American States Water 2025 Q1 Earnings Strong Performance as Net Income Climbs 16%

American States Water (AWR) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company beat expectations with a robust 16% increase in net income, reflecting solid performance driven by new rates at regulated utilities. Guidance remains cautious, aligning with potential revenue volatility due to consumption patterns. AWR maintains its strategic focus on growth-enhancing investments, while carefully observing market dynamics.

Revenue

American States Water's revenue for the first quarter of 2025 saw a notable increase, climbing by 9.4% to reach $148.01 million compared to $135.25 million in the same period of 2024. The water segment contributed significantly, generating $102 million, while the electric segment added $15 million. Contracted services accounted for $31.01 million, with no revenue from AWR Parent, culminating in consolidated revenue of $148.01 million.

Earnings/Net Income

American States Water witnessed a commendable rise in earnings, with EPS increasing 12.9% to $0.70 from $0.62 in Q1 2024. Net income also grew by 16.0%, reaching $26.84 million compared to $23.14 million the previous year. The sustained profitability over 19 years demonstrates the company's stable business performance. The EPS growth reflects positively on the company's financial health.

Price Action

The stock price of American States Water has edged down 1.52% during the latest trading day, has edged down 1.86% during the most recent full trading week, and has edged up 1.38% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of purchasing American States Water (AWR) shares following a quarter-over-quarter revenue increase and holding them for 30 days has yielded disappointing results. This approach resulted in a negative return of -2.20%, significantly lagging behind the benchmark return of 84.08%. The excess return stood at -86.28%, and the compound annual growth rate (CAGR) was -0.45%, indicating substantial losses. Furthermore, the strategy's Sharpe ratio was -0.09, suggesting poor risk-adjusted returns, with a maximum drawdown of -8.48% and a volatility of 4.96%. These figures highlight the challenges of consistently generating positive returns with this strategy.

CEO Commentary

"We are pleased to report first quarter 2025 consolidated diluted earnings per share of $0.70, a 13% increase from $0.62 in the same quarter last year, primarily driven by new rates implemented at our regulated utilities," noted the CEO of American States Water Company. "The California Public Utilities Commission authorized nearly $650 million in capital investments, which positions us well for future growth. However, we acknowledge that transitioning to a modified rate adjustment mechanism may introduce revenue and earnings volatility depending on water consumption fluctuations, emphasizing our need to adapt strategically."

Guidance

The company expects its contracted services business to contribute between $0.59 and $0.63 per share for the full year 2025. This guidance reflects a cautious outlook as AWR navigates the impact of new regulatory frameworks and potential volatility in water revenues due to consumption patterns. The leadership remains focused on strategic investments to enhance growth while closely monitoring market conditions.

Additional News

American States Water recently approved a quarterly dividend on common shares, payable on June 3, 2025, continuing its tradition of increasing dividends annually for 70 consecutive years. Aquatic Capital Management LLC has invested $186,000 in AWR, reflecting investor confidence despite recent stock price volatility. Additionally, AWR announced its Annual General Meeting scheduled for May 20, 2025, where strategic directions and shareholder concerns are expected to be addressed.