On August 6, 2024, American States Water Co (AWR, Financial) released its 8-K filing for the second quarter of 2024. American States Water Co is a water and utilities holding company based in California, operating through segments including water, electric, and contracted services. The company conducts water and electric operations through Golden State Water Company and Bear Valley Electric Service, Inc., while contracted services are managed by American States Utility Services and its subsidiaries.
Performance Overview
American States Water Co (AWR, Financial) reported basic and fully diluted earnings per share of $0.85 for Q2 2024, a decrease from $1.04 per share in Q2 2023. This decline includes the impact of approximately $0.18 per share from the reversal of previously recorded estimated revenues subject to refund due to a final cost of capital decision in June 2023. Excluding this item, adjusted consolidated diluted earnings were $0.85 per share for Q2 2024, compared to $0.86 per share for Q2 2023.
Segment Performance
The water utility segment recorded diluted earnings of $0.67 per share for Q2 2024, down from $0.91 per share in Q2 2023. Adjusted diluted earnings for the water segment were $0.67 per share in Q2 2024, compared to $0.73 per share in Q2 2023. The electric utility segment saw a decrease in diluted earnings to $0.01 per share from $0.03 per share in Q2 2023. The contracted services segment, however, reported an increase in diluted earnings to $0.19 per share from $0.12 per share in Q2 2023.
Financial Achievements and Challenges
Despite the decline in earnings, AWR achieved several milestones. The company reached a settlement agreement in connection with the general rate case, authorizing $573.1 million in capital investment for 2025-2027. Additionally, AWR increased its quarterly dividend by 8.3%, marking the 70th consecutive year of annual dividend increases.
However, the company faced challenges, including increased operating expenses and higher interest costs. Operating expenses rose by $2.8 million, driven by higher labor costs, administrative expenses, and depreciation. Interest expenses increased by $1.6 million due to higher interest rates and borrowing levels.
Income Statement Highlights
| Three Months Ended | 6/30/2024 | 6/30/2023 | Change |
|---|---|---|---|
| Water | $0.67 | $0.91 | $(0.24) |
| Electric | $0.01 | $0.03 | $(0.02) |
| Contracted Services | $0.19 | $0.12 | $0.07 |
| AWR (Parent) | $(0.02) | $(0.02) | $0.00 |
| Consolidated (GAAP) | $0.85 | $1.04 | $(0.19) |
Balance Sheet and Cash Flow
As of June 30, 2024, AWR reported total assets of $2.35 billion, up from $2.25 billion as of December 31, 2023. Net property, plant, and equipment increased to $1.98 billion from $1.89 billion. Current liabilities rose significantly to $299.1 million from $166.6 million, reflecting increased borrowing levels to support capital expenditure programs.
Analysis and Conclusion
American States Water Co (AWR, Financial) faced a challenging quarter with a decline in earnings due to increased operating expenses and higher interest costs. However, the company's strategic investments and consistent dividend growth demonstrate its commitment to long-term value creation. The settlement agreement for capital investment and the commencement of operations at new military bases are positive indicators for future growth.
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Explore the complete 8-K earnings release (here) from American States Water Co for further details.
