California Water Service Group (NYSE:CWT) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 11:00 am ET

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California Water Service Group (NYSE:CWT) Q1 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] And our first question comes from the line of Spencer Joyce from Hilliard Lyons. Your line is now open.

Analyst
Spencer Joyce

Marty, Tom, good morning. Thanks for the call this morning.

Executive
Martin A. Kropelnicki

Good morning, Spencer. How are you?

Analyst
Spencer Joyce

Hey doing well. Thanks. Two questions from me. First, I want to jump back to the acquisition, just -- can you refresh on why perhaps from a high level that the combination of SJW and CWT, really hasn't played out, kind of over the decades. Whether they push back regular -- from a regulatory standpoint or was it cultural, I mean just refresh us on maybe why it hasn't happened yet?

Executive
Martin A. Kropelnicki

Sure, well remember we're franchised monopolies and when you are a franchised monopoly, you need two people to agree to get married. So, we've always had a great relationship with San Jose Water going way, way, way back, believe or not a long time ago we were in the same building together. We had members of the SJW Board used to be on our board. So there is a lot of history that go way back between these two companies.

And so, I think while there has been discussions throughout the year, they just didn't materialize for probably a whole host of reasons. For us that what kind of prompted us now to actually make a hard offer and submit it in writing was the fact that they were going into a registration statement with Connecticut merger and we thought it was time to put our offering right in and submit it.

And again, we also believe that there are significant benefits to be had. If you look at two public companies that are operating literally about a mile apart, you have two sets of Board of Directors, two sets of officer teams, two public companies that listing fees on the New York Stock Exchange, two public company audits, two sets of D&O insurance. And so there is a lot of duplicative costs that we believe bring synergies into this deal that make it a very compelling offer to be considered by both parties involved in the transaction.

And in California what we put in our release is that we would share those synergies with our ratepayers. So there is a good benefit for stockholders and for ratepayers.

Analyst
Spencer Joyce

This might be a difficult follow-up to address, but if we assume that SJW and Connecticut sort of closed kind of as inertia might indicate at this point. It's reasonable to assume that a lot of the same positives of combining kind of the legacy San Jose franchises and Legacy Cal Water assets would still persist a year or two, three years down the road.

I mean is there anything about the tie up with Connecticut that would I guess where do you all off in the future, I mean is there anything kind of about being on the East Coast per se that you think may not work for Cal Water long-term?

Executive
Martin A. Kropelnicki

That is