American States Water Company Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Regulatory Activity: In January, CPUC issued final decisions on water and electric general rate cases. Upcoming: Gearing up to file next electric rate case in early 2026 and next water rate case in July 2026. Golden State Water supports Senate Bill 473 aiming for mandatory revenue decoupling.
• ASUS: Plans to catch up on construction during the second half of the year, still expecting to contribute $0.59 to $0.63 per share for the year.
• Dividends: Board approved an 8.3% dividend increase, with the company having paid dividends annually since 1931 for 71 consecutive years.
• Infrastructure Investments: Regulated utilities on pace to invest $170 million to $210 million in infrastructure this year. Golden State Water completed a transaction with a developer for a new community's water and wastewater system assets.

Segment Performance:

• Water utility (Golden State Water): Reported earnings of $0.73 per share in Q2 2025, an increase from $0.67 per share in Q2 2024. This was largely due to new 2025 water rates and higher investment gains, partially offset by higher operating expenses. Revenue for the water segment increased by $9.3 million due to new 2025 water rates.
• Electric segment: Earnings were $0.03 per share in Q2 2025, up from $0.01 per share in Q2 2024. The increase was primarily due to receiving the final CPUC decision on the electric general rate case with new 2025 electric rates. Revenue for the electric segment increased by $4.2 million.
• ASUS: Earnings were $0.13 per share in Q2 2025, down from $0.19 per share in Q2 2024. This was due to timing of construction activity. Revenue from ASUS decreased by $5.8 million primarily due to lower construction activities during the quarter.

Guidance:

• ASUS is expected to contribute $0.59 to $0.63 per share for the year.
• Anticipate more construction activity in the fourth quarter than the third quarter.
• Cautious optimism regarding Senate Bill 473 moving through the legislative process.

Risks:

• Potential future volatility in revenues and earnings due to fluctuations in water consumption and supply source mix if full revenue decoupling isn't maintained.
• Uncertainty around the outcome of Senate Bill 473 as it progresses through the legislative process.

Q: Just a quick one in terms of sculpting our estimates for the remainder of the year. An we can see that you reiterated the ASUS guidance for the year. Just curious if you are seeing more construction activity pacing towards the third quarter? Or is that later in the year, pickup in 4Q, just so we can kind of rightsize our quarterly estimates there?

A: Well, it's -- we'll see in both the third and the fourth quarter. My guess is we'll probably see more in the fourth than the third, but it's really sort of a guess at this point. We're depending on other folks permitting, et cetera, and it's how quickly we can get through those processes. But we're pretty confident on the $0.59 to $0.63.

Q: And then just on the decoupling legislation. It seems like it's moving through the legislature pretty nicely so far. Obviously, got some robust debate in the committee at this point. But can you just talk us through kind of your confidence level of getting something done on that front? And then just -- apologies if you already mentioned it, but just the process or time line as the bill is currently written to effectuate that into your rate construct?

A: Yes. So Ian, it's pretty difficult thing to handicap here in California. We think we have -- there's a lot of great arguments on our side as to why we should get full decoupling. And probably the biggest one is the electric utilities have it. Why is it good for the electrics and not for water. But not to mention what it does for ability to put tiered rates in and make rates more affordable to low-income customers. We just -- we're cautiously optimistic, I would say. We've done very well to get it this far. And again, I don't want to handicap whether it's going to go through or not because I'm no political scientist, to be honest, just -- we'll just have to watch it carefully. What are you hearing from the other companies Ian?