American States Water pany(AWR) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 45% increase in adjusted earnings per share, reaching $0.72 per diluted share compared to $0.44 per share in the same period last year [6][10] - Consolidated revenues increased by $17.7 million, driven by both the water and contracted services segments [12] - Year-to-date earnings per share for the first six months of 2019 were $1.07, a 47% increase from $0.73 for the same period last year [16] Business Line Data and Key Metrics Changes - The water segment's earnings per share were $0.59, with $0.08 attributed to the retroactive impact of the water rate case [10] - The electric segment's earnings for Q2 2019 were $0.01 per share, down from $0.02 per share in the previous year, primarily due to increased operating expenses [11] - The contracted services segment saw a $0.06 per share increase in earnings, attributed to the Fort Riley contract and increased management fees [12][22] Market Data and Key Metrics Changes - Water revenue for Q2 2019 increased by $11.4 million to $88.1 million due to new water rates, including $3.4 million related to the first three months of 2019 [12] - Electric revenue was slightly down pending a final decision on the electric rate case, with billed electric revenue based on 2017 rates [13] - Contracted services revenues increased by $6.8 million compared to the previous year, largely due to Fort Riley and increased construction activities [13] Company Strategy and Development Direction - The company plans to invest $115 million to $125 million in capital projects for 2019, which is about three times the expected annual depreciation expense [8][17] - The updated dividend policy targets a compounded annual growth rate in dividends of more than 7% over the long term, reflecting confidence in the sustainability of earnings [7][23] - The company is well-positioned to compete for new military base contracts due to strong relationships with the U.S. government and expertise in managing water and wastewater systems [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued earnings growth, supported by regulatory decisions and solid execution of business strategies [6][9] - The company anticipates a final decision on the electric rate case by the end of Q3 or Q4 2019, which could positively impact earnings [11][21] - Management highlighted the importance of the recent regulatory decisions in enhancing revenue and margin stability [18][19] Other Important Information - The company raised its dividend by 10.9%, reflecting confidence in future earnings and the ability to attract capital for necessary investments [7][23] - The company has paid dividends every year since 1931, increasing them for 65 consecutive years [23] Q&A Session Summary Question: Discussion on ASUS guidance and quarterly strength - Management noted that 2019 has seen more construction work in the first and second quarters compared to previous years, leading to a more levelized quarterly contribution [26][27] Question: Future dividend growth expectations - Management indicated that they are comfortable with a growth rate exceeding 7% and do not anticipate reducing dividends moving forward, reflecting a conservative approach [28][30]