AWR - Earnings call transcript Q2 2022 | 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 Second Quarter 2020 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 p.m. Eastern Time and run through Tuesday, August 9, 2022, on the company's Web site www.aswater.com. company Web referring site. the available are that the on slides will to be also The After opportunity [Operator to presentation, ask today’s there questions Instructions]. will be an is Chief Presenting Sprowls, of Finance Officer. Tang, Water American Financial today President Company Chief from Senior Vice President Officer; Executive and and and Eva States Bob

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

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

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

Bob Sprowls

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

increasing the dividend a week, every increase. Board to increase the by American the is dividends company. from consecutive XXXX, dividend on after annualized paid year The now calendar payment approved States years. year dividends per this represents has report second per the another some marks share. action for shareholders XXXth that provide I'm each I of nearly This dividend by since which Before rate $X.XX pleased consecutive current share, quarter $X.XX rate dividend the X% increase received XX annualized sizable highlights our last results,

Now Like decreasing second was the the fund this with results. large unique this earnings of our from was year, a on second share losses one in to compared quarter. to quarter prior investments as on to general timing at first per part This on the CPUC, quarter of quarter our to incurred the year as in or Golden case retirement of Commission, the Water. plans a decision same California receiving rate XXXX, water as with the State gains Utilities period final from well company's issues Public due

Eva quarter adjusted second of XXXX for per adjusted results $X.XX per quarter share share. and second of of an compared XXXX, from from the increase these $X.XX the earnings diluted caused periods $X.XX period our on additional general the revenues and rate consolidated results, water diluted earnings water case Excluding adjusted both investments for were the in and in share same will delay gains detail. supply to the the in in as discuss per including losses

both American calls, that decision were and spend to high a in month year for strengthening our A+ June, Also our year Water's Poor's on $XXX infrastructure we Hearings million that general Golden for rate the filed State We State infrastructure actively & in and Water June. Water this May utilities the this later in our waiting its one $XXX wastewater customers the good to case, and States making are CPUC quality critical discussed this Along processing Company briefs deliver continue we at affirmed electric during We're also progress on the require involved customers investments application. to a quarter. cost occurred term. Standard to of the Golden goal from capital regulated our credit long water, million proceeding during with services and in in rating previous Company. of

Although negative to carry a outlook. continue both ratings

company's will and accessing enable it update With our her. structure next sound we to on provide over A+ turn and will credit terms, to financing now the financing capital do debt to expect the Eva ratings, continue year. over reasonable the which call on us plans, an I'll

Eva Tang

and Bob, you, you us for today. everyone. hello, Again, joining Thank thank

earnings share State of recorded This CPUC, $X.X the in additional second last public per of second earnings were would per on have rate our $X.XX per XXXX water and Consolidated reached new and This to share to unfavorable XXXX compared $X.XX XXXX while $X.XX on investments revenues on due case, for based share. included share receiving an XXXX. million share of per QX implemented for XXXX, Let $X.X we $X.XX rates. as the the held between November item fund compared X, revenues financial variance share. quarter year. have for higher me to supply being a will of the and costs alone with million resulted on general share water $X.XX delay recorded agreement consistent or start with last Has Golden Water adopted office quarter per the a in of the losses $X.XX were approved $X.XX that Furthermore, a of final gains year, results. of retirement January resulted to decision settlement decrease or the in per plan per rates pending

per the water the results, were for earnings share the of in of of second additional So to excluding delays adjusted caused rate cost per and on $X.XX for compared consolidated the the by general of increase case investments that's and share. in adjusted and $X.XX QX as water gains losses periods earnings supply from per the XXXX quarter both revenues $X.XX including an share XXXX,

affected to at $X.XX share water the share per year, items decrease. compared segment. water Golden a were as as For utility $X.XX subsidiary, our Water $X.XX earnings Company, State last earnings discussed per Both

the capital $X.XX same share, increase an factoring partially application, same pending XXXX from impact adjusted the two per revenues. revenues of the a of for in at State on were cost and in of associated Also impact Water's the share for period predict of share debt application. $X.X $X.XX cannot earnings for the revenue of results cost Golden outcome We from of to includes reflect of which this lower requested ultimate in the in per necessary the time capital proceeding a by application more per other cost subject to was also operating changes items, made quarter were or adjusted estimate be income of information the will second increases effective in water which earnings effect million Any best net $X.XX segment's income as $X.XX if share other the at compared tax reduction quarter the included There rate, of as becomes to water and segment expenses. So in XXXX. refund increasing this were offset expenses our estimate per available.

the increases XXXX. to general cost increase and share timing period our that revenues segment's XXXX $X.XX by earnings the revenue to for delays, on the Consolidated case, based discuss decrease from later the usage contracted in effective three largely period per to higher the due on electric per construction the by interest CPUC second other [Indiscernible] Earnings January adopted a decreased from due Bob effective rate $X.X electric to as contracted water debt in income XXXX expense. XXXX partially tax by as approved increase Our the for the XXXX, as offset same month XXXX. well at rate to the pending our in the quarter cost were were XXXX services activities the was for were segment in period in due offset well compared capital for call. X, revenue the in CPUCs decrease second $X.XX XXXX rate were as which as segment. previously, The million Also, XX, compared delayed lower of quarter ending of proceeding been customer the mostly due at services the mentioned the to quarter, expected The will share. have same of decreased segment lower revenue of while revenues and June and water

Slide to Turning X.

were Any are changes water year. million period for electric the in for quarter, $XX.X and balance the to supply costs costs water compared an [Indiscernible]. last supply segments both from adopted same as Our costs [Indiscernible] in supply electric $XXX,XXX increase of and the

plan operation other was construction year's $X.X Golden and than was Water's with retirement due $X.X quarter at net construction losses costs, to the by supply related resulting a XXXX. recognized from depreciation million other benefit decreased second our expenses quarter. expenses, non-service by a benefit the XX by as activity, due bridge as and to consolidated decreased for quarter comparing the income, XXXX. operating offset losses This in for quarter discussed. EPS shows second investments compared costs XXXX at on expense. resulting segment Other increase partially other in lower decrease of of component plan, to This Slide of to in lower second State actuarial million cost partially of Looking decrease last the from maintenance second services offset primarily costs contracted total expenses, held the

of due year $X.X of last months as our Again, this share a on the an same share. of per diluted reflects reported. slide compared segment for $X.XX period for per earnings of year. decrease unfavorable XXXX, six XXXX in $X.XX million compared was This XX. to ended period [June] $X.X share Slide the to planning same per XX, gains losses on for Moving the of year-to-date investments $X.XX retirement million were as earnings to the Fully $X.XX by variance

In addition, our approved the XXXX, in the would X, segment as share. been by have and rate implemented previously $X.XX per on new a GRC has increased water earnings by January discussed, CPUC has

first result retirement losses on for the settlement XX, were $X.XX of the higher periods, were agreement six from consolidated share XXXX, adjusted same the water Excluding earnings the of for than share, year. gains per the fund the last plan both rate months which new $X.XX including per earnings for adjusted investments of the XXXX June half period ended and the

year-to-date and release to XX-Q. more results, details on yesterday's press please refer the Form For

six and of million customers to in months payments our Turning XX. was as In construction to the utility relief to of income timing the of was cash $X.X Net liquidity also early million basis. a receipts of installment XXXX. of of and water year the periods and activity period due regulated military funds same compared total in The for cash pandemic. first State provided the for the tax incurred delinquent COVID-XX customer this $XX.X California $XX.X operating on differences received COVID-XX provide in to in the the increase operating million two timing by electric year, Slide the billing for bills assistance at during for cash work water to between from

with on regulated $XXX total meet utility the than XXXX, increase outstanding of million. Golden of In next the funded of was been we expenditures in other consolidated will capital less have invested borrowings the projects current to XXXX first June liability at borrowing year capital AWR's million the Our increased of The among company the as year, during borrowing a credit as the are This $XX.X amended capacity capital $XXX expenditure $XXX for a million half XXXX. credit in million sheet on from Water. facility the facility State capacity things, $XXX target to XX, to company expired balance and in classified program April support, May maturity overall and the year. million

to expect expiration and dates. to renew facility extend prior its We credit

for issue the capital term sound under prior addition, rating, In portion We to debt A+ structure use put we XXXX. the to us next believe time, current do its proceeds States enable facility. the market access three Water expect XXXX with additional May the reasonable issue long of At this Golden credit fund years May [debt] the outstanding Water businesses. to its not before and to place a expect to facility debt combined and in will equity American with we State this and discipline, payoff terms to financial borrowings new company's credit

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

Bob Sprowls

Thank Eva. you,

by quarter and factors get just rates the to State January Golden settlement XXXX. for record the of will first per I January higher new general the approved, been impact retroactive in X, with the year-to-date I key cumulative is and $X.XX retroactive on the per into regulatory rate consistent water have Therefore, final been and our XXXX. reiterate X, case, earnings issued the decision higher decision few matters, half At share Before CPUC we is a Water's in earnings. contribution second second share will at Once general to for be case would the issued. rate agreement rates $X.XX quarter XXXX, time a a the would impacting like XXXX, implemented the

in earnings year. our that general the rate a case this the view XXXX, far we thus negatively While in it's the delay for unfortunate affected difference has timing as

Golden subject requested from capital impact the also includes year-to-date quarterly share on primarily its $X.XX of in revenues, cost proceeding this cost and decreased We refund to debt our which the by time in estimate recorded reduction a respectively, water best reflect earnings and to Water's May based pending of at assessment XXXX, the of $X.XX, to revenues of our application. filed which accounting State per lower

fully as of in ultimate cannot the XXXX investment revenues. impact one to during The made, our $X.XX share $X.XX earnings be will and estimates the we retirement last more associated period available. per losses plans proceeding application respectively same as information and the in compared by predict the time, on the of this impacted capital quarter at outcome Changes year. necessary, if cost this XXXX of year-to-date of on However, becomes periods negatively and second

July and also we We that and of we half per set to to as to to case, XXXX. in its years up construction for our filed for With second rate activity catch projection share know, you regards new XXXX XXXX. the during XXXX ASUS our XXXX, ASUS reaffirm general $X.XX XXXX, on rates contribute water will $X.XX the expect

general As mentioned of remain. three calls, settlement case. November a with in rate agreement issues reached previous earnings Office this Only Public year Advocates we in the on last

For XX-Q. please of Form filing more details this on refer settlement, our to yesterday's

are disappointed. We

CPUC. decision not the We seen have from a proposed

decision XXXX, final our But this from CPUC decision pending per proposed in by capital in be general January mentioned, quarter we record million the of $X.X effective the rate Water year a the for in As rate the new impacted expected advice share $X.XX year. approved through prior expenses delay negatively earnings and the Golden A CPUC. State revenue of for letters half X, of the the the will during issued will net completed is projects case. the Furthermore, the revenues retroactive rates and case earlier the is second since this quarter. by water recovery included by also which we

requirements and of annual $X.X from capital Additional revenue these generated of year. investments this million XXth became effective February

of XXXX. on as CPUC, X.X% of revenues will capital. reflect X.XX%. billed cost the of for customers. reset of May were the million XXXX. to new The expected of a in to State capital XXXX primarily impact proposed and in equity the compared cost capital briefs capital I'll decision currently filed capital a of the million in Next, to XXXX based X.X% second for $X.X a water year-to-date of reduction XX% of $X.XX of lower included this we half proceeding Golden in filed Hearings is share the embedded recorded to the as return this share debt year requesting cost across the XX% and in June. with on revenues of per on quarter, return of of our second $X.X XX.X% discuss will $X.XX base XXXX, in the rates estimated the of capital or XXXX on through In revenue structure The or of the years the X.X% requested per and equity rate approved application and be being of debt, by case. be a occurred and application cost cost CPUC a cost effective debt Water May Once

to subsidiary file for the electric its August I now new XXXX the scheduled rate is Our to California. through general utility in situation drought rates XXXX. in case set years will discuss

experiencing U.S. of of ago. years is compared drought Drought XXth one record. was XX% year record the drought end is July of drought year severe and on as in reported calendar month, California to to one XX% was XXXX the ago in to XX% thus of extreme a that as California far driest an last year compared XX% of As projected the as California Monitor a three and

Simi mentioned conditions, March year. project this earnings Water's XXth I to adjustments track related will service service conservation work due one Water utilize incremental program outdoor their stage or As includes the restrictions deteriorating State to Water from water State week. its those to Metropolitan per the and limits areas to with a California its supply Golden the from State local needed. moved all This the or Claremont the of for last call rationing on systems areas, Water authorized suppliers Water and Resources in for second has appropriate State April, water Golden a that our drought watering of June, costs In limits of emergency plan areas Golden outdoor memorandum use been State project. Department its water phased of days emergency watering X% to conditions State Water in other day water to XX% account supply continue California in Golden water in dependent assess and MWD per Water as the two to the areas water allocation of Southern condition Water Project make In future portion water a supply week. to recovery. also District Valley that of reduced a impacts that state which declared action SWP

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

on weather construction The differences partially adjustments, for to reaffirm share earnings our supply second XXXX. in the $X.XX Again, dollar $X.XX management of material which times, adjustment, share conditions between as for asset by and additional as per $X.XX as to compared of modifications contribute periods, the to share the per to that XXXX move other delays, increased of we price $X.XX awarded in well requests equitable per for due caused projects ASUS, largely will and slowdown longer period the was and margin. revenues lead by same activity Let's decrease for quarter had timing ASUS with filings economic for new offset transfers ASUS fees. The for completion XXXX. provide projection contract two

Naval we record already in I'd on dividends, water in earlier military to to call. services remain on week, can in new We award which the dividend. are effectively that recently didn't the our of awards quarter future the since the touched compete we confident I based the for based military issued XXXX. Mayport that turn related wastewater win proven our managing but third we disappointed increase for like contract operating Station X.X% wastewater an we system for and Last announced at bases track attention

last grown the increases These X% a achieve of Our quarterly with compound dividend in are dividend over our growth at annual of five long the consistent rate annual the X.X% policy term. compound over to years. has than a more growth rate rate

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

Operator

the [Operator Instructions] come from And Angie Seaport. from will Storozynski first question

Angie Storozynski

heard what the for on capital from settlement or mean the appreciate second in reason both expect I CPUC I have idea think an you either the the in the why case wondering, wondering do running is I'm at the Well, is you just going that half. you'd you of rate your time what's just So been cost haven't proceeding? out. on? again, cases if And decisions still

Bob Sprowls

were several to with the rate hearings So general evidentiary judge assigned earlier we general weeks told that the case, this of law and proceeding. another administrative rate in regard case year involved was

hearings the general water understand proposed ALJ those preparing on now and case. is are the decision Fortunately, that rate now we over in focused our

and harder it So case. see we'll rate the that the to to decision is so covers how of capital the in hearing. a commission briefing a in although that just just we May get understand, long completed the for cost in general little takes The out hearings have and to June, proposed

Angie Storozynski

capital the that the based capital Do plans decision you an side? adjustment, pending Xst on between -- for to mean -- that commission proposed think a mechanism is it adjustment October that cost adjustment the of end there could in that's the of be some ALJ commission when is cost side, capital possible rule water and upward could if plans this mark on the September, issue link to proceeding? of of happen the and to cost see between issue I waiting on

Bob Sprowls

as Angie, they're think out, just whether after or on they're that, close I where rate behind is XXth it But behind general it's to possible trigger it's that may going think wait to see because until comes pretty too. mechanism September to they I the case, adjustment so not. the

to after you craft XXth. some behind they until Although might why could strategy September want wait

Angie Storozynski

the bps adjustment? is -- mean… I for which benchmark that the what I'm you measuring What's against, band XXX that could And remind us

Bob Sprowls

rate… bond utility AA

Eva Tang

X.XX%, Yes, at and the Angie. benchmark right now is

to basis so of be XX% over that’s XXX points And change. trigger so that in you have

Bob Sprowls

the an And period… it for average is

Angie Storozynski

XX month average…

Bob Sprowls

XX Yes, average. month

Angie Storozynski

this that close Well, you so mean lately, the mark. it's said, at I pullback point.. helpful, hit in not call a rates as to is

Bob Sprowls

close. be to going it's Yes,

Angie Storozynski

sense, Speakers] were downwards, lower right? to that [Multiple 'XX, being in they is still anticipation in XXXX, 'XX in increase the of XX a So ROE the impact base in would on no? bps that But happen if rates impacted

Bob Sprowls

Correct.

decision So covers period and XXXX, apply to would the the the adjustment through but the mechanism ROE XXXX XXXX.

theoretically, for then to do. adjustment ROE need proper of what to do let XXXX they so establish the going And and mechanism the it's

Angie Storozynski

from cost assuming And least adjustment say, basically proceeding the you're just that -- separately so as your flat the of capital just of year just catch then does debt that is up remainder year-over-year. And reflecting the results. cost the have, currently well, in earnings of -- for assuming ASUS the at to have to

Given drag your those if at control accounts we but that the this again, and no again, can mean, torn year-over-year? I And that knowing that far, prior you drag over the flat seeing performance actually been -- account earnings? you there I understand excluded. -- did flat drag you mean, is you see looking pension of have earnings be -- of funds, to from from the year-over-year it's that be I I've then in of were kind pension pension thus for chance should earnings I way pension mean get it. benefits the from funds any of you could actually any

Bob Sprowls

last the $X.XX far, recall was Well, retirement know, you date. in $X.XX what the what losses year $X -- plan -- $X.XX. it of as don't so gain was to under is I the

was I lately. would of course. have S&P us for we'd need I the XX% also The to XXXX. the June year, of make it's rest possible. XX we which up gain there. last think for businesses $X.XX, These are numbers, in we'd that The up market's up mean back to So get the loss been only the better make difference have up to not had of to that make the

So the some in it's we but ASUS think possible. our various doing proceedings. think fine, both will utilities the make delay are up mean I for of we ground and

Operator

Reeder from Wells [Operator Fargo. Our question next Instructions] will from Jonathan come

Jonathan Reeder

then, is So like decision just working to the ALJ earlier the imminent far the timing drafting Do the one ALJ of start proposed your the kind and this is? kind from the it? Bob. you ALJ on -- GRC a or of comments, just did clarify PD into What's of how of believe of

Bob Sprowls

we've parties imminent. have But two is in signed would seems not talking than two say. one And of hopefully, think I word don't the but the there's general can I parties -- heard here. a months, we're But something the agreement, in sort I take this expect. rate soap okay, next think difficulty settlement parties to box, it to about frustrating would on what my to the And is there's where few this longer always get case. have days. we see don't we in two

I we're think perhaps of talking a months. couple

Jonathan Reeder

the And $X.XX I you $X.XX goes? that like along QX going the not lines so it's Do and that's the to assuming in in probably QX, how in how mean, case. sounds like then, but distribution of QX much know it to EPS like the approved be be of QX an it EPS would

Bob Sprowls

quarter higher third typically, quarter. than is Yes, the second

Eva Tang

$X.XX you to $X.XX the current, adjustment. Jonathan, but of debt have is by decrease about to GRC impact, higher Annual our then compared of cost that

annual impact. $X.XX the is about impact a net So

so X incurred XX. So minus we XX already

about have the for to we third and fourth So $X.XX quarter. $X.XX another

Jonathan Reeder

half $X.XX for year Another the $X.XX to back from… of the

Eva Tang

of of cost And this the debt is adjustment. net

Bob Sprowls

So $X.XX is net, is… not the XX

Jonathan Reeder

guess I should we from So of looking second be just as it GRC. purely $X.XX year for the the the at half still

Bob Sprowls

Yes, correct…

Jonathan Reeder

XX% it. or of bulk maybe being of that QX something the or And

Bob Sprowls

second typically the Yes, third the quarter quarter than terms greater in usage. of is

Jonathan Reeder

question, how full number figure of ASUS. so kind I last of is. shifting the out end to QX, the the appreciate then the and the But is adjust is my year guess, that. you, in approved by trying I'm hopeful, then Just year it settlement like to what And over I to meantime, just

And the delays. of six period only was last range, months what two know XX think first the XX last due during the guidance construction ASUS year the to it I and was I activity reiterated the same to you like during thirds $X.XX. year, contributed

of So thinking we like range just the the low on side. in lot delays? kind to year 'XX of seems end up of make it be more construction a to ground this due Should potentially for those just the

Bob Sprowls

just on comments a couple that. of Well,

a XXXX, quarters. The activity other to very construction quarter from of first first strong a relative was quarter that standpoint

last So was last look hit. strong a quarter when sort year, we that of first versus year benchmark hard to

The the we construction quarter historically. fourth third other point and make had strong have is I'll in

So the difference last times, bit is quarters, and last the lead than here a material we're up although world looking pricing different at was given in the making et year, it cetera. two

know to much XX that's going in to we're mean, I as put that can try the us as in here construction going So that to we to last where I out don't quarters. XX bring range. two

Jonathan Reeder

But I mean…

Eva Tang

do We QX provide you, Jonathan, how in we update there… an to will

Jonathan Reeder

I guess, ordered things got were stuff well, the anticipating you full mean, the it year... execute way today, like you're could that, you But like for still go you materials I seeing if as the

Bob Sprowls

Yes.

Jonathan Reeder

ones of them. Well, getting constructive proposed good some decisions luck awaiting CPUC. and eagerly out the We're

Operator

conference and this our Ladies for Instructions] to to over gentlemen, question-and-answer I session. concludes closing the would back [Operator Sprowls turn remarks. like Bob any

Bob Sprowls

summer. everyone Good wrap speaking that let Thanks, their today just participation thanking you the you everybody. rest of to Thank Chad. you, want your we to look with for it quarter. and up know I by forward next

Operator

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

may You disconnect. now

American States Water (AWR) 2 Aug 222022 Q2 Earnings call transcript