American States Water Announces Earnings for the Fourth Quarter and Full Year 2014
Fourth Quarter 2014 Results
Each of AWR’s business segments reported an increase in fourth quarter 2014 diluted earnings per share compared to the same period in the prior year. 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 | |||||||||||||||
12/31/2014 | 12/31/2013 | CHANGE | |||||||||||||
Water | $ | 0.21 | $ | 0.18 | $ | 0.03 | |||||||||
Electric | 0.02 | 0.01 | 0.01 | ||||||||||||
Contracted services | 0.12 | 0.10 | 0.02 | ||||||||||||
AWR (parent) | — | 0.01 | (0.01 | ) | |||||||||||
Consolidated diluted earnings per share, as reported | $ | 0.35 | $ | 0.30 | $ | 0.05 | |||||||||
Water
For the three months ended December 31, 2014, fully diluted earnings
from the water segment of AWR’s
-
An increase in the water gross margin (excluding surcharges) resulting
from second-year rate increases approved by the
California Public Utilities Commission ("CPUC") coupled with an overall decrease in operating expenses, increased pretax income by approximately$880,000 , or$0.01 per share. There was a decrease of$2.3 million in surcharges billed to customers during the fourth quarter of 2014 as compared to the same period in 2013. These surcharges affected both revenues and operating expenses, resulting in no impact to net earnings. -
A decrease in interest expense (net of interest income), increasing
earnings by approximately
$0.01 per share primarily due to lower interest expense resulting from the redemption and maturity of certain long-term notes. There was also an increase in interest income due to interest collected on certain outstanding balances owed to GSWC. -
A decrease in the effective income tax rate for the water segment
during the quarter ended December 31, 2014 as compared to the same
period in 2013, which increased earnings by
$0.01 per share. 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
Diluted earnings from AWR’s contracted services subsidiary,
AWR (Parent)
Diluted earnings from AWR (parent) decreased
Full Year 2014 Results
Basic and fully diluted earnings per share for the year ended
December 31, 2014 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 2014 and 2013:
Diluted Earnings per Share | |||||||||||||||
Twelve Months Ended | |||||||||||||||
12/31/2014 | 12/31/2013 | CHANGE | |||||||||||||
Water | $ | 1.16 | $ | 1.19 | $ | (0.03 | ) | ||||||||
Electric | 0.07 | 0.06 | 0.01 | ||||||||||||
Contracted services | 0.31 | 0.30 | 0.01 | ||||||||||||
AWR (parent) | 0.03 | 0.06 | (0.03 | ) | |||||||||||
Consolidated diluted earnings per share, as reported | $ | 1.57 | $ | 1.61 | $ | (0.04 | ) | ||||||||
The following reconciliation provides a summary of the changes.
Increase/ | ||||||
Reconciliation of Changes in Diluted EPS from 2013 to 2014: |
(decrease) |
|||||
|
||||||
Water Segment: |
||||||
Water gross margin contribution due to rate increases (excluding surcharges*) | $ | 0.05 | ||||
One-time recovery of previously incurred costs in 2013 (did not recur in 2014) | (0.05 | ) | ||||
Higher depreciation expense and property taxes | (0.04 | ) | ||||
Lower planned maintenance expense – primarily from the acceleration of maintenance work in 2013 compared to 2014 | 0.03 | |||||
Higher other operating expenses (excluding surcharges*) – primarily outside service costs | (0.02 | ) | ||||
Lower interest expense | 0.01 | |||||
Higher effective income tax rate due to flow-through adjustments | (0.01 | ) | ||||
Electric Segment: |
||||||
Decrease in operating expenses and a lower effective income tax rate | 0.02 | |||||
One-time recovery of costs associated with the Renewables Portfolio Standard in 2013 (did not recur in 2014) | (0.01 | ) | ||||
Contracted Services Segment: |
||||||
Increase in management fees attributed to resolution of various price redeterminations (including retroactive revenues of $0.03 per share for prior years) |
0.05 |
|||||
Additional revenues recorded during the close-out of a large construction project at the Fort Bragg military base |
0.02 | |||||
Decrease in overall construction activity due to significant work on several projects being substantially completed during 2013 |
(0.03 |
) |
||||
Higher effective income tax rate due to cumulative tax deductions on construction activities taken in 2013 for prior years (no similar cumulative deductions in 2014) |
(0.03 |
) |
||||
AWR parent: |
||||||
Decrease due primarily to a cumulative tax benefit recorded in 2013 for deductions related to an employee benefit program (no similar cumulative benefit recorded in 2014) |
(0.03 |
) |
||||
2014 Consolidated EPS decrease |
($0.04 | ) |
* Surcharges billed to customers for previously incurred costs are recorded as revenues with a corresponding increase in operating expenses. These surcharges have no impact to net earnings and therefore, are excluded in the table above.
Dividends
On
Regulatory Matters
In
Non-GAAP Financial Measures
This press release includes a discussion on the water gross margin,
which is computed by taking total water revenues, less total supply
costs. 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, 2014 as filed with
the
Fourth Quarter 2014 Earnings Release Conference Call
The Company will host a conference call on February 26, 2015 at
The call will be archived on the Company’s website and available for
replay beginning Thursday, February 26, 2015 at
About
American States Water Company | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Comparative Condensed Balance Sheets | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
(in thousands) | 2014 | 2013 | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Utility Plant-Net | $ | 1,003,520 | $ | 981,477 | ||||||||||||||||
Goodwill | 1,116 | 1,116 | ||||||||||||||||||
Other Property and Investments | 17,536 | 15,806 | ||||||||||||||||||
Current Assets | 209,451 | 191,617 | ||||||||||||||||||
Regulatory and Other Assets | 146,675 | 120,167 | ||||||||||||||||||
$ | 1,378,298 | $ | 1,310,183 | |||||||||||||||||
Capitalization and Liabilities | ||||||||||||||||||||
Capitalization | $ | 832,599 | $ | 818,483 | ||||||||||||||||
Current Liabilities | 99,290 | 100,906 | ||||||||||||||||||
Other Credits | 446,409 | 390,794 | ||||||||||||||||||
$ | 1,378,298 | $ | 1,310,183 | |||||||||||||||||
Condensed Statements of Income | Three months ended | Twelve months ended | ||||||||||||||||||
(in thousands, except per share amounts) | December 31, | December 31, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Operating Revenues | ||||||||||||||||||||
Water | $ | 72,983 | $ | 72,897 | $ | 326,672 | $ | 320,131 | ||||||||||||
Electric | 6,989 | 10,429 | 34,387 | 38,409 | ||||||||||||||||
Contracted services | 29,906 | 26,590 | 104,732 | 113,537 | ||||||||||||||||
Total operating revenues | $ | 109,878 | $ | 109,916 | $ | 465,791 | $ | 472,077 | ||||||||||||
Operating Expenses | ||||||||||||||||||||
Water purchased | $ | 12,466 | $ | 12,282 | $ | 57,790 | $ | 58,930 | ||||||||||||
Power purchased for pumping | 2,252 | 2,133 | 10,700 | 9,518 | ||||||||||||||||
Groundwater production assessment | 3,766 | 3,875 | 16,450 | 15,541 | ||||||||||||||||
Power purchased for resale | 2,579 | 3,498 | 9,649 | 13,392 | ||||||||||||||||
Supply cost balancing accounts | 2,455 | 223 | 6,346 | 214 | ||||||||||||||||
Other operation | 7,298 | 8,609 | 28,288 | 27,767 | ||||||||||||||||
Administrative and general | 18,554 | 21,188 | 78,323 | 77,291 | ||||||||||||||||
Depreciation and amortization | 9,469 | 10,753 | 41,073 | 40,090 | ||||||||||||||||
Maintenance | 3,886 | 4,259 | 16,092 | 17,772 | ||||||||||||||||
Property and other taxes | 4,073 | 3,861 | 16,722 | 15,865 | ||||||||||||||||
ASUS construction | 17,717 | 17,574 | 65,368 | 76,627 | ||||||||||||||||
Net gain on sale of property | (19 | ) | 10 | (55 | ) | (2 | ) | |||||||||||||
Total operating expenses | 84,496 | 88,265 | 346,746 | 353,005 | ||||||||||||||||
Operating income | $ | 25,382 | $ | 21,651 | $ | 119,045 | $ | 119,072 | ||||||||||||
Other Income and Expenses | ||||||||||||||||||||
Interest expense | (4,693 | ) | (5,017 | ) | (21,617 | ) | (22,415 | ) | ||||||||||||
Interest income | 468 | 195 | 927 | 707 | ||||||||||||||||
Other, net | 308 | 432 | 751 | 1,105 | ||||||||||||||||
Total other income and expenses | (3,917 | ) | (4,390 | ) | (19,939 | ) | (20,603 | ) | ||||||||||||
Income from Operations Before Income Tax Expense | $ | 21,465 | $ | 17,261 | $ | 99,106 | $ | 98,469 | ||||||||||||
Income tax expense | 7,953 | 5,481 | 38,048 | 35,783 | ||||||||||||||||
Net Income | $ | 13,512 | $ | 11,780 | $ | 61,058 | $ | 62,686 | ||||||||||||
Basic Earnings Per Share | $ | 0.35 | $ | 0.30 | $ | 1.57 | $ | 1.61 | ||||||||||||
Fully Diluted Earnings Per Share | $ | 0.35 | $ | 0.30 | $ | 1.57 | $ | 1.61 | ||||||||||||
Weighted average shares outstanding | 38,404 | 38,717 | 38,658 | 38,639 | ||||||||||||||||
Weighted average diluted shares | 38,634 | 38,956 | 38,880 | 38,869 | ||||||||||||||||
Dividends Declared Per Common Share | $ | 0.2130 | $ | 0.2025 | $ | 0.831 | $ | 0.760 |
Source:
American States Water Company
Eva G. Tang
Senior Vice
President-Finance, Chief Financial Officer,
Corporate Secretary and
Treasurer
909-394-3600, ext. 707