American States Water pany(US:AWR)2019-11-06 00:12Financial Data and Key Metrics Changes - Earnings per share (EPS) for Q3 2019 increased by 23% year-over-year, reaching $0.76 per diluted share, with adjusted earnings (excluding retroactive impacts) at $0.69 per share, an 11% increase from the previous year [4][5][7] - Consolidated revenue rose by $10.3 million, with water segment revenue increasing by $7.6 million to $95.2 million due to new water rates [8][9] - Net cash provided by operating activities for the first nine months of 2019 was $84.3 million, down from $108.4 million in the same period of 2018, primarily due to lower water customer usage [11][12] Business Line Data and Key Metrics Changes - Water segment earnings for Q3 2019 were $0.53 per share, up $0.06 from the same period in 2018, driven by the approval of the water general rate case [8] - Electric segment earnings increased by $0.01 per share, excluding the retroactive impact of the electric rate case, due to new electric rates [8] - Contracted services segment earnings decreased to $0.12 per share from $0.13 per share year-over-year, attributed to timing differences in construction work [8] Market Data and Key Metrics Changes - Water and electric supply costs for the quarter were $31.8 million, an increase of $3.3 million from the previous year [9] - The company expects potential additional water revenue increases of approximately $9.1 million in 2020 and $12 million in 2021, subject to earnings tests and inflation forecasts [13][14] Company Strategy and Development Direction - The company plans to invest $115 million to $125 million in capital expenditures for the year, which is about 3.5 times the expected annual depreciation expense [5][12] - The company is preparing to file its next general rate case in July 2020 for new rates starting in 2022, and is also involved in the proposal process for new military base contracts [14][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of earnings and the ability to control expenses, indicating a positive outlook for future earnings growth [45][51] - The company has a long-term dividend growth target of over 7% annually, reflecting confidence in its earnings sustainability [19][52] Other Important Information - The company amended its credit facility to temporarily increase borrowing capacity from $200 million to $225 million, with plans to issue long-term debt next year [12] - The company has paid dividends to shareholders every year since 1931, increasing dividends for 65 consecutive years [19] Q&A Session Summary Question: Insights on California regulatory environment and WRAM - Management reported a smooth resolution of the water rate case with no major issues, indicating a stable regulatory environment [22] Question: Earnings power and WRAM impact - Earnings fully reflect the WRAM in revenues, with a larger WRAM balance this year due to lower consumption [24][27] Question: ASUS guidance for 2020 - Guidance for ASUS earnings in 2020 is set at $0.46 to $0.50 per share, based on new capital upgrade work and operational efficiencies [32][34] Question: Construction expense line fluctuations - Management noted that construction revenues were spread more evenly throughout the year compared to previous years, leading to some lumpiness in quarterly results [39] Question: Expected ROE for GSWC - Management did not provide specific ROE figures but indicated that expense control has been better than expected [41][45] Question: Dividend growth target clarification - The 7% dividend growth target is a long-term goal and not tied to short-term increases [53]