Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the California Water Service Group first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I will now turn the conference over to James Lynch, Senior Vice President. You may begin. Thank you, Demi.

James Lynch: Welcome everyone to our first quarter 2026 results call for California Water Service Group. With me today is Martin A. Kropelnicki, our chairman and CEO, and Greg Milleman, our vice president of rates and regulatory affairs. Replay dial-in information for the call can be found in our quarterly results earnings release, which was issued earlier today. The call replay will be available until 06/29/2026. As a reminder, before we begin, the company has a slide deck to accompany today’s earnings call. The slide deck was furnished with an 8-K and is also available on the company’s website at calwatergroup.com. Before looking at our first quarter 2026 results, I would like to cover forward-looking statements. During our call, we may make certain forward-looking statements.

Because these statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the company’s current expectations. 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, Forms 10-Q, press releases, and other reports filed with the Securities and Exchange Commission. And now, I will turn the call over to Martin A. Kropelnicki.

Martin A. Kropelnicki: Thanks, Jim. Good morning, everyone, and thank you for joining us this morning to review our first quarter 2026. There are six primary areas that we want to talk about today. The first one being, obviously, the quarter, and I would say Q1 results were in line with our expectations given the fact we had a delayed 2024 general rate case. To remind everyone, in March we did get a proposed decision and there is a comment period that follows that proposed decision, which is 30 days. Our comments were filed, and then yesterday we received what is called a revised proposed decision that I have asked Greg to talk about a little bit more in detail later in our discussion today. I will generally say that the revised proposed decision we are very happy with, and we are on the docket day for approval at the California Public Utilities Commission.

In terms of the quarter, again, the delay of the rate case meant there were items we could not book because of the delay. But given where we are, results were in line with expectations. I think the highlight of the quarter is the fact that our infrastructure investment for the first quarter was up 17%, and we continue to make good progress on our PFAS treatment and cost recovery from the polluters who polluted the grounds and the waters that we treat. On the business development side, there are two areas. We are focused on the Nexus acquisition deal, as well as we filed our change of control in Texas to advance our purchasing of a minority interest in BVRT, which is the Texas partnership that we have been involved in for the last five years.

Yesterday, at our Board of Directors meeting, our board declared a 325th consecutive quarterly dividend, and that follows, of course, the 59th annual dividend increase that we had in January. Additionally, as I mentioned on our year-end earnings call, we have officially kicked off our centennial year of operations, which means we have been going out to the regions that we operate doing employee and customer celebrations, which has gotten off to a very good start. I will talk a little bit more about that later today. Before I get into some of the details in these six subject areas, I am going to turn it over to Jim to go through the financial results. Jim, I am going to hand it off to you, please.

James Lynch: Alright. Thanks, Marty. As Marty mentioned, the proposed decision on our California 2024 general rate case is expected later this afternoon. Having said that, our first quarter results do not include the impact of the revenue requirement or any of the other provisions included in the revised proposed decision. Recall that the company does have an interim rates memorandum account and that does authorize us to retroactively apply the decision back to January 1 once it is finalized. So we are not losing out on any of the potential benefit from the rate case for the time that decision has been delayed. In 2026, revenue was $214.6 million compared to $204 million in 2025. Net income for the quarter was $4 million, or $0.07 per diluted share, compared to the prior year first quarter of $13.3 million, or $0.22 per diluted share.

Moving to slide six, you can see the impact of activity during the quarter. The primary earnings drivers were rate increases, which added $0.11 per diluted share, and accrued and unbilled revenue, which added $0.06 per diluted share. The accrued and unbilled revenue increase was due primarily to warm and dry weather during the last month of the quarter. The revenue increases were partially offset by an overall decrease in consumption for the quarter, increased depreciation and interest expense related to new capital investments, and an increase in the effective income tax rate due to a reduction in tax credits, which, when combined with other items, reduced EPS by about $0.32 per diluted share. Turning to slide seven, we continue to make significant investments in our water infrastructure to ensure the delivery of safe and reliable water.

As Marty mentioned, our capital investments for the quarter were up 17.6% to $129.5 million. Our total planned capital investments for 2026 are $627 million, and this reflects the amounts included in the revised proposed 2024 California rate case decision. It also includes our estimated expenditures in the other states. The constructive impact our capital investment program is having on regulated rate base is presented on slide eight. If approved as requested, the 2024 California GRC and Infrastructure Improvement Plan, coupled with planned PFAS investments and capital investments in our utilities in the other states, would result in a compounded annual rate base growth of over 11%. Moving to slide nine, we continue to maintain a strong liquidity profile to execute our capital plan.

We continue to pursue tuck-in M&A opportunities as we progress on the acquisitions of Nevada, Oregon, and VBRT. As of 03/31/2026, we had $58.1 million in unrestricted cash and $45.6 million in restricted cash, along with approximately $470 million available on our bank lines of credit. We maintain credit facilities totaling $600 million that are expandable to $800 million, with maturities that extend into March 2028. We also have over $340 million remaining on the shelf we filed in connection with our ATM program, after completing approximately $6.1 million of program sales during the first quarter. Importantly, both Group and Cal Water maintained strong credit ratings of A+ stable from S&P Global, underscoring the strength of our balance sheet.

Turning to slide 10, we just declared our 325th consecutive quarterly dividend of $0.335 per share. We also announced our 2026 annual dividend of $1.34 per share. This is our 59th consecutive annual increase and is 8.1% higher than 2025. And with that, I will now turn the call over to Greg to discuss the revised proposed decision on our rate case.

Greg Milleman: As Marty mentioned earlier, we received a revised proposed decision on our 2024 California general rate case yesterday, and a final decision is expected later today or shortly thereafter. The revised proposed decision provides clear visibility into revenue growth, including approximately $91 million in 2026, followed by $43 million in 2027, and $49 million in 2028. Importantly, it continues key regulatory mechanisms like the Monterey-style RAM, and authorizes cost balancing accounts such as our pension cost balancing account, health care cost balancing account, and a new general insurance liability balancing account, which help stabilize earnings despite variability in customer usage and certain operating costs.

While decoupling was not included, the decision introduces a new sales reconciliation mechanism and an updated rate design that better support fixed cost recovery. Overall, we view the revised proposed decision as constructive and supportive of continued infrastructure investment and long-term earnings stability. And now Marty will take us through the remainder of the deck.

Martin A. Kropelnicki: Thanks, Greg. Just echoing what I said early on, I am very happy with the PD that is going to the Commission today for approval. When it is approved, we will issue an appropriate press release and related 8-Ks with more of the details of what is included in that final decision. I think it is fair to say from Greg’s perspective managing our rates department and Jim’s perspective as our CFO, we are very happy with the outcome and look forward to getting the rate case wrapped up and moving on with our plans for 2026. Moving on to slide 12, just a quick update on where we are with our Nexus project. As you may recall, we announced that we reached an agreement with Nexus to acquire their Nevada and Oregon operations.

We have continued to progress very well working with Nexus. They are a great company to work with. We did file our change of control applications with both the State of Oregon and the State of Nevada. The State of Nevada has a six-month statutory decision timeline. Oregon does not. We are hoping the two will stay on track around the same time, and we could drive to close these transactions as early as by the end of the year. In the interim, the subject matter experts continue to work very well together, and we are mapping their processes into our systems. I have also had the pleasure of visiting all the sites in Oregon and Nevada and am very happy to say I was very pleased with all the employees that I met with. They are very professional and very sound operators, as well as an outstanding management team.

In addition, since we last talked, I have had meetings with all the commissioners in the State of Oregon as well as the commissioners in the State of Nevada and their staffs. Those meetings have all gone well. When we conclude this acquisition of the Nexus assets, essentially, it will give us almost 100 thousand connections outside of the State of California in total, which is about 20% of our total connections, again diversifying out of California and expanding our footprint on the West Coast. In addition, and I think this is significant and we do not talk a whole lot about it, for those of you that have been with us for a long time, if you remember in 2008 and 2009, we started talking more about water and the wastewater business and recycled water.

Back then, we really had one to two wastewater treatment plants that we operated. When we get this deal closed with Nexus as well as BVRT final buyout of the minority interest, we will have over 24 wastewater plants that we will be operating in the western half of the U.S. I think that shows our diversification out of California into wastewater and water, which I believe will play a very important role for water in the western half of the United States. Looking at slide 13, on the BVRT slide, we did file the change of control application with the Texas Commission. That is on file with them. In addition, we added another 210 connections to our existing system. We are waiting for the Texas Commission there as well, and then we will close on the minority interest that still remains in GVRT, and then that will become a wholly owned subsidiary of Texas Water Service Company.

Moving on to slide 14, we have started officially celebrating our centennial anniversary. I would encourage everyone to take a look at our annual report. Our corporate communications team headed by Shannon Dean did an outstanding job going through “then, now, and next,” which is the theme of the annual report. I am also very happy that we have had over 41 thousand people visit our centennial website, which has a lot of information about the company, the rich history of the company, and how we grew from the idea that started with three World War I veterans to being a multibillion-dollar company that we are today. If you are interested in that site, I encourage you to look at it at 100years.lwatergroup.com. In celebrating our 100-year anniversary, we have scheduled a number of events throughout the State of California that include both employees as well as local officials.

We held our first one in Bakersfield. That was a big success. We will have another one in Southern California in June. The overall goal of the program in celebrating this at a regional level is it allows us to increase awareness of the company’s track record among our local communities and our public officials that we are allowed to serve. In addition to getting people together to celebrate our success, we also are getting a lot of proclamations and resolutions, for example, from the Speaker of the California State Assembly, the City of Visalia, the City of Chico Chamber of Commerce, the Central Valley Asian Chamber of Commerce, and the San Joaquin Hispanic Chamber of Commerce, and there is more to come. It is fun to be out there talking about 100 years of service and reflecting on where we started to where we are today.

We will now open the call for questions. Yami, let us open it up for our Q&A, please, for the guests on the call.

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Operator: Thank you. You will need to press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of an Analyst with Baird. Your line is open.

Analyst: Hey, good morning, Jim, Greg. Good morning, guys. Thank you so much for the time, and I appreciate all the information here. Two questions for me, maybe a PFAS question and then a balance sheet question. I will start with the EPA talking recently about microplastics and potentially regulating some other substances outside the initial PFAS guidelines. Do you have any early thoughts on this, and specifically, might these be treatable within your current plans, or would this require further capital investment beyond what you have already laid out?

Martin A. Kropelnicki: Good question, David. Some of you have heard me talk about UCMR, which is the Unregulated Contaminant Monitoring Rule list that the EPA publishes, and they update that list every so many years. If you really want to see what is coming down the pipe—no pun intended—on water regulation, you want to monitor that UCMR list, and microplastics have shown up and evolved on that list. It is certainly a hotter topic at the EPA right now, and it is something that is in water supply. You will likely see regulations established and an MCL to make sure there are no microplastics in the water. There is more to come from the EPA on that. Obviously, they go through a scientific process and come up with standards. Those standards get handed off to the states, and the state Departments of Health are responsible for implementing those standards at the state level.

I believe we will ultimately have a standard on microplastics. I do, and I think as a society we have gotten a lot better at not putting microplastics into the ground or into the ocean. I think that part of it is improving, but I do think at some point we will have a standard that will evolve that we will have to treat for. As part of that process, the EPA will also talk about the appropriate methods and techniques to treat water that has microplastics in it. I think it is uncertain right now whether or not the current treatment that we are putting in place for PFAS will be effective for microplastics, and that will depend largely on the EPA.

Analyst: Super helpful, thank you. Maybe then just turning to balance sheet. I appreciate all the comments on liquidity and available credit, but could you talk a bit about how you are thinking about equity issuance and capital needs more broadly throughout the balance of the year?

James Lynch: I think—we feel very confident that we will be successful in closing both BVRT and the NexSys acquisitions in Nevada and Oregon. That will be incremental to our normal cadence of debt and equity issuances. We will take a look at the timing on when we anticipate that is going to occur and determine the most efficient way to approach the capital markets to fund those transactions when the time comes. There are some interesting instruments out there relative to forwards that will allow us to time it closer to minimize any dilution that could occur in terms of the difference between the time we raise the equity and the time we actually close the transactions, so we will be looking into that. We believe when the transactions close, it would likely occur towards the end of the year, and that is when I would look to raise the capital for those.

Otherwise, we would continue to rely on our ATM and our normal lines of credit taken out by longer-term debt as we work through our capital programs and fund our other capital needs. Once again, everyone—

Martin A. Kropelnicki: Jim, if you do not mind me jumping in, Dave, it is probably worth mentioning too—as you recall, we have our PFAS program, which is fairly substantial, and we have a separate application before the Commission that we are waiting to hear on because that will add further pressure on Jim on the capital side. But the flip side is we have been very successful on the litigation side. Just last week, we received another $6.5 million gross from the polluters’ trusts that have been set up. We have recovered about $66.5 million in gross receipts in our recovery process going after polluters, which nets us just about $50 million. That $50 million will be a direct offset to our PFAS program and help keep those costs lower for our customers.

So we are approaching 20–25% of those estimated PFAS costs being covered through our legal efforts, and our legal team continues to do a very good job leading our industry efforts at getting recovery on that. That will help a little bit. For some perspective, we initially anticipated two segments of the program: one is treatment and one is well replacement, with our objective to get the treatment in by 2028, and the well replacements will take longer. Of the total amount we plan to spend on PFAS, about $60 million is for the wells and the remainder is for treatment.

Analyst: Super helpful detail. I appreciate it very much, and best of luck tonight with the meeting on the GRC. It has been a long road and I am excited to have it behind us. Thank you.

James Lynch: Thank you. Appreciate it. Thanks, Davis.

Operator: If you would like to ask a question, press star 1 on your telephone keypad. There are no further questions at this time. I will turn the call back over to Martin Kropelnicki, CEO, for closing remarks.

Martin A. Kropelnicki: Thank you, Demi. Thanks, everyone, for joining us today. The big thing to watch for moving forward is what happens at the Commission today. We are hoping for approval, and we are very happy with the revised proposed decision that is on the docket for today. As we move into the second quarter, what are we going to be focused on? We have to implement the results of the rate case. While that sounds like an easy task, there is a lot involved in doing that. There is a retroactive piece that goes back to January 1 that Jim and his team will have to work on, and we will give a lot of clarity around that as we wrap up the quarter and have the appropriate disclosures in our financials for our second quarter 10-Q.

In addition, there are thousands of table changes that have to take place on the billing cycle with the new tariffs. The rates team, working with our customer service team, the accounting team, and the IT team, will be making those tariff changes and doing the appropriate testing to make sure our tariffs are accurately being billed. Assuming an approval today, we anticipate starting billing the new tariffs on July 1 of this year. In addition, we are staying very focused on our M&A side and really the Nexus transaction and the BBRT transaction, answering the Commission’s questions on the change of control applications, as well as doing all the integration work and being ready to quickly close, integrating those assets onto our platform once approved by the appropriate commission.

It is going to be a busy second quarter, and then throw in the 100-year celebrations on top of that. We have a lot going on, but the team remains laser-focused on the tasks at hand. The last thing I want to do before we hang up is note this is Greg Milleman’s last earnings call with us. If you know Greg, he is not a person that wants a lot of hoopla or fanfare, but I could not let the morning go without recognizing his contributions to California Water Service Group. We recruited Greg from Valencia Water in 2013, where Greg served as senior vice president of administration. Believe it or not, we are Greg’s third job out of college. He started off with Arthur Andersen, then went to Valencia Water, and then he joined us. We brought Greg in as a manager of special projects.

We were very impressed with him when we met Greg and did not really have a spot for him, but we thought he was a quality hire, a senior hire from within the water industry. Within a year, he was promoted to the director of operations, helping the operations team focus on deploying capital more quickly and more efficiently and making sure that plant is getting into service as quickly as possible. In 2017, he was named the interim director of rates to help lead our rate case efforts. In 2019, he was named vice president of rates for California, and then in 2022, when Paul Townsley retired, he took the helm as our vice president of rates and regulatory affairs to lead our overall rate strategy for all of our operating companies. Greg has only been with us 13 years, and from a Cal Water standpoint, that is not a lot of time—we have many employees with 30 and 40 years of service with the company—but Greg’s impact on the company has been nothing short of amazing.

If you look at our rate cases over the decade that he has been with us, we have done the best with our rate cases under his leadership and his team. I would be remiss if I did not take this opportunity to tell Greg thank you and to wish him and Jen all the best in retirement, and we look forward to keeping in touch as we do with all of our retirees. So, Greg, thank you, and with that, Demi, we will wrap it up, and we will see everyone next quarter. Thank you very much.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining, and you may now disconnect.

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CALIFORNIA WATER SERVICE GROUP

Q1 2026

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