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AWR Keeps Earnings Beat Streak Alive

Zacks Equity Research

American States Water Company (AWR) reported third-quarter 2013 pro forma earnings of 53 cents per share, beating the Zacks Consensus Estimate of 47 cents by 12.8% and the year-ago figure of 48 cents by 10.4%.

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 the American States Utility Services unit.


In the reported quarter, American States Water’s operating revenues were $130.9 million, lagging the Zacks Consensus Estimate of $138 billion by 5.1%.

The top-line was also down 2.2% year over year from $133.9 million.

Operational Update

In the quarter under review, American States Water’s total operating expenses were $94.8 million, down 2.7% year over year primarily due to a 17.5% decline in ASUS construction expenses.

American States Water’s interest expenses totaled $5.8 million, down 3.3% year over year.

Financial Update

As of Sep 30, 2013, American States Water’s cash and cash equivalents were $ 26.2 million.

Net cash from operating activities in the first nine months of 2013 was $87.3 million, down by $4.3 million from the comparable year-ago period.

The company in on track to strengthen its business by investing $255 million in capital expenditures over the 2013 to 2015 period.

Dividend and Stock-Split Update

During the third quarter the shareholders received additional shares as per the 2-for-1 stock split requirement. Management approved the stock split to lure more investors.

This company has a long history of dividend payments. On Oct 29, 2013, the Board of Directors of American States Water approved a dividend of 0.2025 cents per share. This quarterly dividend will be paid on Dec 2, 2013 to shareholders of record at the close of business on Nov 15, 2013.

Other Company Releases

California Water Service Group (CWT) announced third-quarter 2013 operating earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 52 cents by 17.3%.

SJW Corp.’s (SJW) third quarter 2013 operating earnings per share of 44 cents lagged the Zacks Consensus Estimate by 8 cents.

Our View

American States Water has been a consistent performer and in the process has surpassed our earnings forecasts in the last seven quarters.

The major challenge ahead for water utility operators in the U.S. is the aging water and sewer infrastructure. Maintenance and development of facilities play a crucial role and will test the financial capabilities of these water utilities.

No doubt, developing and maintaining the aging infrastructure is going to be an uphill task. In this light, the initiatives taken by American States Water and Connecticut Water Service, Inc. (CTWS) among other operators to improve their existing water infrastructure are appreciable.

San Dimas, Calif.-based American States Water distributes water, electricity and other allied services in the U.S. The company currently has a Zacks Rank #3 (Hold).

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