American States Water Company

Ladies and gentlemen, thank you for standing by and welcome to the American States Water Company conference call discussing the company's first quarter 2026 results. This 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 May 14th on the company's website at www.aswater.com. The slides that the company will be referring to are also available on the website. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. This call will be limited to one hour. Presenting today from American States Water Company are Mr. Bob Sprouse, President and Chief Executive Officer, and Ms. Eva Tang, Senior Vice President of Finance and Chief Financial Officer. As a reminder, certain matters discussed during the conference call may be 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 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 to unknown risk, uncertainties, and other factors. Listeners should review the company's Description of the company's risk 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 the date of this call and expect, 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 rules. 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 would like to turn the call over to Mr. Bob Sprouse, President and Chief Executive Officer of American States Water Company. Please go ahead, sir.

Thank you, Chuck. Welcome, everyone, and thank you for joining us today. I'll begin with a discussion of the quarter. Eva will discuss some financial details, and then I'll wrap it up with updates on regulatory activity, ASUS, and dividends, and then we'll take your questions. We started 2026 with strong financial results, and I'm pleased to report consolidated earnings per share for the quarter of 76 cents compared to 70 cents for the same quarter in 2025, an increase of 8.6%. All three of our operating business segments performed well and reported year-over-year increases. Our regulated utilities are on pace to invest the combined $185 to $225 million in infrastructure investments this year as we continue to invest in our water, wastewater, and electric utility systems for the long-term benefit of our customers. We saw the benefits this quarter of step rate increases for both our water and electric utilities. We filed a new electric general rate case in January covering 2027 through 2030 and are poised to file a new water general rate case in July covering 2028 through 2030. In addition, our cost of capital application was deferred for another year, which I'll discuss later. Our contracted services segment performed much higher construction activity during the quarter, and we continue to have strong water utility, electric utility, and contracted services businesses. American States Water remains a leader with our strong earned return on equity and dividend histories, and we continue to deliver value and returns to our shareholders. Lastly, we were recently recognized on Newsweek's list of most trustworthy companies in America and ranked number one in the energy and utilities industry. It is an honor to be recognized based on the views of our key stakeholders, made up of customers, employees, and investors. With that, I'll turn the call over to Eva to discuss earnings and liquidity.

Thank you, Bob. Let me start with our first quarter results. Reported consolidated earnings were $0.76 per share as compared to $0.70 per share for the first quarter of 2025. For our water utility, Golden State Water, reported earnings were $0.55 per share compared to $0.52 per share for the first quarter of last year. The $0.03 per share increase was largely due to new water rates for 2026, including additional revenues associated with a vice-ledger capital project approved last year, partially offset by higher water supply costs, overall operating expenses, interest expense, net of interest income, other expense, net of other income, and income taxes. Lastly, there was a decrease in earnings of $0.01 per share due to the dilutive effect from shares issued under the parent company's ad market offering program. Our electric segment reported earnings were $0.08 per share for the quarter as compared to $0.07 per share for the same quarter last year. The $0.01 per share increase is primarily related to rate increases, partially offset by higher overall operating and interest expenses. Earnings from ASUS were $0.15 per share for the quarter compared to $0.13 per share for the same quarter last year, an increase of $0.02 per share, largely due to higher construction activities and lower interest expenses. partially offset by increasing operating expenses. Slide A shows consolidated revenue for the first quarter. The revenue increased by $21.2 million when compared to the same quarter of 2025. Revenue for the water segment increased by $11.1 million, largely due to new 2026 water rate. Revenue for the electric segment also increased by $3.7 million, mainly due to fourth-year array increases and additional revenues from approved advice letter projects in 2025. Revenues from SUS increased $6.4 million, largely driven by higher construction activities during the quarter due to timing. Turning to slide 9, supply costs increased by $5.1 million, mostly driven by higher overall per unit purchase water costs, included in water rates in 2026 with no impact to net earnings, and higher purchase water volume when compared to the same quarter last year. Looking at the total operating expenses other than supply costs, Consolidated expenses increased by $10.2 million compared to 2025. The increase was due to higher ASUS construction expenses resulting from an increase in construction activity and overall increase to operating expenses, some of which is due to timing. In addition, there was an increase in interest expense, net of interest income, largely from the impact of capitalizing debt costs related to certain advice letter projects approved by the CPUC in the latest water general rate case that was recorded in 2025 with no similar items in 2026, and the reduced interest income from a decrease in regulatory asset balances for both regulated utilities, partially offset by a decrease in overall interest expense. Slide 10 shows the earnings per share bridge comparing reported earnings per share for the first quarter of 2026 against the same period for 2025. Turning to liquidity on this slide, net cash provided by operating activity was $71.6 million for the first quarter of 2026. compared to $45.1 million for the same period in 2005. The increase is largely related to the implementation of new rates at our regulated utilities from approved general rate case proceedings, as well as various approved surcharges and additional base rates from advised letter filing. The increase also resulted from billing and cash receipts for work at US's military bases and timing of its vendor payments. For investing activities, our regulated utility invested $42.1 million on company-funded capital projects in the first quarter of this year. We project company-funded capital expenditure to reach $185 to $225 million for the full year of 2026. For financing activities, American States water under its at-the-market offering program raised proceeds of $6.2 million during the quarter, net of insurance and legal costs, leaving a remaining balance of $34.3 million available for insurance under the program. We do not expect to continue the ATM program once the remaining balance has been fully utilized. With that, I'll turn the call back to Bob.