American States Water Company: A Steady Stream of Dividend Growth and Strong Financial Performance

American States Water Company (NYSE: AWR) is set to report its fourth quarter and full year 2024 financial results after market close on Wednesday, February 19, 2025. The company will host a conference call to discuss these results on Thursday, February 20, at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time). Investors can access the live call and presentation slides at www.aswater.com. A replay will be available on the website from February 20 at 5:00 p.m. Eastern Time through February 27.

American States Water Company is a holding company that provides water and electric services to residential, commercial, industrial, and other customers in the United States. Through its water utility subsidiary, Golden State Water Company, the company provides water service to approximately 264,600 customer connections located within more than 80 communities in Northern, Coastal, and Southern California. Through its electric utility subsidiary, Bear Valley Electric Service, Inc., the company distributes electricity to approximately 24,900 customer connections in the City of Big Bear Lake and surrounding areas in San Bernardino County, California. Through its contracted services subsidiary, American States Utility Services, Inc., the company provides operations, maintenance, and construction management services for water distribution, wastewater collection, and treatment facilities located on twelve military bases throughout the country under 50-year privatization contracts with the U.S. government and one military base under a 15-year contract.

American States Water Company has paid dividends to shareholders every year since 1931, increasing the dividends received by shareholders each calendar year for 70 consecutive years. This places the company in an exclusive group of companies on the New York Stock Exchange that have achieved that result. The company's quarterly dividend rate has grown at a compound annual growth rate (CAGR) of 8.8% over the last five years through 2024 and has achieved a 10-year CAGR of 8.0% in its calendar year dividend payments through 2024. The company's current policy is to achieve a CAGR in the dividend of more than 7% over the long-term.

In 2023, American States Water Company's revenue increased by 21.19% to $595.70 million, compared to $491.53 million in the previous year. Earnings also experienced a substantial increase, with a 59.27% rise to $124.55 million in 2023, up from $78.03 million in 2022. This growth can be partially attributed to the increase in revenue, as well as the company's ability to control expenses and improve operational efficiency.

The company's water utility segment contributed significantly to this growth, with a net increase in water operating revenues of approximately $3 million during the three months ended June 30, 2024, largely due to the third-year rate increases. Additionally, the commencement of operations at two new military bases by the company's contracted services subsidiary in April 2024 contributed to earnings in the second quarter and year-to-date June 2024.

However, it is essential to note that the company's earnings per share decreased by $0.19 to $0.85 in the second quarter of 2024, compared to the same period in 2023. This decrease can be primarily attributed to the reversal of previously recorded estimated revenues subject to refund following the receipt of a final decision in the cost of capital proceeding in June 2023. Excluding this impact, adjusted consolidated diluted earnings were $0.86 per share in the second quarter of 2023, compared to recorded consolidated diluted earnings of $0.85 per share in the second quarter of 2024.

Regulatory decisions, such as the CPUC's approval to defer the cost of capital application at Golden State Water Company, have had an impact on American States Water Company's financial performance and future prospects. In June 2023, the CPUC issued a final decision on the cost of capital proceeding, which made all adjustments to rates prospective. As a result, Golden State Water Company (GSWC) reversed its regulatory liability previously recorded during 2022 and through the end of the first quarter of 2023 for estimated revenues subject to refund at that time. This reversal resulted in a decrease of approximately $0.18 per share in the second quarter of 2023, as compared to the same period in 2024.



In conclusion, American States Water Company's financial performance has shown significant growth in revenue and earnings over the past year, driven by increased demand for water and electric services, as well as the commencement of operations at new military bases. The company's dividend growth is primarily driven by its consistent financial performance and regulated utility business model. However, regulatory decisions such as the CPUC's approval to defer the cost of capital application at Golden State Water Company can have an impact on the company's financial performance and future prospects by affecting the recognition of revenue and expenses related to these costs. Investors should closely monitor the company's earnings report and conference call to gain insights into its future prospects and potential dividend growth.