Good morning, ladies and gentlemen, and welcome to the California Water Service Group, Fourth Quarter and Year-End 2019 Earnings Results Teleconference. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instruction will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded.I'd now like to turn the conference over to Mr. David Healey, Vice President and Corporate Controller. Please go ahead, sir.

Thank you, Tiffany. Welcome everyone to the 2019 fourth quarter and year-end earnings call for California Water Service Group. With me today are Martin Kropelnicki, our President and CEO; Tom Smegal, our Vice President, Chief Financial Officer; and Paul Townsley, our Vice President of Business Development and Chief Regulatory Officer.Replay dial-in information for this call can be found in our year-end and fourth quarter earnings release, which was issued earlier today. The replay will be available until April 27, 2020. As a reminder, before we begin, the Company has a slide deck to accompany the earnings call this quarter.The slide deck was furnished with an 8-K this morning and is also available at the Company’s website at www.calwatergroup.com. Before looking at the year-end and fourth quarter results, we would like to take a few moments to cover forward-looking statements. During the course of the call, the Company may make certain forward-looking statements. Because these statements deal with future events, they're subject to various risk and uncertainties, and actual results could differ materially from the Company’s current expectations.Because of this, the Company strongly advises all current shareholders, as well as interested parties to carefully read and understand the Company’s disclosures on risk 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.I’m going to pass it over to Tom to begin.

Thanks, Dave, and good morning, everyone. Welcome to our annual earnings call. I'm going to start walking through the slide deck and I apologize, I realized that we don't have page numbers on the slide deck this time, but I'm going to start with the table of financial results which is on the sixth page of the deck. And that is our full year results starting with earnings per share.We had earnings per share of $1 31, that's down $0.05 or 3.7% from the earnings per share last year, for the full year. Net income was $63.1 million, that's down $2.5 million, or 3.8% from the earnings last year.Looking to the fourth quarter, our earnings in the fourth quarter on a per share basis were $0.24, down $0.08 from the fourth quarter of 2018. And our net income was $11.3 million down $4.1 million from the earnings in the fourth quarter of 2018. I will highlight, actually, for both of these slides.Our capital investments for the year were $273.8 million, that is the highest recorded CapEx that we have as a company, and is a result of a big fourth quarter for CapEx. So, looking at the bottom of that fourth quarter chart, we saw $78.8 million of CapEx in the fourth quarter, up substantially from the fourth quarter of 2018. We'll talk a little bit about that later in the slide deck.Just going to the general description of our financial highlights for the year, remember that this is the third year of our California General Rate Case cycle, the 2015 rate case in California. And this is the time when our rate relief is the most limited. What we saw in rate relief did not cover the increases that we saw in asset-related costs and wages and other operations…

Yes. Thank you, Tom. So, we filed a settlement with the California Public Utilities Commission last October, October 8th. And that was a settlement that we reached with the California Public Advocate's Office. That settlement resolved the vast majority of all of the issues that were in play in our rate case, and including in that settlement were about $609 million of new capital investments that were agreed to in the settlement, and about $200 million of capital that had been authorized in either in 2018 or prior years.There were a handful of items that were not resolved in the settlement. Those included the continuation of our Water Revenue Adjustment Mechanism or WRAM, continuation of our sales reconciliation mechanism, some balancing accounts for pension and medical costs, and then some other items including depreciation, working capital and the financing during construction.We're awaiting a proposed decision for the administrative law judge. The judge has approved interim rates going into effect as of January 1. But we've not received a PD or a proposed decision from the judge yet, either on the settled items or on the disputed items. And the commission has indicated that it is planning to issue a decision in the first-half of 2020.Tom?

Thanks, Paul. So, in light of the rate case delay, we thought it was important to note that we may have some unusual reporting in the first quarter of 2020. And the reason for that is that the management is not yet comfortable with the disputed issues in the rate case, and may elect in the first quarter earnings report, if we don't receive a proposed decision indicating the approval of these items, we may elect not to report our balancing account regulatory assets and liabilities in the first quarter earnings report.I think we will provide color, and so, we will provide a range that's out there what would have been booked had we won these issues or had we known that these issues were confirmed to be one. However, the actual results of the first quarter, if we don't get a proposed decision may not reflect these balancing accounts. And so, it may look different than our first quarter that we typically see for the company.Remember that we do have the interim rates and rates that go back to January 1. So, when a decision is issued, and the commission has currently indicated that they're expecting to issue a decision in the first-half of the year, we would be able to go back and get credit for those things in the first quarter. So, just want to make sure that we don't surprise anyone in late April, if we don't get a decision or proposed decision by them. Just be aware that that might happen.And Marty, do you want to talk about CapEx?

Yes. Thanks, Tom. So, I want to briefly update everyone on the capital program, Tom gave some of the financial highlights a little earlier. For the full year, our company-funded and developer-funded capital investments came in just shy of $274 million, which is a new record for us. That's an increase of about [[check the presentation for developer-funded] 0.8% to 1% 10:38]] compared to '18.But, the more important statistic is the quarter-over-quarter. So Q4, 2018 to Q4, 2019 we saw a 33.9% increase in capital spending. We invested $78.8 million in the fourth quarter. The increased investment of fourth quarter is really attributed two things really. One, we have the Palos Verdes Water Supply Reliability project underway, which is the largest project in the company's history. We've made really good progress on that project in the fourth quarter and that project will be wrapping up here in the second-half of 2020.In addition, we had a very mild fire season. And if you follow our story and our footprint in California, we have a very broad footprint in a lot of areas that can be affected by potential fire threats. So, it was nice to have a light fire season in 2019, and that allowed us to continue to focus on our capital program and achieve those results that we saw in the fourth quarter, which again was the 33.9% increase.In addition, the company implemented it's, at-the-market equity program, that has been designed and implemented to fund our capital needs for the next three years. We anticipate raising approximately $300 million through 2020. And through the end of the year, we've raised $19.3 million of new capital to fund our capital acquisition program. So very happy with the results of our ATM program and how that's working within the market.Business development activity, Paul, do you want to give us an update on that?

Yes. Absolutely. So, our business development activity here at the company continues to accelerate. And we signed a number of deals in 2019, that once they have become approved through the various regulatory commissions, will increase our customer base by about 4.5%. So pretty sizable increase in customer count.Just a few of them are noted here on this slide. On November 6, we announced an agreement to acquire the Rainier View Water Company, this is in Washington State. Rainier View brings 18,000 customer connections to the company. And when approved, when completed, will about double the size of our Washington operations. We've filed a change of control application with a Washington Utilities and Transportation Commission. And we expect that the commission will approve this transaction in the second-half of 2020.On December 23rd of last year, we signed an agreement to acquire the Kapalua Water Company and Kapalua Waste Treatment Company. These are on Maui and they serve a combined of thousand connections at the Kapalua Resort. And then in January of 2020, of this year, we filed an application with the California Public Utilities Commission to enable us to serve what was previously announced, which is the Preserve at Millerton, which is a greenfield development in Central California. So, a lot of activity on that front.I'm going to come back and talk a little bit more about wildfire and public safety power shut offs, also known as PSPS. As I mentioned earlier, the mild fire season was a blessing this year, that allowed us to excel on the capital side. Nonetheless, we have to remain vigilant with our program. If you recall, in 2019, we did have a number of PSPS events that took place, especially in Northern California. At one time, we had 64 locations without water. Excuse me,…

So next page, I'm going to talk about the decoupling balancing accounts. For 2019, our sales ended up at 86% of the adopted estimates in California, that's where we're subject to the WRAM and MCBA.So our net WRAM receivable went up $62.6 million, that's up from $56.1 million at the end of 2018. Our adopted sales have been adjusted lower due to the triggering the sales reconciliation mechanism that allows us to adjust our sales, when they don't meet the target, in the second and third year of a rate case cycle. And had the SRM not been in place, the WRAM balance would have been quite a bit higher about $14.9 million, higher than it is. So, we're very happy that we have had that mechanism.I'm going to turn a couple of pages forward to our CapEx. Not many changes on the CapEx table, although we do reflect the full CapEx for 2019. The projections for 2020 and 2021 are similar to the projections that we showed at the end of the third quarter, and those are the result of the rate case settlement, that we expect the commission to approve sometime in the first-half of 2020.Flipping to the next page, which is the regulated rate base. I will highlight one change here, which is that we've updated 2019. And 2019, now reflects the year-end rate base. So what was there before was a representation of the advice letter projects that we were able to get under the regulatory regime of the 2015 rate case.Most of those advice letter projects were not filed by year-end and will be filed in upcoming years, particularly the Palos Verdes Water Supply Reliability Project. And so that's a reason that that data point has come down a bit, but there's no change to the projected rate base, going forward 2020, through 2022. Those remain the same as we indicated in the slide deck in the third quarter.So Marty, you want to wrap us up here?

Yes. Thanks, Tom. So hopefully, everyone gets a sense that we are keenly focused on wrapping up our 2018 General Rate Case. As Tom mentioned earlier, there may be some noise if we start bleeding over into the second quarter without a proposed decision. And we're hoping the CPUC will conclude on our General Rate Case, which will allow us to avoid a lot of busy work that, frankly, is just expensive and doesn't provide a whole lot of marginal value. And it's just how we got to state the number. So, we're going to stay keenly focused on that.We look forward to welcoming the Rainier View employees to our company. And as Paul mentioned, we filed with the UTC, and hope to have that deal closed, sometime mid to second-half of 2020. We've been very impressed with the Rainier View employees and the processes by which they run their company, and we believe that there's a strong cultural fit with our culture, and they will be a welcome addition to our family.And then lastly, we’ll stay focused on operations, the evolving PFOA and PFOS issues preparing for wildfire season, and more PSPS outages during the year and making sure that we've maintained high quality water, while serving our customers to the best of our ability.So as you wrap up 2019, I think it was a very successful year. It's a little disappointing the rate case is getting delayed, because the company did, I think a fantastic job of trying to keep that on track. But we have to wait for the regulators now and we're going to keep doing what we do, which is invest in capital and build our company to serve our customers.So with that, Tiffany, I will open it up for question-and-answer, please.

[Operator Instructions] At this time, I am showing no questions in the queue. I will now turn the call back over to Mr. Marty Kropelnicki.

Thanks, Tiffany. I know our good friends at [indiscernible] are having their Analyst Day today. And our call is scheduled during their Analyst Day. So we'll be in the office all day. If anyone has any follow-up questions, feel free to reach out to Tom and we'll all be here, and we'll take any one-on-one questions anyone has. And thank you for your support during 2019 and we'll look forward to talking to everyone throughout 2020. Thank you, and have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and have a wonderful day.