American States Water Company

Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company conference call discussing the company's second quarter 2025 results. The call is being recorded. If you would like to listen to the replay of this call, it will begin this afternoon at 5 p.m. Eastern Time and run through August 14th on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. This call will be limited to an hour. Presenting today from American States Water Company are Bob Sprouse, President and Chief Executive Officer, and Eva Tang, Senior Vice President of Finance and Chief Financial Officer. As a reminder, certain matters discussed during this conference call may be forward-looking statements within the meetings of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees or assurances of any outcomes, financial results, levels of activity, performance or achievements, and listeners are cautioned not to place undue reliance upon them. 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 in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. Statements made on this conference call speak only as of the day of this call, and except as required by law, the company does not undertake any obligation to publicly update or revise any forward-looking statements. 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 rule. These non-GAAP financial measures are derived from consolidated financial information but are 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 Sprouse, President and Chief Executive Officer of American States Water Company.

Thank you, Betsy. Welcome, everyone, and thank you for joining us today. I'll begin with a brief discussion on the quarter. Eva will then discuss some financial details, and then I'll wrap it up with updates on regulatory activity, ASUS, dividends, and then we'll take your questions. We had an overall positive and productive second quarter, earnings per share were two cents higher compared to the same quarter in 2024. Favorable variance is attributable to the receipt of final decisions from the California Public Utilities Commission or CPUC in January of this year for the water and electric general rate cases which authorized new water rates for 2025 to 2027 and authorized new electric rates for 2023 to 2026. Favorable variances were partially offset by lower earnings for ASUS of $0.06 per share due mostly to timing differences of construction activities. KSUS plans to catch up on construction during the second half of the year and is still expecting to contribute $0.59 to $0.63 per share for the year. There is also a $0.03 per share favorable variance from gains generated on our investments to fund one of the company's retirement plans. And the dilutive effects from the issuance of equity under American States waters at the market offering program decreased consolidated earnings by $0.03 per share. For the year to date June 30th, earnings were $1.57 per share, $0.10 per share higher than last year. I'm also pleased to report that last week our Board approved a sizable dividend increase of 8.3%. The annualized dividend rate after this increase is and 1.6 cents per share. This increase reflects our board's confidence in the company's ability to achieve long-term, sustainable earnings growth. We believe a growing dividend allows the company to attract capital for investments in its infrastructure that enable us to provide safe and reliable services to our customers and return value to our shareholders. American States Water has paid dividends every year since 1931, increasing the dividends received by shareholders each calendar year now for 71 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. We continue to invest in our water and electric systems for the long-term benefit of our customers. Our regulated utilities are on pace to invest a combined $170 to $210 million in infrastructure investments this year. Golden State Water Company has completed a transaction with a developer to own and operate the water and wastewater system assets, serving a new planned community to be built out over time. and is expected to have approximately 1,300 customer connections, generating two revenue streams for delivering water and wastewater services to this community for many years to come. With that, I'll turn the call over to Eva to discuss earnings and liquidity.

Thank you, Bob. And hello, everyone. Let me start with our second quarter results. Recorded consolidated earnings were 87 cents per share for the quarter compared to 85 cents per share for the second quarter of last year. For our water utility, Golden State Water, reported earnings were 73 cents per share as compared to 67 cents per share last year. The 6 cents per share increase in 2025 was largely due to new 2025 water rates as a result of receiving the final decision on Golden State Waters' general rate case, and higher gains generated on investment held to fund a retirement plan as compared to the same period in 2024, partially offset by higher operating expenses. Lastly, there was a decrease in earnings of $0.02 per share due to dilutive effects from the issuance of equity under AWR's at the market offering program. Our electric segment earnings were $0.03 per share for the quarter as compared to $0.01 per share for the same quarter last year, a $0.02 per share increase. Primarily due to receiving the final CPUC decision on the electric generate case with new 2025 electric rates as compared to 2022 rates, used to record revenue during the second quarter of 2024. Earnings from ASUS were 13 cents per share for the quarter, compared to 19 cents per share of the same quarter last year, largely due to the timing of construction activity, which Bob will discuss further later in the call. Lastly, losses from our parent company were 1 cents per share for the quarter, when compared to losses of two cents in the same quarter of 2024 due largely to a decrease in interest expense resulting from lower average interest rates partially offset by higher borrowing levels at AWR credit facility. Consolidated revenue for the second quarter increased by $7.7 million when compared to the same period of 2024 Revenues for the water segment increased by $9.3 million, largely due to new 2025 water rates as a result of receiving a final decision in Golden State Water's general rate case, with new rates effective January 1, 2025. Revenues for the electric segment increased by $4.2 million, mainly due to new 2025 electric rates as compared to 2022 rates, used to record revenue during the second quarter of last year. Revenues from SUS decreased $5.8 million primarily due to lower construction activities during the quarter as a result of the timing when the work was performed. Turning to slide 9. Supply costs increased by $4.7 million, mostly due to higher per unit water supply costs. Looking at total operating expenses other than supply costs, consolidated expenses increased by $3.9 million compared to 2024. This increase includes the impact of the electric generator decision issued in January, which authorized higher operating expenses primarily for vegetation management and other wildfire mitigation efforts. These costs were previously excluded from customer rates and not expensed in the second quarter of last year, as they were being tracked in memorandum accounts. They are now included in the adopted electric revenues. In addition, the increase was due to higher overall operating expenses partially offset by lower-edged U.S. construction expenses. Lastly, there was an increase in other income, net of other expense of $2.1 million, due largely to higher gains generated on investment held to fund a retirement plan during the quarter due to financial market conditions. Slide 10 shows the EPS bridge. comparing reported EPS for second quarter of 2025 against the same period for 2024. Consolidated earnings for the six months ended June 2025 were $1.57 per share compared to $1.47 per share for same period last year, an increase of $0.10 per share. The increase is largely generated from higher earnings at our regulated utilities. Turning to liquidity on slide 12, net cash provided by operating activities were $109.6 million for the first six months of the year compared to $70.5 million last year, with the increase largely related to the implementation of new rates at our regulated utilities from approved general rate cases, as well as the implementation of various approved surcharges or additional base rates from advice letter filings. In addition, the increase also resulted from differences in timing of billing and cash receipts for construction work at SUS's military bases and the timing of its vendor payments. For investing activities, our regulated utility invested $97.9 million on company-funded capital projects in the first half of the year and will project to be on target to reach $170 to $210 million for the year. For financing activities, American States Water Under is at the market offering program raised proceeds of $25.6 million during the first half of the year, net of issuing costs and legal costs. In May of this year, Golden State Water issued $100 million in unsecured private placement notes that matured in 2032 and 2037. In addition, Earlier during the quarter, both American States Water and Golden State Water executed amendments to their credit agreements to extend their credit facility terms from June 2028 to June of 2029. As part of this amendment, American States Water also extended its credit facility borrowing capacity from $165 million to $195 million. In early July, Standard & Poor's global ratings affirm a credit rating of A-stable for American States water and an A-plus stable rating for Golden State water. These are some of the highest credit ratings in the U.S. investor-owned water utility industry. With that, I'll turn the call back to Bob.