Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company Conference Call discussing the company’s Fourth Quarter and Full Year 2024 Results. [Operator Instructions] The call is being recorded. If you would like to listen to the replay of this call, it will begin this afternoon at 5:00 p.m. Eastern Time and run through February 27 on the company’s website, www.aswater.com. The slides that the company will be referring to are also on the website. This call will be limited to an hour. Presenting today from American States Water Company are Bob Sprowls, President and Chief Executive Officer and Eva Tang, Senior Vice President of Finance and Chief Financial Officer. As a reminder, certain matters discussed during this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees or assurances of any outcomes financial results, levels of activity, performance or achievements, and listeners are cautioned not to place undue reliance upon them. Forward-looking statements are subject to estimates and assumptions and known and unknown risks, uncertainties and other factors. Listeners should review the description of the company’s risks and uncertainties that could affect the forward-looking statements in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. Statements made on this conference call speak only as of the date of this call and except as required by law, the company does not undertake any obligation to publicly update or revise any forward-looking statement. In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or GAAP in the United States and constitute non-GAAP financial measures under SEC rules. These non-GAAP financial measures are derived from consolidated financial information that are not presented in our financial statements that are prepared in accordance with GAAP. For more details, please refer to the press release. At this time, I will turn the call over to Bob Sprowls, President and Chief Executive Officer of American States Water Company.

Thank you, Michael. Welcome, everyone, and thank you for joining us today. I’ll begin with a discussion of the year. Eva will then discuss some financial details for both the fourth quarter and the year, and then I’ll wrap it up with updates on regulatory activity, ASUS, dividends, and then we’ll take your questions. Let’s first start with a look at 2024. On the regulatory front, we are very pleased to have received final decisions from the California Public Utilities Commission, or CPUC, last month for both our water and electric utility subsidiaries. Both decisions represent constructive regulatory outcomes that enable us to continue investing in our water and electric infrastructure for safe and reliable services to our customers for generations to come. I will provide more details on these decisions later in the call. We finished 2024 with very strong financial results. Our reported earnings per share for the full year of 2024 and were $0.19 lower compared to the prior year. Earnings per share were $0.32 higher than adjusted 2023 earnings, which exclude favorable variances related to the receipt of final decisions in the water general rate case, and cost of capital proceedings in June of 2023. Excluding the 2023 adjustments, the increase in adjusted earnings for the full year of 2024 was primarily driven by rate increases in both the water and electric utilities and the commencement of water and wastewater operations at 2 new military bases and successful economic price adjustments in our contracted services business. Additionally, our water utilities segment recorded a tax benefit following the final decision in its general rate case. These increases were partially offset by higher operating expenses and interest costs, and the dilutive effects from the issuance of equity under American States Waters’ at-the-market offering program, which decreased consolidated earnings…

Thank you, Bob, and hello, everyone. Let me start with our fourth quarter results. Recorded consolidated earnings were $0.75 per share for the quarter compared to $0.55 per share for the fourth quarter of 2023. For our water utility, Golden State Water, reported earnings were $0.52 per share as compared to $0.41 per share last year. The $0.11 per share increase in 2024 was largely due to an increase in third year water rates and overall increase in the authorized rate of return on rebate and a tax benefit recorded in the fourth quarter as a result of receiving the final decision in connection with Golden State Water generated proceedings. This increase is partially offset by higher operating and interest expenses and lower gains generated from investments held for retirement plan. Lastly, there was a decrease in earnings of approximately $0.01 per share due to the dilutive effect from the issuance of equity on the American States Water at-the-market offering program. Our electric segment’s earnings were $0.13 per share for the quarter as compared to $0.07 per share for 2023, a $0.06 per share increase primarily due to receiving the final CPUC decision on the electric general rate case with new rates retroactive to January 1, 2023. Earnings from ASUS decreased $0.01 per share for the quarter largely due to an increase in operating expenses, some of which was due to timing, partially offset by an increase in management fee revenues due to commencement of operations of the water and wastewater systems at Joint Base Cape Cod and Naval Air Station Patuxent River, and successful resolution of economic price adjustments at a legacy bases. Consolidated revenue for the quarter increased by $17.9 million as compared to 2023. Revenues for the water segment increased by $5.1 million largely due to an…

Thank you, Eva. I’ll begin with Golden State Water’s general rate case. On January 30 of this year, the CPUC issued a final decision in connection with the general rate case. Final decision adopts the settlement agreement between Golden State Water and the Public Advocates Office at the CPUC or Cal Advocates for short. Among other things, the decision authorizes Golden State Water to invest $573.1 million in capital infrastructure over the 3-year capital cycle. This includes $17.7 million of advice letter capital projects to be filed for revenue recovery during the second and third year attrition increases when those projects are completed. In addition, the approved settlement agreement includes $58.2 million of advice letter capital projects that began construction in 2023 that we expect to file for revenue recovery during the second and third year attrition increases when those projects are completed. For all of the advice letter projects: Golden State Water will be allowed to accrue interest during construction at the adopted cost of debt and recover the full rate of return, including all applicable components of the revenue requirement after the assets are placed in service up until the assets are included in customer rates. Excluding revenues for advice letter capital projects adopted operating revenues less water supply costs for 2025 are projected to increase by approximately $23 million when compared to 2024. In addition, there are potential additional revenue increases of approximately $20 million for each of the years 2026 and 2027, based on inflation factors without factoring in the revenues from those advice letter capital projects. The final decision also adopts Golden State Water’s recommended sales forecast, a supply mix that splits the difference between Golden State Water’s and Cal Advocates forecast, and accepts the sales reconciliation mechanism proposed by the company. In addition, there…

[Operator Instructions] We will begin with Jonathan Reeder with Wells Fargo. Please go ahead.

Hey, Bob and Eva. I hope you guys are well.

Thank you, Jonathan.

Hi, Jonathan. Hope you are as well.

Yes. Hanging in there. Could you help me reconcile how much of the $0.06 electric GRC retroactive EPS benefit that was recorded in Q4 is solely related to 2023? And I saw the 10-K mentions like $9.8 million of retroactive revenues for both ‘23 and ‘24, but it seems like – some of that is offset by corresponding operating expense increases related to those years as well?

Yes, I would say more of it is related to ‘24 than ‘23, Jonathan. As you know, I think you know. And it’s interesting, we had sort of had this situation on both settlements, the Bear Valley settlement and the Golden State settlement, the Public Advocates was very interested in trying to move out that first year increase and that then – that’s why you sort of see these advice letter projects in both cases.

So Jon, we had a substantial amount of unrecovered costs, both capital O&M from implementing our wildfire mitigation plan that we will request recovery of amounts or projected capital O&M for 2023 and ‘26. So on top of what we need to do for this current rate case cycle will also request those dollars to be included in base rate for this breaking cycle. The recovered historical cost it’s about $24 million of CapEx related to the wildfire mitigation plan, along with the increases in costs to recover tree trimming costs and all the wildfire mitigation operating-related expenses. So our first year’s request was quite significant when we file the case in 2022. So during the settlement agreement, we agreed to move certain capital projects to 2024 and beyond, and file some project as advice letter project, which will earn AFUDC while construction. So that’s why the first year increase since – small compared to 2024. We believe this is how we can reach a settlement and mitigate the first year increase to customers, kind of pancake two rate cases in one. So that’s why most of the increase you see probably for 2024.

As a reminder, the last rate cycle we had at Bear Valley was a 5-year rate cycle our decision came out in that particular case, just as things were being put in place for the requirements associated with filing wildfire mitigation plans. I don’t know if this is completely accurate, but I think we – because of just the rate cycle lined up, we probably had gone the longest of any of the electrics in terms of starting the wildfire mitigation plan activities before our next rate case where we would then seek recovery of those expenditures. And so that put, I would say, a little more pressure on that first year rate increase, because we had several years of well fire mitigation plan activities that we hadn’t recovered from customers, but needed to be then included in the rate cycle for 2023 through 2026.

Okay. So would you say any of that $0.06 of the retroactive EPS benefit is related to 2023 or 2023 was pretty neutral in all the $0.06 is in Q1 through Q3 of 2024.

I think the way to think about it is the majority is in – is for ‘24. I can’t really give you a precise split on the $0.06, but I think the way to think about it is the majority of it was in ‘24.

Okay. Alright. And then as you noted, 2024, we saw a huge increase in consolidated operating cash flows to nearly $200 million. Is that a good proxy for your 2025 expectations, given you’ll still be collecting the retroactive revenues from the delayed 2022 to 2024 water GRC decision plus some of the retroactive revenues from the electric GRC?

I think so, Jonathan, is more aligned with what’s going forward in 2023, I would say.

Okay. And then last question for me, how much of the remaining roughly $110 million of equity under the ATM program do you anticipate issuing in 2025?

$60 million-ish, Jonathan. So we like to even it out for 2 years, but if we need a little more, I would say, probably $60 million for this year.

Okay, perfect. Thank you so much for taking my questions.

Okay, thank you.

[Operator Instructions] Seeing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Bob Sprowls for any closing remarks.

Yes, I’d just like to wrap up the call today by thanking everyone for their continued interest in American States. We appreciate your interest. Have a good start to your year. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.