Earnings per Share/Capital Stock

9 Months Ended

Sep. 30, 2023

In accordance with the accounting guidance for participating securities and earnings per share (“EPS”), Registrant uses the “two-class” method of computing EPS. The “two-class” method is an earnings allocation formula that determines EPS for each class of common stock and participating security. AWR has participating securities related to restricted stock units that earn dividend equivalents on an equal basis with AWR’s Common Shares, and that have been issued under AWR’s stock incentive plans for employees and the non-employee directors stock plans. In applying the “two-class” method, undistributed earnings are allocated to both common shares and participating securities.

The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used for calculating basic net income per share:


Basic:	For The Three Months Ended September 30,				For The Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Net income	$	31,565	$	25,654	$	104,493	$	59,767
Less: (a) Distributed earnings to common shareholders	15,900		14,690		45,294		41,664
Distributed earnings to participating securities	46		38		124		104
Undistributed earnings	15,619		10,926		59,075		17,999

(b) Undistributed earnings allocated to common shareholders	15,574		10,897		58,913		17,955
Undistributed earnings allocated to participating securities	45		29		162		44

Total income available to common shareholders, basic (a)+(b)	$	31,474	$	25,587	$	104,207	$	59,619

Weighted average Common Shares outstanding, basic	36,977		36,958		36,974		36,953

Basic earnings per Common Share	$	0.85	$	0.69	$	2.82	$	1.61

Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with restricted stock units granted under AWR’s stock incentive plans for employees and directors, and net income. There were no stock options outstanding as of September 30, 2023 and 2022 under these plans. At September 30, 2023 and 2022, there were 106,879 and 96,629 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Company.

The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:


Diluted:	For The Three Months Ended September 30,				For The Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Common shareholders earnings, basic	$	31,474	$	25,587	$	104,207	$	59,619
Undistributed earnings for dilutive stock-based awards	45		29		162		44
Total common shareholders earnings, diluted	$	31,519	$	25,616	$	104,369	$	59,663

Weighted average common shares outstanding, basic	36,977		36,958		36,974		36,953
Stock-based compensation (1)	94		84		90		81
Weighted average common shares outstanding, diluted	37,071		37,042		37,064		37,034

Diluted earnings per Common Share	$	0.85	$	0.69	$	2.82	$	1.61

(1) All of the 106,879 and 96,629 restricted stock units at September 30, 2023 and 2022, respectively, were included in the calculation of diluted EPS for the three and nine months ended September 30, 2023 and 2022.

During the nine months ended September 30, 2023 and 2022, AWR issued 18,351 and 24,612 common shares related to restricted stock units, respectively.

During the nine months ended September 30, 2023 and 2022, AWR paid $913,000 and $1.2 million, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. During the nine months ended September 30, 2023 and 2022, GSWC paid $835,000 and $1.1 million, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. These payments are included in the stock-based compensation caption of the statements of equity.

During the three months ended September 30, 2023 and 2022, AWR paid quarterly dividends of approximately $15.9 million, or $0.4300 per share, and $14.7 million, or $0.3975 per share, respectively. During the nine months ended September 30, 2023 and 2022, AWR paid quarterly dividends of approximately $45.3 million, or $1.2250 per share, and $41.7 million, or $1.1275 per share, respectively.

During the nine months ended September 30, 2023, GSWC issued one Common Share to AWR for $10.0 million. Proceeds from the stock issuance were used to pay down a portion of intercompany borrowings owed to AWR as described in Note 1.

During the three months ended September 30, 2023, GSWC paid dividends of $16.0 million to AWR. During the three months ended September 30, 2022, GSWC did not pay a dividend to AWR. ASUS paid a $14.7 million dividend to AWR during this period. During the nine months ended September 30, 2023 and 2022, GSWC paid dividends of $55.4 million and $27.0 million, respectively, to AWR.