Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Earnings per share for the third quarter increased by $0.10 compared to the same period last year, driven by rate increases and investment gains.
- American States Water Co (AWR, Financial) has invested $172.5 million in infrastructure year-to-date, with plans to reach a record high of $210 million to $230 million in capital expenditures for the year.
- The company reached a settlement agreement with the California Public Utilities Commission, allowing significant investments in water and electric infrastructure over the next few years.
- ASUS, a subsidiary of AWR, has been awarded a record high $54 million in new capital upgrade construction projects, expected to be completed between 2024 and 2027.
- The company's credit ratings remain strong, with an A stable rating from Standard & Poor's and an A2 stable rating from Moody's, reflecting financial stability.
Negative Points
- Higher operating expenses and interest costs partially offset the earnings increase, impacting overall profitability.
- The electric segment's earnings decreased due to delays in receiving a decision on the electric general rate case, affecting new rate implementations.
- Consolidated expenses increased by $5.3 million compared to the third quarter of 2023, driven by higher administrative, general, and depreciation expenses.
- Interest expenses increased by $1.9 million due to higher average interest rates and borrowing levels.
- The company faces uncertainties related to regulatory decisions, which could impact future financial performance and rate adjustments.
Q & A Highlights
Q: What would the year-to-date EPS have been if the proposed decision in the Bear Valley GRC had been approved and in place at the start of 2024?
A: Robert Sprowls, President and CEO, mentioned that the cumulative impact for 2023 and 2024 would be an estimated $0.05 to $0.07 per share if the decision is approved.
Q: When do you need to get a final order to record the retroactive impact in 2024 results?
A: Eva Tang, CFO, stated that if a final decision is received before the 10-K filing, they would be able to record it in 2024. If the proposed decision fully adopts the settlement, they might have more flexibility to book it into 2024.
Q: Does the increase in ASUS capital work reflect PFOS mitigation work or new bases added in recent years?
A: Robert Sprowls explained that the increase is due to the government having funds to allocate, and ASUS has built strong relationships to secure meaningful projects. The $54 million awarded is a significant number, reflecting both new bases and government priorities.
Q: Should we expect the $54 million award to be the new normal level for ASUS?
A: Robert Sprowls indicated that while the award is approximately double the recent average, it's too early to determine if this will be the new normal. However, new bases are expected to contribute to higher awards in the future.
Q: What drove the increase in the 2024 guidance range for ASUS?
A: Robert Sprowls attributed the increase to better-than-expected construction conditions and contributions from new operations at Joint Base Cape Cod and Naval Air Station, Patuxent River, which performed better than initially anticipated.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
