-
Diluted earnings per share increased to $0.59 vs. $0.56 in 2015
-
Quarterly cash dividend increase of 8 percent, to $0.242 per share
SAN DIMAS, Calif.--(BUSINESS WIRE)--Nov. 2, 2016--
American States Water Company (NYSE:AWR) today reported basic and fully
diluted earnings per share of $0.59 for the quarter ended September 30,
2016, as compared to basic and fully diluted earnings per share of $0.57
and $0.56, respectively, for the quarter ended September 30, 2015.
Third Quarter 2016 Results
The table below sets forth a comparison of the third quarter diluted
earnings per share by business segment, as reported:
|
|
Diluted Earnings per Share
|
|
|
Three Months Ended
|
|
|
|
|
9/30/2016
|
|
9/30/2015
|
|
CHANGE
|
Water
|
|
|
$
|
0.47
|
|
|
|
$
|
0.43
|
|
|
|
$
|
0.04
|
|
Electric
|
|
0.02
|
|
|
0.01
|
|
|
0.01
|
|
Contracted services
|
|
0.10
|
|
|
0.12
|
|
|
(0.02
|
)
|
Consolidated diluted earnings per share, as reported
|
|
|
$
|
0.59
|
|
|
|
$
|
0.56
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
For the three months ended September 30, 2016, diluted earnings from
Golden State Water Company’s (“GSWC’s”) water segment increased by $0.04
per share to $0.47 as compared to the same period in 2015 due to: (i) an
increase in the water margin due to higher revenues from customers that
do not have conservation rates as a result of increased water
consumption, as well as new revenues generated from a water system
acquired in October 2015, (ii) an increase in interest and other income
due primarily to higher gains on investments held for a retirement
benefit plan, and (iii) a decrease in the effective income tax rate due
to differences between book and taxable income that are treated as
flow-through adjustments in accordance with regulatory requirements.
Billed water consumption for the third quarter of 2016 increased by
approximately 12% as compared to the same period in 2015. In general,
changes in consumption do not have a significant impact on recorded
revenues due to the California Public Utilities Commission (“CPUC”)
approved Water Revenue Adjustment Mechanism ("WRAM") accounts in place
at all three water regions. The WRAM only applies to customer classes
with conservation rates in place. The majority of GSWC's water customers
have conservation rate structures; however, a small percentage of GSWC's
customers are not subject to conservation rates and changes in
consumption will impact recorded revenues.
Pending a decision from the CPUC to set water rates for 2016-2018,
billed water revenues for 2016 have been based on 2015 adopted rates
established in the prior rate case. Once the CPUC issues a final
decision in the current water rate case, the adopted revenues for 2016
will be retroactive to January 1, 2016, and are expected to be lower
than the 2015 adopted levels due primarily to decreases in: (i) supply
costs caused by lower consumption, (ii) depreciation expense resulting
from an updated depreciation study, and (iii) other operating expenses.
As a result of the anticipated reduction in the 2016 adopted revenue
level, GSWC has adjusted its water revenues downward with corresponding
reductions in supply costs, depreciation expense and certain other
expenses. These adjustments did not have a significant impact on overall
pretax operating income for the three months ended September 30, 2016. A
proposed decision from the CPUC is expected during the fourth quarter of
2016.
Electric
For the three months ended September 30, 2016, diluted earnings from the
electric segment increased by $0.01 per share as compared to the same
period in 2015. The electric gross margin was slightly higher for the
quarter due to CPUC-approved fourth-year rate increases effective
January 1, 2016, and rate increases generated from advice letter filings
approved by the CPUC during 2016 and 2015. There was also an overall
decrease in operating expenses due to lower spending associated with a
solar-initiative program approved by the CPUC as compared to the third
quarter of 2015.
Contracted Services
For the three months ended September 30, 2016, diluted earnings from the
contracted services segment were $0.10 per share as compared to $0.12
per share for the same period in 2015. During the third quarter of 2015,
there was $3.5 million, or approximately $0.05 per diluted share, in
retroactive management fee revenues recorded resulting from the
successful resolution of price redeterminations during the third quarter
of 2015, with no similar retroactive revenues recorded during the third
quarter of 2016. There was also an increase in the allocation of
administrative and general expenses from GSWC to the contracted services
segment during the third quarter of 2016 as stipulated in the pending
water GRC, and an increase in outside services costs. These decreases to
pretax operating income were partially offset by an overall increase in
construction activity and improved cost efficiencies.
Year-to-Date 2016 Results
Basic and fully diluted earnings per share were $1.32 for the nine
months ended September 30, 2016 as compared to $1.29 per basic and
diluted share for the same period in 2015. The table below sets forth a
comparison of the year-to-date diluted earnings per share by business
segment, as reported:
|
|
Diluted Earnings per Share
|
|
|
Nine Months Ended
|
|
|
|
|
9/30/2016
|
|
9/30/2015
|
|
CHANGE
|
Water
|
|
|
$
|
1.04
|
|
|
|
$
|
1.00
|
|
|
|
$
|
0.04
|
|
Electric
|
|
0.06
|
|
|
0.05
|
|
|
0.01
|
|
Contracted services
|
|
0.20
|
|
|
0.22
|
|
|
(0.02
|
)
|
AWR (parent)
|
|
0.02
|
|
|
0.02
|
|
|
—
|
|
Consolidated diluted earnings per share, as reported
|
|
|
$
|
1.32
|
|
|
|
$
|
1.29
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
For the nine months ended September 30, 2016, diluted earnings from the
water segment increased by $0.04 per share to $1.04 as compared to the
same period in 2015. Favorably impacting earnings per share at the water
segment were: (i) a higher water margin resulting from the recognition
of a portion of the 2015 WRAM revenues that had previously been
deferred, as well as new revenues generated from a water system acquired
in October 2015, (ii) the cumulative impact of lower Common Shares
outstanding resulting from the repurchase of stock pursuant to the stock
repurchase programs, and (iii) 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. These increases to the water segment's diluted
earnings per share were partially offset by increases in: (i)
administrative and general expenses resulting from higher legal and
outside services costs related to condemnation matters, and (ii) other
operation expense related to water treatment activities.
Electric Segment:
For the nine months ended September 30, 2016, diluted earnings from the
electric segment increased $0.01 per share to $0.06 as compared to the
same period in 2015. There was an increase in the electric gross margin
resulting from CPUC approval of fourth-year rate increases effective
January 1, 2016, as well as CPUC-approved rate increases generated from
advice letter filings approved in 2015 and 2016. This increase was
partially offset by an increase in operating expenses (other than supply
costs) due to an increase in: (i) other operation expenses resulting
from additional costs incurred in response to power outages caused by
severe winter storms experienced in January 2016 and higher wages, and
(ii) depreciation expense resulting from additions to utility plant.
Contracted Services Segment:
For the nine months ended September 30, 2016, diluted earnings from the
contracted services segment were $0.20 per share as compared to $0.22
per share for the same period in 2015. During the nine months ended
September 30, 2015, ASUS recorded $3.0 million, or $0.05 per diluted
share, in retroactive management fee revenues as a result of successful
resolution of price redeterminations during the third quarter of 2015,
with no material retroactive revenues recorded during the nine months
ended September 30, 2016. There was also an increase in the allocation
of administrative and general expenses from GSWC to the contracted
services segment as stipulated in the pending water GRC, an increase in
labor and outside services costs, and a higher effective income tax rate
resulting primarily from an increase in state income taxes as compared
to the same period in 2015. State income taxes vary among the
jurisdictions in which the contracted services business operates. These
decreases to pretax operating income were partially offset by an overall
increase in construction activity and improved cost efficiencies.
Regulatory Matters
GSWC is awaiting a proposed decision in its general rate case that will
determine new rates for the years 2016-2018 at all of its water regions
and the general office. At this time, a proposed decision is expected
during the fourth quarter of 2016. GSWC has settled the majority of
GSWC’s operating expenses with the CPUC’s Office of Ratepayer Advocates,
as well as the consumption levels to be used to calculate rates for
2016-2018, which reflect most of the 2015 conservation targets mandated
by the State of California. The primary unresolved issues relate to
GSWC’s capital budget requests and compensation for managerial level
employees. At this time, GSWC cannot predict the final outcome of this
general rate case. The final decision, once issued, will be retroactive
to January 1, 2016 and could result in a material change to GSWC's net
income recorded during the first nine months of 2016 that may need to be
adjusted in the quarter that a proposed decision is issued.
Board Approves 8% Increase in Quarterly Dividend
On November 1, 2016, AWR's Board of Directors approved a fourth quarter
dividend of $0.242 per share on the Common Shares of the Company. This
represents an 8% increase over the third quarter 2016 dividend of $0.224
per share. Dividends on the Common Shares will be payable on December 1,
2016 to shareholders of record at the close of business on November 15,
2016. American States Water Company has paid dividends to shareholders
every year since 1931, increasing the dividends received by shareholders
each calendar year for 62 consecutive years, which places AWR in an
exclusive group of companies on the New York Stock Exchange that have
achieved that result.
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 news 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-Q for the quarter ended September 30, 2016 filed with
the Securities and Exchange Commission.
Third Quarter 2016 Conference Call
The Company will host a conference call tomorrow, November 3, 2016 at
2:00 p.m. Eastern Time (11:00 a.m. Pacific Time) to discuss the
quarterly 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 also be archived on the website and available for replay
beginning Thursday, November 3, 2016 at 5:00 p.m. Eastern Time (2:00
p.m. Pacific Time) through Thursday, November 10, 2016.
About American States Water Company
American States Water Company is the parent of Golden State Water
Company and American States Utility Services, Inc. Through its utility
subsidiary, Golden State Water Company, AWR provides water service to
approximately 261,000 customers located throughout 10 counties in
Northern, Coastal and Southern California. The Company also distributes
electricity to approximately 24,000 customers 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 and wastewater systems located on military bases
throughout the country through 50-year privatization contracts with the
U.S. government.
|
American States Water Company
|
Consolidated
|
Comparative Condensed Balance Sheets
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
(in thousands)
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
Assets
|
|
|
|
|
|
|
|
Utility Plant-Net
|
|
$
|
1,128,588
|
|
|
|
$
|
1,060,794
|
|
|
Goodwill
|
|
|
1,116
|
|
|
|
|
1,116
|
|
|
Other Property and Investments
|
|
|
20,656
|
|
|
|
|
18,710
|
|
|
Current Assets
|
|
|
136,856
|
|
|
|
|
132,697
|
|
|
Regulatory and Other Assets
|
|
|
153,170
|
|
|
|
|
130,642
|
|
|
Total Assets
|
|
$
|
1,440,386
|
|
|
|
$
|
1,343,959
|
|
|
Capitalization and Liabilities
|
|
|
|
|
|
|
Capitalization
|
|
$
|
811,696
|
|
|
|
$
|
786,845
|
|
|
Current Liabilities
|
|
|
179,848
|
|
|
|
|
123,507
|
|
|
Other Credits
|
|
|
448,842
|
|
|
|
|
433,607
|
|
|
Total Capitalization and Liabilities
|
|
$
|
1,440,386
|
|
|
|
$
|
1,343,959
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Income
|
|
Three months ended
|
|
Nine months ended
|
(in thousands, except per share amounts)
|
|
September 30,
|
|
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Operating Revenues
|
|
|
|
|
|
|
|
Water
|
|
$
|
90,617
|
|
$
|
97,273
|
|
|
$
|
237,987
|
|
$
|
256,358
|
|
Electric
|
|
|
8,146
|
|
|
7,946
|
|
|
|
26,420
|
|
|
26,804
|
|
Contracted services
|
|
|
25,043
|
|
|
27,756
|
|
|
|
64,880
|
|
|
65,364
|
|
Total operating revenues
|
|
$
|
123,806
|
|
$
|
132,975
|
|
|
$
|
329,287
|
|
$
|
348,526
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
Water purchased
|
|
$
|
19,631
|
|
$
|
18,127
|
|
|
$
|
49,265
|
|
$
|
46,833
|
|
Power purchased for pumping
|
|
|
2,988
|
|
|
2,982
|
|
|
|
6,752
|
|
|
7,122
|
|
Groundwater production assessment
|
|
|
4,482
|
|
|
3,146
|
|
|
|
11,150
|
|
|
10,657
|
|
Power purchased for resale
|
|
|
2,394
|
|
|
2,299
|
|
|
|
7,481
|
|
|
7,364
|
|
Supply cost balancing accounts
|
|
|
(4,213
|
)
|
|
4,824
|
|
|
|
(10,145
|
)
|
|
8,453
|
|
Other operation
|
|
|
7,448
|
|
|
7,056
|
|
|
|
21,331
|
|
|
20,578
|
|
Administrative and general
|
|
|
19,768
|
|
|
19,272
|
|
|
|
61,829
|
|
|
59,270
|
|
Depreciation and amortization
|
|
|
9,486
|
|
|
10,512
|
|
|
|
28,878
|
|
|
31,596
|
|
Maintenance
|
|
|
4,203
|
|
|
4,393
|
|
|
|
11,908
|
|
|
12,075
|
|
Property and other taxes
|
|
|
4,317
|
|
|
4,326
|
|
|
|
12,863
|
|
|
12,662
|
|
ASUS construction
|
|
|
13,685
|
|
|
14,853
|
|
|
|
35,351
|
|
|
35,311
|
|
Total operating expenses
|
|
$
|
84,189
|
|
$
|
91,790
|
|
|
$
|
236,663
|
|
$
|
251,921
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
39,617
|
|
$
|
41,185
|
|
|
$
|
92,624
|
|
$
|
96,605
|
|
|
|
|
|
|
|
|
|
Other Income and Expenses
|
|
|
|
|
|
|
Interest expense
|
|
|
(5,730
|
)
|
|
(5,484
|
)
|
|
|
(16,956
|
)
|
|
(16,239
|
)
|
Interest income
|
|
|
206
|
|
|
118
|
|
|
|
568
|
|
|
332
|
|
Other, net
|
|
|
254
|
|
|
(346
|
)
|
|
|
872
|
|
|
4
|
|
Total other income and expenses
|
|
|
(5,270
|
)
|
|
(5,712
|
)
|
|
|
(15,516
|
)
|
|
(15,903
|
)
|
|
|
|
|
|
|
|
|
Income Before Income Tax Expense
|
|
$
|
34,347
|
|
$
|
35,473
|
|
|
$
|
77,108
|
|
$
|
80,702
|
|
Income tax expense
|
|
|
12,708
|
|
|
14,394
|
|
|
|
28,577
|
|
|
31,826
|
|
Net Income
|
|
$
|
21,639
|
|
$
|
21,079
|
|
|
$
|
48,531
|
|
$
|
48,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
36,561
|
|
|
37,063
|
|
|
|
36,546
|
|
|
37,653
|
|
Basic earnings per Common Share
|
|
$
|
0.59
|
|
$
|
0.57
|
|
|
$
|
1.32
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
|
|
|
36,762
|
|
|
37,266
|
|
|
|
36,743
|
|
|
37,853
|
|
Fully diluted earnings per Common Share
|
|
$
|
0.59
|
|
$
|
0.56
|
|
|
$
|
1.32
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
Dividends Paid Per Common Share
|
|
$
|
0.224
|
|
$
|
0.224
|
|
|
$
|
0.672
|
|
$
|
0.650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161102006665/en/
Source: American States Water Company
American States Water Company
Eva G. Tang
Senior Vice
President-Finance, Chief Financial Officer,
Corporate Secretary and
Treasurer
(909) 394-3600, ext. 707