American States Water Reports Strong Financial Performance in 2025 Earnings Call

In its latest earnings call, American States Water demonstrated a robust financial performance for the year 2025, marked by significant growth in revenue and earnings per share. The company continues to navigate the complexities of the water utility sector while implementing strategic initiatives to enhance its market positioning. With a focus on operational efficiency and long-term growth, American States Water remains committed to delivering value to its shareholders.

Financial Performance

American States Water reported consolidated earnings per share (EPS) of $3.37 for the full year of 2025, an increase from $3.17 in 2024. This reflects a 10.9% growth year-over-year, driven primarily by the implementation of new rates and higher earnings from its regulated utilities. Notably, excluding a one-time tax benefit of $0.13 per share recorded in 2024, the adjusted EPS for 2025 shows a solid increase from $3.04 per share in the prior year.

Key financial metrics from the earnings call include:

• Total revenue increased significantly, with a notable $9.5 million rise in revenue from outside the U.S. due to heightened construction activities.
• Operating expenses, excluding supply costs, rose by $4.2 million compared to 2024, primarily attributed to higher construction expenses and increased operational costs.
• The net cash provided by operating activities was $229.7 million, an increase from $198.7 million in 2024, bolstered by new rates and various approved surcharges.

The company also noted an increase in interest expenses, though this was partially offset by a reduction in overall interest expenses due to lower borrowing levels. The increase in other income, mainly from gains on investments held for retirement plan funding, also contributed positively to overall financial performance.

Strategic Initiatives

In 2025, American States Water undertook several strategic initiatives aimed at enhancing its operational capabilities and market presence. Key highlights include:

• Regulatory Approvals: In January 2025, the California Public Utilities Commission (CPUC) approved a new rate structure for Golden State Water, transitioning to a modified rate adjustment mechanism. This change is crucial for managing future revenue fluctuations and improving financial stability.
• Infrastructure Investments: The company invested $210.9 million in capital projects in 2025, reflecting its commitment to enhancing service delivery and operational efficiency. The approved capital investment of $573.1 million for infrastructure projects over the next several years underscores the long-term growth strategy.
• Acquisition Efforts: American States Water has been proactive in expanding its service offerings. The company filed an application with the CPUC to acquire water system assets from Norwalk, which is expected to increase revenues by approximately $1 million if approved.
• Community Development: The company is also involved in acquiring water and wastewater system assets in new developments, such as the planned community on California's Central Coast, which is expected to serve up to 1,300 customers.

These initiatives align with American States Water's strategic vision to enhance its operational footprint while delivering essential services to its customers.

Future Outlook

Looking ahead, American States Water's management provided optimistic guidance for 2026 and beyond. Key expectations include:

• Earnings Growth: The company projects that its military base contractor subsidiary, ASUS, will contribute between $0.63 and $0.67 per share in 2026, reflecting ongoing contract awards and operational growth.
• Dividend Growth: The company raised its dividend by 8.3% in the third quarter of 2025, maintaining a compound annual growth rate of 8.5% over the last five years. This commitment to increasing dividends aligns with its long-term goal to achieve a CAGR of over 7%.
• Rate Structure Stability: The new rate structures implemented by the CPUC are expected to provide greater revenue stability for Golden State Water, which will mitigate fluctuations due to changes in water consumption.
• Market Positioning: American States Water's infrastructure investments and strategic acquisitions position the company favorably within the competitive landscape, allowing it to capitalize on growth opportunities in the water utility sector.

Management expressed confidence in the company's ability to navigate challenges and leverage its strategic advantages to drive future growth.

Conclusion

In conclusion, American States Water's performance for 2025 reflects a solid foundation for future growth, driven by strong financial results and strategic initiatives. The company's commitment to infrastructure investment, regulatory compliance, and shareholder returns positions it well for sustained success in the evolving utility landscape. As American States Water continues to enhance its operational capabilities, investors can look forward to a promising outlook characterized by stability and growth potential. The company's proactive approach to navigating regulatory changes and expanding its service offerings reinforces its status as a leader in the water utility sector.

With a track record of delivering value to shareholders and a clear strategic vision, American States Water remains poised for success in the years to come.