California Water Service Group

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the California Water Service Group Q4 2025 and full year earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to redraw your question again, press the star one. I would now like to turn the conference over to James Lynch, Chief Financial Officer. You may begin.

Thank you, Desiree. Welcome, everyone, to the fourth quarter and full year 2025 results call for California Water Service Group. With me today is Marty Kropelnicki, our Chairman and CEO, Shillen Patel, our Chief Business Development Officer, and Greg Milliman, our Vice President of Rates and Regulatory Affairs. Replay dialing information for this call. can be found in our quarterly results earnings release, which was issued yesterday. The call replay will be available until April 27, 2026. As a reminder, before we begin, the company has a slide deck to accompany today's earnings call. The slide deck was furnished with an 8K and is also available on the company's website at www.calwatergroup.com. Before looking at our fourth quarter 2025 results, I'd like to cover forward-looking statements. During our call, we may make certain forward-looking statements, and 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. As a result, we strongly advise all current shareholders and interested parties to carefully read the company's disclosures on risks and uncertainties found in our Form 10-K, Form 10-Q, press releases, and other reports filed with the Securities and Exchange Commission. And now I'll turn the call over to Marty.

Thanks, Jim. Good morning, everyone. I can't think of a more appropriate way to kick off our 100th year of operations as an essential utility than by quickly talking about two deals we announced. First and foremost, yesterday we executed an agreement to purchase the Nevada and Oregon operations from Nexus Water. We've been busy working with them over the last few months to put that deal together, and we'll be talking about the deal later on today. Secondly, in December, we announced we've reached an agreement to purchase the outstanding minority interest in the Texas joint venture that we helped start, BBRT Holdings, and become the sole owner of seven Texas water and wastewater utilities. So big news that continues to allow us to expand our geographical footprint and further split us solidify our position as a leader in the water industry in the western U.S. In addition, while we don't have a general rate case for the 2024 rate case for California yet, we know it is actively being worked on and we expect to get a rate decision here soon. It's a little different situation than what we're in in the 21 rate case where there was a lot of silence based on what we're seeing, on where the commissioner is in the process, the questions they're asking And we know it's a priority within the commission to get that done soon. In addition, during the quarter, we filed and we're expecting a decision for our consolidated rate case in Texas. And we've also filed a rate case in the state of Washington. So we'll talk about that more a little bit later. So if I can get everyone to go to page five, please. We'll do a quick recap on what we did for the year. So first and foremost, we went into the fourth quarter really ahead of budget and performing well. But I think as many of you saw, we had a major storm on the West Coast in December. And the financial results in December were clearly affected by wet, cold weather. This is really the second time we've had an atmospheric river that really kind of hits the whole West Coast. Normally, if you think about California, it's kind of a long state. And while we might get wet weather in Northern California, you know, demand for water services stay high in Southern California because it tends to be warmer. This is one of those storms that was from all the way from the Canadian border all the way down to the Gulf of Mexico and to the Baja Coast on the California side. So we had a pretty big weather impact that Jim will be talking about later. So overall, you know, our results in the fourth quarter softened in December really because of these storms. As a highlight for 2025, we invested a record $517 million into our infrastructure systems, and that includes an additional $52.3 million invested in the fourth quarter alone. In 2025, we increased our annual dividend by a record 10.7%, and that was filed by our 59th annual dividend increase earlier this year in 2026 by an additional 8%. We received during the fourth quarter our extension for our cost of capital in the state of California, which allows us to retain a 10.27 ROE until January 2028. I believe this is one of the highest ROEs of a water utility in North America. And we have received approval to increase interim rates by the commission. So when the decision didn't come out In December, the Commission gave us the green light to implement an interim rate increase of 3% that we implemented in January in California. So overall, kind of a busy year from that perspective on the rate side. And in addition to that, we also maintained our A-plus stable credit rating from S&P, which I believe is one of the highest rated credit utilities in North America. So there's a lot to get into in the details, so I'm going to turn it back to Jim to go through some of the details on the financial results. Jim?

Great. Thanks, Barney. In Q4 2025, revenue was $220 million, and that compares to $222 million in the fourth quarter of 2024. Net income for the quarter was $11.5 million, or 19 cents per diluted share, compared to the prior year period of $19.7 million, or 33 cents per diluted share. As Marty mentioned, our results in the fourth quarter were negatively impacted by the strong statewide weather pattern over much of California that created exceptionally wet and cold weather during the month of December. Moving to slide six, you can see the impact of this and other activities during the fourth quarter on our earnings results as compared to 2024. While tariff rate changes and other regulatory activities generated an increase of 48 cents per share, The weather-induced consumption decline led to a 59-cent earnings per share decrease. In fact, of the 12.7 million in consumption decrease experienced in 2025, 14.6 million of it occurred in the first quarter. In addition, the three-year conservation program approved in the 2021 rate case ended in Q4 with final expenses and the expense true-up reducing earnings by 10 cents per share. Slide 8 shows our 2025 year-end financial results. And as many of you know, the company's delayed 2021 GR rate case decision resulted in 2023 interim rate relief, which was recorded in 2024. So, in reporting our results, we presented both the GAAP and non-GAAP measures for 2024. Essentially, the non-GAAP measures removed the impact of the 2023 interim rate relief from our 24 results, 2024 results. Operating revenue for 2025 was $1 billion. This compared to $1,370,000,000 in 2024. When compared to non-GAAP 2024 revenue of $949.3 million, our revenue for the year actually increased by $50.8 million or approximately 5.4 percent. Net income attributed to group was $128.2 million compared to net income of $190.8 million in 2024. Again, when compared to 2024 non-GAAP income of $126.8 million, our net income increased $1.4 million, or 1% in 2025. Diluted earnings per share was $2.15 in 2025, compared to $3.25 in 2024. And again, removing the 2023 rate relief from our 2024 numbers, the non-GAAP 2024 earnings per share was $2.16, which was essentially flat when you compare it to 2025. Turning to slide nine, the primary drivers of our 2025 diluted earnings per share when compared to non-GAAP 2024 results were tariff rate changes and other regulatory activities. In addition, income taxes were lower year over year due to lower taxable income and the related effects on our income tax rate. Combined, these added $1.05 per diluted share, The increases were primarily offset by wholesale water rates that, net of the volume decreases, reduced diluting earnings per share by 27 cents, consumption decreases of 19 cents per share, and depreciation expense increases of 18 cents per share. Turning to slide 10, we continued to make significant investments in our water infrastructure during 2025 to ensure the delivery of safe, reliable water service. Our capital investments for the quarter and year to date were $152.3 million and $517 million, respectively. This record level of annual investment represents a 19.8% over construction levels in 2024. As a reminder, our capital investment estimates for 2026 and 2027 presented on this slide do not include $235 million of anticipated remaining PFAS project expenditures, which we expect will be incurred over the next few years. In addition, the estimates do not include any capital investments for our recently announced system acquisitions in Nevada and Oregon. The positive impact of our capital investment program and what it's having on our rate base is presented on slide 11. If approved as requested, the 2024 California GRC Infrastructure Improvement Plan, coupled with planned capital investments in our utilities in other states, would result in a compounded annual rate-based growth of almost 12 percent through 2027. Again, this is without PFAS expenditures or capital investments required in Nevada or Oregon, which would further add to our estimated rate-based growth. Moving to slide 12, We continue to maintain a strong liquidity profile to execute our capital plan, to fund BVRT Greenfield utility growth, and to integrate Nevada in our Oregon systems. At year end, we had $51.8 million in unrestricted cash and $45.6 million in restricted cash, along with approximately $470 million available on our bank lines of credit. We maintain credit facilities totaling $600 million that are expandable to $800 million with the maturities extending to March of 2028. On October 1st, 2025, we issued $370 million in long-term financing, which consisted of a combination of group notes and Cal Water First mortgage bonds. We also renewed our ATM program in May of 2025 with a $350 million shelf registration and completed $1.5 million of program sales in the 2025 fourth quarter. Importantly, Both Group and Cal Water maintain strong credit ratings of A-plus stable from S&P Global, underscoring the strength of our balance sheet. And finally, in January of 2026, we declared our 324th consecutive quarterly dividend of $0.33 per share. We also announced our intended 2026 annual dividend of $1.34 per share. This would be our 59th consecutive announced increase. The 10 cents per share increase represents an 8.1% increase over 2025. So we've got a lot going on in 2025, and we're really looking forward to 2026. With that, I'll turn it back over to Marty.

All right. Thanks, Jim. And just to remind everyone, 2025 was the third year of the rate case. When you look at the press releases, people might say, well, you know, you're essentially flat kind of year over year. You're off a penny year over year. But Remember, coming out of COVID, there was a pretty big spike in inflation. We have absorbed those costs within that period, and we're waiting for rate relief on that. And historically, the third year of the rate case, in California being 92%-ish of our total operations, we really feel that inflationary lag in that third year. So kind of all in, you know, I'm happy with how we ended up the year. We would have ended up stronger if we didn't have that atmospheric river take, you know, really wipe out the West Coast consumption here in December. But overall, I think we finished here in a good position as we wait for the rate case in California. I am on slide 13, and I want to talk a little bit more about the deal with our friends at Nexus Water. And when you look at slide 13, you know, this acquisition really is meaningful because it strengthens our position as a leader on the western coast. U.S. by adding two additional states and diversifying our geographic footprint. In addition to that, it also increases our regulatory diversification by, if you exclude BBRT, this adds about 40% to our operations outside the state of California. So the geographical diversification and the regulatory diversification we think are really, really important. At year-end 2025, the acquired systems represent about $109 million of rate base and a purchase price of approximately two times rate base, consistent with our allocation of capital and our disciplined approach to looking at acquisitions. In addition, at the purchase price, the proposed purchase price, we believe this deal will be accreted within the first year, backing out some of the one-time integration costs left. in appropriate jurisdictions. So overall, you know, really happy with this deal. We expect it to be accreted the first year, and we look forward to entering these two new markets, closing the deal, and welcoming the Nexus employees to California Water Service Group. Moving on to slide 14, it just gives you an illustration of what the footprint looks like as we operate and expand into a total of eight states total. So again, diversifying out of California, extending our footprint to these other states. And I was doing some work in preparation with our board and looking back in 1926 when we were founded. And we started with really four little water systems in Northern California and kind of how they have grown. And then as I was looking at the growth of the company, at some point we bought the system called Bear Gulch, in the 20s, in the early 30s. And I'm sure some people thought, why would they want to buy a system down in Silicon Valley? All it is is farmland down there. So, you know, as we acquire these new systems, you know, we like to think of them as seeds in robust markets that will grow over time. And that is consistent with our capital strategy. Look for systems in growing markets that we can continue to invest capital and grow out their infrastructure to continue to improve service and spread our baseline costs over a larger base. So spread that marginal cost over a larger base. On slide 14, this deal will add about 36,000 equivalent residential units. So it's water and wastewater. And we think it is a great strategic fit for the company. If you go to slide 15, we cover some of the points on the strategic rationalization for this deal. It adds rate base. driven growth platforms with meaningful capital investment opportunities consistent with our existing long-term infrastructure investment strategy. Both states, Oregon and Nevada, operate under a hybrid rate-making framework which supports ongoing infrastructure investment and replacement costs. In addition, Nevada allows for a DISC, which we think is a regulatory best practice, and the framework really provides some visibility into the future rate relief for capital investments that are needed. And with a larger footprint, we see opportunities to optimize our corporate costs and, again, leverage our water utilities, our high-cost marginal providers, having a larger base to spread those costs over to allow us to lower the overall marginal costs for customers while making sure we meet and exceed water quality standards. We'll also benefit from strong regulatory relationships within the states. We were very impressed with the employees of both systems in the states of Oregon and in Nevada. And as we know, Cal Water is a big believer in strong regulatory relationships, and we believe that's the underpin of the long-term stability of the system and our success on the regulatory side. In addition, these systems come with embedded growth pipelines that include both tuck-in acquisitions and other opportunities to add around the existing systems to grow out. So we're excited about that, especially in the state of Nevada, which we deem as a high growth state. And then finally, you know, we were very impressed with the staff and the assets. I think as a kind of a gold standard utility, you know, when you look at deals, you know, a lot of times you go look at someone and they look different than you or they operate different than you. You know, we were very impressed with the operations of Nexus Water and It's not surprising for those of you that know Rob McClain and the management team at Nexus. They do a very good job operating their systems. So we're very happy with the quality of not only their people, but the quality of their systems that they operate in. So we look forward to a smooth approval process with the commissions in Oregon and Nevada and integrating the systems onto our platform. Looking at slide 16, I'm going to hand that over to Shilin. I think most of you know Shilin as our chief business development officer, but Shilin has also been our general manager in Texas, managing our Texas operations. So, Shilin, you want to talk about the transaction we executed there and what's going on in Texas?

Yes. Thank you, Marty. We have entered into an agreement to acquire the remaining outstanding membership interest in BBRT in Texas. As you recall, it was a joint venture, and we're acquiring a minority. Upon closing, we'll become the sole owner of seven regulated water and wastewater utilities located in the high growth corridor between Austin and San Antonio. We continue to expand through ongoing system build outs, infrastructure enhancements, really positioning the platforms to support sustained customer growth. At the end of 2025, as you can see on this slide, We have more than 19,000 committed customers, and of that, 5,000 are connected currently, with an additional 20,000 likely in the next foreseeable future, and then about 100,000 in the long-term potential customers as our systems grow and mature. As reflected in the anticipated customer growth, both connected and committed customers continue increased meaningfully in recent years, demonstrating the embedded growth profiles of both systems and also just the nature of growth in that corridor of Texas alone. The transaction will require our utility or Texas subsidiary to file a change control application and be contingent on regulatory approval and other customary closing conditions, including the PUCET and also Cal Water Group board approval once we receive POCT approval. Strategically, consolidating full ownership enhances our governance, but simplifies the structure, allows us to fully capture the long-term growth and infrastructure investment opportunities within this market, and really looking forward to continuing to build on the successes that the team locally have put in place for the last six to seven years. Glenn, I'll turn it to you.

Sure. Thanks, Shalyn. Turning to slide 17, as Marty said, the key takeaway here on the 24 California general rate case is that we're expecting a proposed decision very soon, given where we are in the process. As we previously reported in the case, we proposed to invest $1.6 billion in water infrastructure in order to continue providing safe and reliable water service to our customers. We also requested revenue adjustments over the three-year period, totaling just a little under $3 million. Given the fact that the Commission can vote as early as 30 days after the proposed decision is issued and our oral arguments made, we believe that if the Commission were to issue a proposed decision by March 5th, there would be adequate time for the Commission to consider and adopt the final decision at its next voting meeting on April 9th. Obviously, we'll provide an update when we receive the proposed decision. Turning to slide 18, I'll provide a brief update on regulatory activity across our other jurisdictions, and I'll start with Hawaii. In November of 2025, we filed a rate case in Hawaii for our Kapalua District, requesting $2.2 million in annual revenues to recover higher operating costs and system improvements. Additionally, in October 2025, The Hawaii PEC approved a $4.7 million annual revenue increase for Hawaii Water's five Waikoloa systems with a two-year phase-in that began in October 2025. Moving to Texas, during the second quarter of 2025, DVRT reached settlement with the consumer advocates on our 2024 GRC, and interim rates were adopted and implemented in July of 2025. These rates are not subject to refund, and we're waiting on a final PUC Texas approval that is currently pending. Moving to Washington, in September of 2025, Washington Water filed a rate case with the Washington Utilities and Transportation Commission requesting a 4.9 million annual revenue increase to recover costs of system investments and rising operating costs. Expect the case to be completed and new rates implemented in the second half of 2026. Overall, these filings demonstrate our continued investment in infrastructure, proactive regulatory engagement, and disciplined efforts to align rates with the cost of providing safe, reliable service. Marty, back to you.

Thanks, Greg. And I am now on that last page. So what are we focused on in 2026, our centennial year? First and foremost, we're committed to a timely completion of the acquisitions we announced with Nexus Water for Nevada and for Oregon, and working with Nexus Water to successfully clean those transactions on time, and in a way that is good for customers and good for the employees. So we expect a smooth transition there. As Greg mentioned, we have a lot of regulatory activities going on, whether it's the 24-hour rate case in California, and then we have the rate case that Greg just mentioned in Washington, Mexico, Hawaii, as well as change of control applications that we're working on. And then, of course, once we get the 24-rate case done, it's a three-year cycle in California. We start to pivot on planning the 2027 general rate case. So it just kind of keeps moving forward. We'll continue to pursue growth opportunities in these high-growth areas. and looking for opportunities for systems that are kind of close to where we are that we could easily integrate on our platform and that meet our investment criteria. Again, just to remind everyone, the primary growth engine at California Water Service Group is really the reinvestment of existing capital into our rate base. And as Jim said, we were just about 10% year-over-year increasing CapEx. That's the primary growth engine. That excludes any of the PFAS stuff. And then secondary, We plan on continuing strategic acquisitions like what we've done here with Nexus that add to the existing platform. But having criteria that we use to evaluate acquisitions is really important because we want to maintain that 10% cadence on the CapEx line. And we also believe that allows us to keep rates affordable while making sure that our systems are resilient and we're building resiliency into our systems as we deal with things like climate change. And then of course, lastly, we will continue our discipline strategy on the regulatory side, working with our regulators. Affordability continues to be an issue. We know and understand that. We've been able to keep our rates affordable we've been able to maintain our rate-based growth and our capital replacement programs. So we'll continue looking at that and making sure we're being sensitive to the needs of our customer while balancing public health and sustainability and reliability in the systems. So with that, Desiree, we will open it up for questions, please.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Again, press star 1 to join the queue. Our first question comes from the line of Davis Sunderland with Beard. Your line is open.

Good morning, Davis.

Gentlemen, Marty, Jim, Sheila, and Greg, thank you guys for the updates, and thank you for taking my questions. Good morning. Lots of exciting updates. Maybe I'll start with what could be viewed as, I guess, the least exciting first, just on the GRC delay. Marty, in your prepared remarks, I think you said this case is a little different. It seems from my seat that it may be a lot different than the highly unusual 15-month delay last time. But I guess my question is just, is the delay of cases something that we should expect as a new norm? And fully recognizing that this is a very large and complex case, I guess just what gives you guys confidence in future cases staying on track, so to speak?

You want to go first, Greg? Yeah, sure. I'll go ahead and answer that question. Really a couple of things that we would say. The California Water Association over the past three or four years has been really focused on educating the commissioners about the impacts of the delays on customers. And we have seen actions moving to get the cases out on a more timely basis. Second, one of the lead advocates for that is the commissioner that's assigned to our case, Commissioner Matt Baker, And he is very focused on getting decisions out on time. And then the third thing really with where we're feeling where our proposed decision should be coming out pretty soon is the water division staff at the commission has been asking us for information to help them process up and get to publish the PD, very similar to what they did in the 21 and 2018 GRCs right before the PDs came out. So that's where I feel that long-term, the cases will come out on a more timely basis, and then short-term for our case, we see it coming out in the very near future.

Yeah, and just to echo what Greg said, I was being politically correct in my opening comments, Davis, but in the last rate case, it was just kind of like a black hole. Stuff was submitted, and then we waited and waited and waited and waited, and there wasn't a lot of communication there. We weren't getting questions, as Greg said. We got a lot of questions at the very, very end, and then the PD came out all of a sudden. It's been really different in this case. The judge, when it was delayed, gave us the 3% interim rate increase right away, which we thought was good. They have been asking questions throughout the process, which is good. We've seen a lot of activity, which leads us to believe they're very focused on it. Well, they haven't given us any assurances of a date. It's been very clear that they made it a priority at the commission. I think the other big thing that's changed now from where it was in the 21 rate case is affordability is a big issue. And when you deal with things in California like the skyrocketing electric rates that people had to deal with and gas rates that are up, the commissions are getting more scrutiny about rate increases. The idea of making a rate increase look worse than what it really is because you can't get a rate case out, I don't think the commission likes being in that position. And having a commissioner assigned to your case who used to run the Office of Ratepayer Advocates, I think it's good because they deal with those complaints from customers and rates go up. And so Baker has been very, very clear that his thing is getting rate cases out on time. So it can vary commissioner by commissioner. And while you have an assigned ALJ, the real hearing officer really is the commissioner in these cases. And so the commissioner kind of sets the tone in this case. I think we're fortunate we have Baker, who has been setting the tone. We need to get the rate cases out on time and be reasonable and diligent in our approach. So I think for now, I frankly expect to get a decision here relatively soon. And obviously, when it comes out, it's material. So we'll be 8K-ing it right away when it comes out.

That is super helpful, and thank you both for all the details there.

Maybe my second question, Marty, I appreciate you bringing up the DISC in Nevada. I was just going to ask about maybe the friendliness of operating environments or specifically any key regulatory mechanisms in either Oregon or Nevada that are worth calling out, either that are in place now or that you might be pursuing that would be helpful. And I think, Jim, you also mentioned in your comments, CapEx, of course, does not include potential investments in these, and maybe it's too early to say, but any thoughts on what those might look like would be helpful, too.

Yeah, sure. Let's start with Nevada. Nevada's got a very reasonable commission, which is positive. For our water systems that we're acquiring there, they're allowing consolidated or statewide rates to be phased in over six years for the water systems. The two wastewater systems are already on a statewide rate. As we mentioned, a hybrid rate environment, which means a historic test year with about a half year of capital improvements into your first year being included in the case. As you said, they have the DSIC. They also have the coupling in Nevada, and their rate case processes to approve them last about six months in Oregon. They also have a hybrid system of a rate case. They allow construction work in progress in rate base. They have a mechanism for interim rate memorandum account if your case is late. They allow adjustments for changes in your water production costs from your wholesalers, and their cases take about six months to complete. In Oregon, about half of the systems are non-regulated wastewater systems. Nexus has treated them as they treat their regulated entities, and so they file a rate case annual adjustment on an annual basis. Those are kind of the high-level benefits of each of the rate-making areas in each state.

Yeah, and I think as far as the CapEx goes, Davis, Clearly, we're working. First of all, they're historically in state. So, you know, we don't get pre-approval like we do in California. But Nevada did file a capital plan in their last rate case. And as a result of that, there's kind of a pre-recognition of what the levels are going to be, at least in Nevada, as we kind of move forward. But I would expect in the first couple of years, somewhere between $20 to $30 million in CapEx between the two systems. And then as we get more familiarity with the systems, that number could change. We feel there's also a lot of opportunity there for tuck-in, potential tuck-in acquisitions around the systems, especially in Nevada. So I think there's some great opportunity there that we're going to be able to to take advantage of, not only because it provides us the diversification that Marty talked about, but because there is an opportunity for us to continue investment growth.

Super helpful again, and thank you. Maybe if I could be greedy and just sneak in one more quick one.

I saw yesterday the EPA appears to officially be moving forward now with the PFAS pushout that's been talked about now for a few quarters. I know we've talked about this before, and Marty, you've said your plans here probably won't change, continue to make the upgrades as they come. But maybe just give any update on funds that are flowing as a result of the class action suit, and then if that first piece is indeed correct. And thank you guys very much.

Yeah, no, good question, Davis. Yeah, I think I've used the example. It's really hard to look at a mother with their child and say, you know, yes, there's something in the water that's not safe, but don't worry about it for three years, right? That just doesn't work. And I think consumers have gotten fairly well educated on water because, you know, as a utility, our product is consumable and it's ingested. You know, there's no room for error on water quality. It is absolutely critical. That's why it's in our bonus plan. That's why it's published right up front. We show what the ramifications are. Our goal is to meet all primary and secondary water quality standards every moment that we operate in. And obviously, as this becomes a new MCL, we've got to be compliant with it. So we're moving forward with our plans. What we've seen when you've had this fight between the states and feds on kind of when does it go, where does it go, if the feds have said, hey, we might delay this three years, we've seen states say, okay, but then we're going to make it effective sooner, right? Because again, I don't think anyone wants to not protect their citizens. I think that's really important. So we're moving ahead as planned. In 2025, Jim, I believe we spent about $20 million on our PFAS programs. And that's really getting all the program logistics up, the planning for all the constructions, putting the contracts out to bid, procuring all the materials and scheduling out. We're running it as a corporate, a group-sponsored program. So there's a PMO program. project management office, just really down the hall from me here. We have a very, very good engineer who's leading that program. The senior management team gets updates on it all the time, and everything's being scheduled out. So we're going to continue going kind of full steam ahead. I expect in 2026, Jim, if I remember correctly, we're going to spend between $50 and $70 million on PFAS in 2026. Again, that's incremental to the capital numbers that Jim has shared. And we're going to keep going for it. In terms of recoveries, Jim, what's our net amount that we've recovered so far? Is it 40-some-odd million?

The net amount is just slightly above, I think slightly below $40 million after the attorneys have taken out their share of the proceeds. But, you know, we continue to work on other opportunities to fund those investments. I know we've got a pretty strong grant program underway that's really – is going to help us I think in some of our more challenged districts and states. So we're looking at potential grant dollars in addition to the recovery dollars. The other thing I would just add is that if you take a look at the $235 million that we are anticipating in terms of spend for PFAS, probably you have to think of it in two kind of tranches. One is the treatment. And the other is where new wells need to be drilled in order to take out, either to replace old wells or to put new wells in where we don't believe there's as big of a contamination problem. And so the treatment is going to be in place much quicker than the wells. It usually takes us three, four, five years, depending upon the permitting process, to get those wells going up. But a majority of the treatment we do anticipate right now being put in place by the end of 2027.

It's phased, yeah. Outstanding. Thank you guys very much. Appreciate all the detail. All right, Davis. Have a good day. Please feel free to call with follow-up. Take care.

And again, if you would like to ask a question, press star then the number one on your telephone keypad. There are no further questions at this time.

I would like to turn the call back over to Marty Kroponiki for closing remarks.

All right, Desiree. Thank you, everyone, for joining us here today. Obviously, 2026 is starting off with a bang. We have plenty to do on our agenda at California Water Service Group, and we'll look forward to integrating the acquisitions that we talked about, the Nexus acquisitions, as well as the BBRT acquisitions that we announced. getting the right cases, staying focused on the right cases, and getting those concluded as quickly as possible, and then continue with the PFAS treatment in our capital program. So there'll be plenty to talk about at the end of Q1, and we'll look forward to giving everyone an update then. So until then, thanks for joining us today. Be safe, and we'll talk to everyone soon. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.