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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American States Water Co | NYSE:AWR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 70.84 | 0 | 09:00:05 |
• 22% increase in Diluted EPS over fourth quarter of 2018 • 33% increase over full year 2018 (30% increase in adjusted EPS over 2018) • Increased earnings per share in all business segments for full year 2019
American States Water Company (NYSE:AWR) today reported basic and fully diluted earnings per share of $0.45 for the fourth quarter ended December 31, 2019, as compared to basic and fully diluted earnings per share of $0.37 for the fourth quarter ended December 31, 2018. Fully diluted earnings for the year ended December 31, 2019 were $2.28 per share, compared to $1.72 per share for 2018.
Fourth Quarter 2019 Results
The table below sets forth a comparison of the fourth quarter 2019 diluted earnings per share by business segment, as reported, with the same period in 2018:
Diluted Earnings per Share
Three Months Ended
12/31/2019
12/31/2018
CHANGE
Water
$
0.28
$
0.17
$
0.11
Electric
0.05
0.03
0.02
Contracted services
0.12
0.18
(0.06
)
AWR (parent)
—
(0.01
)
0.01
Consolidated diluted earnings per share
$
0.45
$
0.37
$
0.08
Water Segment:
Diluted earnings from the water segment of AWR’s Golden State Water Company (GSWC) subsidiary increased by $0.11 per share for the three months ended December 31, 2019, as compared to the same period in 2018. The following items affected the comparability between the two periods (excluding the impact of billed surcharges, which have no impact to net earnings):
Electric Segment:
The electric segment’s recorded diluted earnings for the three months ended December 31, 2019 were $0.05 per share as compared to $0.03 per share for the same period in 2018. There was an increase in the electric gross margin as a result of new rates authorized by the CPUC in the August 2019 final decision on the electric general rate case, partially offset by an increase in operating expenses and the ETR as compared to the same period in 2018 resulting from certain flow-through taxes.
Contracted Services Segment:
For the three months ended December 31, 2019, diluted earnings from the contracted services segment were $0.12 per share as compared to $0.18 per share for the same period in 2018. The decrease of $0.06 per share was largely due to differences in the timing of construction work performed in 2019 as compared to 2018, as well as an increase in outside services during the fourth quarter of 2019. Diluted earnings for the twelve months ended December 31, 2019 for this segment were $0.05 per share higher than 2018, as discussed in the full year 2019 results below.
AWR (parent):
For the three months ended December 31, 2019, diluted earnings at AWR (parent) increased $0.01 per share due primarily to changes in state unitary taxes.
Full Year 2019 Results
In August 2019, the CPUC issued a final decision on the electric general rate case, which set new rates for 2018 through 2022. Since the new rates were retroactive to January 1, 2018, the cumulative 2018 earnings impact from the decision of $0.04 per share was included in 2019 results. Excluding this retroactive impact related to the full year 2018, which is shown on a separate line in the table below, fully diluted earnings for the year ended December 31, 2019, as adjusted, were $2.24 per share compared to $1.72 per share for 2018, a 30% increase. The table below sets forth a comparison of the diluted earnings per share contribution by business segment and for the parent company.
Diluted Earnings per Share
For The Year Ended
12/31/2019
12/31/2018
CHANGE
Water
$
1.61
$
1.19
$
0.42
Electric, adjusted (2019 excludes retroactive impact of CPUC decision in the general rate case related to 2018)
0.15
0.11
0.04
Contracted services
0.47
0.42
0.05
AWR (parent)
0.01
—
0.01
Consolidated diluted earnings per share, adjusted
2.24
1.72
0.52
Retroactive impact of CPUC decision in the electric general rate case related to the full year of 2018
0.04
—
0.04
Consolidated diluted earnings per share, as reported
$
2.28
$
1.72
$
0.56
Water Segment:
Diluted earnings per share from the water segment for the year ended December 31, 2019 increased by $0.42 per share as compared to the same period in 2018 largely due to the approval of the water general rate case in May 2019 and effective January 1, 2019. Also included in the earnings for 2019 was a $1.1 million reduction to administrative and general expense, positively impacting earnings by $0.02 per share, which reflects the CPUC's approval received in the general rate case for recovery of costs previously expensed as incurred and tracked in memorandum accounts. Excluding this $0.02 per share impact, diluted earnings per share from the water segment for 2019 increased by $0.40 per share due to the following items (excluding billed surcharges):
Electric Segment:
Excluding the retroactive impact of $0.04 per share resulting from the electric general rate case related to the full year 2018, which is shown on a separate line in the table above, diluted earnings from the electric segment for 2019 were $0.15 per share as compared to $0.11 per share for 2018. The increase was due to a higher electric gross margin as a result of new rates authorized by the CPUC's final decision, partially offset by an increase in operating expenses and a higher ETR as compared to 2018 due to changes in certain flow-through taxes.
Contracted Services Segment:
For the year ended December 31, 2019, diluted earnings from contracted services were $0.47 per share, compared to $0.42 per share for 2018. The increase was due, in part, to the commencement of operations at Fort Riley in July 2018. There was also an increase in management fees at several other military bases due to the successful resolution of various price adjustments during 2018 and 2019.
AWR (parent):
For the year ended December 31, 2019, diluted earnings from AWR (parent) increased $0.01 per share compared to 2018 due primarily to changes in state unitary taxes.
Liquidity
In 2019, GSWC invested $136.2 million in company-funded capital projects, a record high for the company. Continuing our strong capital investment levels is a critical factor in delivering consistent, high-quality service to all our customers, as well as improving safety. AWR borrows under a credit facility, which expires in May 2023, and provides funds to its subsidiaries in support of their operations and capital investment programs. As of December 31, 2019, there was $205.0 million outstanding under this facility. In October 2019, the credit facility was temporarily increased by $25 million to $225.0 million, effective until June 30, 2020. In February 2020, AWR received a binding commitment from its lender for the option to revise the temporary increase of the credit facility to $260.0 million through the end of 2020. When needed, AWR will be able to exercise this commitment and have immediate access to the additional funds. On December 31, 2020, the borrowing capacity will revert to $200.0 million. Management intends to seek additional financing in 2020 through the issuance of long-term debt at GSWC. GSWC intends to use the proceeds from any additional long-term debt to reduce its intercompany borrowings and to partially fund capital expenditures. AWR intends to use any financing proceeds from GSWC to pay down the amounts outstanding under its credit facility.
Dividends
On January 28, 2020, AWR's board of directors approved a first quarter dividend of $0.305 per share on AWR's common shares. Dividends on the common shares will be paid on March 2, 2020 to shareholders of record at the close of business on February 14, 2020. The board of directors of AWR approved a 10.9% increase in the company’s third quarter 2019 cash dividend on the common shares of the company. American States Water Company has paid dividends to shareholders every year since 1931, increasing the dividends received by shareholders each calendar year for 65 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. The company’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 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. Furthermore, the retroactive impact related to fiscal 2018 resulting from the CPUC's final decision on the electric general rate case issued in August 2019 have been excluded when communicating that segment's full year 2019 results to help facilitate comparisons of the company’s performance from period to period. All of 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 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, 2019 as filed with the Securities and Exchange Commission.
Conference Call
Robert J. Sprowls, president and chief executive officer, and Eva G. 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, February 25. 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 February 25, 2020 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) through March 3, 2020.
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 customer connections located within more than 80 communities in Northern, Coastal and Southern California. The company also distributes electricity to approximately 24,000 customer connections 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 distribution and wastewater collection and treatment facilities located on eleven military bases throughout the country under 50-year privatization contracts with the U.S. government.
American States Water Company
Consolidated
Comparative Condensed Balance Sheets
(in thousands)
December 31, 2019
December 31, 2018
Assets
Utility Plant-Net
$
1,415,705
$
1,296,310
Goodwill
1,116
1,116
Other Property and Investments
30,293
25,356
Current Assets
122,456
131,468
Regulatory and Other Assets
71,761
47,183
Total Assets
$
1,641,331
$
1,501,433
Capitalization and Liabilities
Capitalization
$
882,526
$
839,310
Current Liabilities
115,998
146,585
Other Credits
642,807
515,538
Total Capitalization and Liabilities
$
1,641,331
$
1,501,433
Condensed Statements of Income
(in thousands, except per share amounts)
Three months ended December 31,
Twelve months ended December 31,
2019
2018
2019
2018
Operating Revenues
(Unaudited)
Water
$
71,718
$
66,424
$
319,830
$
295,258
Electric
9,515
8,802
39,548
34,350
Contracted services
31,760
35,779
114,491
107,208
Total operating revenues
112,993
111,005
473,869
436,816
Operating Expenses
Water purchased
17,026
16,847
72,289
68,904
Power purchased for pumping
2,098
1,830
8,660
8,971
Groundwater production assessment
4,942
4,294
18,962
19,440
Power purchased for resale
3,298
3,151
11,796
11,590
Supply cost balancing accounts
(4,181
)
(4,539
)
(7,026
)
(15,649
)
Other operation
8,210
7,525
32,756
31,650
Administrative and general
21,207
20,519
83,034
82,595
Depreciation and amortization
8,904
10,631
35,397
40,425
Maintenance
5,738
4,761
15,466
15,682
Property and other taxes
5,042
4,541
20,042
18,404
ASUS construction
16,002
18,738
55,673
53,906
Gain on sale of assets
(17
)
(42
)
(253
)
(85
)
Total operating expenses
88,269
88,256
346,796
335,833
Operating income
24,724
22,749
127,073
100,983
Other Income and Expenses
Interest expense
(5,708
)
(5,514
)
(24,586
)
(23,433
)
Interest income
605
1,765
3,249
3,578
Other, net
1,203
(1,084
)
3,276
760
Total other income and expenses, net
(3,900
)
(4,833
)
(18,061
)
(19,095
)
Income Before Income Tax Expense
20,824
17,916
109,012
81,888
Income tax expense
4,124
4,127
24,670
18,017
Net Income
$
16,700
$
13,789
$
84,342
$
63,871
Weighted average shares outstanding
36,842
36,749
36,814
36,733
Basic earnings per Common Share
$
0.45
$
0.37
$
2.28
$
1.73
Weighted average diluted shares
36,996
36,959
36,964
36,936
Fully diluted earnings per Common Share
$
0.45
$
0.37
$
2.28
$
1.72
Dividends paid per Common Share
$
0.305
$
0.275
$
1.160
$
1.060
View source version on businesswire.com: https://www.businesswire.com/news/home/20200224005855/en/
Eva G. Tang Senior Vice President-Finance, Chief Financial Officer, Corporate Secretary and Treasurer Telephone: (909) 394-3600, ext. 707
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