- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the American States Water Company Conference Call discussing the company’s Third Quarter 2022 Results. The call is being recorded. And if you would like to listen to the replay of this call, it will begin this afternoon at 2 p.m. Eastern Time and run through Tuesday, November 15, 2022 on the company’s website www.aswater.com. The slides that the company will be referring to are also available on the website. will to call hour. This Instructions] be an limited [Operator of is States President Eva Presenting Financial President American Company Tang, and Bob Officer. Vice and today from Officer; Water Sprowls, Chief Executive and Senior Finance Chief

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

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

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

Bob Sprowls

was Like take year, on questions. quarter, this incurred one the with our prior earnings from will activity, California’s reported first regulatory case quarters Welcome, some issues to investments compared to same will financial up Golden your due us of for to as thank ASUS, retirement gains and with water the drought, and further final Water. I’ll begin well losses then updates I thoughts quarter, was today. decreasing and on our details, as timing with receiving as quarter, a on decision in Joe. we you the then unique part general some at dividends then period with State and it you, year’s company’s brief rate this plans Thank XXXX on the the everyone This on of comparable some comments quarter. large share in fund the of a joining Eva per discuss wrap will second

usual both the rate the losses revenues from per water, per results, compared the as our been military adjusted electric or electric the for Excluding as it’s per and same of $X.XX and water bases and delay operations caused nearly the and on perspective, XXXX investments earnings including an business in additional of diluted increase of for share as earnings XXXX, period in supply subsidiaries, water share services our adjusted $X.XX water periods our third utility as costs were for general we serve. on third the diluted well case providing customers, consolidated the share From an to regulated in adjusted to quarter quarter reliable $X.XX and XX X%. gains wastewater from

pace infrastructure on spend are year $XXX our million $XXX to this to utilities. investments We at regulated million in

front, there filings are On the regulatory pending. several

well as or State for as as proposed on cost general are California a X, time, XXXX. general take The has so the year. delay of reduced we both to case this our far on January quarter expect effect in fourth rate this year, earnings rates decisions new were We proposed of decision capital Utilities the a CPUC rate this from pending both application. Public decision the Golden Water’s At Commission, case awaiting

the in earnings detail. case its August to on results In year of her. our will years I over will discuss XXXX. XXXX electric this for new rates utility general turn subsidiary more through Eva rate XX addition, to And filed the set the call

Eva Tang

Thank you, Bob and hello everyone.

results. financial quarter third our with start me Let

to plan in held included $X.XX per consolidated a X, investments alone This $X.X share. as share losses gains compared decrease of per unfavorable $X.XX can last earnings see per as as were $X.XX you million XXXX. year, per to share. recorded share to an small of As compared a of Slide from resulted retirement share in or variance item per on fund This $X.XX $X.XX

earnings CPUC, receiving agreement have rate XXXX the were would on of In water new case, ‘XX. that January have Water final per supply the delay revenues addition, with XXXX Public has pending consistent for rate Golden in costs water approved of and the third a and settlement in while based rate XXXX State decision adopted XXXX the being November for X, between share implemented the due additional resulted we revenue reached and reported on Advocates to higher would quarter $X.XX a on the Office,

investments Excluding X%. results, of the the were water adjusted quarter including the is $X.XX of near XXXX losses share as to the for consolidated compared delay of per QX increase per for by share, caused impact and $X.XX the the earnings $X.XX on GRC earnings adjusted that in and gains per from periods both or share an in

Water items, for share, to in was per earnings per $X.XX to Water $X.XX a increases expenses cost income earnings as segment, factoring for per share which by of increasing $X.XX year, of other in increase compared which expenses. same share both included were offset third adjusted other of from estimates interest of refund were two million segment’s the same Water’s affected an was included Water earnings per decrease subject in discussed, operating revenue cost the the our from to of of the partially $X.XX $X.X a adjusted $X.XX pending our expense for share effect share $X.XX capital share compared quarter net results as of per were the best quarter segment, segment, in the Golden items earnings as at For State Also revenue, an to so requested impact applications, at the per $X.XX last XXXX. in and debt also express reduction There lower Water period or application. in

income as as offset were quarter operating by Contracted our last due for the from based cost in year’s a Consolidated revenue Services of QX. were Electric $X.X debt the segment of increase Water cost $X.XX decrease a third quarter, The of capital decrease lower expected same XXXX. earnings period period the increased for rate share increases same per offset customer higher million mostly partially discuss for XXXX adjustment third previously, pending were Also to of the from The same decision approved third CPUC on expenses. adopted rate for An mentioned at in electric to will by the Earnings compared CPUC in and the to in electric the XXXX. Our by the proceeding segment was revenues tax delay effective XXXX interest decrease water as share the in later. the usage for due Bob revenue quarter due compared quarter as was to decreased $X.XX per DRC. mainly revenue segment. the rate to XXXX a on which while and

Turning the cost general, This construction by year’s compared components expenses related same the benefit to as this lower slide Golden from total from other depreciation cost the Slide increasing interest for first losses in to reflects on quarter. year-to-date decreased on quarter XXXX. EPS recognized quarter at a in per This shows Slide investments XXXX. was quarter discussed. of as months XXXX. approximately due bridge year by with by unfavorable by year same X, plan at of other to per decrease partially resulting plans partially other looking as a last costs, OEM variance compared increased in State decrease income, XXXX our to to average of borrowing of for comparing of supply earnings resulting plan per interest gains for actuary than due services $X.X to XX Other $X.XX due for to losses this and the and of overall in contracted third income operating the This period the activity net for X increased consolidated by administrative quarter the million $XXX,XXX $X.X primarily an the share and decrease expenses non-service of losses diluted Water’s held XXXX, reported. the of net was expense, levels. segment, compared offset Interest rates third $XXX,XXX expenses earnings our due retirement a retirement An million increase period was to expenses. of the Fully third of offset segment share $X.X third to of $X million were investments share. $X.XX of $X.XX lower construction

by In GRC per being the CPUC rate in settlement earnings X, on approved and by $X.XX would have implemented XXXX, the increased share. our January addition, has new the

adjusted settlement for were consolidated were Excluding share and of the adjusted new including for the losses the X investment higher first the water XXXX, months than period of periods share, on plan from which gains XXXX. the result $X.XX the per of retirement $X.XX X earnings per same from the agreement for in and rate months earnings both

For more please and our to year-to-date – Form yesterday’s detail press last the release refer on XX-Q. to results,

operating ended in for $XX.X total relief Turning compared adopted moratoriums regulated partially These payments the and XXXX. decreased assistance State for XXXX operating on provide funds incurred on being drought the military of received in on water cash bills resulting the our affected cash X billing for based in have case customer the decision condition a months by revenue from for These negatively as a of customer activities cash periods customer of then, during water of while XXXX, was increase. to resumed. to for receipts billed general COVID-XX to delinquent early of the Since from year-to-date service XX, disconnection consumption electric increases million cash in rates, Furthermore, collections timings In electric was are XX, have connection due differences bases. by expenses captured also the of customers has million construction in income non-payments installment at flows has and collection from work rationing. in for The flow decrease activities rate million liquidity due provided September and as timing and XXXX cash to water two operating continued been count. to customer operating and Slide non-payments were our XXXX delay utilities the and has increase $X.X water RAM on offset California to due tax pandemic. same between ended net $XX.X to period services

during months utility with this $XXX With year. capital company a as on to are regulated expenditures classified balance State less current million expires XXXX. year, Water’s facility consolidated a borrowing a a in has of liability sheet. in May than maturity company’s been borrowing of funded the X credit capacity $XXX.X invested $XXX million $XXX million meet outstanding the to first the we million target and American capital on Our for projects year the of

trying We to this are prior to date. and expiration facility renew extend

In capital to credit the terms. the next do X Golden time, to put to debt markets enable and in place quarter call of X financial to XXXX expect additional years a believe its and will to new Water expect XXXX. to assess combined at the company’s State fourth issue facility May discipline lenders, At us not business. with this and I turn its fund the rating, long-term reasonable relationship in structure equity With we addition, that, for A+ American Bob. current history back before sound with with credit least we issue through State their and that will Water We

Bob Sprowls

Eva. you, Thank

a our reiterate into would to impacting quarter earnings. I factors year-to-date like key Before get matters, few regulatory third I and just

during the and third $X.XX year. respectively and negatively discussed, last losses previously XXXX year-to-date periods share earnings of retirement as same plans per one the on compared As of by our periods quarter investment the $X.XX to impacted

the third have had XXXX Water’s for January rates higher implemented with for settlement In been per per will issued. cumulative a case, X, first the of is we to rate X months case contribution the CPUC Therefore, agreement be the and rate in XXXX, January new would approved the water earnings Golden Once the retroactive general rates share a decision will $X.XX impact decision addition, is time the been and at and the final XXXX. retroactive XXXX. the $X.XX X, general record higher consistent on issued share State quarter by

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

to We from new XXXX. are time the rates in record decision hopeful the receive to in impact a

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

at information revenues. the and be fully proceeding of estimates cannot and if case, in impact to application filed rate years However, available. associated ultimate general rates our Changes water know, of outcome XXXX XXXX, XXXX. this predict the will for this in more necessary, capital to as we set in we time, becomes With cost the made, on as regards the new July you XXXX XXXX

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

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

the We not are disappointed CPUC. that we a decision proposed from have seen

and the we proposed which issued for in the quarter the rates expenses X-year the settled share although from in during expected CPUC effective decision the revenue million $X.X retroactive the negatively revenues case the mentioned, included rate projects for will $X.X annual be quarter. earnings our capital year-to-date. XXXX. these capital million January delay water not year. Water X, new per per XXXX, revenue is A The the over the $XXX.X XX, recovery previously capital February generated for infrastructure case, the But fourth additional general effective by Golden by investments in are of and are CPUC. As this approved is State also as from projects earlier million this net $X.XX will completed through quarter these $X.XX the in and in share advice prior pending projects a final were rate And requirements since included decision period. impacted letters became record by the of Furthermore, these

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

to of capital continue In the CPUC cost addition requested has Water water the the mechanism. capital from in authorization application, the segment of cost

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

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

X, We expect addressed the signed the Senate general this XXXX. XXXX, Water, RAM including revenue Governor or to case. of the rate utilities, the XXXX adjustment requesting allows Effective use this of January water be the State Bill decision. of and On water Bill to September next A in proposed mechanism, pending continue year, Class California the XX CPUC Golden by Senate

be general use to RAM case request in for new rates Bill the XXXX continued be customer the in XXXX, XXXX establish With of that will State next Water the to Senate Golden its through filed able years the will passage of XXXX.

the In have and briefs Water appealed to hear X. case. Supreme has the and CPUC Golden State others September agreed the addition, decision filed were Court to on decoupling California court the Opening

last petition. State motion Senate CPUC’s the that the and month, of opposition dismiss Golden the result motion an file requested the year. dismiss granted earlier, is its to the CPUC a our Water review. suspend court there request to suspend general The the schedule. for on court a plans Mentioned XXXX, XX August rate proceedings utility electric case the the proceeding CPUC’s no complete of filed court petition timeline subsidiary to filed the currently to as However, Bill to And the to scheduled. this

approved rate capital to In addition and items as part this such final new additional X-year make now of once in are quarter CPUC of be the a drought Interim expenditures rates I of situation requested requested rates the are X, California. rate, to fourth in discuss expected there decision January are new number a capital structure. that year, in will which the new will cycle effective as XXXX.

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

Resources local continue from drought-related California has Project as calls, to deteriorating appropriate to SWP Water and this to or account State work previous recovery. memorandum As of in State DWR Golden of in suppliers conditions or our year. use future for water Water Golden March State of mentioned make assess service and a its adjustments incremental water authorized costs in restrictions with been supply its areas needed. to track XX% will the I water reduced X% conditions, to Water earnings the Water allocation the due Department in

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

compared to quarter period resulting to earnings $X.XX same per largely XX, of fee on $X.XX its September as the construction in for per offset revenue, $X.XX per expenses which and the was the increase price resolution increase longer overall $X.XX partially the as share share same as economic period for of move an contributed the the for to XXXX. continues The adjustments ASUS, for same higher material experience in challenges to lead resulting delays. to third other XXXX compared supply by operating weather per to conditions contracted last due from year. share Earnings segment chain Let’s services management of were activity, compared year-to-date year period as last times, share from various

As $X.XX contribute a expected for to per result, XXXX. $X.XX ASUS to is share

since investment in of to story. improve We adjustments, expect completion projects ASUS to on economic our services share the supply to proven project for that $X.XX adjustment, dividends, track confident provide for and will for turn related awarded that our modifications filings price new equitable compelling contribute awards of and revenues like can chain requests record our with remains remain based issues per asset $X.XX of for for XXXX. a margin. year dollar XXXX. contract water effectively and we The next We and new military part base bases ASUS which I’d additional attention managing contract compete will the for future transfers, military wastewater

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

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

Bob Sprowls

a for Yes, quarter forward just thank wish I you, happy Thank don’t between And want much. Thank season. I look all Joe. to to now holiday next everyone participation. and to speaking you we speak and their you with you today then. I you very

Operator

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

lines. your You may disconnect now

American States Water (AWR) 9 Nov 222022 Q3 Earnings call transcript