Executive Summary

Q2 2025 delivered modest growth: diluted EPS $0.87 vs $0.85 YoY and net income $33.7m, driven by new CPUC-authorized rates at water and electric; contracted services (ASUS) lagged on construction timing and mix shift, but full-year ASUS contribution was reiterated at $0.59–$0.63 EPS .
Revenues rose to $163.1m from $155.3m YoY, with water up $9.3m from new rates; electric benefited from the BVES GRC decision, while ASUS revenues fell on lower construction activity .
The quarter transitioned to M‑WRAM and an incremental supply cost mechanism at GSWC, creating potential earnings volatility tied to consumption and supply mix; Q2 benefited from a lower-cost pumped water mix versus adopted assumptions .
Dividend increased 8.3% to $0.5040 (annualized $2.016), marking 71 consecutive years of annual increases; S&P affirmed A (AWR) and A+ (GSWC) with stable outlooks, supporting funding for $170–$210m 2025 capex .
Versus S&P Global consensus, AWR modestly missed: EPS $0.87 vs $0.9125* and revenue $163.1m vs $170.6m*; investor focus: decoupling legislation (SB 473), ASUS execution cadence 2H25, and wildfire mitigation cost recovery at BVES .

What Went Well and What Went Wrong

What Went Well
- New rates drove segment EPS gains: Water +$0.06 to $0.73; Electric +$0.02 to $0.03; consolidated EPS $0.87 vs $0.85 YoY .
- Favorable water supply mix (more pumped vs purchased) and higher “other income” from retirement plan investments supported water earnings; management highlighted potential volatility under new mechanisms .
- Credit strength and capital plan intact: S&P affirmed A/A+ ratings; capex target $170–$210m reiterated; dividend raised 8.3% reflecting confidence in sustainable earnings growth .
- Quote: “We had an overall positive and productive second quarter… EPS were $0.02 higher… ASUS plans to catch up on construction during the second half… still expecting to contribute $0.59 to $0.63 per share for the year.” — CEO Robert Sprowls .
What Went Wrong
- ASUS EPS fell $0.06 YoY (to $0.13) and revenues declined $5.8m on lower construction activity timing and higher operating expenses ex-construction .
- Transition from full decoupling to M‑WRAM and incremental supply cost balancing introduces exposure to consumption/supply mix; management explicitly flagged earnings volatility risk .
- Dilution from ATM equity issuance reduced EPS by ~$0.02 in Q2; 1.48m shares sold since program inception through 6/30/25 .

Financial Results

Consolidated performance (oldest → newest)

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Total Operating Revenues ($USD millions)	155.328	143.098	148.013	163.066
Operating Income ($USD millions)	51.748	38.693	45.546	50.959
Net Income ($USD millions)	31.864	28.435	26.844	33.690
Diluted EPS ($)	0.85	0.75	0.70	0.87
Weighted Avg Diluted Shares (millions)	37.418	38.076	38.354	38.642

Segment revenues (Q2 2024 vs Q2 2025)

Segment Revenue ($USD millions)	Q2 2024	Q2 2025
Water	110.424	119.697
Electric	8.703	12.928
Contracted Services	36.201	30.441
Total	155.328	163.066

Segment EPS contribution (Q2)

Segment EPS Contribution ($/share)	Q2 2024	Q2 2025
Water	0.67	0.73
Electric	0.01	0.03
Contracted Services	0.19	0.13
AWR (Parent)	(0.02)	(0.01)
Consolidated (GAAP)	0.85	0.87

Select KPIs (YTD through June)

KPI	YTD 2024	YTD 2025
Diluted EPS ($)	1.47	1.57
Net cash provided by operating activities ($USD millions)	70.5	109.6

Notes: EPS by business segment is a non‑GAAP presentation reconciling to consolidated GAAP EPS in the press release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ASUS EPS contribution	FY 2025	$0.59–$0.63 (Q1 reaffirmed)	$0.59–$0.63	Maintained
Regulated utilities capex	FY 2025	On pace $170–$210m	On target $170–$210m	Maintained
Quarterly dividend	Q3 2025	$0.4655	$0.5040	Raised

Other updates: S&P affirmed A (AWR) and A+ (GSWC), stable outlooks .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
CPUC GRC outcomes and rate mechanisms	Water GRC finalized for 2025–27; BVES GRC finalized for 2023–26; water decision removed full decoupling, moved to M‑WRAM; BVES rates retroactive and wildfire costs recoverable	Management reiterates M‑WRAM and ICBA increase revenue/earnings volatility; BVES new rates support wildfire mitigation opex	Stable, with policy risk noted
Supply mix & cost pass‑through	Q1: favorable pumped water share vs adopted, flagged non‑decoupled volatility	Q2: favorable mix (less purchased water) aided earnings; warns variability may not persist	Volatile but favorable in Q2
ASUS construction cadence	Q4: stable EPS; Q1: weather delays; $56.5m new awards for 2024–27; reiterate FY25 $0.59–$0.63 EPS	Q2: construction timing drove lower Q2; expect catch‑up in 2H; FY guide maintained	Near-term catch-up expected
Legislative decoupling (SB 473)	N/A	CEO “cautiously optimistic” but won’t handicap outcome; timelines noted (Assembly and Governor deadlines)	Watch item; potential structural upside
BVES wildfire mitigation opex	Q1: expenses now in rates; memorandum tracked in 2024	Q2: higher vegetation/wildfire costs now expensed and supported by new rates	Embedded in rates
Capital plan & rate base	Q4/Q1: water rate base CAGR 10.3% (2018–2024); GRC authorizes $573.1m water capex plus advice letters; BVES projects $28m solar+storage pending approval	Capex $170–$210m reiterated; utility plant grew with developer conveyance ($10.7m) for 1,300-connection community	Continued investment momentum

Management Commentary

“We had an overall positive and productive second quarter… Earnings per share were $0.02 higher compared to the same quarter in 2024… ASUS 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.” — Robert Sprowls, CEO .
“Revenues for the water segment increased by $9.3 million… electric increased by $4.2 million… ASUS decreased $5.8 million primarily due to lower construction activities… supply costs increased by $4.7 million mostly due to higher per unit water supply costs… increase in other income net of other expense of $2.1 million due largely to higher gains generated on investments held to fund a retirement plan.” — Eva Tang, CFO .
“Without the continuation of a full revenue decoupling mechanism and a full cost balancing account for water supply, the company may be subject to future volatility in revenues and earnings… Final decision adopted the company’s M‑WRAM rate design proposal… and approved the company’s request for the continuation of a sales reconciliation mechanism.” — CEO .
“S&P… affirmed a credit rating of A stable for AWR and an A+ stable rating for GSWC.” — CFO .

Q&A Highlights

ASUS pacing: Expect higher construction in both Q3 and Q4, “probably more in the fourth,” while reiterating $0.59–$0.63 EPS contribution for FY25 .
Legislative decoupling: Management is “cautiously optimistic” on SB 473 mandating revenue decoupling for water utilities but would not handicap the outcome; highlighted parity with electric utilities and potential affordability benefits for low-income customers .

Estimates Context

Metric	Consensus Mean*	Actual	Surprise
EPS (Primary)	$0.9125*	$0.87	-$0.0425
Revenue ($USD millions)	$170.64*	$163.07	-$7.57

EPS based on 4 estimates; revenue based on 2 estimates*.
Outcome: modest misses on both EPS and revenue; softness tied to ASUS construction timing and higher opex at BVES, partially offset by favorable water supply mix and gains in other income .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Rate relief is flowing through: water and electric segments drove EPS growth; favorable supply mix and higher other income were incremental tailwinds .
The transition to M‑WRAM/ICBA introduces genuine earnings variability tied to consumption and supply mix; monitor weather/demand and supply sourcing as key quarter-by-quarter drivers .
ASUS is a 2H‑weighted story in 2025; Q2 miss was timing-related, with management planning catch-up in Q3–Q4 and reiterating $0.59–$0.63 EPS contribution .
BVES wildfire mitigation costs are now expensed and supported by rates; electric revenues increased with new GRC decision; track CPUC approval of $28m solar+storage settlement for incremental long-term benefits .
Capital deployment remains robust and supported by investment-grade ratings; reiterated $170–$210m 2025 capex and ongoing rate base growth .
Share count drift from ATM issuance is a continuing headwind to per-share metrics; Q2 dilution ~2c and 1.48m shares issued since program start through 6/30/25 .
Near-term stock catalysts: progress on SB 473 decoupling, ASUS construction ramp execution, and any updates on supply mix and consumption under M‑WRAM .

Appendices

Additional Q2 press release and financial details:

Consolidated Q2 2025 income statement and segment EPS reconciliation included in the 8‑K Exhibit 99.1 and press release .
Developer conveyance: GSWC recorded a $10.7m non‑cash increase to utility plant tied to a new 1,300‑connection planned community; two revenue streams (water and wastewater) expected as connections come online .

All figures from company documents are cited accordingly. Estimates marked with an asterisk are sourced from S&P Global.*

AMERICAN STATES WATER CO (AWR)·Q2 2025 Earnings Summary