Earnings per Share/Capital Stock

9 Months Ended

Sep. 30, 2022

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)	2022		2021		2022		2021
Net income	$	25,654	$	28,153	$	59,767	$	73,997
Less: (a) Distributed earnings to common shareholders	14,690		13,480		41,664		38,207
Distributed earnings to participating securities	38		37		104		100
Undistributed earnings	10,926		14,636		17,999		35,690

(b) Undistributed earnings allocated to common shareholders	10,897		14,596		17,955		35,597
Undistributed earnings allocated to participating securities	29		40		44		93

Total income available to common shareholders, basic (a)+(b)	$	25,587	$	28,076	$	59,619	$	73,804

Weighted average Common Shares outstanding, basic	36,958		36,933		36,953		36,916

Basic earnings per Common Share	$	0.69	$	0.76	$	1.61	$	2.00

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 September 30, 2022 and 2021 under these plans. At September 30, 2022 and 2021, there were 96,629 and 101,267 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 September 30,				For The Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Common shareholders earnings, basic	$	25,587	$	28,076	$	59,619	$	73,804
Undistributed earnings for dilutive stock-based awards	29		40		44		93
Total common shareholders earnings, diluted	$	25,616	$	28,116	$	59,663	$	73,897

Weighted average common shares outstanding, basic	36,958		36,933		36,953		36,916
Stock-based compensation (1)	84		92		81		88
Weighted average common shares outstanding, diluted	37,042		37,025		37,034		37,004

Diluted earnings per Common Share	$	0.69	$	0.76	$	1.61	$	2.00

(1) All of the 96,629 and 101,267 restricted stock units at September 30, 2022 and 2021, respectively, were included in the calculation of diluted EPS for the three and nine months ended September 30, 2022 and 2021.

During the nine months ended September 30, 2022 and 2021, AWR issued 24,612 and 47,149 of common shares related to restricted stock units, respectively.

During the nine months ended September 30, 2022 and 2021, AWR paid $1.2 million and $1.3 million, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. During the nine months ended September 30, 2022 and 2021, GSWC paid $1.1 million and $1.2 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, 2022 and 2021, 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 nine months ended September 30, 2022 and 2021, AWR paid quarterly dividends of approximately $41.7 million, or $1.1275 per share, and $38.2 million, or $1.035 per share, respectively.

During the three months ended September 30, 2021, GSWC paid dividends of $13.5 million to AWR. During the three months ended September 30, 2022, GSWC did not pay a dividend to AWR. Instead, ASUS paid a $14.7 million dividend to AWR during this period. During the nine months ended September 30, 2022 and 2021, GSWC paid dividends of $27.0 million and $38.3 million, respectively, to AWR during these periods.