Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company conference call discussing the company's third quarter 2025 results. 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 November 13 on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website. [Operator Instructions] 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 statements. 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 but 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. Please proceed.

Thank you, Bailey. Welcome, everyone, and thank you for joining us today. I'll begin with brief highlights to our quarter, Eva will discuss some financial details, and then I'll wrap it up with updates on regulatory activity, ASUS, dividends and then we'll take your questions. I'm pleased to report that recorded earnings per share for the third quarter were $0.11 per share higher compared to the third quarter of last year, an increase of 11.6%. Favorable variance is attributable to the receipt of final decisions from the California Public Utilities Commission or CPUC in January 2025 for our regulated water and electric utilities general rate cases which authorized new water rates for 2025 to 2027 and authorized new electric rates for 2023 to 2026 and higher earnings for our contracted services business, American States Utility Services, or ASUS, of $0.08 per share, due mostly to increases in construction activities during the quarter. For the year-to-date September 30, earnings were $2.63 per share, $0.21 per share higher than last year or 8.7%. We continue to invest in our water and electric utility systems for the long-term benefit of our customers. Our regulated utilities are on pace to invest a combined $180 million to $210 million in infrastructure investments this year. In addition, our water utility recently received CPUC approval to provide water services at another new planned community that will be built out over time with the first development expected to serve up to 3,800 customer connections during the next 5 years. And over the longer term, 20-plus years, allows for the construction of 17,500 total dwelling units at full build-out. ASUS continues to enter into U.S. government awarded contract modifications for new construction projects and was awarded $28.7 million in new capital upgrade construction projects during the 9 months ended September 30 of this year. These newly awarded projects are expected to be completed through 2028. I'd also like to mention that we are pleased to be recognized on Times America's Best Midsize Companies 2025 list and are 1 of only 2 investor-owned water utilities on the list. Companies are ranked by revenue growth, employee satisfaction and sustainability transparency. In addition, American States Water Company is the only water utility included in Barron's 100 Most Sustainable Companies for 2025. Companies were scored across 230 environmental, social and governance performance indicators from workplace diversity to greenhouse gas emissions. We believe these recognitions reflect our strategic growth plans, commitment to our workforce and focus on our initiatives and disclosures in the sustainability areas and these will remain priorities for the company. With that, I will turn the call over to Eva to discuss earnings and liquidity.

Thank you, Bob. Hello, everyone. Let me start with our third quarter results. Recorded consolidated earnings were $1.06 per share for the quarter as compared to $0.95 per share for the third quarter of 2024. For our water utility Golden State Water reported earnings were $0.86 per share as compared to $0.84 per share last year. The $0.02 per share increase in 2025 was largely due to new 2025 water rates as a result of receiving a final decision in Golden State Water's general rate case proceeding. Higher gain generated on investments held to fund a retirement plan and lower interest expense, partially offset by higher operating expenses and a higher effective income tax rate. Lastly, there was a decrease in earnings of $0.02 per share due to the dilutive effect from the insurance of equities under AWR ad market offering program. Our Electric segment earnings were $0.04 per share for the quarter as compared to $0.02 per share for the same quarter last year, a $0.02 per share increase primarily due to receiving the final CPUC decision on the electric general rate case with the new 2025 electric rates as compared to 2022 rate used to record revenues during the third quarter of last year. Earnings from ASUS were $0.19 per share for the quarter compared to $0.11 per share for the same quarter last year. That is an increase of $0.08 per share, which Bob will discuss further later. Lastly, losses from our parent company were $0.03 per share for the quarter when compared to losses of $0.02 per share for the same quarter last year, due largely to an increase in interest expense resulting from higher borrowing levels from AWR's credit facility. Consolidated revenue for the third quarter increased by $21 million when compared to the same…

Thank you, Eva. On the regulatory front, as previously mentioned, in January of this year, the CPUC issued a final decision in connection with the recent water general rate case that covers rates for 2025 through 2027. We have discussed the details of this rate case decision in our prior earnings releases and calls. We have begun preparation for our next water rate case expected to be filed by July 1, 2026. As a reminder, the final decision ordered Golden State Water to transition from a full decoupling mechanism and a full supply cost balancing account, which were requested again in the general rate case application to a modified rate adjustment mechanism known as the Monterey-Style Water Revenue Adjustment Mechanism, or MRAM and an incremental cost balancing account for supply cost effective January 1, 2025. Without the continuation of a full revenue decoupling mechanism and a full cost balancing account for water supply, the company may be subject to future volatility in revenues and earnings as a result of fluctuations in water consumption by its customers and changes in water supply source mix. Final decision adopted the company's MRAM rate design proposal, which authorizes Golden State Water to increase the revenue requirement in the fixed services charges to between 45% and 48% of the revenue requirement depending on the rate making area, representing approximately 65% and of the water utilities fixed cost in aggregate. It also approved Golden State Water's sales forecast and its request for the continuation of a sales reconciliation mechanism, which would allow the company to adjust its sales forecast throughout the general rate cycle to address significant fluctuations in consumption. In August 2023, Golden State Water entered into an agreement which was subject to CPUC approval to purchase from a developer, the water and wastewater system…

[Operator Instructions] Our first question comes from Ian Rapp with Bank of America.

Congrats on the good quarter. I'm just curious on ASUS, obviously, a good quarter and a good contract announcement there. If I look at the incremental contract, I'm just curious if you could provide a little color on the timing and when we might see that further into EPS over the -- I think you said '25 to '28 period. I'm just looking at the ASUS guidance for '26, and it looks like year-over-year a little bit down relative to the last 3 years. So just curious if that's just contracts rolling off or what the earnings power looks like going forward there?

Yes. I mean it's a pretty good step up, I think, in the earnings from $0.59 to $0.63 to the $0.63 to $0.67. It's -- but would just talk a little bit about the new capital upgrades. Those have been an important part of our overall performance and getting almost $29 million of new capital upgrades a pretty good year for us. Additionally, last year, we had a fairly significant amount of new capital upgrades relative to our history in the neighborhood of $55 million. So between those 2, we've got a pretty good backlog to do new capital upgrade work in '26 and beyond. We also have the renewal and replacement work that we're doing. So it's, I would say, a pretty good year, recognizing we don't -- we're not adding any new bases in that number. It's -- I think, as you know, Ian, there's a transition period we typically have to go through once we were awarded a contract. And so the expectation is we likely won't have a new contract to deal with in 2026 just because of that transition period and where we think the government might be on privatizations.

Okay. Got it. Yes, that makes a lot of sense. And then just on the new announcements or, I guess, the new approvals on the new customer connection growth, it looks like some robust activity around the new development projects. I'm just curious like if you look at these numbers, should we think about translating that -- those new customer connections to rate base based on looking at your Golden State rate base relative to your customer base or as a rule of thumb? Or should we think about it more just on the capital that you've applied for? Just any color as to how we should think about the rate base translation would be helpful.

Yes. I guess the one difficult thing with those new customers is it is a function of people wanting to buy homes and a developer signing them up to buy homes. And so looking at the potential there. It is under this incremental acquisition approach. So as phases are done, the company will buy the infrastructure. I think the way to think about it maybe is the distribution infrastructure for these houses. And that's a pretty favorable activity for both the company and the developer because typically, the developer would have had to advance those facilities to the company to be then paid back over 4 years. So we will be acquiring new systems there. And I'm not exactly sure what to tell you about how you bake that into your rate base forecast because I do think the figuring out when those customers are going to be added is a challenge.

Right. Okay. That's helpful color. And with that growth, maybe just one more if I could squeeze it in. Obviously, the big thematic these days is corporate M&A. As you look out at your growth profile, do you feel like gaining scale in California or other places would be beneficial? Or I'm really just curious to hear your thoughts on how you're thinking about M&A as investor attention kind of shifts toward it.

Yes. I mean we were a bit surprised by the announcement of the merger between American Water and Essential Utilities, which I think that's what you're sort of asking about. However, we don't really think that merger will impact our company's strategic direction going forward. We are optimistic about the future of our company. The rate bases at both of our regulated utilities continue to grow at strong rates of growth, and our ASUS business also continues to grow at a good pace. We noted in our presentation materials, the 10.4% 4-yea CAGR on our rate base for 2025 -- sorry, 2022 to 2025 at Golden State Water in our presentation and Bear Valley Electric's rate base has been growing at a faster rate than that. And then, of course, we will see additional customer growth, we believe, through the 2 new developments that we've mentioned, San Juan Oaks and Sutter Pointe over time. So I think generally, we're happy with our growth plan. That's not to say if a good deal came along. We wouldn't try to buy some systems that are in places where we believe the regulatory framework is neutral to positive. Does that answer your question?

Yes, that's super helpful. And that all makes a lot of sense. I appreciate you guys walking me through and congrats again on the quarter and I'll echo your confidence on the growth rate. It looks promising.

Our next question comes from Angie Storozynski with Seaport

Okay. So you added your rate base projection for 2025 on Slide 15. It is actually a little bit lower than I would have implied it from just the pace of CapEx less depreciation. I mean, Eva is there any reason why again, just assuming that you're spending about, I don't know, $190 million, right, and around $30 million something of the depreciation that would have implied a slightly higher rate base for '25 versus '24, no?

So Angie, we talk about -- we have tons of advice letter yet to be filed toward end of this year in the rate case decision, we will authorize about $76 million of advice letter that we can file by end of this year to get new rates effective 1/1 next year. So we are preparing the documentation and close the job and to get the final number in Q4. So we anticipate that should be approved for rate effect is 1/1 of next year. So after 2025, those actual advice letter project amount will be added to the rate base. So that's maybe something...

And that $573 million, that number, does that include the advise letters? No...

Does not including the advice letter that was started to do prior to the rate case cycle. So there are $58 million I would think advice letter coming from the prior rate case that were allowed to added to rate starting next year. So in total, $573 million, I believe, including $17 million of new advice letter project, but we have another $58 million project that come in from the prior rate case. So both of which can be added to our rate base starting next year.

Yes. I mean -- and again, I don't want to nickel and dime you here, but it's just that, that would imply this $573 million number, right, that I'm spending about, again, assuming that it's ratable, $190 million a year, right, if I divide it just by 3 simple math and then subtract $30 million or say $35 million, that would still suggest that, that rate base should have grown by about $150-something million versus the $100 million that is shown of a growth between '24 and '25. So is it deferred taxes, again, just like simplistically.

Our actual spending is about that amount. I was just talking about the adopted rate base.

We are spending a little ahead of the rate cycle because we do have an earnings test in California that we have to meet. And you are predisposed to try to spend early because it's a 13-month average. So that may be contributing a little bit. I don't know, Eva, what do you...

Yes, I think that will definitely contribute. And we want to make sure we can finish advice letter project so we can file this year. So we've been spending the $76 million that authorized us to file .

And that wouldn't count towards the right base? Because my point is that the rate base is lower than it would have been implied from the approved CapEx minus depreciation.

Yes, it will count as the actual rate base. It's just not -- currently not in the revenue requirement based on the adopted rate base. We'll have a new rate next year to cover what we spent so far. Does that makes sense?

Yes. Okay. And even though you have gone through the GRC for the water business, you will not show the projected rate base for '26 and '27?

We will show that next time for sure, because we want to make sure we have the exact number of what we can file by end of this year for those advice letter even though we are also right $76 million, not sure that's exactly the number will be in the adopted rate base. So we're very conservative. We like to have a pretty certain number before announce [indiscernible]. So definitely, we'll announce that next quarter earnings.

Okay. Okay. I've been asking. So I'm just repeating the question. Okay. I have...

Yes, I can probably share with you the [indiscernible] number for next year, but I don't have the information right now. But it's public information, so I can shoot you an e-mail, Angie.

This concludes our question-and-answer session. I would like to turn the conference back over to Bob Sprowls for any closing remarks.

Thank you, Bailey. Just want to wrap up by thanking you all for your participation today, letting you know that we look forward to speaking with you next quarter and then wishing all of you a happy holiday season. Thank you very much.

The conference has now concluded. You may disconnect.