Oct 29, 2026 earnings call — Record infrastructure investment and rate step increase
Record infrastructure investment: year-to-date investment reached $425 million.
Revenue $0.3B (est $0.3B) · EPS $1.05 (est $1.16)
Key quotes
"Given the success of our 2026 capital program, this sets us up very well to capture a big chunk of the $49 million step increase that's available."
"This sets us up to close these acquisitions before the end of the year."
"To date, we have recovered a net $59.4 million in litigation proceeds, and that amount will be used to offset the $228 million."
Analyst Q&A 3
How inflation affects expenses
Q (Davis Sunderland · Baird): Analyst asked how inflation is affecting operating and capital expenses, and whether supply chain or other costs have changed materially.
A: Management said they are paying essentially 20%-30% more for fuel year-over-year and run almost 1,000 vehicles daily, and they have been able to absorb many inflation increases into operating budgets. They noted California capital approvals (included in tariff rates) and the $49 million step increase will help offset inflation there. They also said materials and fuel costs are up but no single line item has blown up budgets, and Jim added they strengthened supply chain and advanced purchases during COVID so they are well positioned.
"One of the things I pointed out to our board yesterday when Jim and I were updating them on the financials, we are paying essentially 20%-30% more for fuel year-over-year, and we have almost 1,000 vehicles that we roll on a daily basis." — Marty Kropelnicki (CEO·CHAIR)
CapEx timing and possible delays
Q (Matvey Tayts · Freedom Broker): Analyst asked if the planned $627 million CapEx is still on track for Q4 or if some will slip into 2027, and whether everything is running smoothly.
A: Management said think in multi-year cycles, because California is 90% of the company and capital can be pushed or pulled year to year. They plan for about 10%-11% growth year over year but warned CapEx can be lumpy due to weather, permitting and other factors outside the company's control. They highlighted Prop 45 on the ballot could speed permitting and reduce one major bottleneck.
"We also say capital can be lumpy based on factors that the company can't control, like weather and permitting and so forth." — Marty Kropelnicki (CEO·CHAIR)
High nonregulated costs and dividend policy
Q (Angie Storozynski · Seaport): Analyst asked why unregulated costs are high year-to-date and whether the board targets a payout ratio or cap for dividend growth.
A: Management said unregulated costs are driven by housing business acquisition expenses there and by lower-than-normal gains from non-qualified investments; integration costs from the Nexus acquisition (about $4 million to date) are temporary and related to integration. They also said those integration costs sit in the non-regulated line and cannot be passed to customers. For dividends, they set a floor for dividend growth at 7% and target a payout ratio between 50% and 60%, which will shift over a three-year rate case cycle.
"We've set the floor for the dividend growth at 7%." — Marty Kropelnicki (CEO·CHAIR)