American States Water Company Announces Fourth Quarter and Full Year 2022 Results
American States Water Company (NYSE:AWR) reported a decrease in fourth quarter 2022 diluted earnings per share (EPS) to $0.50, down $0.05 from $0.55 in Q4 2021. Full year 2022 EPS fell by $0.44 to $2.11 compared to $2.55 in 2021. The decline is attributed to 2021 water rates still in effect due to delays from the California Public Utilities Commission. Had new rates been approved, EPS could have been $0.38 higher. Additionally, lower investment gains impacted earnings, reflecting a loss of $5.2 million in 2022 versus gains of $4.3 million in 2021, resulting in an effective tax rate drop that slightly benefited net earnings.
- Adjusted diluted EPS for Q4 2022 increased by $0.05 to $0.56 due to potential revenue adjustments.
- Electric segment showed resilience with a $0.01 increase in diluted EPS to $0.08.
- Q4 2022 recorded diluted EPS decreased by $0.05 due to delayed water rate approvals.
- Full year 2022 diluted EPS fell by $0.44 compared to 2021, primarily from investment losses.
- Operating expenses rose by $2.0 million, impacting overall earnings.
-
per share decrease in recorded fourth quarter consolidated diluted EPS compared to fourth quarter of 2021, or$0.05 per share increase as adjusted$0.05 -
Fourth quarter recorded results reflect 2021 water rates. 2022 water rates, if approved as settled, would be retroactive to
January 1, 2022 and would have add per share to the quarter.$0.09 -
Fourth quarter results also reflect an unfavorable variance of
per share from lower gains on investments held to fund a retirement plan.$0.01
-
Fourth quarter recorded results reflect 2021 water rates. 2022 water rates, if approved as settled, would be retroactive to
-
per share decrease in recorded full year 2022 consolidated diluted EPS compared to 2021, or$0.44 per share increase as adjusted$0.12 -
2022 recorded results reflect 2021 water rates. 2022 water rates, if approved as settled, would be retroactive to
January 1, 2022 and would have add per share to 2022 results.$0.38 -
2022 results also reflect an unfavorable variance of
per share from losses on investments held to fund a retirement plan compared to gains in 2021.$0.18
-
2022 recorded results reflect 2021 water rates. 2022 water rates, if approved as settled, would be retroactive to
Due to the delay in receiving a final decision from the
Including the additional revenues and water supply costs in the results for the fourth quarter of 2022 had the water general rate case not been delayed and excluding the gains and losses on investments from both periods, adjusted consolidated diluted earnings for the fourth quarter of 2022 would have been
Fourth Quarter 2022 Results
The table below sets forth a comparison of the fourth quarter 2022 diluted earnings per share contribution recorded by business segment and for the parent company with amounts recorded during the same period in 2021.
|
|
Diluted Earnings per Share |
||||||||||
|
|
Three Months Ended |
|
|
||||||||
|
|
|
|
|
|
CHANGE |
||||||
Water |
|
$ |
0.28 |
|
|
$ |
0.36 |
|
|
$ |
(0.08 |
) |
Electric |
|
|
0.08 |
|
|
|
0.07 |
|
|
|
0.01 |
|
Contracted services |
|
|
0.17 |
|
|
|
0.13 |
|
|
|
0.04 |
|
AWR (parent) |
|
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
Consolidated fully diluted earnings per share, as reported |
|
$ |
0.50 |
|
|
$ |
0.55 |
|
|
$ |
(0.05 |
) |
Water Segment:
For the three months ended
Excluding only the gains on investments from both periods discussed above, adjusted diluted earnings at the water segment for the fourth quarter of 2022 were
-
A decrease in water operating revenues of
largely as a result of the lower cost of debt included in the pending$2.6 million May 2021 cost of capital application. GSWC recorded a reduction to revenues of , or$1.4 million per share, to reflect management’s best estimate at this time of revenues subject to refund from the pending cost of capital proceeding, which includes the impact of GSWC’s lower cost of debt requested in its application. However, management cannot predict the ultimate outcome of the cost of capital application and the associated impact on 2022 revenues. Changes in estimates will be made, if necessary, as more information in this proceeding becomes available. As discussed, water revenues billed and recorded during the fourth quarter of 2022 were based on 2021 adopted rates, pending a final decision by the CPUC on the general rate case application. In addition, the decrease in water revenues was also due to approximately$0.03 in over-collected amounts included in CPUC-approved pension and conservation balancing accounts, both of which are offset by lower expenses and have no net earnings impact.$1.0 million
-
An overall increase in operating expenses of
(excluding supply costs that remained relatively flat), which negatively impacted earnings and was mainly due to increases in (i) overall labor costs, (ii) other operation-related expenses resulting from higher chemical and water treatment costs and transportation expenses, (iii) administrative and general expenses resulting from higher insurance costs, and employee-related benefits, (iv) depreciation and amortization expenses resulting from additions to utility plant, and (v) property taxes as a result of higher assessed property values. These increases were partially offset by a decrease in maintenance expenses compared to the same period in 2021.$2.0 million
-
The sale of non-utility-related land at the water segment resulted in a gain of
recorded during the three months ended$409,000 December 31, 2021 , with no equivalent item in 2022.
-
An increase in interest expense (net of interest income) of
resulting primarily from an overall increase in total borrowing levels to support, among other things, the capital expenditures program at GSWC, and an increase in short-term interest rates.$798,000
-
An overall increase in other income (net of other expenses) of
due primarily to a decrease in the non-service cost components related to GSWC's benefit plans resulting from lower actuarial losses recognized during the fourth quarter of 2022 as compared to the same period in 2021.$996,000
- A decrease in the effective income tax rate, which positively impacted net earnings at the water segment. The decrease resulted primarily from changes in certain flow-through and permanent items. As a regulated utility, GSWC treats certain temporary differences as flow-through in computing its income tax expense consistent with the income tax method used in its CPUC-jurisdiction ratemaking. Changes in the magnitude of flow-through items either increase or decrease tax expense, thereby affecting diluted earnings per share.
Electric Segment:
Diluted earnings from the electric utility segment were
Contracted Services Segment:
Diluted earnings from the contracted services segment increased
AWR (Parent):
For the fourth quarter of 2022, diluted earnings from AWR (parent) decreased
Full Year 2022 Results
The table below sets forth a comparison of the diluted earnings per share contribution by business segment and for the parent company as recorded during the twelve months ended
|
|
Diluted Earnings per Share |
||||||||||
|
|
Twelve Months Ended |
|
|
||||||||
|
|
|
|
|
|
CHANGE |
||||||
Water |
|
$ |
1.45 |
|
|
$ |
1.87 |
|
|
$ |
(0.42 |
) |
Electric |
|
|
0.24 |
|
|
|
0.21 |
|
|
|
0.03 |
|
Contracted services |
|
|
0.46 |
|
|
|
0.48 |
|
|
|
(0.02 |
) |
AWR (parent) |
|
|
(0.04 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
Consolidated fully diluted earnings per share, as reported |
|
$ |
2.11 |
|
|
$ |
2.55 |
|
|
$ |
(0.44 |
) |
As noted in the table above, fully diluted earnings for the twelve months ended
Excluding the gains and losses on investments from both periods, and including the additional revenues and water supply costs in the results for the twelve months ended
For more details on the full year 2022 results, please refer to the company’s Form 10-K filed with the
Dividends
On
Non-GAAP Financial Measures
This press release includes a discussion of Registrant’s operations in terms of earnings per share by business segment and AWR (parent), which equals each business segment’s earnings divided by AWR’s weighted average number of diluted common shares. Furthermore, the gains and losses generated on the investments held to fund one of the Company’s retirement plans for the three- and twelve month periods ended
AWR uses earnings per share by business segment as an important measure in evaluating its operating results and believes it provides investors with clarity surrounding the performance of its segments. AWR reviews this measurement regularly and compares it to historical periods and to its operating budget. The company has provided the computations and reconciliations of diluted earnings per share from the measure of operating income by business segment to AWR’s consolidated fully diluted earnings per share in this press release.
Forward-Looking Statements
Certain matters discussed in this press 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 most recent Form 10-Q and Form 10-K filed with the
Conference Call
About
|
|||||
Consolidated |
|||||
|
|
|
|
||
|
Comparative Condensed Balance Sheets |
||||
(in thousands) |
|
|
|
||
Assets |
|
|
|
||
Net Property, Plant and Equipment |
$ |
1,753,766 |
|
$ |
1,626,004 |
|
|
1,116 |
|
|
1,116 |
Other Property and Investments |
|
36,907 |
|
|
40,806 |
Current Assets |
|
151,294 |
|
|
138,052 |
Other Assets |
|
91,291 |
|
|
95,005 |
Total Assets |
$ |
2,034,374 |
|
$ |
1,900,983 |
Capitalization and Liabilities |
|
|
|
||
Capitalization |
$ |
1,156,096 |
|
$ |
1,098,123 |
Current Liabilities |
|
396,522 |
|
|
155,574 |
Other Credits |
|
481,756 |
|
|
647,286 |
Total Capitalization and Liabilities |
$ |
2,034,374 |
|
$ |
1,900,983 |
|
Condensed Statements of Income |
||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||
(in thousands, except per share amounts) |
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
(unaudited) |
|
|
|
|||||||||
Operating Revenues |
|
|
|
|
|
||||||||
Water |
$ |
75,041 |
|
$ |
77,682 |
|
|
$ |
340,602 |
|
$ |
347,112 |
|
Electric |
|
10,958 |
|
|
10,134 |
|
|
|
39,986 |
|
|
38,345 |
|
Contracted services |
|
39,368 |
|
|
28,808 |
|
|
|
110,940 |
|
|
113,396 |
|
Total operating revenues |
|
125,367 |
|
|
116,624 |
|
|
|
491,528 |
|
|
498,853 |
|
|
|
|
|
|
|
||||||||
Operating Expenses |
|
|
|
|
|
||||||||
Water purchased |
|
17,824 |
|
|
17,666 |
|
|
|
75,939 |
|
|
77,914 |
|
Power purchased for pumping |
|
2,679 |
|
|
2,513 |
|
|
|
11,861 |
|
|
11,103 |
|
Groundwater production assessment |
|
4,345 |
|
|
4,567 |
|
|
|
19,071 |
|
|
19,412 |
|
Power purchased for resale |
|
5,853 |
|
|
3,037 |
|
|
|
15,039 |
|
|
11,240 |
|
Supply cost balancing accounts |
|
(5,840 |
) |
|
(3,462 |
) |
|
|
(12,000 |
) |
|
(11,421 |
) |
Other operation |
|
10,067 |
|
|
8,573 |
|
|
|
38,095 |
|
|
34,738 |
|
Administrative and general |
|
21,160 |
|
|
20,609 |
|
|
|
86,190 |
|
|
83,547 |
|
Depreciation and amortization |
|
10,913 |
|
|
10,440 |
|
|
|
41,315 |
|
|
39,596 |
|
Maintenance |
|
3,272 |
|
|
3,873 |
|
|
|
13,392 |
|
|
12,781 |
|
Property and other taxes |
|
5,647 |
|
|
5,257 |
|
|
|
22,894 |
|
|
22,522 |
|
|
|
21,908 |
|
|
13,999 |
|
|
|
53,171 |
|
|
56,909 |
|
Gain on sale of assets |
|
(75 |
) |
|
(465 |
) |
|
|
(75 |
) |
|
(465 |
) |
Total operating expenses |
|
97,753 |
|
|
86,607 |
|
|
|
364,892 |
|
|
357,876 |
|
|
|
|
|
|
|
||||||||
Operating income |
|
27,614 |
|
|
30,017 |
|
|
|
126,636 |
|
|
140,977 |
|
|
|
|
|
|
|
||||||||
Other Income and Expenses |
|
|
|
|
|
||||||||
Interest expense |
|
(7,781 |
) |
|
(4,991 |
) |
|
|
(27,027 |
) |
|
(22,834 |
) |
Interest income |
|
939 |
|
|
357 |
|
|
|
2,326 |
|
|
1,493 |
|
Other, net |
|
2,495 |
|
|
2,136 |
|
|
|
125 |
|
|
5,134 |
|
Total other income and expenses, net |
|
(4,347 |
) |
|
(2,498 |
) |
|
|
(24,576 |
) |
|
(16,207 |
) |
|
|
|
|
|
|
||||||||
Income Before Income Tax Expense |
|
23,267 |
|
|
27,519 |
|
|
|
102,060 |
|
|
124,770 |
|
Income tax expense |
|
4,638 |
|
|
7,169 |
|
|
|
23,664 |
|
|
30,423 |
|
Net Income |
$ |
18,629 |
|
$ |
20,350 |
|
|
$ |
78,396 |
|
$ |
94,347 |
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding |
|
36,961 |
|
|
36,936 |
|
|
|
36,955 |
|
|
36,921 |
|
Basic earnings per Common Share |
$ |
0.50 |
|
$ |
0.55 |
|
|
$ |
2.12 |
|
$ |
2.55 |
|
|
|
|
|
|
|
||||||||
Weighted average diluted shares |
|
37,049 |
|
|
37,029 |
|
|
|
37,039 |
|
|
37,010 |
|
Fully diluted earnings per Common Share |
$ |
0.50 |
|
$ |
0.55 |
|
|
$ |
2.11 |
|
$ |
2.55 |
|
|
|
|
|
|
|
||||||||
Dividends paid per Common Share |
$ |
0.3975 |
|
$ |
0.3650 |
|
|
$ |
1.5250 |
|
$ |
1.4000 |
|
Computation and Reconciliation of Non-GAAP Financial Measure (Unaudited)
Below are the computation and reconciliation of diluted earnings per share from the measure of operating income by business segment to AWR’s consolidated fully diluted earnings per share for the three and twelve months ended
|
Water |
|
Electric |
|
Contracted Services |
|
AWR (Parent) |
|
Consolidated (GAAP) |
||||||||||||||||||||||||||
In 000's except per share amounts |
Q4 2022 |
|
Q4 2021 |
|
Q4 2022 |
|
Q4 2021 |
|
Q4 2022 |
|
Q4 2021 |
|
Q4 2022 |
|
Q4 2021 |
|
Q4 2022 |
|
Q4 2021 |
||||||||||||||||
Operating income |
$ |
15,294 |
|
$ |
20,278 |
|
$ |
3,767 |
|
|
$ |
3,442 |
|
|
$ |
8,555 |
|
|
$ |
6,300 |
|
|
$ |
(2 |
) |
|
$ |
(3 |
) |
|
$ |
27,614 |
|
$ |
30,017 |
Other income and expense |
|
3,181 |
|
|
2,674 |
|
|
(6 |
) |
|
|
(208 |
) |
|
|
101 |
|
|
|
(142 |
) |
|
|
1,071 |
|
|
|
174 |
|
|
|
4,347 |
|
|
2,498 |
Income tax expense (benefit) |
|
1,723 |
|
|
4,377 |
|
|
794 |
|
|
|
1,096 |
|
|
|
2,077 |
|
|
|
1,507 |
|
|
|
44 |
|
|
|
189 |
|
|
|
4,638 |
|
|
7,169 |
Net income (loss) |
$ |
10,390 |
|
$ |
13,227 |
|
$ |
2,979 |
|
|
$ |
2,554 |
|
|
$ |
6,377 |
|
|
$ |
4,935 |
|
|
$ |
(1,117 |
) |
|
$ |
(366 |
) |
|
$ |
18,629 |
|
$ |
20,350 |
Weighted Average Number of Diluted Shares |
|
37,049 |
|
|
37,029 |
|
|
37,049 |
|
|
|
37,029 |
|
|
|
37,049 |
|
|
|
37,029 |
|
|
|
37,049 |
|
|
|
37,029 |
|
|
|
37,049 |
|
|
37,029 |
Diluted earnings per share |
$ |
0.28 |
|
$ |
0.36 |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.17 |
|
|
$ |
0.13 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.50 |
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Water |
|
Electric |
|
Contracted Services |
|
AWR (Parent) |
|
Consolidated (GAAP) |
||||||||||||||||||||||||||
In 000's except per share amounts |
YTD 2022 |
|
YTD 2021 |
|
YTD 2022 |
|
YTD 2021 |
|
YTD 2022 |
|
YTD 2021 |
|
YTD 2022 |
|
YTD 2021 |
|
YTD 2022 |
|
YTD 2021 |
||||||||||||||||
Operating income |
$ |
92,455 |
|
$ |
107,573 |
|
$ |
11,740 |
|
|
$ |
10,738 |
|
|
$ |
22,449 |
|
|
$ |
22,675 |
|
|
$ |
(8 |
) |
|
$ |
(9 |
) |
|
$ |
126,636 |
|
$ |
140,977 |
Other income and expense |
|
22,339 |
|
|
16,263 |
|
|
425 |
|
|
|
(101 |
) |
|
|
(273 |
) |
|
|
(488 |
) |
|
|
2,085 |
|
|
|
533 |
|
|
|
24,576 |
|
|
16,207 |
Income tax expense (benefit) |
|
16,346 |
|
|
22,095 |
|
|
2,439 |
|
|
|
2,975 |
|
|
|
5,476 |
|
|
|
5,434 |
|
|
|
(597 |
) |
|
|
(81 |
) |
|
|
23,664 |
|
|
30,423 |
Net income (loss) |
$ |
53,770 |
|
$ |
69,215 |
|
$ |
8,876 |
|
|
$ |
7,864 |
|
|
$ |
17,246 |
|
|
$ |
17,729 |
|
|
$ |
(1,496 |
) |
|
$ |
(461 |
) |
|
$ |
78,396 |
|
$ |
94,347 |
Weighted Average Number of Diluted Shares |
|
37,039 |
|
|
37,010 |
|
|
37,039 |
|
|
|
37,010 |
|
|
|
37,039 |
|
|
|
37,010 |
|
|
|
37,039 |
|
|
|
37,010 |
|
|
|
37,039 |
|
|
37,010 |
Diluted earnings per share |
$ |
1.45 |
|
$ |
1.87 |
|
$ |
0.24 |
|
|
$ |
0.21 |
|
|
$ |
0.46 |
|
|
$ |
0.48 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
2.11 |
|
$ |
2.55 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230227005698/en/
Senior Vice President-Finance, Chief Financial Officer,
Corporate Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707
Source:
FAQ
What was the diluted EPS for AWR in Q4 2022?
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