American States Water Company Announces Second Quarter 2019 Results
- Achieved a 64% increase in EPS, or a 45% increase in adjusted EPS, over second quarter 2018
Second Quarter 2019 Results
The table below sets forth a comparison of the second quarter 2019 diluted earnings per share by business segment, as reported, with the same period in 2018. In
|
|
Diluted Earnings per Share |
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|
|
Three Months Ended |
|
|
|
|||||||
|
|
6/30/2019 |
|
6/30/2018 |
|
CHANGE |
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Water (excluding retroactive impact related to Q1 2019 from the CPUC decision on general rate case) |
|
$ |
0.51 |
|
|
$ |
0.35 |
|
|
$ |
0.16 |
|
Electric |
|
0.01 |
|
|
0.02 |
|
|
(0.01 |
) |
|||
Contracted services |
|
0.12 |
|
|
0.06 |
|
|
0.06 |
|
|||
AWR (parent) |
|
— |
|
|
0.01 |
|
|
(0.01 |
) |
|||
Consolidated diluted earnings per share, adjusted |
|
|
0.64 |
|
|
|
0.44 |
|
|
|
0.20 |
|
Retroactive impact of CPUC decision related to Q1 2019 |
|
|
0.08 |
|
|
|
— |
|
|
|
0.08 |
|
Consolidated diluted earnings per share, as reported |
|
$ |
0.72 |
|
|
$ |
0.44 |
|
|
$ |
0.28 |
|
Water Segment
The water segment’s recorded diluted earnings for the three months ended
-
An increase in the water gross margin, which increased earnings by approximately
$0.07 per share largely as a result of theMay 2019 CPUC decision on the general rate case, which approved new water rates and adopted supply costs for 2019. The 2019 water revenue requirement has 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 water 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
$0.06 per share mostly due to lower depreciation, maintenance and administrative and general expenses. The lower depreciation expense is reflected in the new revenue requirement approved in the general rate case. The decrease in maintenance expense was due, in part, to timing of maintenance activity compared to the same period in 2018. Maintenance expense is expected to increase during the second half of 2019 as compared to the first half of 2019. The decrease in administrative and general expenses was partially due to timing differences related to the recognition of stock-based compensation expense, as well as lower outside services costs. -
An increase in the gains generated during the three months ended
June 30, 2019 on investments held to fund a retirement benefit plan due to market conditions, increasing the water segment’s earnings by$0.01 per share, as compared to the same period of 2018.
Electric Segment
For the three months ended
On
Contracted Services Segment
For the three months ended
AWR (parent)
For the three months ended
Year-to-date 2019 Results
Fully diluted earnings for the six months ended
|
|
Diluted Earnings per Share |
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|
Six Months Ended |
|
|
|
|||||||
|
|
6/30/2019 |
|
6/30/2018 |
|
CHANGE |
||||||
Water |
|
$ |
0.80 |
|
|
$ |
0.55 |
|
|
$ |
0.25 |
|
Electric |
|
0.05 |
|
|
0.06 |
|
|
(0.01 |
) |
|||
Contracted services |
|
0.22 |
|
|
0.11 |
|
|
0.11 |
|
|||
AWR (parent) |
|
— |
|
|
0.01 |
|
|
(0.01 |
) |
|||
Consolidated diluted earnings per share, as reported |
|
$ |
1.07 |
|
|
$ |
0.73 |
|
|
$ |
0.34 |
|
Water Segment
Diluted earnings per share from the water segment for the six months ended
-
An increase in the water gross margin of
$0.11 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
$0.07 per share due, in large part, to lower depreciation resulting from lower authorized composite rates. The decrease in depreciation expense from lower 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 second half of 2019 as compared to the first half of 2019. -
An increase in interest and other income, net of interest expense, of
$0.04 per share, due to higher gains generated during the six months endedJune 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 six months ended
June 30, 2019 as compared to the same period in 2018, increased earnings at the water segment by approximately$0.01 per share.
Electric Segment
For the six months ended
Contracted Services Segment
For the six months ended
AWR (parent)
For the six months ended
Regulatory Matters
In
Dividends
On
Non-GAAP Financial Measures
This press release includes a discussion on the water gross margins 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 earnings divided by the company’s weighted average number of diluted shares. Furthermore, the retroactive impact related to the first quarter of 2019 resulting from the CPUC's final decision on the water 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 | |||||||||||||
Consolidated | |||||||||||||
Comparative Condensed Balance Sheets (Unaudited) | |||||||||||||
June 30, | December 31, | ||||||||||||
(in thousands) |
2019 |
2018 |
|||||||||||
Assets | |||||||||||||
Utility Plant-Net |
$ |
1,355,663 |
|
$ |
1,296,310 |
|
|||||||
Goodwill |
1,116 |
|
1,116 |
|
|||||||||
Other Property and Investments |
27,312 |
|
25,356 |
|
|||||||||
Current Assets |
122,025 |
|
131,468 |
|
|||||||||
Regulatory and Other Assets |
61,167 |
|
47,183 |
|
|||||||||
Total Assets |
$ |
1,567,283 |
|
$ |
1,501,433 |
|
|||||||
Capitalization and Liabilities | |||||||||||||
Capitalization |
$ |
859,801 |
|
$ |
839,310 |
|
|||||||
Current Liabilities |
106,346 |
|
146,585 |
|
|||||||||
Other Credits |
601,136 |
|
515,538 |
|
|||||||||
Total Capitalization and Liabilities |
$ |
1,567,283 |
|
$ |
1,501,433 |
|
|||||||
Condensed Statements of Income (Unaudited) | |||||||||||||
Three months ended | Six months ended | ||||||||||||
(in thousands, except per share amounts) | June 30, | June 30, | |||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||
Operating Revenues | |||||||||||||
Water |
$ |
88,140 |
|
$ |
76,733 |
|
$ |
152,863 |
|
$ |
141,145 |
|
|
Electric |
|
7,408 |
|
|
7,841 |
|
|
18,037 |
|
|
17,673 |
|
|
Contracted services |
|
29,099 |
|
|
22,327 |
|
|
55,480 |
|
|
42,811 |
|
|
Total operating revenues |
|
124,647 |
|
|
106,901 |
|
|
226,380 |
|
|
201,629 |
|
|
Operating Expenses | |||||||||||||
Water purchased |
|
18,762 |
|
|
16,608 |
|
|
31,902 |
|
|
30,215 |
|
|
Power purchased for pumping |
|
1,982 |
|
|
2,231 |
|
|
3,520 |
|
|
3,924 |
|
|
Groundwater production assessment |
|
4,640 |
|
|
4,534 |
|
|
8,386 |
|
|
9,185 |
|
|
Power purchased for resale |
|
2,391 |
|
|
2,384 |
|
|
6,095 |
|
|
5,792 |
|
|
Supply cost balancing accounts |
|
1,207 |
|
|
(2,029 |
) |
|
(165 |
) |
|
(5,898 |
) |
|
Other operation |
|
7,708 |
|
|
7,782 |
|
|
16,279 |
|
|
15,770 |
|
|
Administrative and general |
|
19,529 |
|
|
20,213 |
|
|
41,201 |
|
|
40,506 |
|
|
Depreciation and amortization |
|
6,655 |
|
|
10,010 |
|
|
17,487 |
|
|
19,676 |
|
|
Maintenance |
|
3,053 |
|
|
3,670 |
|
|
5,619 |
|
|
7,499 |
|
|
Property and other taxes |
|
4,870 |
|
|
4,372 |
|
|
9,766 |
|
|
9,171 |
|
|
ASUS construction |
|
14,532 |
|
|
11,576 |
|
|
26,777 |
|
|
21,548 |
|
|
Gain on sale of assets |
|
(112 |
) |
|
(18 |
) |
|
(112 |
) |
|
(18 |
) |
|
Total operating expenses |
|
85,217 |
|
|
81,333 |
|
|
166,755 |
|
|
157,370 |
|
|
Operating income |
|
39,430 |
|
|
25,568 |
|
|
59,625 |
|
|
44,259 |
|
|
Other Income and Expenses | |||||||||||||
Interest expense |
|
(6,282 |
) |
|
(6,048 |
) |
|
(12,599 |
) |
|
(11,971 |
) |
|
Interest income |
|
876 |
|
|
636 |
|
|
1,818 |
|
|
1,172 |
|
|
Other, net |
|
591 |
|
|
579 |
|
|
1,933 |
|
|
621 |
|
|
Total other income and expenses, net |
|
(4,815 |
) |
|
(4,833 |
) |
|
(8,848 |
) |
|
(10,178 |
) |
|
Income Before Income Tax Expense |
|
34,615 |
|
|
20,735 |
|
|
50,777 |
|
|
34,081 |
|
|
Income tax expense |
|
7,831 |
|
|
4,387 |
|
|
11,141 |
|
|
6,951 |
|
|
Net Income |
$ |
26,784 |
|
$ |
16,348 |
|
$ |
39,636 |
|
$ |
27,130 |
|
|
Weighted average shares outstanding |
|
36,804 |
|
|
36,733 |
|
|
36,788 |
|
|
36,723 |
|
|
Basic earnings per Common Share |
$ |
0.72 |
|
$ |
0.44 |
|
$ |
1.07 |
|
$ |
0.74 |
|
|
Weighted average diluted shares |
|
36,963 |
|
|
36,912 |
|
|
36,942 |
|
|
36,896 |
|
|
Fully diluted earnings per Common Share |
$ |
0.72 |
|
$ |
0.44 |
|
$ |
1.07 |
|
$ |
0.73 |
|
|
Dividends declared per Common Share |
$ |
0.275 |
|
$ |
0.255 |
|
$ |
0.550 |
|
$ |
0.510 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190805005533/en/
Source:
Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer,
Corporate Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707