American States Water pany(US:AWR)2020-02-25 21:15Financial Data and Key Metrics Changes - The company reported adjusted earnings per fully diluted share of $2.24 for 2019, a 30% increase over 2018 [7] - Consolidated earnings for Q4 2019 were $0.45 per share, compared to $0.37 per share for the same period in 2018 [11] - Consolidated revenues for Q4 increased by $2 million compared to the same period in 2018, with a total revenue increase of $5.3 million due to new rates approved [12] Business Line Data and Key Metrics Changes - Earnings from the water segment increased by $0.42 per share compared to 2018, primarily due to new rates approved by the CPUC [14] - Adjusted earnings from the electric segment were $0.04 per share higher than 2018, driven by new electric rates [15] - Diluted earnings from ASUS were $0.47 per share, up from $0.42 per share in 2018, attributed to operations at Fort Riley and increased maintenance fees [16] Market Data and Key Metrics Changes - The company achieved a total return of 31.2% for 2019, with 5-year and 10-year compound annual returns exceeding 20% [7] - The weighted average water rate base authorized by the CPUC grew from $717 million in 2017 to $916 million in 2020, reflecting a compound annual growth rate of 8.5% [23] Company Strategy and Development Direction - The company plans to invest $120 million to $135 million in capital projects in 2020, focusing on replacing and upgrading critical infrastructure [27] - The company is preparing its next water general rate case to be filed in July 2020 for new rates beginning in 2022 [21] - The company aims to maintain a stable capital structure with 57% equity for the foreseeable future [59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of each business segment and highlighted the importance of timely capital investments [6] - The company remains committed to community engagement and has exceeded requirements for hiring small businesses [10] - Management noted that the regulatory environment in California is constructive for their operations [27] Other Important Information - The company raised its dividend by nearly 11% in 2019, marking 65 consecutive years of annual dividend increases [7][26] - The company received a binding commitment to temporarily increase its credit facility capacity to $260 million [18] Q&A Session Summary Question: What needs to transpire for ASUS to deliver earnings at the high end of the range? - Management indicated that increased construction work at military bases could help achieve the higher end of the earnings range [30] Question: In what bases is the most activity being seen? - Management noted significant activity at larger bases such as Eglin Air Force Base, Fort Riley, Fort Bragg, and Fort Bliss [32] Question: What drove the gross margin higher in 2019 at Golden State Water Company? - Management explained that the gross margin increase was due to new rates and non-WRAM customers contributing to revenue [34][41] Question: What is the status of the cost of capital extension request? - Management stated that they have not received any data requests from the PAO regarding the request [47] Question: Can you explain the rationale behind temporarily increasing the credit facility capacity? - Management clarified that the temporary increase is to bridge the gap until long-term debt issuance is approved by the CPUC [52] Question: What is the timing for acquiring the solar project? - Management indicated a six-month construction timeframe once the project receives approval [56]