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AS

AMERICAN STATES WATER CO (AWR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EPS of $1.06 grew 11.6% YoY, with increases across all segments; revenue rose 13.0% YoY to $182.7M, driven by CPUC-approved rate increases at regulated utilities and higher construction activity at ASUS . Versus S&P Global consensus, AWR beat on EPS by $0.06 (actual $1.06 vs $1.00*) and on revenue by ~$3.9M (actual $182.7M vs $178.8M*) . Values retrieved from S&P Global.
  • Management lifted the low end of 2025 capex target to $180–$210M (from $170–$210M prior), reiterating nearly ~$650M of authorized capex across recent GRCs; ASUS FY25 EPS contribution guidance maintained at $0.59–$0.63, with initial FY26 view introduced at $0.63–$0.67 .
  • Strategic/regulatory catalysts: CPUC approved initial Sutter Pointe rates (3,800 connections over next five years; 17,500 dwellings long term) and BVES solar + battery storage settlement pending CPUC decision by 1Q26, supporting rate base growth and resiliency .
  • Watch items: transition to MRAM (Monterey-style decoupling) and incremental supply cost balancing introduces consumption and water-mix-driven earnings volatility; ATM share issuance remained dilutive (~$0.02/sh QoQ; $68M capacity remaining) .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based EPS growth across segments; CEO: “recorded earnings per share for the third quarter were $0.11 per share higher… Favorable variance is attributable to… CPUC… authorized new water [2025–2027] and electric [2023–2026] rates, and higher earnings for ASUS” .
    • ASUS execution improved with higher construction activity and resolved economic price adjustments; Q3 contribution +$0.08/sh YoY; FY25 guidance $0.59–$0.63 reaffirmed .
    • Regulated growth visibility: nearly $650M authorized capex, on pace to invest $180–$210M in 2025; Sutter Pointe initial rates approved; long-lived customer growth runway .

  • What Went Wrong

    • New regulatory mechanisms increase volatility: MRAM and incremental supply cost balancing reduce decoupling protection; higher per-unit purchased water costs lifted supply costs YoY .
    • Elevated operating expenses (vegetation management, wildfire mitigation, outside services) at BVES offset part of revenue uplift from new rates .
    • Continued equity dilution under ATM (~$0.02/sh negative impact this quarter; $68M capacity remaining) and higher parent-level interest expense pressured parent EPS .

Financial Results

  • Consolidated headline comparison
MetricQ3 2024Q2 2025Q3 2025
Total Operating Revenues (USD)$161.8M $163.1M $182.7M
Diluted EPS (GAAP)$0.95 $0.87 $1.06
Operating Income (USD)$55.1M $51.0M $61.7M
Net Income (USD)$35.8M $33.7M $41.2M
  • Margins
MetricQ3 2024Q2 2025Q3 2025
Operating Margin %34.0% (55,068/161,782) 31.3% (50,959/163,066) 33.8% (61,733/182,716)
Net Income Margin %22.2% (35,834/161,782) 20.7% (33,690/163,066) 22.5% (41,167/182,716)
  • Actual vs S&P Global Consensus (Q3 2025)
MetricConsensus*Actual
Revenue (USD)$178.8M*$182.7M
EPS (GAAP)$1.00*$1.06
# of EstimatesRev: 2*; EPS: 1*—

Values retrieved from S&P Global.

  • Segment revenue (YoY and seq)
Segment Revenues (USD)Q3 2024Q2 2025Q3 2025
Water$124.0M $119.7M $132.3M
Electric$9.0M $12.9M $13.3M
Contracted Services$28.7M $30.4M $37.1M
  • Segment EPS contribution (diluted)
Segment EPSQ3 2024Q2 2025Q3 2025
Water$0.84 $0.73 $0.86
Electric$0.02 $0.03 $0.04
Contracted Services$0.11 $0.13 $0.19
AWR (Parent)($0.02) ($0.01) ($0.03)
Consolidated$0.95 $0.87 $1.06
  • KPIs
KPIQ3 2025Prior/Context
Authorized capex across recent GRCsNearly $650M —
2025 capex outlook$180–$210M; “on target” Q2 outlook $170–$210M
ASUS FY25 EPS contribution guidance$0.59–$0.63 Reaffirmed from Q1/Q2
ASUS new capital upgrade awards (YTD)$28.7M, to be completed through 2028 —
Dividend per share (Q4 payable Dec 2)$0.5040; +8.3% YoY Prior increase announced July 29
ATM program remaining capacity$68M; 1,680,979 shares sold through 9/30/25 —
Weighted avg diluted shares (quarter)38.702M (Q3’25) vs 37.683M (Q3’24) —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
2025 CapexFY 2025$170–$210M $180–$210M Raised low end
ASUS EPS contributionFY 2025$0.59–$0.63 $0.59–$0.63 Maintained
ASUS EPS contributionFY 2026—$0.63–$0.67 (mgmt view) New
Dividend (quarterly)Q4 2025$0.5040 (post-July increase) $0.5040 declared Oct 28, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Regulatory design (MRAM) and supply cost mechanismTransition from full decoupling to MRAM; potential volatility; favorable water-mix tailwind in Q1–Q2 Continued emphasis on potential volatility; higher per-unit purchased water costs increased supply expense Cautious/Volatile
Electric wildfire mitigation cost recoveryInclusion in rates; higher opex tracked in memos previously Higher vegetation and wildfire mitigation expenses offset part of rate uplift Embedded/offsetting
ASUS activity and earningsQ1: construction weighed by weather; Q2: timing reduced activity; FY25 guide $0.59–$0.63 Q3: construction ramp; FY25 guide reaffirmed; FY26 initial view $0.63–$0.67 Improving
Growth projects (San Juan Oaks, Sutter Pointe)San Juan Oaks closing; initial assets conveyed CPUC approved Sutter Pointe initial rates (2026–2028); up to 3,800 connections in 5 years; 17,500 dwellings long term Advancing
Renewable/storage initiative at BVES—Solar + battery storage settlement (cost ~$28M + AFUDC) pending CPUC approval; decision expected by 1Q26 Pending approval
Capital plan and rate baseStrong capex plan and high credit ratings affirmed On pace $180–$210M; reiterated robust rate base growth outlook Stable/positive
Equity issuance/dilutionATM in place; modest dilution ~$0.02/sh dilutive impact in Q3; $68M capacity remains Ongoing

Management Commentary

  • Strategic focus and drivers: “Favorable variance is attributable to… CPUC… authorized new water and electric rates, and higher earnings for ASUS.”
  • Investment and growth: “Our regulated utilities are on pace to invest a combined $180–$210 million… Our water utility recently received CPUC approval to provide water services at another new planned community…”
  • ASUS pipeline: “ASUS was awarded $28.7 million in new capital upgrade construction projects… to be completed through 2028… we project that ASUS will contribute $0.63–$0.67 per share [in 2026].”
  • Dividend discipline: “We raised our dividend by 8.3%… CAGR of 8.5% over the last five years… policy to achieve a CAGR… of more than 7% over the long term.”
  • Regulatory caution: “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…”

Q&A Highlights

  • ASUS outlook and cadence: Management framed FY26 EPS contribution of $0.63–$0.67, supported by ~$29M YTD capital upgrade awards and prior ~$55M awards, noting limited likelihood of a new base in 2026 given transition periods .
  • Translating new customer connections to rate base: Management noted acquisitions via incremental phases and timing uncertainty tied to developer home sales; distribution infrastructure is favorable, but forecasting precise rate base additions is challenging .
  • Rate base trajectory and advice letters: Discussion highlighted spending slightly ahead to meet CA earnings test and large advice letter backlog ($76M authorized to file), with adds to rate base as projects close and rates reset next year .
  • M&A posture: Management does not see the announced American Water–Essential Utilities merger materially impacting AWR’s strategy; open to bolt-on deals where regulatory frameworks are neutral to positive .

Estimates Context

  • Q3 2025 actuals versus S&P Global consensus: EPS $1.06 vs $1.00* (beat $0.06); revenue $182.7M vs $178.8M* (beat ~$3.9M). Limited coverage (EPS: 1 estimate; revenue: 2 estimates) tempers confidence in the magnitude of the beat . Values retrieved from S&P Global.
  • Implications: With regulated rate increases in place and ASUS construction activity improving, FY25 ASUS contribution guidance remains intact; estimate revisions may trend modestly higher on ASUS execution and higher electric revenues, offset by MRAM/supply-cost volatility and ongoing ATM dilution .

Key Takeaways for Investors

  • Quality beat: Broad-based EPS and revenue beats versus consensus*, driven by regulated rate implementation and ASUS construction strength; margin profile improved sequentially as operating leverage returned in Q3 . Values retrieved from S&P Global.
  • Regulated growth runway intact: Nearly $650M authorized capex and raised low-end 2025 spend to $180M underpin multi-year rate base growth at GSWC/BVES .
  • ASUS inflecting: Stronger construction and EPA resolution support FY25 guide; early FY26 view ($0.63–$0.67) adds visibility to mid-teens YoY growth potential .
  • Mechanism risk: MRAM and incremental supply cost balancing reintroduce volume/mix sensitivity; higher purchased water costs can pressure unit economics, warranting closer monitoring of consumption and source mix .
  • Wildfire cost normalization: Inclusion of vegetation/wildfire mitigation in BVES rates increases expense base but stabilizes recovery; pending solar+storage approval would aid resource adequacy and cost control longer term .
  • Capital markets: ATM issuance is dilutive (~$0.02/sh this quarter; $68M capacity remaining); supportive A/A+ credit ratings enable funding for elevated capex while maintaining balance sheet strength .
  • Dividend compounder: 8.3% increase to $0.5040/qtr and >7% long-term growth policy remain intact—an anchor for total return amid regulated growth .

Appendix: Source Excerpts and Data

  • Consolidated financials and segment contributions (Q3 2025): detailed tables and reconciliation in Exhibit 99.1 of the 8-K .
  • Q3 2025 call transcript: prepared remarks on regulatory outcomes, capex, ASUS awards; Q&A on ASUS cadence, rate base/advice letters, and M&A posture .
  • Prior quarters for trend analysis: Q2 2025 PR and financials; Q1 2025 PR and financials .