AWR - Earnings call transcript Q3 2020 | American States Water Company

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company Conference Call discussing the company’s Third Quarter 2020 Results. This call is being recorded.

If you would like to listen to a replay of the call, it will begin this afternoon at approximately 5:00 p.m. Eastern Time and run through Tuesday, November 10, 2020 on the company’s website, www.aswater.com. company website. referring the available are of this on slides will to be also The This will Instructions] [Operator call X hour. be limited to today and Water and Presenting Chief Financial President States Bob and American President Sprowls, of Company Finance Chief Tang, Eva is Officer Officer. Senior Vice Executive from

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

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

Water Executive release. of please over Bob press to Chief to President the turn time, Company. to this For more and would details, the I States refer conference American At Sprowls, like Officer

Bob Sprowls

I’ll again these will times, delivered once you dividends, it you, we the a then by today. few financial would up and take and American our to Thank quarter, ASUS some on then for highlights with of results. States the thanking uncertain updates Eva questions. and activity, Through your start Welcome, regulatory wrap solid like employees employees. Keith. Water I’ll everyone and I thank details, for us some joining begin with will review

X.X% of earnings third quarter earnings per X.X%. August booked for of from cash quarterly an the I for compared pleased Board of XXXX, The or XXXX $X.XXX XXXX. decision case am the $X.XXX retroactive Directors XXXX the results that per to quarter company’s the adjusted in increase for dividend a XX.X% approved This of per third consolidated increase a and to the increases in increase electric in share share in XXXX year, to as in in X.X% quarter to periods $X.XX dividend addition to Along with $X.XX of get share CPUC, of is Public XXXX. way share on. share per the regulatory essential working rate providing and customers which for per through that $X.XX adjusted or assistance exclude the $X.XX for are some of services and per Our to Utilities prior will were pandemic, July quarter Commission, report through adjustment discuss of I to California the general quarter this with our third we our later communities third the processes share.

contracts new In we military-based subsidiaries. continue our addition, for of pursue levels service and our remain three high to all

to have to more embraced for They services safety electricity the personnel X as field over stringent healthy. wastewater water, protocols customers, bases. have XX environment. worked are we and achievements support working Since States, pandemic, that of March, going to our on United of the those Now personnel the both month and keep we and tirelessly military our in a including on operating million look the employees I COVID-XX customer-facing customers provide across reflect who our wanted smoothly remote X keep

our commitments for benefit infrastructure doing long-term short we kept and our customers. have to While strengthen the this, our of

resulting about any annual expense. million capital to would utility COVID-XX. X months our in year, depreciation expected scheduling For from spent the X.Xx and water million for This million track $XX.X on XXXX, segments spend the $XXX be expenditures, XX, company-funded to September barring ended delays electric our $XXX

our people I later, than While call quarter. financial normal resiliency will that the turn to over for to return now I’m to the of a have results Eva we rather review shown. sooner for the hope the proud

Eva Tang

hello and everyone. Bob you, Thank

with at quarter look a Let Slide me more our start detailed third financial on results X.

mentioned, water share to period as remaining segment the our gross $X.XX Water’s was share plan increase quarter in earnings share State segment’s per earnings the in in XXXX for share quarter. per the were Earnings for in water the XXXX. of on to segment’s the continues in COVID-XX retirement a There fund compared third Bob be the to $X.XX for water increase adjusted The per $X.XX one held contributing quarter This of the for water in as quarter. the earnings and markets new due rate due assets. $X.XX the rates, least expense effective consolidated operating volatility margin expenses, by gains As Golden higher well partially to income on increase tax at interest lower water as offset in same interest pandemics. earned from for in investments per income volatility a regulatory at increased financial an to part increase resulted an

incremental by approved increases costs. expense of year. maintenance previously resulting There $X.XX decision $X.XX as resulted which the by also quarter in new our as that share $X.XX was Excluding in contracted rates offset XXXX. from to new adjusted the fourth quarter the third of The to first decrease slowdowns third as per the lower the the XXXX. the company funding from partially $X.XX reduction an equivalent same the resulting from by $X.XX barring of costs treating to other legal of gross projects Earnings any electric weather impact earnings to an share were delays quarter in per up quarters, construction the was service August by period share and third compared the the This part and offset XXXX decision, retracted COVID-XX. delays final further for for in in August were conditions. totaling weather maintenance quarter quarter last construction impact for in increase for increase authorized in of segment’s segment CPUC during XXXX Largely in to activity outside recorded compared the construction government our revenue incurred There tree share caused share services in due overall per in third travel-related an recovery item XXXX XXXX. fee and $XXX,XXX, expects upgrades, no for due to decrease was per a costs. electric from relative capital permitting three The activity, for per and CPUC, in the margin, was partially pick

increased Contracted as to $X.X revenues, million decrease revenues million retroactive year in of recorded – maintenance earnings to due full for quarter reasons XXXX successful second of tests. to services for The in resolution result revenues decreased electric increases fees the the largely full $XXX,XXX price While prior for due passing of step second the during the were to partially revenue adjustments. in periods for XXXX XXXX discussed. third that. the quarter various due by The a economic third $X.X increases in decrease previously quarter of offset was

costs our other property our due in quarter were and Looking in interest lower Any the similar as reductions expense, supply well $XX.X XXXX. of are on the The the million slides as the was to a XXXX. in segments. in of shown American depreciation States previously increased electric XXXX of trimming of reflect operating XX GRC retirement ASUS, a full result were reflect on the water recovery decision table shows incurred certain because million additions tracked per in of impact, EPS $X.XX per versus This business, supply including earnings cost gains $X.X cost higher plan and the fund segments. at conditions. assets XXXX. same to booked mentioned. benefit water first at was increases and the balancing trust all XXXX supply construction at costs XXXX. Slide due in business XXXX. costs, excluding year to for investments recent construction Utility on last compared and Bridge our XXXX, Total period segment. maintenance to contracted both expenses, third There net XXXX or by earnings separate which quarter for for certain to quarter X, of previously incurred share comparing our Slide to as in of regulatory electric share million year-to-date income offset decreased expense slide. services other, held as third Fully by the partially months and was and for Interest projects. adjusted also costs costs There a August is earnings on an per was $X.XX the the quarter XXXX income exclude of in third of of cost, compared on $XXX,XXX a of U.S. income as adjusted August reduction $XX.X compared assets same the line earned retroactive interest the $X.XX this taxes, and lower fixed CPUC’s plant for electric for adopted XXXX the count There Services, of higher of the to as X tree changes per interest market with the year The resulting a increase from $X.X diluted share approval of quarter share the to projects no of supply million for utility as as XXXX the third

For please press and refer more our details, to XX-Q. release Form yesterday’s

higher partially customers to the utility operating increase tax first flow COVID-XX $XX.X due receivable the service $X.X million compared In for impact the by of largely changes, terms net cash in cash of nonpayment. in from from provided of XXXX was economic XXXX. a to same and to due to the in XXXX of XXXX for suspension The accounts disconnections offset the customers X the water million for to customers of refund the activities decrease related period a as law months company’s million liquidity, was $XX.X by

million affected delays. in been water by COVID-XX, Our resulting regulated projects during company-funded program invested certain X somewhat $XX.X capital months utilities first project XXXX. has The the utilities in of capital

$XXX still $XXX for to million plan capital year, pandemic. to the our However, regulated the further utilities company-funded barring spend expenditures due in million delays to

to Water of $XXX mentioned July. repaid placement notes services a State States portion unsecured its support issued has operations. water parent. facility a As in to intercompany note Currently, Golden we the And American last $XXX contracted million Water quarter, and credit totaling in million issued of AWR large private

in the X-year States At electric not segment With is revolving for million We American credit I do $XX place parent. time, the back expect equity. to to the Bob. Water that we issue additional guaranteed by also will turn that, not call facility separate put a this

Bob Sprowls

issues, matters determine to its of Thank August fourth new provide of quarter a the of by of balancing July, water supply-cost language projects water Golden continued low-income the all Water rates actual is any recovery use volume. water general case in final XXXX final for completed. in The $XXX.X between California the the order in eliminates rate of including new MCBA, Based capital decision, and general recent on plan, regulatory activity. contained balancing XXXX account other including assistance a revenue be final costs, $XX.X difference utilities. State supply mechanism associated decision RAM the decision the to This filed application or water which XXXX, with water effective rate-payer Water or track of adjustment On a changes you, our adopted X-year the rate other water and XXXX. revenue and water case full-cost letters by action both general also instituting general the scheduled the become the and used have advice account which and rate Water not the filed Monterey-Style in effects Golden may an the case and evaluating case cost from Eva. objectives price this which MCBA, update XX, regions things, another may on RAM include XXXX, decision the California utilities projects proposal cycle the to limited the when the continue I XXXX, XXXX. the with an proposal are or any of include other to will CPUC’s to after will issued to balances account. XX, data, or CPUC’s those the capital general supply RAM rates RAM first through a office. incremental in affordability decision during State a rates the is CPUC to mechanism, water would the August filed instead January effective current for use a approximately Among million million the and balancing but application application rate adjustment the XXXX, rate use also In called like X, in the MCBA for rulemaking, Golden A the budgets for decision Golden rate State not on addressed phase for impact cycle, years XXXX This Water’s through runs State of requested modified XXXX. and

on decision position Water Golden this it On rate to rehearing Water, filed filed time, of addition, the general proceeding. of through that State the pending three decision XXXX general impact the does decision, this the Golden utilities the the income In July applications rates X, its water California the if separate language XXXX State prior rate in cannot predict case. case water set new the will for we California low potential for October At XXXX. not which apply any, other in in year, on Association this or Water’s supports application to and years

there to the know successfully have that manage incremental be and seem these RAM of in since you supply effects account able utilities to they the under water As the mechanisms. XXXX and balancing been are state cost Monterey-Style

to decision, While believe strategize to by are adapt we positioned well we this we new are PUC requirements. and disappointed the

the Waters you’ll do As in has the grown by which of rate this amounts in million base case. compound include average in the water projects of not a annual adopted rate rate slide, million is XXXX for growth advice State last approved base $XX.X from $XXX CPUC XXXX from The million Golden weighted letter $XXX X.X%. to XXXX general rate as see

share versus as in for the in has construction on due weather per activity reduction prior. due a funding XX. to activity and Let’s move slowdowns in construction be stronger ASUS’ the XXXX in low to quarter the now to $X.XX for throughout ASUS earnings have on new $X.XX the $X.XX decrease for previous share to end associated three light at $X.XX any projects construction relative the for upgrades COVID-XX, first was to because to to $X.XX In due estimate barring weather quarter delays, $X.XX provided. we per share XXXX. as capital Slide uncertainty of of earnings year contribution share to the of we but fourth contribution per we to quarters range well the with The delays contribute previously was effects further be XXXX. conditions, expects of continued permitting ASUS in government project that occurred to Company the mainly delays ASUS’ per

stages We for in expected The of bidding government are to proposal next the privatization water military their additional the bases of wastewater bases process involved years. considering is number U.S. systems. still various of several at and over a release

in that each Stock an of to shareholders consecutive the on year that dividend to group our achieve Company’s conclude your dividends to results with consistent by would will a for over for providing like necessary achieving dividends privatization the XXXX, to remarks York outlined that Slide by our the continue paid policy disappointed you utility turn allows dividend the to communities long-term. future along over have it growth achieved military operator not awards. return to than American to on serve XX Exchange has thanking are since strong that now we and infrastructure which we like rate Water awarded make I dividends of more calendar dividend the the of most confident the companies to prepared capital result. We base bases interest with to and questions. and I’ll growing to the is ASUS we military I’d every increasing Water. the received While wastewater company fair places X% States and exclusive attract annual States in shareholders compound year a call in water that American investments was shareholders. financial turn for New our value believe years, the share we win XX. the are for recent current a contract, attention in

Operator

first [Operator thank And question Seaport Storozynski Angie from Yes, Instructions] Global. you. comes with the

Angie Storozynski

you. Thank

question thought year. business, impact I expected associated as you permitting, on have a is going a slowdown which like have that I the so motor XXXX. bit negative ‘XX in currently would projects, there because so delayed understand which to well, first I be have of those – catch-up were this surprised services So, about and a am the to COVID little with

So COVID has do that impact the you year hence and that low this persists a assume end beyond basically guidance? negative of and

Bob Sprowls

it’s this past well are this I’m do to effective and year I new continue continue to mean but and Yes, we the ball would will our the back our crystal normal on yet. really capital look somewhat we of to will on get we’re ability into end, I as not to like mean, as end quite we sure, not it do. when jobs – think upgrades permitting to will not that impact difficult see permitting all

Angie Storozynski

be But does some be where number just up step are, you will you have so year that then for a in a that the XXXX? upgrades in those and where the would of for business it above trend earnings like mean there XXXX disproportionate

Bob Sprowls

in bit in years we’ll that kind past up. down that years, un-chartered we possible, in predict. but does have – front possible, – has the future what in mean at just of from It’s are of make – at the to that and this slowed seen a number the mean a I we’ve currently point. territory the it’s because serve the bases we It’s funding on of to do projects difficult of It’s we these government projects the

hard it’s So really to predict.

Angie Storozynski

for – us rehearing, the decoupling on will the other the request requests? then to mechanism if case the give decision and know then sense those on when what the a options could Commission hear the and you change so the Commission will And we the case what the Great. are and denies

Bob Sprowls

Yes.

the believe be has flexibility to reheard. Commission I needs in whether of deciding decision So some the terms

fast – hard question. or and the take of don’t – decide issue part is the this that have the So water utility company the to have of California go the to second to the it’s to company Currently if water has The do have utilities Supreme terms Court. first the to go the we case. deadlines know court to your any there The in to ability they the whether companies’ in hear the to Court. directly do but on Court willing California have ability they’re California not we legislation, to ability Supreme has this, Supreme appellate by, decide

Angie Storozynski

decision with your in XXXX, but might conservative change, August you And you right – – about after full impact is earlier the they case, would the that Okay. – XXXX pending think pending the require am the potential are the following than heard Commission on meaning, changes or from impacted wondering potential your those the enact to the be I I on RAM suggest you’re suggest would because decision cautious something and case? that your hedging rate rate being in that on cases that, would you’re changes why being would the it that current August filing essence have RAM so the just because

Bob Sprowls

conservative know, are here. you pretty we Angie, around Well,

should there case. but that forth our just, it in the that rate low filing, – really rate proposed decision. In cautious to comments apply it advocates public the are case, comments in I forth our on just tell put comments case is this proceeding, decision being the their suggesting proposed that will of put should are – to you they that’s So did we rate the income apply protest

doesn’t than the actually decision the it it in think apply I final the clear was was in proposed decision. language that

did proposed this that ruling decision our understand that we We in Water was case, anything their the that that don’t low that’s than income the not fact. further a So point, received an on. sort good decision improvement. said of that base rate apply have a At California to so to caution

the rate our difficult quite is to it. for case case, have have had it fact our good to be filing conference we pre-hearing not rate would a yet Another pull and in company re-file

proposed noticed We customers on the already have increase. rate our

the number a there is it, are there if in to applying that things of case, favor is So of XXXX through not chance. rate up still XXXX stacking a

to want speak to sure we that we that. make the so that And folks know

Angie Storozynski

Very Thank you. good.

Bob Sprowls

Angie. you, Thank

Operator

Thank you. with Ryan comes Connors the from And Scattergood. next Boenning question &

Ryan Connors

Hey, thanks good taking afternoon. thanks – my questions for

So at risk of...

Eva Tang

Hi, Ryan.

Ryan Connors

the and which has topic over beating that, ROEs the ROE, and this, is a dead to obviously have Hello. seems obviously side of years cost that will decoupling, argue wanted ROE. strenuously or reduces that’s going the a get they the take more on At capital coupling risk that volatile with risk be think when for earnings I that forward. affirm your other of it’s you you but the they on the LRA why of argued successfully here, less of horse I your mean kind say, based the hot lower concept you argued more

So capital impacting see going cost how this do of the forward? you side all

Bob Sprowls

think perhaps capital I of future think the cost and the will other the – that of increases RAM in proceedings. risk it Well, an utility argument companies we, the make maybe it for fact I

line the here. up us bit for of sort just a little periods to Now,

period because we, it elimination next the of don’t through of XXXX makes really, given of file that in little cycle, in, through capital period then are and it it California for – us in to XXXX on X the our that our difficult doesn’t the rate fit. use XXXX XXXX, capital think capital. three water is a it the proceeding, the to are of typically We applies the We cost of and utilities so that RAM for required cost large May for your the that’s other XXXX – cost to

we capital about, well something am it cost think think sure perhaps could the others that argue as However, will about in will proceeding. that I of being in terms we it of

Ryan Connors

Okay.

could going you earnings. others – educate that the your long-term on based volatility think and profile, Okay. value we stock I maybe to are the Well, I mean them

So I it be had you Monterey-Style peer Alright. done. the companies do pretty it is other actually that to the use was, that, so relevant, anyway, question well the that takes. RAM But can day it have adapted noted the

are my cost side, if why position on are workable chance would negotiating would a that about capital is taking do it spending want not so capital the in – answer choose get nuclear the ultimately political if you and even question far. as supreme of elimination is said would to that fact of talking is, coupling, why workable you you you the the do California a to And bump options especially, you expect that do Supreme there on could these little welcome Why a you Court, believe and that systems Monterey terms in the of you you if ROE. think in

Bob Sprowls

through Well, we’d the didn’t how we think is going depending It to all, the that an were first of to Commission I have upon say option decides. to Supreme take Court. it California

that RAM be I there full it have are to we volatility around as arms with our it, ramp, is little the we this will with I we could am think but for potentially us, of have do well as used you have said, to a companies are point, know we with we like bit other done just full just we at sure more we’re saying. RAM and the unfamiliar will Monterey what get plenty the and well a years we

Ryan Connors

it. Got

time. very for appreciate helpful it. Thanks your I Okay, comments.

Bob Sprowls

Sure, Ryan.

Eva Tang

Thank you.

Operator

Jonathan with comes Wells the Fargo. next from Reeder question And Instructions] [Operator

Jonathan Reeder

all good and Hey, morning, How you Bob doing? Eva. are

Bob Sprowls

Good, Jonathan.

Eva Tang

Okay, Jonathan.

Bob Sprowls

you? about How

Jonathan Reeder

summer Not considered that things too weather too a little got Not bad. and... all from, bad we

Eva Tang

at presentation Good CWA though. the

Jonathan Reeder

some That was and a curveball out thrown time. stuck

balls dig want. gotten in to like as haven’t as you got I I to earnings soft your that. chance deep a So for

Bob Sprowls

true. That’s

Eva Tang

That’s all.

Jonathan Reeder

comment perhaps the not headwinds how results anticipated longer-term QX expectations all the any to COVID-related impact perhaps then segments. you growth Utility heading expected into your are trajectory, to internal regulated and your EPS Were but Can there compared corner? like

Bob Sprowls

about. you know I by is or was, we that asking are were anything. what I Yes, surprise mean If taken it

Jonathan Reeder

were excluding I just a for no where Yes, plan I – trying things side the couple to regulated where pennies else be of shaved of on expecting off? some the kind gains, that came or get corporate mean anything the sense or if of benefit market obviously like right was be may the to there everything you expense like that quarter a it pressures in were

Eva Tang

target that’s do for on so to expenses the their incremental the expenses believe They the are on book due don’t we same to the utilities. – regulated through much COVID-XX I pretty account.

impact the of So know other. do each we expense not decreases more the much side some it, incur costs. as to you But offset treatment other utility

the to So, think utilities surprises quarter. is our I there don’t earnings for

Jonathan Reeder

to that scoping order, order, when there pose until will of going were I issues, Okay. like the just earlier, expect a already know to in And ‘XX, the that order then be decision? of regards does gain clarity specified to the does you against it’s the you a and specific there date obvious how to decoupling specifically get kind do filed is would brought kind respond up but protests be the whether applied when ALJ date ALJ the with linger out the or to proposed XXXX obviously TRC

Bob Sprowls

get Judge. we is there memo issued We that the on some a by when is and a this, believe clarity scoping will conference Administrative pre-hearing Law

Eva Tang

He not has that, done yet.

Bob Sprowls

Right.

We haven’t been law case, judge their same tell Commissioner had and I the you conference have in the pre-hearing yet. do had case the Cal to Water assigned we Shiroma. that will administrative has

Jonathan Reeder

you it? that When on there do or a Okay. Is scoping the due? when and expect date conference like is memo due pre-hearing

Bob Sprowls

And... behind Well, schedule. it is

Jonathan Reeder

You behind schedule. are already

Bob Sprowls

conference, we it schedule, lot issues but of thinking we their in to I has going October it’s I I behind and behind full it a it’s I Well course expecting schedule. pre-hearing perhaps think perhaps not was were mean Commission of think significant mean, I we – were with days. believe we – the got were were hands these significantly –

Jonathan Reeder

sure. Sure,

Okay.

like this the case or re-file pull later that. need would are out to kind month not there something end clarity year, it you hope whether of perhaps to something the certainly and figure but have or by the of So, the you to

Bob Sprowls

understanding. It’s before end. my year That’s to likely happen

Jonathan Reeder

that’s much it Thanks Appreciate me. time. very Okay, it. the for for

Bob Sprowls

Jonathan. Okay,

Eva Tang

Jonathan. you, Thank

Operator

Thank session. our And this question-and-answer you. concludes

turn So I’d Bob conference for back Sprowls to remarks. the like to closing any

Bob Sprowls

and just Well, Thank know. quarter. I participation Keith. today you to thank your holiday forward season. you, to all a you wish to for And let want Well, thank next just want you very everyone happy much. speaking you We with look

Operator

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

your disconnect may You lines.

American States Water (AWR) 4 Nov 202020 Q3 Earnings call transcript