Q2 2026 American States Water Co Earnings Call Transcript
Key Points
- Reported strong Q2 2026 EPS of $1.09, a 25.3% increase year-over-year, driven by new customer rates and higher construction activities.
- Board approved an 8.2% dividend increase, marking 72 consecutive years of dividend growth, reflecting confidence in long-term sustainable earnings.
- Regulated utilities are on track to invest $185 million to $220 million in infrastructure, supporting rate base growth and future earnings.
- Successfully completed the at-the-market equity offering program, raising $200 million, with no plans for additional equity issuance through at least 2029.
- S&P affirmed strong credit ratings (A for American States Water, A+ for Golden State Water) with stable outlooks, among the highest in the industry.
- Filed new general rate cases for electric (2027-2030) and water (2028-2030), requesting significant capital budgets to support continued growth.
- ASUS segment performed well, with earnings up $0.03 per share year-over-year, and is projected to contribute $0.63-$0.67 per share in 2026.
- Uncertainty remains whether favorable Q2 conditions (4% higher water consumption and less purchased water) will continue, with potential for earnings reversal.
- Earnings face future volatility due to CPUC's modified revenue decoupling mechanism and incremental water supply cost balancing account.
- Higher water supply costs and increased interest expense (net of interest income) partially offset earnings growth in the quarter.
- Dilutive effect from share issuances under the at-the-market offering program reduced EPS by $0.02 per share in Q2.
- Operating expenses increased by $4.6 million year-over-year, largely due to higher ASUS construction expenses and overall cost increases.
- The cost of capital application deferral to 2027 leaves current authorized return on equity (10.06%) in place through 2027, but future adjustments are uncertain.
- Affordability challenges exist in a few smaller service areas, requiring measures to address concerns, which could impact rate recovery.
Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company conference call discussing the company's second quarter 2026 results. The call is being recorded. If you would like to listen to the replay of this call, it will begin this afternoon at 5:00 PM Eastern Time and run through August 13 on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website.
Presenting today from American States Water Company are Bob Sprowls, President and Chief Executive Officer; and Eva Tang, Senior Vice President of Finance and Chief Financial Officer.
As a reminder, certain matters discussed during this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees or assurances of any outcomes, financial results, levels of activity, performance or achievements, and listeners are cautioned not to place undue reliance upon them.
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