awr-20211101
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported) November 1, 2021

AMERICAN STATES WATER COMPANY
(Exact name of registrant as specified in its charter)
California
001-14431
95-4676679
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
630 East Foothill Blvd.
San Dimas
CA
91773-1212
(Address of Principal Executive Offices)
(Zip Code)
(909) 394-3600
Registrant's telephone number, including area code

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
American States Water Company Common SharesAWRNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Section 2 - Financial Information

Item 2.02. Results of Operations and Financial Condition

On November 1, 2021, American States Water Company (NYSE:AWR) released earnings for the third quarter ended September 30, 2021. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

The information furnished in this Current Report, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Section 9 - Financial Statements and Exhibits

Item 9.01.    Financial Statements and Exhibits
The following documents are filed as an Exhibit to this report:
Exhibit No.Description
Exhibit 99.1
Exhibit 104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN STATES WATER COMPANY
Date: November 1, 2021/s/ EVA G. TANG
Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer, Corporate Secretary and Treasurer



Document


Exhibit 99.1
https://cdn.kscope.io/6e5e7038f2af6f590e86e0701c2ee65e-awrlogoa04.jpg

American States Water Company Announces
Third Quarter 2021 Results
5.6% increase in third quarter consolidated diluted EPS over third quarter of 2020, or 8.6% increase as adjusted
11.7% increase in year-to-date consolidated diluted EPS over prior year, or 10.7% increase as adjusted

San Dimas, California, November 1, 2021…. American States Water Company (NYSE:AWR) today reported basic and fully diluted earnings per share of $0.76 for the quarter ended September 30, 2021, as compared to basic and fully diluted earnings per share of $0.72 for the quarter ended September 30, 2020. Included in the results for the third quarter of 2021 were minimal gains on investments held to fund one of the company's retirement plans, as compared to gains of $1.2 million, or $0.02 per share, for the same period in 2020 largely due to volatility in the financial markets resulting, in part, from the COVID-19 pandemic. Excluding the gains on investments from both periods, adjusted diluted earnings for the third quarter of 2021 were $0.76 per share, as compared to adjusted diluted earnings of $0.70 per share for the third quarter of 2020, an adjusted increase of $0.06 per share, or 8.6%.
Third Quarter 2021 Results
The table below sets forth a comparison of diluted earnings per share contribution by business segment and for the parent company as recorded during the third quarter of 2021 and 2020.
 Diluted Earnings per Share
 Three Months Ended 
 9/30/20219/30/2020CHANGE
Water$0.62 $0.57 $0.05 
Electric0.04 0.04 — 
Contracted services0.11 0.10 0.01 
AWR (parent)(0.01)0.01 (0.02)
Consolidated fully diluted earnings per share, as reported$0.76 $0.72 $0.04 
Water Segment:
Diluted earnings from AWR's regulated water utility segment, Golden State Water Company ("GSWC"), for the three months ended September 30, 2021 were $0.62 per share as compared to $0.57 per share for the same period in 2020. Excluding the gains on investments from both periods as discussed above, the water segment's adjusted diluted earnings for the third quarter of 2021 were $0.62 per share, as compared to adjusted diluted earnings of $0.55 per share for the third quarter of 2020, an adjusted increase of $0.07 per share, due to the following items:
An increase in water’s operating revenues less water supply costs (“RLWSC”) of $3.1 million as a result of new rates authorized by the California Public Utilities Commission ("CPUC"). Effective January 1, 2021, GSWC received its full third-year step increase, which it achieved as a result of passing an earnings test. The higher water rates are expected to increase water’s RLWSC by $11.1 million for 2021.
An overall increase in operating expenses (excluding supply costs) of $766,000, which negatively impacted earnings and was mainly due to increases in water treatment costs, conservation costs, and depreciation expense, partially offset by a decrease in maintenance expense.




A decrease in interest expense (net of interest and other income) of $754,000, which favorably impacted earnings and resulted primarily from lower overall interest rates due, in large part, to the early redemption of 9.56% private placement notes in the amount of $28 million in May 2021.
A decrease in the effective income tax rate, which favorably impacted earnings and resulted primarily from changes in certain flow-through taxes and permanent items during the three months ended September 30, 2021, as compared to the same period in 2020. As a regulated utility, GSWC treats certain temporary differences as flow-through in computing its income tax expense consistent with the income tax method used in its CPUC-jurisdiction ratemaking. Changes in the magnitude of flow-through items either increase or decrease tax expense, thereby affecting diluted earnings per share.
Electric Segment:
Diluted earnings from the electric utility segment were $0.04 per share for the three months ended September 30, 2021 and 2020. An increase in electric’s operating revenues less electric supply costs (“RLESC”) was largely offset by higher operating expenses.
Contracted Services Segment:
Diluted earnings from the contracted services segment for the three months ended September 30, 2021 increased $0.01 per share as compared to the same period in 2020, largely due to a decrease in overall operating expenses.
AWR (parent):
Diluted earnings from AWR (parent) for the three months ended September 30, 2021 decreased $0.02 per share due to changes in state unitary taxes.
Year-To-Date 2021 Results
Fully diluted earnings for the nine months ended September 30, 2021 were $2.00 per share as compared to $1.79 per share recorded for the same period in 2020. Included in the results for the nine months ended September 30, 2021 were gains on investments held to fund one of the Company's retirement plans totaling $2.3 million, or $0.04 per share, as compared to $1.3 million, or $0.02 per share, in gains generated during the same period in 2020 largely due to volatility in the financial markets. Excluding these gains from both periods, adjusted diluted earnings for the nine months ended September 30, 2021 were $1.96 per share as compared to adjusted diluted earnings of $1.77 per share for the same period in 2020, an adjusted increase of $0.19 per share, or 10.7%. The table below sets forth a comparison of diluted earnings per share contribution by business segment and for the parent company as recorded during the nine months ended September 30, 2021 and 2020.

 Diluted Earnings per Share
 Nine Months Ended 
 9/30/20219/30/2020CHANGE
Water$1.51 $1.35 $0.16 
Electric
0.14 0.13 0.01 
Contracted services0.35 0.30 0.05 
AWR (parent)— 0.01 (0.01)
Consolidated fully diluted earnings per share, as reported$2.00 $1.79 $0.21 
Water Segment:
For the nine months ended September 30, 2021, diluted earnings from the water segment were $1.51 per share as compared to $1.35 per share for the same period in 2020, an increase of $0.16 per share. Excluding the gains on investments held to fund one of the Company's retirement plans from both periods as discussed above, adjusted diluted earnings for the nine months ended September 30, 2021 at the water segment were $1.47 per share as compared to adjusted diluted earnings of $1.33 per share for the same period in 2020. This adjusted increase of $0.14 per share was due to the following items:
An increase in water’s RLWSC of $8.8 million as a result of new rates authorized by the CPUC. GSWC received its full third-year step increase effective January 1, 2021, which is expected to increase water’s RLWSC by $11.1 million for 2021.
An overall increase in operating expenses (excluding supply costs) of $1.9 million, which negatively impacted earnings and was primarily due to increases in water treatment costs, conservation costs,




regulatory costs, insurance premiums, depreciation expense, and property and other non-income taxes as compared to the same period in 2020, partially offset by a decrease in maintenance expense.
An overall increase in interest expense (net of interest and other income) of $1.1 million, which negatively impacted earnings and was primarily due to an overall increase in interest rates at the water segment compared to the same period in 2020 due, in part, to the issuance of long-term debt in July 2020. GSWC used the proceeds to pay down its intercompany borrowings (as required by the CPUC); intercompany borrowings bear lower short-term rates.
A decrease in the effective income tax rate, which favorably impacted earnings and resulted primarily from changes in certain flow-through taxes and permanent items during the nine months ended September 30, 2021 as compared to the same period in 2020. As a regulated utility, GSWC treats certain temporary differences as flow-through in computing its income tax expense consistent with the income tax method used in its CPUC-jurisdiction ratemaking. Changes in the magnitude of flow-through items either increase or decrease tax expense, thereby affecting diluted earnings per share.
Electric Segment:
Diluted earnings from the electric segment for the nine months ended September 30, 2021 increased by $0.01 per share as compared to the same period in 2020. Increases in electric’s RLESC resulting from new rates authorized by the CPUC, as well as a decrease in interest expense, were partially offset by an increase in operating expenses.
Contracted Services Segment:
Diluted earnings from the contracted services segment for the nine months ended September 30, 2021 increased by $0.05 per share as compared to the same period in 2020 primarily due to an overall increase in construction activity and management fee revenue, as well as a decrease in overall operating expenses including lower legal and other outside services costs, labor costs and maintenance expense. The increase in construction activity was largely due to timing differences of when work was performed as compared to the first nine months of 2020. We expect the contracted services segment to contribute $0.45 to $0.49 per share for the year 2021.
AWR (parent):
Diluted earnings from AWR (parent) for the nine months ended September 30, 2021 decreased $0.01 per share due to changes in state unitary taxes.
Regulatory Matters
On July 15, 2020, GSWC filed a general rate case application for all its water regions and the general office that will determine new water rates for the years 2022 – 2024. Among other things, GSWC requested capital budgets in this application of approximately $450.6 million for the three-year rate cycle, and another $11.4 million of capital projects to be filed for revenue recovery only through advice letters when those projects are completed. In September 2021, GSWC and the Public Advocates Office at the CPUC reached a settlement in principle on nearly all of the items in this general rate case application. The unsettled matters are GSWC's requests for: (i) a medical cost balancing account, (ii) a general liability insurance cost balancing account, and (iii) the consolidation of two of GSWC's customer service areas. The date to file a Joint Motion for Approval of Settlement Agreement to the CPUC has been proposed for November 23, 2021. As a result of this proposed timing, a final decision from the CPUC on this general rate case application is not expected by the end of 2021. For a final decision issued after 2021, new rates adopted in the case will be effective retroactively to January 1, 2022.
Dividends
On October 26, 2021, AWR's Board of Directors approved a fourth quarter dividend of $0.365 per share on AWR's Common Shares. Dividends on the Common Shares will be paid on December 1, 2021 to shareholders of record at the close of business on November 15, 2021. AWR has paid common dividends every year since 1931, and has increased the dividends received by shareholders each calendar year for 67 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. AWR's current policy is to achieve a compound annual growth rate in the dividend of more than 7% over the long-term.
Non-GAAP Financial Measures
This press release includes a discussion about “operating revenues less supply costs” at the company’s water and electric segments. Operating revenues less supply costs are computed by subtracting water supply costs from water operating revenues (or RLWSC), and by subtracting electric supply costs from electric operating revenues (or RLESC). The company believes these measures are useful supplemental data in that they remove the effects of pass-through supply costs that, due to regulatory mechanisms in place, do not impact the profitability of AWR’s water and electric segments. The discussion also includes AWR’s operations in terms of diluted earnings per share by business segment, which is each business segment’s net income divided by the company’s weighted average




number of diluted shares. Furthermore, the gains generated on the investments held to fund one of the company's retirement plans during the three-and nine-month periods ended September 30, 2021 and 2020 have been excluded when communicating the results to help facilitate comparisons of the company’s performance from period to period. 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 “operating revenues less supply costs” at its water and electric segments, and diluted earnings per share by each 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. However, these measures are not presented in accordance with GAAP and should not be considered as an alternative to "operating revenues" or "fully diluted earnings per common share", which are determined in accordance with GAAP and presented in the company’s consolidated statements of income. The company has provided the computations and reconciliations of its non-GAAP measures to the most directly comparable GAAP measures in this press release.
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 Securities and Exchange Commission.
Conference Call
Robert Sprowls, president and chief executive officer, and Eva Tang, senior vice president and chief financial officer, will host a conference call to discuss these results at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time) on Tuesday, November 2. There will be a question and answer session as part of the call. Interested parties can listen to the live conference call and view accompanying slides on the internet at www.aswater.com. The call will be archived on the website and available for replay beginning November 2, 2021 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) through November 9, 2021.
About American States Water Company
American States Water Company is the parent of Golden State Water Company, Bear Valley Electric Service, Inc. and American States Utility Services, Inc., serving over one million people in nine states. Through its water utility subsidiary, Golden State Water Company, the company provides water service to approximately 262,500 customer connections located within more than 80 communities in Northern, Coastal and Southern California. Through its electric utility subsidiary, Bear Valley Electric Service, Inc., the company distributes electricity to approximately 24,600 customer connections in the City of Big Bear Lake 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 distribution and wastewater collection and treatment facilities located on 11 military bases throughout the country under 50-year privatization contracts with the U.S. government.
CONTACT:    Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer,
Corporate Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707




American States Water Company
Consolidated
Comparative Condensed Balance Sheets (Unaudited)
  (in thousands)September 30, 2021December 31, 2020
Assets
Net Property, Plant and Equipment$1,594,546$1,512,043
Goodwill1,116 1,116 
Other Property and Investments37,287 35,318 
Current Assets143,659 157,115 
Other Assets98,192 86,011 
        Total Assets$1,874,800$1,791,603
Capitalization and Liabilities
Capitalization$1,091,028$1,082,021
Current Liabilities151,120 118,572 
Other Credits632,652 591,010 
        Total Capitalization and Liabilities$1,874,800$1,791,603
Condensed Statements of Income (Unaudited)Condensed Statements of Income (Unaudited)
(in thousands, except per share amounts)Three months ended September 30,Nine months ended September 30,
2021202020212020
Operating Revenues
Water$102,768 $98,701 $269,430 $257,199 
Electric8,564 8,288 28,211 26,935 
Contracted services25,423 26,699 84,588 79,909 
               Total operating revenues136,755 133,688 382,229 364,043 
Operating Expenses
Water purchased24,093 23,445 60,248 56,291 
Power purchased for pumping3,584 3,369 8,590 7,626 
Groundwater production assessment5,185 5,962 14,845 15,140 
Power purchased for resale2,875 2,117 8,203 7,127 
Supply cost balancing accounts(2,446)(2,639)(7,959)(6,606)
Other operation9,414 8,128 26,165 24,573 
Administrative and general20,255 20,644 62,938 63,992 
Depreciation and amortization9,826 9,348 29,156 27,190 
Maintenance2,979 4,246 8,908 12,224 
Property and other taxes6,052 5,693 17,265 16,098 
ASUS construction12,154 13,568 42,910 39,166 
               Total operating expenses93,971 93,881 271,269 262,821 
Operating income42,784 39,807 110,960 101,222 
Other Income and Expenses
Interest expense(5,553)(6,161)(17,843)(17,533)
Interest income333 316 1,136 1,364 
Other, net467 1,613 2,998 2,388 
            Total other income and expenses, net(4,753)(4,232)(13,709)(13,781)
Income Before Income Tax Expense38,031 35,575 97,251 87,441 
Income tax expense9,878 9,045 23,254 21,227 
Net Income$28,153 $26,530 $73,997 $66,214 
Weighted average shares outstanding36,933 36,886 36,916 36,877 
Basic earnings per Common Share$0.76 $0.72 $2.00 $1.79 
Weighted average diluted shares37,025 37,002 37,004 36,990 
Fully diluted earnings per Common Share$0.76 $0.72 $2.00 $1.79 
Dividends paid per Common Share$0.365 $0.335 $1.035 $0.945 








Computations and Reconciliations of Non-GAAP Financial Measures
Below are the computations and reconciliations of diluted earnings per share from the measure of operating income by business segment as disclosed in the company’s most recent Form 10-Q (Note 10 to the Unaudited Consolidated Financial Statements), to AWR’s consolidated fully diluted earnings per share for the three and nine months ended September 30, 2021 and 2020.
WaterElectricContracted ServicesAWR (Parent)Consolidated (GAAP)
In 000's except per share amountsQ3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020
Operating income (Note 10)$35,459 $33,149 $2,053 $1,865 $5,273 $4,794 $(1)$(1)$42,784 $39,807 
Other income and expense4,669 4,323 33 24 (111)(40)162 (75)4,753 4,232 
Income tax expense (benefit)7,993 7,683 537 533 1,265 1,150 83 (321)9,878 9,045 
Net income $22,797 $21,143 $1,483 $1,308 $4,119 $3,684 $(246)$395 $28,153 $26,530 
Weighted Average Number of Diluted Shares37,025 37,002 37,025 37,002 37,025 37,002 37,025 37,002 37,025 37,002 
Diluted earnings per share$0.62 $0.57 $0.04 $0.04 $0.11 $0.10 $(0.01)$0.01 $0.76 $0.72 

WaterElectricContracted ServicesAWR (Parent)Consolidated (GAAP)
In 000's except per share amountsYTD 2021YTD 2020YTD 2021YTD 2020YTD 2021YTD 2020YTD 2021YTD 2020YTD 2021YTD 2020
Operating income (Note 10)$87,295 $80,416 $7,296 $6,865 $16,375 $13,946 $(6)$(5)$110,960 $101,222 
Other income and expense13,589 13,530 107 426 (346)(266)359 91 13,709 13,781 
Income tax expense (benefit)17,718 17,031 1,879 1,722 3,927 3,199 (270)(725)23,254 21,227 
Net income $55,988 $49,855 $5,310 $4,717 $12,794 $11,013 $(95)$629$73,997 66,214 
Weighted Average Number of Diluted Shares37,004 36,990 37,004 36,990 37,004 36,990 37,004 36,990 37,004 36,990 
Diluted earnings per share$1.51 $1.35 $0.14 $0.13 $0.35 $0.30 $— $0.01 $2.00 $1.79 

The tables below provide the amounts (in thousands) of increases (decreases) and percent changes in water and electric operating revenues, water and electric supply costs, and operating revenues less supply costs, during the three and nine months ended September 30, 2021 and 2020.

Three Months Ended 
 September 30, 2021
Three Months Ended 
 September 30, 2020
$
CHANGE
%
CHANGE
WATER OPERATING REVENUES (GAAP) (1)$102,768 $98,701 $4,067 4.1 %
WATER SUPPLY COSTS:    
Water purchased (1)$24,093 $23,445 $648 2.8 %
Power purchased for pumping (1)3,584 3,369 215 6.4 %
Groundwater production assessment (1)5,185 5,962 (777)(13.0)%
Water supply cost balancing accounts (1)(2,114)(3,019)905 (30.0)%
TOTAL WATER SUPPLY COSTS$30,748 $29,757 $991 3.3 %
WATER OPERATING REVENUES, LESS WATER SUPPLY COSTS (NON-GAAP)$72,020 $68,944 $3,076 4.5 %
  
ELECTRIC OPERATING REVENUES (GAAP) (1)$8,564 $8,288 $276 3.3 %
ELECTRIC SUPPLY COSTS:    
Power purchased for resale (1)$2,875 $2,117 $758 35.8 %
Electric supply cost balancing accounts (1)(332)380 (712)(187.4)%
TOTAL ELECTRIC SUPPLY COSTS$2,543 $2,497 $46 1.8 %
ELECTRIC OPERATING REVENUES, LESS ELECTRIC SUPPLY COSTS (NON-GAAP)$6,021 $5,791 $230 4.0 %





Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020$
CHANGE
%
CHANGE
WATER OPERATING REVENUES (GAAP) (1)$269,430 $257,199 $12,231 4.8 %
WATER SUPPLY COSTS:    
Water purchased (1)$60,248 $56,291 $3,957 7.0 %
Power purchased for pumping (1)8,590 7,626 964 12.6 %
Groundwater production assessment (1)14,845 15,140 (295)(1.9)%
Water supply cost balancing accounts (1)(8,445)(7,297)(1,148)15.7 %
TOTAL WATER SUPPLY COSTS$75,238 $71,760 $3,478 4.8 %
WATER OPERATING REVENUES, LESS WATER SUPPLY COSTS (NON-GAAP)$194,192 $185,439 $8,753 4.7 %
  
ELECTRIC OPERATING REVENUES (GAAP) (1)$28,211 $26,935 $1,276 4.7 %
ELECTRIC SUPPLY COSTS:    
Power purchased for resale (1)$8,203 $7,127 $1,076 15.1 %
Electric supply cost balancing accounts (1)486 691 (205)(29.7)%
TOTAL ELECTRIC SUPPLY COSTS$8,689 $7,818 $871 11.1 %
ELECTRIC OPERATING REVENUES, LESS ELECTRIC SUPPLY COSTS (NON-GAAP)$19,522 $19,117 $405 2.1 %

(1) As reported on AWR’s GAAP Consolidated Statements of Income, except for supply cost balancing accounts. The sum of water and electric supply cost balancing accounts in the tables above are shown in AWR’s GAAP Consolidated Statements of Income and totaled $(2,446,000) and $(2,639,000) for the three months ended September 30, 2021 and 2020, respectively, and $(7,959,000) and $(6,606,000) for the nine months ended September 30, 2021 and 2020, respectively.