American States Water Company (AWR, Financial) filed Quarterly Report for the period ended 2012-09-30.
American States Water Co has a market cap of $831.6 million; its shares were traded at around $45.58 with a P/E ratio of 17.6 and P/S ratio of 2. The dividend yield of American States Water Co stocks is 3.2%. American States Water Co had an annual average earning growth of 5.6% over the past 10 years. GuruFocus rated American States Water Co the business predictability rank of 3.5-star.
For the three months ended September 30, 2012, 39.2% of GSWCs water supply mix was purchased as compared to 36.8% purchased for the three months ended September 30, 2011. However, as noted above, the implementation of the MCBA for GSWCs water regions eliminates the effects of changes in the water supply mix on earnings. The overall adopted percentages of purchased water for the three months ended September 30, 2012 was approximately 43.8% as compared to the overall actual purchased water of 39.2% as stated above. The overall water margin percent was 69.9% in the third quarter of 2012 as compared to 69.3% in the same period of 2011.
Revenues from contracted services are composed of construction revenues (including renewals and replacements) and management fees for operating and maintaining the water and/or wastewater systems at military bases. For the nine months ended September 30, 2012, revenues from contracted services increased by $26.7 million, or 42.6%, to $89.3 million as compared to $62.6 million for the nine months ended September 30, 2011 primarily due to an increase in construction activities particularly at Fort Bragg in North Carolina, Andrews Air Force Base in Maryland and the military bases in Virginia. At Fort Bragg, there is a major water and wastewater pipeline replacement project estimated to be substantially completed by the end of 2013. The increase in construction activities was partially offset by a $2.9 million increase in revenues recorded during the second quarter of 2011 due to a change in estimated costs related to the pipeline project at Fort Bragg. Contracted services continues to receive contract modifications from the U.S. government and agreements with third-party prime contractors for new construction projects at the Military Utility Privatization Subsidiaries. The majority of new construction activity is expected to be performed during the next twelve months. Earnings and cash flows from amendments and modifications to the original 50-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue in future periods.
For the nine months ended September 30, 2012, 35.5% of GSWCs water supply mix was purchased as compared to 35.2% purchased for the nine months ended September 30, 2011. However, GSWC implemented the MCBA for all its water regions which eliminates the effects of changes in the water supply mix on earnings. The overall adopted percentages of purchased water for the nine months ended September 30, 2012 was approximately 42.1% as compared to overall actual purchased water of 35.5%. The difference in actual mix compared to the mix approved by the CPUC resulted in an over-collection in the MCBA account. The overall water margin percent was 71.7% for the nine months ended September 30, 2012 as compared to 71.3% in the same period of 2011.
On June 21, 2012, GSWC filed a motion to adopt a settlement agreement between GSWC, the DRA, and The Utility Reform Network (TURN) in connection with the water General Rate Case (GRC) filing made in July 2011. The proposed settlement, if approved by the CPUC, resolves almost all of the issues in the GRC application and would generate approximately $9.9 million in additional annual revenues starting in 2013 as compared to 2012 adopted revenues. The proposed rate increases for 2014 over 2013 are $8.1 million or 3%, and the 2015 proposed rate increases over 2014 amount to $7.2 million, or 2%, subject to an earnings test and fluctuations in market indices. While the increase in 2013 revenues would be $9.9 million pursuant to the settlement agreement, the increase in the adopted water gross margin is approximately $13.4 million, or 6.2%, when compared to the 2012 adopted water gross margin.
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American States Water Co has a market cap of $831.6 million; its shares were traded at around $45.58 with a P/E ratio of 17.6 and P/S ratio of 2. The dividend yield of American States Water Co stocks is 3.2%. American States Water Co had an annual average earning growth of 5.6% over the past 10 years. GuruFocus rated American States Water Co the business predictability rank of 3.5-star.
Highlight of Business Operations:
For the nine months ended September 30, 2012, fully diluted earnings from GSWCs electric operations increased by $0.08 per share as compared to the same period in 2011, due primarily to: (i) the CPUCs approval of GSWCs application to recover $1.2 million, or $0.04 per share, in legal and outside service costs previously incurred in connection with our efforts to procure renewable energy resources; (ii) an increase in the electric gross margin of $1.1 million, or $0.03 per share; and (iii) a decrease in the effective income tax rate increasing earnings by approximately $0.02 per share. These increases were partially offset by an increase in other operating expenses (excluding the $1.2 million recovery of legal costs discussed above), which decreased earnings by $0.01 per share.For the three months ended September 30, 2012, 39.2% of GSWCs water supply mix was purchased as compared to 36.8% purchased for the three months ended September 30, 2011. However, as noted above, the implementation of the MCBA for GSWCs water regions eliminates the effects of changes in the water supply mix on earnings. The overall adopted percentages of purchased water for the three months ended September 30, 2012 was approximately 43.8% as compared to the overall actual purchased water of 39.2% as stated above. The overall water margin percent was 69.9% in the third quarter of 2012 as compared to 69.3% in the same period of 2011.
Revenues from contracted services are composed of construction revenues (including renewals and replacements) and management fees for operating and maintaining the water and/or wastewater systems at military bases. For the nine months ended September 30, 2012, revenues from contracted services increased by $26.7 million, or 42.6%, to $89.3 million as compared to $62.6 million for the nine months ended September 30, 2011 primarily due to an increase in construction activities particularly at Fort Bragg in North Carolina, Andrews Air Force Base in Maryland and the military bases in Virginia. At Fort Bragg, there is a major water and wastewater pipeline replacement project estimated to be substantially completed by the end of 2013. The increase in construction activities was partially offset by a $2.9 million increase in revenues recorded during the second quarter of 2011 due to a change in estimated costs related to the pipeline project at Fort Bragg. Contracted services continues to receive contract modifications from the U.S. government and agreements with third-party prime contractors for new construction projects at the Military Utility Privatization Subsidiaries. The majority of new construction activity is expected to be performed during the next twelve months. Earnings and cash flows from amendments and modifications to the original 50-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue in future periods.
For the nine months ended September 30, 2012, 35.5% of GSWCs water supply mix was purchased as compared to 35.2% purchased for the nine months ended September 30, 2011. However, GSWC implemented the MCBA for all its water regions which eliminates the effects of changes in the water supply mix on earnings. The overall adopted percentages of purchased water for the nine months ended September 30, 2012 was approximately 42.1% as compared to overall actual purchased water of 35.5%. The difference in actual mix compared to the mix approved by the CPUC resulted in an over-collection in the MCBA account. The overall water margin percent was 71.7% for the nine months ended September 30, 2012 as compared to 71.3% in the same period of 2011.
On June 21, 2012, GSWC filed a motion to adopt a settlement agreement between GSWC, the DRA, and The Utility Reform Network (TURN) in connection with the water General Rate Case (GRC) filing made in July 2011. The proposed settlement, if approved by the CPUC, resolves almost all of the issues in the GRC application and would generate approximately $9.9 million in additional annual revenues starting in 2013 as compared to 2012 adopted revenues. The proposed rate increases for 2014 over 2013 are $8.1 million or 3%, and the 2015 proposed rate increases over 2014 amount to $7.2 million, or 2%, subject to an earnings test and fluctuations in market indices. While the increase in 2013 revenues would be $9.9 million pursuant to the settlement agreement, the increase in the adopted water gross margin is approximately $13.4 million, or 6.2%, when compared to the 2012 adopted water gross margin.
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