News Column

American States Water Company Announces Earnings for the First Quarter of 2014

May 6, 2014

SAN DIMAS, Calif.--(BUSINESS WIRE)-- American States Water Company (NYSE:AWR) today reported net income of $11.0 million, or basic and fully diluted earnings per share of $0.28, for the quarter ended March 31, 2014, as compared to net income of $13.5 million, or basic and fully diluted earnings per share of $0.35, for the quarter ended March 31, 2013.

The table below sets forth a comparison of the first quarter diluted earnings per share by business segment, as reported:

    Q1 2014     Q1 2013     Change
Water   $ 0.22     $ 0.26     ($0.04 )
Electric 0.02 0.02 ---
Contracted services   0.04       0.07     (0.03 )
Consolidated diluted earnings $ 0.28     $ 0.35     ($0.07 )


Water

For the three months ended March 31, 2014, diluted earnings from the water segment were $0.22 per share, as compared to $0.26 per share for the same period of 2013. Included in the results for the first quarter of 2013 was the impact of the one-time recovery of previously incurred costs totaling $3.1 million, or $0.05 per share, approved by the California Public Utilities Commission (“CPUC”) in 2013 as part of Golden State Water Company’s (“GSWC’s”) rate case decision. There was no similar item in the first quarter of 2014. Excluding the one-time recovery of $0.05 per share, diluted earnings from the water segment increased $0.01 per diluted share during the first quarter of 2014 as compared to the same period in 2013. The $0.01 per share increase was due to the following items:

  • An increase in the water gross margin of approximately $578,000, or $0.01 per share, due primarily to second-year rate increases approved by the CPUC.
  • An increase in operating expenses (excluding supply costs) of approximately $900,000, or $0.01 per share, due primarily to increases in chemical and water treatment costs, outside services costs and depreciation expense. These increases were partially offset by lower maintenance expense.
  • A decrease in the water effective income tax rate for the three months ended March 31, 2014 as compared to the same period in 2013, increasing earnings by $0.01 per share. The change in the tax rate is due to changes between book and taxable income from flow-through adjustments in accordance with regulatory requirements.

    Electric

    For the three months ended March 31, 2014 and 2013, diluted earnings from the electric segment were $0.02 per share. GSWC has been in settlement negotiations with all the parties involved in the electric general rate case for new rates in years 2013 through 2016. Those negotiations have resulted in an agreement in principle and GSWC anticipates that a settlement agreement will be filed with the CPUC in the second quarter of 2014. A final decision from the CPUC is expected in late 2014. Pending a final decision on this rate case, electric revenues have been recorded using 2012 adopted levels authorized by the CPUC.

    Contracted Services

    Diluted earnings from contracted services decreased by $0.03 per share as compared to the same period in 2013, mainly as a result of an expected reduction in planned renewal and replacement ("R&R") capital work, primarily at the Fort Bliss and Fort Jackson military bases. Overall construction activity is expected to increase during the remainder of 2014 as compared to the first quarter; however, R&R construction will continue to vary from year-to-year over the remaining term of the 50-year contracts with the U.S. government. The decrease in construction activity resulting in lower earnings was partially offset by a decrease in outside services expense as compared to the same period in 2013.

    Non-GAAP Financial Measures

    This press release includes a discussion on the water gross margin, which is computed by taking total water revenues, less total water supply costs. The discussion also includes AWR’s operations in terms of diluted earnings per share by business segment, which is each business segment’s earnings divided by the Company’s weighted average number of diluted shares. These items are derived from consolidated financial information but are not presented in our financial statements that are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States. These items constitute "non-GAAP financial measures" under Securities and Exchange Commission rules.

    The non-GAAP financial measures supplement our GAAP disclosures and should not be considered as alternatives to the GAAP measures. Furthermore, the non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other registrants. The Company uses the water gross margin and earnings per share by business segment as important measures in evaluating its operating results and believes these measures are useful internal benchmarks in evaluating the performance of its operating segments. The Company reviews these measurements regularly and compares them to historical periods and to the operating budget.

    Forward-Looking Statements

    Certain matters discussed in this news release with regard to the Company’s expectations may be forward-looking statements that involve risks and uncertainties. The assumptions and risk factors that could cause actual results to differ materially include those described in the Company’s Form 10-Q for the quarter ended March 31, 2014 filed with the Securities and Exchange Commission.

    First Quarter 2014 Earnings Release Conference Call

    The Company will host a conference call tomorrow, May 7, 2014 at 2:00 p.m. Eastern Time. Interested parties can listen to the live conference call over the Internet by logging on to www.aswater.com and clicking the “Investors” button at the top of the page.

    The call will also be archived on our website and can be replayed beginning Wednesday, May 7, 2014 at 5:00 p.m. Eastern Time and will run through Wednesday, May 14, 2014.

    American States Water Company is the parent of Golden State Water Company and American States Utility Services, Inc. Through its utility subsidiary, Golden State Water Company, AWR provides water service to approximately 257,000 customers located within 75 communities throughout 10 counties in Northern, Coastal and Southern California. The Company also distributes electricity to approximately 24,000 customers in the City of Big Bear and surrounding areas in San Bernardino County, California. Through its contracted services subsidiary, American States Utility Services, Inc., the Company provides operations, maintenance and construction management services for water and wastewater systems located on military bases throughout the country through 50-year privatization contracts with the U.S. government.

    American States Water Company has paid dividends to shareholders every year since 1931, increasing the dividends received by shareholders each calendar year since 1954. On May 5, 2014, the Board of Directors approved a quarterly dividend of $0.2025 per share on the Common Shares of the Company.

     
    American States Water Company
    Consolidated
     
    Comparative Condensed Balance Sheets  
      March 31, December 31,
    (in thousands)     2014       2013  
    (Unaudited)
    Assets
    Utility Plant-Net $ 983,929 $ 981,477
    Goodwill 1,116 1,116
    Other Property and Investments 15,828 15,806
    Current Assets 213,242 191,617
    Regulatory and Other Assets     119,656       120,167  
    Total Assets   $ 1,333,771     $ 1,310,183  
    Capitalization and Liabilities
    Capitalization $ 821,809 $ 818,483
    Current Liabilities 119,076 100,906
    Other Credits     392,886       390,794  
    Total Capitalization and Liabilities   $ 1,333,771     $ 1,310,183  
     
    Condensed Statements of Income Three months ended
    (in thousands, except per share amounts)   March 31,
      2014     2013  
    (Unaudited)
    Operating Revenues
    Water $ 70,757 $ 69,233
    Electric 10,456 10,734
    Contracted services   20,732       30,585  
    Total operating revenues$101,945$110,552
     
    Operating Expenses
    Water purchased $ 11,224 $ 10,732
    Power purchased for pumping 1,964 1,639
    Groundwater production assessment 3,540 3,187
    Power purchased for resale 2,699 3,680
    Supply cost balancing accounts 818 1,371
    Other operation 6,947 5,454
    Administrative and general 20,184 17,907
    Depreciation and amortization 10,530 9,816
    Maintenance 3,489 3,934
    Property and other taxes 4,325 4,148
    ASUS construction 13,457 20,733
    Net gain on sale of property   -       (12 )
    Total operating expenses $ 79,177 $ 82,589
     
    Operating income$22,768$27,963
     
    Other Income and Expenses
    Interest expense (5,627 ) (5,778 )
    Interest income 112 187
    Other, net   125       342  
    Total other income and expenses (5,390 ) (5,249 )
     
    Income Before Income Tax Expense$17,378$22,714
    Income tax expense     6,357       9,249  
    Net Income   $11,021     $13,465  
     
     
    Weighted average shares outstanding38,74738,529
    Basic earnings per Common Share$0.28$0.35
     
    Weighted average diluted shares38,94438,772
    Fully diluted earnings per Common Share$0.28$0.35
     
    Dividends Declared Per Common Share$0.2025$0.1775





    American States Water Company

    Eva G. Tang

    Senior Vice President-Finance, Chief Financial Officer,

    Corporate Secretary and Treasurer

    Telephone: (909) 394-3600, ext. 707


    Source: American States Water Company


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