California Water Beats Q4 Earnings Ests

Zacks

California Water Service Group (CWT) reported fourth-quarter 2013 earnings of 12 cents per share, beating the Zacks Consensus Estimate of 5 cents by an impressive 140.0%. Earnings however remained flat with the year-ago level.

In 2013, earnings were $1.02 per share, 12.8% below last year’s earnings. Yearly earnings downscaled due to a reduction in authorized return on equity mandated by the California Public Utilities Commission (:CPUC), higher labor and other operational expenses and limited benefits arising out of rate relief from the company’s rate case cycle. In addition, the issuance of 5.75 million shares during the year had a dilutive impact on earnings per share.

Following the earnings beat, the share price of California Water Service showed a positive momentum of 2.4% yesterday.

Total Revenue

In the quarter under review, California Water’s total operating revenues were $133.7 million, surpassing the Zacks Consensus Estimate of $125.0 million by nearly 7.0%. Total operating revenues were 10.0% higher year over year.

Total operating revenues of $584.1 million in 2013 were 4.3% ahead of the 2012 revenue figure. The upswing can be attributed to increased rates and the addition of new customers during the year.

Operational Update

During the quarter, the company’s total operating expenses were $122.1 million, up 10.7% year over year primarily due to a 21.4% increase in water production costs.

The company’s quarterly operating income increased 3.5% year over year to $11.6 million.

Interest expenses totaled approximately $7.0 million, compared with $7.3 million in fourth quarter of 2012. Interest expense went down in the reported quarter due to a decline in debt levels.

Financial Update

As of Dec 31, 2013, California Water’s cash and cash equivalents were $27.5 million compared with $38.8 million as of Dec 31, 2012.

Long-term debt as of Dec 31, 2013, was $426.1 million compared with $434.5 million as of Dec 31, 2012.

California Water’s net utility plant was worth $152 billion at the end of Dec 31, 2013, as against $1.46 billion as of Dec 31, 2012.

Peer Comparison

American States Water Company (AWR) posted fourth-quarter 2013 earnings of 30 cents per share, beating the Zacks Consensus Estimate of 19 cents by 57.9%.

American Water Works Company, Inc. (AWK) reported fourth-quarter 2013 adjusted earnings of 47 cents per share, in line with the Zacks Consensus Estimate.

Veolia Environnement (VE) reported a loss of €0.32 (42 cents) in 2013, wider than the Zacks Consensus Estimate of a loss of 40 cents (€0.29).

Zacks Rank

California Water Service currently has a Zacks Rank #2 (Buy).

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