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 2023 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 Thursday, February 29, 2024, on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website. All participants will be in a listen-only mode. [Operator Instructions] This call will be limited to one hour. Presenting today from American States Water Company are Bob Sprouls, 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 intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Please review a description of the company's risks and uncertainties in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. 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 go ahead.

Thank you, Andrea, and welcome, everyone, and thank you for joining us today. I'll begin with some brief comments on the year. Eva will then 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. It was a very productive and positive year for the company. In June, the company's water utility subsidiary, Golden State Water Company, received the final decision from the California Public Utilities Commission, or CPUC, on its water general rate case to set rates for 2022 through 2024, as well as the decision on its cost of capital proceeding. Both decisions represent constructive regulatory outcomes and enable us to continue investing in our water infrastructure for safe and reliable water services for generations to come. The cost of capital decision adopted the authorized return on equity, capital structure, and the embedded cost of debt prospectively. It also allows for the continuation of the water cost of capital mechanism for adjusting the return on equity. As a result, Golden State Water's authorized return on equity increased from 8.9% to 9.36% effective July 31, 2023, and increased again to 10.06% for 2024 as a result of triggering the cost of capital mechanism for each year. In addition, we filed Golden State Water's general rate case in August 2023 to set new rates for the years 2025 through 2027. Filing included a request for capital investment of $611.4 million over the rate cycle. Let's briefly discuss our earnings for the full 2023 year. Recorded diluted earnings for the year increased by $1.25 per share from 2022, or $0.41 per share adjusted, which excludes favorable variances resulting from the receipt of the final decisions in the general rate case and cost of capital proceedings in June 2023…

Thank you, Bob. Hello, everyone. Let me start with our fourth quarter result on Slide 8. Consolidated earnings as recorded were $0.55 per share for the quarter as compared to $0.50 per share for the quarter of 2022. That is an increase of $0.05 per share. In last year's fourth quarter, Golden State Water recorded a decrease in earnings of $0.03 per share for revenue subject to refund based on its cost of capital filing in 2021. As a result of receiving the final decision in the cost of capital proceeding in June of 2023 that sets the cost of capital prospectively to $0.03 per share accrual recorded in Q4 2022 was reversed in the second quarter of 2023. Excluding this item, adjusted consolidated earnings for the fourth quarter of 2023 were $0.55 per share as compared to adjusted earnings of $0.53 per share for the fourth quarter of 2022, an increase of $0.02 per share. For Golden State Water, reported earnings were $0.41 per share as compared to $0.28 per share for the fourth quarter of 2022. The $0.13 per share increase includes a $0.03 favorable variance from the cost of capital decision as discussed. Excluding this item, adjusted earnings for the fourth quarter of 2022 at the water segment were $0.31 per share as compared to recorded earnings of $0.41 per share for the fourth quarter of 2023. An adjusted increase of $0.10 per share, or a 32% increase. The $0.10 per share increase largely represents the rate increases for 2022 and 2023 recorded in 2023 and higher gains generated from investment held for retirement plan. Partially offset by the effect of the cost of capital decision effective July 31, 2023, where there was a reduction in cost of debt recovered in rates, partially offset by increased to…

Thank you, Eva. I'll take a minute here and discuss a few key regulatory matters. As mentioned earlier, the CPUC adopted Golden State Water's general rate case decision in June of 2023. Final decision issued set new rates for 2022 through 2024, authorizes a capital infrastructure budget of $404.8 million over the three-year rate cycle, adopts new operating expense levels and allows for additional increases in adopted revenues for 2023 and 2024, subject to an earnings test and changes to the inflationary index values. In August of last year, Golden State Water filed its general rate case for water rates for the years 2025 through 2027. Among other things, Golden State Water requested capital budgets in this application of $611.4 million over the rate cycle. They also requested the continuation of mechanisms to accommodate fully decoupled revenues in sales and track differences between recorded and CPUC authorized supply-related expenses. A proposed decision in the water general rate case is scheduled for the fourth quarter of 2024, with new rates to become effective January 1, 2025. Also, in June of last year, the CPUC adopted the final decision in the cost of capital proceeding to set the new cost of capital for 2022 through 2024. The decision adopted our requested capital structure of 57% equity and 43% debt, our requested cost of debt of 5.1%, and a return on equity of 8.85%. It also allows for the continuation of the water cost of capital mechanism. In addition, based on the final decision, all adjustments to rates were prospective. Golden State Water filed an advice letter that implemented the new cost of capital effective July 31, 2023. They just mentioned the decision allowed for the continuation of the water cost of capital mechanism for the period from October 1, 2021, through September…

[Operator Instructions] And our first question will come from Gregg Orrill of UBS. Please go ahead.

Hello?

Hi, Greg.

Oh, sorry, I'm on mute. Thank you.

Okay.

Hi, what's the schedule in the rate case? What are the milestones coming up? I know you said the proposed decision in the fourth quarter.

Yes, I would say the big issue is we're waiting for public advocate's report on the rate case and that's, I think, due out by the end of February, and then we'll move forward there. I'm not sure hearings have been scheduled at this point. But we'll be very interested to see what public advocates have to say. And sorry, Greg. Hello?

Hi, Greg.

Yes. And so, I know one. There was sort of a controversial or non-standard recommendation by Cal advocates in the case for one of your peers. Is that kind of what you're expecting in this case?

Well, we're not really sure. We -- it's a little strange to see a signed commissioner issue an alternate decision from the ALJ, given that commissioner is the assigned commissioner, but it's not unheard of. We hope we don't have something similar there, but we do believe that the alternate in the Cal Water case does not reflect a balanced decision, and we'd like to see the original proposed decision approved or the alternate revised. Not exactly sure why it's headed down this path. Some of the things included in the decision are things that we've had included in our prior filing. So we're watching it closely, as you can -- as you would expect, Greg.

Okay. Thank you.

Thank you, Greg.

[Operator Instructions] That will conclude today's question-and-answer session. I would like to turn the conference back over to Bob Sprowls for any closing remarks.

Yes, thank you, Andrea. I just wanted to thank everybody that participated today for their participation and let them know that we look forward to speaking with them during the next quarter. Thank you, everyone.

The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.