American States Water Co. bolstered its second-quarter earnings, finding a silver lining in the forced sale of one of its water systems after a five-year legal battle as the company also scored major military base contracts.
The San Dimas-based parent of the Golden State Water Co. utility saw its second-quarter earnings jump 17 cents to 62 cents a share, a 36.5 percent increase as its net income rose to $22.8 million from $16.7 million in the same period a year ago.
Its operating revenue rose 1 percent to $113.2 million from $112 million in the year-earlier period, but that didn’t include the gain from its sale of the Ojai water system this spring.
That $34 million deal with the Casitas Municipal Water District ended American States’ legal battle with a group of Ojai residents and the water district, who sought to wrest control of the system from Golden State. American States booked an $8.3 million gain on the sale, translating to 13 cents a share.
“While we were not looking to sell this system, we are pleased with the terms of the settlement agreement,” Chief Executive Robert Sprowls said in a conference call with analysts a day after the Aug. 2 earnings release.
Operating revenue from Golden State’s remaining 38 water systems was actually flat at around $81 million compared with the second quarter of last year.
American States ranked No. 54 on the Business Journal’s list of largest public companies in the L.A. area based on its market capitalization of $1.74 billion as of June 30. At the close of markets Aug. 9, the company’s stock hit a 52-week high of $51.38 a share as its market cap climbed to $1.88 billion.
A handful of private water utilities around the state have faced legal challenges in recent years to put their systems in the hands of public entities.
Golden State is also fighting an eminent-domain battle with Claremont for control of the utility’s water system in that San Gabriel Valley city. In December, a court ruled in favor of Golden State’s effort to retain control of its system, but the city is appealing the decision. Appellate hearings aren’t expected to take place until early next year.
Residents in both cities have complained about high and rising water rates from Golden State; the utility has said those costs are inevitable as more money must be spent to maintain aging pipes.