American States Water Company (NYSE:AWR) today reported basic
and fully diluted earnings per share of $0.38 for the quarter ended
March 31, 2022, as compared to basic and fully diluted earnings per
share of $0.52 for the quarter ended March 31, 2021. Due to the
delay in receiving a final decision from the California Public
Utilities Commission ("CPUC") on the pending water general rate
case at AWR's regulated water utility segment, Golden State Water
Company ("GSWC"), to set new rates beginning in 2022, water
revenues billed and recorded for the first quarter of 2022 were
based on 2021 adopted rates, pending a final decision. When
approved, the new rates will be retroactive to January 1, 2022 and
cumulative adjustments will be recorded in the quarter the new
rates are approved by the CPUC. Had new rates been approved and
implemented on January 1, 2022 consistent with the settlement
agreement discussed immediately below, GSWC would have recorded
additional revenues of approximately $6.3 million, or $0.12 per
share, and additional water supply costs of approximately $1.6
million, or $0.03 per share, for the first quarter of 2022.
Including the additional revenues and water supply costs,
consolidated adjusted diluted earnings for the first quarter March
31, 2022 were $0.47 per share.
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
the general rate case application that will set new rates for the
years 2022 through 2024. The settlement agreement, if approved,
resolves all issues related to the 2022 annual revenue requirement
and results in an increase in the 2022 adopted revenues of
approximately $30.3 million as compared to the 2021 adopted
revenues, and an increase in the 2022 adopted supply costs of $9.7
million as compared to the 2021 adopted supply costs.
First Quarter 2022 Results
The table below sets forth a comparison of the first quarter
2022 diluted earnings per share contribution by business segment
with the same period in 2021.
Diluted Earnings per
Share
Three Months Ended
3/31/2022
3/31/2021
CHANGE
Water
$
0.23
$
0.33
$
(0.10
)
Electric
0.07
0.07
—
Contracted services
0.08
0.12
(0.04
)
Consolidated fully diluted earnings per
share, as reported
$
0.38
$
0.52
$
(0.14
)
Water Segment:
For the three months ended March 31, 2022, diluted earnings from
the water utility segment were $0.23 per share, as compared to
$0.33 per share for the same period in 2021, a decrease of $0.10
per share. As previously discussed, water revenues billed and
recorded for the first quarter of 2022 were based on 2021 adopted
rates, pending a final decision by the CPUC in the pending general
rate case application. Had the settlement agreement between GSWC
and Public Advocates been approved and implemented on January 1,
2022, GSWC would have recorded additional revenues of approximately
$6.3 million, or $0.12 per share, and additional water supply costs
of approximately $1.6 million, or $0.03 per share, for the first
quarter of 2022. In addition, for the three months ended March 31,
2022, GSWC recorded a reduction to revenues of $1.4 million, or
$0.03 per share, to reflect revenues subject to refund from the
estimated impact of a lower cost of debt of 5.1% included in GSWC's
pending cost of capital proceeding, as compared to a 6.6% cost of
debt in 2021 rates currently billed to water customers. A final
decision on the cost of capital application, once issued by the
CPUC, is expected to have an effective date retroactive to January
1, 2022.
Furthermore, included in the results for the first quarter of
2022 were losses of $1.7 million, or approximately $0.03 per share,
on investments held to fund one of the Company's retirement plans,
as compared to gains of $628,000, or approximately $0.01 per share,
for the same period in 2021, largely due to volatility in the
financial markets. Excluding the gains and losses on investments
from both periods, adjusted diluted earnings at the water segment
for the first quarter of 2022 were $0.26 per share, as compared to
adjusted earnings of $0.32 per share for the first quarter of 2021,
an adjusted decrease of $0.06 per share due to the following
items:
- A decrease in water operating revenues of $1.1 million largely
as a result of the lower cost of debt included in the pending May
2021 cost of capital application as previously discussed.
Furthermore, water revenues billed and recorded for the first
quarter of 2022 were based on 2021 adopted rates, pending a final
decision by the CPUC on the general rate case application.
- An increase in water supply costs of $462,000, which consist of
purchased water, purchased power for pumping, groundwater
production assessments and changes in the water supply cost
balancing accounts. Adopted supply costs for the first quarter of
2022 were based on 2021 authorized amounts, pending a final
decision by the CPUC in the water general rate case application.
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 of $1.8 million
(excluding supply costs and fluctuations in pension costs that due
to a CPUC-authorized pension balancing account have no impact to
earnings), which negatively impacted earnings and was mainly due to
increases in water treatment costs, conservation spending,
insurance, depreciation and maintenance expenses.
- A decrease in interest expense (net of interest income) of
$566,000 resulting from lower overall borrowing rates due to the
early redemption of GSWC's 9.56% private placement notes in the
amount of $28 million in May 2021, partially offset by an overall
increase in total borrowing levels to support, among other things,
GSWC's capital expenditures program.
- An increase in the effective income tax rate, which negatively
impacted net earnings at the water segment. The increase resulted
primarily from changes in certain flow-through taxes and permanent
items. 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 utility segment were $0.07
per share for the three months ended March 31, 2022 and 2021. An
increase in electric operating revenues was offset by higher
operating expenses.
Contracted Services Segment:
Diluted earnings from the contracted services segment decreased
$0.04 per share for the first quarter of 2022 as compared to the
same period in 2021, largely due to a decrease in construction
activity primarily due to timing differences, partially offset by
an increase in management fees, as well as lower overall operating
expenses. The contracted services segment is expected to contribute
$0.45 to $0.49 per share for the full 2022 year.
Liquidity
On April 22, 2022, AWR's credit facility was amended to increase
the borrowing capacity from $200 million to $280 million through
the expiration of the credit facility in May 2023. This overall
increase in total borrowing capacity will support, among other
things, the capital expenditures program at GSWC. The amendment
also changed the benchmark interest rate from the London Interbank
Offered Rate ("LIBOR") to the Secured Overnight Financing Rate
("SOFR").
Dividends
On April 28, 2022, AWR's Board of Directors approved a second
quarter dividend of $0.365 per share on AWR's Common Shares.
Dividends on the Common Shares will be paid on June 1, 2022 to
shareholders of record at the close of business on May 16, 2022.
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 compound annual growth
rate in the dividend of more than 7% over the long-term.
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 Tuesday, May 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 May 3, 2022 at 5:00
p.m. Eastern Time (2:00 p.m. Pacific Time) through May 10,
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
262,900 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 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)
March 31, 2022
December 31, 2021
Assets
Net Property, Plant and Equipment
$
1,649,859
$
1,626,004
Goodwill
1,116
1,116
Other Property and Investments
39,018
40,806
Current Assets
130,856
138,052
Other Assets
93,083
95,005
Total Assets
$
1,913,932
$
1,900,983
Capitalization and Liabilities
Capitalization
$
1,099,575
$
1,098,123
Current Liabilities
160,154
155,574
Other Credits
654,203
647,286
Total Capitalization and
Liabilities
$
1,913,932
$
1,900,983
Condensed Statements of
Income
Three months ended March
31,
(in thousands,
except per share amounts)
2022
2021
(Unaudited)
Operating Revenues
Water
$
73,906
$
75,029
Electric
11,892
11,539
Contracted services
22,772
30,492
Total operating revenues
108,570
117,060
Operating Expenses
Water purchased
17,848
15,239
Power purchased for pumping
2,374
2,145
Groundwater production assessment
4,211
4,440
Power purchased for resale
5,166
3,198
Supply cost balancing accounts
(6,343
)
(2,427
)
Other operation
8,667
8,217
Administrative and general
22,972
22,053
Depreciation and amortization
10,114
9,560
Maintenance
3,140
2,662
Property and other taxes
5,853
5,940
ASUS construction
10,203
15,704
Total operating expenses
84,205
86,731
Operating income
24,365
30,329
Other Income and Expenses
Interest expense
(5,606
)
(6,258
)
Interest income
283
455
Other, net
(419
)
656
Total other income and expenses,
net
(5,742
)
(5,147
)
Income Before Income Tax
Expense
18,623
25,182
Income tax expense
4,461
5,914
Net Income
$
14,162
$
19,268
Weighted average shares outstanding
36,944
36,898
Basic earnings per Common Share
$
0.38
$
0.52
Weighted average diluted shares
37,019
36,993
Fully diluted earnings per Common
Share
$
0.38
$
0.52
Dividends paid per Common Share
$
0.365
$
0.335
Computation and Reconciliation of Non-GAAP Financial Measure
(Unaudited)
Below is the computation and reconciliation 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 months ended March 31, 2022 and 2021.
Water
Electric
Contracted Services
AWR (Parent)
Consolidated (GAAP)
(in thousands,
except per share amounts)
Q1 2022
Q1 2021
Q1 2022
Q1 2021
Q1 2022
Q1 2021
Q1 2022
Q1 2021
Q1 2022
Q1 2021
Operating income
$
16,999
$
21,059
$
3,598
$
3,448
$
3,770
$
5,824
$
(2
)
$
(2
)
$
24,365
$
30,329
Other income and expense
5,743
5,060
(30
)
40
(171
)
(188
)
200
235
5,742
5,147
Income tax expense (benefit)
2,689
3,768
952
884
944
1,391
(124
)
(129
)
4,461
5,914
Net income
$
8,567
$
12,231
$
2,676
$
2,524
$
2,997
$
4,621
$
(78
)
$
(108
)
$
14,162
$
19,268
Weighted Average Number of Diluted
Shares
37,019
36,993
37,019
36,993
37,019
36,993
37,019
36,993
37,019
36,993
Diluted earnings per share
$
0.23
$
0.33
$
0.07
$
0.07
$
0.08
$
0.12
$
—
$
—
$
0.38
$
0.52
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220429005769/en/
Eva G. Tang Senior Vice President-Finance, Chief Financial
Officer, Corporate Secretary and Treasurer Telephone: (909)
394-3600, ext. 707
American States Water (NYSE:AWR)
Historical Stock Chart
From Mar 2024 to Apr 2024
American States Water (NYSE:AWR)
Historical Stock Chart
From Apr 2023 to Apr 2024