- 7.8% increase in adjusted second quarter consolidated
diluted EPS over adjusted second quarter of 2020, or 4.3% increase
as recorded
- 12.1% increase in adjusted YTD consolidated diluted EPS
over adjusted YTD 2020, or 15.9% increase as
recorded
- 9% increase in quarterly dividend for September 1 dividend
payment
American States Water Company (NYSE:AWR) today reported basic
and fully diluted earnings per share of $0.72 for the quarter ended
June 30, 2021, as compared to basic and fully diluted earnings per
share of $0.69 for the quarter ended June 30, 2020. Included in the
results for the second quarter of 2021 were gains on investments
held to fund one of the company's retirement plans totaling $1.6
million, or $0.03 per share, as compared to higher gains of $2.4
million, or approximately $0.05 per share, for the same period in
2020 largely due to volatility in the financial markets last year
caused by the early stages of the COVID-19 pandemic. Excluding this
unfavorable variance of $0.02 per share, adjusted diluted earnings
for the second quarter of 2021 increased by $0.05 per share as
compared to the same period in 2020 adjusted, or a 7.8%
increase.
Second Quarter 2021 Results
The table below sets forth a comparison of diluted earnings per
share contribution by business segment as recorded during the
second quarter of 2021 and 2020.
Diluted Earnings per
Share
Three Months Ended
6/30/2021
6/30/2020
CHANGE
Water
$
0.57
$
0.54
$
0.03
Electric
0.04
0.03
0.01
Contracted services
0.11
0.12
(0.01
)
Consolidated diluted earnings per
share
$
0.72
$
0.69
$
0.03
Water Segment:
Diluted earnings per share from AWR's regulated water utility
segment, Golden State Water Company ("GSWC"), for the three months
ended June 30, 2021 increased by $0.03 per share as compared to the
same period in 2020. Excluding the unfavorable variance of $0.02
per share from the gains on investments held to fund one of the
company's retirement plans discussed above, diluted earnings at the
water segment for the second quarter of 2021 increased by $0.05 per
share due to the following items (excluding the impact of billed
surcharges, which have no effect on net earnings):
- An increase in the water gross margin of $3.2 million, or
approximately $0.06 per share, as a result of new rates authorized
by the California Public Utilities Commission ("CPUC"). Effective
January 1, 2021, GSWC received its full third-year step increase,
which it achieved as a result of passing an earnings test. The full
step increase is expected to generate an additional $11.1 million
in water gross margin for 2021.
- An overall increase in operating expenses (excluding supply
costs), which negatively impacted earnings by $0.02 per share
mainly due to increases in water treatment costs and depreciation
expense, partially offset by a decrease in maintenance
expense.
- An increase in interest expense (net of interest and other
income), which negatively impacted earnings by approximately $0.02
per share resulting primarily from an overall increase in total
borrowing levels and higher interest rates at the water segment
compared to the same period in 2020. The overall higher interest
rates resulted from the issuance of long-term debt in July 2020 and
GSWC used the proceeds to pay down its intercompany borrowings (as
required by the CPUC), which bear lower short-term rates.
- Changes in the effective income tax rate resulting from certain
flow-through taxes and permanent items for the three months ended
June 30, 2021 as compared to the same period in 2020, favorably
impacted earnings by approximately $0.03 per share.
Electric Segment:
Diluted earnings per share from the electric utility segment for
the three months ended June 30, 2021 increased $0.01 per share due
primarily to an increase in the electric gross margin resulting
from higher customer rates for 2021 approved by the CPUC. Overall
operating expenses at the electric segment (excluding supply costs)
were relatively flat as compared to the same period in 2020.
Contracted Services Segment:
Diluted earnings from the contracted services segment for the
three months ended June 30, 2021 decreased $0.01 per share largely
due to higher construction costs incurred on certain projects.
Year-To-Date 2021 Results
Fully diluted earnings for the six months ended June 30, 2021
were $1.24 per share as compared to $1.07 per share recorded for
the same period in 2020. Included in the results for the six months
ended June 30, 2021 were gains on investments held to fund one of
the company's retirement plans totaling $2.2 million, or $0.04 per
share, as compared to minimal gains generated during the same
period in 2020 largely due to volatility in the financial markets
last year caused by the early stages of the COVID-19 pandemic.
Excluding this favorable variance of $0.04 per share, adjusted
diluted earnings for the six months ended June 30, 2021 increased
by $0.13 per share as compared to the same period in 2020 adjusted,
or a 12.1% increase. The table below sets forth a comparison of
diluted earnings per share contribution by business segment and for
the parent company as recorded during the six months ended June 30,
2021 and 2020.
Diluted Earnings per
Share
Six Months Ended
6/30/2021
6/30/2020
CHANGE
Water
$
0.90
$
0.78
$
0.12
Electric
0.10
0.09
0.01
Contracted services
0.24
0.20
0.04
Consolidated diluted earnings per
share
$
1.24
$
1.07
$
0.17
Water Segment:
Diluted earnings per share from the water segment for the six
months ended June 30, 2021 increased by $0.12 per share as compared
to the same period in 2020. Excluding the favorable variance of
$0.04 per share from the gains on investments held to fund one of
the company's retirement plans discussed above, diluted earnings
for the six months ended June 30, 2021 at the water segment
increased by $0.08 per share due to the following items (excluding
the impact of billed surcharges, which have no effect on net
earnings):
- An increase in the water gross margin of $5.7 million, or
approximately $0.11 per share, as a result of new rates authorized
by the CPUC. GSWC received its full third-year step increases
effective January 1, 2021, which are expected to generate an
additional $11.1 million in water gross margin for 2021.
- An overall increase in operating expenses (excluding supply
costs), which negatively impacted earnings by approximately $0.03
per share due, in large part, to an increase in water treatment
costs, depreciation expense and property taxes as compared to the
same period in 2020, partially offset by a decrease in maintenance
expense.
- An overall increase in interest expense (net of interest and
other income), which negatively impacted earnings by approximately
$0.03 per share resulting primarily from an overall increase in
total borrowing levels and higher interest rates at the water
segment compared to the same period in 2020. The overall higher
interest rates resulted from the issuance of long-term debt in July
2020 and GSWC used the proceeds to pay down its intercompany
borrowings (as required by the CPUC), which bear lower short-term
rates.
- Changes in the effective income tax rate resulting from certain
flow-through taxes and permanent items for the six months ended
June 30, 2021 as compared to the same period in 2020, favorably
impacted earnings by approximately $0.03 per share.
Electric Segment:
Diluted earnings per share from the electric segment for the six
months ended June 30, 2021 increased by $0.01 per share as compared
to the same period in 2020 largely due to an increase in the
electric gross margin resulting from new rates authorized by the
CPUC, as well as a decrease in interest expense.
Contracted Services Segment:
Diluted earnings from the contracted services segment for the
six months ended June 30, 2021 increased by $0.04 per share as
compared to the same period in 2020 primarily due to an overall
increase in construction activity and management fee revenue, as
well as a decrease in overall operating expenses including lower
legal and other outside services costs. The increase in
construction activity was largely due to timing differences of when
work was performed as compared to the first six months of 2020. We
expect the contracted services segment to contribute $0.45 to $0.49
per share for the year 2021.
Dividends
On July 27, 2021, AWR's Board of Directors approved a 9%
increase in the third quarter dividend, from $0.335 per share to
$0.365 per share on AWR's Common Shares. This increase is
comparable to the compound annual growth rate ("CAGR") of 9%
achieved by the company in its quarterly dividend over the last
five years. Dividends on the Common Shares will be paid on
September 1, 2021 to shareholders of record at the close of
business on August 16, 2021. AWR has paid common dividends every
year since 1931, and has increased the dividends received by
shareholders each calendar year for 67 consecutive years, which
places it in an exclusive group of companies on the New York Stock
Exchange that have achieved that result. AWR's current policy is to
achieve a CAGR in the dividend of more than 7% over the long-term.
The company has achieved nearly a 10% CAGR in its calendar year
dividend payments from 2011–2021.
Non-GAAP Financial Measures
This press release includes a discussion on the water and
electric gross margins for various periods, which are computed by
subtracting total supply costs from total revenues. The discussion
also includes AWR’s operations in terms of diluted earnings per
share by business segment, which is each business segment’s
earnings divided by the company’s weighted average number of
diluted common shares. Furthermore, the gains generated during the
three-and six-month periods ended June 30, 2021 and 2020 on the
investments held to fund one of the company's retirement plans have
been excluded when communicating the results to help facilitate
comparisons of the company’s performance from period to period.
These items are derived from consolidated financial information but
are not presented in our financial statements that are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) in
the United States. These items constitute "non-GAAP financial
measures" under Securities and Exchange Commission rules.
The non-GAAP financial measures supplement our GAAP disclosures
and should not be considered as alternatives to the GAAP measures.
Furthermore, the non-GAAP financial measures may not be comparable
to similarly titled non-GAAP financial measures of other
registrants. The company uses the water and electric gross margins,
and earnings per share by business segment as important measures in
evaluating its operating results and believes these measures are
useful internal benchmarks in evaluating the performance of its
operating segments. The company reviews these measurements
regularly and compares them to historical periods and to the
operating budget.
Forward-Looking Statements
Certain matters discussed in this press release with regard to
the company’s expectations may be forward-looking statements that
involve risks and uncertainties. The assumptions and risk factors
that could cause actual results to differ materially include those
described in the company’s most recent Form 10-Q and Form 10-K
filed with the Securities and Exchange Commission.
Conference Call
Robert Sprowls, president and chief executive officer, and Eva
Tang, senior vice president and chief financial officer, will host
a conference call to discuss these results at 2:00 p.m. Eastern
Time (11:00 a.m. Pacific Time) on Tuesday, August 3. There will be
a question and answer session as part of the call. Interested
parties can listen to the live conference call and view
accompanying slides on the internet at www.aswater.com. The call
will be archived on the website and available for replay beginning
August 3, 2021 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)
through August 10, 2021.
About American States Water Company
American States Water Company is the parent of Golden State
Water Company, Bear Valley Electric Service, Inc. and American
States Utility Services, Inc., serving over one million people in
nine states. Through its water utility subsidiary, Golden State
Water Company, the company provides water service to approximately
262,000 customer connections located within more than 80
communities in Northern, Coastal and Southern California. Through
its electric utility subsidiary, Bear Valley Electric Service,
Inc., the company distributes electricity to approximately 24,500
customer connections in the City of Big Bear Lake and surrounding
areas in San Bernardino County, California. Through its contracted
services subsidiary, American States Utility Services, Inc., the
company provides operations, maintenance and construction
management services for water distribution and wastewater
collection and treatment facilities located on 11 military bases
throughout the country under 50-year privatization contracts with
the U.S. government.
American States Water
Company
Consolidated
Comparative Condensed Balance
Sheets (Unaudited)
(in thousands)
June 30, 2021
December 31, 2020
Assets
Net Property, Plant and Equipment
$1,570,633
$1,512,043
Goodwill
1,116
1,116
Other Property and Investments
37,414
35,318
Current Assets
136,312
157,115
Other Assets
96,883
86,011
Total Assets
$1,842,358
$1,791,603
Capitalization and Liabilities
Capitalization
$1,076,479
$1,082,021
Current Liabilities
111,351
118,572
Other Credits
654,528
591,010
Total Capitalization and
Liabilities
$1,842,358
$1,791,603
Condensed Statements of Income
(Unaudited)
Condensed Statements of Income
(Unaudited)
(in thousands, except per share
amounts)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Operating Revenues
Water
$
91,633
$
87,074
$
166,662
$
158,498
Electric
8,108
7,679
19,647
18,647
Contracted services
28,673
26,525
59,165
53,210
Total operating revenues
128,414
121,278
245,474
230,355
Operating Expenses
Water purchased
20,916
18,754
36,155
32,846
Power purchased for pumping
2,861
2,398
5,006
4,257
Groundwater production assessment
5,220
5,030
9,660
9,178
Power purchased for resale
2,130
1,967
5,328
5,010
Supply cost balancing accounts
(3,086
)
(1,802
)
(5,513
)
(3,967
)
Other operation
8,534
7,959
16,751
16,445
Administrative and general
20,630
20,398
42,683
43,348
Depreciation and amortization
9,770
9,031
19,330
17,842
Maintenance
3,267
4,094
5,929
7,978
Property and other taxes
5,273
5,246
11,213
10,405
ASUS construction
15,052
12,487
30,756
25,598
Total operating expenses
90,567
85,562
177,298
168,940
Operating income
37,847
35,716
68,176
61,415
Other Income and Expenses
Interest expense
(6,032
)
(5,322
)
(12,290
)
(11,372
)
Interest income
348
490
803
1,048
Other, net
1,875
3,009
2,531
775
Total other income and expenses,
net
(3,809
)
(1,823
)
(8,956
)
(9,549
)
Income Before Income Tax
Expense
34,038
33,893
59,220
51,866
Income tax expense
7,462
8,281
13,376
12,182
Net Income
$
26,576
$
25,612
$
45,844
$
39,684
Weighted average shares outstanding
36,916
36,884
36,907
36,872
Basic earnings per Common Share
$
0.72
$
0.69
$
1.24
$
1.07
Weighted average diluted shares
37,007
37,000
36,993
36,985
Fully diluted earnings per Common
Share
$
0.72
$
0.69
$
1.24
$
1.07
Dividends paid per Common Share
$
0.335
$
0.305
$
0.670
$
0.610
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210802005688/en/
Eva G. Tang Senior Vice President-Finance, Chief Financial
Officer, Corporate Secretary and Treasurer Telephone: (909)
394-3600, ext. 707
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