cwt-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-13883

CALIFORNIA WATER SERVICE GROUP

(Exact name of registrant as specified in its charter)


Delaware						77-0448994
(State or other jurisdiction						(I.R.S. Employer Identification No.)
of incorporation or organization)

1720 North First Street

San Jose, California 95112

(Address of principal executive offices)

408-367-8200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:

Trading Symbol(s)

Name of Each Exchange on Which Registered:

Common Stock, $0.01 par value per share

CWT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of April 20, 2026, there were 59,853,262 shares of the registrant’s common stock outstanding.

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TABLE OF CONTENTS


		Page
PART I	Financial Information	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (unaudited) as of March 31 , 202 6 and December 31, 20 25	3
	Condensed Consolidated Statements of Operations (unaudited) For the Three Months Ended March 31 , 202 6 and 202 5	5
	Condensed Consolidated Statements of Comprehensive Income (unaudited) For the Three Months Ended March 31 , 202 6 and 202 5	6
	Condensed Consolidated Statements of Cash Flows (unaudited) For the Three Months Ended March 31 , 202 6 and 202 5	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	30
Item 4.	Controls and Procedures	31

PART II	Other Information	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
	Signature	33

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PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

The condensed consolidated financial statements presented in this filing on Form 10-Q have been prepared by management and are unaudited.

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited (In thousands, except par value)


	March 31, 2026		December 31, 2025
ASSETS
Utility plant:
Utility plant	$	6,012,052	$	5,909,242
Less accumulated depreciation and amortization	(1,346,695)		(1,329,652)
Net utility plant	4,665,357		4,579,590
Current assets:
Cash and cash equivalents	58,102		51,820
Restricted cash	45,642		45,553
Receivables:
Customers, net	52,580		56,322
Short-term regulatory accounts	78,336		72,511
Other, net	47,464		49,004
Accrued and unbilled revenue, net	39,879		39,674
Materials and supplies	19,637		19,784
Taxes, prepaid expenses, and other assets	33,521		19,760
Total current assets	375,161		354,428
Other assets:
Regulatory assets	341,684		339,865
Goodwill	37,063		37,063
Other	360,484		360,219
Total other assets	739,231		737,147
TOTAL ASSETS	$	5,779,749	$	5,671,165

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited (In thousands, except par value)


	March 31, 2026		December 31, 2025
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $0.01 par value; 136,000 shares authorized, 59,853 and 59,638 outstanding on March 31, 2026 and December 31, 2025, respectively	$	599	$	596
Additional paid-in capital	980,113		973,454
Retained earnings	713,333		729,276
Accumulated other comprehensive loss	(13,537)		(13,922)
Noncontrolling interest	2,604		2,571
Total equity	1,683,112		1,691,975
Long-term debt, net	1,472,034		1,471,968
Total capitalization	3,155,146		3,163,943
Current liabilities:
Current maturities of long-term debt, net	821		2,270
Short-term borrowings	230,000		130,000
Accounts payable	164,802		175,729
Short-term regulatory accounts	51,594		25,458
Accrued other taxes	7,460		6,048
Accrued interest	23,471		12,976
Other accrued liabilities	66,809		65,683
Total current liabilities	544,957		418,164
Deferred income taxes	452,591		450,946
Regulatory liabilities	915,692		929,814
Pension	94,733		94,226
Advances for construction	212,175		210,638
Contributions in aid of construction	297,719		297,016
Other long-term liabilities	106,736		106,418
Commitments and contingencies (Note 9)
TOTAL CAPITALIZATION AND LIABILITIES	$	5,779,749	$	5,671,165

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited (In thousands, except per share data)


	Three Months Ended March 31,
		2026		2025
Operating revenue		$	214,573	$	203,973
Operating expenses:
Operations:
Water production costs		71,329		62,991
Administrative and general		33,686		34,174
Other operations		31,233		28,836
Maintenance		8,366		7,668
Depreciation and amortization		39,964		35,956
Income tax expense		74		1,035
Property and other taxes		11,757		10,968
Total operating expenses		196,409		181,628
Net operating income		18,164		22,345
Other income and expenses:
Non-regulated revenue		5,221		5,081
Non-regulated expenses		(5,457)		(3,466)
Other components of net periodic benefit credit		3,972		4,800
Allowance for equity funds used during construction		2,079		1,797
Income tax expense on other income and expenses		(1,391)		(1,703)
Net other income		4,424		6,509
Interest expense:
Interest expense		19,619		16,509
Allowance for borrowed funds used during construction		(1,068)		(857)
Net interest expense		18,551		15,652
Net income		4,037		13,202
Net loss attributable to noncontrolling interest		—		(129)
Net income attributable to California Water Service Group		$	4,037	$	13,331
Earnings per share:
Basic		$	0.07	$	0.22
Diluted		$	0.07	$	0.22
Weighted average shares outstanding:
Basic		59,699		59,511
Diluted		59,771		59,566

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited (In thousands)


	Three Months Ended March 31,
		2026		2025
Net income		$	4,037	$	13,202
Other comprehensive income:

Amortization of defined benefit pension plans, net of tax of $150 and $60, respectively		385		154
Other comprehensive income, net of tax		385		154
Comprehensive income		4,422		13,356
Comprehensive loss attributable to noncontrolling interest		—		(129)
Comprehensive income attributable to California Water Service Group		$	4,422	$	13,485

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (In thousands)


	Three Months Ended March 31,
	2026		2025
Operating activities:
Net income	$	4,037	$	13,202
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	40,290		36,494
Change in value of life insurance contracts	315		(356)
Allowance for equity funds used during construction	(2,079)		(1,797)
Changes in operating assets and liabilities:
Receivables and accrued and unbilled revenue	(10,006)		(2,537)


Accounts payable	(148)		(21,044)
Other current assets	(6,664)		(4,788)
Other current liabilities	12,626		14,262
Other changes in noncurrent assets and liabilities	11,016		4,985
Net cash provided by operating activities	49,387		38,421
Investing activities:
Utility plant expenditures	(129,457)		(110,103)



Other	1		207
Net cash used in investing activities	(129,456)		(109,896)
Financing activities:
Short-term borrowings	160,000		170,000
Repayment of short-term borrowings	(60,000)		(90,000)
Repayment of long-term debt	(230)		(214)
Advances and contributions in aid of construction	10,144		9,497
Refunds of advances for construction	(2,600)		(2,317)

Repurchase of common stock	(823)		(1,109)
Issuance of common stock	6,880		743
Dividends paid	(19,980)		(20,226)
Payment for purchase of noncontrolling interest	(6,951)		—
Distribution to noncontrolling interest	—		(451)

Net cash provided by financing activities	86,440		65,923
Change in cash, cash equivalents, and restricted cash	6,371		(5,552)
Cash, cash equivalents, and restricted cash at beginning of period	97,373		95,687
Cash, cash equivalents, and restricted cash at end of period	$	103,744	$	90,135
Supplemental disclosures of cash flow information:
Cash paid for interest (net of amounts capitalized)	$	7,515	$	4,103
Supplemental disclosure of investing and financing non-cash activities:
Accrued payables for investments in utility plant	$	58,664	$	48,093
Utility plant contributed by developers	$	7,219	$	3,706

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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CALIFORNIA WATER SERVICE GROUP

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2026

Dollar amounts in thousands, unless otherwise stated

Note 1. Organization and Operations and Basis of Presentation

California Water Service Group (Company) is a holding company that provides water utility and other related services in California, Washington, New Mexico, Hawaii and Texas through its wholly-owned subsidiaries. California Water Service Company (Cal Water), Washington Water Service Company (Washington Water), New Mexico Water Service Company (New Mexico Water), and Hawaii Water Service Company, Inc. (Hawaii Water) provide regulated utility services under the rules and regulations of their respective state’s regulatory commissions. CWS Utility Services and HWS Utility Services LLC provide non-regulated water utility and utility-related services. TWSC, Inc. (Texas Water) indirectly holds regulated and contracted water and wastewater utilities through a majority owned joint venture, BVRT Utility Holding Company LLC (BVRT). BVRT’s water and wastewater utilities provide services under the rules and regulation of the Public Utilities Commission of Texas (PUCT). Each state’s regulatory commission will be jointly referred to as the Commissions.

Basis of Presentation

The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. Interim financial information includes the Company’s accounts and those of its wholly owned subsidiaries. BVRT, a 96.5% owned subsidiary of Texas Water, is consolidated using the voting interest model as the Company owns a majority of the voting interests. The unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 27, 2026.

The preparation of the Company’s unaudited condensed consolidated interim financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the consolidated balance sheet dates and the reported amounts of revenues and expenses for the periods presented. These include, but are not limited to, estimates and assumptions used in determining the Company’s regulatory asset and liability balances based upon probability assessments of regulatory recovery, utility plant useful lives, revenues earned but not yet billed, asset retirement obligations, allowance for credit losses, pension and other employee benefit plan assets and liabilities, and income tax-related assets and liabilities. Actual results could differ from these estimates.

In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring transactions that are necessary to provide a fair presentation of the results for the periods covered.

Due to the seasonal nature of the water business, the results for interim periods are not indicative of the results for a 12-month period. Revenue and income are generally higher in the warm, dry summer months when water usage and sales are greater. Revenue and income are generally lower in the winter months when cooler temperatures and rainfall curtail water usage and sales.

Noncontrolling Interest

Noncontrolling interest in the Company’s unaudited condensed consolidated interim financial statements represents the 3.5% interest not owned by Texas Water in BVRT. Texas Water obtained control over BVRT on May 1, 2021. Since the Company controls BVRT, its financial statements are consolidated with those of the Company, and the noncontrolling owner’s 3.5% share of BVRT’s net assets and results of operations is deducted and reported as noncontrolling interest in total equity on the unaudited Condensed Consolidated Balance Sheets, as net loss attributable to noncontrolling interest in the unaudited Condensed Consolidated Statements of Operations, and as comprehensive loss attributable to noncontrolling interest in the unaudited Condensed Consolidated Statements of Comprehensive Income. The Company reports noncontrolling interest in consolidated entities as a component of equity separate from the Company’s equity. The Company’s net income and comprehensive income attributable to California Water Service Group excludes the loss attributable to the noncontrolling interest.

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Note 2. Summary of Significant Accounting Policies

Operating Revenue

The following table disaggregates the Company’s operating revenue by source for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31,
		2026		2025
Revenue from contracts with customers		$	197,334	$	182,701
Regulatory balancing account revenue		17,239		21,272
Total operating revenue		$	214,573	$	203,973

Revenue from contracts with customers

The Company principally generates operating revenue from contracts with customers by providing regulated water and wastewater services at tariffed rates authorized by the Commissions in the states in which it operates, and non-regulated water and wastewater services at rates authorized by contracts with government agencies and other third parties. Revenue from contracts with customers reflects amounts billed for the volume of consumption at authorized per unit rates, for service charges, and for other authorized charges.

The Company satisfies its performance obligation to provide water and wastewater services over time as services are rendered. The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has a right to invoice for the volume of consumption, for the service charge, and for other authorized charges.

The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding accrued and unbilled revenue is recognized. The estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage).

Contract terms are generally short-term and at will by customers and, as a result, no separate financing component is recognized for the Company’s collections from customers, which generally require payment within 30 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay.

In the following table, revenue from contracts with customers is disaggregated by class of customers for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31,
		2026		2025
Residential		$	108,891	$	105,433
Business		41,920		40,548
Multiple residential		20,600		19,203
Industrial		5,951		6,405
Public authorities		9,429		9,245
Other (a)		10,543		1,867
Total revenue from contracts with customers		$	197,334	$	182,701

(a) Other includes changes to accrued and unbilled revenue.

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Regulatory balancing account revenue

Regulatory balancing account revenue is revenue related to revenue mechanisms authorized in California by the California Public Utilities Commission (CPUC). For certain revenue mechanisms, the Company recognizes revenue when it is objectively determinable, probable of recovery and expected to be collected within 24 months following the end of the accounting period. To the extent that revenue is estimated to be collectible beyond 24 months, recognition is deferred. These mechanisms include the Monterey-Style Water Revenue Adjustment Mechanism (MWRAM), which tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate had been in effect. The MWRAM fluctuates with the seasonality of the water business. During the warm, dry summer months when water use is typically highest, the MWRAM will reflect an overcollection of revenue compared to an undercollection in the cool, wet winter months when less water is typically used.

These mechanisms also include the Water Revenue Adjustment Mechanism (WRAM), which decoupled revenue from the volume of sales and allowed the Company to recognize the adopted level of volumetric revenues. The variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts was recorded as regulatory balancing account revenue. The WRAM concluded on December 31, 2022; however, the Company has a net WRAM receivable balance for which the Company continues to defer revenue recognition for amounts estimated to be collected beyond 24 months following the end of the accounting period.

Regulatory balancing accounts also include revenue that is recognized when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process.

Non-Regulated Revenue

The following table disaggregates the Company’s non-regulated revenue by source for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31,
		2026		2025
Contract operating and maintenance revenue		$	3,385	$	3,267
Other non-regulated revenue		1,250		1,248
Non-regulated revenue from contracts with customers		4,635		4,515
Lease revenue		586		566
Total non-regulated revenue		$	5,221	$	5,081

Contract operating and maintenance services are provided for non-regulated water and wastewater systems owned by private companies and municipalities. The Company negotiates formal agreements with the customers under which the Company provides operating, maintenance and customer billing services related to the customers’ water systems. The formal agreements outline a fee schedule for the services provided. The agreements typically call for a fee-per-service or a flat-rate amount per month. The Company satisfies its performance obligation of providing contract operating and maintenance services over time as services are rendered; as a result, the Company employs the invoice practical expedient and recognizes revenue in the amount that it has the right to invoice. Contract terms are generally short-term and, as a result, no separate financing component is recognized for its collections from customers, which generally require payment within 30 days of billing.

Other non-regulated revenue primarily relates to services for the design and installation of water mains and other water infrastructure for customers outside the regulated service areas, and insurance program administration.

Lease revenue is not considered revenue from contracts with customers and is recognized following operating lease standards. The Company is the lessor in operating lease agreements with telecommunications companies under which cellular phone antennas are placed on the Company’s property.

Allowance for Credit Losses

The Company measures expected credit losses for customer receivables, other receivables, and accrued and unbilled revenue on an aggregated level. These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less. The expected credit losses for other receivables and accrued and unbilled revenue are inconsequential. Customer receivables include receivables for water and wastewater services provided to residential customers, business, industrial, public authorities, and other customers. The expected credit losses for business, industrial,

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public authorities, and other customers are inconsequential. The overall risks related to the Company’s receivables are low as water and wastewater services are seen as essential services. The estimate for the allowance for credit losses is based on a historical loss ratio, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if the allowance for credit losses should be further adjusted in accordance with the applicable accounting guidance. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, payment options and programs available to customers, and the methods that the Company is able to use to encourage payment.

The Company reviews its allowance for credit losses utilizing a quantitative assessment, which includes a trend analysis of customer billings and collections, and agings by customer class. The Company also utilizes a qualitative assessment, which considers the future collectability of customer outstanding balances, management’s estimate of the cash recovery, and a general assessment of the economic conditions in the locations the Company serves. Based on these assessments, the Company adjusts its allowance for credit losses, accordingly.

The Company has elected to apply a practical expedient which allows the Company to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of its receivables in developing reasonable and supportable forecasts as part of estimating expected credit losses.

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2026 and twelve months ended December 31, 2025:


	March 31, 2026		December 31, 2025
Beginning balance	$	3,322	$	4,128
Provision for credit loss expense	773		3,910
Write-offs	(1,264)		(5,281)
Recoveries	128		565
Total ending allowance balance	$	2,959	$	3,322

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the unaudited Condensed Consolidated Balance Sheets that total to the amounts shown on the unaudited Condensed Consolidated Statements of Cash Flows (see Note 9 of the Notes to Unaudited Condensed Consolidated Financial Statements on restricted cash):


	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	58,102	$	51,820
Restricted cash	45,642		45,553
Total cash, cash equivalents, and restricted cash	$	103,744	$	97,373

Earnings per Share

Basic earnings per share of common stock is computed by dividing the net income attributable to California Water Service Group by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution from shares potentially issuable in connection with Restricted Stock Unit (RSU) awards under the Company’s equity incentive plan. Restricted Stock Awards (RSAs) are included in the common shares outstanding because the shares have all the same voting and dividend rights as issued and unrestricted common stock.

Recently Adopted Accounting Pronouncements

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. ASU 2025-06 is effective for the Company’s annual periods beginning January 1, 2028. Early adoption is permitted and the guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis. The Company early adopted ASU 2025-06 prospectively

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beginning January 1, 2026. The adoption of this guidance did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements or disclosures.

New Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disaggregation of certain Consolidated Statement of Operations’ expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted. The guidance is applied prospectively with the option of retrospective application for each period presented. The Company is evaluating the impact the new standard will have on its financial statement disclosures upon adoption.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements. ASU 2025-10 is effective for the Company’s annual periods beginning January 1, 2029. The Company is evaluating the impact the new standard will have on its consolidated financial statements and disclosures upon adoption.

Note 3. Stock-Based Compensation

The Company’s 2024 Equity Incentive Plan (2024 Equity Plan) was adopted by the Board of Directors and approved by stockholders on May 29, 2024. The Company reserved 1,600,000 shares of common stock for awards the Company is authorized to issue pursuant to the 2024 Equity Plan. In addition, the Board of Directors reauthorized 158,950 shares for issuance under its legacy equity incentive plan.

In March of 2026, the Company granted RSAs to Officers and members of the Board of Directors (Directors). The RSAs are valued based on the fair market value of the Company’s common stock at the date of grant. The 2026 RSAs granted to Officers vest over 36 months with the first 12 months cliff vesting and the remaining RSAs vesting quarterly thereafter. RSAs granted to the Directors in 2026 vest at the end of 12 months. The 2026 RSAs are recognized as expense evenly over 36 months for the shares granted to Officers and 12 months for the shares granted to the Directors. As of March 31, 2026, there was approximately $4.4 million of total unrecognized compensation cost related to RSAs. The cost is expected to be recognized over a weighted average period of 1.9 years.

A summary of the status of the outstanding RSAs as of March 31, 2026 is presented below:


	Number of RSA Shares	Weighted-Average Grant-Date Fair Value
RSAs at January 1, 2026	76,294	$	47.34
Granted	62,875	46.95
Vested	(42,630)	47.18

RSAs at March 31, 2026	96,539	$	47.15

In March of 2026, the Company granted both market-based and performance-based RSUs to Officers. The 2026 RSU awards may be earned upon the completion of a 36-month performance period. Whether RSUs are earned at the end of the performance period will be determined based on the achievement of certain performance objectives set by the Organization and Compensation Committee of the Board of Directors in connection with the issuance of the RSUs.

The 2026 performance objectives are based on the Company’s business plan covering the performance period from 2026 through 2028. The performance objectives include the achievement of a three-year average return on equity target for the performance-based RSUs and the achievement of relative total stockholder return targets for the market-based RSUs. Depending on the results achieved during the 36-month performance period, the actual number of shares that a grant recipient receives at the end of the performance period may range from 0% to 200% of the target RSUs granted, provided that the grantee is continuously employed by the Company through the vesting date. If prior to the vesting date employment is terminated by reason of death, disability or normal retirement, then a pro rata portion of this award will vest.

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The Company utilizes the Monte Carlo valuation model, which requires the use of subjective assumptions, to compute the fair value of market-based RSUs at the date of grant and recognizes expense ratably over the 34-month requisite service period. The fair value of performance-based RSUs is calculated based on the fair value of the Company’s common stock at the date of grant and the Company recognizes expense ratably over the 34-month requisite service period based on the expected attainment of the performance target. Changes in the estimates of the expected attainment of the performance target will result in a change in the number of shares that are expected to vest, which may cause a cumulative adjustment for the amount of expense during each reporting period in which such estimates are altered. As of March 31, 2026, there was approximately $6.9 million of total unrecognized compensation cost related to RSUs. The cost is expected to be recognized over a weighted average period of 2.0 years.

A summary of the status of the outstanding RSUs as of March 31, 2026 is presented below:


	Number of RSU Shares	Weighted-Average Grant-Date Fair Value
RSUs at January 1, 2026	184,665	$	49.43
Granted	86,281	46.95
Performance criteria adjustment	(20,384)	55.48
Vested	(17,384)	55.48

RSUs at March 31, 2026	233,178	$	47.53

The Company recorded compensation costs for the RSAs and RSUs, which are included in administrative and general operating expenses, of $0.6 million and $1.3 million for the three months ended March 31, 2026 and 2025, respectively.

Note 4. Equity

On May 14, 2025, the Company entered into an equity distribution agreement to sell shares of its common stock having an aggregate gross sales price of up to $350.0 million (2025 Equity Agreement) from time to time, depending on market conditions, through an at-the-market equity program over the succeeding three years. Pursuant to the terms of the 2025 Equity Agreement, the Company may enter into forward sale agreements with forward counterparties. The Company intends to use the net proceeds from equity sales, after deducting commissions and offering expenses, for general corporate purposes, which may include working capital, construction and acquisition expenditures, investments and repurchases, and redemptions of securities. During the three months ended March 31, 2026, the Company sold 134,200 shares of common stock through its at-the-market equity program and raised proceeds of $6.1 million, net of $0.1 million in commissions paid. During the three months ended March 31, 2025, the Company did not utilize the at-the-market equity program.

The Company’s changes in total equity for the three months ended March 31, 2026 and 2025 were as follows:


	Three Months Ended March 31, 2026
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Equity

	Shares	Amount
	(In thousands)
Balance at January 1, 2026	59,638	$	596	$	973,454	$	729,276	$	(13,922)	$	2,571	$	1,691,975
Net income	—	—		—		4,037		—		—		4,037
Issuance of common stock	233	3		7,515		—		—		—		7,518
Repurchase of common stock	(18)	—		(823)		—		—		—		(823)
Dividends paid on common stock ($0.335 per share)	—	—		—		(19,980)		—		—		(19,980)
Other comprehensive income, net of tax (a)	—	—		—		—		385		—		385
Investment in business with noncontrolling interest	—	—		(33)		—		—		33		—

Balance at March 31, 2026	59,853	$	599	$	980,113	$	713,333	$	(13,537)	$	2,604	$	1,683,112

Table of Contents


	Three Months Ended March 31, 2025
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Equity

	Shares	Amount
	(In thousands)
Balance at January 1, 2025	59,484	$	595	$	966,975	$	674,918	$	(7,217)	$	3,015	$	1,638,286
Net income (loss)	—	—		—		13,331		—		(129)		13,202
Issuance of common stock	110	1		2,133		—		—		—		2,134
Repurchase of common stock	(24)	—		(1,109)		—		—		—		(1,109)
Dividends paid on common stock ($0.34 per share)	—	—		—		(20,226)		—		—		(20,226)

Other comprehensive income, net of tax (a)	—	—		—		—		154		—		154
Investment in business with noncontrolling interest	—	—		(310)		—		—		310		—
Distribution to noncontrolling interest	—	—		—		—		—		(452)		(452)
Balance at March 31, 2025	59,570	$	596	$	967,689	$	668,023	$	(7,063)	$	2,744	$	1,631,989

(a) This accumulated other comprehensive loss component is included in the computation of net periodic benefit costs for the Company’s supplemental executive retirement plan (SERP), specifically the following components: amortization of unrecognized (gain) loss and amortization of prior service credit.

Note 5. Pension Plan and Other Postretirement Benefits

The Company provides a qualified, defined-benefit, non-contributory pension plan for substantially all of its employees. The Company makes annual contributions to fund amounts accrued for the qualified pension plan. The Company also maintains an unfunded, non-qualified SERP. The costs of the plans are charged to expense or are capitalized in utility plant as appropriate.

The Company offers medical, dental, vision, and life insurance benefits for retirees and their spouses and dependents (other postretirement benefit plans). Participants are required to pay a premium, which offsets a portion of the cost.

Cash contributions made by the Company to the pension plans were $1.2 million and $2.3 million for the three months ended March 31, 2026 and 2025, respectively. No cash contributions were made by the Company to the other postretirement benefit plans for the three months ended March 31, 2026 and 2025. The Company estimates in 2026 that the annual contribution to the pension plans will be $2.7 million and no annual contribution will be made to the other postretirement plans.

The following tables list components of net periodic benefit costs for the pension plans and other postretirement benefits. The data listed under “pension plan” includes the qualified pension plan and the non-qualified SERP. The data listed under “other benefits” is for all other postretirement benefit plans.

SEC Form 10-Q filed by California Water Service Group