SAN DIMAS, Calif.--(BUSINESS WIRE)--May 6, 2019--
American States Water Company (NYSE:AWR) today reported basic and fully
diluted earnings per share of $0.35 for the first quarter ended
March 31, 2019, as compared to basic and fully diluted earnings per
share of $0.29 for the quarter ended March 31, 2018.
First Quarter 2019 Results
The table below sets forth a comparison of the first quarter 2019
diluted earnings per share by business segment with diluted earnings per
share for the first quarter of 2018, as reported:
|
|
Diluted Earnings per Share |
|
|
Three Months Ended |
|
|
|
|
3/31/2019 |
|
3/31/2018 |
|
CHANGE |
Water
|
|
$
|
0.21
|
|
$
|
0.20
|
|
$
|
0.01
|
|
Electric
|
|
|
0.03
|
|
|
0.04
|
|
|
(0.01
|
)
|
Contracted services
|
|
|
0.11
|
|
|
0.05
|
|
|
0.06
|
|
Consolidated diluted earnings per share, as reported
|
|
$
|
0.35
|
|
$
|
0.29
|
|
$
|
0.06
|
|
Water Segment
In 2017, AWR’s Golden State Water Company (“GSWC”) subsidiary filed its
water general rate case to set rates for the years 2019 through 2021. In
August 2018, GSWC and the Public Advocates Office of the California
Public Utilities Commission (“CPUC”) filed a joint motion to adopt a
settlement agreement between the two parties in connection with the
general rate case. On April 8, 2019, the assigned Administrative Law
Judge (“ALJ”) issued a proposed decision (“PD”) on the general rate
case. The PD approves the settlement agreement, with the exception of
advice letter capital projects totaling approximately $20.4 million that
were agreed to by GSWC and the Public Advocates Office in the
settlement. The PD does not explicitly disallow these projects, but
instead instructs GSWC to include these projects in its next general
rate case filing. As a result, no impairment charges were recorded for
the three months ended March 31, 2019 related to the immaterial costs
incurred to date for these projects. GSWC and the Public Advocates
Office have separately filed their response and comments to the PD, and
both parties dispute the ALJ’s rejection of the advice letter capital
projects. At this time, GSWC cannot predict the final outcome regarding
this matter.
For the three months ended March 31, 2019, diluted earnings per share
from the water segment increased $0.01 to $0.21 per share as compared to
$0.20 per share for the same period in 2018 despite delays in receiving
a final decision on the pending water general rate case. Billed water
revenues for the first three months of 2019 have been based on 2018
adopted rates, pending a final decision by the CPUC. As a result, the
water gross margin remained relatively flat after excluding the effects
of changes in the pension balancing account and of billed surcharges,
both of which have no material impact to earnings. Had new rates been in
place as of January 1, 2019 based on the proposed decision issued in
April 2019, pretax income at the water segment would have been higher by
approximately $4.0 million, or $0.08 per share, for the first quarter of
2019. If the PD is approved as is, the new rates will be retroactive to
January 1, 2019 and these retroactive adjustments will be recorded
accordingly. In addition, the PD approves the recovery of previously
incurred costs that were being tracked in CPUC-authorized memorandum
accounts, which will result in a reduction to operating expenses of
approximately $1.0 million, or $0.02 per share, if the PD is approved by
the CPUC.
Diluted earnings from GSWC’s water operations increased compared to the
same period in 2018 due mostly to the following two items which, when
combined, increased the water segment’s earnings by approximately $0.01
per share:
-
an increase in interest and other income (net of interest expense) due
primarily to gains recorded on investments held to fund a retirement
benefit plan as a result of market conditions, as compared to losses
recognized during the same period in 2018. This was partially offset
by an increase in interest expense resulting from higher borrowings to
fund a portion of GSWC’s capital expenditures.
-
an overall increase in operating expenses (excluding supply costs) due
primarily from higher water treatment, conservation and
employee-related compensation costs, as well as depreciation expense
resulting from capital additions. These increases in operating
expenses were partially offset by lower maintenance expense incurred
as compared to the same period in 2018.
Electric Segment:
In May 2017, GSWC filed its electric general rate case application with
the CPUC to determine new electric rates for the years 2018 through
2021. In November 2018, GSWC and the Public Advocates Office filed a
joint motion to adopt a settlement agreement between the two parties
resolving all issues in connection with the general rate case. Had the
new rates in the settlement agreement been in place as of January 1,
2018, pretax income at the electric segment would have increased by
approximately $2.0 million, or $0.04 per share, for the full year ended
December 31, 2018, and by approximately $941,000, or approximately $0.02
per share, for the first three months of 2019. When approved, the new
rates will be retroactive to January 1, 2018 and retroactive adjustments
for 2019 will be recorded accordingly, as well as the $2.0 million, or
$0.04 per share, related to 2018.
For the three months ended March 31, 2019, diluted earnings from the
electric segment were $0.03 per share as compared to $0.04 per share for
the same period in 2018. The decrease in earnings was largely due to an
increase in operating expenses without an increase in customer base
rates due to delays in finalizing the pending electric general rate
case. Because of the delay, billed electric revenues during the first
three months of 2019 were based on 2017 adopted rates, pending a final
decision by the CPUC.
The increase in operating expenses was due mostly to higher legal and
outside service costs, as well as labor and other employee-related
compensation. Maintenance and depreciation expenses were also higher
than last year. The higher operating expenses (excluding supply costs),
were partially offset by a higher electric gross margin resulting from
rate increases generated from advice letter filings approved by the CPUC
in the fourth quarter of 2018.
Contracted Services Segment:
For the three months ended March 31, 2019, diluted earnings from the
contracted services segment were $0.11 per share as compared to $0.05
per share for the same period in 2018, due, in part, to the commencement
of operations at Fort Riley in July 2018. There was also an increase in
management fees and construction activity at other military bases due to
the successful resolution of various price adjustments and an overall
increase in construction activity.
Dividends
On May 1, 2019, AWR's Board of Directors approved a second quarter
dividend of $0.275 per share on AWR's Common Shares. Dividends on the
Common Shares will be paid on June 3, 2019 to shareholders of record at
the close of business on May 16, 2019. American States Water Company has
paid dividends to shareholders every year since 1931, increasing the
dividends received by shareholders each calendar year for 64 consecutive
years, which places it in an exclusive group of companies on the New
York Stock Exchange that have achieved that result. The company’s
current policy is to achieve a compound annual growth rate in the
dividend of more than 6% over the long-term.
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 shares. 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
The company will host a conference call on May 7, 2019 at 2:00 p.m.
Eastern Time (11:00 a.m. Pacific Time) to discuss the company and its
financial results. Interested parties can listen to the live conference
call and view accompanying slides on the Internet at www.aswater.com
by clicking the “Investors” button at the top of the page. The call will
be archived on the website and available for replay beginning May 7,
2019 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) through May 14,
2019.
About American States Water
American States Water Company is the parent of Golden State Water
Company and American States Utility Services, Inc., serving over one
million people in nine states. Through its utility subsidiary, Golden
State Water Company, the company provides water service to approximately
260,000 customer connections located within more than 80 communities in
Northern, Coastal and Southern California. The company also distributes
electricity to approximately 24,000 customer connections in the City of
Big Bear 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 military bases throughout
the country under 50-year privatization contracts with the U.S.
government.
American States Water Company |
Consolidated |
|
Comparative Condensed Balance Sheets |
|
|
|
|
March 31,
|
|
December 31,
|
(in thousands)
|
|
2019
|
|
2018
|
|
|
(Unaudited)
|
Assets |
|
|
|
|
Net property, plant and equipment
|
|
$1,325,502
|
|
|
$1,296,310
|
|
Goodwill
|
|
1,116
|
|
|
1,116
|
|
Other Property and Investments
|
|
26,632
|
|
|
25,356
|
|
Other Current Assets
|
|
116,776
|
|
|
131,468
|
|
Regulatory and Other Assets
|
|
56,071
|
|
|
47,183
|
|
Total Assets |
|
$1,526,097
|
|
|
$1,501,433
|
|
Capitalization and Liabilities |
|
|
|
|
Capitalization
|
|
$842,570
|
|
|
$839,310
|
|
Other Current Liabilities
|
|
107,630
|
|
|
146,585
|
|
Other Credits
|
|
575,897
|
|
|
515,538
|
|
Total Capitalization and Liabilities |
|
$1,526,097
|
|
|
$1,501,433
|
|
|
|
|
|
|
Condensed Statements of Income |
|
Three months ended
|
(in thousands, except per share amounts)
|
|
March 31,
|
|
|
2019
|
|
2018
|
|
|
(Unaudited)
|
Operating Revenues |
|
|
|
|
Water
|
|
$64,723
|
|
|
$64,412
|
|
Electric
|
|
10,629
|
|
|
9,832
|
|
Contracted services
|
|
26,381
|
|
|
20,484
|
|
Total operating revenues |
|
101,733 |
|
|
94,728 |
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Water purchased
|
|
13,140
|
|
|
13,607
|
|
Power purchased for pumping
|
|
1,538
|
|
|
1,693
|
|
Groundwater production assessment
|
|
3,746
|
|
|
4,651
|
|
Power purchased for resale
|
|
3,704
|
|
|
3,408
|
|
Supply cost balancing accounts
|
|
(1,372
|
)
|
|
(3,869
|
)
|
Other operation
|
|
8,571
|
|
|
7,988
|
|
Administrative and general
|
|
21,672
|
|
|
20,293
|
|
Depreciation and amortization
|
|
10,832
|
|
|
9,666
|
|
Maintenance
|
|
2,566
|
|
|
3,829
|
|
Property and other taxes
|
|
4,896
|
|
|
4,799
|
|
ASUS construction
|
|
12,245
|
|
|
9,972
|
|
Total operating expenses |
|
81,538
|
|
|
76,037
|
|
|
|
|
|
|
Operating income |
|
20,195 |
|
|
18,691 |
|
|
|
|
|
|
Other Income and Expenses |
|
|
|
|
Interest expense
|
|
(6,317
|
)
|
|
(5,923
|
)
|
Interest income
|
|
942
|
|
|
536
|
|
Other, net
|
|
1,342
|
|
|
42
|
|
Total other income and expenses |
|
(4,033
|
)
|
|
(5,345
|
)
|
|
|
|
|
|
Income Before Income Tax Expense |
|
16,162 |
|
|
13,346 |
|
Income tax expense
|
|
3,310
|
|
|
2,564
|
|
Net Income |
|
$12,852 |
|
|
$10,782 |
|
|
|
|
|
|
Weighted average shares outstanding |
|
36,773 |
|
|
36,712 |
|
Basic earnings per Common Share |
|
$0.35 |
|
|
$0.29 |
|
|
|
|
|
|
Weighted average diluted shares |
|
36,951 |
|
|
36,874 |
|
Fully diluted earnings per Common Share |
|
$0.35 |
|
|
$0.29 |
|
|
|
|
|
|
Dividends Declared Per Common Share |
|
$0.275 |
|
|
$0.255 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190506005648/en/
Source: American States Water Company
Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer,
Corporate
Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707