American States Water (AWR) 11 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company conference call discussing the company's First Quarter 2023 Results. The call is being recorded.

If you want to listen to a of this call, it will begin this afternoon at 5:00 p.m. Eastern Time and run through Thursday, May 18, 2023, on the company's website, www.aswater.com. company website. referring the available are that the on slides will to be also The Instructions]. [Operator call This limited be will to an hour.

American Executive Tang, Presenting President Officer. Finance from States are Financial Company today Bob and and Chief Chief Vice Officer; Senior Eva and President of Water Sprowls,

forward-looking harbor Litigation reminder, a from by Private Securities be liability Act discussed to of qualify conference call during established As intended this for Reform XXXX. matters may certain statements the safe the

and a uncertainties on our with Commission. description Form of and review the Exchange risks XX-K company's Please recent in the and most Form file XX-Q Securities

In accordance constitute statements prepared addition, GAAP. information call in are non-GAAP in SEC rules. financial a the financial principles include not generally certain presented our with financial in discussion accounting measures are financial accepted under of this with consolidated conference non-GAAP derived from accordance or but in These are and measures measures not States that are that GAAP will United prepared

For the more press details, please release. refer to

At Water I Chief American Sprowls, of Bob Executive Officer call President States the this over will and time, Company. to turn

Thank I'll begin some financial updates comments you, for the thank and questions. ASUS, we'll discuss on then Eva on wrap then dividends, with it quarter. activity, will up details, your brief regulatory today. us and Gary. some everyone, then take joining Welcome, I'll you with and

water a we contracted and that per at communities allows infrastructure us services Public States safe report the or earnings proposed to of performance State quarter XXXX. utility Utilities for from the for or aided reliable CPUC, XXXX provide earnings to adjusted ASUS. by to our during GRC, of our than decision strong Rate April Company's share first business, Golden Commission investing serve. in higher the in $X.XX pleased adjusted for XXXX higher continue I'm Water the The proposed Services Utility or in and American the quarter The California were decision earnings services water Case General the first of receipt was earnings

and It is serve ASUS performed work infrastructure X, per rates utilities, customers share generations earnings our million to We for is spending the at electric the systems million sets water in year XXXX on our years January $XX.X to to remain to $X.XX $XXX also pace contribution its to meet regulated XXXX quarter of XXXX. committed and our come. new fortifying to this during XXXX. and construction of million targeted investments for for $X.XX to water through $XXX retroactive

will the to turn liquidity quarterly and I'll earnings Eva discuss and the her. over call

Thank you, Bob. Hello, everyone.

with increase first water the me share to the of Case recorded related first quarter losses in held also $X.X from of investments of million compared per $X.XX on share a included of $X.XX quarter million The share the gains of share the $X.X for the favorable We to year plan. $X.XX XXXX. XXXX. to XXXX the per fund full for retirement of of recorded the per a variance impact which results. our from to per investment Let as quarter $X.XX per as the as decision $X.XX to of in the $X.XX in retroactive share the first Included share. Consolidated proposed of results an per start quarter was compared $X.XX of were Rate earnings share rates XXXX, quarter first General per increase for related

year, of were adjusted $X.XX adjusted the earnings items, per quarter the first per to share. an per $X.XX as quarter for consolidated last these compared of of increase share for X $X.XX Excluding earnings share

segment. first per as quarter Both earnings discussed for For our items $X.XX the share compared a the to subsidiaries, were water XXXX, as Water at earnings $X.XX reported share utility of Company, increase. affected Water Golden $X.XX State per

the for the adjusted earnings factoring $X.XX from share XXXX. to per So same compared items, share, period at as was of in the earnings effect Water per $X.XX increase X per share an segment or of first $X.XX adjusted which quarter for the same

XXXX offset adjusted difference and effective adopted accounted represent in as for for second GRC, increase the January largely XXXX of year estimated first has end Since from quarter. of per rate been in increases quarter, operating estimated increases expenses. the other second year the and the this in $X.XX year interest earnings The the XXXX rate year XXXX, increases is partially second share the by

the primarily having period segment decrease Electric as first earnings the $X.XX compared year. yet for to the XXXX set effect experiencing were quarter $X.XX new operating overall share to in last XXXX, interest will in increases rates per that also not pending XXXX new Our for while for and await for GRC same to as continued electric related expenses costs. The we share per rates

$XX.X adjustments issued electric new share increased be One XXXX, contracted services cumulative later. year. quarter our the segment expected to of for the the Consolidated per increased quarter, GRC which compared as from same first retroactive will will time. the Earnings at Bob in million recorded X, by be for is decision the that and rates revenue to January last discuss $X.XX are to period

of was Electric impact to the included to adopted impact $X.X year increases Revenue estimated revenue and resulting electric allocation filing true-up in proposed the new retroactive of and for segment expenses $XX.X as revenues, X earnings. no increase an the partly the electric The the expense corresponding segment March of GRC this decision. increase months million which water the result a increased also of for in to million, office for by a XXXX increase in year. water The letter $XX.X ended revenue of XX rate million XXXX full general in includes offsetting attributed advice allocated the

revenue addition, services. million $XX of In was in our from there increase an contracted

X. Slide to Turning

compared segment due Looking XXXX higher earnings. last year to in depreciation construction increased largely approved the the construction wins in to no $XX.X to than on study. also the at and Services and decision was an first as depreciation increase expenses water depreciation increase construction revenue corresponding costs, higher resulting performed timing XXXX. quarter The million at total expense, the from composite The to April supply as rates due depreciation water net expenses. operations, the expenses a activity GRC first administrative revised in in of composite proposed increases increase costs impact other was based requirements adopt increase The in overall operating difference issued depreciation a consolidated our Contracted work of quarter in compared adopted general with to in to resulting rates in higher

interest due rates interest primarily million quarter during gains Golden nonservice retirement borrowing for net State to higher in investments in income level. held $X overall cost expenses Water's benefit Interest due to income component and plan. expense other the by increased $X.X net million average partially by increase for of benefit the offset plans of increases on increased by Other

XX adjusted the Slide first and comparing the EPS shows XXXX bridge quarter of XXXX.

on liquidity operating XX. million for to $X $XX provided cash was as million of to Slide activities by the compared Net XXXX. quarter Turning first

finance $X.X California this the to customer were the since flow in relief Once the There customers GRC XX% and pandemic. in last delinquent During The to continued COVID-XX build-water will received provide sales delay XXXX. final funds decrease request retroactive as a as year, a the of operating well electric in January receiving to accumulated Golden cash first through quarter received water due our is the consumption decision. surcharge of regulated water State also for million assistance no relief state funds was during from year. utility incurred decrease of our the Water recovery received decision in revenue

will year for we file rate addition, In the for also second XXXX. increases

issuance July in adequate the result new by to place placement us capacity months. proceeds were State facility pay In notes. same Water requested capital AWR's down as and ultimately the January that credit $XXX AWR the possibly XXXX, $XXX and credit of Water's support million Water. credit of put XXXX agreements. private unsecured used Golden extension received to day both The Golden with a provide to borrowing X million program. proceeds for We time provides an S&P credit AWR's expires X maturity Golden from rating of facility State State further extended of amendment a the consolidated partially in

considering facility are Water utility. water State for and rating Golden possibly credit separate separate to for our improve a flagship allow We a outlook for credit rating the

the Water lining sound new access at up agreement company's facilities little date in and X lenders credit a market X with new will structure We capital earlier its anticipate credit with history State and with discipline the a ratings of the enable terminated terms. will financial While A+ combined longer superseded credit us instead States place takes it's Golden when believe that and by the relationship an facility the time. for existing American credit to and reasonable and be agreement. put We

American equity current to Water At this fund issue the XX least not its time, expect we States additional to for XX businesses. next months to at do

to made over equity capital is and to time. to continue issue plan will for decision need assess issuance We a equity and when the raise if we

We offering years. its each over timing sales and of enables common market will to of share size consider that doing several an added AWR the control

With that, Bob. I'll back the call turn to

and through XXXX. the between discuss discussed XXXX other application, in all Water XXXX the proposed case. general Thank resolved I water rate Golden entirety, that in requirement Public regulatory had few the the settlement we January you, filed case and agreement adopt been related I Advocates a key items, CPUC to State issues annual Earlier, will decision X, Eva. rate revenue CPUC the in at received the in matters. the Among Office the its decision to proposed to November retroactive with the

State the million settlement in capital in invest infrastructure projects, agreement projects authorized request in the areas. request liability insurance Golden Water's issues approve XXXX. customer proposed medical customer to for and of for consolidation to consolidate cost denied in as Water's of a the the completed and related general both decision to million balancing cycle Golden which of $X.X balancing February X capital insurance have filed account advice X State Water's been decision revenue areas. to State proposed Golden effect service Golden Water plus unresolved the address the and Furthermore, to approved a accounts service remaining of State was letter balancing account, decision that X X-year over The $XXX.X proposed The

by in increases advice State revenues depreciation XXXX for adopted new inflationary to and costs excluding It revenues a million revenues project proposed expense index XXXX excluding adopts on XXXX, -- adopted operating subject the allows for compared based revenues, an the of forecasted includes adopted to rates for depreciation test potential higher increases values. from increase expense, Golden an as levels It XXXX revenues, XXXX additional decision million, which revenues. and compared the project for to adopted depreciation composite adopted letter earnings the and including Water's advice letter higher the supply the higher changes $X.X adopted $XX.X operating resulting new study overall in for XXXX, and it sorry, to

our XXXX through years We're of now in rate case XXXX to third year. in process the general the this the preparing quarter next of filed for water be

December may water X.XX%. of on the cost the on you cost The filed Golden State XX, adopts As from received of adopts this It of decision the of proposed Tuesday the Water decision capital January a it application, capital debt on and a requested through cost new adopts mechanism proposed have and allows XXXX. the capital continuation capital of of equity X, return of structure proceeding. the seen, in for week XXXX cost

and to per per on rates $X.X the the As adjustment reflect the retroactive reduction XXXX included in to based record revenue subject application on the to related which XXXX revenues impact additional of share to share reduction of debt in being the X.X% represents of cost of of estimated currently in share capital impact as at first rates or million quarter adopted a similar revenues $X.XX a new water compared A made quarter of throughout an revenues, X.X% lower cost calls, rates adjustment. was decreased impact continued included prior billed $X.XX earnings for per the as we customers. to proceeding. capital incremental water the $X.XX requested was the to cost year the by of XXXX arriving have of full to XXXX. That discussed our first of to Also, in refund

continuation the the capital mentioned, cost allows previously water As proposed for of decision of the mechanism.

X, from period Moody's the basis October through rate XX, more bond the benchmark. September XXXX, than by XXXX, points AA from For the utility XXX increased

basis XXX a is positive if more return adjusted points, by difference. of there change of know, or may you negative X/X on As than is equity the

decision, will capital water cost through a of proposed mechanism the As XXXX. continue the result, of

to Slide XX. Moving on

rate XXXX. subsidiary case its utility general new August XX, for filed XXXX electric rates through period Our on XXXX the for

are capital structure. items expenditures new as additional there requested as In part capital cycle rate that addition X-year to a rates, new the a of of are number and such

In approved $XX January will already than general case addition, memorandum a we million rates have a has recovery in new make more mitigation rate to account requested the decision spent approved a in of related CPUC plans. final for that The wildfire decision once effective XXXX. CPUC X, capital

the decision, rate rate rate would a compound XXXX by $XXX.X the XXXX general XXXX shown base in in for the million, to any case adopted base rate We amount Golden CPUC the not authorized by grown in amounts average which, The $XXX.X and growth State XX.X% since XXXX rate recovery to average Based attention approved, base advice million XX. annual rate has growth agreement do XXXX. approved projects. include proposed rate letter the in water Turning if base for settlement on present $X,XXX.X Slide our XXXX. result for from Water's XXXX as as XXXX. is million of through and Weighted

compared and by overall period to move of $X.XX period an last in offset was compared performed partially as the first the due revenue expenses Let's compared I'm same period an in announce the for fee resolution share. to same various interest year operating The the and construction economic resulting ASUS increase per differences activity when in to due on quarter the work XXXX. an per year, increase same of for timing per pleased XXXX last increase to increase ASUS. share largely share earnings quarter was construction first contributed the management higher price costs of of of to as adjustments, of to as from $X.XX $X.XX to that

military-based requests proven target remain revenues on for As new to can mentioned per for provide of margin. since compete ASUS that for projects $X.XX adjustments, of ASUS earlier, equitable asset completion effectively we share contract with adjustment, contract for and and XXXX. our year. awarded new filings $X.XX is related based record services a the additional dollar managing confident for to and modifications price contribute The transfers for track awards basis wastewater We water on military economic

last consistent achieve our attention XX our dividend shareholders rate remain has turn our a growth compelling story. achieved the to in the to dividends, our X% more to rate over are investment annual long like of The payments a years. calendar company I'd year than which These policy in part growth annual to compound dividend with of of term. the compound over increases a X.X%

operator now remarks your prepared States you for to our over conclude to like call American by I'd the and interest Water, we'll thanking in for the turn questions.

Instructions]. [Operator

The is with Angie first Seaport. question from Storozynski

interesting because of decision really So it's capital, applies. first, I know cost when it and don't proposed the the with even

of based January i.e., you debt retroactive this cost that best for your is to of it? truly guess, lower XXXX, booking on been X guys it provision have basically would the stick So

Yes.

clear entirely of item to not the the is does it's us, not debt. note One expressly decision to Angie. So in cost it state proposed lower that interesting

intent interpreted it perspective. proposed XXXX, so for for of was set the is. the For the by that intent rate the doesn't these XXXX solely they ALJ's don't know of decision And changes, ordering equity all in be return on make what higher to lower it forth on beginning the paragraph could and state all focused ALJ's the and be we partially XXXX a are which equity should Since changes that to XXXX, offset retroactive cost really of XXXX. future the

to more So come on that.

rates an if perspective? reverse with be lower of that provisions I -- cost starting signs under those XXXX the right, would the the back be -- on the prospective the But if -- EPS assumption what What debt, to basically are associated Okay. meaning from to the be on off add adjusted midyear, it. changes, were would would the after commission

Yes.

the for to have we roughly That back So start was $X.XX. with. add XXXX

$X.XX.

Yes.

the this book $X.XX first will of for it And year. quarter additional

that that in adding $X.XX So total, XX, be Angie, back. will up we'll to March be

It's don't, second appropriately in we a think get won't possible we -- quarter. but -- hopefully, where final it deal we'll we in so the second possible more they're we the with a this it's headed on we if little quarter, can will have that clarity as

I just of the mechanism mean really right? Either there kick X/X/XX, coincidental of there be could and kick rates, request only be half Or I would it options, there have with you mean question, the would could XXXX? one cost in, no, is Or the the to would that's be right? Okay. adjustment new -- only X would mid you Well, in. right? when and year? so The mean capital actually, middle first need increase the I it are So then second be X. of file that

it option, So September a I there time is meaning don't third a like get know, delayed frame. could until

we... And Right.

that be fair. would So

Yes. that... also There's

So that would be fair.

that points, although very also basis for but... There's XXXX X adjustment, small it's

it in that So happens, your with year. the be reduction the current debt, cost meaning guess that would mid roughly it of coincides

we fair, may know had be to But for we I sort days. this X.X would be think Yes. although in yes, more lockstep probably we've here, of through time that mean, move move you as we will.

last I that's one, promise. what And now the so

it doing midyear. well, of starting whatever, ROE right? So right, increase XX of XX that up right, minus X it the midyear, now cost in we get starting mean, cost bps, So bps, by are if the that so equity the assuming debt I I bps down,

have an EPS that perspective? impact been an have on from it basis? Does big an how increase annualized So does an

booked right? Angie. you take that Okay. our recording reflecting Well, the X.X% one, through So I'll that's number. debt,

So $X.X I points rate $X.XX X.XX%, the our to think base, the basis for year. basis will be it X.X% billion $X.XX XX about upside XX the to from on the points. full translates

depends full be year So this the for it perspective. to on

increase. have you So your count to into that

Okay.

-- mean, the it's almost. that than this complicated, on but quarter have just process issue just frankly resolved, Okay. now I much this the we're that that's Well, whole both so we it's and were call fourth frankly, GRC well, in remarkable further almost been again,

looking at electric So just moving on to the the schedule. GRC,

mean still proceeding we're So realistically I mean, next in we're expecting only right? I again, year, speaking. be that issued decision to still a

Yes.

get possible but would say it's So that unlikely. we could XXXX, in something I

Okay. And quarterly my actually last interest question, we now some I yes, drag because I did expense increase slightly there. actually that assume in get that this should $X.XX a level true-up this corporate deferred at But the recognition you will have drag revenues, I the revenues? the slower of in cash is expect mean, an of

$X.XX of about the talking unfavorable variance You're at parent? the

Yes. Yes.

it So basically I'm $X.XX asking a now or is per that... quarter recurring

it of is. -- really is tied borrowings the not It Because parent to we the it are borrowings that have utility. the is at at function a

Your Fargo. Wells with Reeder next from question Jonathan is

PDs awaited, on but right? the guess getting California, long I Congrats pours two rains, when in it it

That is different us. for a of lot true in

to little wanted decision cost of just So on bit. keep capital proposed the going a

it the or is are on if have like this likelihood on like water PD modify cost a proposed any proposed proposed of decision whether to lot have sense side, before the and So of on the had some what they decision it kind the commission the capital this obviously, the of proceedings get past as of might maybe something. the commission took influence you don't how much adopting thoughts decision whether adopting time know

Yes.

and the mean the it analyzing like whether or decision company utilities is not. -- I we determining So our proposed

then doing same other utilities the X same. doing is the sure I'm so are And the public advocates and

then an going with this other And know So necessarily anyone I get issue question say would have the this the early their the commissioners own to tell. is to lobbying that be it's I'd to becomes, commission on changed. too decision. don't

the this more activity a on early But completely so terms We're in decision to be what of says retro they're process. going just lot the honest. to this understand We into be here. don't just

have be on. will that something clarity more so And we'll get to

can't definitive I a Sorry, it. more your report that. view, on be I What's than out you have Jonathan, know

raise know. if why History if it, I no. then don't kind I raise it certainly wouldn't guess, don't they it. you presented, of then he that mean, some, you Well, but I adopt a with good mean , I the issues modify guys point. they'll commission, are

So I guess...

we in They public how supposed interest -- And -- that ROEs it's I but adopted I don't in XXXX when you're know know to mean rates they I back try recommended know. were to usually, where everybody about they for we feel now advocates predict was where going. XXXX, -- is now had know this, too. were don't to filed. lower They it. supposed interest where rates are be XXXX, But the on

sorry, So just If I which I anyway, can't more isn't know you remember, decision was that. which awful, awful. XXXX, the like this be proposed I'm than was helpful though, Jonathan,

this one, Right, That some very I capital your was middle of and no, have you where and to of everything. one proposed to in seem of kind cost everything kind resets the mean ROEs right. mechanism the and the then point degree one-sided

any there of hasn't out, it very did messaging been if where onboarding come just long any if because wants or past this the whereas the that ones to I so case. or indicative early that have know just was if take commission you much sort there of So thoughts maybe was is some

the I well, XXXX to that view of they that. anything assigned here of of as these get that the are had the is this point. sigh you answer weigh just I and a I'm know, commissioners a things bit compared to in to and just this take have ALJ in -- always it at don't Is the sorry. and or -- know the little out, nervous commissioner chance relief. other when was come you didn't I Right. a

agree. I agree. I No, Yes.

across good we'll the So and finish line. yes, on luck stay getting it tuned

and remarks on companies facility your to I a it it or me you struck credit at to seems but queue of like do in extension, that. discussion around mean, touch in the wanted I most expiration date. extend bit, discussed facilities the I the and advance just Eva, need a really well prepared the the in topic other The know X-month renew I mean the

you takes that So to in additional do the it mentioned remarks time prepared the credit I know I X facilities. mean

again, in But would could done current kind have I the thought of have that been well of advance this expiring. facility

So the ones be do you in banking the any upheaval that extension, place to last time X-month the way in is enough I industry in think going impacted guess question and is, efforts to new been get the these the few by have months. the

Yes, it extended that. ahead to X Jonathan, well done we but of expect we get months,

want don't just anything. facility hedged day and last allow we be to the of credit the So doesn't to

approach. more really it's a conservative So

we facility. months the talking get be research earlier State met much We in of of facility, to Water expect intention get took to had the Golden XXX. separate get this and to a December on S&P about a kind amount the rating can extension that X to deadline. and we the try to came would and for to -- how met down with lot will larger X this Bob it than S&P And looking credit and to come We when I

August. the in much grow base higher file case, case last And will in that anticipate case. we expenditure the capital rate we rate got when rate rate This we

to it few line would credit much PFAS, for this I credit with together of put next are years, take process. That's and if amount the bigger this support it a take we a why when facilities. uncertainty X for longer start asking we CapEx syndicated to So effort

years bigger are than and add company I industry have and we help upheaval we of think here. larger do because our program, the in of and at have the I mean, were didn't that to all to X probably just capabilities So us in banking now there, a we CapEx financing because ago,

just So number things. a of

of advantage splitting company. did to into anything don't it we is facility. should takes real I we And complexity X But time increase credit to function about the would And people should think going be worried a bit, that. the and term, on the All I started Maybe. a pieces, have But more think facility the do that's long is earlier? to this it size is, be say. the a I

Okay. and obviously, that's thing. is strong mean -- it Yes, rating the no, extremely I is. where credit And the

an have wouldn't getting be So would thought facility if like issue. a new you

just is And know on big or addressing as appreciate be to good. the impact how the Last I CapEx weeks on stuff? a like comment with companies comments I or PFAS. correctly, maybe other potentially upcoming your that the how of have reading issue should and going different been territory, service in based something it budget additional an was would that? that's the rate filing it. sounds if so the kind like So in -- I'm of the what leaves tea have It place new on ahead,

I can you on give that. of detail bit little Yes. a

point, direction, then are tests you at notification of and have levels. the XX that tested over need So wells to what of found at the over at levels And state's these XX XX the we state's we've areas they identify state's the this the sort doing X basically company, be response on.

X response actually are Now these levels EPA trillion higher notification what than parts and the of is. per

And so through we're going the process.

got XX to and well issues to between wells for them million and million per issue. we've $X XX retrofit have of $X cost So the this

XX. also the more wells total than of We We've got have XXX. a

to a know of the standards X the of parts the I the per really But everything don't trillion or industry -- can't not. -- for be per a it sort first sizable we what the know, So at cost are the to whether don't is parts up X what stick than this point expecting. estimate it's lower I bit was CapEx. Jonathan, getting came going in where trillion. we going to

accordance compared -- also... to million does through I the with trillion the parts How that's $X of cost kind like that the in the X you out levels? guess, to state to that per might -- there, retrofit I would $X Yes. the standards? Or just million guess, them state Because mean, I

It per jump putting it at reduce you when that trillion. doesn't X considerably the to the parts materials you're kind in point. big is, Not down jump of a because but there

Okay.

those those four you many test, Do how of I XX you XX with out so And state with the parts per trillion would issues standard? that the standards. have know of the know have issues

of all them. Yes,

extend you it even, those XX the beyond why out I guess. So that's could XXX, and threw

It what than or state standard higher state the the is lower is the is. yes, because -- current federal possible, is

the case be going rate all you if Are and the potentially see settles compliance is kind separate to per what the to X time parts right. until filing? All is something everything. Okay. Or in frame you upcoming trillion try EPA of on and this would encapsulate it at what this

the the working still the at we're putting cetera. strong on at possibility, rate case point, additional looking a et CapEx testimony we're mix water and this So Jonathan, on supply impact,

it a don't what at I So back filed we but point, we this have folks. by let the is file, number decision, really all goes the think,

conference Sprowls closing over to like session. concludes for Bob question-and-answer to the remarks. would This back our any turn I

Thank you, Gary.

you next participation, it up you I with and today forward we thanking all look So quarter. just to by want to wrap speaking for your

start have to your So good good week, you. Thank of your a rest and summer.

now has Thank The today's for concluded. presentation. attending you conference

may now disconnect. You