American States Water Company Announces Fourth Quarter and Full Year 2016 Results
Fourth Quarter 2016 Results
The table below sets forth a comparison of the fourth quarter diluted earnings per share by business segment, as reported:
Diluted Earnings per Share | |||||||||||||||
Three Months Ended | |||||||||||||||
12/31/2016 | 12/31/2015 | CHANGE | |||||||||||||
Water | $ | 0.13 | $ | 0.19 | $ | (0.06 | ) | ||||||||
Electric | 0.04 | 0.03 | 0.01 | ||||||||||||
Contracted services | 0.13 | 0.09 | 0.04 | ||||||||||||
Consolidated diluted earnings per share, as reported | $ | 0.30 | $ | 0.31 | $ | (0.01 | ) | ||||||||
Water Segment
For the three months ended December 31, 2016, fully diluted earnings
from the water segment of AWR’s
Excluding the retroactive impact to the water gross margin of this adjustment, the discussion below includes the major items impacting the comparability of the two periods in the water segment results:
-
Overall, the water gross margin decreased by approximately
$800,000 primarily due to a lower adopted gross margin in this new rate cycle (starting with 2016) resulting, in large part, from decreases in adopted expenses, including depreciation expense resulting from an updated depreciation study, and many other operating expenses resulting from GSWC's cost containment initiatives. The reduction in the water gross margin was mostly offset by corresponding decreases in depreciation and certain other operating expenses as discussed below. The decrease in the adopted water gross margin in the fourth quarter was also offset by (i) not recognizing$1.4 million of the 2015 Water Revenue Adjustment Mechanism (“WRAM”) revenues during the fourth quarter of 2015 as required under the accounting guidance for revenue programs such as the WRAM, (ii) new revenues generated from a water system acquired in late 2015, and (iii) higher revenues due to increased water consumption of approximately 6% during the fourth quarter of 2016 as compared to 2015 from customers that are not subject to conservation rates. -
Total operating expenses (excluding supply costs) decreased by
approximately
$2.6 million . The lower operating expenses, most of which were reflected in the lower gross margin discussed immediately above, included a decrease in (i) other operation expenses including conservation and drought-related costs, (ii) pension and other employee-related costs, (iii) depreciation expense resulting from a new depreciation study approved in the water GRC, and (iv) maintenance expense. In addition, the CPUC's decision issued inDecember 2016 approved for recovery approximately$800,000 of previously incurred costs that were being tracked in CPUC-authorized memorandum accounts, and were reflected as a decrease in operating expenses during the fourth quarter of 2016.
Electric Segment
For the three months ended
Contracted Services Segment
For the three months ended
Full Year 2016 Results
Fully diluted earnings for the year ended December 31, 2016 were
Diluted Earnings per Share | |||||||||||||||
For The Year Ended | |||||||||||||||
12/31/2016 | 12/31/2015 | CHANGE | |||||||||||||
Water | $ | 1.17 | $ | 1.19 | $ | (0.02 | ) | ||||||||
Electric | 0.10 | 0.07 | 0.03 | ||||||||||||
Contracted services | 0.33 | 0.32 | 0.01 | ||||||||||||
AWR (parent) | 0.02 | 0.02 | — | ||||||||||||
Consolidated diluted earnings per share, as reported | $ | 1.62 | $ | 1.60 | $ | 0.02 | |||||||||
Water Segment
For the year ended December 31, 2016, diluted earnings from the water
segment decreased by
The water gross margin decreased by
Favorably impacting the water segment’s results was (i) a decrease in the effective income tax rate for the water segment due to differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements, and (ii) the cumulative impact of lower Common Shares outstanding resulting from the stock repurchase programs completed in 2015.
Electric Segment
For the year ended December 31, 2016, diluted earnings from the electric
segment increased by
Contracted Services Segment
For the year ended December 31, 2016, diluted earnings from contracted
services were
Dividends
On
Regulatory Matters
Due to the delay in issuing a final decision in the water GRC, the CPUC
has ordered GSWC to bypass implementing changes to 2016 rates and to
implement 2017 rates once the CPUC has corrected some minor rate
calculations in the
Higher conservation and drought-related costs were incurred in 2015 in
response to the governor of
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 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 Form 10-K for the year ended December 31, 2016 as filed with
the
Conference Call
The company will host a conference call on February 24, 2017 at
About
American States Water Company | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Comparative Condensed Balance Sheets | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
(in thousands) | 2016 | 2015 | ||||||||||||||||||
Assets | ||||||||||||||||||||
Utility Plant-Net | $ | 1,150,926 | $ | 1,060,794 | ||||||||||||||||
Goodwill | 1,116 | 1,116 | ||||||||||||||||||
Other Property and Investments | 20,836 | 18,710 | ||||||||||||||||||
Current Assets | 166,875 | 132,697 | ||||||||||||||||||
Regulatory and Other Assets | 130,740 | 130,642 | ||||||||||||||||||
$ | 1,470,493 | $ | 1,343,959 | |||||||||||||||||
Capitalization and Liabilities | ||||||||||||||||||||
Capitalization | $ | 815,278 | $ | 786,845 | ||||||||||||||||
Current Liabilities | 177,944 | 123,507 | ||||||||||||||||||
Other Credits | 477,271 | 433,607 | ||||||||||||||||||
$ | 1,470,493 | $ | 1,343,959 | |||||||||||||||||
Condensed Statements of Income | Three months ended | Twelve months ended | ||||||||||||||||||
(in thousands, except per share amounts) | December 31, | December 31, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Operating Revenues | ||||||||||||||||||||
Water | $ | 64,944 | $ | 72,153 | $ | 302,931 | $ | 328,511 | ||||||||||||
Electric | 9,351 | 9,235 | 35,771 | 36,039 | ||||||||||||||||
Contracted services | 32,505 | 28,727 | 97,385 | 94,091 | ||||||||||||||||
Total operating revenues | $ | 106,800 | $ | 110,115 | $ | 436,087 | $ | 458,641 | ||||||||||||
Operating Expenses | ||||||||||||||||||||
Water purchased | $ | 15,177 | $ | 15,893 | $ | 64,442 | $ | 62,726 | ||||||||||||
Power purchased for pumping | 1,911 | 1,866 | 8,663 | 8,988 | ||||||||||||||||
Groundwater production assessment | 3,843 | 2,991 | 14,993 | 13,648 | ||||||||||||||||
Power purchased for resale | 2,906 | 3,031 | 10,387 | 10,395 | ||||||||||||||||
Supply cost balancing accounts | (2,061 | ) | (668 | ) | (12,206 | ) | 7,785 | |||||||||||||
Other operation | 6,926 | 7,851 | 28,257 | 28,429 | ||||||||||||||||
Administrative and general | 19,165 | 20,547 | 80,994 | 79,817 | ||||||||||||||||
Depreciation and amortization | 9,972 | 10,437 | 38,850 | 42,033 | ||||||||||||||||
Maintenance | 4,562 | 4,810 | 16,470 | 16,885 | ||||||||||||||||
Property and other taxes | 3,938 | 3,974 | 16,801 | 16,636 | ||||||||||||||||
ASUS construction | 18,369 | 17,499 | 53,720 | 52,810 | ||||||||||||||||
Total operating expenses | 84,708 | 88,231 | 321,371 | 340,152 | ||||||||||||||||
Operating income | $ | 22,092 | $ | 21,884 | $ | 114,716 | $ | 118,489 | ||||||||||||
Other Income and Expenses | ||||||||||||||||||||
Interest expense | (5,036 | ) | (4,849 | ) | (21,992 | ) | (21,088 | ) | ||||||||||||
Interest income | 189 | 126 | 757 | 458 | ||||||||||||||||
Other, net | 125 | 352 | 997 | 356 | ||||||||||||||||
Total other income and expenses | (4,722 | ) | (4,371 | ) | (20,238 | ) | (20,274 | ) | ||||||||||||
Income from Operations Before Income Tax Expense | $ | 17,370 | $ | 17,513 | $ | 94,478 | $ | 98,215 | ||||||||||||
Income tax expense | 6,158 | 5,905 | 34,735 | 37,731 | ||||||||||||||||
Net Income | $ | 11,212 | $ | 11,608 | $ | 59,743 | $ | 60,484 | ||||||||||||
Basic Earnings Per Share | $ | 0.30 | $ | 0.31 | $ | 1.63 | $ | 1.61 | ||||||||||||
Fully Diluted Earnings Per Share | $ | 0.30 | $ | 0.31 | $ | 1.62 | $ | 1.60 | ||||||||||||
Weighted average shares outstanding | 36,570 | 36,605 | 36,552 | 37,389 | ||||||||||||||||
Weighted average diluted shares | 36,772 | 36,835 | 36,750 | 37,614 | ||||||||||||||||
Dividends paid per Common Share | $ | 0.242 | $ | 0.224 | $ | 0.914 | $ | 0.874 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170223006676/en/
Source:
American States Water Company
Eva G. Tang
(909) 394-3600, ext.
707
Senior Vice President-Finance, Chief Financial Officer,
Corporate Secretary and Treasurer