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 third quarter 2026 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 November 12th on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website. 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 your telephone keypad. 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 Sprowls, 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 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 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 date of this call and accept as required by law. The company does not undertake any obligation to publicly update or revise any forward-looking statement. 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 will turn the call over to Bob Sprowls, President and Chief Executive Officer of American States Water Company.

Thank you, Chloe. 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. Reported earnings per share for the third quarter were $1.06, consistent with reported earnings from last year. However, this year's third quarter included a 5 cent per share unfavorable period over period impact from changes in returns on investments helped to fund one of the company's retirement plans driven by volatile market conditions. Removing the effects of the gains and losses on investments from both periods, adjusted earnings for the third quarter of 2026 remained at $1.06 per share as compared to adjusted earnings of $1.01 per share for the same period in 2025. an increase of five cents per share. All three of our operating business segments have performed well year-to-date and report year-over-year earnings increases. On the regulatory front, Golden State Water filed its general rate case in July with the California Public Utilities Commission or CPUC to set new rates for the years 2028 through 2030. The filing included a request for capital investments of approximately $1 billion over the rate cycle. In July, Golden State Water and the Public Advocates Office at the CPUC, or Cal Advocates, filed a joint settlement to approve the acquisition of an existing water system that serves almost 900 customer connections located in the city of Norwalk in Los Angeles County. We continue to seek opportunities to expand our regulated water operations. Our regulated utilities are on pace to invest $185 to $220 million in infrastructure investments for the full year as we continue to invest in our water, wastewater, and electric utility systems for the long-term benefit of our customers. ASUS continues to secure funding from the U.S. government for new construction projects at the bases we serve and was awarded $31 million in new capital upgrade construction projects during the nine months ended September 30th of this year. These newly awarded projects are expected to be completed through 2029. With that, I'll turn the call over to Eva to discuss earnings and liquidity.

Thank you, Bob. Hello, everyone. I'll begin on slide seven. As Bob mentioned, our consolidated reported earnings were $1.06 per share and were flat compared to last year. But included in the quarterly consolidated and water segment earning comparison was an unfavorable variance of $0.05 per share related to gains generated on investment in the third quarter of 2025 compared to a small loss generated in the current quarter. Discluding the impact of gains and losses on investments from both periods, adjusted consolidated earnings remain at $1.06 per share for the current quarter compared to adjusted earnings of $1.01 per share last year, an increase of $0.05 per share. The increase in adjusted net earnings resulted largely from the implementation of new customer rate increases approved by the CPUC at our regulated utilities. Our water utility, Golden State Water, reported earnings of 85 cents per share as compared to 86 per share for the third quarter of last year, or 85 cents per share as adjusted for 2026, as compared to adjusted earnings of $0.81 per share for the same period in 2025, an increase of $0.04 per share, while excluding the effect of gain and losses on investment as discussed. The $0.04 per share increase in adjusted earnings was due to an increase in water rates for 2026, including additional revenue associated with a completed device leather capital project filed and approved for recovery in late 2025, partially offset by increasing operating expenses and interest expenses, net of interest income, as well as a higher effective income tax rate. Lastly, there was a decrease in earnings of $0.02 per share due to the dilutive effect from the share insurances under the parent company's as the market offering program. Our electric segments reported earnings were $0.05 per share for the quarter as compared to $0.04 per share for the same quarter last year. The $0.01 per share increase is from rate increases partially offset by higher operating and interest expenses and the higher effective income tax rate. Earnings from ASUS were $0.17 per share for the quarter compared to 19 cents per share for the same quarter last year. A decrease of 2 cents per share primarily from an increase in overall operating and construction expenses partially offset by an increase in total revenue recognized. There was also a decrease of 2 cents per share in losses from our parent company. This decrease is principally from a decrease in interest expense resulting from lower borrowing levels under its credit facility and lower interest rates. The decrease in borrowing needs was driven primarily by additional proceeds raised under the company's ATM offer program. Consolidated revenue for the third quarter increased by $9.89 when compared to the same quarter of 2025. Revenues increased by $7.6 million in the water segment and $1.6 million in the electric segment, driven mostly by the new 2026 rate and additional revenues associated with the vice-ledger project approved in 2025. Revenue from SUS increased $6.6 million, primarily due to higher management fees. Turning to slide 9, overall operating expenses increased by $4.2 million. Looking at total operating expenses other than supply costs, expenses increased by $3.7 million compared to last year. The increase comes largely from higher depreciation and amortization expenses, higher US construction expenses, and higher other operating operation expenses. Interest expense, net of interest income also increased. Largely found a decrease in interest income due to the capitalization of debt costs associated with certain advice letter projects in 2025 with no similar items in 2026. As the project work completed, a new rate took effect in 2026. and reduced interest income from a decrease in regulatory asset balances for both regulated utilities. Lastly, other income decreases during the quarter, mainly due to a change in market conditions that results in gains on investments held to fund Retirement Plan 2025 compared to losses on those investments in 2026. Slide 10 shows the EPS bridge comparing adjusted EPS for the third quarter of 2026 against the same period for 2025. Moving on to slide 11. Consolidated earnings for the nine months ended September 2026 as reported were $2.92 per share compared to $2.63 per share for the same period in 2025, an increase of $0.29 per share. Removing the effect of the gains on investment from both periods, adjust the earnings for year-to-date 2026 were $2.86 per share as compared to adjusted earnings of $2.54 per share in 2025. an increase of $0.33 per share or 12.6%. All three of our operating business segments have performed well and reported year-to-date increases in earnings per share. Turning to liquidity on slide 12, net cash provided by operating activities was largely consistent with last year. The implementation of new rates and surcharges at our regulated utilities added to cash flows from operations. However, the timing of cash receipts and disbursements related to working capital items continues to impact our cash flows from operations. For investing activities, our regulated utilities invested $149.3 million on company-funded Capital Projects here today, and as Bob mentioned earlier, we're on target to reach $185 to $220 million this year. In July, Standard & Poor's affirmed the company's strong credit ratings of A for American States Water with a stable outlook, and an A-plus for Golden State Water with also a stable outlook. 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.