California Water Service Group (NYSE:CWT) executives used the company’s fourth-quarter and full-year 2025 earnings call to outline a year shaped by unusual weather-driven demand declines, record infrastructure investment, and a widening set of growth initiatives through acquisitions and regulatory filings.
Fourth-quarter results pressured by December storms
Chief Financial Officer James Lynch said fourth-quarter 2025 revenue totaled $220 million, down slightly from $222 million in the fourth quarter of 2024. Net income was $11.5 million, or $0.19 per diluted share, compared with $19.7 million, or $0.33 per diluted share, a year earlier.
Lynch quantified the consumption impact and its effect on earnings. Tariff rate changes and other regulatory items added $0.48 per share, but weather-related consumption declines reduced earnings by $0.59 per share. Of the $12.7 million consumption decrease experienced in 2025, Lynch said $14.6 million occurred in the fourth quarter, underscoring the outsized December impact. The quarter also included the conclusion of a three-year conservation program approved in the 2021 California rate case, with final expenses and a true-up reducing earnings by $0.10 per share.
Full-year 2025 results and comparison to adjusted 2024
For the full year, Lynch reported operating revenue of $1.0 billion in 2025 versus $1.37 billion in 2024. Because 2024 results included the accounting impact of interim rate relief tied to a delayed 2021 California rate case decision, the company also presented non-GAAP comparisons removing that item. On that basis, non-GAAP 2024 revenue was $949.3 million, implying 2025 revenue rose about $50.8 million, or 5.4%.
Net income attributable to the group was $128.2 million in 2025 compared with $190.8 million in 2024. Against non-GAAP 2024 net income of $126.8 million, Lynch said net income increased $1.4 million, or 1%. Diluted earnings per share were $2.15 in 2025 versus $3.25 in 2024; non-GAAP 2024 EPS was $2.16, which Lynch described as essentially flat compared with 2025.
Drivers of 2025 EPS versus non-GAAP 2024 included $1.05 per share of benefit from tariff rate changes and other regulatory activity and lower income taxes. Those gains were partially offset by wholesale water rates (net of volume decreases) reducing EPS by $0.27, consumption decreases of $0.19, and higher depreciation expense of $0.18, management said.
Capital investment, liquidity, and dividend actions
Kropelnicki highlighted a “record” $517 million invested into infrastructure systems during 2025, including $152.3 million in the fourth quarter. Lynch said the annual investment level represented a 19.8% increase over construction levels in 2024.
Management also discussed spending related to PFAS compliance and mitigation. Lynch noted that the company’s 2026 and 2027 capital estimates presented in the slide deck did not include $235 million of anticipated remaining PFAS project expenditures expected over the next few years, nor did they include capital investments related to the newly announced Nevada and Oregon acquisitions. In the Q&A, Kropelnicki said the company spent about $20 million on PFAS programs in 2025 and expects to spend between $50 million and $70 million in 2026, incremental to the broader capital plan. He also said the PFAS program includes both treatment installations and drilling new wells, with treatment moving faster than well development; management expects a majority of the treatment to be in place by the end of 2027, with well work potentially taking three to five years depending on permitting.
On the balance sheet, Lynch said the company ended 2025 with $51.8 million in unrestricted cash, $45.6 million in restricted cash, and about $470 million available on bank credit lines. Credit facilities total $600 million and are expandable to $800 million, with maturities extending to March 2028. The company issued $370 million in long-term financing on Oct. 1, 2025, comprised of a combination of group notes and Cal Water First Mortgage Bonds. Lynch also noted the company renewed its at-the-market equity program in May 2025 with a $350 million shelf registration and completed $1.5 million of sales in the fourth quarter.
Kropelnicki said the company maintained A+ stable credit ratings from S&P Global and received an extension for its California cost of capital, allowing it to retain a 10.27% return on equity until January 2028.
On shareholder returns, Lynch said the company declared its 324th consecutive quarterly dividend of $0.33 per share in January 2026 and announced an intended 2026 annual dividend of $1.34 per share. Kropelnicki noted the company increased its annual dividend by 10.7% in 2025 and followed that with an additional 8% increase in 2026, marking its 59th consecutive announced increase.
Acquisitions expand footprint to eight states
Kropelnicki opened the call by pointing to two transactions the company announced. First, he said the company executed an agreement to purchase the Nevada and Oregon operations of Nexus Water. Second, he said the company reached an agreement in December to purchase the outstanding minority interest in the BVRT Holdings Texas joint venture and become the sole owner of seven Texas water and wastewater utilities.
Discussing the Nexus agreement, Kropelnicki said the acquired systems represented about $109 million of rate base at year-end 2025 and a purchase price of approximately 2x rate base, which he said was consistent with the company’s disciplined acquisition approach. He also said management expects the deal to be accretive within the first year, excluding one-time integration costs, subject to regulatory approvals in Oregon and Nevada. The transaction would add about 36,000 equivalent residential units, he said.
In response to an analyst question, management described regulatory elements in the two states. Kropelnicki said Nevada has consolidated or statewide rates being phased in over six years for the water systems, statewide rates already in place for the two wastewater systems, a hybrid rate environment, a distribution system improvement charge (DSIC), and rate “coupling,” with rate cases that can be approved in about six months. For Oregon, he cited a hybrid ratemaking framework, construction work in progress in rate base, an interim rate memorandum account if a case is late, and mechanisms allowing adjustments for changes in wholesale water production costs, also with rate cases that can take about six months. He also noted that about half of the Oregon systems are non-regulated wastewater systems that Nexus has historically managed with annual rate adjustments.
For BVRT, Chief Business Development Officer Shilen Patel said the company would become the sole owner of seven regulated utilities in the high-growth corridor between Austin and San Antonio. Patel said that at the end of 2025 BVRT had more than 19,000 committed customers, with about 5,000 currently connected, an additional 20,000 “likely” in the foreseeable future, and about 100,000 potential customers in the long term as systems mature. He said the change of control transaction will require filing with Texas regulators and is contingent on approvals including the Public Utility Commission of Texas (PUCT) and Cal Water Group board approval after PUCT approval.
Regulatory updates: California decision expected “very soon”
Much of the call focused on pending and newly filed rate cases. Kropelnicki said the company is awaiting a decision in its 2024 California general rate case and emphasized that the proceeding appears active, contrasting it with what he described as a “black hole” in the prior cycle. Lynch said the company implemented an interim California rate increase of 3% in January after approval when a decision did not arrive in December.
Vice President of Rates and Regulatory Affairs Greg Milleman said the company expects a proposed decision in the California case “very soon,” citing the stage of the process and recent information requests from commission staff. Milleman said the company proposed to invest $1.6 billion in water infrastructure in the case and requested revenue adjustments over the three-year period totaling “just a little under $3 million.” He also outlined a potential timetable in which a proposed decision issued by March 5 could allow for a final commission vote as early as April 9, given the ability to vote 30 days after the proposed decision and oral arguments.
In other jurisdictions, Milleman said:
- Hawaii: In November 2025, the company filed a rate case for the Kapalua district requesting $2.2 million in annual revenues. In October 2025, the Hawaii PUC approved a $4.7 million annual revenue increase for Hawaii Water’s five Waikoloa systems, phased in over two years beginning in October 2025.
- Texas: BVRT reached a settlement with consumer advocates on its 2024 general rate case; interim rates were adopted and implemented in July 2025 and are not subject to refund, with final PUCT approval pending.
- Washington: In September 2025, Washington Water filed a rate case requesting a $4.9 million annual revenue increase, with completion and new rates expected in the second half of 2026.
Looking ahead, Kropelnicki said 2026—its centennial year—will focus on completing and integrating the announced acquisitions, advancing multiple regulatory proceedings, continuing PFAS work, and sustaining the company’s capital program, which management reiterated is its primary growth engine.
About California Water Service Group (NYSE:CWT)
California Water Service Group (NYSE: CWT) is a publicly traded holding company that provides regulated water utility services through its subsidiaries. The company delivers safe, reliable drinking water and wastewater management to residential, commercial, industrial and municipal customers across California, Hawaii and New Mexico. Its principal operating units include California Water Service, New Mexico Water Service and Hawaii Water Service, each responsible for end‐to‐end water supply operations—from source development and treatment to distribution and customer service.
Founded in 1926 as the California Water Service Company, the group has grown to become one of the largest investor‐owned water utilities in the United States by customer count.
