American States Water Company (AWR, Financial) filed Quarterly Report for the period ended 2009-03-31.
American States is a public utility company engaged principally in thepurchase production distribution and sale of water. The company alsodistributes electricity in some communities. In the customer service areas for both water and electric rates and operations are subject to the jurisdiction of the California Public Utilities Commission. American States Water Company has a market cap of $588.1 million; its shares were traded at around $33.96 with a P/E ratio of 20.8 and P/S ratio of 1.8. The dividend yield of American States Water Company stocks is 2.9%. American States Water Company had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated American States Water Company the business predictability rank of 5-star.
For three months ended March 31, 2009, net income was $4.9 million compared to $5.3 million in the same period of 2008, a decrease of 7.0%. Diluted earnings per share for the three months ended March 31, 2009 were $0.28 compared to $0.30 in the same period of 2008. The decrease in earnings is due primarily to: (i) a $2.8 million pretax unrealized gain on purchased power contracts, or $0.10 per share, for the three months ended March 31, 2008 with no corresponding entry in 2009, as more fully discussed below; and (ii) higher operating expenses at GSWC of $2.5 million, or $0.08 per share. These decreases to earnings were partially offset by: (i) an increase of $0.03 per share in the dollar water margin due to higher customer rates approved by the CPUC and effective January 1, 2009; (ii) the improved financial performance of the Military Utility Privatization Subsidiaries resulting in an increase in ASUS pretax operating income of $1.6 million, or $0.05 per share, during the three months ended
In 2009, the CPUC issued a proposed decision approving the new purchase power contract and authorizing GSWC to establish the memorandum account to track unrealized gains and losses on the new contract throughout the term of the contract. Accordingly, during the three months ended March 31, 2009, there was an $8.4 million unrealized loss which has been included in the memorandum account therefore not impacting GSWCs earnings. There was a $2.8 million pretax unrealized gain on purchased power contracts included in earnings for the three months ended March 31, 2008. Diluted earnings for the three months ended March 31, 2008 were $0.30 per share. Eliminating the effects of the unrealized derivative gains, adjusted diluted earnings per share for the three months ended March 31, 2008 would have decreased by $0.10 per share to $0.20 per share compared to recorded diluted earnings per share of $0.28 for the three months ended March 31, 2009, which did not contain any unrealized gains or losses on purchased power contracts in earnings.
Water - Pretax operating income for water decreased by 6.4% due to higher operating expenses of $1.5 million, as more fully described later. Higher operating expenses were partially offset by an increase in the dollar water margin of $755,000. Higher water rates approved by the CPUC effective January 1, 2009 increased water revenues by $1.8 million, partially offset by a 3.5% decrease in actual consumption, or $1.0 million, when compared to the first quarter of 2008, mostly due to the continued effects of statewide customer conservation efforts. However, as a result of the implementation of a Water Revenue Adjustment Mechanism (WRAM) account for Regions II and Region III in late November of 2008, GSWC recorded $3.7 million in additional revenues in the WRAM account to adjust the first quarter 2009 revenues to consumption levels approved by the CPUC.
Electric For the three months ended March 31, 2009, pretax operating income from electric operations decreased by $4.0 million due in large part to a decrease of $2.8 million in the pretax unrealized gain on purchased power contracts. The unrealized gain on purchased power contracts increased operating income by approximately $2.8 million during the first quarter of 2008, or $0.10 per share, with no corresponding gain in 2009. As previously discussed, the purchased power contract that resulted in unrealized gains and losses to BVES earnings terminated at December 31, 2008. The remainder of the decrease in pretax operating income was due to an increase in operating expenses including higher outside consulting and legal costs related to the general rate case, as well as an increase in the allocation of costs from the corporate headquarters to BVES pursuant to CPUC requirements.
Contracted Services - For the three months ended March 31, 2009, pretax operating income for contracted services increased by $1.6 million, or $0.05 per share. This was primarily due to an increase in new construction projects at Fort Bliss and the TRADOC bases. Pretax operating income increased $1.6 million at these bases. Earnings and cash flows from amendments and modifications to the original 50-year contracts with the U.S. government are sporadic and may or may not continue in the future periods. There was also an increase of approximately $338,000 to pretax operating income related to TUS and ASUS corporate office resulting from lower legal and consulting fees. Partially offsetting these increases were continued losses incurred at military bases under the PSUS and ONUS contracts. ASUS began operating and maintaining the water and wastewater systems under these contracts in North Carolina and South Carolina in March and January of 2008, respectively. Pretax operating losses at these two bases increased by $319,000 due to increased maintenance expenses at both bases coupled with the fact that expenses for ONUS in 2009 reflect a full quarter whereas in 2008 it reflected only one month. In September 2008, PSUS submitted a Request for Equitable Adjustment (REA) for the water and wastewater systems at Fort Jackson, South Carolina requesting a contract modification for initial capital upgrades and emergency construction costs incurred during 2008 due to pre-existing conditions that were not anticipated at the time the contract was executed. The aggregate value of the REA relating to construction work is approximately $1.6 million. The REA has not yet been approved by the U.S. government.
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American States is a public utility company engaged principally in thepurchase production distribution and sale of water. The company alsodistributes electricity in some communities. In the customer service areas for both water and electric rates and operations are subject to the jurisdiction of the California Public Utilities Commission. American States Water Company has a market cap of $588.1 million; its shares were traded at around $33.96 with a P/E ratio of 20.8 and P/S ratio of 1.8. The dividend yield of American States Water Company stocks is 2.9%. American States Water Company had an annual average earning growth of 5.4% over the past 10 years. GuruFocus rated American States Water Company the business predictability rank of 5-star.
Highlight of Business Operations:
Registrant plans to continue to seek additional rate increases in future years to recover operating and supply costs and receive reasonable returns on invested capital. Capital expenditures in future years are expected to remain at much higher levels than depreciation expense. Cash solely from operations is not expected to be sufficient to fund Registrants needs for capital expenditures, dividends, investments in Registrants contract business and other cash requirements. Registrant expects to fund a portion of these needs through common stock offerings over the next twelve months depending on market conditions. On August 25, 2008, AWR amended its $85 million syndicated credit facility, to increase its aggregate bank commitments by $30 million to $115 million. In addition, GSWC issued a senior note in the amount of $40.0 million on March 10, 2009, to CoBank, ACB (CoBank). The proceeds are being used to pay down GSWCs intercompany short-term borrowings and to fund capital expenditures.For three months ended March 31, 2009, net income was $4.9 million compared to $5.3 million in the same period of 2008, a decrease of 7.0%. Diluted earnings per share for the three months ended March 31, 2009 were $0.28 compared to $0.30 in the same period of 2008. The decrease in earnings is due primarily to: (i) a $2.8 million pretax unrealized gain on purchased power contracts, or $0.10 per share, for the three months ended March 31, 2008 with no corresponding entry in 2009, as more fully discussed below; and (ii) higher operating expenses at GSWC of $2.5 million, or $0.08 per share. These decreases to earnings were partially offset by: (i) an increase of $0.03 per share in the dollar water margin due to higher customer rates approved by the CPUC and effective January 1, 2009; (ii) the improved financial performance of the Military Utility Privatization Subsidiaries resulting in an increase in ASUS pretax operating income of $1.6 million, or $0.05 per share, during the three months ended
In 2009, the CPUC issued a proposed decision approving the new purchase power contract and authorizing GSWC to establish the memorandum account to track unrealized gains and losses on the new contract throughout the term of the contract. Accordingly, during the three months ended March 31, 2009, there was an $8.4 million unrealized loss which has been included in the memorandum account therefore not impacting GSWCs earnings. There was a $2.8 million pretax unrealized gain on purchased power contracts included in earnings for the three months ended March 31, 2008. Diluted earnings for the three months ended March 31, 2008 were $0.30 per share. Eliminating the effects of the unrealized derivative gains, adjusted diluted earnings per share for the three months ended March 31, 2008 would have decreased by $0.10 per share to $0.20 per share compared to recorded diluted earnings per share of $0.28 for the three months ended March 31, 2009, which did not contain any unrealized gains or losses on purchased power contracts in earnings.
Water - Pretax operating income for water decreased by 6.4% due to higher operating expenses of $1.5 million, as more fully described later. Higher operating expenses were partially offset by an increase in the dollar water margin of $755,000. Higher water rates approved by the CPUC effective January 1, 2009 increased water revenues by $1.8 million, partially offset by a 3.5% decrease in actual consumption, or $1.0 million, when compared to the first quarter of 2008, mostly due to the continued effects of statewide customer conservation efforts. However, as a result of the implementation of a Water Revenue Adjustment Mechanism (WRAM) account for Regions II and Region III in late November of 2008, GSWC recorded $3.7 million in additional revenues in the WRAM account to adjust the first quarter 2009 revenues to consumption levels approved by the CPUC.
Electric For the three months ended March 31, 2009, pretax operating income from electric operations decreased by $4.0 million due in large part to a decrease of $2.8 million in the pretax unrealized gain on purchased power contracts. The unrealized gain on purchased power contracts increased operating income by approximately $2.8 million during the first quarter of 2008, or $0.10 per share, with no corresponding gain in 2009. As previously discussed, the purchased power contract that resulted in unrealized gains and losses to BVES earnings terminated at December 31, 2008. The remainder of the decrease in pretax operating income was due to an increase in operating expenses including higher outside consulting and legal costs related to the general rate case, as well as an increase in the allocation of costs from the corporate headquarters to BVES pursuant to CPUC requirements.
Contracted Services - For the three months ended March 31, 2009, pretax operating income for contracted services increased by $1.6 million, or $0.05 per share. This was primarily due to an increase in new construction projects at Fort Bliss and the TRADOC bases. Pretax operating income increased $1.6 million at these bases. Earnings and cash flows from amendments and modifications to the original 50-year contracts with the U.S. government are sporadic and may or may not continue in the future periods. There was also an increase of approximately $338,000 to pretax operating income related to TUS and ASUS corporate office resulting from lower legal and consulting fees. Partially offsetting these increases were continued losses incurred at military bases under the PSUS and ONUS contracts. ASUS began operating and maintaining the water and wastewater systems under these contracts in North Carolina and South Carolina in March and January of 2008, respectively. Pretax operating losses at these two bases increased by $319,000 due to increased maintenance expenses at both bases coupled with the fact that expenses for ONUS in 2009 reflect a full quarter whereas in 2008 it reflected only one month. In September 2008, PSUS submitted a Request for Equitable Adjustment (REA) for the water and wastewater systems at Fort Jackson, South Carolina requesting a contract modification for initial capital upgrades and emergency construction costs incurred during 2008 due to pre-existing conditions that were not anticipated at the time the contract was executed. The aggregate value of the REA relating to construction work is approximately $1.6 million. The REA has not yet been approved by the U.S. government.
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