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    AWR
    Earnings call· Jun 2026(Q2 FY26)

    AMERICAN STATES WATER Q2 FY26 earnings call AWR

    Aug 6, 2026 Source

    Executive summary

    American States Water Q2 FY26 — Strong Earnings Growth Driven by Water Segment and Dividend Increase

    American States Water delivered a strong second quarter, with consolidated EPS rising 25.3% to $1.09, primarily fueled by new rates and increased consumption in its Water segment. The company also announced an 8.2% dividend increase, reflecting confidence in long-term growth. While regulatory frameworks and capital investments support future growth, management noted uncertainty regarding the continuation of favorable water consumption and supply mix trends for the remainder of 2026.

    Highlights

    5

    • Consolidated EPS increased by $0.22 or 25.3% to $1.09 in Q2 FY26.

    • Water segment EPS increased by $0.18 per share, driven by new rates and a 4% increase in water consumption.

    • Board approved an 8.2% dividend increase, resulting in an annualized dividend rate of $2.82 per share.

    • Completed $200 million at-the-market equity offering program, with no plans for further equity issuance through 2029.

    • Affirmed strong credit ratings of A for AWR and A+ for Golden State Water by S&P.

    Concerns

    3

    • Uncertainty whether favorable Q2 conditions (4% water consumption increase, favorable supply mix) will continue through H2 2026 or if their positive earnings impact will reverse.

    • Consolidated operating expenses increased by $4.6 million compared to 2025, largely due to higher ASUS construction expenses and overall operating expenses.

    • Interest expense net of interest income increased due to capitalization of debt costs related to certain isolated projects in 2025 with no similar items this year, and reduced interest income from a decrease in regulatory asset balances.

    Guidance & targets

    10
    CategoryTargetConfidence
    ASUS projected EPS contribution
    $0.63 to $0.67 per share
    medium materiality
    High
    Dividend compound annual growth rate
    more than 7%
    high materiality
    High
    Company-funded capital expenditures
    $185 million to $200 million
    high materiality
    High
    Electric GRC capital budgets
    approximately $133 million
    medium materiality
    High
    Electric GRC capital projects for advice letters
    approximately $17 million plus AFUDC
    low materiality
    Medium
    Electric GRC Return on Equity (ROE)
    11.3%
    medium materiality
    High
    Electric GRC Embedded Cost of Debt
    5.92%
    medium materiality
    High
    Electric GRC Capital Structure
    60% equity and 40% debt
    medium materiality
    High
    Electric GRC Return on Rate Base
    9.15%
    medium materiality
    High
    Water GRC capital budgets
    approximately $1 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Water
    The $0.18 per share increase was largely due to new water rates for 2026, including additional revenues associated with approved capital projects in late 2025 and higher gains generated on investments for a retirement plan, partially offset by an increase in water supply costs, interest expense, net of interest income, and the effective income tax rate.
    EPS: $0.91 per share (Q2 FY26)EPS: $0.73 per share (Q2 FY25)Water consumption increase: 4%
    		$11.4 million increase———
    Electric
    The $0.01 per share increase is primarily related to rate increases, partially offset by higher overall operating and interest expenses.
    EPS: $0.04 per share (Q2 FY26)EPS: $0.03 per share (Q2 FY25)
    		$700,000 increase———
    Contracted Services (ASUS)
    Largely due to higher construction activities, an increase in management fee revenues from the resolution of various economic price adjustments and lower interest expenses partially offset by an increase in operating expenses.
    EPS: $0.16 per share (Q2 FY26)EPS: $0.13 per share (Q2 FY25)
    		$6.2 million increase———

    Operational metrics

    12
    Consolidated Adjusted EPS
    $1.09up $0.22 or 25.3% YoY
    Q2 FY26

    Our reported earnings per share for the second quarter was $1.09 compared to $0.87 for the same quarter in 2025, an increase of $0.22 or 25.3%.

    Consolidated Adjusted EPS
    $0.87
    Q2 FY25

    Our reported earnings per share for the second quarter was $1.09 compared to $0.87 for the same quarter in 2025

    Consolidated Adjusted EPS
    $1.86up $0.29 YoY
    6 months ended June 2026

    Consolidated earnings for the 6 months ended June 2026 were $1.86 per share compared to $1.57 per share for the same period in 2025 an increase of $0.29 per share.

    Consolidated Adjusted EPS
    $1.57
    6 months ended June 2025

    Consolidated earnings for the 6 months ended June 2026 were $1.86 per share compared to $1.57 per share for the same period in 2025

    Consolidated operating expenses
    $4.6 million increasevs 2025
    Q2 FY26

    The remaining consolidated operating expenses increased by $4.6 million compared to 2025, largely due to higher ASUS construction expenses from an increase in construction activity and overall increase in operating expenses.

    Net cash provided by operating activities
    $116.6 millionvs $109.6 million YTD 2025
    YTD 2026

    Net cash provided by operating activities were $116.6 million for year-to-date 20 as compared to $109.6 million for the same period last year.

    Equity offering program proceeds
    $200 millionmaximum aggregate offering capacity
    since Feb 2024

    We successfully completed our at-the-market equity offering program in June, reaching the maximum aggregate offering capacity of $200 million in gross proceeds raised since the program was first established in February 2024.

    Equity offering program proceeds (net)
    $39.9 million
    H1 FY26

    American States Water under its ad market offering program rates proceeds of $39.9 million during the first half of the year, net of issuing cost and legal costs.

    Water segment adopted operating revenues less water supply costs
    $32 million increasevs FY25
    FY26

    This approval results in higher adopted operating revenues less water supply costs for the full year 2026 of $32 million compared to adopted operating revenues less water supply cost for 2025.

    Water segment advice letter capital projects revenue
    nearly $11 million
    FY26

    Included in the 2026 increase is nearly $11 million related to advice letter capital projects.

    Water segment adopted operating revenues less water supply costs
    $23 million increasevs FY24
    FY25

    In comparison, the net change in adopted operating revenues less water supply cost in 2025 over 2024 adopted levels was $23 million.

    Bear Valley Electric capital projects approved for recovery
    $27.9 million
    2025 and 2026

    There were also additional increases in revenues in 2025 and 2026 associated with $27.9 million of capital projects including AFUDC, approved for recovery through advice letters that were completed and placed in service.

    Industry KPIs

    6
    MetricValueDetails
    Retail sales growth4%%
    Adjusted operating EPS$1.09USD per share
    Dividend per share growth8.2%%
    Regulatory rate base growth11.3%%
    Equity hybrid financing atm issuance$200 millionUSD
    CAPEX multi year capital investment plan$185 million to $200 millionUSD

    Deals & partnerships

    1
    Public Advocates Office at the California Public Utilities Commission (Cal Advocates)Acquisition of an existing water system in Norwalk, Los Angeles County

    serves almost 900 customer connections located in the city of Norwalk in Los Angeles County. If the settlement agreement is approved by the CPC system will be incorporated into one of Golden State Water's existing ratemaking areas.

    Capital programs

    3
    Water General Rate Case Capital Budgetsrequestedapproximately $1 million
    Start: 2028

    Golden State Water filed a general rate case application for all of its water regions and the general office. This general rate case will determine new water rates for the years 2028 through 2030. Golden State Water requested capital budgets of approximately $1 million for the 3-year rate cycle. The stated value of $1 million for a 3-year capital budget for a utility of this size appears to be an ASR error. Given the company's annual capex of $185M-$200M, this is likely intended to be $1 billion or a similar large figure. Capturing as stated with this note.

    Electric General Rate Case Capital Budgetsrequestedapproximately $133 million
    Start: 2027

    Fair Value Electric filed a general rate case application that will determine new electric rates for the years 2027 through 2030 and Among other things, Fair Value Electric requested capital budgets of approximately $133 million for the 4-year rate cycle

    Electric GRC Advice Letter Capital Projectsto be filed for recoveryapproximately $17 million plus AFUDC

    and another approximately $17 million plus AFUDC for capital projects to be filed for revenue recovery through advice letters when the projects are completed.

    Risks & headwinds

    5
    Uncertainty of favorable Q2 conditions continuingremainder of 2026

    Favorable conditions (4% water consumption increase, favorable water supply source mix) may not continue through the remainder of 2026 or their positive earnings impact may reverse.

    Mitigation: Company monitors factors like climate change, conservation efforts, weather conditions, groundwater quality issues, and operating conditions of groundwater basins.

    Consumption fluctuationsfuture

    Can fluctuate due to factors like climate change, conservation efforts, weather conditions (e.g., El Nino or La Nina events affecting precipitation levels and outdoor water use).

    Mitigation: Company monitors these factors; regulatory mechanisms like modified revenue decoupling and incremental water supply cost balancing account are in place to mitigate some impact.

    Water supply mix changesfuture

    Can occur due to unforeseen groundwater quality issues and changes in the operating conditions of groundwater basins and associated pumping facilities.

    Mitigation: Regulatory mechanisms like modified revenue decoupling and incremental water supply cost balancing account are in place to mitigate some impact.

    Increased consolidated operating expensesQ2 FY26

    Increased by $4.6 million compared to 2025, largely due to higher ASUS construction expenses and overall operating expenses.

    Increased interest expense net of interest incomeQ2 FY26

    Increased due to capitalization of debt costs related to certain isolated projects approved by the CPUC in 2025 (no similar items in 2026) and reduced interest income from a decrease in regulatory asset balances.

    What to watch in Q3 FY26

    3

    Norwalk water system acquisition approval

    Q4 FY26
    CurrentJoint settlement filed, pending CPUC approval
    TargetProposed decision in Q4 2026

    Why it matters

    Approval will lead to increased water revenues and expansion of regulated operations.

    The proposed decision is expected in the fourth quarter of this year.

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 Financial Performance

    American States Water reported strong Q2 FY26 consolidated EPS of $1.09, a 25.3% increase year-over-year. This growth was primarily driven by new customer rates implemented in 2026 for regulated utilities, a 4% increase in water consumption, and higher construction activities in the Contracted Services (ASUS) segment. The Water segment's EPS rose $0.18 per share, while Electric and ASUS segments also saw increases.

    02

    Dividend Policy and History

    The Board approved an 8.2% dividend increase, raising the annualized rate to $2.82 per share. This aligns with the company's long-term policy of achieving a compound annual growth rate in dividends of over 7%. American States Water boasts a 72-year streak of consecutive annual dividend increases, a testament to its financial stability and commitment to shareholder returns.

    03

    Regulatory Filings and Rate Base Growth

    Golden State Water filed a new general rate case application in July 2026 for water rates covering 2028-2030, requesting approximately $1 million (likely ASR error for $1 billion) in capital budgets and reinstatement of full revenue decoupling and supply cost balancing accounts. Bear Valley Electric also filed a GRC for 2027-2030 rates, requesting $133 million in capital budgets. The adopted average water rate base for Golden State Water grew from $980.4 million in 2021 to $1.732 billion in 2026, representing an 11.3% CAGR.

    04

    Capital Investments and Financing

    The company's regulated utilities are on track to invest $185 million to $220 million in infrastructure in FY26. American States Water successfully completed its $200 million at-the-market equity offering program in June 2026, raising $39.9 million net in H1 2026, and does not anticipate issuing additional equity through at least the end of 2029.

    05

    Norwalk Water System Acquisition

    Golden State Water and Cal Advocates filed a joint settlement to acquire a water system serving nearly 900 customer connections in Norwalk, Los Angeles County. If approved by the CPUC, this acquisition is expected to increase water revenues and integrate into an existing ratemaking area, with a proposed decision anticipated in Q4 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.