American States Water Company Q3 FY2025 earnings call

• Recorded earnings per share for the third quarter were $0.11 per share higher than the third quarter of last year, with the favorable variance due to CPUC decisions on rate cases and higher earnings from ASUS. • Regulated utilities are on pace to invest a combined $180 million to $210 million in infrastructure investments this year. • Water utility received CPUC approval to provide water services at a new planned community with first development expected to serve up to 3,800 customer connections in the next 5 years. • ASUS was awarded $28.7 million in new capital upgrade construction projects during the 9 months ended September 30 and continues to enter into U.S. government awarded contract modifications. • Recognized on Times America's Best Midsize Companies 2025 list and Barron's 100 Most Sustainable Companies for 2025, reflecting strategic growth plans and sustainability focus.

The water segment saw revenues increase by $8.3 million in the third quarter, largely due to the final decision in Golden State Water's general rate case with new rates effective January 1, 2025. The electric segment's revenues rose by $4.3 million, mainly because of new 2025 electric rates compared to 2022 rates. Revenues from ASUS increased by $8.4 million, primarily due to higher construction activity during the quarter. Recorded earnings per share for the third quarter were $0.11 per share higher than the third quarter of last year, an increase of 11.6%. Year-to-date September 30 earnings were $2.63 per share, $0.21 per share higher than last year or 8.7%.

• ASUS is projected to contribute $0.59 to $0.63 per share in 2025, representing an increase of 7.3% to 14.5% year-over-year. • For 2026, ASUS is projected to contribute $0.63 to $0.67 per share. • The company has a policy to achieve a compound annual growth rate in the dividend of more than 7% over the long term, with the quarterly dividend rate having grown at a CAGR of 8.5% over the last 5 years.

• The company may be subject to future volatility in revenues and earnings as a result of fluctuations in water consumption by its customers and changes in water supply source mix due to the transition from certain rate adjustment mechanisms. • Settlement agreements for projects like Bear Valley Electric's solar and battery storage facilities are pending CPUC approval, which could impact the timing and cost recovery in customer rates. • Project delays in construction activities, such as those at ASUS or in new community water and wastewater system acquisitions, could affect earnings and growth projections.

Q: Congrats on the good quarter. Curious on ASUS, timing of incremental contract and EPS impact.

A: New capital upgrades are an important part of performance with nearly $29 million in new contracts in the year, but 2026 may have no new contract due to transition period.

Q: On new customer connection growth and rate base translation.

A: New customers come through incremental acquisition approach with infrastructure acquisition, but figuring out customer addition timing is challenging.

Q: Thoughts on M&A for growth.

A: Noted merger between American Water and Essential Utilities won't impact strategic direction, but open to good deals in regulatory framework neutral to positive areas.

Q: On rate base growth vs CapEx.

A: There are advice letter projects from prior rate cases and new ones that will be added to rate base starting next year, and actual spending is as per amount with new rates to cover spending so far