American States Water Company Announces Third Quarter 2018 Results
Third Quarter 2018 Results
The table below sets forth a comparison of the third quarter-diluted earnings per share by business segment, as reported:
Diluted Earnings per Share | |||||||||||||
Three Months Ended | |||||||||||||
9/30/2018 | 9/30/2017 | CHANGE | |||||||||||
Water | $ | 0.47 | $ | 0.44 | $ | 0.03 | |||||||
Electric | 0.02 | 0.03 | (0.01 | ) | |||||||||
Contracted services | 0.13 | 0.10 | 0.03 | ||||||||||
Consolidated diluted earnings per share, as reported | $ | 0.62 | $ | 0.57 | $ | 0.05 | |||||||
Water Segment:
For the three months ended
-
An overall increase in the water gross margin, which increased net
earnings by approximately
$0.02 per share, was due primarily to third-year rate increases approved by theCalifornia Public Utilities Commission (“CPUC”) effectiveJanuary 1, 2018 . This increase was partially offset by the revenue impact from a lower authorized return on rate base approved in the cost of capital decision issued by the CPUC inMarch 2018 , which was effective in 2018. The lower authorized return decreased the water gross margin during the three months endedSeptember 30, 2018 by approximately$0.02 per share. -
An overall increase in operating expenses (other than supply costs),
which decreased earnings by approximately
$0.02 per share, was due primarily to higher employee-related benefits, depreciation expense and property taxes. -
A lower effective income tax rate (excluding the effects of the Tax
Act), which increased earnings by approximately
$0.03 per share, was due primarily to differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (primarily related to plant, rate case and compensation-related items). Flow-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase in another period.
Electric Segment:
For the three months ended
Contracted Services Segment:
For the three months ended
Year-to-Date 2018 Results
Basic and fully diluted earnings for the nine months ended
Diluted Earnings per Share | |||||||||||||
Nine Months Ended | |||||||||||||
9/30/2018 | 9/30/2017 | CHANGE | |||||||||||
Water, excluding one-time gain on sale of Ojai water system | $ | 1.02 | $ | 1.04 | $ | (0.02 | ) | ||||||
Electric | 0.08 | 0.09 | (0.01 | ) | |||||||||
Contracted services | 0.24 | 0.26 | (0.02 | ) | |||||||||
AWR (parent) | 0.01 | 0.01 | — | ||||||||||
Consolidated diluted earnings per share, adjusted | 1.35 | 1.40 | (0.05 | ) | |||||||||
Gain on sale of Ojai water system | — | 0.13 | (0.13 | ) | |||||||||
Consolidated diluted earnings per share, as reported | $ | 1.35 | $ | 1.53 | $ | (0.18 | ) | ||||||
Water Segment:
Included in earnings for the first nine months of 2017 was the
recognition of a pretax gain of
-
An increase in the water gross margin, which increased net earnings by
approximately
$0.02 per share. This increase was due to the impact of third-year rate increases effectiveJanuary 1, 2018 , partially offset by the revenue impact from the lower authorized return on rate base in the cost of capital proceeding approved by the CPUC and effective in 2018, as well as the cessation of theOjai operations in June of 2017. The lower return on rate base beginning in 2018 is expected to decrease GSWC’s 2018 adopted annual revenue requirement by approximately$3.6 million , or about$0.07 per share. Before reflecting the effects of the new cost of capital and the Tax Act, third-year rate increases are expected to add approximately$4.5 million to the 2018 full year adopted water gross margin, net of the cessation of theOjai water system. -
An overall increase in operating expenses (excluding supply costs),
which lowered net earnings by approximately
$0.03 per share resulting primarily from higher employee-related benefits, maintenance, depreciation and property taxes as compared to the same period in 2017. -
An increase in interest expense (net of interest and other income),
which lowered net earnings at the water segment by approximately
$0.02 per share, due primarily to (i) higher short-term borrowings to fund operations and a portion of GSWC’s capital expenditures, (ii) lower gains recorded on investments held to fund a retirement benefit plan resulting from recent market conditions, as compared to the same period in 2017, and (iii) amounts collected and recorded in 2017 from developers on certain outstanding balances, with no similar collections in 2018. -
A lower effective income tax rate (excluding the effects of the Tax
Act), increasing earnings by approximately
$0.03 per share resulting primarily from differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (primarily related to plant, rate case and compensation-related items).
Electric Segment:
For the nine months ended
Contracted Services Segment:
For the nine months ended
Regulatory Matters
In
In
Dividends
On
Non-GAAP Financial Measures
This press release includes a discussion on the water gross margin for
various periods, which is computed by subtracting total water 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 net income divided by the company’s
weighted average number of diluted shares. These items are derived from
consolidated financial information but are not presented in our
financial statements that are prepared in accordance with accounting
principles generally accepted 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 measures regularly and compares them to historical periods and to the operating budget.
Forward-Looking Statements
Certain matters discussed in this news 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
Conference Call
The company will host a conference call on
About
American States Water Company | ||||||||||||||||||
Consolidated | ||||||||||||||||||
Comparative Condensed Balance Sheets | ||||||||||||||||||
September 30, | December 31, | |||||||||||||||||
(in thousands) | 2018 | 2017 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||
Assets | ||||||||||||||||||
Utility Plant-Net | $1,262,915 | $1,204,992 | ||||||||||||||||
Goodwill | 1,116 | $1,116 | ||||||||||||||||
Other Property and Investments | 26,386 | $24,070 | ||||||||||||||||
Current Assets | 134,898 | $155,463 | ||||||||||||||||
Regulatory and Other Assets | 39,727 | 31,093 | ||||||||||||||||
Total Assets | $1,465,042 | $1,416,734 | ||||||||||||||||
Capitalization and Liabilities | ||||||||||||||||||
Capitalization | $835,171 | $850,984 | ||||||||||||||||
Current Liabilities | 143,186 | 156,662 | ||||||||||||||||
Other Credits | 486,685 | 409,088 | ||||||||||||||||
Total Capitalization and Liabilities | $1,465,042 | $1,416,734 | ||||||||||||||||
Condensed Statements of Income | Three months ended | Nine months ended | ||||||||||||||||
(in thousands, except per share amounts) | September 30, | September 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||
Operating Revenues | ||||||||||||||||||
Water | $ | 87,689 | $ | 91,919 | $ | 228,834 | $ | 239,057 | ||||||||||
Electric | 7,875 | 7,994 | 25,548 | 26,108 | ||||||||||||||
Contracted services | 28,618 | 24,505 | 71,429 | 71,258 | ||||||||||||||
Total operating revenues | $ | 124,182 | $ | 124,418 | $ | 325,811 | $ | 336,423 | ||||||||||
Operating Expenses | ||||||||||||||||||
Water purchased | $ | 21,842 | $ | 20,576 | $ | 52,057 | $ | 50,619 | ||||||||||
Power purchased for pumping | 3,217 | 2,913 | 7,141 | 6,667 | ||||||||||||||
Groundwater production assessment | 5,961 | 5,870 | 15,146 | 14,176 | ||||||||||||||
Power purchased for resale | 2,647 | 2,439 | 8,439 | 7,847 | ||||||||||||||
Supply cost balancing accounts | (5,212 | ) | (4,621 | ) | (11,110 | ) | (11,663 | ) | ||||||||||
Other operation | 8,355 | 7,657 | 24,125 | 21,989 | ||||||||||||||
Administrative and general | 21,570 | 21,823 | 62,076 | 62,519 | ||||||||||||||
Depreciation and amortization | 10,118 | 9,854 | 29,794 | 29,184 | ||||||||||||||
Maintenance | 3,422 | 3,222 | 10,921 | 10,292 | ||||||||||||||
Property and other taxes | 4,692 | 4,475 | 13,863 | 13,386 | ||||||||||||||
ASUS construction | 13,620 | 11,693 | 35,168 | 34,589 | ||||||||||||||
Gain on sale of assets | (25 | ) | (17 | ) | (43 | ) | (8,318 | ) | ||||||||||
Total operating expenses | $ | 90,207 | $ | 85,884 | $ | 247,577 | $ | 231,287 | ||||||||||
Operating income | $ | 33,975 | $ | 38,534 | $ | 78,234 | $ | 105,136 | ||||||||||
Other Income and Expenses | ||||||||||||||||||
Interest expense | (5,948 | ) | (5,775 | ) | (17,919 | ) | (17,606 | ) | ||||||||||
Interest income | 641 | 321 | 1,813 | 1,200 | ||||||||||||||
Other, net | 1,223 | 434 | 1,844 | 1,439 | ||||||||||||||
Total other income and expenses, net | (4,084 | ) | (5,020 | ) | (14,262 | ) | (14,967 | ) | ||||||||||
Income Before Income Tax Expense | $ | 29,891 | $ | 33,514 | $ | 63,972 | $ | 90,169 | ||||||||||
Income tax expense | 6,939 | 12,508 | 13,890 | 33,670 | ||||||||||||||
Net Income | $ | 22,952 | $ | 21,006 | $ | 50,082 | $ | 56,499 | ||||||||||
Weighted average shares outstanding | 36,737 | 36,659 | 36,728 | 36,625 | ||||||||||||||
Basic earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 1.36 | $ | 1.53 | ||||||||||
Weighted average diluted shares | 36,950 | 36,856 | 36,935 | 36,813 | ||||||||||||||
Fully diluted earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 1.35 | $ | 1.53 | ||||||||||
Dividends declared per Common Share | $ | 0.275 | $ | 0.255 | $ | 0.785 | $ | 0.739 | ||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181105005896/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