American States Water Company Announces Third Quarter 2019 Results
- Achieved 23% increase in EPS, or an 11% increase in adjusted EPS, over third quarter 2018
Third Quarter 2019 Results
The table below sets forth a comparison of the third quarter 2019 diluted earnings per share by business segment, as reported, with the same period in 2018. In
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Diluted Earnings per Share |
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Three Months Ended |
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9/30/2019 |
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9/30/2018 |
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CHANGE |
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Water |
|
$ |
0.53 |
|
|
$ |
0.47 |
|
|
$ |
0.06 |
|
Electric (excluding retroactive impact of CPUC decision on general rate case) |
|
0.03 |
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|
0.02 |
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|
0.01 |
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Contracted services |
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0.12 |
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0.13 |
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(0.01 |
) |
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AWR (parent) |
|
0.01 |
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|
— |
|
|
0.01 |
|
|||
Consolidated diluted earnings per share, adjusted |
|
0.69 |
|
|
0.62 |
|
|
0.07 |
|
|||
Retroactive impact of CPUC decision in the electric general rate case for first six months of 2019 and fiscal 2018 |
|
0.07 |
|
|
— |
|
|
0.07 |
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Consolidated diluted earnings per share, as reported |
|
$ |
0.76 |
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|
$ |
0.62 |
|
|
$ |
0.14 |
|
Water Segment:
Diluted earnings per share from the water segment for the three months ended
-
An increase in the water gross margin increased earnings by approximately
$0.06 per share largely as a result of aMay 2019 CPUC decision issued in GSWC's water general rate case, which approved new water rates and adopted supply costs for 2019. The 2019 water revenue requirement has also been reduced to reflect a decrease in depreciation expense, due to a reduction in the overall composite depreciation rates based on a revised study filed in the general rate case. The decrease in depreciation expense lowers the water gross margin, and is offset by a corresponding decrease in depreciation expense as discussed below, resulting in no impact to net earnings. -
An overall decrease in operating expenses (excluding supply costs), which positively impacted earnings by
$0.02 per share mostly due to lower depreciation and administrative and general expenses. As discussed above, the lower depreciation expense is reflected in the new revenue requirement approved in the general rate case. The decrease in administrative and general expenses was due, in large part, to timing differences related to the recognition of stock-based compensation expense. These decreases were partially offset by higher maintenance expense, and property and other taxes. -
A decrease in the gains generated during the three months ended
September 30, 2019 on investments held to fund a retirement benefit plan due to market conditions as well as an increase in interest expense, decreased water earnings by approximately$0.01 per share, as compared to the same period of 2018. -
Changes in the effective income tax rate resulting from certain flow-through taxes and permanent items for the three months ended
September 30, 2019 as compared to the same period in 2018, decreased earnings at the water segment by approximately$0.01 per share.
Electric Segment:
The electric segment’s recorded diluted earnings for the three months ended
Contracted Services Segment:
For the three months ended
AWR (parent):
For the three months ended
Year-to-date 2019 Results
Excluding the retroactive impact resulting from the electric general rate case related to the full year 2018, which is shown on a separate line in the table below, fully diluted earnings for the nine months ended
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Diluted Earnings per Share |
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Nine Months Ended |
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9/30/2019 |
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9/30/2018 |
|
CHANGE |
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Water |
|
$ |
1.33 |
|
|
$ |
1.02 |
|
|
$ |
0.31 |
|
Electric (excluding retroactive impact of CPUC decision on general rate case) |
|
0.11 |
|
|
0.08 |
|
|
0.03 |
|
|||
Contracted services |
|
0.34 |
|
|
0.24 |
|
|
0.10 |
|
|||
AWR (parent) |
|
0.01 |
|
|
0.01 |
|
|
— |
|
|||
Consolidated diluted earnings per share, adjusted |
|
1.79 |
|
|
1.35 |
|
|
0.44 |
|
|||
Retroactive impact of CPUC decision in the electric general rate case related to the full year of 2018 |
|
0.04 |
|
|
— |
|
|
0.04 |
|
|||
Consolidated diluted earnings per share, as reported |
|
$ |
1.83 |
|
|
$ |
1.35 |
|
|
$ |
0.48 |
|
Water Segment:
Diluted earnings per share from the water segment for the nine months ended
-
An increase in the water gross margin of
$0.17 per share, as a result of new rates authorized by the CPUC's final decision on the water general rate case and retroactive toJanuary 1, 2019 . -
An overall decrease in operating expenses (excluding supply costs), positively impacting earnings by
$0.08 per share due, in large part, to lower depreciation expense resulting from lower authorized composite rates recently approved in the water general rate case. The decrease in depreciation expense from lower adopted composite rates also lowers the adopted water gross margin, resulting in no impact to net earnings. There was also a decrease in maintenance expense, which is expected to increase during the remainder of 2019. -
An increase in interest and other income, net of interest expense, of
$0.02 per share due to higher gains generated during the nine months endedSeptember 30, 2019 on investments held to fund a retirement benefit plan, as compared to the same period of 2018 due to market conditions. -
Changes in the effective income tax rate resulting from certain flow-through taxes and permanent items for the nine months ended
September 30, 2019 as compared to the same period in 2018, increased earnings at the water segment by approximately$0.02 per share.
Electric Segment:
The electric segment’s recorded diluted earnings for the nine months ended
The increase was due to a higher electric gross margin as a result of new rates authorized by the CPUC's final decision in the general rate case, partially offset by a higher effective income tax rate as compared to the nine months ended
Contracted Services Segment:
For the nine months ended
Dividends
On
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. Furthermore, the retroactive impacts related to the first six months of 2019 and for fiscal 2018 resulting from the CPUC's final decision on the electric general rate case issued 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 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
Conference Call
The company will host a conference call on
About
American States Water Company |
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Consolidated |
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Comparative Condensed Balance Sheets (unaudited) |
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(in thousands) |
September 30, 2019 |
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December 31, 2018 |
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Assets |
|
|
|
|
|
||||||||||||||
Utility Plant-Net |
$ |
1,378,366 |
|
|
$ |
1,296,310 |
|
||||||||||||
Goodwill |
|
1,116 |
|
|
|
1,116 |
|
||||||||||||
Other Property and Investments |
|
27,579 |
|
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|
25,356 |
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Current Assets |
|
132,469 |
|
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|
131,468 |
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||||||||||||
Regulatory and Other Assets |
|
64,851 |
|
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|
47,183 |
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Total Assets |
$ |
1,604,381 |
|
|
$ |
1,501,433 |
|
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Capitalization and Liabilities |
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Capitalization |
$ |
876,948 |
|
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$ |
839,310 |
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||||||||||||
Current Liabilities |
|
119,847 |
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|
146,585 |
|
||||||||||||
Other Credits |
|
607,586 |
|
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|
515,538 |
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||||||||||||
Total Capitalization and Liabilities |
$ |
1,604,381 |
|
|
$ |
1,501,433 |
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Condensed Statements of Income (unaudited) |
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(in thousands, except per share amounts) |
Three months ended September 30, |
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Nine months ended September 30, |
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2019 |
2018 |
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2019 |
2018 |
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Operating Revenues |
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|
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Water |
$ |
|
95,249 |
|
$ |
|
87,689 |
|
|
$ |
|
248,112 |
|
$ |
|
228,834 |
|
||
Electric |
|
11,996 |
|
|
7,875 |
|
|
|
30,033 |
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|
25,548 |
|
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Contracted services |
|
27,251 |
|
|
28,618 |
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|
82,731 |
|
|
71,429 |
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Total operating revenues |
|
134,496 |
|
|
124,182 |
|
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|
360,876 |
|
|
325,811 |
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|
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Operating Expenses |
|
|
|
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||||||||||||||
Water purchased |
|
23,361 |
|
|
21,842 |
|
|
|
55,263 |
|
|
52,057 |
|
||||||
Power purchased for pumping |
|
3,042 |
|
|
3,217 |
|
|
|
6,562 |
|
|
7,141 |
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Groundwater production assessment |
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5,634 |
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5,961 |
|
|
|
14,020 |
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|
15,146 |
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Power purchased for resale |
|
2,403 |
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|
2,647 |
|
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|
8,498 |
|
|
8,439 |
|
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Supply cost balancing accounts |
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(2,680 |
) |
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(5,212 |
) |
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(2,845 |
) |
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(11,110 |
) |
||||||
Other operation |
|
8,267 |
|
|
8,355 |
|
|
|
24,546 |
|
|
24,125 |
|
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Administrative and general |
|
20,626 |
|
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21,570 |
|
|
|
61,827 |
|
|
62,076 |
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Depreciation and amortization |
|
9,006 |
|
|
10,118 |
|
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|
26,493 |
|
|
29,794 |
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Maintenance |
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4,109 |
|
|
3,422 |
|
|
|
9,728 |
|
|
10,921 |
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Property and other taxes |
|
5,234 |
|
|
4,692 |
|
|
|
15,000 |
|
|
13,863 |
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ASUS construction |
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12,894 |
|
|
13,620 |
|
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|
39,671 |
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|
35,168 |
|
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Gain on sale of assets |
|
(124 |
) |
|
(25 |
) |
|
|
(236 |
) |
|
(43 |
) |
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Total operating expenses |
|
91,772 |
|
|
90,207 |
|
|
|
258,527 |
|
|
247,577 |
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||||||
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|
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Operating income |
|
42,724 |
|
|
33,975 |
|
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|
102,349 |
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|
78,234 |
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Other Income and Expenses |
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Interest expense |
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(6,279 |
) |
|
(5,948 |
) |
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(18,878 |
) |
|
(17,919 |
) |
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Interest income |
|
826 |
|
|
641 |
|
|
|
2,644 |
|
|
1,813 |
|
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Other, net |
|
140 |
|
|
1,223 |
|
|
|
2,073 |
|
|
1,844 |
|
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Total other income and expenses, net |
|
(5,313 |
) |
|
(4,084 |
) |
|
|
(14,161 |
) |
|
(14,262 |
) |
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Income Before Income Tax Expense |
|
37,411 |
|
|
29,891 |
|
|
|
88,188 |
|
|
63,972 |
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Income tax expense |
|
9,405 |
|
|
6,939 |
|
|
|
20,546 |
|
|
13,890 |
|
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Net Income |
$ |
|
28,006 |
|
$ |
|
22,952 |
|
|
$ |
|
67,642 |
|
$ |
|
50,082 |
|
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Weighted average shares outstanding |
|
36,835 |
|
|
36,737 |
|
|
|
36,804 |
|
|
36,728 |
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Basic earnings per Common Share |
$ |
|
0.76 |
|
$ |
|
0.62 |
|
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$ |
|
1.83 |
|
$ |
|
1.36 |
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|
|
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||||||||||||||
Weighted average diluted shares |
|
36,996 |
|
|
36,950 |
|
|
|
36,960 |
|
|
36,935 |
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Fully diluted earnings per Common Share |
$ |
|
0.76 |
|
$ |
|
0.62 |
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$ |
|
1.83 |
|
$ |
|
1.35 |
|
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Dividends declared per Common Share |
$ |
|
0.305 |
|
$ |
|
0.275 |
|
|
$ |
|
0.855 |
|
$ |
|
0.785 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191104005851/en/
Source:
Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer,
Corporate Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707