On May 7, 2024, American States Water Co (AWR, Financial) disclosed its first quarter financial results through an 8-K filing, reporting a consistent earnings per share (EPS) of $0.62, which aligns with analyst estimates. This performance marks a significant shift from the previous year's first quarter EPS of $0.93, primarily due to non-recurring rate adjustments in 2023.
Company Overview
Based in California, American States Water Co operates through its subsidiaries in various segments including water, electric, and contracted services. The company’s primary operations are managed through Golden State Water Company and Bear Valley Electric Service, Inc., focusing on water and electric services respectively. Additionally, American States Utility Services caters to military installations, providing essential utility services.
Performance Breakdown by Segment
The water segment reported a decrease in EPS from $0.74 in Q1 2023 to $0.48 in Q1 2024, attributed to the lapse of prior year's rate adjustments. However, adjusted for these factors, the water segment saw a 17.1% increase in adjusted EPS, driven by rate increases and higher water supply costs passed through to customers. The electric segment slightly declined by $0.01 per share due to pending rate case decisions, while the contracted services segment saw a $0.02 drop per share, affected by lower construction activity and increased operating expenses.
Financial Highlights and Challenges
The total operating revenues for Q1 2024 were reported at $135.251 million, a decrease from $161.423 million in the same quarter the previous year. This decline was largely due to the high base effect of the previous year's rate adjustments. The company also faced increased operating expenses across segments, which include higher labor costs, administrative expenses, and interest expenses due to rising interest rates.
Strategic Developments and Outlook
In April 2024, AWR's contracted services subsidiary began operations at two new military bases, which is expected to contribute positively to future earnings. The company continues to focus on strategic growth areas, including the expansion of services under long-term contracts with the U.S. government.
Dividend Consistency and Growth
AWR announced a quarterly dividend of $0.43 per share, maintaining its historical practice of dividend growth, which has seen an annual increase for 69 consecutive years. This reflects the company's strong commitment to delivering shareholder value and its confidence in long-term financial stability.
Conclusion
While American States Water Co faces challenges such as regulatory delays and increased costs, its consistent dividend growth and strategic expansions provide a balanced outlook for long-term investors. The alignment of Q1 earnings with analyst expectations, despite the backdrop of operational adjustments, showcases the company's resilience and adaptability in a dynamic market environment.
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Explore the complete 8-K earnings release (here) from American States Water Co for further details.
