American States Water (AWR) 8 Aug 232023 Q2 Earnings call transcript

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

If you would like to listen to the replay of this call, it will begin this afternoon at 5:00 p.m. Eastern Time and run through Tuesday, August 15, 2023, on the company's Web site, www.aswater.com. company Web referring site the available are that the on [Operator slides will to be also The Instructions]. After an today's opportunity be to ask presentation, questions [Operator there will Instructions]. President States Senior Tang, President of Financial are from and Chief Vice Water and today Executive Officer; American Bob Presenting Sprowls, Officer. and Finance Chief Eva Company

of statements liability reminder, for Act and the qualify and Exchange certain Commission. this Please established with As Litigation file to the XXXX. discussed a Securities conference the call Form XX-Q Form of risks Harbor from description intended during matters may by Private Securities on our XX-K be the forward-looking uncertainties and review Safe most Reform company's recent in

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

details, more refer For press to release. please the

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

adopted continue take for company. Public ASUS, proceeding. serve. prospectively I'll late everyone, services State cost and we'll California to the set adopted then your Welcome was June, to be productive the decisions wrap can of in Thank you, they financial the CPUC general Company's will I'm Commission in on it water Golden we capital to then and Eva that debt for provide today. comments with joining reliable It return decisions or rate as Water capital dividends, Utilities Both of for The rates communities XXXX on on allows quarter. positive pleased a adjusting mechanism and questions. water And capital the begin case of us the very up quarter thank and return the on Alan. and of cost with decision you I'll the the brief and some activity, regulatory some safe then details. updates enable continuation infrastructure or authorized for constructive for the of us structure equity. equity, and for investing utility the cost for viewed capital embedded through cost and XXXX GRC discuss water

cost July cost with of filed billing equity of adopted newly on a on rates CPUC cost As the XXst. a implement effective of equity XXXX retroactive January recovery XXXX approved the rate new XX% capital X.XX% by Water’s rates. X, letters We of a and rates X.X% have the decisions. will Advice result, customers XXst to seek debt implementing and of the XXXX based a on and from State the return capital and rates July been to general Golden days XX, reflects case ratio XX with started July XXXX within new

subject quarter the been June proceeding a up receiving our sets $X.XX last quarterly cost of of diluted of of per results from result through in was as year. quarter recorded of last of per in share Recorded Let's of reversal earnings during XXXX, prospectively. which final recorded decision for This $X.XX first $X.XX of per cost the share XXXX of that capital quarter capital the the had increased made share include is quarter was in second XXXX second the share the reversal briefly $X.XX discuss that earnings. refund variance the from per year. that previously revenues favorable to a

for the a quarter share $X.XX from held fund on of to gains year. quarter per retirement to of favorable variance second investments losses last results reflect also Second plan a net compared

Excluding as earnings XXXX share higher earnings of rates, Golden $X.XX final to reflect these consolidated due XXXX to increase for per adjusted an two were adjusted impacts, proven largely new of quarter The of as compared adjusted XXXX. second water the GRC earnings the State the a for favorable Water’s second quarter decision.

construction our States And of track In contracted the American services ASUS, for year. addition, earnings or business, to Utility higher the is the contribution for second targeted also higher on its quarter activity contributed to meet at XXXX. Services earnings ASUS

discuss dividend sustainable increase achieve our and $X.XX I'll Board received over by from increase I'm the company's shareholders is long and The also term this each to This paid earnings to marks Water Board's represents of every payment turn the our company. report rate also XXXth by States dividend dividend XX ability an share, for Eva current faction annualized dividends liquidity, XXXX, $X.XX the that years. consecutive pleased X.X% American share. dividends the sizable quarterly since dividend confidence per rate annualized increase. approved week dividend growth. earnings her. the increase reflects The last year the another per after increasing will which to year has significant the call consecutive now calendar in

Bob. everyone. Hello, you, Thank

start investments increase share last which of The record been of quarter to XXXX. from a has through against quarter the $X.XX XXXX per plan. as $X.X on subject $X.X Bob per $X.XX investments revenue second in debt year. estimate $X.XX XXXX, losses per of an favorable fund of in million quarter, me of second recorded second of variance recorded share with the refund mentioned, been also We share the in during recorded per of of our $X.XX quarter to share these of increase results. $X.XX million reversal included share that is compared the per as Let held has Included as quarter a first share the result to per related share. for earnings quarter retirement cost of lower to the XXXX, $X.XX Consolidate as quarter the of second to the the or compared of per for for $X.XX

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

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

per $X.XX share second the for increase was for for in items, as factoring quarter of which the were So of adjusted an year. $X.XX same period share, earnings compared two per same per from water adjusted impact the the $X.XX earnings segment share the to last

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

this also in per for pending share segment’s second the await our not to electric XXXX experiencing while decision costs. and set is be the service in year in from for decrease new per new to cumulative recorded same the Earnings increase earning construction through $X.XX issued at were segments rates operating made GRC will quarter the expenses quarter the will primarily effect continued electric we overall year. GRC Our relates share period to When The and the to and $X.XX to XXXX time. $X.XX rates for increased for share electric per last new that expected XXXX, be as that as due compared having yet are interest for activity. adjustment contracted January higher rates retroactive

shows capital by million included for water subject reversal a $XX in Slide million, which periods that as the refund $X.X to being prospective. of the second X of increased cost revenue consolidated XXXX. quarter increased the the by result revenue compared to of segment same million for the as of Revenues $XX.X

The in quarter the also increases the While largely the refund of XXXX a in were year allocation revenue resulting The compared an up increase general estimate adopted the letter An increases. electric that's represent of increase additional period the adopted lower the to XXXX of in second the attributable in million to as subject and to filings true electric increase XXXX of second and and $X.X from same corresponding revenues difference of the decision. time. recorded rates allocated no includes revenue advice to XXXX as a at electric segment earnings. was TRC primarily expenses to revenue water in result office impact an expense offset revenues

an was in $X.X from services due there increase million In higher construction our activity. of to revenue addition, contracted

retirement in in year costs looking to was second million held Slide expenses on Water’s X, total Consolidate [act]. as components $X $X levels. an of increased our quarter. was and higher general cost Benefit XXXX. increases investments compared actual this higher on segments at to all non-service quarter. offset resulting assumptions average costs. contracted of construction increased million increase from quarter differences increased Turning due plans, supply expenses when expenses Golden services due other related than income, by during aerial and segment, largely business during by second resulting operating million expense, the in activity borrowing to for rate administrative increase gain for changes expenses, increase Interest the when overall net compared last construction benefit due to construction were in to year's plan, There partially State primarily [Indiscernible] interest $X.X net from other The interest work across Other to in to timing income, also by higher performed

was June quarters Slide in earnings the decision included results and our retroactive per to XX of second per XXXX. compared as XXXX share $X.XX by of ended XXXX. to for of period of rates which XXXX the first This the per the related per share months from an shows for share XX, the same comparing half Fully were to and the reported reflects water increase full for of as segment earnings reported diluted impact year the GRC six $X.XX EPS as the XXXX in $X.XX the adjusted. XXXX, in $X.XX year-to-date 'XX, bridge adjusted $X.XX share of related slide year-to-date

In a months reversal of recorded the the include estimated cost of per lower capital held six per debt [$X.XX] plan. to XX, cost was share retirement ended the result results to $X.XX increase variance favorable the which of XXXX, related share XXXX in during from of final XXXX. fund recorded the a $X.XX share as per [dollar] The $X.XX addition, decision, a of also impact year-to-date of June include a of investment

consolidated XXXX same share. last period three above, year, of were six for $X.XX the ended $X.XX per $X.XX adjusted mentioned share for increase to adjusted an as per months the earning earnings items compared June share Excluding XX, per of

June through million Turning this compared to $XX.X for of liquidity. Net activities provided year-to-date by operating million XXXX. $XX.X year cash as was to

the the and increases and XXXX, Since half new The to have thus surcharges was to first decision last decrease due accumulated for effect decision. July year, funds from retroactive new to funds of delay of and of the COVID-XX receiving recover far to Monday, provide water last filed in which customer rates pandemic. incurred file also relief of decrease regulated that the operating the received will received, our consumption XXXX build customers through XXXX. the in effective implementing the the been delinquent assistance in a water has During in electric in XX, the utility rates There future. $X.X cash day GRC California final amounts relief million State bills in for Water during is implementation water no been received near flow took XX% Golden on final State

million regulated $XXX activities investing on to $XXX in at company expenditure our will year this funded Our to remain million capital spend track utilities.

new for ability and borrowing the for Golden $XXX to During new Water spend Water facility credit lenders bring $XXX quarter, and for the of capacity combined the will million additional American borrowing for of State American we borrowing credit The State credit to $XX five Water. capacity State both has past million a subject an $XXX Each finalized approval. million. also million agreements for capacities year Water Golden facilities this State

additional amended over to utility also the electric issuing facility its to current XX start borrowing its in raise to businesses. Water to additional equity likely $XX million. months Our capital American XX capacity fund its credit increase time next State by is to

of the at As that AWR the and its an doing enable common to we the will we timing market mentioned size of consider time. over control offering the before, sales shares

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

levels higher XXXX adopted completed It adopts forecasted an as water issued the XXXX. was cycle, revenue decision CPUC new you, all Thank compared excluding new to in to the of higher inflationary agreement increases water million, Water based And decision The of general over in for things, study case. revenues, State year rates the Golden the projects, $XX.X regulatory filed will Public expense, I from recap in subject approves on an the in adopted test and revenues and expense the revenues a costs the Office and the a discussed it XX, key decision for million Advocate's with It letter consistent to Eva. rates and To settlement Golden key I adopted capital letter is as authorized the for project matters. projects Final at rate other discuss XX, June earnings million years to XXXX the that the three by in changes higher plus few the received Earlier a depreciation issued XXXX. for advice overall material of proposed of respects adopted advice includes and decision XXXX, index Water we XXXX for final $X.X have composite between State the depreciation XXXX adoption the you adopted February additional sets including in provide XXXX, new on points operating million the supply April. $X.X the which which operating Water’s capital decision $XXX.X with increases values. for for decision. in revenues. invest XXXX through infrastructure final allows depreciation Golden resulting been State Among increase a decision. effect in

final requested We rate XXXX are Also next quarter, set capital third to return on and the water the now of through proceedings for of the mechanism. the X.X% XXXX. in the the XXXX of the water CPUC cost of cost case of capital the equity through and our to cost filed in the structure cost continuation debt of adopts a adopts allows the of process of The our debt, of of in XXXX preparing on this general filed the adopted the adopts XX% decision for be during as new XX% equity quarter years for decision capital capital application, year. X.XX%

and rates In company's of addition, on be to the not all retroactive. to based are assessment the decision, final prospective adjustments

revenues X.X% in were debt cost of through compared in XXXX, and on of discussed reduction a our As in included that impact the was of X.X%, water estimated reflect the to calls capital as cost XXXX a prior to decision all requested capital of of we recorded to the issued. first rates as cost revenue water lower before billed to XXXX application quarter of of customers

refund $X.XX to again were in XXXX As that and a prospectively the a or per XXXX circumstances. share retroactively, of which and through to regulatory segment result liability million receiving reverse rates of quarter not in subject for estimate the as cost of the capital final to decision, water change an recorded revenues first increased revenues sets its $X.X water recorded

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

as from the through return For XX adopted October XX, half points increases the rate by XXX.X basis decision. points September the on from utility from XXXX the the X.XX% XXXX, by Moody's period bond change adopted one AA benchmark, basis increased the equity or which X, in

rate year, authorized return As return equity a Golden of a and result, X.XX%, of a capital debt an and X.XX%. State July of on XX% equity XXst XX% this base effective Water of structure on has

August XXXX case XXXX. rates through year for subsidiary XXth on general utility of for last period XX, its filed Slide to the Moving on new our rate electric

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

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

Water's Turning the decision base of in by in to is from million Golden XXXX base year rate the CPUC. as and the rate our authorized rate for rate average XXXX, forecasted [$X,XXX.X growth XX.X% we of grow million] the final general a case, level that's XXXX period. on XXXX from growth forecasted XXXX an Water's actual $XXX.X State in the to authorized through State six in present from attention growth Golden through average to annual Slide XX, XXXX Based compound the

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

As to per to earlier, share ASUS $X.XX the for is year. mentioned contribute $X.XX target on

of the dividend the increase term. in policy Last quarter a week rate our is more based over also than achieve our on XXXX. since military attention can compound increase wastewater remain confident our dividend. on annual earlier which we in already the effectively related record of consistent touched turn long for water dividends, This I we to that to military with new basis like contract for X.X% We call. growth proven the third X% compete based an I'd awards services and announced managing in to track

shareholders Water. to remarks And proud I'll dividend XXXX. the dividend from I'd is thanking annual asset record your through quarterly over States XXXX us is the now is the something allowed American and compound interest in of our for call questions. you history to to company This five last that prepared our by Our strong track turn payments a to operator our growth rate like shareholders. for achieve a to years conclude X.X% continuing has the over strong in

Our first comes Seaport. Angie [Operator Storozynski from Instructions] question from

your far earnings. so this many So there's second year just pieces the of for half as moving as

Just help maybe. me out

cost for of of So basis the on still of that the first the cost fair? The slightly. return rate equity. is versus cost increased in debt capital, changes falling Is

going current The return X.XX%. rate of Yes. forward is

Right, from the previous X.XX%…

has marginal detrimental for impact that So Is year. earnings the fair? on some that of remainder the

correct. That's

Yes.

but Angie, I'm we these, to you're of all on booking were X.X. sure in top of XXXX the

Yes, exactly.

incremental XXXX. the revenues for Now step up in

So then this would and ‘XX basis increase the on net revenue annualized step an $X.XX pickup up? was GRC be much how

you XXXX? Are comparing 'XX to

revenue incremental Well, Yes. was GRC? was the step is [Multiple associated with What that to saying the just no, the basically that addition increase inflationary this increase $X.XX you embedded from have in the I'm adjustment, Speakers]. right, what in the what change GRC,

all, booked. we -- about increase six for Then think we $X.XX months. it's that -- for believe XXXX, I rate First for we have of from is $X.XX XXXX I increase year-to-date, increase

six XXXX, the year XXXX increase last So that's months. so for from

anything don't else, XXXX, expect the which we and the And thinking electric then I'm just only about right? will still with trued until and GRC up weakness result, the on be side -- then

in get I it unlikely, say. it’s we'll mean, would XXXX, but possible I

the the to I upcoming getting next GRC, ready and this embed are Will file promise you [RAM] then question. in my filing? as last full it's And you

plan request we Yes, it. to

Yes.

of from Wells comes question Fargo. next Reeder Jonathan Our

GRCs in you where Good thing them. were filed the has quarter, with yet. that were generally I mentioned expecting is not been one line we But things new think

your normally GRCs I July. in think file you

out this So untimely another delayed by in do related the filing think just the the this you outcome last delay XXXX? look CPUC to then we is in GRC, and the means decision when to

And the case, we the, XXXX call we delay this related delay to general is processing think of rate The do do case. the in it'll the it, affect not. we

timely great back somehow track they get decisions. to can more that'd be No, if on get

EPS of like there where pursuit awarded? around terms ASUS, be might of you obviously, term year and that for would new bases you update come might near or affirmed what Any thought grabs in. get In bases full the up

waiting privatization, o think there there a won competitors it's to it. announcement there's been one who Pax out privatization when will hear I navy while called be River a Unclear all out And privatization. that that's made. the are

interested the We very we're in a reputation military. with great So do that. have we think

performance at the contractor say We same have ratings they where -- competitor thing the our sure are of strong. there's themselves. each rate and very our about something bases assessment I'm would called a rating you

their don't in will we're push we line to particular privatization know bidding the finish announced. So and I that here. get hope across when one be

point. bit I little perhaps think at it is a schedule behind this

kind one? the of only that's But near-term-ish

that's typical Right, the on guess for only, that's the say, street, bidding. privatization I out I would

right RFP the That's general the now? on open only side actual in military

don't previously standard Jonathan, assets, other to there's taking privatization. I over the I've bit perhaps -- through of but about, Yes, the year ways XX process work talked a little is

are we privatization. they're interested, we're standard but So not additional the on projects, working

on and out, I adjustments regulatory the bed. congrats cost your getting two in California of a in XXXX, say, keeping with ROE? in maybe mind another we'll where you you to capital that I mean to general, better, expecting finally quarter mind upward put big outcome ROEs? it was the in were good particularly adjustment items little get Well, shake Would looks mean, like to the a allowed it it

from I of capital, cost prior a honest. lot be tissue mean, I Yes, to of scar got

So they it reasonable commission here XXXX. were they've relative the like where in seems been -- pretty is to

So it the mechanism that and we triggered about particularly adjustment perhaps feel given again. that good will trigger outcome,

should it but… been feel So give reasons I yes, higher I we mean, I you can have why think okay.

keep think XX% we good still Jonathan. layer, that's and I outcome, very equity our And

I but of have the one they your and kept take of didn't it's layers interesting. your obviously kind down, you they peers then which for guess peers your increased Yes, layer, done. of I also could mean, other

consumer advocate those position and that I high given come past layers the So are at equity has least in down. that's constructive should been too certainly know

probably I speak Right. think -- know but things I to don't generally what landed. that mean, they they I with talked the mean, the I industry. But you've Is are folks, where said, okay they I for that said? other can't what

the it. with okay certainly everyone's that retroactive it's Yes, fact And helps. not

Right, with I agree that.

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

Yes. I just Thank speaking just letting to quarter. their today wanted and everyone have you wrap up rest for and that today, know look to by all, a participation good thanking with we forward next everyone summer. of your

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

may You disconnect. now