American States Water Company Q2 FY2026 earnings call

• Overall Financial Performance

  • Reported Q2 2026 EPS of $1.09, a 25.3% (22 cent) increase from $0.87 in Q2 2025. Year-to-date (first half 2026) consolidated EPS is $1.86, up $0.29 from $1.57 in the first half of 2025. Consolidated revenue increased by $18.2 million year-over-year.
  • Net cash from operating activities totaled $116.6 million year-to-date 2026, up from $109.6 million year-to-date 2025, driven by new rates, approved surcharges, advice letter project revenue, and PFAS litigation proceeds.
  • Standard & Poor's affirmed strong credit ratings: A (stable outlook) for American States Water, and A- (stable outlook) for Golden State Water, among the highest ratings in the U.S. investor-owned water utility industry.

• Capital and Acquisition Activity

  • Regulated utilities are on track to invest $185 million to $220 million in water, wastewater, and electric infrastructure in full-year 2026; company-funded capital expenditures are projected to total $185 million to $200 million for full-year 2026, with $91.7 million invested in the first half of 2026.
  • The $200 million at-the-market (ATM) equity offering program, established in February 2024, was fully completed in June 2026 after raising $39.9 million in net proceeds in the first half of 2026. No additional equity issuance is planned through at least the end of 2029.
  • Golden State Water and Cal Advocates filed a joint settlement for approval of the acquisition of a water system serving ~900 customer connections in Norwalk, Los Angeles County; a proposed decision is expected in Q4 2026.

• Dividend

  • The board approved an 8.2% dividend increase, bringing the annualized dividend rate to $2.182 per share. This marks 72 consecutive years of annual dividend increases, and the company has paid dividends annually since 1931. The dividend increase aligns with the long-term target of over 7% compound annual dividend growth; the 5-year (Q3 2021 to Q3 2026) compound annual growth rate is 8.4%, and the 10-year compound annual growth rate through 2026 is on pace to hit 8.7%.

• Regulatory Updates

  • The 2025-2027 Golden State Water general rate case was approved in December 2025, with new rates effective January 1, 2026, delivering a $32 million net increase in 2026 operating revenue less water supply costs over 2025 levels, including $11 million from advice letter capital projects added to rate base. Golden State Water's average rate base grew at an 11.3% CAGR from $980.4 million in 2021 to $1.6732 billion in 2026.
  • Golden State Water filed a new general rate case for 2028-2030 in July 2026, requesting a $1 billion 3-year capital budget, reinstatement of full revenue decoupling and a full supply-cost balancing account, with a decision expected in Q4 2027. A required cost of capital application has been deferred to May 2027 (effective January 2028), leaving the current authorized 7.93% return on rate base in place through the end of 2027.
  • Bear Valley Electric filed a general rate case for 2027-2030 in January 2026, requesting a $133 million 4-year capital budget, an 11.30% return on equity, and a 9.15% return on rate base.
  • The company prioritizes customer bill affordability; most service areas meet CPUC affordability metrics, and mitigation measures are in place or proposed for the small number of service areas with affordability challenges.

• ASUS Operations

  • ASUS delivered strong Q2 growth driven by higher construction and resolved price adjustments; management projects full-year 2026 ASUS earnings contribution of $0.63 to $0.67 per share, and remains confident in its ability to win new military base contracts due to its industry expertise and strong government reputation.

American States Water Company operates three business segments, all of which delivered year-over-year earnings growth in Q2 2026:

1. Water segment (Golden State Water): Reported earnings of $0.91 per share, up $0.18 per share from $0.73 per share in Q2 2025. It generated $11.4 million of the $18.2 million total consolidated year-over-year revenue increase, accounting for 62.6% of the total revenue growth. Revenue growth was driven by new 2026 customer rates and additional revenue from approved 2025 advice letter capital projects.
2. Electric segment (Bear Valley Electric): Reported earnings of $0.04 per share, up $0.01 per share from $0.03 per share in Q2 2025. It generated $0.7 million of the total year-over-year consolidated revenue increase, accounting for 3.8% of total revenue growth. Revenue growth was driven by new 2026 rate increases, partially offset by higher operating and interest expenses.
3. ASUS (Contracted Services): Reported earnings of $0.16 per share, up $0.03 per share from $0.13 per share in Q2 2025. It generated $6.2 million of the total year-over-year consolidated revenue increase, accounting for 34.1% of total revenue growth. Revenue growth was driven by higher construction activity, increased management fee revenue from resolved economic price adjustments, and lower interest expenses, partially offset by higher operating expenses.

• Full-year 2026 company-funded capital expenditures for regulated utilities are maintained at a range of $185 million to $200 million, with total annual infrastructure investment guided between $185 million and $220 million.
• ASUS full-year 2026 earnings contribution is guided to a range of $0.63 to $0.67 per share.
• No upward or downward revision to the company's long-term 7%+ compound annual dividend growth target, which the company continues to meet or exceed.

• Favorable Q2 2026 conditions for the water segment (4% higher customer consumption, lower reliance on more expensive purchased water due to restored well operation) are not guaranteed to continue for the remainder of 2026, and their positive earnings impact may reverse.
• The CPUC-mandated modified revenue decoupling mechanism and incremental water supply cost balancing account create earnings volatility from fluctuations in customer consumption and water supply mix. Consumption can shift due to weather (including El Nino/La Nina events), climate change, and customer conservation efforts. Water supply mix can change unexpectedly due to groundwater quality issues, and changes in groundwater basin and pumping facility operating conditions, all of which can negatively impact net earnings.
• The proposed Norwalk water system acquisition is still pending CPUC approval, with no guarantee of final approval on the current timeline.

No questions were submitted by conference call participants during the Q&A session.