Q4 2024 American States Water Co Earnings Call
[music].
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the American States Water Company Conference call discussing the company's fourth quarter and full year 2024 results. All participants will be in listen only mode should you need assistance. Please standby your conference specialist by pressing the star key followed by zero after today's presentation.
Patients there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: The call is being recorded.
Speaker Change: You'd like to listen to the replay of this call. It will begin this afternoon at five P. M. Eastern time and run through February 27th on the company's website Www Dot a S water dotcom.
Speaker Change: The slides that the company will be referring to are also on the website.
This call will be limited to an hour.
Speaker Change: Presenting today from American States water company are Bob Sprowls, President and Chief Executive Officer, and Eva Tang Senior Vice President of Finance and Chief Financial Officer.
Speaker Change: As a reminder, certain matters discussed during this conference call maybe forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward looking statements are not guarantees or assurances of any outcomes financial result levels of activity performance or achievements and listeners are cautioned not to.
Speaker Change: Place undue reliance upon them.
Speaker Change: Forward looking statements are subject to estimates and assumptions and known and unknown risks uncertainties and other factors listeners should review the description of the company's risks and uncertainties that could affect the forward looking statements and our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission.
Speaker Change: Statements made on this conference call speak only as of the date of this call and except as required by law. The company does not undertake any obligation to publicly update or revise any forward looking statement.
Speaker Change: In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or GAAP in the United States and constitute non-GAAP financial measures under SEC rules. These non-GAAP financial measures are derived from consolidated financial information.
Not presented in our financial statements that are prepared in accordance with GAAP for more details. Please refer to the press release at this time I will turn the call over to Bob Sprowls, President and Chief Executive Officer of American States water company.
Michael: Thank you Michael.
Bob Sprowls: Welcome everyone and thank you for joining us today.
Michael: I'll begin with a discussion of the year.
Michael: He will then discuss some financial details for both the fourth quarter and the year.
Michael: And then I'll wrap it up with updates on regulatory activity.
Michael: Yes.
Michael: Dividends and then we'll take your questions.
Michael: Let's first start with a look at 2024.
Michael: On the regulatory front, we were very pleased to have received final decisions from the California Public Utilities Commission or CPUC last month.
Michael: For both our water and electric utility subsidiaries.
Michael: Both decisions represent constructive regulatory outcomes.
Michael: It enabled us to continue investing in our water and electric infrastructure.
Michael: Safe and reliable services to our customers for generations to come.
Michael: I will provide more details on these decisions later in the call.
Michael: We finished 2024 with very strong financial result.
Michael: Our reported earnings per share for the full year of 2024.
Michael: For 19 cents lower compared to the prior year.
Michael: Earnings per share were 32 cents higher than.
Michael: Net adjusted 2023 earnings.
Michael: Let's exclude favorable variances.
Related to the receipt of final decisions in the water general rate case and cost of capital proceedings.
Michael: In June of 2023.
Michael: Excluding the 2023 adjustments.
Michael: The increase in adjusted earnings for the full year of 2024.
Michael: This is primarily driven by rate increases in both the water and electric utilities.
Michael: And the commencement of water and wastewater operations at two new military bases.
Michael: Successful economic price adjustments in our contracted services business.
Michael: Additionally, our water utility segment recorded a tax benefit following the final decision and its general rate case.
Michael: These increases were partially offset by higher operating expenses and interest costs.
And the dilutive effects from the issuance of equity.
Michael: American States water's at the market offering program.
Michael: Which decreased consolidated earnings by approximately four cents per share.
Michael: In 2024, we invested $235 $5 million and.
Michael: In infrastructure at our regulated utilities.
Michael: Reflecting our strong ability to execute our capital plan.
Michael: Our contracted services business.
Michael: We're at $56 $5 million in new capital upgrade awards.
Michael: With projects scheduled for completion through 2027.
Both are record highs for our regulated utilities.
Michael: Sure.
Michael: Hey.
Michael: Yes.
Michael: We began work under two new military contracts, serving new bases on the east coast.
Michael: Further expanding our footprint managing water and wastewater systems for the U S government.
Michael: American States water achieved a return on equity of 14, 1% for the year.
Michael: And we increased our dividend to shareholders by eight 3%.
Michael: Marching 70 consecutive years of annual dividend increases.
Michael: The 14.1% earned return on equity.
Michael: It was achieved despite a 14, 2% increase in our average consolidated equity balance between the two years.
Michael: Some of the increase in the equity balance is due to the stock issued under the at the market program.
Michael: These accomplishments compare very favorably to other utilities.
Michael: We're very proud of our longstanding track record of delivering value to our shareholders.
Michael: Overall, it was a productive year, which sets the stage for future growth for the entire company.
Michael: And of course, we continued to deliver safe and reliable service to over 1 million people in 10 states.
Michael: No small task.
Michael: And one that remains a key driver for the entire organization.
Michael: With that I'll turn the call over to Eva to discuss earnings and liquidity.
Thank you Bob Hello, everyone, Let me start with without fourth quarterly health.
Michael: Corrugated consolidated.
Michael: 75 cents per share for the quarter compared with 55 cents per share.
Michael: For the fourth quarter of <unk>.
Yeah.
Michael: Well water utility they want at this point yet.
Michael: Okay.
Michael: Yeah, that's kind of takes off like it once it's for sure not.
Michael: 11 cents per share it wont create trying to guide you for like a lottery ticket.
Michael: While the rate.
Michael: And all of them are increasingly authorized rate of return on rate base.
Michael: <unk>.
Michael: And a tax benefit recorded in fourth quarter actually in Philadelphia.
Michael: A final decision in connection with Golden State water.
Michael: Okay.
Michael: It increases partially offset by higher I'll play.
Michael: And.
Michael: Generally that's been held for retirement plan.
Michael: I think there was a decrease.
Michael: Approximately one cents per share.
Michael: Exactly exactly.
Michael: That's accurate.
Michael: American States water.
Michael: At the market offering program.
Michael: Our electric segment's angles like two cents per share for the quarter as compared to seven cents a share that's what kinds of things.
Michael: Makes sense per share increase.
Michael: Do you think they are going.
Michael: The financing decision.
Michael: <unk>.
Michael: The electric rate case.
Michael: With new rates retroactive to January.
Michael: Trying to think differently.
Michael: I mean ex U S.
Michael: One cents per share for the quarter largely due to an increase in operating expenses some of which was timing.
Michael: Partially offset by an increase in.
Michael: Management fee revenue due to commencement of operations out there why didn't wastewater system.
Michael: At joint base Cape Cod.
Michael: Eric.
Goodbye.
Speaker Change: And that's like that's I've never seen all economic price adjustment at the lack of sleep.
Speaker Change: Consolidated revenue for the quarter increased by $17 $9 million as compared to 2023.
Speaker Change: Revenue for the water segment increased by $5 $1 million that you baked into it.
Speaker Change: Okay.
Speaker Change: Why that rate.
Speaker Change: And then after that wait a week.
Speaker Change: I'd like to thank you for it.
Speaker Change: That's good news for I think that's exactly increased by $10 6 million dollar man.
Speaker Change: Due to the impact of the Bachelor applicants need extra weight.
Speaker Change: Yeah.
Speaker Change: Sweet and crunchy, Thank you for it.
Speaker Change: Rather than you thought as you add increased $2 $3 million, primarily due to higher management fee revenue.
Speaker Change: As I just mentioned.
Speaker Change: Turning to slide 10, and looking at total operating expenses are there if I caught.
Speaker Change: Consolidated expenses increased by $2.
Speaker Change: $1 million compared to 23.
This increase included the impact of the electric General rate case decision recorded in the fourth quarter of 'twenty 'twenty four.
Speaker Change: In fact it.
Speaker Change: $8 2 million dollar increase.
Speaker Change: Hi.
Speaker Change: Let me go to a higher at a trade channel.
Paul: That's partially offset by a factor of active in pack off at lower overall composite depreciation rate for both trying to sweet and crunchy. Thank you Paul.
Speaker Change: Oh, so recorded in Q4 of 24.
Speaker Change: These items are included in the click.
Speaker Change: And I think that's quite a bit.
Speaker Change: In addition, the increase due to higher overall labor cost.
Speaker Change: Thank you.
Speaker Change: And timing.
Speaker Change: And Oh cricket.
Speaker Change: Depreciation expense actually at Golden State water.
Speaker Change: Property tax expenses.
Speaker Change: So which are impacted by increased capital expenditures.
Speaker Change: Thank you Kelly.
Speaker Change: The increases are partially offset by a decrease in golden state water other operation related expenses.
Speaker Change: Pelican.
Speaker Change: Coverage of previously incurred costs.
Speaker Change: And nowhere and yet construction expenses.
Speaker Change: Other income net other expenses increased by $1 $6 million in the fourth quarter compared to last year.
Speaker Change: Largely due to lower again, because I don't think that's meant to help you find that.
Speaker Change: Yeah.
The decrease was partially offset by the recording of.
Speaker Change: Allowed return given construction for the electric segment.
Speaker Change: Electric segment in fact leather pocket.
Speaker Change: Slide 11 shows the EPS bridge.
Speaker Change: Comparing our reported EPS for the fourth quarter of 24.
Speaker Change: Against the same period for two I think it's great.
Speaker Change: This slide reflects our full year earnings per share by segment actually pointed it just yet.
Speaker Change: Dollar, David and me and for the full year 'twenty 'twenty four that's recorded what's the dollar 17 cents per share.
Speaker Change: Compared to $3 36, a share for 2023.
Speaker Change: However included in the readout for 2023.
Speaker Change: <unk> per share related to the impact of retroactive rate starting to find that the fishing a wider geography for the full year of 'twenty two.
Speaker Change: And we put yourself because I can't say for sure but revenue is subject to refund.
Speaker Change: Recorded in 2022, I think we thought that was gonna find out cause of captain fishing until after Thanksgiving.
Speaker Change: The items related to our what exactly.
Speaker Change: Excluding the two items just mentioned.
Speaker Change: See I mean recorded and adjusted consolidated for 24 or $3.17 per share as compared to adjusted earnings.
Speaker Change: Oh $2.85 per share for train train three.
Speaker Change: The increase of two cents per share.
Speaker Change: Please refer to our press release and the Form 10-K filed yesterday for a more detailed full year.
Speaker Change: Yeah.
Speaker Change: Turning to liquidity on slide 17.
Speaker Change: Net cash provided by operating activities.
Speaker Change: $198 $7 million for 2024, that's compared to $67 7 million for the type of thing.
Speaker Change: The increase in operating cash flow was primarily as a result of Golden state water has implemented new rates in 'twenty and.
Speaker Change: In 2024.
Speaker Change: Selection of surcharges to recover actual act.
Speaker Change: The revenue kind of thing.
Speaker Change: June July.
Speaker Change: July of 'twenty three.
Speaker Change: <unk> hired a lot of consumption.
Speaker Change: For the.
Speaker Change: The increase in cash flows.
Speaker Change: Oh, so please tell the differences in the timing of billing and <unk>.
Speaker Change: Catholic confessional work at military bases.
Speaker Change: And U S as well as the timing of payments.
Speaker Change: Well investing activities it's.
Speaker Change: As Bob mentioned earlier, our regulated utility invested $235 million $80 million.
Speaker Change: Company funded capital projects in 2024.
Speaker Change: And we project company funded capital expenditures to reach $170 million to $210 million for trying to quantify.
Speaker Change: American States water aftermarket offering program to sell my shares.
Speaker Change: And then I will go in.
Speaker Change: Glad to allow the company though.
Speaker Change: Just a question to sell up to $200 million.
Speaker Change: Over a three year period.
Speaker Change: Doing trying to 24.
Speaker Change: How about kind of stays where they raised proceeds of $88 $7 million net.
Speaker Change: And that definitely shouldn't cost in legal hot and cold.
Speaker Change: And I can see why Theyre current right.
Speaker Change: About 10 states, while they're currently maintains a credit rating of AA stable with dengue and Florida Global ratings.
Speaker Change: Keith.
Speaker Change: It goes to the state while it maintains a stable rating with S&P.
Speaker Change: The age or stable rating with Moody's investors service.
Speaker Change: Each of these ratings have been affirmed during 2024.
Speaker Change: These are some of the highest credit ratings in the U S investor owned water utility.
Bob Sprowls: With that I'll turn the call back to Bob.
Bob Sprowls: Thank you Eva I'll.
Speaker Change: I'll begin with Golden State water general rate case.
Speaker Change: On January 30 of this year, the CPUC issued a final decision in connection with the general rate case.
Speaker Change: Final decision adopts the settlement agreement between Golden State water and.
Speaker Change: And the public advocates office at the CPUC or Cal advocates for short.
Speaker Change: Among other things the decision authorizes Golden state water to invest 573.
Speaker Change: Sure.
Speaker Change: In capital infrastructure.
Speaker Change: Over the three year capital cycle.
Speaker Change: This includes $17 $7 million.
Speaker Change: All the advice letter capital projects to be filed for revenue recovery during the second and third year attrition increases.
Speaker Change: These projects are completed.
Speaker Change: In addition, the approved settlement agreement.
Speaker Change: <unk> $58 $2 million of advice letter capital projects that.
Speaker Change: <unk> began construction in 2023.
Speaker Change: That we expect to file for revenue recovery during the second and third year attrition increases when those projects are completed.
For all of the advice letter projects Golden State water will be allowed to accrue interest during construction at the <unk>.
Speaker Change: <unk> cost of debt.
Speaker Change: And recover the full rate of return.
Speaker Change: Quoted all applicable components of the revenue requirement.
Speaker Change: After the assets are placed in service up until <unk> or.
Speaker Change: Included in customer rates.
Speaker Change: Excluding revenues for advice letter capital projects.
Speaker Change: Adopted operating revenues less water supply costs for 2025.
Speaker Change: Our projected to increase by approximately $23 million when compared to 2024.
Speaker Change: In addition, there are potential additional revenue increases of approximately $20 million.
Speaker Change: For each of the years 2026 and.
Speaker Change: In 2027 based on inflation factors.
Speaker Change: Without factoring in the revenues from those advice letter capital projects.
Speaker Change: The final decision also adopt Golden state water's recommended sales forecast.
Speaker Change: Our supply mix it splits the difference between Golden State waters.
Speaker Change: Cal advocates forecast.
Speaker Change: It accepts the sales reconciliation mechanism proposed by the company.
Speaker Change: In addition, there were three other regulatory mechanisms that Golden state water requested that.
Speaker Change: That were litigated and addressed in the decision.
Speaker Change: Yeah.
Speaker Change: The decision however rejected.
Wholesales and revenue decoupling mechanism and a full supply cost balancing account.
Speaker Change: And instead ordered the transition to a modified rate adjustment mechanism for sales.
Speaker Change: And the incremental cost balancing account for supply costs.
Speaker Change: The decision also rejected our supply mix adjustment mechanism.
Speaker Change: And a request to modify the existing Paphos memorandum account.
Speaker Change: Detract carrying costs on capital investments needed to comply with the new <unk> regulations.
Speaker Change: The new mechanisms authorized in the decision are effective January one 2025.
Speaker Change: The final decision approved Golden State Water's proposed rate design associated with the modified rate adjustment mechanism.
Speaker Change: Which moves more revenue recovery into the fixed service charge.
Speaker Change: Then under the rate design associated with the company's full revenue decoupling mechanism.
Speaker Change: On January 14th of this year, the CPUC approved a request to defer the cost of capital application by one year.
Speaker Change: The may one 2026.
Speaker Change: With the deferral Golden State water will retain its authorized return on equity.
Speaker Change: 10.06%.
Speaker Change: And a 57% equity ratio through the end of 2026.
Speaker Change: On January 16th of this year, our electric utility subsidiary received a final CPUC decision and its general rate case.
Speaker Change: That approves the settlement agreement between Bear Valley Electric.
Speaker Change: Advocates.
Speaker Change: Other intervenors in the proceeding in its entirety.
Speaker Change: The preceding sets rates retroactive to January one 2023.
Speaker Change: Then determines electric rates for the years 2023 through 2026.
Speaker Change: The decision among other things.
Speaker Change: Allows bear valley electric to invest $75 $6 million.
Speaker Change: And capital infrastructure.
Speaker Change: Including at least $23 $1 billion of advice letter projects over the four year rate cycle.
Speaker Change: Get adopts a return on equity of 10.0%.
Speaker Change: And a 57% equity ratio.
Speaker Change: Approves recovery.
Speaker Change: Our requested capital expenditures and incremental operating costs incurred prior to 2023.
Speaker Change: In connection with its wildfire mitigation plan.
Speaker Change: These costs were not previously included in customer rates.
Speaker Change: In addition to <unk>.
Speaker Change: Settlement provides increases in the adopted operating revenues of $2 $2 million for 2025.
$3 $3 million in 2026.
Speaker Change: Yeah.
Speaker Change: The rate increases for 2024 through 2026.
Speaker Change: We're not subject to an earnings test.
Speaker Change: The previously mentioned advice letter projects.
Speaker Change: $23 $1 million are expected to generate additional annual operating revenues of approximately $3 million.
Speaker Change: With respect to projects are completed and placed in service.
Speaker Change: For recovery in customer rates.
Speaker Change: These projects also accrue allowance for funds used during construction.
Speaker Change: That will further increase the revenue requirement.
Turning our attention to slide 17, we present the growth in Golden State Water's adopted average water rate base for.
Speaker Change: For 2018 through 2024.
Speaker Change: Which increased from $752 $2 million in 2018.
Speaker Change: The 1 billion 357 <unk>.
Speaker Change: $5 million in 2024.
Speaker Change: That is a compound annual growth rate of 10, 3%.
Speaker Change: For the six year period.
Speaker Change: Using 2018 as the base year for the calculation.
Speaker Change: Golden State water anticipates, a robust and sustained growth in its rate base over.
Speaker Change: Over the next few years.
Speaker Change: As a result.
Speaker Change: Receiving its recent general rate case decision.
Speaker Change: Then again authorized to invest $573 $1 billion in capital infrastructure.
Including $17 $7 million of a device there are capital investments.
Speaker Change: To be filed for revenue recovery during the second and third year attrition increases when those projects are completed.
Speaker Change: In addition, it authorizes investment on certain other capital projects already under construction beginning in 2023.
Speaker Change: The recovery of rich of which will also be handled through advice letter filings upon project completion.
Speaker Change: Oh, an advice letter capital projects will contribute to further growth in rate base in the second and third years.
Speaker Change: Of this cycle.
Speaker Change: Okay.
Speaker Change: Let's continue to <unk>.
Speaker Change: Which contributed earnings of <unk> 55 per share for the full year of 2024.
Speaker Change: As compared to <unk> 50 per share for 2023.
Speaker Change: The increase was mainly due to an increase in management fee revenues.
Speaker Change: <unk> from the commencement of operations at the two new bases.
Speaker Change: And the resolution of various economic price adjustments.
Speaker Change: Partially offset by higher overall operating expenses.
Speaker Change: From the new basis, and a decrease in earnings of approximately one seven per share due.
Speaker Change: Due to the dilutive effects from the issuance of equity.
Speaker Change: The company's aftermarket offering program.
Speaker Change: We're also very pleased that <unk> has received a significant increase.
Speaker Change: And new capital upgrade awards in 2024 of.
Speaker Change: A $56 $5 million in total.
Speaker Change: As compared to $25 $2 million for 2023.
Speaker Change: In addition to continued work on the existing bases. We serve we remain confident that we can effectively compete for new military base contract of works.
Speaker Change: With a solid performance expected for <unk> in 2025.
Speaker Change: We project that subsidiary to contribute.
Speaker Change: 59 to 63 per share this year.
Speaker Change: I would like to turn our attention to dividends, which remains a compelling part of our investment story.
Speaker Change: Our quarterly dividend rate has grown at a compound annual growth rate or CAGR of eight 8% over the last five years through 2024.
Speaker Change: Then we have achieved a 10 year CAGR of 8% and the calendar dividend payments.
Speaker Change: Through 2024.
Speaker Change: These increases are consistent with our policy to achieve a compound annual growth rate in the dividend of more than 7% over the long term.
Speaker Change: I'd like to conclude our prepared remarks. This morning by thanking you for your interest in American States water and well.
Speaker Change: I'll now turn the call over to the operator for questions.
Speaker Change: We will now take your questions to.
Speaker Change: To ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Okay.
Speaker Change: We will begin with Jonathan Reeder with Wells Fargo. Please go ahead.
Speaker Change: Hey, Bob and Eva I Hope you guys are well.
Speaker Change: Thank you Hi, Jonathan Hope you are as well.
Speaker Change: Yeah, Hey hanging in there.
Speaker Change: Could you help me reconcile how much of the six.
Speaker Change: Electric GIC retroactive EPS benefit.
Speaker Change: It was recorded in Q4.
Speaker Change: Solely related to 2023 and I saw the 10-K mentioned like $9 8 million of retroactive revenues for both 23 and 24, but it seems like you know.
Speaker Change: Some of that is offset by corresponding operating expense increase was related to those years as well.
Speaker Change: Yeah, I would say.
Speaker Change: I would say more of it is related to 'twenty, four and 'twenty three Jonathan.
Speaker Change: As you know I think you know.
Speaker Change: And it's interesting we hit for hedges.
Speaker Change: Tuition on both.
Speaker Change: Settlements to bear Valley settlement and the.
Speaker Change: Golden State settlement.
Speaker Change: Public advocates who was very interested in.
Speaker Change: Tried to move off that first year increase.
Speaker Change: And that then.
Speaker Change: That's why you sort of see these advice letter projects.
In both cases.
Speaker Change: So you know that.
Speaker Change: We had a substantial amount of our recover caught them.
Speaker Change: Both capital O N fact, implementing our wildfire mitigation plan.
Speaker Change: We're really quite the recovery.
Speaker Change: Now I'll have protected capital O N.
Speaker Change: And can I get sick.
Speaker Change: So on top of what we need to do for that kind of rate case cycle will totally quit.
Speaker Change: The other is to be included in base rate case cycle.
Speaker Change: Yeah.
Speaker Change: He's always will cost.
Speaker Change: It's about $24 million of Capex related to the wildfire mitigation plan along with the increases in cost to cover.
Speaker Change: Training costs in all of the wife had litigation related expenses.
Speaker Change: So our first in.
Speaker Change: Quest was quite significant five cases like 92.
Speaker Change: So during the settlement agreement, we agreed to move capital target to try to tighten for N B O S.
Speaker Change: And file that's about podcasts and by platinum partners.
Speaker Change: Excuse me while construction.
Speaker Change: So that's why I can say equally.
Speaker Change: Small compared to 2024.
Speaker Change: We believe.
Speaker Change: How we can't reach a settlement and mitigate.
Speaker Change: The increase in customers.
Speaker Change: Kinds of pancake two rate cases.
Speaker Change: So that's why most of the increase you're seeing.
Speaker Change: Thanks, Paul.
Speaker Change: As a reminder.
Speaker Change: The last rate cycle, we had a fair value was a five year rate cycle.
Speaker Change: Our decision came out.
Speaker Change: In that particular case.
Speaker Change: Just as things were being put in place for the requirements associated with filing wildfire mitigation plans.
Speaker Change: I don't know if this is completely accurate but.
Speaker Change: I think we.
Speaker Change: Because it was just the rate cycle might end up.
Speaker Change: We had probably had gone the longest of any of the electrics in terms of starting the wildfire mitigation plan activities before our next rate case, where we would then seek recovery of those expenditures.
Speaker Change: And so that put I would say a little more pressure on that first year rate increase because we had.
Speaker Change: Several years of a wildfire mitigation plan activities that we hadn't recovered from customers, but needed to be that included in the rate cycle for 2023 through 2026.
Speaker Change: Okay. So would you say any of that six.
Speaker Change: Of the retroactive EPS benefit.
Speaker Change: It related to 2023 or two.
Speaker Change: 2023 was pretty neutral in all of the six senses in Q1 through Q3.
Speaker Change: 24 to take the way to think about it is the majority is in is for 24.
Speaker Change: I can't really give you a precise split on the six but.
Speaker Change: I think the way to think about it is the majority of it was for 'twenty.
Speaker Change: Okay, Alright, and then even as you noted 2024, and we saw a huge increase in consolidated operating cash flows to nearly $200 million is that a good proxy for your 2025 expectations given you'll still be collecting the retroactive revenues from the delays.
Speaker Change: 2022 to 2020 for water <unk> decision plus some other retroactive revenues from our electric <unk>.
Speaker Change: I think so.
Speaker Change: It's more aligned with whats going forward in 'twenty, two 'twenty three I would say.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Then last question for me.
Speaker Change: Much of the remaining roughly $110 million of equity under the ATM program do you anticipate issuing in 2025.
Speaker Change: $60 million ish, and so we like to even the out for two years, if we need a little more so I would say probably 60 million for this year.
Speaker Change: Okay perfect.
Speaker Change: Thank you so much for taking my questions.
Thank you.
Speaker Change: Okay.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: Seeing no further questions in the queue. This concludes our question and answer session I would like to turn the conference back over to Bob Sprowls for any closing remarks.
Bob Sprowls: Yes, I'd just like to wrap up the call today by thanking everyone for their continued interest in American States.
Bob Sprowls: Appreciate your interest in <unk>.
Bob Sprowls: Have a good start to your ear. Thank you.
Bob Sprowls: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Bob Sprowls: Okay.
Bob Sprowls: Yeah.
Bob Sprowls: [music].
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the American States Water Company Conference call discussing the company's fourth quarter and full year 2024 results. All participants will be in listen only mode should you need assistance. Please standby your conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask.
Speaker Change: Question to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: Withdraw your question. Please press Star then two.
Speaker Change: The call is being recorded.
Speaker Change: I would like to listen to the replay of this call. It will begin this afternoon at five P. M. Eastern time and run through February 27th on the company's website Www Dot a S water dot com.
Speaker Change: The slides that the company will be referring to are also on the website.
Speaker Change: This call will be limited to an hour.
Speaker Change: Presenting today from American States water company are Bob Sprowls, President and Chief Executive Officer, and Eva Tang Senior Vice President of Finance and Chief Financial Officer.
Speaker Change: As a reminder, certain matters discussed during this conference call maybe forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward looking statements are not guarantees or assurances of any outcomes financial result levels of activity performance or achievements and listeners are cautioned not to.
Speaker Change: Place undue reliance upon them.
Forward looking statements are subject to estimates and assumptions and known and unknown risks uncertainties and other factors.
Speaker Change: Listeners should review the description of the company's risks and uncertainties that could affect the forward looking statements and our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission.
Speaker Change: Statements made on this conference call speak only as of the date of this call and except as required by law. The company does not undertake any obligation to publicly update or revise any forward looking statement.
Speaker Change: In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or GAAP in the United States and constitute non-GAAP financial measures under SEC rules. These non-GAAP financial measures are derived from consolidated financial information, but are.
Speaker Change: Presented in our financial statements that are prepared in accordance with GAAP for more details. Please refer to the press release at this time I will turn the call over to Bob Sprowls, President and Chief Executive Officer of American States water company.
Speaker Change: Thank you Michael.
Bob Sprowls: Welcome everyone and thank you for joining us today.
Speaker Change: I'll begin with a discussion of the year.
Speaker Change: David will then discuss some financial details for both the fourth quarter and the year.
Speaker Change: And then I'll wrap it up with updates on regulatory activity.
Speaker Change: As U S D.
Speaker Change: Dividend and then we will take your questions.
Speaker Change: Let's first start with a look at 2024.
Speaker Change: On the regulatory front, we were very pleased to have received final decisions from the California Public Utilities Commission or CPUC last month.
Speaker Change: For both our water and electric utility subsidiaries.
Speaker Change: Both decisions represent constructive regulatory outcomes.
Speaker Change: It enabled us to continue investing in our water and electric infrastructure.
Safe and reliable services to our customers for generations to come.
Speaker Change: I will provide more details on these decisions later in the call.
Speaker Change: We finished 2024 with very strong financial result.
While our reported earnings per share for the full year of 2024.
Speaker Change: Were 19% lower compared to the prior year.
Speaker Change: Earnings per share were <unk> 32 cents higher net.
Speaker Change: Net adjusted 2023 earnings.
Speaker Change: Let's exclude favorable variances.
Speaker Change: Related to the receipt of final decisions in the water general rate case and cost of capital proceedings.
Speaker Change: In June of 2023.
Speaker Change: Excluding the 2023 adjustments.
Speaker Change: The increase in adjusted earnings for the full year of 2024.
Speaker Change: This is primarily driven by rate increases in both the water and electric utilities.
Speaker Change: And the commencement of water and wastewater operations at two new military bases.
Speaker Change: Successful economic price adjustments in our contracted services business.
Speaker Change: Additionally, our water utility segment recorded a tax benefit following the final decision and its general rate case.
Speaker Change: These increases were partially offset by higher operating expenses and interest costs.
Speaker Change: And the dilutive effects from the issuance of equity.
Speaker Change: American States water's at the market offering program.
Speaker Change: Which decreased consolidated earnings by approximately <unk> <unk> per share.
Speaker Change: In 2024, we invested $235 5 million.
Speaker Change: In infrastructure at our regulated utilities.
Speaker Change: Reflecting our strong ability to execute our capital plan.
Speaker Change: Our contracted services business.
Speaker Change: <unk> $56 $5 million net new capital upgrade awards.
With projects scheduled for completion through 2027.
Speaker Change: Both are record highs for our regulated utilities.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: We began work under two new military contracts, serving new bases on the east coast.
Speaker Change: Further expanding our footprint of managing water and wastewater systems for the U S government.
Speaker Change: American States water achieved a return on equity of 14, 1% for the year.
Speaker Change: And we increased our dividend to shareholders by eight 3%.
Speaker Change: Marking seven consecutive years of annual dividend increases.
Speaker Change: The 14, 1% earned return on equity.
Speaker Change: It was achieved despite a 14, 2% increase in our average consolidated equity balance between the two years.
Speaker Change: Some of the increase in the equity balance is due to the stock issued under the at the market program.
Speaker Change: These accomplishments compare very favorably to other utilities.
Speaker Change: We're very proud of our longstanding track record of delivering value to our shareholders.
Speaker Change: Overall, it was a productive year, which sets the stage for future growth for the entire company.
Speaker Change: And of course, we continued to deliver safe and reliable service to over 1 million people in 10 states.
Speaker Change: No small task.
Speaker Change: And one that remains a key driver for the entire organization.
Speaker Change: With that I'll turn the call over to Eva to discuss earnings and liquidity.
Eva Tang: Thank you Bob Hello, everyone and then our fourth quarterly health.
Speaker Change: <unk> consolidated.
75 cents per share for the quarter compared to 55 for the fourth quarter of <unk>.
Speaker Change: Our water utility they want at the point yet.
Speaker Change: <unk> per share.
Speaker Change: That's compared to <unk> <unk> per share last year.
Speaker Change: 11 cents per share increase.
Speaker Change: Thank you for like a logic to it.
Speaker Change: Why there right.
Speaker Change: And our increase in the authorized rate of return on rate base.
Speaker Change: And a tax benefit recorded in fourth quarter ethylene Philadelphia.
Speaker Change: That final decision well connection with Golden State water general rate case proceeding.
Speaker Change: Increases, partially offset by higher operating and interest expenses.
Speaker Change: January.
Speaker Change: Thanks, Howard for retirement plan.
Speaker Change: There was a decrease.
Speaker Change: Past 31 cents per share.
The diluted effect.
Speaker Change: Equity markets.
Speaker Change: American States water.
Speaker Change: At the market offering program.
Speaker Change: Our electric segment's angles.
Speaker Change: Thanks per share for the quarter as compared to seven Bcf or <unk>.
Speaker Change: <unk> per share increase primarily due to including the final CPUC mutation.
Speaker Change: Electric.
Speaker Change: With new rates retroactive to January <unk>.
Speaker Change: Thank you Kelly.
Kelly: Thank you.
Kelly: <unk> decreased <unk> <unk> per share for the quarter.
Kelly: Due to an increase in operating expenses, some of which was timing partially offset by an increase in management fee revenue due to commencement of operations out there why didnt await flattish.
Speaker Change: Joining base Cape Cod.
Kelly: Education apps in their life.
Kelly: And that's why we had the owners.
Kelly: Economic price adjustments at the legacy <unk> 18.
Consolidated revenue for the quarter increased by $17 9 million as compared to 2023.
Kelly: Revenue for the water segment increased by $5 1 million gallon batch of it into a home.
Speaker Change: Why that rate.
Kelly: And then increasing Aflac Gregory K already baked in.
Kelly: Sure.
Kelly: Revenues for that segment increased by $10 $6 million, mainly due to the impact of <unk>.
Kelly: Great.
Kelly: Full year upfront Kenneth Lee and thank you. Thank you for it.
Revenue increased.
Kelly: <unk> increased $2 $3 million, primarily due to higher management fee revenue.
Kelly: As I just mentioned.
Kelly: Turning to slide 10, and looking at total operating expenses either as an icon.
Kelly: Consolidated expenses increased by $2 $1 million compared to 2019.
Kelly: This increase included the impact of the electric general rate case decision.
Kelly: Coordinating the fourth quarter of 2024.
Kelly: And in fact that $8 2 million dollar increase in operating expenses.
Kelly: Hi, Ed.
Speaker Change: Changes in general and maintenance expenses.
Kelly: Surely offset by active impact.
Kelly: Lower overall composite depreciation rate for both <unk> and <unk>.
Kelly: Also recorded in Q4 of 2024.
Kelly: These items are included in the.
Kelly: Thanks, a lot revenue requirement.
Kelly: In addition, the increase due to higher overall labor cost.
Kelly: <unk> expense timing.
Kelly: An increase in depreciation expense actually at Golden State water and property tax expenses.
Kelly: Both of which are impacted by increased capital expenditures.
Kelly: Yeah.
Kelly: The increases are partially offset by a decrease in golden state water other operation related expenses.
Kelly: In fact, receiving a recovery of previously incurred costs.
Kelly: And nowhere and yet construction expenses.
Kelly: Other income net of other expenses.
Kelly: <unk> by $1 $6 million in the fourth quarter compared to last year.
Kelly: Due to lower again.
Kelly: Our investments held to fund type Manpack plan.
Kelly: The decrease was partially offset by the recording of.
Kelly: Allow us to repay given construction for electric segment.
Kelly: Electric segment in fact leather pocket.
Kelly: Slide 11 shows the EPS bridge, comparing compelling reported EPS for the fourth quarter of 2004.
Kelly: Against the same period for 2023.
Kelly: This slide reflects our full year earnings per share by segment.
Reported and adjusted.
Yes.
Kelly: Consolidated earnings for the full year 2024, actually corrugate, let's say dollars 17 per share compared to $3 <unk> per share for 2023.
Kelly: However included in the readout for 2023.
<unk> per share related to the impact of that to activate.
Kelly: Financing fishing what hei.
Kelly: For the full year of 2002.
Kelly: <unk> per share, but revenue subject to refund originally recorded in 2022 I think we felt that was the final cost of capital decision in June of <unk> Suisse.
Kelly: Both items related to our what exactly.
Kelly: Excluding the two items just mentioned.
Kelly: <unk> recorded an adjusted consolidated 2004.
Kelly: $3.17 per share as compared to adjusted earnings of $2 85 per share for 2023.
Kelly: Increased <unk> <unk> per share.
Kelly: Please refer to our press release and the Form 10-K filed yesterday for more detail.
Yes.
Kelly: Turning to liquidity on slide 17.
Kelly: Net cash provided by operating activities.