How significant were the timing differences in construction activities, and what is the outlook for those impacts in upcoming quarters?

Answer

The press release notes that “timing differences in construction activities” reduced the quarter‑2025 earnings for American States Water Company (AWR) relative to what they would have been without those timing effects. While the release does not give a dollar amount for the construction‑related hit, the overall picture lets us gauge both the size of the impact and what is likely to happen in the next quarters.

1. How significant were the timing differences?

• The company’s earnings per share actually rose year‑over‑year, even though the construction timing differences “partially offset” the stronger performance of the water and electric utility segments.
  
• Because the net EPS improvement was only $0.02 (≈2.4 % of the 2025 figure), the construction‑related timing effect can be inferred to be modest—likely in the low‑cent range per share (e.g., a few cents per share, roughly $0.01‑$0.03).
  
• In other words, the timing differences shaved away a portion of the upside from the utility businesses, but they were not large enough to turn the quarter into a loss or to reverse the overall earnings trend.

2. What is the outlook for those impacts in upcoming quarters?

a. Why the timing differences occurred

Construction timing differences usually stem from:

• Project‑start or -completion dates shifting (e.g., a major capital‑intensive water‑system upgrade that began later than planned or was finished earlier than expected).
  
• Seasonal or weather‑related constraints that push work into a later month.
  
• Regulatory or permitting delays that temporarily pause on‑site activity.

Because the press release frames the effect as a “timing” issue rather than a “cost‑overrun” or “scope‑change,” it suggests the underlying projects are still on track; the only change is when the costs (or related revenue) are recognized.

b. Anticipated trajectory

c. Bottom‑line expectation

• Short‑term: Expect a minor, temporary reduction in earnings in the quarter(s) when the delayed construction costs are finally booked. The magnitude should stay in the low‑cent range per share, given the modest $0.02 YoY EPS improvement this quarter.
• Medium‑term (next 1‑2 quarters): As the projects progress on schedule, the timing effect will diminish, and the earnings trajectory will be driven primarily by the “higher earnings at the water and electric utility segments” that already lifted EPS.
• Long‑term: No indication that the timing differences signal a structural issue. The company’s capital‑plan and utility‑segment growth should continue to support steady or incremental EPS growth beyond 2025, with construction timing impacts largely absorbed.

3. Take‑away for investors

• The timing differences are a modest, short‑lived headwind—they have not derailed the overall earnings improvement and are unlikely to create a lasting drag on profitability.
  
• Management’s focus on utility‑segment performance suggests the core earnings engine remains strong, and the construction schedule is expected to normalize.
  
• Quarter‑by‑quarter earnings guidance should therefore be viewed as still positive, with a small, predictable “construction‑timing” adjustment that can be modeled as a low‑cent EPS variance in the next 1‑2 quarters.
  

In summary, the timing differences in construction activities had a limited, low‑cent impact on Q2 2025 earnings and are expected to fade quickly as the projects move back into their normal cost‑recognition rhythm, leaving the company’s earnings growth trajectory largely intact for the remainder of 2025 and beyond.