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American States Water Co (AWR) Q1 2024 Earnings Call Transcript Highlights: A Mixed Financial ...

GuruFocus Research
·3 min read

  • Recorded Diluted Earnings Per Share: Decreased by $0.31 from Q1 2023.

  • Adjusted Earnings Per Share: Increased by $0.02 from Q1 2023.

  • Consolidated Earnings Per Share: $0.62 for Q1 2024 compared to $0.93 for Q1 2023.

  • Golden State Water Earnings Per Share: $0.48 for Q1 2024, up from adjusted $0.41 in Q1 2023.

  • Electric Segment Earnings Per Share: $0.05 for Q1 2024, down from $0.06 in Q1 2023.

  • Consolidated Revenue: Decreased by $26.1 million from Q1 2023.

  • Operating Expenses: Decreased by $2.2 million from Q1 2023.

  • Interest Expense: Increased by $3.2 million due to higher rates and borrowing levels.

  • Net Cash from Operating Activities: $45.8 million, significantly higher than $7 million in Q1 2023.

  • Capital Expenditure: $47.6 million on company-funded capital projects in Q1 2024.

  • Dividend Growth: Compound annual growth rate of 9.4% from 2018 through 2023.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • American States Water Co (NYSE:AWR) successfully began water and wastewater operations at two new military bases, enhancing its contracted services segment.

  • The company continues to invest in infrastructure to strengthen its water and electric systems, maintaining a focus on long-term safety and efficiency.

  • AWR reported a slight increase in adjusted earnings per share, indicating stable financial performance despite challenges.

  • The company has secured significant long-term contracts, such as the 50-year contract at Naval Air Station Patuxent River, estimated at $349 million.

  • American States Water Co (NYSE:AWR) maintains strong credit ratings, reflecting its financial stability and appealing to investors.

Negative Points

  • Recorded diluted earnings for the quarter decreased by $0.31 per share from the same period in 2023.

  • There was a decrease in construction activities at ASUS due to timing differences, impacting earnings from this segment.

  • The company experienced a delay in the electric general rate case decision, affecting financial planning and projections.

  • Increased interest expenses due to higher interest rates and overall borrowing levels, which could impact net income.

  • Revenue for the first quarter decreased by $26.1 million compared to the same period in 2023, largely due to lower construction activity and delays in rate case decisions.

Q & A Highlights

Q: How large was the 3rd year rate increase from the 2022 to 2024 GRC? A: Eva Tang, CFO, mentioned that the first quarter increase was about $3.5 million, and they would provide further details for the full year later.

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Q: Where exactly do things stand with the electric GRC? Are you just waiting for a PD at this point? A: Robert Sprowls, CEO, explained that all work in the case has been completed and they are in settlement discussions, but it's challenging due to the company's smaller size compared to major electric companies.

Q: Are you optimistic that the electric GRC decision will be finalized by the statutory deadline? A: Sprowls noted the assignment of a second ALJ to the case, indicating a good chance of resolution by the deadline, though a settlement could delay the process.

Q: Does the pending Golden State Water case include any of the anticipated $80 to $200 million in PFOA-related CapEx? A: Sprowls clarified that it does not, although they have requested to expand a memo account to include carrying costs for capital projects related to PFOA.

Q: How might the final PFAS rule impact ASUS construction going forward? A: Sprowls mentioned that PFAS issues are currently relevant at only one military base, suggesting it's not a significant driver for new construction work at this time.

Q: Has the Joint Base Cape Cod contract been adjusted to a higher value? A: Sprowls confirmed that the contract value was increased to $75 million, reflecting a better understanding of the required work scope.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.