American States Water Announces Earnings for the Fourth Quarter and Full Year 2015
Fourth Quarter 2015 Results
The table below sets forth a comparison of the fourth quarter diluted earnings per share by business segment and for the parent company:
Diluted Earnings per Share | ||||||||||||
Three Months Ended | ||||||||||||
12/31/2015 | 12/31/2014 | CHANGE | ||||||||||
Water | $ | 0.19 | $ | 0.21 | $ | (0.02 | ) | |||||
Electric | 0.03 | 0.02 | 0.01 | |||||||||
Contracted services | 0.09 | 0.12 | (0.03 | ) | ||||||||
AWR (parent) | — | — | — | |||||||||
Consolidated diluted earnings per share, as reported | $ | 0.31 | $ | 0.35 | $ | (0.04 | ) | |||||
Water
For the three months ended December 31, 2015, fully diluted earnings
from the water segment of AWR’s
-
A decrease in the water gross margin of
$463,000 primarily resulting from a delay in recognizing$1.4 million of Water Revenue Adjustment Mechanism (“WRAM”) revenue, partially offset by rate increases approved by theCalifornia Public Utilities Commission ("CPUC") in 2015. Under the accounting guidance for alternative revenue programs such as the WRAM, GSWC is required to recognize revenue for amounts collectable within 24 months following the year in which they are recorded. The$1.4 million represents amounts estimated to be collected beyond the 24 month period. The accounting guidance affects the timing of revenue recognition, but not the collectability of the WRAM; therefore, the$1.4 million will be recognized as revenue as it becomes collectable within 24 months. Due to the impact of state-mandated water-conservation targets on customer usage, GSWC recorded large WRAM balances during 2015. Under current CPUC amortization guidelines, surcharges ranging from 12 - 36 months will be implemented in 2016 to recover the recorded WRAM balances, as well as the$1.4 million not recorded. -
Excluding supply costs, there was an increase in operating expenses of
approximately
$2.0 million due primarily to increases in: (i) maintenance expense of$1.0 million resulting from higher levels of maintenance activity during the fourth quarter of 2015 compared to the same period in 2014, and (ii) administrative and general expense of$824,000 due to higher legal costs incurred to defend against condemnation-related activities. Though maintenance expenses were$1.0 million higher than last year for the quarter, they were$868,000 higher for the full year 2015 compared to 2014. -
A decrease in interest income of approximately
$343,000 , primarily due to interest collected on certain outstanding balances owed to GSWC during 2014. There was no similar item in 2015. - A decrease in the effective income tax rate for the water segment during the quarter ended December 31, 2015 as compared to the same period in 2014. The change in the tax rate is primarily due to changes between book and taxable income from items that are treated as flow-through adjustments in accordance with regulatory requirements.
Electric
For the three months ended
Contracted Services
For the three months ended
Full Year 2015 Results
Basic and fully diluted earnings per share for the year ended
December 31, 2015 were
The table below sets forth a comparison of the recorded diluted earnings per share contribution by business segment and for the parent company for 2015 and 2014:
Diluted Earnings per Share | ||||||||||||
Twelve Months Ended | ||||||||||||
12/31/2015 | 12/31/2014 | CHANGE | ||||||||||
Water | $ | 1.19 | $ | 1.16 | $ | 0.03 | ||||||
Electric | 0.07 | 0.07 | — | |||||||||
Contracted services | 0.32 | 0.31 | 0.01 | |||||||||
AWR (parent) | 0.02 | 0.03 | (0.01 | ) | ||||||||
Consolidated diluted earnings per share, as reported | $ | 1.60 | $ | 1.57 | $ | 0.03 | ||||||
Water
For the year ended December 31, 2015, fully diluted earnings per share
for the water segment increased by
-
The water gross margin increased by
$1.2 million primarily as a result of CPUC-approved third-year rate increases and advice letter filings for the completion of certain capital projects not previously included in rates. These increases were partially offset by$1.4 million of 2015 WRAM revenues not recognized, as previously discussed. -
Excluding supply costs, there was an increase in operating expenses of
approximately
$1.0 million due primarily to increases in maintenance costs and depreciation expense. These increases in operating expenses were partially offset by lower other operation-related costs, such as water treatment, mainly as a result of decreases in water usage and pumped water. -
An increase in earnings per share due to the Company’s stock
repurchase programs was partially offset by a decrease of
$637,000 in other income, net of other expenses (including interest), due to a decrease in interest income as well as a decrease in gains on investments held for a retirement benefit plan resulting from market conditions during 2015.
Electric
For the year ended December 31, 2015 and 2014, diluted earnings from the
electric segment were
Contracted Services
For the year ended December 31, 2015, diluted earnings from contracted
services were
-
An increase of
$2.6 million in operations and maintenance ("O&M") management fees in 2015 as a result of successful resolutions of various price redeterminations received during the third quarter of 2015. These price redeterminations included an increase of$1.2 million in retroactive O&M management fees, as compared to the retroactive impact for the price redeterminations received in the same period of 2014. -
An increase in operating expenses of
$2.0 million primarily due to an increase in labor, insurance and other outside services costs. -
An overall decrease in construction activity reducing pretax operating
income by approximately
$2.0 million due to significant work on several larger projects being substantially completed during 2014, which did not recur in 2015. - An increase in earnings per share due to the Company's stock repurchase programs and a reduction in state income taxes, which vary among the jurisdictions in which it operates.
AWR (parent)
Diluted earnings from AWR (parent) decreased
Dividends
On
Regulatory Matters
GSWC was scheduled to file its next cost-of-capital application in
In
Non-GAAP Financial Measures
This press release includes a discussion on the water gross margin,
which is computed by subtracting total supply costs from total water
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 shares. These items are derived from consolidated financial
information but are not presented in AWR’s financial statements that are
prepared in accordance with Generally Accepted Accounting Principles
(“GAAP”) in
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 gross margin 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.
Other
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 Form 10-K for the year ended December 31, 2015 as filed with
the
Fourth Quarter 2015 Earnings Release Conference Call
The Company will host a conference call on February 25, 2016 at
The call will be archived on the Company’s website and available for
replay beginning Thursday, February 25, 2016 at
About
American States Water Company | ||||||||||||||
Consolidated | ||||||||||||||
Comparative Condensed Balance Sheets | ||||||||||||||
December 31, | ||||||||||||||
(in thousands) | 2015 | 2014 | ||||||||||||
Assets | ||||||||||||||
Utility Plant-Net | $1,060,794 | $1,003,520 | ||||||||||||
Goodwill | 1,116 | 1,116 | ||||||||||||
Other Property and Investments | 18,710 | 17,536 | ||||||||||||
Current Assets | 132,697 | 209,451 | ||||||||||||
Regulatory and Other Assets | 135,283 | 146,675 | ||||||||||||
$1,348,600 | $1,378,298 | |||||||||||||
Capitalization and Liabilities | ||||||||||||||
Capitalization | $791,486 | $832,599 | ||||||||||||
Current Liabilities | 123,507 | 99,290 | ||||||||||||
Other Credits | 433,607 | 446,409 | ||||||||||||
$1,348,600 | $1,378,298 | |||||||||||||
Condensed Statements of Income | Three months ended | Twelve months ended | ||||||||||||
(in thousands, except per share amounts) | December 31, | December 31, | ||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Unaudited) | ||||||||||||||
Operating Revenues | ||||||||||||||
Water | $72,153 | $72,983 | $328,511 | $326,672 | ||||||||||
Electric | 9,235 | 6,989 | 36,039 | 34,387 | ||||||||||
Contracted services | 28,727 | 29,906 | 94,091 | 104,732 | ||||||||||
Total operating revenues | $110,115 | $109,878 | $458,641 | $465,791 | ||||||||||
Operating Expenses | ||||||||||||||
Water purchased | $15,893 | $12,466 | $62,726 | $57,790 | ||||||||||
Power purchased for pumping | 1,866 | 2,252 | 8,988 | 10,700 | ||||||||||
Groundwater production assessment | 2,991 | 3,766 | 13,648 | 16,450 | ||||||||||
Power purchased for resale | 3,031 | 2,579 | 10,395 | 9,649 | ||||||||||
Supply cost balancing accounts | (668 | ) | 2,455 | 7,785 | 6,346 | |||||||||
Other operation | 7,851 | 7,298 | 28,429 | 28,288 | ||||||||||
Administrative and general | 20,547 | 18,535 | 79,817 | 78,268 | ||||||||||
Depreciation and amortization | 10,437 | 9,469 | 42,033 | 41,073 | ||||||||||
Maintenance | 4,810 | 3,886 | 16,885 | 16,092 | ||||||||||
Property and other taxes | 3,974 | 4,073 | 16,636 | 16,722 | ||||||||||
ASUS construction | 17,499 | 17,717 | 52,810 | 65,368 | ||||||||||
Total operating expenses | 88,231 | 84,496 | 340,152 | 346,746 | ||||||||||
Operating income | $21,884 | $25,382 | $118,489 | $119,045 | ||||||||||
Other Income and Expenses | ||||||||||||||
Interest expense | (4,849 | ) | (4,693 | ) | (21,088 | ) | (21,617 | ) | ||||||
Interest income | 126 | 468 | 458 | 927 | ||||||||||
Other, net | 352 | 308 | 356 | 751 | ||||||||||
Total other income and expenses | (4,371 | ) | (3,917 | ) | (20,274 | ) | (19,939 | ) | ||||||
Income from Operations Before Income Tax Expense | $17,513 | $21,465 | $98,215 | $99,106 | ||||||||||
Income tax expense | 5,905 | 7,953 | 37,731 | 38,048 | ||||||||||
Net Income | $11,608 | $13,512 | $60,484 | $61,058 | ||||||||||
Basic Earnings Per Share | $0.31 | $0.35 | $1.61 | $1.57 | ||||||||||
Fully Diluted Earnings Per Share | $0.31 | $0.35 | $1.60 | $1.57 | ||||||||||
Weighted average shares outstanding | 36,605 | 38,404 | 37,389 | 38,658 | ||||||||||
Weighted average diluted shares | 36,835 | 38,634 | 37,614 | 38,880 | ||||||||||
Dividends Declared Per Common Share | $0.224 | $0.213 | $0.874 | $0.831 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160224006645/en/
Source:
American States Water Company
Eva G. Tang
Senior Vice
President-Finance, Chief Financial Officer,
Corporate Secretary and
Treasurer
(909) 394-3600, ext. 707