Earnings per Share/Capital Stock

3 Months Ended

Mar. 31, 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 March 31,
(in thousands, except per share amounts)	2023		2022
Net income	$	34,407	$	14,162
Less: (a) Distributed earnings to common shareholders	14,695		13,485
Distributed earnings to participating securities	37		31
Undistributed earnings	19,675		646

(b) Undistributed earnings allocated to common shareholders	19,625		644
Undistributed earnings allocated to participating securities	50		2

Total income available to common shareholders, basic (a)+(b)	$	34,320	$	14,129

Weighted average Common Shares outstanding, basic	36,968		36,944

Basic earnings per Common Share	$	0.93	$	0.38

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 the non-employee directors stock plans, and net income. There were no options outstanding as of March 31, 2023 and 2022 under these plans. At March 31, 2023 and 2022, there were 106,817 and 96,586 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Registrant.

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 March 31,
(in thousands, except per share amounts)	2023		2022
Common shareholders earnings, basic	$	34,320	$	14,129
Undistributed earnings for dilutive stock-based awards	50		2
Total common shareholders earnings, diluted	$	34,370	$	14,131

Weighted average common shares outstanding, basic	36,968		36,944
Stock-based compensation (1)	79		75
Weighted average common shares outstanding, diluted	37,047		37,019

Diluted earnings per Common Share	$	0.93	$	0.38

(1) All of the 106,817 and 96,586 restricted stock units at March 31, 2023 and 2022, respectively, were included in the calculation of diluted EPS for the three months ended March 31, 2023 and 2022.

During the three months ended March 31, 2023 and 2022, AWR issued 14,043 and 19,348 of common shares related to restricted stock units, respectively.

During the three months ended March 31, 2023 and 2022, AWR paid $883,000 and $1.2 million, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. During the three months ended March 31, 2023 and 2022, GSWC paid $808,000 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 March 31, 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.

During the three months ended March 31, 2023 and 2022, AWR paid quarterly dividends of approximately $14.7 million, or $0.3975 per share, and $13.5 million, or $0.365 per share, respectively. During the three months ended March 31, 2023 and 2022, GSWC paid dividends of $24.7 million and $13.5 million, respectively, to AWR during these periods.