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American States Water Company Announces Earnings For The Second Quarter Of 2012

Stocks in this article: AWR

American States Water Company (NYSE:AWR) today reported net income from continuing operations of $15.1 million, or $0.79 per basic and fully diluted share for the quarter ended June 30, 2012, as compared to net income from continuing operations of $12.7 million, or $0.68 per basic and fully diluted share for the same period in 2011, a 16% increase in earnings per share. Total basic and fully diluted earnings per share were $0.79 for the quarter ended June 30, 2012, as compared to basic and fully diluted earnings per share of $0.85 for the quarter ended June 30, 2011. Included in the results for the second quarter of 2011 were earnings from discontinued operations of $0.17 per share resulting from the operation and sale of Chaparral City Water Company which was completed in May 2011. The table below sets forth a comparison of diluted earnings per share for the second quarter.

 
       

Q2 2012

     

Q2 2011

     

$ Change

     

% Change

Income from continuing operations       $ 0.79       $ 0.68       $ 0.11       16 %
Income from discontinued operations   ---         0.17         (0.17 )       (100 %)
Total diluted earnings per share $ 0.79       $ 0.85         ($0.06 )       (7 %)
 

Second Quarter 2012 Results

Continuing Operations:

The table below sets forth a comparison of the second quarter diluted earnings per share from continuing operations by business segment:

 
        Q2 2012       Q2 2011      

$ Change

Water       $ 0.56       $ 0.51       $ 0.05
Electric 0.04 0.03 0.01
Contracted services   0.19         0.14         0.05
Totals from continuing operations $ 0.79       $ 0.68       $ 0.11
 

Water

For the three months ended June 30, 2012, fully diluted earnings from the water operations of AWR’s Golden State Water Company (“GSWC”) subsidiary increased by $0.05 per share to $0.56 per share as compared to $0.51 per share for the three months ended June 30, 2011. It is worth noting that 2012 is the last year of a rate case cycle for all of GSWC’s water regions, and rate increases are typically lowest in the final year of a rate case cycle. Items impacting the comparability of the two periods are detailed below:

  • An increase in the water gross margin of approximately $305,000, or $0.01 per share, during the three months ended June 30, 2012 as compared to the same period in 2011 due to third year rate increases for Regions II and III approved by the California Public Utilities Commission (“CPUC”) effective January 1, 2012.
  • An increase in operating expenses (other than supply costs) by approximately $1.0 million, or $0.03 per share, due primarily to increases in depreciation expense resulting from additions to utility plant, conservation related costs, and employee related costs.
  • An overall decrease in interest expense (net of interest income) of $1.3 million, or $0.04 per share, due primarily to lower short-term bank borrowings and the recording of a $381,000 reduction in interest expense in connection with the CPUC’s final decision on the water cost of capital proceeding. In addition, included in the three months ended June 30, 2011 results were interest charges totaling $553,000 related to the redemption of $22.0 million of GSWC’s 7.65% Medium-Term Notes, which did not recur in 2012.
  • A decrease in the effective tax rate increased earnings by approximately $0.03 per share during the second quarter of 2012 primarily resulting from changes between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements, and changes in certain permanent items.

Electric

For the three months ended June 30, 2012, fully diluted earnings from GSWC’s electric operations were $0.04 per share, an increase of $0.01 per share compared to the same period in the prior year due to an increase in the electric gross margin, partially offset by increased operating expenses.

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