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California Water Q3 Earnings Miss Estimates on Higher Taxes & Costs
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Key Takeaways
California Water's Q3 earnings rose 1.9% to $1.05 per share but missed estimates by 13.93%.
CWT's revenues grew 6.7% to $332.2M, while operating expenses rose 3.7% and tax costs increased.
CWT plans $627M in 2026 capital spending, backed by regulatory approvals and expanded financing.
California Water Service Group (CWT - Free Report) reported third-quarter 2026 earnings of $1.05 per share, up 1.9% from $1.03 in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.22 by 13.93%.
Total Revenues
Quarterly revenues increased 6.7% year over year to $332.2 million but missed the Zacks Consensus Estimate of $335 million by 0.76%.
Results benefited from rate changes, new customers and regulatory recoveries, partially offset by lower water consumption. Infrastructure investment reached $148.3 million, reflecting continued spending on water system reliability.
Operating revenues increased $21 million from the prior-year quarter. Rate changes and new customers contributed $22.1 million, while changes in the Drought Response Memorandum Account added $3.9 million.
These gains were partially offset by a $4.4 million reduction attributable to lower customer water usage. The revenue increase reflected the April 2026 resolution of California Water's 2024 General Rate Case, which supported higher authorized rates.
California Water Service Group Price, Consensus and EPS Surprise
Total operating expenses rose 3.7% year over year to $249.5 million from $240.6 million. Water production costs declined marginally to $102.1 million from $102.7 million as higher wholesale water costs were offset by reduced customer consumption.
Other operations expenses climbed 12.1% to $37.5 million, primarily reflecting a $2.8 million increase in water conservation program expenditures. Administrative and general expenses declined 3.4% to $35 million, while depreciation and amortization expenses decreased 3.9% to $34.7 million.
Net operating income increased 17.1% year over year to $82.7 million from $70.6 million, as revenue growth outpaced operating expense increases. Net income attributable to California Water Service Group rose 6.8% to $65.4 million from $61.2 million.
Income tax expense on operating income increased $7.1 million due to higher pretax income and a scheduled reduction in the Tax Cuts and Jobs Act refund. Net other income declined $6 million, reflecting a $3.9 million reduction in non-qualified benefit plan investment gains and $1.4 million of additional acquisition expenses. Net interest expense increased 10.7% to $19 million.
California Water Expands Infrastructure Investment
Third-quarter capital expenditures totaled $148.3 million. For the first nine months of 2026, infrastructure investment increased 16.5% year over year to $424.8 million from $364.7 million.
The company projects capital investments of $627 million in 2026, followed by $667 million in 2027 and $700 million in 2028. Its rate base is expected to reach approximately $3.46 billion by 2028, excluding anticipated Nevada and Oregon investments. Management emphasized that infrastructure spending supports long-term earnings growth and system reliability.
CWT's Regulatory Approvals Support Growth
The Washington Utilities and Transportation Commission approved a $4.1 million annual revenue increase, effective Oct. 1, 2026. Hawaii regulators subsequently authorized a $1.94 million annual increase for the Kapalua systems, effective Oct. 21, 2026.
California regulators also approved an advice letter process covering $113.1 million of capital costs for certain PFAS treatment projects and recovery of $2.5 million in previously incurred expenses. The company plans $228 million in PFAS treatment and well replacement investments, with 65 projects planned. Net litigation recoveries of $59.4 million are expected to help reduce customer rate impacts.
California Water's Liquidity Supports Expansion
Cash and cash equivalents totaled $45.1 million as of Sept. 30, 2026, while restricted cash amounted to $45.8 million. The company had approximately $425 million in available short-term borrowing capacity across its credit facilities.
During the quarter, CWT raised $49.8 million through its at-the-market equity program and entered into forward sales agreements representing potential additional proceeds of $77.8 million. Subsequent financing agreements provided for $125 million in unsecured debt and $150 million in first mortgage bonds, strengthening resources for planned investments and acquisitions.
CWT Advances Acquisitions and Dividend Growth
The company received regulatory approvals for its planned acquisitions of Nexus Water Group's Nevada and Oregon utility systems. Management expects both transactions to close in the fourth quarter of 2026, with estimated integration expenses ranging from $7 million to $9 million.
California Water declared its 327th consecutive quarterly dividend of 33.5 cents per share. The anticipated annual dividend of $1.34 represents an 8.1% increase over 2025 and marks the company's 59th consecutive year of dividend growth.
American States Water (AWR - Free Report) is slated to report third-quarter 2026 results on Nov. 4, after market close. The Zacks Consensus Estimate for AWR’s third-quarter EPS is pegged at $1.09, implying an increase of 2.8% from the prior-year figure. The company has a dividend yield of 2.6%.
Essential Utilities Inc. (WTRG - Free Report) is scheduled to report its third-quarter 2026 results on Nov. 3, after the market opens. The Zacks Consensus Estimate for WTRG’s third-quarter EPS is pegged at 35 cents, implying an increase of 6.1% from the prior-year figure. The company has a dividend yield of 3.4%.
Consolidated Water Co. Ltd (CWCO - Free Report) is set to report its third-quarter 2026 results on Nov. 9. The Zacks Consensus Estimate for CWCO’s third-quarter EPS is pegged at 24 cents, implying a decrease of 29.25% from the prior-year figure. The company has a dividend yield of 2.1%.
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California Water Q3 Earnings Miss Estimates on Higher Taxes & Costs
Key Takeaways
California Water Service Group (CWT - Free Report) reported third-quarter 2026 earnings of $1.05 per share, up 1.9% from $1.03 in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.22 by 13.93%.
Total Revenues
Quarterly revenues increased 6.7% year over year to $332.2 million but missed the Zacks Consensus Estimate of $335 million by 0.76%.
Results benefited from rate changes, new customers and regulatory recoveries, partially offset by lower water consumption. Infrastructure investment reached $148.3 million, reflecting continued spending on water system reliability.
Operating revenues increased $21 million from the prior-year quarter. Rate changes and new customers contributed $22.1 million, while changes in the Drought Response Memorandum Account added $3.9 million.
These gains were partially offset by a $4.4 million reduction attributable to lower customer water usage. The revenue increase reflected the April 2026 resolution of California Water's 2024 General Rate Case, which supported higher authorized rates.
California Water Service Group Price, Consensus and EPS Surprise
California Water Service Group price-consensus-eps-surprise-chart | California Water Service Group Quote
California Water's Operating Costs Increase
Total operating expenses rose 3.7% year over year to $249.5 million from $240.6 million. Water production costs declined marginally to $102.1 million from $102.7 million as higher wholesale water costs were offset by reduced customer consumption.
Other operations expenses climbed 12.1% to $37.5 million, primarily reflecting a $2.8 million increase in water conservation program expenditures. Administrative and general expenses declined 3.4% to $35 million, while depreciation and amortization expenses decreased 3.9% to $34.7 million.
Net operating income increased 17.1% year over year to $82.7 million from $70.6 million, as revenue growth outpaced operating expense increases. Net income attributable to California Water Service Group rose 6.8% to $65.4 million from $61.2 million.
Income tax expense on operating income increased $7.1 million due to higher pretax income and a scheduled reduction in the Tax Cuts and Jobs Act refund. Net other income declined $6 million, reflecting a $3.9 million reduction in non-qualified benefit plan investment gains and $1.4 million of additional acquisition expenses. Net interest expense increased 10.7% to $19 million.
California Water Expands Infrastructure Investment
Third-quarter capital expenditures totaled $148.3 million. For the first nine months of 2026, infrastructure investment increased 16.5% year over year to $424.8 million from $364.7 million.
The company projects capital investments of $627 million in 2026, followed by $667 million in 2027 and $700 million in 2028. Its rate base is expected to reach approximately $3.46 billion by 2028, excluding anticipated Nevada and Oregon investments. Management emphasized that infrastructure spending supports long-term earnings growth and system reliability.
CWT's Regulatory Approvals Support Growth
The Washington Utilities and Transportation Commission approved a $4.1 million annual revenue increase, effective Oct. 1, 2026. Hawaii regulators subsequently authorized a $1.94 million annual increase for the Kapalua systems, effective Oct. 21, 2026.
California regulators also approved an advice letter process covering $113.1 million of capital costs for certain PFAS treatment projects and recovery of $2.5 million in previously incurred expenses. The company plans $228 million in PFAS treatment and well replacement investments, with 65 projects planned. Net litigation recoveries of $59.4 million are expected to help reduce customer rate impacts.
California Water's Liquidity Supports Expansion
Cash and cash equivalents totaled $45.1 million as of Sept. 30, 2026, while restricted cash amounted to $45.8 million. The company had approximately $425 million in available short-term borrowing capacity across its credit facilities.
During the quarter, CWT raised $49.8 million through its at-the-market equity program and entered into forward sales agreements representing potential additional proceeds of $77.8 million. Subsequent financing agreements provided for $125 million in unsecured debt and $150 million in first mortgage bonds, strengthening resources for planned investments and acquisitions.
CWT Advances Acquisitions and Dividend Growth
The company received regulatory approvals for its planned acquisitions of Nexus Water Group's Nevada and Oregon utility systems. Management expects both transactions to close in the fourth quarter of 2026, with estimated integration expenses ranging from $7 million to $9 million.
California Water declared its 327th consecutive quarterly dividend of 33.5 cents per share. The anticipated annual dividend of $1.34 represents an 8.1% increase over 2025 and marks the company's 59th consecutive year of dividend growth.
CWT’s Zacks Rank
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.
Upcoming Earnings Releases
American States Water (AWR - Free Report) is slated to report third-quarter 2026 results on Nov. 4, after market close. The Zacks Consensus Estimate for AWR’s third-quarter EPS is pegged at $1.09, implying an increase of 2.8% from the prior-year figure. The company has a dividend yield of 2.6%.
Essential Utilities Inc. (WTRG - Free Report) is scheduled to report its third-quarter 2026 results on Nov. 3, after the market opens. The Zacks Consensus Estimate for WTRG’s third-quarter EPS is pegged at 35 cents, implying an increase of 6.1% from the prior-year figure. The company has a dividend yield of 3.4%.
Consolidated Water Co. Ltd (CWCO - Free Report) is set to report its third-quarter 2026 results on Nov. 9. The Zacks Consensus Estimate for CWCO’s third-quarter EPS is pegged at 24 cents, implying a decrease of 29.25% from the prior-year figure. The company has a dividend yield of 2.1%.