews key revenue stabilization mechanisms, including the Monterey-style Water Revenue Adjustment Mechanism and water production incremental cost balancing accounts, establishes a new Sales Reconciliation Mechanism, and approves a rate design that increases recovery of fixed costs regardless of water sales. These mechanisms are designed to support more predictable cost recovery while helping mitigate the financial impact of customer usage variability and other uncertain costs. Company Invests a Record $147 Million in Infrastructure in Second Quarter 2026 In the second quarter of 2026, the Company invested $147 million in infrastructure needed to continue providing safe, reliable water supply to customers, compared to $119 million in the second quarter of 2025. Through the first half of 2026, the Company invested a record $276.4 million in infrastructure, compared to $229.5 million invested in the first half of 2025. Overall, based on the final 2024 CA GRC decision, the Company anticipates investing up to $627 million in 2026. Company Continues to Make Progress on Water System Acquisitions In February 2026, the Company announced an agreement to acquire Nexus Water Group’s water and wastewater systems in Nevada and Oregon for approximately $218 million. The transaction is expected to add approximately 36,000 customer equivalent residential units and about $109 million of rate base, further strengthening its position as a leading regulated water and wastewater utility in the western United States. The acquisition remains subject to customary regulatory approvals and closing conditions, but remains on track with the Company filing Change of Control applications with the public utilities commissions in Nevada and Oregon in April and continuing integration activities. In Texas, the Company received notification that its change in control application has been deemed complete by the Public Utility Commission of Texas. Company Delivers Strong Dividend Performance During the first quarter, the Company announced its intent to increase the annual dividend by 8%, or $0.10 per common share, which is expected to result in an annualized dividend of $1.34 per common share. The Board of Directors has declared a quarterly dividend in the amount of $0.3350 per common share that will be payable on August 21, 2026 to stockholders of record as of August 10, 2026. This marks the Company’s 326th consecutive quarterly dividend and its 59th annual dividend increase. For additional details, please see the Form 10-Q which will be available at: www.calwatergroup.com/investors/financials-filings-reports/sec-filings, or listen to the earnings teleconference or teleconference replay. Quarterly Earnings Teleconference Scheduled The quarterly teleconference will take place on July 30, 2026, at 8 a.m. PT/11 a.m. ET. To join, dial 1-800-715-9871 or 1-646-307-1963 and key in ID# 5478283, or access the live audio webcast at edge.media-server.com/mmc/p/p8cvrm58/. A replay of the call will be available from 2 p.m. ET on July 30, 2026, through September 28, 2026, at 1-800-770-2030 or 1-609-800-9909 by keying in ID# 5478283, or by accessing the webcast above. The call will be hosted by Chairman and Chief Executive Officer Martin A. Kropelnicki and Senior Vice President, Chief Financial Officer and Treasurer James P. Lynch. Prior to the call, the Company will publish a slide presentation on its website. About California Water Service Group Group is the parent company of regulated utilities Cal Water, Hawaii Water Service, New Mexico Water Service and Washington Water Service, as well as Texas Water Service (TWSC, Inc.), a utility holding company. Together, these companies provide regulated and non-regulated water and wastewater service to more than 2.2 million people in California, Hawaii, New Mexico, Washington, and Texas. Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available online at www.calwatergroup.com. This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the PSLRA. Forward-looking statements in this news release are based on currently available information, expectations, estimates, assumptions and projections and our management’s beliefs, assumptions, judgments and expectations about us, the water utility industry and general economic conditions. These statements are not statements of historical fact. When used in our documents, statements that are not historical in nature, including words like will, would, expects, intends, plans, believes, may, could, estimates, assumes, anticipates, projects, progress, predicts, hopes, targets, forecasts, should, seeks or variations of these words or similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements in this news release include, but are not limited to, statements describing the Company’s expected financial performance, expectations regarding the Company’s plans and proposals pursuant to the 2024 CA GRC and the anticipated closing of the Company’s acquisition of Nexus Water Group’s Nevada and Oregon subsidiaries and expected integration of the acquired systems and benefits resulting from the acquisition. Forward-looking statements are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Consequently, actual results or outcomes may vary materially from what is contained in a forward-looking statement. Factors that may cause actual results or outcomes to be different than those expected or anticipated include, but are not limited to: the outcome and timeliness of regulatory commissions’ actions concerning rate relief and other matters, including with respect to general rate cases and other regulatory proceedings; the impact of opposition to rate increases; our ability to recover costs; federal governmental and state regulatory commissions’ decisions, including decisions on proper disposition of property; changes in state regulatory commissions’ policies and procedures; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements, such as the United States Environmental Protection Agency’s (EPA) finalization of a National Primary Drinking Water Regulation (NPDWR) establishing legally enforceable maximum contaminant levels (MCL) for PFAS in drinking water in 2024 as well as legal challenges to such MCLs; EPA’s proposed new PFAS rulemaking, including impacts to the current PFAS NPDWR; the impact of weather, climate change, natural disasters, including wildfires and landslides and actual or threatened public health emergencies, including disease outbreaks, on our operations, water quality, water availability, water sales and operating results and the adequacy of our emergency preparedness; electric power interruptions, especially as a result of public safety power shutoff programs; availability of water supplies; our ability to invest or apply the proceeds from the issuance of common stock in an accretive manner; consequences of eminent domain actions relating to our water systems; increased risk of inverse condemnation losses as a result of the impact of weather, climate change and natural disasters, including wildfires and landslides; shifts in population, including housing and customer growth; issues with the implementation, maintenance or security of our information technology and operational technology systems; physical and cyber security risks and threats and the adequacy of our efforts to mitigate such risks and threats; the ability of our enterprise risk management processes to identify or address risks adequately; labor relations matters as we negotiate with the unions; changes in customer water use patterns and the effects of conservation, including as a result of drought conditions; our ability to complete, in a timely manner or at all, successfully integrate and achieve anticipated benefits from announced acquisitions, including the Oregon, Nevada and BVRT acquisitions; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; risks associated with expanding our business and operations, including into other geographic areas; the impact of stagnating or worsening business and economic conditions, including inflationary pressures, general economic slowdown or a recession, changes in tariff policy, the interest rate environment, changes in monetary policy, adverse capital markets activity or macroeconomic conditions as a result of geopolitical conflicts, including ongoing conflicts in the Middle East, and the prospect of shutdowns of the U.S. federal government; the impact of market conditions and volatility on unrealized gains or losses on our non-qualified benefit plan investments and our operating results; the impact of weather and timing of meter reads on our accrued and unbilled revenue; the impact of evolving legal and regulatory requirements, including sustainability requirements; the impact of the evolving U.S. political environment and changes effected, proposed, or threatened by the U.S. federal government that has led to, in some cases, legal challenges and uncertainty around the funding, functioning and policy priorities of U.S. federal regulatory agencies and the status of current and future regulations; and other risks and unforeseen events described in our Securities and Exchange Commission (“SEC”) filings. In light of these risks, uncertainties and assumptions, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the Annual Report on Form 10-K, Quarterly 10-Q and other reports filed from time-to-time with the SEC. We are not under any obligation and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. A credit rating is not a recommendation to buy, sell or hold any securities, may be changed at any time by the applicable ratings agency and should be evaluated independently of any other information. CALIFORNIA WATER SERVICE GROUPCONDENSED CONSOLIDATED BALANCE SHEETSUnaudited CALIFORNIA WATER SERVICE GROUPCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In thousands, except per share data)