[Second Quarter 2025 Results Highlights](index=1&type=section&id=Second%20Quarter%202025%20Results%20Highlights) The company reported increased Q2 2025 diluted EPS, driven by utility segments, and announced an **8.3%** dividend increase [Consolidated Diluted Earnings Per Share](index=1&type=section&id=1.1%20Consolidated%20Diluted%20Earnings%20Per%20Share) Consolidated diluted EPS rose to **$0.87** in Q2 2025, primarily from utility segments, partially offset by contracted services | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------ | :------ | :------ | :----- | | Consolidated Diluted EPS | $0.87 | $0.85 | +$0.02 | - Increase in diluted EPS primarily generated from higher earnings at the water and electric utility segments, partially offset by timing differences in construction activities that resulted in lower earnings at the contracted services segment[2](index=2&type=chunk) [Key Company Updates](index=1&type=section&id=1.2%20Key%20Company%20Updates) AWR increased its dividend by **8.3%** for the 71st year, secured significant capital investments, and maintained strong credit ratings - Quarterly dividend increased **8.3%** with first payment on September 3, marking the **71st consecutive year** of annual dividend increases[3](index=3&type=chunk) - AWR's regulated utilities received CPUC decisions authorizing nearly **$650 million** in capital investments, with **$170 million to $210 million** targeted for spending in 2025[3](index=3&type=chunk) - AWR's regulated water utility completed a transaction to build, own, and operate water and wastewater system assets for a new planned community of **1,300 connections**[3](index=3&type=chunk) - Standard & Poor's affirmed strong credit ratings: **'A' for AWR** (stable outlook) and **'A+' for its regulated water utility** (stable outlook)[3](index=3&type=chunk) [Second Quarter 2025 Segment Performance Details](index=2&type=section&id=Second%20Quarter%202025%20Segment%20Performance%20Details) Water and Electric segments reported increased diluted EPS from new rates, while Contracted Services saw a decrease due to reduced construction [Water Segment](index=2&type=section&id=2.1%20Water%20Segment) Water Segment diluted EPS increased by **$0.06** to **$0.73** due to new rates, partially offset by higher costs and equity dilution | Metric | Q2 2025 EPS | Q2 2024 EPS | Change | | :------------------------------------ | :---------- | :---------- | :----- | | Water Segment Diluted EPS Contribution | $0.73 | $0.67 | +$0.06 | - Water operating revenues increased by **$9.3 million** due to CPUC-authorized new rate increases effective January 1, 2025[6](index=6&type=chunk) - Water supply costs increased by **$4.2 million**, largely due to higher per-unit costs, though a favorable source mix positively impacted earnings[6](index=6&type=chunk) - Overall operating expenses (excluding supply costs) increased by **$3.1 million**, driven by labor, benefits, chemicals, treatment, maintenance, depreciation, and property taxes[6](index=6&type=chunk) - Earnings were negatively impacted by approximately **$0.02 per share** due to dilutive effects from equity issuance under AWR's ATM offering program[7](index=7&type=chunk) [Electric Segment](index=3&type=section&id=2.2%20Electric%20Segment) Electric Segment diluted EPS increased by **$0.02** due to new rates supporting rate base growth and wildfire mitigation costs | Metric | Q2 2025 EPS | Q2 2024 EPS | Change | | :------------------------------------ | :---------- | :---------- | :----- | | Electric Segment Diluted EPS Contribution | $0.03 | $0.01 | +$0.02 | - Increase in revenues from new rates implemented in 2025, supporting rate base growth and higher operating costs for wildfire mitigation plans[8](index=8&type=chunk)[9](index=9&type=chunk) [Contracted Services Segment](index=3&type=section&id=2.3%20Contracted%20Services%20Segment) Contracted Services diluted EPS decreased by **$0.06** in Q2 2025 due to reduced construction, but expects **$0.59-$0.63** per share for the full year | Metric | Q2 2025 EPS | Q2 2024 EPS | Change | | :------------------------------------ | :---------- | :---------- | :----- | | Contracted Services Diluted EPS Contribution | $0.13 | $0.19 | -$0.06 | - Decrease in construction activity and higher overall operating expenses were partially offset by increased management fee revenues and lower interest expense[10](index=10&type=chunk) - Contracted services business is still expected to contribute **$0.59 to $0.63 per share** for the full 2025 year[10](index=10&type=chunk) [AWR (Parent)](index=3&type=section&id=2.4%20AWR%20(Parent)) AWR (parent company) diluted losses decreased by **$0.01 per share** in Q2 2025, driven by lower interest expense from reduced average rates | Metric | Q2 2025 EPS | Q2 2024 EPS | Change | | :------------------------------------ | :---------- | :---------- | :----- | | AWR (Parent) Diluted EPS Contribution | -$0.01 | -$0.02 | +$0.01 | - Decrease in interest expense resulting from lower average interest rates, partially offset by higher borrowing levels[11](index=11&type=chunk) [Year-to-Date 2025 Results](index=3&type=section&id=Year-to-Date%202025%20Results) Year-to-date consolidated diluted EPS increased by **$0.10** to **$1.57**, driven by regulated utilities despite contracted services decline [Consolidated YTD Performance](index=3&type=section&id=3.1%20Consolidated%20YTD%20Performance) Consolidated diluted EPS for YTD 2025 increased by **$0.10** to **$1.57**, driven by new utility rates, offset by contracted services and equity dilution | Metric | YTD 2025 | YTD 2024 | Change | | :------------------------------------ | :------- | :------- | :----- | | Consolidated Diluted EPS | $1.57 | $1.47 | +$0.10 | | Segment | YTD 2025 EPS | YTD 2024 EPS | Change | | :-------------------- | :----------- | :----------- | :----- | | Water | $1.25 | $1.15 | +$0.10 | | Electric | $0.10 | $0.06 | +$0.04 | | Contracted services | $0.26 | $0.32 | -$0.06 | | AWR (parent) | -$0.03 | -$0.06 | +$0.03 | - YTD consolidated results were negatively impacted by approximately **$0.05 per share** due to dilutive effects from equity issuance under AWR's ATM offering program[14](index=14&type=chunk) [Company Developments](index=4&type=section&id=Company%20Developments) GSWC acquired water and wastewater assets for a new community, and AWR increased its quarterly dividend by **8.3%** for the 71st year [Asset Acquisition](index=4&type=section&id=4.1%20Asset%20Acquisition) GSWC acquired water and wastewater assets for a new California community, valued at **$10.7 million**, serving up to **1,300 customers** - GSWC completed the acquisition of water and wastewater system assets for a new planned community, serving up to approximately **1,300 customers** by 2034[16](index=16&type=chunk) - CPUC approved the transaction, establishing rates for water and sewer services and allowing recovery of the purchase price through future customer rates[16](index=16&type=chunk) - Initial installation and conveyance of assets valued at **$10.7 million** was recorded as a non-cash transaction during Q2 2025, increasing GSWC's utility plant[16](index=16&type=chunk) [Dividends](index=4&type=section&id=4.2%20Dividends) AWR's Board approved an **8.3%** increase in quarterly dividend to **$0.5040 per share**, marking the **71st consecutive year** of increases | Metric | Q3 2025 Dividend | Q2 2025 Dividend | Increase | | :------------------------------------ | :--------------- | :--------------- | :------- | | Quarterly Dividend per Share | $0.5040 | $0.4655 | 8.3% | - AWR has increased annual dividends to shareholders for **71 consecutive years**[17](index=17&type=chunk) - AWR's current policy is to achieve a CAGR in the dividend of more than **7%** over the long-term[17](index=17&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) This section provides details on non-GAAP measures, forward-looking statements, conference call, company overview, and contact information [Non-GAAP Financial Measures](index=4&type=section&id=5.1%20Non-GAAP%20Financial%20Measures) The report includes diluted EPS by business segment as a non-GAAP measure, used internally for evaluation and supplementing GAAP disclosures - Diluted earnings per share by business segment is a non-GAAP financial measure used to evaluate operating results and segment performance[18](index=18&type=chunk)[19](index=19&type=chunk) - This non-GAAP measure supplements GAAP disclosures and should not be considered an alternative to GAAP measures[18](index=18&type=chunk) [Forward-Looking Statements](index=4&type=section&id=5.2%20Forward-Looking%20Statements) The document contains forward-looking statements subject to risks, with readers cautioned against undue reliance and no obligation for public updates - Press release contains forward-looking statements subject to estimates, assumptions, known and unknown risks, and uncertainties[20](index=20&type=chunk)[21](index=21&type=chunk) - Readers are cautioned not to place undue reliance on these statements, and the company does not undertake any obligation to publicly update or revise them, except as required by law[21](index=21&type=chunk) [Conference Call](index=5&type=section&id=5.3%20Conference%20Call) A conference call will be held on Thursday, August 7, 2025, at 2:00 p.m. ET, hosted by Robert Sprowls and Eva Tang, accessible via webcast - Conference call to discuss results on Thursday, August 7, 2025, at **2:00 p.m. Eastern Time**[22](index=22&type=chunk) - Hosted by Robert Sprowls (President & CEO) and Eva Tang (SVP & CFO), with a Q&A session, accessible via webcast at www.aswater.com[22](index=22&type=chunk) [About American States Water Company](index=5&type=section&id=5.4%20About%20American%20States%20Water%20Company) American States Water Company is a utility holding company serving over **one million people** in ten states through its water, electric, and contracted services subsidiaries - American States Water Company serves over **one million people** in ten states through its subsidiaries: Golden State Water Company, Bear Valley Electric Service, Inc., and American States Utility Services, Inc[23](index=23&type=chunk) - Golden State Water Company provides water service to approximately **265,000 customer connections** in over **80 California communities**[23](index=23&type=chunk) - Bear Valley Electric Service, Inc. distributes electricity to approximately **25,000 customer connections** in the City of Big Bear Lake and surrounding areas[23](index=23&type=chunk) - American States Utility Services, Inc. provides services for water/wastewater facilities on **twelve military bases** under 50-year contracts and one under a 15-year contract[23](index=23&type=chunk) [Contact Information](index=5&type=section&id=5.5%20Contact%20Information) Contact information for investor inquiries is provided for Eva G. Tang, SVP-Finance, CFO, Corporate Secretary and Treasurer - Contact: Eva G. Tang, Senior Vice President-Finance, Chief Financial Officer, Corporate Secretary and Treasurer, Telephone: (909) 394-3600, ext. 707[24](index=24&type=chunk) [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited comparative balance sheets, income statements, and non-GAAP financial measure reconciliations [Comparative Condensed Balance Sheets (Unaudited)](index=6&type=section&id=6.1%20Comparative%20Condensed%20Balance%20Sheets%20(Unaudited)) Total assets increased to **$2,610,534 thousand** as of June 30, 2025, driven by Net Property, Plant and Equipment and Capitalization | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total Assets | $2,610,534 | $2,500,209 | +$110,325 | | Net Property, Plant and Equipment | $2,193,581 | $2,099,625 | +$93,956 | | Capitalization | $1,762,003 | $1,560,433 | +$201,570 | | Current Liabilities | $162,075 | $285,525 | -$123,450 | [Condensed Statements of Income (Unaudited)](index=6&type=section&id=6.2%20Condensed%20Statements%20of%20Income%20(Unaudited)) Q2 2025 total operating revenues increased to **$163,066 thousand** and net income to **$33,690 thousand**, with similar YTD increases | Metric (in thousands) | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | | :-------------------- | :------ | :------ | :----- | :------- | :------- | :----- | | Total operating revenues | $163,066 | $155,328 | +$7,738 | $311,079 | $290,579 | +$20,500 | | Operating income | $50,959 | $51,748 | -$789 | $96,505 | $90,722 | +$5,783 | | Net Income | $33,690 | $31,864 | +$1,826 | $60,534 | $54,999 | +$5,535 | | Fully diluted EPS | $0.87 | $0.85 | +$0.02 | $1.57 | $1.47 | +$0.10 | | Dividends paid per Common Share | $0.4655 | $0.4300 | +$0.0355 | $0.9310 | $0.8600 | +$0.0710 | [Computation and Reconciliation of Non-GAAP Financial Measure (Unaudited)](index=7&type=section&id=6.3%20Computation%20and%20Reconciliation%20of%20Non-GAAP%20Financial%20Measure%20(Unaudited)) This section provides a detailed reconciliation of net income and diluted EPS by business segment for Q2 and YTD 2025 and 2024 | Segment (Q2) | Net Income (000s) Q2 2025 | Net Income (000s) Q2 2024 | Diluted EPS Q2 2025 | Diluted EPS Q2 2024 | | :------------------ | :------------------------ | :------------------------ | :------------------ | :------------------ | | Water | $28,140 | $25,195 | $0.73 | $0.67 | | Electric | $1,176 | $342 | $0.03 | $0.01 | | Contracted Services | $4,874 | $7,251 | $0.13 | $0.19 | | AWR (Parent) | $(500) | $(924) | $(0.01) | $(0.02) | | **Consolidated (GAAP)** | **$33,690** | **$31,864** | **$0.87** | **$0.85** | | Segment (YTD) | Net Income (000s) YTD 2025 | Net Income (000s) YTD 2024 | Diluted EPS YTD 2025 | Diluted EPS YTD 2024 | | :------------------ | :------------------------- | :------------------------- | :------------------- | :------------------- | | Water | $48,046 | $42,989 | $1.25 | $1.15 | | Electric | $3,802 | $2,084 | $0.10 | $0.06 | | Contracted Services | $9,998 | $12,025 | $0.26 | $0.32 | | AWR (Parent) | $(1,312) | $(2,099) | $(0.03) | $(0.06) | | **Consolidated (GAAP)** | **$60,534** | **$54,999** | **$1.57** | **$1.47** |

Part I Financial Information [Item 1: Financial Statements](index=7&type=section&id=Item%201%3A%20Financial%20Statements) The report presents unaudited consolidated financial statements for AWR and its subsidiary GSWC for the quarter ended June 30, 2025 [American States Water Company Financial Statements](index=8&type=section&id=American%20States%20Water%20Company%20Financial%20Statements) This section details the consolidated balance sheets, income statements, and cash flow statements for AWR for periods ended June 30, 2025 AWR Consolidated Income Statement Highlights (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $163,066 | $155,328 | $311,079 | $290,579 | | **Operating Income** | $50,959 | $51,748 | $96,505 | $90,722 | | **Net Income** | $33,690 | $31,864 | $60,534 | $54,999 | | **Fully Diluted EPS** | $0.87 | $0.85 | $1.57 | $1.47 | AWR Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $2,610,534 | $2,500,209 | | Net Property, Plant & Equipment | $2,193,581 | $2,099,625 | | **Total Liabilities** | $1,638,015 | $1,580,158 | | Long-term Debt | $789,484 | $640,382 | | **Total Common Shareholders' Equity** | $972,519 | $920,051 | AWR Consolidated Cash Flow Highlights - YTD (in thousands) | Cash Flow Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $109,636 | $70,515 | | **Net Cash from Investing Activities** | ($118,334) | ($108,897) | | **Net Cash from Financing Activities** | $2,284 | $27,892 | | **Net Change in Cash** | ($6,414) | ($10,490) | [Golden State Water Company Financial Statements](index=14&type=section&id=Golden%20State%20Water%20Company%20Financial%20Statements) This section details the balance sheets, income statements, and cash flow statements for GSWC for periods ended June 30, 2025 GSWC Income Statement Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $119,697 | $110,424 | $221,700 | $200,689 | | **Operating Income** | $42,557 | $40,565 | $77,353 | $69,732 | | **Net Income** | $28,140 | $25,195 | $48,046 | $42,989 | GSWC Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $2,230,570 | $2,131,981 | | Net Utility Plant | $1,994,354 | $1,911,369 | | **Total Liabilities** | $1,342,734 | $1,326,148 | | Long-term Debt | $704,879 | $605,547 | | **Total Common Shareholder's Equity** | $887,836 | $805,833 | [Notes to Consolidated Financial Statements](index=20&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section explains accounting policies and details key financial items like acquisitions, financing, and legal settlements - In May 2025, GSWC completed the acquisition of a new water and wastewater system, recording an initial non-cash transaction of **$10.7 million** in utility plant assets[53](index=53&type=chunk) - AWR's At-The-Market (ATM) offering program raised net proceeds of **$25.8 million** in the first six months of 2025, with approximately **$82.9 million** remaining available for sale under the program as of June 30, 2025[60](index=60&type=chunk) - In May 2025, GSWC issued **$100.0 million** in new long-term debt and received a **$50.0 million** equity contribution from AWR to pay down its revolving credit facility[59](index=59&type=chunk)[62](index=62&type=chunk) - GSWC will receive approximately **$19 million** (net of fees) from a 3M Company class action settlement related to PFAS contamination, with an initial **$12.5 million** recognized as a receivable in Q2 2025[84](index=84&type=chunk)[85](index=85&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, regulatory impacts, and capital resources [Overview and Regulatory Matters](index=38&type=section&id=Overview%20and%20Regulatory%20Matters) This section covers key performance factors and significant regulatory decisions impacting water and electric rates - GSWC's 2025-2027 General Rate Case (GRC) decision authorizes approximately **$573.1 million** in capital infrastructure investment over three years[136](index=136&type=chunk) - The GRC decision transitioned GSWC to a modified Monterey-style WRAM (M-WRAM), which will subject earnings to volatility from fluctuations in customer consumption and water supply costs[137](index=137&type=chunk)[139](index=139&type=chunk) - BVES's 2023-2026 GRC decision authorized approximately **$52.5 million** in capital infrastructure in base rates and an additional **$23.1 million** to be recovered through advice letters[141](index=141&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section analyzes financial performance by business segment for the three and six months ended June 30, 2025 Diluted EPS by Segment - Q2 | Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Water | $0.73 | $0.67 | $0.06 | | Electric | $0.03 | $0.01 | $0.02 | | Contracted services | $0.13 | $0.19 | ($0.06) | | AWR (parent) | ($0.01) | ($0.02) | $0.01 | | **Consolidated** | **$0.87** | **$0.85** | **$0.02** | Diluted EPS by Segment - YTD | Segment | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Water | $1.25 | $1.15 | $0.10 | | Electric | $0.10 | $0.06 | $0.04 | | Contracted services | $0.26 | $0.32 | ($0.06) | | AWR (parent) | ($0.03) | ($0.06) | $0.03 | | **Consolidated** | **$1.57** | **$1.47** | **$0.10** | - Water segment earnings increased due to new CPUC-authorized rates and a favorable water supply mix[149](index=149&type=chunk) - Electric segment earnings increased due to new rates from its GRC decision supporting rate base growth and higher wildfire mitigation costs[150](index=150&type=chunk)[151](index=151&type=chunk) - Contracted services earnings decreased due to the timing of construction activities, though the full-year 2025 EPS contribution is still expected to be between **$0.59 and $0.63**[152](index=152&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's capital-intensive funding through internal cash flows and external financing activities - AWR's At-The-Market (ATM) offering program has raised a total of **$115.3 million** through June 30, 2025, with **$82.9 million** remaining available for sale[233](index=233&type=chunk) - On July 29, 2025, AWR's Board approved an **8.3% increase** in the quarterly dividend to $0.5040 per share, targeting a long-term dividend CAGR of more than 7%[241](index=241&type=chunk)[299](index=299&type=chunk) - For 2025, company-funded capital expenditures for the regulated utilities are projected to be between **$170 million and $210 million**[247](index=247&type=chunk) - Net cash from operating activities increased to **$109.6 million** for YTD 2025 from $70.5 million in YTD 2024, due to the timing of cash receipts and postponed tax payments[245](index=245&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risks since the 2024 Annual Report - The company confirms no material changes to its market risk disclosures regarding interest rates and commodity prices from its 2024 Form 10-K[288](index=288&type=chunk) [Item 4: Controls and Procedures](index=66&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were adequate and effective as of the end of the fiscal quarter[289](index=289&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that materially affected the company's internal control over financial reporting[291](index=291&type=chunk) Part II Other Information [Item 1: Legal Proceedings](index=68&type=section&id=Item%201%3A%20Legal%20Proceedings) This section details developments in legal matters, primarily focusing on PFAS contamination lawsuit settlements - GSWC will receive approximately **$19 million** (net of fees) from a PFAS class action settlement with 3M Company, with an initial **$12.5 million** funded in Q2 2025[293](index=293&type=chunk) - GSWC and an ASUS subsidiary are plaintiffs in approved class action settlements with Dupont, Tyco Fire Products, and BASF Corp related to PFAS, but settlement amounts are not yet determined[294](index=294&type=chunk) [Item 1A: Risk Factors](index=68&type=section&id=Item%201A%3A%20Risk%20Factors) The company reports no significant changes to risk factors from its 2024 Annual Report - There have been no significant changes to the risk factors disclosed in the 2024 Form 10-K[296](index=296&type=chunk) [Item 2: Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details AWR's common share repurchases during Q2 2025 for employee and dividend plans AWR Common Share Repurchases - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 5,946 | $79.41 | | May 2025 | 6,858 | $77.98 | | June 2025 | 3,655 | $78.66 | | **Total** | **16,459** | **$78.65** | [Item 5: Other Information](index=69&type=section&id=Item%205%3A%20Other%20Information) This section discloses other corporate actions, including a dividend increase and director trading plan updates - On July 29, 2025, AWR's Board of Directors approved an **8.3% increase** in the third quarter dividend to $0.5040 per share, payable on September 3, 2025[299](index=299&type=chunk)

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]