American States Water Co Reports Solid Earnings Growth and Dividend Increase for Q4 and Full ...
Q4 Diluted EPS: Increased by 10% to $0.55 compared to $0.50 in Q4 2022.
Full Year Diluted EPS: Increased by $1.25 to $3.36 for 2023, with an adjusted increase of $0.41 per share.
Capital Expenditures: Regulated utilities invested a historic high of $175.7 million in 2023.
Dividend Growth: Quarterly dividend increased by 8.2% in 2023, marking a 9.4% CAGR over the last five years.
Water Segment Performance: Water segment's Q4 diluted EPS increased by $0.13 to $0.41, with an adjusted increase of $0.10 per share.
Regulatory Matters: A final decision by the CPUC in the cost of capital proceeding led to a lower cost of debt and an adjusted return on equity.
Financial Position: Total assets increased to $2.246 billion as of December 31, 2023, from $2.034 billion the previous year.
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On February 21, 2024, American States Water Co (NYSE:AWR) released its 8-K filing, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company reported a 10% increase in consolidated diluted earnings per share (EPS) for the fourth quarter, rising from $0.50 in Q4 2022 to $0.55 in Q4 2023. For the full year, AWR reported a significant increase in consolidated diluted EPS from $2.11 in 2022 to $3.36 in 2023, which includes a $1.25 per share increase as reported and a $0.41 per share increase when adjusted for specific items.
Company Overview
AWR is a water and utilities holding company based in California, operating through its subsidiaries in various segments including water, electric, and contracted services. The company's water and electric operations are conducted through Golden State Water Company (GSWC), which serves numerous counties in California and is regulated by the California Public Utilities Commission (CPUC). American States Utility Services provides water services to military installations under contracts with the U.S. government. The majority of AWR's revenue is derived from water services to commercial and residential customers.
Performance and Challenges
The water segment's performance was particularly strong, with a 32% increase in adjusted diluted EPS for Q4 2023, driven by rate increases and operational efficiencies. However, the electric segment experienced a slight decrease in diluted EPS due to the absence of new rates and increased operating expenses. The contracted services segment also saw a decrease in diluted earnings, attributed to a decrease in construction activity.
AWR's financial achievements are significant in the context of the Utilities - Regulated industry, as they reflect the company's ability to navigate regulatory environments and invest in infrastructure to support long-term growth. The company's historic high in capital expenditures demonstrates its commitment to maintaining and improving essential services.
Financial Highlights
AWR's balance sheet shows a healthy increase in total assets, with net property, plant, and equipment rising to $1.892 billion in 2023 from $1.754 billion in 2022. The company's capitalization also grew, indicating a solid financial position that can support future growth and dividend payments.
Key metrics such as operating revenues in the water segment increased from $75.041 million in Q4 2022 to $87.622 million in Q4 2023, and full-year water revenues increased from $340.602 million in 2022 to $433.473 million in 2023. These increases are important as they reflect the company's ability to grow its core business in a regulated market.
"The increase in water revenues during the fourth quarter of 2023 represents the difference from the 2023 second-year rate increases and the 2021 adopted rates recorded during the three-month period ended December 31, 2022," the company stated, highlighting the impact of regulatory decisions on its financial performance.
Analysis of Performance
AWR's performance in 2023 demonstrates the company's resilience and strategic management in a challenging regulatory environment. The company's ability to secure favorable rate adjustments and manage its capital expenditures effectively has translated into solid earnings growth and an impressive track record of dividend increases, making it an attractive option for value investors.
For more detailed information on AWR's financial performance, investors are encouraged to review the company's Form 10-K filed with the Securities and Exchange Commission.
AWR continues to maintain strong credit ratings, reflecting its financial stability and prudent management. The company's focus on long-term growth and shareholder returns, coupled with its strategic investments in infrastructure, positions it well for continued success in the regulated utilities sector.
Investors interested in the full details of AWR's earnings can access the conference call hosted by Robert Sprowls, president and chief executive officer, and Eva Tang, senior vice president and chief financial officer, which took place on February 22, 2024.
For further insights and analysis on American States Water Co and other investment opportunities, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from American States Water Co for further details.
This article first appeared on GuruFocus.
