California Water Service Group

Q2 net income was $56.5 million, or $0.93 per diluted share, versus $42.2 million, or $0.71 per diluted share, in Q2 2025. Revenue was $309 million versus $265 million a year ago. The main drivers were $15.3 million of IRMA revenue, $15 million from rate changes and regulatory mechanisms, and $9.3 million of deferred RAM revenue, partly offset by $6.3 million of higher water supply costs, $7.9 million of costs related to deferred RAM revenue, and $7 million of higher income taxes. Year to date, net income was $60.5 million, or $1.00 per diluted share, on $523 million of revenue versus $55.5 million, or $0.93 per diluted share, on $469 million last year. CapEx was $147 million in the quarter and $270 million for the first half of the year. For the balance of 2026, management said any additional financing would mainly support the remaining capital program and the Nevada and Oregon acquisitions, while California’s 2024 GRC revenue started being recognized in billings on July 1.

Martin A. Kropelnicki emphasized that the quarter was defined by regulatory progress and heavy infrastructure investment. He pointed to California’s delayed but ultimately retroactive GRC decision, the Washington settlement, and continued progress on Nexus integration, while describing the company as still very capital focused. His tone was confident and operationally active, with repeated emphasis on long-term rate base growth, PFAS treatment, and closing strategic transactions without needing to chase growth through expensive M&A.

James Patrick Lynch highlighted the quarter’s earnings lift from regulatory items, including $15.3 million of IRMA revenue, $15 million from rate changes and regulatory mechanisms, and $9.3 million of deferred RAM revenue. He also cited offsets from $6.3 million of higher water supply costs, $7.9 million of deferred RAM costs, and $7 million of higher taxes. On liquidity, he said the company had $43.4 million of unrestricted cash, $45.7 million of restricted cash, and about $395 million available on its bank line, with $600 million of credit facilities expandable to $800 million and maturities into March 2028. He added that $88 million was raised through the ATM in the quarter and that the company maintained an A+ stable rating from S&P Global.

The main analyst topic was affordability and how rising utility bills and public pushback might affect the company’s strategy. Management said affordability remains a core focus, noted that all districts are below the EPA’s 2% affordability threshold, and said California’s rate case process includes affordability testing plus tools like a rate support fund and low-income assistance. On higher interest rates, management said the business is partly protected by California’s cost of capital adjustment mechanism and that any future debt and ROE resets would be handled through the regulatory process; they also stressed that M&A is opportunistic, not necessary for growth. When asked about other operating expenses and depreciation, Lynch said the main movement was the deferred RAM revenue accounting, where costs and revenues were shown separately rather than netted.