- A 9.4% increase in full year 2021 consolidated diluted EPS
over prior year, or an 8.8% increase as adjusted
- Increased earnings per share at all operating business
segments for full year 2021
American States Water Company (NYSE:AWR) today reported basic
and fully diluted earnings per share of $0.55 for the fourth
quarter ended December 31, 2021, as compared to basic and fully
diluted earnings per share of $0.55 and $0.54, respectively,
recorded for the fourth quarter ended December 31, 2020.
Basic and fully diluted earnings per share for the full year
2021 were $2.55 compared to basic and fully diluted earnings of
$2.34 and $2.33 per share, respectively for 2020, a $0.22 per share
increase in diluted earnings per share or 9.4%. Included in the
results for the full year 2021 were gains on investments held to
fund one of the company's retirement plans totaling $4.3 million,
or $0.08 per share, as compared to $3.0 million, or $0.06 per
share, in gains generated during the same period in 2020 largely
due to volatility in the financial markets. Excluding these gains
from both periods, adjusted diluted earnings for the full year 2021
were $2.47 per share as compared to adjusted diluted earnings of
$2.27 per share for the same period in 2020, an adjusted increase
of $0.20 per share, or 8.8%.
Fourth Quarter 2021 Results
The table below sets forth a comparison of the fourth quarter
2021 diluted earnings per share contribution by business segment
and for the parent company with the same period in 2020.
Diluted Earnings per
Share
Three Months Ended
12/31/2021
12/31/2020
CHANGE
Water
$
0.36
$
0.32
$
0.04
Electric
0.07
0.07
—
Contracted services
0.13
0.17
(0.04
)
AWR (parent)
(0.01
)
(0.02
)
0.01
Consolidated fully diluted earnings per
share, as reported
$
0.55
$
0.54
$
0.01
Water Segment:
Diluted earnings from AWR's regulated water utility segment,
Golden State Water Company ("GSWC"), for the three months ended
December 31, 2021 were $0.36 per share as compared to $0.32 per
share recorded for the same period in 2020, an increase of $0.04
per share, due to the following items:
- An increase in the water segment’s operating revenues of $4.2
million, largely as a result of new rates authorized by the
California Public Utilities Commission ("CPUC"). GSWC received its
full third-year step increase effective January 1, 2021 as well as
mid-year increases to reflect higher water supply costs. Due to
regulatory mechanisms in place for water supply costs, the increase
in operating revenues includes the full recovery of increases in
supply costs discussed below.
- An increase in water supply costs of $636,000, which consist of
purchased water, purchased power for pumping, groundwater
production assessments and changes in the water supply cost
balancing accounts. Actual water supply costs are tracked and
passed through to customers on a dollar-for-dollar basis by way of
the CPUC-approved water supply cost balancing accounts. The
increase in water supply costs results in a corresponding increase
in water operating revenues and has no net impact on the water
segment’s profitability.
- An overall increase in operating expenses (excluding supply
costs and a gain on the sale of assets) of $1.2 million, which
negatively impacted the water segment's earnings. The increase was
primarily due to higher conservation costs, employee-related
benefits, insurance costs and depreciation expense as compared to
the fourth quarter of 2020, partially offset by a decrease in
property and other taxes.
- The sale of non-utility-related land at the water segment
resulted in a gain of $409,000 recorded during the three months
ended December 31, 2021, with no equivalent item in 2020.
- An increase in the effective income tax rate, which negatively
impacted earnings. The increase resulted primarily from changes in
certain flow-through taxes and permanent items during the fourth
quarter of 2021 as compared to the same period in 2020. As a
regulated utility, GSWC treats certain temporary differences as
flow-through in computing its income tax expense consistent with
the income tax method used in its CPUC-jurisdiction ratemaking.
Changes in the magnitude of flow-through items either increase or
decrease tax expense, thereby affecting diluted earnings per
share.
Electric Segment:
Diluted earnings from the electric segment for each of the three
month periods ended December 31, 2021 and 2020 were $0.07 per
share. Higher electric revenues and lower electric supply costs
were largely offset by an overall increase in other operating
expenses as compared to the fourth quarter of 2020.
Contracted Services Segment:
Diluted earnings from the contracted services segment for the
three months ended December 31, 2021 were $0.13 per share as
compared to $0.17 per share for the same period in 2020. This
decrease was primarily due to a decrease in construction activity,
partially offset by an increase in management fee revenue and an
overall decrease in operating expenses. The decrease in
construction activity was due largely to timing differences of when
work was performed as compared to the fourth quarter of 2020.
AWR (parent):
For the three months ended December 31, 2021, diluted earnings
at AWR (parent) increased $0.01 per share due primarily to changes
in state unitary taxes.
Full Year 2021 Results
Fully diluted earnings for the year ended December 31, 2021 were
$2.55 per share as compared to $2.33 per share recorded for 2020.
The table below sets forth a comparison of the diluted earnings per
share contribution by business segment and for the parent company
for the years 2021 and 2020.
Diluted Earnings per
Share
For The Year Ended
12/31/2021
12/31/2020
CHANGE
Water
$
1.87
$
1.66
$
0.21
Electric
0.21
0.20
0.01
Contracted services
0.48
0.47
0.01
AWR (parent)
(0.01
)
—
(0.01
)
Consolidated fully diluted earnings per
share, as reported
$
2.55
$
2.33
$
0.22
Water Segment:
Diluted earnings per share from the water segment for the year
ended December 31, 2021 increased by $0.21 per share as compared to
2020. As previously noted, included in the results for 2021 were
gains on investments held to fund one of the company's retirement
plans totaling $4.3 million, or $0.08 per share, as compared to
$3.0 million, or $0.06 per share, in gains generated during 2020
largely due to market conditions. Excluding these gains from both
years, adjusted diluted earnings at the water segment for 2021 were
$1.79 per share as compared to adjusted diluted earnings of $1.60
per share for 2020. This adjusted increase of $0.19 per share was
due to the following items:
- An increase in the water segment’s operating revenues of $16.5
million, largely as a result of new rates authorized by the CPUC.
GSWC received its full third-year step increase effective January
1, 2021 as well as mid-year increases to reflect higher water
supply costs. Due to regulatory mechanisms in place for water
supply costs, the increase in operating revenues includes the full
recovery of increases in supply costs discussed below.
- An increase in water supply costs of $4.1 million, which
consist of purchased water, purchased power for pumping,
groundwater production assessments and changes in the water supply
cost balancing accounts. Actual water supply costs are tracked and
passed through to customers on a dollar-for-dollar basis by way of
the CPUC-approved water supply cost balancing accounts. The
increase in water supply costs results in a corresponding increase
in water operating revenues and has no net impact on the water
segment’s profitability.
- An overall increase in operating expenses (excluding supply
costs and a gain on the sale of assets) of $3.1 million, which
negatively impacted the water segment's earnings. The increase was
primarily due to higher chemical and water treatment costs,
conservation costs, regulatory costs, insurance costs, depreciation
expense, and property and other taxes as compared to 2020,
partially offset by a decrease in maintenance expense.
- The sale of non-utility-related land at the water segment
resulted in a gain of $409,000 recorded during 2021, with no
equivalent item in 2020.
- An overall increase in interest expense (net of interest and
other income) of $1.7 million, which negatively impacted earnings.
GSWC issued $160 million of long-term debt in July 2020 and used
the proceeds to pay down its intercompany borrowings (as required
by the CPUC); intercompany borrowings bear lower short-term rates.
There was also a decrease in interest income earned on regulatory
assets at the water segment bearing interest at the current 90-day
commercial paper rate, which decreased compared to 2020, as well as
a decrease in the receipt of other income amounts owed by
developers.
- A decrease in the effective income tax rate, which favorably
impacted earnings. The decrease resulted primarily from changes in
certain flow-through taxes and permanent items during 2021 as
compared to 2020.
Electric Segment:
Diluted earnings from the electric segment was $0.21 per share
for 2021, as compared to $0.20 per share recorded for 2020, an
increase of $0.01 per share. There was an increase in electric
revenues due to CPUC-approved rate increases effective January 1,
2021, as well as lower interest expense as compared to 2020. The
decrease in interest expense was due primarily to the elimination
of interest expense allocated from GSWC effective July 1, 2020 as a
result of the spin-off of GSWC's electric division to Bear Valley
Electric Service, Inc. These increases to net earnings were
partially offset by an increase in electric supply costs and other
operating expenses. Due to regulatory mechanisms in place, the
increase in electric supply costs results in a corresponding
increase in electric operating revenues and has no net impact on
the electric segment’s profitability.
Contracted Services Segment:
Diluted earnings from the contracted services segment was $0.48
per share, as compared to $0.47 per share for 2020, an increase of
$0.01 per share. This was due to an increase in management fee
revenue, as well as a decrease in overall operating expenses,
partially offset by overall lower construction activity as compared
to 2020. The decrease in overall operating expenses was due to,
among other things, lower legal and outside services costs and
other non-income taxes.
AWR (Parent):
For the year ended December 31, 2021, diluted earnings from AWR
(parent) decreased $0.01 per share compared to 2020 due primarily
to changes in state unitary taxes.
California Water and Wastewater Arrearage Payment
Program
On July 12, 2021, the governor of California approved SB-129
Budget Act of 2021, in which nearly $1 billion in relief funding to
customers for their overdue water bills was included. The relief
program is being managed by the State Water Resources Control Board
through its California Water and Wastewater Arrearage Payment
Program (“Program”). The Program enabled water suppliers to apply
on behalf of customers for funds made available to the state from
the federal American Rescue Plan Act of 2021 to pay their water
bills incurred during the pandemic. In December 2021, GSWC
requested $9.5 million in relief for its customers across its
California service areas. In January 2022, GSWC received 100% of
the relief funds requested on behalf of its customers, and is in
the process of applying credits to eligible customers’
accounts.
Regulatory Matters
In July 2020, GSWC filed a general rate case application for all
of its water regions and its general office. This general rate case
will determine new water rates for the years 2022 – 2024. In
November 2021, GSWC and the Public Advocates Office at the CPUC
("Public Advocates") filed with the CPUC a joint motion to adopt a
settlement agreement between GSWC and Public Advocates on this
general rate case application. The settlement agreement, if
approved, resolves all issues related to the 2022 annual revenue
requirement in the general rate case application, leaving only
three unresolved issues. Among other things, the settlement
authorizes GSWC to invest approximately $404.8 million in capital
infrastructure over the three-year cycle. The settlement also
authorizes GSWC to complete certain advice letter capital projects
approved in the last general rate case, which have recently been
completed for a total capital investment of $9.4 million. The
additional annual revenue requirements generated from these capital
investments are $1.2 million and became effective February 15,
2022. Advice letter projects are filed for revenue recovery only
when those projects are completed. Excluding the advice letter
project revenues, the amounts included in the settlement agreement
would increase the 2022 adopted revenues by approximately $30.3
million as compared to the 2021 adopted revenues, and increase the
2022 adopted supply costs by $9.7 million as compared to the 2021
adopted supply costs. The settlement agreement also allows for
potential additional increases in adopted revenues for 2023 and
2024 subject to an earnings test and changes to the forecasted
inflationary index values.
The three remaining unresolved issues relate to GSWC's requests
for: (i) a medical cost balancing account, (ii) a general liability
insurance cost balancing account, and (iii) the consolidation of
two of GSWC's customer service areas. GSWC and Public Advocates
have filed briefs with the CPUC on these unsettled issues. A
proposed decision is expected in mid-2022, and would address the
three unresolved issues along with the settlement agreement filed
by GSWC and Public Advocates. Pending a final decision on this
general rate case application, GSWC filed with the CPUC for interim
rates, which will make new 2022 rates, once approved in a CPUC
final decision, retroactively effective January 1, 2022.
Dividends
On February 1, 2022, AWR's Board of Directors approved a first
quarter dividend of $0.365 per share on AWR's Common Shares.
Dividends on the Common Shares will be paid on March 1, 2022 to
shareholders of record at the close of business on February 15,
2022. AWR has paid dividends on its Common Shares for over 82
consecutive years, and has increased the dividends received by
shareholders each calendar year for 67 consecutive years. This
places AWR in an exclusive group of companies on the New York Stock
Exchange that have achieved that result. Registrant's current
policy is to achieve a compound annual growth rate in the dividend
of more than 7% over the long-term. The company has achieved nearly
a 10% compound annual growth rate in its calendar year dividend
payments from 2011–2021.
Non-GAAP Financial Measures
This press release includes a discussion on 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. This measure is derived
from consolidated financial information but is not presented in our
financial statements that are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) in the United States. This
item constitutes a "non-GAAP financial measure" under Securities
and Exchange Commission rules, which supplements our GAAP
disclosures but should not be considered as an alternative to the
GAAP measure. Furthermore, the non-GAAP financial measure may not
be comparable to similarly titled non-GAAP financial measures of
other registrants. The company uses earnings per share by business
segment as an important measure in evaluating its operating results
and believes this measure is a useful internal benchmark in
evaluating the performance of its operating segments. The company
reviews this measurement regularly and compares it to historical
periods and to the operating budget. The company has provided the
computations and reconciliations of diluted earnings per share from
the measure of operating income by business segment to AWR’s
consolidated fully diluted earnings per share in this press
release.
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 Wednesday, February 23. 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
February 23, 2022 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific
Time) through March 2, 2022.
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
262,800 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 24,700
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, wastewater collection,
and treatment facilities located on eleven military bases
throughout the country under 50-year privatization contracts with
the U.S. government.
American States Water
Company
Consolidated
Comparative Condensed Balance
Sheets
(in thousands)
December 31, 2021
December 31, 2020
Assets
Net Utility Plant
$
1,626,004
$
1,512,043
Goodwill
1,116
1,116
Other Property and Investments
40,806
35,318
Current Assets
138,052
157,115
Other Assets
95,005
86,011
Total Assets
$
1,900,983
$
1,791,603
Capitalization and Liabilities
Capitalization
$
1,098,123
$
1,082,021
Current Liabilities
155,574
118,572
Other Credits
647,286
591,010
Total Capitalization and
Liabilities
$
1,900,983
$
1,791,603
Condensed Statements of
Income
(in thousands, except per share
amounts)
Three months ended December
31,
Twelve months ended December
31,
2021
2020
2021
2020
(Unaudited)
Operating Revenues
Water
$
77,682
$
73,438
$
347,112
$
330,637
Electric
10,134
10,089
38,345
37,024
Contracted services
28,808
40,673
113,396
120,582
Total operating revenues
116,624
124,200
498,853
488,243
Operating Expenses
Water purchased
17,666
18,263
77,914
74,554
Power purchased for pumping
2,513
2,508
11,103
10,134
Groundwater production assessment
4,567
5,252
19,412
20,392
Power purchased for resale
3,037
3,296
11,240
10,423
Supply cost balancing accounts
(3,462
)
(5,197
)
(11,421
)
(11,803
)
Other operation
8,573
8,663
34,738
33,236
Administrative and general
20,609
19,623
83,547
83,615
Depreciation and amortization
10,440
9,660
39,596
36,850
Maintenance
3,873
3,478
12,781
15,702
Property and other taxes
5,257
6,101
22,522
22,199
ASUS construction
13,999
23,236
56,909
62,411
(Gain) loss on sale of assets
(465
)
40
(465
)
31
Total operating expenses
86,607
94,923
357,876
357,744
Operating income
30,017
29,277
140,977
130,499
Other Income and Expenses
Interest expense
(4,991
)
(4,998
)
(22,834
)
(22,531
)
Interest income
357
437
1,493
1,801
Other, net
2,136
2,465
5,134
4,853
Total other income and expenses,
net
(2,498
)
(2,096
)
(16,207
)
(15,877
)
Income Before Income Tax
Expense
27,519
27,181
124,770
114,622
Income tax expense
7,169
6,970
30,423
28,197
Net Income
$
20,350
$
20,211
$
94,347
$
86,425
Weighted average shares outstanding
36,936
36,889
36,921
36,880
Basic earnings per Common Share
$
0.55
$
0.55
$
2.55
$
2.34
Weighted average diluted shares
37,029
37,007
37,010
36,995
Fully diluted earnings per Common
Share
$
0.55
$
0.54
$
2.55
$
2.33
Dividends paid per Common Share
$
0.365
$
0.335
$
1.400
$
1.280
Computations and Reconciliations of Non-GAAP Financial
Measure
Below are the computations and reconciliations of diluted
earnings per share from the measure of operating income by business
segment to AWR’s consolidated fully diluted earnings per share for
the three and twelve months ended December 31, 2021 and 2020.
Water
Electric
Contracted Services
AWR (Parent)
Consolidated (GAAP)
In 000's except per share
amounts
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Operating income
$
20,278
$
17,480
$
3,442
$
3,438
$
6,300
$
8,363
$
(3
)
$
(4
)
$
30,017
$
29,277
Other income and expense
2,674
2,287
(208
)
(90
)
(142
)
(92
)
174
(9
)
2,498
2,096
Income tax expense
4,377
3,484
1,096
967
1,507
2,002
189
517
7,169
6,970
Net income
$
13,227
$
11,709
$
2,554
$
2,561
$
4,935
$
6,453
$
(366
)
$
(512
)
$
20,350
$
20,211
Weighted Average Number of Diluted
Shares
37,029
37,007
37,029
37,007
37,029
37,007
37,029
37,007
37,029
37,007
Diluted earnings per share
$
0.36
$
0.32
$
0.07
$
0.07
$
0.13
$
0.17
$
(0.01
)
$
(0.02
)
$
0.55
$
0.54
Water
Electric
Contracted Services
AWR (Parent)
Consolidated (GAAP)
In 000's except per share
amounts
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Operating income
$
107,573
$
97,896
$
10,738
$
10,303
$
22,675
$
22,309
$
(9
)
$
(9
)
$
140,977
$
130,499
Other income and expense
16,263
15,817
(101
)
336
(488
)
(358
)
533
82
16,207
15,877
Income tax expense (benefit)
22,095
20,515
2,975
2,689
5,434
5,201
(81
)
(208
)
30,423
28,197
Net income
$
69,215
$
61,564
$
7,864
$
7,278
$
17,729
$
17,466
$
(461
)
$
117
$
94,347
$
86,425
Weighted Average Number of Diluted
Shares
37,010
36,995
37,010
36,995
37,010
36,995
37,010
36,995
37,010
36,995
Diluted earnings per share
$
1.87
$
1.66
$
0.21
$
0.20
$
0.48
$
0.47
$
(0.01
)
$
—
$
2.55
$
2.33
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220218005567/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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