U.S. Markets closed

AWR Beats Q2 Earnings and Sales

Zacks Equity Research

American States Water Company (AWR) reported second-quarter 2013 pro forma earnings of 85 cents per share, beating the Zacks Consensus Estimate by a penny and the year-ago results by 7.6%.

The improvement in results was primarily driven by a rise in earnings at the company’s subsidiary Golden State Water Company; partially offset by a decline in earnings at American States Utility Services unit.


In the reported quarter, American States Water’s operating revenues were $120.7 million, beating the Zacks Consensus Estimate by $1.7 million. Quarterly revenues also increased 5.3% year over year due to 3.6%, 0.3% and 12.4% year-over-year increase in sales at the company’s Water, Electric and Contracted Services segments, respectively.

Operational Update

In the quarter under review, American States Water’s total operating expenses were $87.4 million, up 3.4% year over year due to a rise in costs of water purchased, power purchased for pumping and resale, and general and administrative expenses and higher maintenance expenses.

An increase in total operating expenses was more than offset by higher revenues. In the reported quarter, operating margin increased to 27.6% from 26.3% in the year-ago quarter.

American States Water’s interest expenses totaled $5.8 million, up 0.8% year over year primarily due to an increase in Water and Contracted Services segments’ expenses.

Financial Update

As of Jun 30, 2013, American States Water’s cash and cash equivalents were $8.5 million versus $23.5 million as of Dec 31, 2012.

Long-term debt as of Jun 30, 2013 was $332.4 million versus $332.5 million as of Dec 31, 2012.

During the first six months of 2013, American States Water’s capital expenditure was $41.2 million compared with $29.4 million in the year-ago comparable period. An increase in investment was primarily due to Golden State Water Company’s continued capital improvement plan.

Dividend and Stock-split Update

The board of directors of American States Water announced an increase of 14.1% quarter to quarter in its quarterly dividend to 40.5 cents. This new dividend will be paid on Sep 3, 2013 to shareholders of record at the close of business on Aug 15, 2013.

Further, the board also approved a 2-for-1 stock split, which will be effective from about Sep 3, 2013.

Other Company Releases

SJW Corp.’s (SJW) second quarter 2013 operating earnings per share of 37 cents beat the Zacks Consensus Estimate by 9 cents.

California Water Service Group (CWT) announced second-quarter 2013 operating earnings of 28 cents per share, in line with the Zacks Consensus Estimate.

Middlesex Water Company (MSEX) reported second-quarter 2013 earnings per share of 28 cents, beating the Zacks Consensus Estimate by a penny.

Our View

It is evident from American States Water’s activities that the company is currently upgrading its existing infrastructure and also expanding operations via inorganic route. In Jun 2013, the company announced to acquire Rural Water Co. for expanding its footprint in California.

American States Water intends to invest $85 million annually over the next three year rate cycle to improve its subsidiary Golden State Water Company’s water supply and distribution infrastructures. These ventures will help the company to provide hygienic water to its customers.

In May 2013, American States Water has received new rate approval from the California Public Utilities Commission and expects water gross margin to increase by 6.6% year over year. This kind of government support will encourage the company to invest more for the improvement of utility infrastructure.

San Dimas, California-based American States Water caters to the customers’ need in the United States and distributes water, electricity and other allied services. The company currently has a Zacks Rank #3 (Hold).

Read the Full Research Report on SJW

Read the Full Research Report on MSEX

Read the Full Research Report on CWT

Read the Full Research Report on AWR

Zacks Investment Research

More From Zacks.com