Q1 2025 California Water Service Group Earnings Call
Okay.
Desert Rain: Ladies and gentlemen, thank you for standing by my name is desert rain I will be your conference operator today at this time I would like to welcome everyone to the California Water Service group first quarter 'twenty 25 earnings call. All lines have been placed on mute to prevent any background noise.
Desert Rain: After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question shrink. This time simply press star followed by the number one on your telephone keypad if.
Desert Rain: If you would like to withdraw your question again press the Star Wise I would now like to turn the conference over to James Lynch Senior Vice President Chief Financial Officer, and Treasurer, you may begin.
James Lynch: Thank you <unk> welcome.
James Lynch: Welcome everyone to the first quarter of 2025 results call for California Water Service group with me today is Martin <unk>, our chairman and CEO.
James Lynch: Replay dial in information for this call can be found in our quarterly results earnings release, which was issued earlier today.
James Lynch: The call replay will be available until June 30 of 2025.
James Lynch: As a reminder, before we begin the company has a slide deck to accompany today's earnings call slide deck was furnished with an 8-K and is also available on the Companys website at Www Dot Cal water group Dot com.
James Lynch: If we're looking at our first quarter of 2025 results I'd like to cover forward looking statements.
James Lynch: During our call we may make forward looking statements and because these statements deal with future events. They are subject to various risks and uncertainties.
James Lynch: Actual results could differ materially from the Companys current expectations.
James Lynch: As a result, we strongly advise all current shareholders and interested parties to carefully read the company's disclosures on risks and uncertainties found in our Form 10-K Form 10-Q press releases and other reports filed from time to time with the Securities and Exchange Commission.
Marty: Now I will turn the call over to Marty.
Marty: Thanks, Jeff and good morning, everyone and thanks for dialing in this morning to review our Q1 2025 results.
Marty: We have a few items on the agenda today, one will talk about the strong first quarter and just to remind everyone. We are in that.
Marty: Third year of the general rate case in the state of California, which is our largest subsidiary into the first quarter is one of our more challenging quarters, but Q1 of this year actually we.
Marty: We did surprisingly well.
Marty: We want to keep an update on our progress with the 2024 general rate case, which remains on track talked about a couple of favorable decisions that we've had in both California and Hawaii other regulatory items.
Marty: Finally give you an update on what's happening with the annual water supply.
Marty: The west and so before going into our topics today I am going to turn it over to Jim to walk us through the financials, which Jim I think are a little confusing, but I think in the press release in the back there is a reconciliation there.
Speaker Change: <unk> found very helpful. Enel has preparing for today, so Jim on the priority.
Marty: Thanks, Marty and what Marty was referring to is we did present non-GAAP information.
Marty: In our press release, and we will be discussing some non-GAAP information on todays deck as it relates to 2024 as we've discussed on previous calls the company's delayed 2021 general rate case decision resulted in interim rate relief, which is reported in 2024 and reporting the first quarter 2025 result.
Marty: As we present, both GAAP and non-GAAP financial measures with the non-GAAP financial measures in place to remove the impact of the 2023 interim rate relief from the 2024 results.
Marty: On a GAAP basis operating revenue for the quarter was $204 million compared to $277 million in the first quarter of 2024 and net income attributed to group was $13 3 million or 22 per diluted share compared to $69 9 million or $1 21.
Marty: <unk> 21 per diluted share in Q1 of 2024.
Marty: Interim rate relief recorded in the first quarter of 2024 that related to 2023 included revenue of $93 million and net income of $65 $8 million for $1 14 per share when we adjust for the Q1 2020 for interim rate relief first quarter revenue.
Marty: Increased 13% over non-GAAP 2020 for revenue of $185 million.
Marty: In addition, first quarter net income and diluted earnings per share increased 225% and 214% respectively. Over Q1, 2024, non-GAAP income of $4 million $4 1 million and non-GAAP earnings per share of <unk>.
Marty: Moving to our diluted earnings per share bridge. The primary drivers for first quarter 2024 hour rate changes and increases and increased customer usage, which contributed <unk> 20 per share and approval of two advice letters wanted to recover drought expenses and wanted to recover expenses related to the palace.
Marty: Today's pipeline project that together contributed <unk> <unk> per share.
Marty: Offsets included water production wholesale costs and customer usage increases of eight cents per share and <unk> per share and higher depreciation expense due to new assets placed in service.
Marty: We're really pleased with the outcome of both the Palo Verde and drought advice letter decisions and Marty is going to provide some more information on these decisions a little bit later in his remarks.
Speaker Change: Turning to slide seven we continue to make significant investments in our water infrastructure to ensure that delivery and safe reliable water service.
Speaker Change: Capital permanent capital investments during the quarter totaled $110 $1 million a pace that was consistent with the record quarter. We reported in Q1 of 2024.
As a reminder, our capital investments do not include estimated $222 $5 million of remaining <unk> phosphate project expenditures.
Speaker Change: Estimates for 2025 through 2027 are predicated in part on the outcome of our 2024 general rate case in California, and normal capital needs and our other subsidiaries.
Speaker Change: We expect our annual capital expenditures to increase during the next five years due to the continuing need to replace and maintain our water infrastructure.
Speaker Change: Turning to slide eight the positive impact of our capital investment program as demonstrated in our regulated rate base growth presented on the slide <unk>.
Speaker Change: If approved as requested the 'twenty 'twenty, four, California, DRC and infrastructure improvement plans with our other planned capital investments and other states would result in a compounded annual rate base growth of approximately 11, 7%.
Moving to slide nine we continue to maintain a strong liquidity profile as of March 31, 2025, we had $44 5 billion and unrestricted cash of $45 $7 million in restricted cash and $315 million and availability on our credit lines.
Speaker Change: <unk>.
Speaker Change: We continue to maintain strong equity and debt credit ratings.
Speaker Change: And with the cost of capital extension in California through 2026 are authorized 10, 7% ROE will be applied to our support of equity percentage in our authorized capital structure of 53, 4%.
Speaker Change: With that I'll turn the call over to Marty for a few additional remarks, thanks, Jim I'm on slide 10, and I am pleased to report the estimate our board of directors approved a 321 consecutive quarterly dividend in the amount of <unk> 30, a share as a reminder, in January of this year, we announced a dividend increase of eight share plus a special.
Speaker Change: A one time increase of four cents a share bringing the annual dividend from $1 24 up from $1 12, the dividend increase for 2025 represents about a 10, 7% dividend increase and gives us a five year compound annual growth rate of seven 7% on the dividend line, which we think is great.
Speaker Change: A number.
Speaker Change: The special one time dividend was met and approved by our board of directors to reward our stockholders, who dealt with until late 2021 general rate case and the financial challenges.
Speaker Change: It brought forth with that.
Speaker Change: <unk>.
Speaker Change: <unk> some of the financial reporting that Jim's been working on and I think has done a good job with the financial statements this quarter.
Speaker Change: Looking to slide 11, moving on to some stuff on the regulatory side.
Speaker Change: The California 2021 General rate case continues to move forward on schedule. Following the issuance from the California public advocates they're basically review Northern report of our rate case, we submitted our rebuttal testimony and we participated in settlement discussions during the month of April.
Speaker Change: While we are not able to reach a global settlement with the California public advocates we are now working to identify areas of agreement in order to streamline the upcoming evidentiary hearings, which will take place. This month the month of May.
Speaker Change: We remain confident in our test in a way that we provided in the rate case I think as most of you know we.
Speaker Change: Pat.
Speaker Change: The last three cycles, we've invested heavily in how we plan for capital in our capital programs and we remain confident in our testimony and we look forward to moving into the evidential hearings pace at the process with the commissioner and with the judge.
Speaker Change: Moving on to Slide 12, a couple of other things that are noteworthy on the regulatory side.
Speaker Change: First and foremost as part of the 2021 general rate case decision, we're authorized to get.
Speaker Change: What's called an annual escalation rate and so our 2025 that was filed.
Speaker Change: It is subject to an earnings test and I'm very pleased to report that the majority of the majority of our districts pass that earnings test.
Speaker Change: And it represents a $27 2 million.
Speaker Change: Additional revenue requirement that was adopted for this year. These.
Speaker Change: These rates went into effect on January 1st in addition in California. The palace their knees excuse me palisade as peninsula water reliability project, that's what happens when you lap engineers named projects they can rely on.
Speaker Change: So I called the <unk> project is the largest project in the company's history, which is replacing about 15 miles of main.
Speaker Change: And kind of downtown Palo Verde as an urban area in January we received a final decision approving the inclusion of $14 $2 million of incremental capital cost for this project. So that's been added to rate base. In addition, the decision allows us for a temporary surcharge to recover three.
Speaker Change: $8 million of carrying costs associated with that project.
As new base rates were implemented in February and the surcharge in late April sales for last month.
Speaker Change: In addition in California in January we received approval to recover $1 $4 million in drought related costs that have been tracked through dreamer account.
Speaker Change: Related surcharges were implemented on April one of this year looking at a couple of other regulatory events that are happening around our systems turning to Hawaii. During the first quarter, we reached a settlement with the kind of poly general rate case with the Hawaii consumer advocates a settlement that's attached to revenue of $7 $5 million. So thats.
Speaker Change: At $1 $1 million increase in revenue.
Speaker Change: So that will be going into effect later this month.
Speaker Change: And then lastly, kind of looking on to slide 13.
Speaker Change: Looking at our water supply going into the spring that's always a hot topic out west with the climate change overall, it's been a very healthy winter out here on the West coast.
Speaker Change: We have a strong snow pack and overall in California was 99% of normal for the month of April.
Speaker Change: For those of you that know the topography associated with California. The Sierras, it's a very very long range.
Speaker Change: So you can be as far south to southern California down in L. A and all the way up.
Speaker Change: Well pass Tahoe, and northern California, So the range would then.
Speaker Change: The range is 85% to 120%, but overall, we're about 99% of normal snowfall for the state of California. This coupled with a very heavy rainfall during the winter and spring months.
Speaker Change: It's put us in really good shape and the major reservoirs remain above historical averages and we feel really good about the decision California's going into going into the summer months.
Speaker Change: We do not expect any other water supply issues in other states, including Washington, New Mexico and for the majority of Hawaii, Although in West Maui.
Speaker Change: Yes, now it continues to be in a drought and targeted conservation efforts are underway, but we do not expect any material issues in that area.
Speaker Change: Hawaii is a state that we're spending.
Speaker Change: Maybe the simplest way, taking a lot of lessons learned in California, and our conservation programs and applying that to states that have newer issues associated with drought and drought management. So we're taking a lot of it is lessons learned in California, and a planned outage in our conservation programs in the West Maui area.
Speaker Change: So with that moving to slide number 14 looking at the year ahead as I mentioned at the beginning it is the third year the rate case cycle in California. This is historically a period, where we see heightened regulatory lag and that coupled with market volatility inflation and the potential for tariff.
Speaker Change: Tariff effects on a lot of the goods and services, we use during our construction products projects means that tight management of controllable expenses remains a priority and it will be throughout the year.
Speaker Change: In addition to staying focused on the budget and the execution of our capital plans keep.
Speaker Change: Keeping the general rate case on focus and to avoid any major delays like we saw in 2021, I will say I've been generally pleased with the feedback we've been getting from the advocates are commissioner's office and the judge offices in terms of doing everything they can to keep the rate case on schedule, which I think is really good news.
Speaker Change: News looking.
Speaker Change: Looking at our growth strategy the ongoing Greenfield development that we have in Texas has continued to develop very very well and continued strong results. So we plan to stay focused on that South Austin corridor, which continues to grow and we're also continuing to evaluate a number of domestic M&A opportunities, although I just want to be.
Speaker Change: The main growth objective of California water service group really is the rate base growth that Jim talked about earlier in the slide deck and that 11, 7% compound annual growth rate. So M&A is a supplemental growth losses for us.
Speaker Change: Additionally, as we go into the warmer summer months, we want to maintain our best in class customer service and our water quality equal Scholes of no primary or secondary water quality violations.
Speaker Change: Obviously, we got a lot of infrastructure investment to do over the remaining nine months of 2025, especially coming out of a wet winter as Jim referenced we kept at the same pace that we had last year and the quarter on the capital investments, which we're very happy with given the fact it was a very very wet winter in California and that tends to slowest.
Speaker Change: Down on the construction management side.
Speaker Change: And of course lastly, today between May 1st flavors.
Speaker Change: Facial startup fire season, and so our teams are busy.
Speaker Change: All of the wildfire hardening projects that we do a refresh et cetera, getting all the equipment ready for the long drive summer months that lie ahead.
Speaker Change: So with that overall it was a very good quarter, we're very pleased with the results.
Speaker Change: Financial results again, I'll apologize that they're confusing, but again that was.
Speaker Change: The company can control and again I would just call your attention to the non-GAAP information that Jim provided in the <unk> to look at the quarters on a more normalized basis, and so desert right with that let's open it up to questions. Please.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and trying to queue.
Speaker Change: We'd like to thank you for your question simply press Star. One again, if you are called upon to ask a question in a listening via speaker floating a device based.
Speaker Change: Pick up your handset they assured that your phone is not on mute and asking a question again press star one to join the queue.
Speaker Change: And our first question comes from the line of Angie <unk> with Seaport. Your line is open.
Angie: Thank you.
Angie: I wanted to talk about the California Juris day, we haven't seen a settlement, even though we were hoping for.
Angie: So just wonder.
Angie: Can you just give us a sense for example, what are the key.
Angie: Point of contention here is the decoupling is that O&M expense capex, just any sense of.
Angie: Maybe for <unk>.
Speaker Change: From a different angle where.
Angie: What can you agree.
Angie: With that with the consumer advocate thank you.
Angie: Yeah. Thanks Angie.
Speaker Change: As I mentioned in my previous comments, obviously, we did not reach a global settlement with the Cal advocates and.
Speaker Change: Because we are settlement discussions I really can't get into the details of that but to the comments I made were obviously going through a process right now and identifying areas that were non contested and that will be submitted to the judge and the pretty high pre hearing conference as we move into the hearing and part of the process. So we really.
Speaker Change: Can't say a whole lot.
Speaker Change: Other than it's moving forward and again, even with the US are not enabled reached a global settlement with the commission the.
Speaker Change: The commissioner of the judge and advocates have all indicated the desire to keep the rate case on schedule. So I anticipate this next phase going through their hearing compliance will continue to move on schedule as has the rest of the rate case, so can't really say much more than that right now, but obviously, we'll be flat be filing briefs and stuff et cetera.
Speaker Change: With the PUC here during the month of May.
Speaker Change: Okay. That's all I had thank you.
Speaker Change: Thanks, Andrew you have a good day.
Speaker Change: Our next question comes from the line of BB Sunderland with Baird. Your line is open.
Speaker Change: Hey, Marty good morning, guys. Thank you for taking my question.
Maybe.
Speaker Change: If I could start I actually would like to piggyback on Andy's question, just about the CRC and thank you Marty for the updates on this.
Speaker Change: Just trying to get a frame of reference for the 2021 <unk> and when you guys were able to see for the first time, Hey, this might get delayed or it's getting off the rail is a little bit. How is this case progressing relative to that one and I guess any insight to compare that to or what that inflection point was if you can see what im getting at would be helpful. And then maybe one follow up.
David: That's a very good question David.
Speaker Change: <unk>.
Speaker Change: 2021 rate case right out of the chute.
Speaker Change: There were significant disagreements.
Speaker Change: Hello advocates and us and.
Speaker Change: Not only disagreements it was hard to even get people in and around data even early really talk about it.
Speaker Change: So you add that any at Covid and the fact that the commission was still on a work remote basis.
Speaker Change: Theres just a lot of different factors then to now to me. The most significant factor that I'm tracking is kind of what are what are people, saying and so I go back to.
Speaker Change: Commissioner Baker's clearly indicated in public comments, he thinks California used to do a better job at any rate cases done on time I think that's a big positive comment we didn't have that before in the last rate case. The fact that the Cal advocates and our discussion even though we couldnt reach a global settlement have indicated they want to do everything they can to get the rate case on time.
Speaker Change: And then the judge I think the judge that we have a sign of this case I think he is he is unbiased I think he is very.
Speaker Change: Focus on the procedural law, which I think is a very good thing and he is driving the rate case process really hard. So I think to me. The big thing is kind of what the parties are staying involved in the process and the fact, they are saying that you didn't have a whole lot of that going on in the last rate case, and I think a big stumbling block was.
Speaker Change: The fact, you were coming out of Covid and people cannot get around even talk so I look at how the comments are lining up they're very consistent everyone's, indicating a desire to get this rate case done on time.
Speaker Change: Didn't know comments like that in the last rate case cycle. So I'm a lot more bullish. This time, obviously you can hit a procedural snag as they go through the process, but look we're almost a year and I guess, we're 10 months into a 18 month process and so far every indication we've had is it staying on schedule.
Speaker Change: Which I think is a good sign.
Speaker Change: That is super helpful and thank you for that and then maybe if I could just ask one more you mentioned tariffs or potential impacts and managing costs throughout the rest of the year.
Speaker Change: I don't know if you could share any more just about how you guys are baking in potential elevated costs or the impact of rerouting supply change into your outlook for the year or specifically, if there's any meaningful year over year comps the rest of the year that we should consider as it relates to costs and thank you again.
Speaker Change: Yeah.
Speaker Change: That's another good question I think it's still too early to tell.
Speaker Change: If you look at the volatility associated with comments coming from the administration about the effects of tariffs who is going to be tariff, who is not going to be tariff, what's going to be tariffs, which companies, which countries are negotiated which countries are not.
Speaker Change: So I still think it's a little too early to tell obviously and what we do and especially given our large construction project.
Speaker Change: We have stopped that come from all around the world panel boards have chips chips come from Taiwan.
Speaker Change: We have steel and pipe and boast both PVC and steel that's manufactured domestically at some of that comes from foreign sources.
Speaker Change: Some of the steel thats manufactured domestically as iron ore of that comes from Europe. So it's a very very very kind of murky situation.
What I would say and this is why I remain guardedly optimistic as we went through supply strained constraints during COVID-19 and our materials management team and our engineering management team program management teams.
Speaker Change: We're able to navigate those supply constraints without disrupting our capital flow and our ability to get capital in the ground. So.
Speaker Change: Up to this point, we've managed it likewise, we've had a fair amount of inflation in the last two years, we have been able to manage a saar that inflation and still maintain our earnings momentum and our growth momentum. So I remain guardedly optimistic, but I'd be lying to you if I had a crystal ball Davis and I look at the economic indicator.
Speaker Change: And say Oh, there's clear sailing ahead, because clearly the market is not saying that and so for us it's.
Speaker Change: Continue to button down the hatches continue to make sure that you are managing your over time your expenses.
Speaker Change: Obviously, we have things like wildfire management programs, we have to do we're not going to cut costs on that but do everything. We can do is keep everyone focused on kind of a disciplined budgetary approach and then being able to adapt to those things when they happen and so Cal water's adequate history of being able to hit their budgets during difficult times, and we will maintain Jim anything.
Speaker Change: You want to add on that yeah, I think Marty the only other thing I would mention Davis is.
Speaker Change: Financial markets have been whipsawed over the last well since since April the beginning of April.
Speaker Change: We're continuing to keep an eye on what's happening in the in the.
The debt markets as well as the equity markets in terms of our future financings.
Speaker Change: Right now Theres a lot of volatility out there and so we're hoping that as we go from the second to the third quarter that volatility kind of settles down and we will have a better sense of whats available and the timing with which we want to enter the debt and equity markets, but.
Speaker Change: To where we are right now we're in a really strong <unk>.
Speaker Change: <unk> in terms of our short term availability of financing to continue our our.
Speaker Change: <unk> initiatives and so we'll just kind of keep an eye on and hope for the best in terms of getting a little more.
Speaker Change: I guess settled down financial markets that we can take advantage of later in the year.
Speaker Change: Okay.
Speaker Change: This is great. Thank you both I appreciate it.
Speaker Change: Thanks, David I have a good day.
Speaker Change: Our next question comes from the line of Jonathan Reeder with Wells Fargo. Your line is open.
Jonathan Reeder: Hey, good morning team how are you.
Speaker Change: Hey, Jonathan.
Speaker Change: So it sounds like Marty the Q1 results were a little better than your internal expectations can you just kind of elaborate on what drove that beyond what the waterfall chart shows.
Speaker Change: Was it higher usage now that you are no longer decoupled or were there, perhaps some favorable expense timing issues.
Marty Davis: Jonathan It was it was.
Speaker Change: A number of things one obviously, when we had the delayed general rate case.
Speaker Change: Jim did a really good job with the financing really buttoning down the budgets.
Speaker Change: So while the rate cases delayed we really just we cut spending are in place we cut until I got the rate case decision kind of put in place. So we had to really prioritize our capital where we're spending it at any of the discretionary spend that the company had so.
Speaker Change: I think in operations. The team has continued to do a good job with their budgets, even though we've loosened some of those budgets up once we got the rate case resolved. So I think you can kind of start with that.
Speaker Change: And in addition to that I think the water mix in this rate case.
Speaker Change: Much more closely aligned to what actual is and if you recall when we are decoupled you had some big.
Speaker Change: Big differences between adopted actual so the fact that the water mix is tracking closely together means that.
Speaker Change: On the rate cases is a more accurate forecast I think that's helping us.
Jonathan Reeder: I mean, youre absolutely right, Jonathan you follow us for a while usually when it is the third year of the rate case.
Jonathan Reeder: We always tell people don't expect anything in the first quarter and so I was really happy with the quarterly results year over year increase in earnings.
Jonathan Reeder: And we'll just have to keep executing to the plan and again to the question of Davis SaaS, there is going to be curve ball thrown at us with everything that we're seeing in the market and I think our ability to absorb those curve balls, we're positioned really well, whether it's liquidity in the balance sheet that we have right now are our ability to re prioritize capital and <unk>.
Jonathan Reeder: <unk> to meet our obligations and goals for the company for the year.
Jonathan Reeder: Water mix rate case.
Jonathan Reeder: And tariff differences is what I would attribute to you as well as good kind of budget management by the operating teams within Cal water.
Jonathan Reeder: Yes, and then we did get.
Jonathan Reeder: From a from a usage perspective, we were at at authorized into the first couple of months.
Jonathan Reeder: The third month in March we got a little bit of wet weather colder weather as compared to last year and so that brought us back close to where we were last year about the same time, so year over year, a little better.
Jonathan Reeder: Usage, then we saw we were hoping for a little bit better better usage than what we saw.
Jonathan Reeder: But but I think it didn't not having the Ram did not hurt us in any way.
Jonathan Reeder: In Q1, yes, Jim I think the other again, so it's worth it to us or the step increases and <unk>.
Jonathan Reeder: At $27 million step increases you're starting to see the effect of that into.
Jonathan Reeder: And of the tariffs and it used to be if you go back to rate cycles, our step increases would be $4 million, maybe $10 million. So because we've done a much better job of executing our capital plan the amount of uptake that we get on our step increase has been a lot higher and that step increase basically it into place.
Marty Davis: Shai offset but it is subject to an earnings test and that earnings test is based on invested capital. So that plays into this as well, yes, So I guess Marty.
Jonathan Reeder: Initial comments were well it has a lot of things Jonathan.
Speaker Change: What kind of go through some of them, but we can't point to one individual kind of pop that benefited the company in Q1, it's just a culmination of a number of items.
Jonathan Reeder: Alright, great.
Jonathan Reeder: Like things are on track and hopefully you can keep them that way throughout the remainder of the year.
Jonathan Reeder: I did want to shift quickly to the DRC.
Jonathan Reeder: Previously you mentioned that a settlement could potentially come either before or after the hearings.
Jonathan Reeder: And as such do you believe a more expansive settlement.
Jonathan Reeder: Or even a global settlement could still be achievable or is based on the comments youre, making today has that ship sailed.
Jonathan Reeder: Yeah.
Jonathan Reeder: I don't know if I can really honestly answer that Jonathan I mean, one of the things we did when we couldnt reach a global settlement, we went back and we looked at.
Jonathan Reeder: Previous rate cases, with other water utilities in the state and its really been a mixed bag.
Jonathan Reeder: We've seen.
Jonathan Reeder: Where theres been a fully reach settlement, but then it takes.
Jonathan Reeder: <unk> months to a year and a half to get that.
Jonathan Reeder: Settlement approved within the commission.
Speaker Change: We've seen two of the companies get a settlement being done close to being on time. So it's been really kind of a mixed bag and thats why I go back to kind of in my analysis Whats the commissioner, saying because the commissioner assigned hearing officer once the judge, saying and what are they advocate, saying.
Speaker Change: And I suppose there is always a chance you could still reach a global settlement here during the month of May but the indicators. We are as we're moving into the kind of the pre conference hearings in.
Speaker Change: Taking their report in our report and things that are identified that there is no disagreement and we're identifying those are also that that to the judge and then see what he says so I suppose there is always hope but from my position.
Speaker Change: Im happy things are tracking on schedule.
Speaker Change: Couldn't reach a global settlement or can we still reach something hard to tell but we need to proceed as if we're not going to and head into the the hearings in may and see where it goes from there, but generally very happy with the fact that the commissioner.
Speaker Change: Advocates and the judge have all been aligned saying the same thing oriented you everything we can to get this rate case on time.
Speaker Change: Jim I just wanted to I guess, the only thing I'd add Jonathan is remember theres kind of two areas that.
Speaker Change: Where there was significant.
Speaker Change: Differences between us and the Cal advocate that being the approach to the decoupling.
Speaker Change: Decoupling.
Speaker Change: Second is we identified some significant capital expenditures that are required in our system.
Those two.
Speaker Change: <unk>.
Speaker Change: Aspects of our rate case or kind of permeate throughout a lot of different elements within the rate case, and so there was a big difference between where we were coming from and where Cal Africa was coming from on the larger issues and so it's not really a surprise that.
Speaker Change: We weren't able to get a global settlement, but I think if we can knock out some of the smaller items that Marty was talking about it puts us in a good position I think to move forward timely on the case.
Speaker Change: Yes, sorry, I was going to say like I mean in the past you've kind of reached.
Speaker Change: Call it a partial settlement.
Speaker Change: I mean, it sounds like that's what you've kind of got here again with some of these undisputed items that.
Speaker Change: Take those off the table, but.
Speaker Change: Like you said, Jim I mean based on the last year see capex be coupling those are major issues that ultimately had to get fully litigated and it.
Speaker Change: It sounds like Thats, where we are again this time around.
Speaker Change: Yes, I think Thats right, Jonathan I think Thats right and Thats why this next step looking at their report our report lining up things that there is no disagreement on it and submitting that to the judge.
Speaker Change: That may very well take those elements off the table and then we just focus on the major areas of disagreement which which would be on a rate design decoupling et.
Speaker Change: Et cetera.
Speaker Change: Yes, Okay, and then last question for me and I apologize if you did mention it but where do you stand on renewing the ATM program and what size do you think you'll need when you do renew it.
Speaker Change: So we're in the process of kind of working with banks and whatnot, we do intend to renew it.
Speaker Change: It will probably be the spring sometime early this spring, we always like to have that availability for us to take advantage of the equity markets win win opportunities.
Speaker Change: The timing is right for us to do so.
Speaker Change: At this point, we're still in the process of reviewing with our Finance Committee.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: The ATM and the different features that we may we may want to pursue on it but I would expect we would announce something probably early spring here.
Speaker Change: Not too distant future.
Speaker Change: Okay, great. Thanks, so much for the time this morning.
John: Alright, Thanks, John Thanks, Jonathan.
Speaker Change: There are no more further questions at this time I would like to turn the call back over to Mike Koppel Nikki for closing remarks.
Mike Koppel: Great. Thanks does right well thanks, everyone for joining US today Q1 is done and in the books as they say and we'll move on to Q2, and obviously as things change.
Mike Koppel: Change with the general rate case, we will look forward to updating everyone in July for our second quarter earnings call. So thanks for calling in today and any questions feel free to reach out and everybody have a great day. Thank you. Thank you.
Mike Koppel: This concludes today's conference call. Thank you all for joining and you may now disconnect.
Mike Koppel: [music].
Mike Koppel: Yeah.