California Water Service Group · NYSE:CWT
California Water Service — Non-Deal Roadshow (September 2004)
30 slides from California Water Service's roadshow presentation, Sep 27, 2004
Slide 1: California Water Service Group: You're in Good Company
California Water Service Group You’re in Good Company Robert W. Foy, Board Chairman Peter C. Nelson, President and CEO Richard D. Nye, CFO and Treasurer East Coast Analyst Meetings Shannon Dean, Director of Corporate Communications September 27-29, 2004 www.calwatergroup.com
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation, including all documents incorporated by reference, contain forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions
Slide 3: Presentation Overview
Presentation Overview Introduction to the water industry California Water Service Group Business overview Commitment from employees Quality for customers Value for stockholders Vision for the future Reasons to invest in CWT 3
Slide 4: Basics of Our Business
Basics of Our Business Regulated business, lower business cycle risk Straightforward earnings drivers Long history of paying dividends An irreplaceable, life-sustaining product Increasing demand from growing population 4
Slide 5: Industry Provides Tap Water to Homes and Businesses
Industry Provides Tap Water to Homes and Businesses Builds and maintains infrastructure of wells, pumps, pipes, and treatment plants Secures supply of water, either locally or from wholesalers Treats and tests water to meet all standards Sells tap water to homes and businesses 5
Slide 6: Groundwater
Groundwater Well-Water Disinfection Facility Underground Aquifer
Slide 7: Earnings Drivers are Straightforward
Earnings Drivers are Straightforward Weather/water sales Regulatory treatment Customer growth Capital investment Non-regulated operations 7
Slide 8: Business is Changing
Business is Changing Increasingly strict water quality standards (e.g., USEPA has set a standard of 10 parts per billion for arsenic) Need for significant capital investment in years ahead Consolidation – only 11 American investor- owned water utilities remain Responsibility for securing ade
Slide 9: Opportunities in Water
Opportunities in Water Only 15% of U.S. population served by investor-owned, private water companies Of 55,000 community water systems, 47,000 serve fewer than 3,000 people Small providers lack technical and financial resources to meet water quality and supply challenges Opportunities exist
Slide 10: California Water Service Group Highlights
California Water Service Group Highlights Second largest publicly-traded water utility in the United States; largest in the West More than $300 million in revenue Market cap over $500 million Service to more than 2 million people Produce enough water to serve one glass of water, every day,
Slide 11: Shares, Market CAP, Analysts
Shares, Market CAP, Analysts Ticker “CWT” Listed on NYSE Market capitalization $537.5 M* Average daily trading volume (3 mo.) 38,400* Debt/equity ratio 49%/51% Moody’s and S&P ratings A2/A+ Market/book 1.9 times P/E ratio 18.10* Dividend yield 3.9%* ANALYST COVERAGE: A.G. EDWARDS – Tim Winter CHARLE
Slide 12: Service Area Map
Added in 1999 Harbor South Sound California Wee. Oroville : Marysville (San Francisco) Redwood Valley (Sacramento) Dixon Bayshore Stockton Bear Gulch —_~ Los Altos Salinas King City Kern River Valley Westlake Rancho Dominguez (Los Angeles) cad Se) ¥ = (Honolulu) So , Hawaii ° Kaanapali aon 2008) >!
Slide 13: Why You're in Good Company With Cal Water
Why You’re in Good Company With Cal Water Commitment of employees Quality service and product to customers Value to stockholders 13
Slide 14: It Takes Committed Employees to Meet Customer Needs
It Takes Committed Employees to Meet Customer Needs Continuous improvement approach: Every employee focused on enhancing service and increasing efficiency Professional development opportunities, certification programs, and tuition reimbursement encourage every employee to improve knowledge and s
Slide 15: Providing Excellent Customer Service
Providing Excellent Customer Service To meet stockholder needs, we must meet customer needs Customer satisfaction levels can affect regulatory decisions 88% rate service as “excellent” or “very good” 91% successfully served on first contact 15
Slide 16: Focus on Water Quality
Focus on Water Quality Vigilance 60,000 samples collected annually 210,000 water quality tests conducted State-of-the-art facilities Two certified laboratories monitor company-owned systems and serve three external clients Expert staff Several Ph.D.s and advanced degree professionals o
Slide 17: Securing a Reliable Water Supply
Securing a Reliable Water Supply Cal Water develops 20-year water supply plans for each system Most systems utilize more than one source of supply, and groundwater systems can produce adequate supplies through multi-year droughts Company works cooperatively with other organizations and forms i
Slide 18: Providing Value to Stockholders
Providing Value to Stockholders Aggressive regulatory affairs management Diligent investment in infrastructure Successful strategic growth plan Solid financial results and dividend history 18
Slide 19: Regulatory Affairs Management
Regulatory Affairs Management All California water utilities working together to improve regulation Recent decisions received by CPUC Salinas ($1.1 million annual revenue) Two of five CPUC commissioners’ terms expire December 2004 19
Slide 20: Cal Water is Beginning to Receive Rate Relief
Cal Water is Beginning to Receive Rate Relief 20
Slide 21: Diligent Investment of Capital in Water System Infrastructure
Diligent Investment of Capital in Water System Infrastructure 2004 Capital Expenditures 2004 capital budget is Budget $65.8 million $66 million Next five years estimated at $70 - $80 million per year Disciplined approach - projects are initiated only after approved in rates 21
Slide 22: Successful Strategic Growth Plan
Successful Strategic Growth Plan Pursuing regulated growth in California, Washington, New Mexico, and Hawaii Purchasing systems at rate base to be immediately accretive to earnings Adding contracts for non-regulated services 22
Slide 23: Steady Revenue Growth
Steady Revenue Growth R 5% CAG 23
Slide 24: History of Solid Financial Performance
History of Solid Financial Performance Solid debt ratings (S&P - A+, Moody’s - A2) Strong balance sheet (49% debt/51% equity) Excellent dividend track record Paid for 59 consecutive years Increased for 37 consecutive years Current yield approximately 3.9%, highest in industry 24
Slide 25: Financial Performance
Financial Performance First Half 2004 Revenue increased $29.8 million, or 25%, to $149.1 million Net income of $11.5 million vs. $3.8 million a year ago EPS $0.67 vs. $0.25 a year ago 25
Slide 26: Dividend Philosophy that Recognizes Stockholder Needs
Dividend Philosophy that Recognizes Stockholder Needs 2004 – Dividend $1.13, a current yield of 3.9% Highest dividend yield in the industry at approximately 3.9% (as of September 15, 2004) Paid for past 59 years Increased for 37 consecutive years 26
Slide 27: Dividends Paid Through Business Cycles
Dividends Paid Through Business Cycles S I NCE 1967 E ND S EA SED DIVID INCR PAID DIVIDENDS SINCE 1944 1940 1950 1960 1970 1980 1990 2000 2010 WWII Hawaii First Man Oil Stock Persian Stock Persian Ends becomes on the Crises Market Gulf War Market Gulf War 50th State Moon Plunges Plunges 27
Slide 28: Our Vision for the Future
Our Vision for the Future Continue to focus on providing excellent customer service and a high-quality product Continue to execute strategic growth plan Continue to be aggressive in pursuit of reasonable and timely rate relief 28
Slide 29: Reasons to Invest in CWT
Reasons to Invest in CWT Long history of paying and increasing dividends Strong balance sheet Commitment to high corporate governance standards Experienced management team Track record of prudent growth California rate-making environment improving 29
Slide 30: For Additional Information
For Additional Information CALIFORNIA WATER SERVICE GROUP Richard D. Nye, CFO (408) 367-8216 [email protected] Log on to our Investor Relations & News page at www.calwatergroup.com for detailed information 30
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