California Water Service Group CWT posted first-quarter 2026 earnings of 7 cents per share, down 68.2% from 22 cents a year ago. The figure missed the Zacks Consensus Estimate of 25 cents by 72.0%.
The earnings shortfall reflected cost pressure across the income statement. Total operating expenses rose 8.1% year over year to $196.4 million, outpacing the growth in operating revenues.
CWT’s Revenues
Quarterly revenues were $215 million, up 5.2% from the year-ago period. The top line came in below the consensus mark of $218 million by 1.38%.
Operating revenues increased $10.6 million year over year, supported by rate-related items and higher accrued and unbilled revenues. At the same time, customer usage declined, pressuring billed consumption for the quarter.
CWT’s management attributed the usage decline to climate variability between the periods, while noting that rate changes and higher accrued and unbilled revenues contributed meaningfully to quarterly revenues. This mix underscores the company’s continued reliance on regulatory constructs and billing dynamics to smooth results through seasonal demand swings.
California Water Service Group Price, Consensus and EPS Surprise
California Water Service Group price-consensus-eps-surprise-chart | California Water Service Group Quote
CWT’s Operational Highlights
Water production costs increased $8.3 million year-over-year to $71.3 million, driven primarily by higher wholesale water rates. Depreciation and amortization also climbed to $40 million as additional capital assets were placed into service.
During the quarter, CWT announced an agreement to acquire Nexus Water Group’s water and wastewater systems in Nevada and Oregon for approximately $218 million. The transaction is expected to add about 36,000 customer equivalent residential units and roughly $109 million of rate base, expanding the company’s footprint beyond California.
CWT continues to invest heavily in its regulated systems, a strategy that supports long-term rate base growth but also raises near-term non-cash costs. The quarter’s step-up in depreciation expense reflected ongoing infrastructure work and new assets entering service.
The company’s expense profile also showed higher financing-related pressure. Net interest expense increased to $18.6 million from $15.7 million in the prior-year quarter, which further weighed on profitability as capital spending and funding needs expanded.
California Water Rate Case Milestone and Catch-Up
A key near-term swing factor remains California Water Service’s 2024 California General Rate Case. The company received a revised proposed decision on April 29, 2026, and received final decision yesterday.
Importantly, the decision authorizes incremental revenues of $90.5 million in 2026, plus additional increases of $43.2 million in 2027 and $48.9 million in 2028. The filing also supports revenue stabilization through continued Monterey-Style mechanisms and additional balancing accounts, along with a new sales reconciliation mechanism aimed at improving fixed-cost recovery.
CWT’s Financial Highlights
CWT ended the quarter with $58.1 million in unrestricted cash and $45.6 million in restricted cash. The company also highlighted access to revolving credit facilities totaling $600 million, expandable to $800 million, with maturities extending to March 2028.
Long-term debt as of March 31, 2026, was $1.472 billion compared with $1.471 billion as of Dec. 31, 2025.
Strategic activity remains in focus. Shareholder returns stayed intact despite the earnings miss. The board declared a quarterly dividend of 33.50 cents per share, marking the 325th consecutive quarterly dividend, and communicated an expected annualized dividend of $1.34 per share following its 59th annual dividend increase.
Cash flow from operational activities in first-quarter 2026 was $49.4 million compared with $38.4 million in the year-ago quarter.
CWT’s Zacks Rank
California Water currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
American States Water AWR is slated to report first-quarter 2026 results on May 6, 2026, after market close. The Zacks Consensus Estimate for AWR’s first-quarter EPS is pegged at 77 cents, implying an increase of 10% from the prior-year figure. Long-term (three to five years) earnings growth is pegged at 6.93%.
Essential Utilities Inc. WTRG is scheduled to report first-quarter 2026 results on May 7, 2026, before market opens. The Zacks Consensus Estimate for WTRG’s first-quarter EPS is pegged at $1.01, implying a decrease of 1.94% from the prior-year figure. The company has a dividend yield of 3.47%, better than its industry’s 2.59%.
Consolidated Water Co. Ltd CWCO is set to report first-quarter 2026 results on May 12. The Zacks Consensus Estimate for CWCO’s first-quarter EPS is pegged at 27 cents, implying a decrease of 12.90% from the prior-year figure. The company has a dividend yield of 1.73%.
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California Water Service Group (CWT): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).