Core Viewpoint - American States Water Company (AWR) is benefiting from strategic investments in infrastructure and a growing customer base, but its heavy reliance on California for earnings poses challenges [1][5]. Group 1: Positive Factors - AWR's subsidiary, American States Utility Services (ASUS), has successfully begun operating water and wastewater systems at two new military bases, enhancing revenue stability through long-term defense contracts [2]. - ASUS is projected to contribute between 59-63 cents per share to AWR's total earnings for the full year 2025, indicating strong future earnings potential [3]. - The company has approved rate cases for regulated utilities, which will facilitate revenue and earnings growth, with capital expenditures expected to reach $573.1 million from 2025 to 2027 [4]. Group 2: Challenges - AWR's financial performance is significantly tied to California, particularly Southern California, making it vulnerable to various risks including political conditions, water supply issues, and natural disasters [5]. - There is an ongoing risk of groundwater contamination, which may lead to additional costs for AWR in the future [6]. Group 3: Stock Performance - Over the past six months, AWR's stock has increased by 1.7%, while the industry has seen a growth of 13.7% [7]. Group 4: Comparisons with Peers - Other companies in the sector, such as American Water Works (AWK), Essential Utilities (WTRG), and CenterPoint Energy (CNP), have better rankings and growth rates, with AWK showing a long-term earnings growth rate of 7.4% [9][10].

Core Viewpoint - Dividend-paying stocks are generally considered lower-risk investments compared to non-payers, as they generate sufficient cash to fund growth and return excess to shareholders through dividends [1] Group 1: Black Hills (BKH) - Black Hills operates as a regulated utility with a monopoly on natural gas distribution and electricity in several states, benefiting from government regulation [5][6] - The company has a growing customer base, expanding at twice the rate of the U.S. population, and has a history of increasing dividends for over five decades, achieving Dividend King status [7] - Expected earnings growth of 4% to 6% and a dividend yield of 4.8% make Black Hills an attractive investment opportunity [8] Group 2: Kinder Morgan (KMI) - Kinder Morgan is one of the largest energy infrastructure platforms in the U.S., with stable cash flows supported by take-or-pay contracts that account for 64% of annual cash flows [9][10] - The company anticipates cash flow growth to $5.9 billion this year, sufficient to cover its $2.6 billion dividend outlay and fund capital expenditures with excess free cash flow [11][12] - With $8.8 billion in growth capital projects, primarily in natural gas pipelines, Kinder Morgan has a strong foundation for future dividend increases, having raised its payout for eight consecutive years [13] Group 3: American States Water (AWR) - American States Water is a major water utility serving 1 million consumers across nine states, with a long history of dividend payments since 1931 and 70 consecutive years of increases, making it a top Dividend King [15] - The company has achieved a compound annual growth rate (CAGR) of 8.8% in dividend growth over the past five years and aims for over 7% in the long term, supported by planned capital expenditures [16] - The stable cash flows and growth potential position American States Water as one of the safest and most reliable dividend stocks available, with a current yield of 2.4% [17]

Core Insights - SJW (HTO) is currently rated 2 (Buy) by Zacks, while American States Water (AWR) is rated 4 (Sell), indicating a stronger earnings outlook for HTO compared to AWR [3] - HTO has a Value grade of B, while AWR has a Value grade of D, suggesting that HTO is perceived as a better investment option for value investors [6] Valuation Metrics - HTO has a forward P/E ratio of 17.48, significantly lower than AWR's forward P/E of 23.83, indicating that HTO may be undervalued relative to AWR [5] - The PEG ratio for HTO is 4.04, while AWR's PEG ratio is 4.22, suggesting that HTO offers a more favorable valuation when considering expected earnings growth [5] - HTO's P/B ratio stands at 1.27, compared to AWR's P/B ratio of 3.15, further supporting the notion that HTO is a more attractive investment based on valuation metrics [6]

Financial Performance - Consolidated diluted earnings per share increased to $0.70 in Q1 2025 from $0.62 in Q1 2024[12] - Total operating revenues increased to $148 million in Q1 2025 from $135.3 million in Q1 2024[14] - Operating cash flows were $45.1 million for Q1 2025, compared to $45.8 million for Q1 2024[19] Segment Performance - Water segment diluted EPS increased to $0.52 in Q1 2025 from $0.48 in Q1 2024[13] - Electric segment diluted EPS increased to $0.07 in Q1 2025 from $0.05 in Q1 2024[13] - Contracted Services (ASUS) earnings remained consistent at $0.13 per share for both Q1 2025 and Q1 2024[32] Regulatory and Capital Investments - GSWC was authorized to invest $573.1 million in capital infrastructure over a three-year capital cycle[12, 23] - BVES was authorized to invest $75.6 million in capital infrastructure over a four-year rate cycle[12, 29] - The company is on pace to invest $170-$210 million in infrastructure investments at regulated utilities[12]

Financial Data and Key Metrics Changes - Consolidated earnings per share for Q1 2025 were $0.70, an increase from $0.62 in Q1 2024, attributed to favorable decisions from the CPUC regarding new water and electric rates [7][8] - Consolidated revenues for Q1 increased by $12.7 million compared to the same quarter last year [9] - Net cash provided by operating activities was $45.1 million for the quarter, slightly down from $45.8 million in the same quarter last year [13] Business Line Data and Key Metrics Changes - Water utility earnings increased to $0.52 per share from $0.48 per share, primarily due to new water rates [8] - Electric segment earnings rose to $0.07 per share from $0.05 per share, driven by new electric rates [9] - ASUS earnings remained stable at $0.13 per share, with increased management fee revenues offset by decreased construction activity [23] Market Data and Key Metrics Changes - Revenues for the water segment increased by $11.7 million due to new 2025 water rates [10] - Electric segment revenues increased by $2.8 million, also due to new rates [10] - Revenues from ASUS decreased by $1.8 million, primarily due to lower construction activities impacted by unfavorable weather [11] Company Strategy and Development Direction - The company plans to invest $170 million to $210 million in infrastructure in 2025, with a focus on capital projects approved by the CPUC [7][15] - Golden State Water is transitioning to a modified rate adjustment mechanism, which may introduce future revenue volatility [19][20] - The company anticipates sustained growth in its rate base due to recent regulatory approvals [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory environment, noting successful rate case outcomes and ongoing investments [17][22] - There is uncertainty regarding future military base privatizations, with expectations of potential opportunities in 2025 [33][34] - The company remains committed to maintaining a strong dividend growth rate, exceeding its long-term goals [25] Other Important Information - The company raised $25.8 million through its at-the-market offering program in Q1 2025 [15] - Credit facility terms were extended, and borrowing capacity increased from $165 million to $195 million [16] Q&A Session Summary Question: Equity raise expectations for 2025 - Management confirmed a target of raising approximately $60 million over the full year 2025, with reassessment based on credit facility capacity [28][29] Question: Update on military base privatization efforts - Management indicated no current fifty-year privatizations are available, but potential Army privatizations may arise later in the year [32][33] - The Navy is actively pursuing privatization opportunities, with ongoing efforts to secure contracts [34][35] Question: Nature of nontraditional contracts - Management noted that fifteen-year contracts may be easier for bases to manage compared to fifty-year contracts, with ongoing pursuits in this area [41][42]

Financial Data and Key Metrics Changes - Consolidated earnings per share for Q1 2025 were $0.70, an increase from $0.62 in Q1 2024, attributed to favorable decisions from the CPUC regarding new water and electric rates [7][8] - Consolidated revenues for Q1 increased by $12.7 million compared to the same quarter last year [9] - Net cash provided by operating activities was $45.1 million for the quarter, slightly down from $45.8 million in the same quarter last year [13] Business Line Data and Key Metrics Changes - Golden State Water's earnings were $0.52 per share, up from $0.48 per share in the previous year, primarily due to new water rates [8] - The electric segment's earnings increased to $0.07 per share from $0.05 per share, driven by new electric rates [9] - ASUS earnings remained consistent at $0.13 per share compared to the same period in 2024, despite a decrease in construction activity [23] Market Data and Key Metrics Changes - Revenues for the water segment increased by $11.7 million due to new 2025 water rates [10] - Revenues for the electric segment rose by $2.8 million, also due to new rates [10] - Revenues from ASUS decreased by $1.8 million, impacted by lower construction activities due to unfavorable weather conditions [11] Company Strategy and Development Direction - The company plans to invest between $170 million to $210 million in infrastructure investments for 2025 [7][15] - Golden State Water is transitioning to a modified rate adjustment mechanism, which may introduce future revenue volatility [19] - The company aims to maintain a compound annual growth rate in dividends of over 7% in the long term, with a current CAGR of 8.8% over the last five years [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory decisions received, which are expected to support future growth [17][22] - There is uncertainty regarding future military base privatizations due to changes in administration, but management remains optimistic about ongoing projects [32][41] - The company anticipates continued growth in its rate base due to recent regulatory approvals and capital investments [21] Other Important Information - The company raised $25.8 million through its at-the-market offering program in Q1 2025 [15] - The credit facility term was extended from June 2028 to June 2029, with an increased borrowing capacity from $165 million to $195 million [16] Q&A Session Summary Question: Equity raised via ATM and full year expectations - Management confirmed the target of raising approximately $60 million over the full year 2025, with some capacity available in the credit facility [27][28] Question: Update on military base privatization efforts - Management indicated no current fifty-year privatizations are available, but expects potential Army privatizations later in the year, with ongoing assessments [31][32] Question: Nature of nontraditional contracts - Management explained that fifteen-year contracts may be easier for bases to manage compared to fifty-year contracts, and they are pursuing several nontraditional privatization opportunities [40][41]

Financial Data and Key Metrics Changes - Consolidated earnings per share for Q1 2025 were $0.70, an increase from $0.62 in Q1 2024, attributed to favorable decisions from the CPUC regarding new water and electric rates [7][10] - Consolidated revenues for Q1 increased by $12.7 million compared to the same quarter last year [10] - Net cash provided by operating activities was $45.1 million for the quarter, slightly down from $45.8 million in the same quarter last year [14] Business Line Data and Key Metrics Changes - Golden State Water's earnings were $0.52 per share, up from $0.48 per share in the previous year, primarily due to new water rates [8] - The electric segment's earnings increased to $0.07 per share from $0.05 per share, driven by new electric rates [10] - ASUS earnings remained consistent at $0.13 per share compared to the same period in 2024, despite a decrease in construction activities due to unfavorable weather [24] Market Data and Key Metrics Changes - Revenues for the water segment increased by $11.7 million due to new 2025 water rates [11] - Electric segment revenues rose by $2.8 million, also due to new rates [11] - Revenues from ASUS decreased by $1.8 million, primarily due to lower construction activities impacted by weather conditions [12] Company Strategy and Development Direction - The company plans to invest between $170 million to $210 million in infrastructure investments in 2025 [7] - Golden State Water is transitioning to a modified rate adjustment mechanism, which may introduce future revenue volatility due to changes in water consumption and supply source mix [19][20] - The company anticipates robust growth in its rate base, supported by recent regulatory decisions allowing significant capital investments [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial results and the impact of new regulatory decisions on future earnings [6][17] - The company is monitoring the potential for military base privatizations, with expectations of some activity in 2025, although uncertainty remains due to changes in administration [33][34] - Management highlighted the importance of maintaining strong credit ratings and liquidity to support ongoing investments [16] Other Important Information - The company raised $25.8 million through its at-the-market offering program in Q1 2025 [15] - The Board of Directors approved a second-quarter cash dividend, continuing a trend of increasing dividends at a CAGR of 8.8% over the last five years [26] Q&A Session Summary Question: Equity raised via ATM and full-year expectations - Management confirmed a target of raising approximately $60 million over the full year 2025, with reassessment based on credit facility capacity [28][29] Question: Update on military base privatization efforts - Management indicated no current privatizations are expected in 2025, but the Army may initiate one or two later in the year, with ongoing assessments of the situation [32][33] Question: Nature of nontraditional contracts - Management explained that nontraditional contracts, such as fifteen-year agreements, may be easier for bases to manage compared to fifty-year contracts, and they are pursuing such opportunities [41][42]

Core Insights - American States Water Company (AWR) reported first-quarter 2025 operating earnings per share (EPS) of 70 cents, matching the Zacks Consensus Estimate and increasing from 62 cents in the same quarter last year [1] - Total revenues for AWR reached $148 million, exceeding the Zacks Consensus Estimate of $142 million by 4.2% and reflecting a 9.4% increase from $135.3 million in the prior-year period [1] Financial Performance - Operating expenses totaled $102.5 million, up 6.4% from $96.3 million in the year-ago quarter, driven by higher water purchases, increased administrative costs, and maintenance expenses [2] - Operating income was reported at $45.5 million, a 16.7% increase from $39 million in the corresponding period of 2024 [2] - Interest expenses decreased to $12.1 million, down 6.2% year over year, while interest income slightly declined to $2.013 million from $2.07 million in the previous year [3] Segment Performance - Earnings from the Water segment were 52 cents per share, an 8.3% increase from 48 cents a year ago, attributed to new water rates set by the California Public Utilities Commission (CPUC) for the 2025-2027 period [4] - EPS from the Electric segment was 7 cents, up 2 cents from the previous year, due to revenue increases from electric rate hikes implemented in 2025 following CPUC decisions [5] - EPS from the Contracted Services segment remained flat at 13 cents year over year, while AWR (Parent) reported a loss of 2 cents per share, an improvement from a loss of 3 cents in the year-ago quarter [5] Financial Position - As of March 31, 2025, AWR's cash and cash equivalents were $21.2 million, down from $26.7 million as of December 31, 2024 [6] - Long-term debt increased to $690.2 million from $640.4 million as of December 31, 2024 [6] - Cash provided by operating activities in Q1 2025 totaled $45.1 million, slightly down from $45.8 million in the year-ago quarter [6] Market Position - AWR currently holds a Zacks Rank of 4 (Sell), indicating a less favorable market position compared to other stocks [7]

Core Viewpoint - American States Water (AWR) reported quarterly earnings of $0.70 per share, matching the Zacks Consensus Estimate and showing an increase from $0.62 per share a year ago [1] - The company also posted revenues of $148.01 million for the quarter, exceeding the Zacks Consensus Estimate by 4.24% and up from $135.25 million year-over-year [2] Financial Performance - Earnings per share (EPS) for the last quarter were $0.70, consistent with estimates, and the company has surpassed consensus EPS estimates two times in the last four quarters [1] - Revenues for the quarter were $148.01 million, surpassing expectations and marking a year-over-year increase [2] - The current consensus EPS estimate for the upcoming quarter is $0.91, with projected revenues of $169 million, and for the current fiscal year, the estimate is $3.28 on $621 million in revenues [7] Market Performance - American States Water shares have increased by approximately 3.9% since the beginning of the year, contrasting with a decline of -4.7% in the S&P 500 [3] - The company's stock is currently rated Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions [6] Industry Outlook - The Utility - Water Supply industry is currently ranked in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - For the first quarter of 2025, American States Water Company reported diluted earnings per share of $0.70, an increase of $0.08 or 13% compared to $0.62 in the same period of 2024[2][6]. - Net income for Q1 2025 was $26,844,000, representing a 16.7% increase compared to $23,135,000 in Q1 2024[21]. - Basic earnings per common share rose to $0.70 in Q1 2025, up from $0.62 in Q1 2024, reflecting a 12.9% increase[21]. - Operating income for Q1 2025 was $45,546,000, a 16.8% increase from $38,974,000 in Q1 2024[21]. - Total operating revenues for Q1 2025 increased to $148,013,000, up 9.8% from $135,251,000 in Q1 2024[21]. Revenue Contributions - The water utility segment contributed $0.52 per share, up from $0.48 per share in the prior year, primarily due to new water rates approved by the California Public Utilities Commission (CPUC) for 2025-2027[5][6]. - The electric utility segment saw an increase in diluted earnings of $0.02 per share, attributed to new electric rates implemented retroactively to January 1, 2023, which supported revenue growth despite higher operating costs[9][6]. - The first quarter of 2025 saw an increase in water operating revenues of $11.7 million, largely due to the new rate increases effective January 1, 2025[10]. Dividends and Shareholder Returns - The company declared a second quarter dividend of $0.4655 per share, continuing a 70-year history of annual dividend increases[13]. - Dividends paid per common share increased to $0.4655 in Q1 2025, compared to $0.4300 in Q1 2024, reflecting an 8.0% increase[21]. Capital Investments and Financial Position - The company received CPUC authorization for nearly $650 million in capital investments related to its regulated utilities' general rate cases[6]. - Total assets increased to $2,545,453,000 as of March 31, 2025, compared to $2,500,209,000 at the end of 2024, marking a growth of 1.8%[21]. - Current liabilities rose to $294,296,000 in Q1 2025, up from $285,525,000 in Q4 2024, indicating a 3.0% increase[21]. Operating Expenses and Interest - Total operating expenses for Q1 2025 were $102,467,000, up from $96,277,000 in Q1 2024, representing a 6.5% increase[21]. - Interest expense decreased to $12,082,000 in Q1 2025 from $12,855,000 in Q1 2024, a reduction of 6.0%[21]. Share Issuance - The company has sold 1,479,767 Common Shares through its at-the-market offering program, which has a gross offering price of up to $200 million[10]. Future Outlook - AWR's contracted services business is projected to contribute between $0.59 and $0.63 per share for the full year 2025[6][11]. - AWR's transition to a modified rate adjustment mechanism (M-WRAM) may lead to future revenue volatility due to fluctuations in water consumption[5][10]. - AWR's diluted losses from the parent company decreased by $0.01 per share due to lower interest expenses from reduced borrowing levels[12].