California Water Service Group Reports 81% Decline in Net Income for Q1 2025

California Water Service Group reported a significant decline in financial performance for the first quarter of 2025, with net income attributable to the company falling to $13.3 million, or $0.22 per diluted share, compared to $69.9 million, or $1.21 per diluted share, in the same period of 2024. This represents a decrease of approximately 81% year-over-year. The company attributed this decline primarily to a $66.7 million drop in operating revenue, which totaled $204.0 million for the quarter, down from $270.7 million in the prior year. The decrease was largely influenced by the resolution of the 2021 General Rate Case (GRC) in early 2024, which had resulted in a one-time revenue adjustment that did not recur in 2025.

Operating expenses also saw a reduction, decreasing by $11.3 million, or 5.8%, to $181.6 million. This decline was primarily driven by a significant reduction in income tax expenses, which fell by $14.5 million, offset by an increase in depreciation and amortization expenses. The company reported that water production costs decreased slightly, reflecting a shift in the sources of water supply, with well production accounting for 52% of total water production, down from 54% in the previous year.

In terms of operational metrics, California Water Service Group's customer base and engagement remained stable, with the company continuing to serve a diverse range of residential, business, and public authority customers. The company has also been active in regulatory matters, submitting its 2024 GRC application in July 2024, which proposes significant infrastructure investments exceeding $1.6 billion over the next three years. This includes enhancements to water quality and reliability, as well as initiatives aimed at improving conservation efforts.

Looking ahead, California Water Service Group anticipates continued challenges due to regulatory changes and market conditions, particularly concerning the implementation of new water quality standards and the ongoing impacts of climate variability on water supply. The company plans to fund its capital needs through a balanced approach of long-term debt and equity, while also managing short-term liquidity through its revolving credit facilities. The outlook remains cautious, with management emphasizing the importance of regulatory compliance and infrastructure investment to support long-term growth and sustainability.