Annual Meeting Financial Report March 19, 2019 F inanc ial - - PowerPoint PPT Presentation

Annual Meeting – Financial Report

March 19, 2019

F inanc ial Statements

Financial Statements – As of and For the Year Ending December 31, 2018 Include:

• Balance Sheets – snapshot of Utility’s financial health
• Statements of Revenues and Expenses – results of the Utility’s operations
• Statements of Changes in Members’ Equity – reports the changes in members’

equity accounts

• Statements of Cash Flow s – reports cash inflow s and cash outflow s from
• ngoing operations and investment (capital) and finance (debt) sources

F inanc ial Statement F ac ts

 Audited annually by a firm of Certified Public Accountants  Provides an independent opinion on the accuracy of the Utility’s financial

statements

 Users can rely on that information in making financial decisions  Utility has received an unmodified opinion from the independent auditors

• n its 2018 financial statements, stating that the financial statements are

fairly stated in all material respects

 Highest level of assurance auditors can provide  Financial Statements duplicated in the

Annual Report, completed audited Financial Statements include: Notes to the Financial Statements Supplemental Information

F inanc ial Highlights

 Utility had another successful year and is in strong financial shape  Capital Credit retirement program commenced during 2018 – retirements

totaled $2.9 million

 Credits w ere allocated to members for qualifying years from 1988 – 2005  Utility’s underlying credit rating unchanged  2012A and 2013 series revenue bonds

paid in full

 Credit rating on the Utility’s 2010 series

revenue bonds upgraded by Moody’s to Aa2

 Total liabilities decreased $8.2 million

 Assets – resources that provide future economic benefit to the

Company

 Total assets year over year – increase of approximately $2,485,000  Plant, Property and Equipment (PPE) – Expenditures totaling

approximately $17,479,000 during 2018

 $23.5 million of capital projects completed and placed into service

• Lime Water Treatment Plant Upgrades
• RO Plant Expansion Project
• Phase II Water Main R& R Priority Projects
• Wastew ater Plant Upgrades
• Sew er R& R Rehabilitation projects

Balance Sheets - Assets– December 31, 2018 and 2017 – Highlights

Balance Sheets - Assets– December 31, 2018 and 2017 – Highlights (cont’d)

Cash and cash equivalents:

• Restricted cash – not available for use
• Continued effort to invest Utility’s cash in accordance w ith

investment policy for a better investment return

• Includes customer deposits of $3m – not available for use
• Overall cash reserve levels w ill be decreasing throughout 2019

due to the follow ing:

 Expansion of the Operations Service Center  West Wastew ater Plant upgrades  Ongoing service line renew al and replacement

Balance Sheets - Assets– December 31, 2018 and 2017 – Highlights (cont’d)

Investments:

• $40.6 million – governed by Utility’s Investment Policy
• Diversification
• Compliance w ith the Utility’s investment policy monitored on a

monthly basis

Cash and Investments by Type

Balance Sheets – Liabilities - Highlights

 Liabilities – future sacrifices of economic benefits that the Utility is

• bligated to make as a result of past transactions

 Total liabilities decreased $8.2 million from 2017 to 2018  Series 2012A and 2013 revenue bonds w ere

paid in full during 2018

 Payments due in 2019:

$1,295,361 interest due 5/1 $6,120,361 principal and interest due 11/1

Balance Sheets - Liabilities - Long-Term Debt Service

The Utility has three outstanding long-term bond issues totaling $66,595,000 at December 31, 2018: $48,090,000 Series 2010 Bonds – Water & Wastewater (refinancing) Maturity 2033 Interest Rates 2.50 – 5.00% $8,895,000 Series 2012B Bond – Water & Wastewater Refunding (Series 2002A/B) Maturity 2023 Interest Rate – 1.9326% $9,610,000 Series 2014 Bond – Water Refunding (Series 2004A) Maturity 2024 Interest Rate – 1.97%

Balance Sheets – Total Liabilities

Statements of Revenues and Expenses

 Operating revenues increased 3.4% from 2017, consistent w ith expectations  Water Sales - 40%  Wastew ater Sales - 52%  Other fees are meter connection fees, special service charge interest payments, backflow installation fees, among others

Statements of Revenues and Expenses (cont.)

 Operating expenses increased 8.1% to $37.8 million compared to $35.0 million in 2017  Increase due to higher chemical cost and usage, increased labor costs and higher depreciation expense  Depreciation expense increased approximately $1.1 million, mainly due to the completion of several large capital projects:

RO Plant Expansion Water Treatment Plant upgrades Phase II Water Main R& R)

 Operating margin: 2018: $2.6 million 2017: $4.1 million

Statements of Members’ Equity

 Increase totaling $10.7 million as a result of:

$1.8 million net margin $11.9 million of capital contributions $2.9 million of capital credit retirements

 Increase of 4.7% from 2017  Capital contributions consist of:

$7.7 million of ANC fee and SSC principal payments $4.2 million of contributed collection and distribution lines from developers

 Members’ equity as a % of total assets at year end:

2018: 76.4% 2017: 73.8%

Statements of Cash Flow s - Highlights

 Reports on the cash inflow s and outflow s during the year  Net cash provided by operating activities:

2018: $17.7 million 2017: $18.2 million

 Investing – investments in securities and purchases

• f capital assets

 $20.9 million spent on capital projects  $7.7 million received in ANC fees and special service charge principal

Statements of Cash Flow s (cont.)

 $6.1 million in principal payments on long-term debt  Principal payment included payoff of 2012A and 2013 bonds  Cash and cash equivalents decreased $1.5 million during 2018

Final Thoughts

 Strong w orking capital position  In compliance w ith all of its debt covenants and has strong service coverage ratios  Currently has AA and Aa2 bond ratings issued by Standard and Poor’s and Moody’s, respectively  The Utility w ill continue its system improvement capital project efforts, its debt reduction plan and capital credit retirement plan  The Utility is w ell positioned to continue the same level of service its members expect