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California Water Service Group (NYSE: CWT ) Q3 2015 Earnings Conference Call October 29, 2015 11:00 ET Executives Thomas Smegal – Vice President and Chief Financial Officer Martin Kropelnicki – President and Chief Executive Officer Analysts Jonathan Reeder – Wells Fargo Spencer Joyce – Hilliard Lyons Operator Good morning, ladies and gentlemen. Welcome to the California Water Service Group Third Quarter 2015 Earnings Results Teleconference. This call is being recorded. I would now like to turn the meeting over to Mr. Thomas Smegal, Vice President and Chief Financial Officer. Please go ahead, sir. Thomas Smegal Thank you, Dana. Welcome everyone to the third quarter earnings call for California Water Service Group. With me today is Martin Kropelnicki, our President and CEO. A replay of today’s proceedings will be available beginning today, October 29, 2015 through December 29, 2015 at 1-888-203-1112 or at 1-719-457-0820 with a replay pass code of 6725942. Before looking at this quarter’s 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 are subject to various risks 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 risks and uncertainties found in our Form 10-K, 10-Q and other reports filed from time to time with the Securities and Exchange Commission. Now let’s look at our quarterly results. I am going to go through the income statement and some financial highlights and then turn it over to Marty for some other comments. For the third quarter, our net income was $25.1 million compared to net income of $33.7 million in the same period last year for a decrease of $8.6 million rather, earnings per share $0.52 on a fully diluted basis for the quarter as compared to earnings per share of $0.70 in the third quarter of ‘14. In the third quarter of ‘14, the company had received the benefit of the August Cal Water rate case decision by the CPUC. As part of that decision, the company had realized $6.8 million of net income related to interim rates that covered the period from January through June of 2014. Also in the third quarter 2014, the company realized a $2.3 million tax benefit. This tax benefit did not recur in 2015. These two items cover the bulk of the change in earnings for the quarter. Revenue accrual, which you will recall, was a drag on earnings in the second quarter rebounded to some extent, as I will discuss in a moment. Before proceeding to revenue and expense changes, I want to point out and highlight two financial items from the quarter. First, the company’s capital construction was $42.5 million for the quarter, bringing the total for the first nine months of 2015 to $118.3 million. Over the last four quarters, which includes the fourth quarter of ‘14, our construction spending has been over $160 million. We now expect capital construction on the high end of our annual estimate for 2015 and that estimate was $125 million to $145 million. Capital spending, as you will recall on our facilities, which are included in regulated revenue requirement, the primary growth driver for the company’s revenue and net income in the long-term. Second thing I would like to point out. The company’s decoupling balance called the net WRAM receivable shrank slightly to $42.5 million at the end of the quarter despite a 19% water sales decline. The account benefited from $23.6 million of drought surcharges on customers who exceeded their water budgets in the quarter. Since the WRAM balance is recovered through future collections from all customers, the drought surcharges on high users are benefiting the majority of customers who are conserving. Now, let me get back to revenue and expense details for the quarter. Our revenue was down, was $183.5 million, down 4% or $7.6 million. Again, this has to do in most part due to the rate case recognition in ‘14. $10.3 million of extra revenue had been recognized in the third quarter of ‘14. We had a $1 million decrease due to rate changes and balancing account entries. We did have $3.9 million increase in our estimate of unbilled accrued revenue. Average bills at the end of September, which include the effective drought surcharges, were higher than the average bills in June. So, we do see a little bit of a rebound in that factor. Our total operating expenses were $151.3 million for the third quarter, that’s up $0.9 million or 0.6%. Production costs were down 9.8%, or $6.5 million and that’s due to the fact that water production was down 19% in the third quarter with the drought conditions that we have. Our production mix didn’t change from the third quarter of 2014, 50% of total water production is purchased water, 47%, ground water, and 3% surface water. Other changes to operation and maintenance expenses, we had employee wages and benefits that were higher by $3 million. Our drought costs, $1.8 million in the quarter, up from $400,000 in the third quarter of 2014. Conservation program costs increased $1 million. Uninsured loss expense increased $1.4 million due to current assessment of ongoing claims. Maintenance costs were up $1.2 million due to more repairs of mains and services in the quarter. This maybe due to our heightened awareness of leaks in our water systems and the interest of our operators in fixing leaks on an expedited basis per the public perception of those leaks during the drought. Depreciation and amortization is $15.3 million for the quarter, an increase of 4.7% or $0.7 million as driven by higher utility plant. Our net other loss of $400,000 was an increase in the loss amount from $200,000 in the third quarter of 2014. And let’s go to year-to-date. So year-to-date, our financial results, net income of $36.5 million, that’s down 19.4% or $8.8 million. The earnings per share, $0.76 on a year-to-date basis, fully diluted, that’s a decrease of 20% or down $0.19 from the first nine months of 2014. On a year-to-date basis, the major factors of the change are tax benefits which occurred in 2014, representing $4.8 million or about $0.10 on an earnings per share basis, which did not recur in 2015; a shortfall in unbilled revenue that’s carrying forward from our second quarter discussion, on net basis, so far during the year, that’s $4.9 million or about $0.06 on a EPS basis, and increased drought costs, which can only be recovered after regulatory review, it’s $2.4 million more this year or about $0.03 on the EPS basis. So, our revenue for the year-to-date $449.9 million for the year, that’s down 2.2% or $10.2 million. Lower water production costs affect that as well as the unbilled revenue accrual amount. Operation and maintenance expense on a year-to-date basis, they were lower by $1.1 million, or 0.3%. Other changes – sorry, production costs were $158.7 million for the year-to-date, down 9% or $15.6 million. Total water production that decreased 17% on a year-to-date basis. Other factors in O&M and A&G and maintenance are wage and benefits expenses increased $10.6 million, primarily due to normal actuarial changes in pension and retiree health costs, which have been higher all year, offset by lower employee medical costs. Our drought expenses, again up $2.4 million more than in 2014. Regulatory expenses are higher by $0.5 million due to rate case filings in California and Hawaii. Maintenance expenses for the year are up $900,000, that’s due to that higher mains and service repairs. And going on to depreciation, $46.0 million for the year, a decrease of 1.7% or $800,000, driven by lower depreciation rates within the 2014 GRC decision, partially offset by higher utility plant. Our net other income is $200,000 for the year, a decrease of 64% or $400,000 from last year. Now, I would like to turn it over to Marty for some comments. Martin Kropelnicki Thanks, Tom. Good morning, everyone. Thank you for joining us today to review the third quarter of 2015. Three areas I want to cover today. One, I want to give some comments and color on the quarter. It’s a rather confusing quarter when you look at the comparables year-over-year and then you factor in the drought and the effects of drought accounting. So I want to take you through the major items and how I kind of dissected the income statement in doing my review. Second, I want to provide a status update on the drought and our progress towards meeting the mandated water reductions that are mandated by the State of California; and then three, provide an update on the 2015 General Rate Case that we filed earlier this year, in July and give you an update on where we are in the progress of getting that well on its way. First, talking about the quarter, as I said it’s a little confusing with a lot of moving parts, including the accounting for drought surcharges, which is the penalty rate or drought tariff rate for people who are exceeding their water budgets. Essentially, with the mandated compliance order or the Governor Brown’s emergency drought declaration, any household or business that goes over their budget is going to pay two time the highest tier rate and what’s called the drought tariff or what we call drought surcharge. That surcharge is not revenue. Those surcharge costs go to offset anything in the WRAM balance. Let’s take a quick look and as noted also in the press release and as Tom said, in the year-over-year comparables and the third quarter of 2014, we received approval to our authorization for our 2012 general rate case. Included in that approval was an authorization for us to collect our interim rates, this is the revenue the company would have received if the general rate case was concluded on-time and new tariffs going into effect on January 1, 2014. That amount was about $10.3 million of revenue or $6.8 million of net income associated with that authorization and the true-up. In addition, as in the press release and as Tom mentioned, we have that one-time tax credit, which is a non-recurring item of $2.3 million. So when you look at the non-recurring items for the quarter, you have about $0.19 associated with the GRC catch-up from the third quarter of last year and the tax credit that was booked in the third quarter of last year as well. So that’s going to throw the comparables on a year-over-year basis off. Now let’s continue on a little bit with the drought. We do have incremental expenses associated with the drought. The commission at the State of California, the public utilities commission, did authorize us to have a drought memorandum account. So a drought memorandum account is a little different than a balancing account. A drought memorandum account basically has us expense any of the incremental costs associated with the drought that were not anticipated in the rate case, so it flows through the income statement. It affects net income, but allows us to recover those costs at a later date, after we apply for recovery at the commission and they go through a prudency review. Clearly, with everything going on with the drought and we have tried to call out those numbers in the press release with the – and especially with the mandated compliance with the state, we have certainly been spending dollars to help our customers hit the required mandatory reductions. And for the third quarter of this year, we had $1.8 million or $0.02 a share of incremental drought expense. Again, these are expenses that were not anticipated in the rate case and directly associated with the drought response. In addition, as Tom mentioned maintenance is up 24%, that’s a lot. But we basically told the crews, any leaks you jump on them. It doesn’t matter what time of day it is. We don’t want to be on the television. We have seen this with some of our brother and sister municipalities, where they will have a main break and it takes them hours and hours to respond to it. So anytime there has been any type of main leak or main break, we have dispatched crews 24 hours a day with the idea of, just fix it don’t waste the water. So that adds another $0.02 of cost. And some of that cost will go to the drought memorandum account. We just have to go through it on a project-by-project basis and determine which were drought related and what was normal maintenance to pick those two apart. So essentially, there is about $0.04 there that we think is attributable to the drought. So you got the $0.19 of non-recurring items, plus the $0.04 of drought related items that will go through the memorandum account. And we did include in the rate case that we filed in July, we did request authorization to collect the drought memorandum account as that rate case gets approved including that into the rate case, which hopefully rates will go into effect January 1, 2017. As Tom mentioned, the company funded CapEx, we are really happy with that. We are starting to see the fruits of our labor going back to 2010 and 2011, when we started to take a more systematic and programmatic view of capital projects and multiyear capital planning. As Tom said, we are well on our way of being in the high end of our range or potentially exceeding our range for the year. And the trailing 12 months of $160 million is a new record for the company and we feel really, really good about that. As we announced last quarter, we do have a new VP of Engineering, Rob Kuta. We are in the process of reorganizing the engineering department, focusing on expedited capital delivery on scope, on schedule and on budget, so overall feeling good on the capital side and rate base growth side. Moving on a little bit to the drought, I think we are taking a little bit of a sigh of relief that we have gotten through the long, hot, dry summer months and we are well into fall in the State of California. As you may recall, part of our drought response was to take what we call the customer first approach. We opened up a call center in Southern California with dedicated drought staff. That runs 12 hours a day, 5 days a week. In addition, we put a number of conservation specialists out in the field in all of our large districts to work with our large commercial and heavy use customers. In total, we have about 38 full-time equivalents that are incremental, that are – have just been hired just to help respond to the drought. And that has a monthly burn rate of about $700,000 in incremental expenses. As we mentioned before, we think we are going to spend between $6 million to $8 million in drought response and based on the current run rate and burn rate of the team, we believe that is true. And we anticipate that these expenses will continue through February of 2016, which is when the Governor’s declaration is set to expire. Further on the drought, when you look at how we have been doing, I am very pleased to say that 16 of our districts have continued to exceed the budgeted mandatory reduction targets. And nine of them are missing that target, but most of them are within 1% or 2% of hitting the overall target. So if you compare our production from 2013 to 2015, our production is down about 29% total. So overall, we are making this thing happen. Water supplies have been – have held steady. So we have been monitoring water supplies on a daily basis and we have continued to be able to meet demand in all of our districts. In addition, we recently did polling that we got the results from on October 14. And we wanted to get the pulse of our customer. Again, this is the first time in the history of the State of California where you have had mandatory water reduction cuts. And those cuts ranged from 8% to as high as 36% in our service areas. And so we did a random poll throughout the state, statistically balloted using a polling firm and we got some interesting polling results. When we asked customers overall are they satisfied on a scale of one to five, one being the worst, five being the best, we received a 4.0. In terms of water quality, on a scale of one to five, we received a 4.1. In terms of service, on a scale of one to five, we received a 4.4. And on communications, on a scale of one to five, we received a 4.0. That’s the overall summary of the polling. Did – it did vary a little bit based on three regions: the southern part of the state, the middle part of the state and the northern part of the state. Not surprising, the Central Valley in the State of California, where we have the tightest water supply, we scored the worst. And in Southern California, where you – we are pretty constrained as well, but it’s very, very densely populated, we scored the best. So overall, I was very, very happy with the polling scores. And I think it shows the dedication of the company to work – in terms of working with the customers to help them achieve their goals. As noted in the press release, we did collect $23.6 million of surcharges from customers. Again, these are customers who are exceeding the required and mandatory water budgets, going over their authorized amounts and they are paying a surcharge. That is not incremental revenue of the company nor does the company keep any of those funds, those funds are directly applied to the WRAM balance. So from a rate design perspective, what does this mean, it means basically that customers that are hitting their requirements, and about 75% of all of our customers are hitting their mandatory reductions are doing a great job. They are not paying a drought surcharge. About 25% of our customers have continued to exceed their water budgets. And they are paying a direct surcharge with an authorized drought tariff of two times our highest rate. All the funds that are collected that drought surcharge are applied to the WRAM accounts and they lower the WRAM balances for all the customers in that service area. So from a rate design perspective and then from a pricing perspective, we are very happy with the rate design and that it is penalizing the people who are using the most water and it’s rewarding the people who are conserving the most water. So we believe the rate design is working. Further, we believe that the polling results show that the majority of our customers understand what our approach was when we took a customer-first approach and trying to work with them hand-in-hand to help them hit their budget requirements for their water budgets. In addition, I think it shows the dedication of the Cal Water staff, all of our district managers, all of our customer service managers, all of our people in the field. It’s been a long summer. It’s been a lot of extra hours, but overall we are making this thing happen. And the company and the staff have just done an outstanding job of getting us to where we are in terms of being in compliance with the governor’s orders. Moving on to the General Rate Case, two weeks ago, we finished all of our site tours in California. So, essentially, our rates team with help from all the different departments in Cal Water visited 23 districts and looking at all the capital requirements, doing site visits, reviewing projects. Overall, the feedback from the team is that we were very well prepared for these discussions with the Division of Ratepayer Advocates, or ORA as they are now known and we are moving into the next phase of the rate case. So, it was filed. We have done the site visits. Now, we are answering all the data requests. And the ORA will prepare their report, which we expect to get in the first quarter of 2016. Once we get that report in the first quarter of 2016, we will prepare our response and then we move into what’s called the public participation hearings. And we anticipate that we will have 18 to 20 of these hearings throughout the state with the administrative law judge, in the local districts that we support, taking comments from our customers about the General Rate Case. And once we get through that, we will be in settlement discussions. Probably, hopefully, if things go to plan, kind of the middle of the second quarter and then hopefully, we will proceed from there. We would like to have the rate case completed on schedule, which would be new rates taken in effect to January 1, 2017. So having said that, as I mentioned, we are glad it’s fall. We are looking forward to going into winter and we are making it happen. So, we are very happy with the results of our conservation efforts and really want to commend our customers and our employees for doing an outstanding job for getting our overall production down almost 30% from 2013. Tom, back to you. Thomas Smegal Thanks, Marty. Now, I would like to finish up with just a couple of highlights from the balance sheet. Our net utility plant grew to $1.66 billion as of September 30. Our work-in-progress balance increased to $149 million. As I mentioned earlier, capital investments were $118.3 million on a year-to-date basis. At the end of the quarter, company had $50.8 million in cash and $136.6 million outstanding on its revolving credit facilities. However, at financing activities, after the end of the quarter, subsequent event, on October 13, Cal Water, the regulated California operating subsidiary, sold $100 million in first mortgage bonds in a private placement. The proceeds are being used to pay down the operating company revolving credit facilities and for other corporate purposes. Cal Water has also agreed to sell an additional $50 million in first mortgage bonds on March 13, 2016 subject to customary closing conditions. So that’s the end of our presentation. Dana, we are now happy to take questions. Question-and-Answer Session Operator Thank you. [Operator Instructions] We will go first to Jonathan Reeder with Wells Fargo. Jonathan Reeder Hey, good morning Marty and Tom. First question, the unbilled revenue impacting Q3 that you guys kind of outlined, would you characterize that as fairly typical for the Q3 impact? Thomas Smegal So, we had a lot of discussion about this last quarter. And what we saw at the end of the last quarter was a substantial dip in the unbilled revenue accounts receivable and that affected second quarter earnings. So, what we are seeing for the third quarter, the accounts receivable balance is approximately normal and that has to do both with the billings and the drought surcharge. So, the drought surcharge is adding to that accrual. And so when you compare it to the low number in the second quarter, we did see a bump upward in it. And so we do have to keep in mind as we go forward, there is going to be some difficulty in estimating or guessing, if you will, what that factor is going to be at the end of the year, at the end of the fourth quarter. Three moving parts. First moving part is we expect we will still see conservation from our customers. We may or may not see a continuation of the current level of drought surcharges. And so we are monitoring that carefully, and that could change by the end of the year. The other is that California is experiencing an El Niño, and the question really is whether it’s a wet El Niño as everyone expects or not. And if it occurs by the time the end of the year rolls around, we could see a drop in sales simply because it’s raining a lot in California in the later part of December. So, we have to watch those things very carefully. That does have the potential to have a year-end impact on us if any of those three factors changes. Jonathan Reeder Okay. So, if it’s really wet, sales, I guess, fall off and then that unbilled… Thomas Smegal That will drop. Jonathan Reeder Yes, it will decrease a lot. Thomas Smegal Yes. Jonathan Reeder Okay. And then, go ahead. Thomas Smegal It’s a little hard to predict that obviously, because we aren’t going to know anything from looking at sales in October and November. It’s really going to be the end of December which affects that calculation. Remember that calculation looks at the last say 20, 21 days of the quarter. It’s really going to be dependent upon what happens during that exact period. Jonathan Reeder Right. But I guess, year-to-date, the only thing that was really unusual was the Q2 drop, which was attributable to the conservation, mandatory conservation, going into effect? Thomas Smegal Right. Jonathan Reeder At this point, okay. And then I think you said there is $0.04 of drought-related items that are going to go through the memorandum account, is that year-to-date so far? Thomas Smegal That’s year-to-date, yes. Martin Kropelnicki Yes, that’s right. Jonathan Reeder Okay. And then the full year expectation is still for about $0.08 or? Martin Kropelnicki Yes, I mean, we have ramped up pretty quick and we have had to add more resources, just depending on how each individual district is doing. We have moved resources around to respond to different needs based on the geographical regions. So, I think we were thinking between $0.06 and $0.08 a share and I think we will probably be on the high side of that about $0.07 to $0.08 a share would be my bet based on the current run rate. Jonathan Reeder Okay. So, then I guess year-to-date EPS, we are at $0.76. Last Q4, I think you earned $0.24. And I don’t think there was any noise in there like the GRC catch-up or the tax benefit from a comparable this year, so assuming you would earn something similar, it puts you right around $1 for the full year. And then had it not been for that Q2 decrease in the unbilled revenues, which I think was about $0.13, I guess it would have put you about $1.13. Is that roughly, I guess, in line with your expectations and the right way to be thinking about 2015 EPS power or should we also add like the $0.08 of the drought expense on top of that? How should we think about that? Thomas Smegal No, I think that’s about right in terms of the components of your analysis. Just keep in mind that the $0.13 in the second quarter, we did bite a little bit of that back here in the third quarter with an upward change in unbilled. So, a little bit of that came back, so you need to factor that in as well. Martin Kropelnicki Yes. And I think just for everyone on the call remember that the unbilled revenue it’s simply the GAAP revenue accrual at the end of the period. And it’s not included in the WRAM. So, it’s unbilled. It’s estimated. And as that – as it becomes billed consumption in the next billing cycle, it goes through the WRAM and it’s trued up or down based on our adopted numbers. Jonathan Reeder Okay. I mean, for a – I mean, is there a way to kind of characterize for a typical year like what the unbilled impact might be looking like? I mean, if I understand correctly, I mean, Q2 – well, go ahead, sorry. Thomas Smegal Yes, sorry, Jonathan. So, in a very typical year, you would see no change from December to the next December in unbilled. When you have a rate change as we did have the rate design change at the end of ‘14, you do tend to see a little bit higher unbilled just because bills are higher, if you think about it way. But generally the bump up in unbilled during the summer goes away by the end of the year. So typically, it’s not a real component of earnings. It should – it’s just a floating item. Unfortunately, for this year, it’s been kind of floating downward due to the fact that people have lower bills because the drought is on and they are using less water. Jonathan Reeder Okay. Yes, I got it. Alright, thank you guys. Martin Kropelnicki Thanks, Jonathan. Operator [Operator Instructions] We will go next to Spencer Joyce with Hilliard Lyons. Spencer Joyce Martin and Tom good morning. Martin Kropelnicki Hi Spencer, good morning. Spencer Joyce Just want to jump back to the tax items here for a moment and I know we saw a nice benefit in Q3 ’14, it gave us a bit of a tough comp this year, but I know pretty consistently over the past few years, we have seen some benefits throughout the year that, while maybe one-time, they seem to be somewhat recurring, can you give us a sense of maybe what the Q4 tax rate might look like or maybe what you are gauging for a full year ‘15 here, it looks like may be trending towards a higher rate than perhaps we have seen over the past few years? Thomas Smegal Spencer, I think you are correct there. Let’s talk a little bit about what’s been happening. Back in 2012, I think it was the first time we started incorporating the analysis of the repairs and maintenance deductions. And that 2012 started to look back at prior years, and there were adjustments from prior years. Those are the kind of what you would call non-recurring blips in this tax benefit. And so right now, we continue to have a repairs deduction, but it’s the current year repair deduction. So we are looking at for 2015, our tax rate being about 38%, whereas if you go back to ‘14, the tax was 34%. And so that is a factor. We are just on an ongoing basis now and maybe we have gotten over the hump of the analysis and reanalysis of what those past repairs and maintenance deductions were. Spencer Joyce Okay. So the potentially 38% here in ‘15 versus before in ‘14, is that strictly due to a differing call it CapEx or repair profile this year or were there still some catch-up items in ‘14 that depressed that level? Thomas Smegal So the ‘14 items were other items. They are pretty complicated and they were related to the rate case. It’s something called the South Georgia method of determining the difference between a regulatory item and a tax item, which I have some understanding of but our technical people have a lot better understanding of. So it was kind of the tax change as a result of the rate case, not really a repairs item. It’s a different item. Spencer Joyce Okay. So this year here in 2015 seems to be a fairly clean year than not any special stuff, but perhaps a decent level of repair activity that might be normal moving forward? Thomas Smegal Yes. One of the things, as we talk about the CapEx, a lot of that CapEx is mains. And a lot of those mains will likely qualify under the repair deduction, but that leads us to the tax rate that we have, the 38% rather than the higher statutory rate. So that’s kind of embedded in getting to that number. So again could it be 37%, 39% at the end of the year or probably not going to vary from 38% at this point. Spencer Joyce Okay, perfect, that’s really helpful. Just finally then, I apologize, I had to hop on a little bit late. The $1.4 million uninsured loss that you all noted in the release, can you give us a little color on that and I assume that we could almost adjust that out of earnings, I mean it’s strictly a one-time kind of unique situation? Thomas Smegal Yes. So the company has a self-insured retention level of about $0.5 million on claims. And so periodically, any utility company is going to have claims against it. Right now, our reserve required us to – we were required to increase our reserve by that amount based on a couple of relatively large claims in the quarter. That’s going to vary up and down. And I think if you go back and look, in the third quarter of ‘14 it was at a very low level. So I don’t want you to adjust it out entirely because I think that there is a normal course there. But what happened was just the difference between the third quarter of ‘14 and third quarter of ‘15 resulted in that big difference. We are always having those things. You hope that you don’t have as many. We have a couple this quarter that we had to reserve for. Martin Kropelnicki Yes. And things will happen in the ordinary course of business. Say we have 600 vehicles in our fleet, so there is – as much as we try to avoid accidents, there is always something that happens. There is always a main break that happens. And that self-insured retention, Tom has to look at that on a monthly and quarterly basis and true that up or down based on the new claims that are coming here. Spencer Joyce Yes, absolutely. Thanks for the color there. And I assume, even now we may be in a period of higher activity, if you will with some of the drought stuff. So that’s very helpful. Alright. Martin Kropelnicki Okay, thanks. Spencer Joyce Thank you. Operator [Operator Instructions] And it appears we have no further questions on the phone at this time. Thomas Smegal Okay. Dana, thank you. And I want to thank all of you for your continued interest in California Water Service Group. We look forward to talking with you again with our year end results. Thanks very much. Martin Kropelnicki Thanks everyone. Bye-bye. Operator Again, that does conclude today’s presentation. We thank you for your participation. Thank you for calling. Scalper1 News
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