American States Water pany(AWR) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Earnings per share (EPS) increased by 9.4% to $2.55 for 2021 compared to$ 2.33 in 2020, driven by higher performance in the Water segment due to new rates authorized by the California Public Utilities Commission (CPUC) [6][10] - Consolidated diluted earnings for Q4 2021 were $0.55 per share, slightly up from$ 0.54 per share in Q4 2020 [11] - Consolidated revenue for Q4 2021 decreased by $7.6 million compared to the same period in 2020, primarily due to lower construction activity in the contracted services segment [12] Business Segment Data and Key Metrics Changes - Water segment earnings increased by$ 0.21 per share in 2021, attributed to a $15.5 million increase in water revenues from new rates [14] - Electric segment earnings remained stable at$ 0.07 per share for Q4 2021, with higher revenues offset by increased operating and interest expenses [11] - Contracted services segment earnings decreased to $0.13 per share in Q4 2021 from$ 0.17 per share in Q4 2020, mainly due to reduced construction activity [12] Market Data and Key Metrics Changes - Water usage by customers decreased by 29% and electric usage by 5% since 2007, despite an increase in the number of customers [9] - The average water rate base authorized by the CPUC grew from $752.2 million in 2018 to$ 980.4 million in 2021, with a projected increase to $1.152 billion in 2022 if approved [20] Company Strategy and Development Direction - The company plans to invest$ 140 million to $160 million in capital projects in 2022, continuing its focus on infrastructure reliability [16] - A joint settlement agreement with the CPUC is expected to allow continued investment in water systems through 2024 [8][17] - The company aims to reduce greenhouse gas emissions by 60% by 2035, reflecting its commitment to environmental social responsibility [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022 and beyond, citing strong performance in 2021 and a commitment to customer service and community support [10] - The company is closely monitoring regulatory changes and the impact of inflation on operating costs, particularly in the electric segment [35] Other Important Information - The company has increased its annual dividend by 9%, marking the 67th consecutive year of dividend increases [10][22] - The company has been recognized for its gender balance, with 56% of its Board of Directors being women [8] Q&A Session Summary Question: What caused the decrease in maintenance expenses for 2021? - Management indicated that the decrease was due to less unplanned maintenance work compared to 2020, which had higher emergency maintenance needs [24][25] Question: Is the increase in short-term debt related to the timing of long-term debt issuance? - Management acknowledged the increase in short-term debt and noted that it is related to timing differences in capital needs [26] Question: How does the company view the upcoming cost of capital adjustments? - Management highlighted that the cost of debt is expected to decrease, which will positively impact revenues by approximately$ 7.5 million [41] Question: What is the expected capital expenditure for the electric segment in 2022? - Management suggested that capital expenditures for the electric segment could range between $15 million to$ 20 million, depending on ongoing projects [44] Question: Is the company involved in bidding for military contracts? - Management confirmed active participation in bidding for military contracts, including a bid for naval station Mayport [57]