American States Water Company

What they do

AWR operates through three reportable segments: water, electric and contracted services. Its main subsidiary, Golden State Water Company, is a CPUC-regulated water and wastewater utility serving 265,142 water customers across 11 California counties. Bear Valley Electric Service is a CPUC-regulated electric utility serving 24,915 customers in San Bernardino County mountain communities. American States Utility Services and its subsidiaries provide water and wastewater services, including renewal and replacement construction, at U.S. military installations under long-term firm-fixed-price contracts, including an initial 50-year contract.

Revenue drivers

• Water utility (GSWC) — CPUC-authorized rates for potable water delivery in California; the largest segment, contributing $0.91 of second-quarter 2026 diluted EPS versus $0.73 a year earlier.
• Electric utility (BVES) — CPUC-authorized electricity distribution in the Big Bear area of San Bernardino County; small relative contributor at $0.04 of second-quarter 2026 diluted EPS.
• Contracted services (ASUS) — Firm-fixed-price U.S. government contracts and task orders to operate and maintain water and wastewater systems at military bases, plus construction work; contributed $0.16 of second-quarter 2026 diluted EPS.

Recent performance

For the quarter ended June 30, 2026, AWR reported diluted EPS of $1.09 versus $0.87 a year earlier, a 25.3% increase. Water segment diluted EPS rose to $0.91 from $0.73, electric to $0.04 from $0.03, and contracted services to $0.16 from $0.13. The company attributed the water increase largely to CPUC-approved rate increases effective January 1, 2026, which raised 2026 adopted operating revenues less water supply costs by $32.0 million over 2025, including $11.0 million from advice letter capital projects. Second-quarter 2026 revenue was $181.3 million. On June 12, 2026, AWR completed its at-the-market offering program, raising the maximum $200 million in gross proceeds through the sale of 2,575,947 shares.

Strategy

The CPUC's January 30, 2025 final decision in GSWC's 2025-2027 water general rate case authorizes approximately $573.1 million of capital infrastructure investment over the three-year cycle. In December 2025, the CPUC approved GSWC's full second-year rate increases effective January 1, 2026, adding about $32.0 million of adopted operating revenues less water supply costs for 2026, including roughly $11 million from advice letter projects now added to rate base. AWR states its regulated utilities are on target to invest $185 to $220 million in 2026. Following completion of the ATM program, AWR says it has no plans to issue additional equity through at least the end of 2029.

Risks

• Tariffs and construction cost inflation — U.S. tariffs could raise the cost of goods including construction materials, though timing, magnitude and possible exemptions remain uncertain.
• Consumption and water supply mix volatility — With the modified revenue decoupling mechanism and incremental water supply cost balancing account effective January 1, 2025, GSWC earnings face future volatility from consumption fluctuations and water supply mix changes.
• Dependence on CPUC rate decisions — GSWC and BVES revenues, operating income and cash flows depend on rates authorized by the CPUC, and the final decision rejected GSWC's request for continuation of a full sales and other regulatory mechanisms.
• Government contract termination exposure — ASUS contracts with the U.S. government can be terminated in whole or in part prior to the end of their terms for convenience of the government or for default or nonperformance.

Outlook

Management expects the contracted services business to contribute $0.63 to $0.67 per share for full year 2026. AWR's regulated utilities are on target to invest $185 to $220 million in 2026. It is uncertain whether the second quarter's higher demand and favorable water supply source mix will continue through the remainder of 2026 or reverse. In July, S&P affirmed AWR's credit ratings of "A" with a stable outlook and its regulated water utility's rating of "A+" with a stable outlook.