American States Water AWR Form 10-Q filing Q2 FY2026

GLOSSARY OF TERMS

The following terms and acronyms used in this Form 10-Q are defined below:

Term or Acronym Definition

AFUDC Allowance for Funds Used During Construction

ASUS American States Utility Services, Inc.

ATM At-The-Market Offering Program

AWR American States Water Company

BRRBA Base Revenue Requirement Balancing Account

BSUS Bay State Utility Services LLC

BVES Bear Valley Electric Service, Inc.

Cal Advocates Public Advocates Office of the California Public Utilities Commission

COC Cost of Capital

CPUC California Public Utilities Commission

DDW Division of Drinking Water

ECUS Emerald Coast Utility Services, Inc.

EPA Economic Price Adjustment

EPS Earnings Per Share

ETR Effective Tax Rate

Exchange Act Securities Exchange Act of 1934, as amended

FBWS Fort Bliss Water Services Company

FRUS Fort Riley Utility Services, Inc.

GAAP Generally Accepted Accounting Principles in the United States of America

GSWC Golden State Water Company

ICBA Incremental Cost Balancing Account

M-WRAM Monterey-style Water Revenue Adjustment Mechanism

MCBA Modified Cost Balancing Account

ODUS Old Dominion Utility Services, Inc.

ONUS Old North Utility Services, Inc.

PFAS Per- and Polyfluoroalkyl Substances

PRUS Patuxent River Utility Services LLC

PSUS Palmetto State Utility Services, Inc.

REA Request for Equitable Adjustment

Registrant American States Water Company and Golden State Water Company

SEC Securities and Exchange Commission

SERP Supplemental Executive Retirement Plan

SWRCB State Water Resources Control Board

TUS Terrapin Utility Services, Inc.

U.S. United States

U.S. EPA U.S. Environmental Protection Agency

WMP Wildfire Mitigation Plan

WRAM Water Revenue Adjustment Mechanism

PART I

Item 1. Financial Statements

General

The basic financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments consisting of normal recurring items and estimates necessary for a fair statement of results for the interim period have been made.

It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto in the latest Annual Report on Form 10-K of American States Water Company and its wholly owned subsidiary, Golden State Water Company.

Filing Format

American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”), Bear Valley Electric Service, Inc. (“BVES”) and American States Utility Services, Inc. and its subsidiaries (“ASUS”).

This quarterly report on Form 10-Q is a combined report being filed by two separate Registrants: AWR and GSWC. For more information, please see Note 1 of the Notes to Consolidated Financial Statements and the heading titled “General” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. GSWC makes no representations as to the information contained in this report other than with respect to itself.

AMERICAN STATES WATER COMPANY

CONSOLIDATED BALANCE SHEETS

ASSETS

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICAN STATES WATER COMPANY

CONSOLIDATED BALANCE SHEETS

CAPITALIZATION AND LIABILITIES

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2026 AND 2025

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CHANGES

IN COMMON SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2026

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CHANGES

IN COMMON SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2025

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDEN STATE WATER COMPANY

BALANCE SHEETS

ASSETS

(Unaudited)

The accompanying notes are an integral part of these financial statements.

GOLDEN STATE WATER COMPANY

BALANCE SHEETS

CAPITALIZATION AND LIABILITIES

(Unaudited)

The accompanying notes are an integral part of these financial statements.

GOLDEN STATE WATER COMPANY

STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2026 AND 2025

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDEN STATE WATER COMPANY

STATEMENTS OF CHANGES

IN COMMON SHAREHOLDER’S EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2026

(Unaudited)

The accompanying notes are an integral part of these financial statements.

GOLDEN STATE WATER COMPANY

STATEMENTS OF CHANGES

IN COMMON SHAREHOLDER’S EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2025

(Unaudited)

The accompanying notes are an integral part of these financial statements.

GOLDEN STATE WATER COMPANY

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

The accompanying notes are an integral part of these financial statements.

AMERICAN STATES WATER COMPANY AND SUBSIDIARIES

AND

GOLDEN STATE WATER COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Summary of Significant Accounting Policies

Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”), Bear Valley Electric Service Inc. (“BVES”), and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Old Dominion Utility Services, Inc. (“ODUS”), Terrapin Utility Services, Inc. (“TUS”), Palmetto State Utility Services, Inc. (“PSUS”), Old North Utility Services, Inc. (“ONUS”), Emerald Coast Utility Services, Inc. (“ECUS”), Fort Riley Utility Services, Inc. (“FRUS”), Bay State Utility Services LLC (“BSUS”), and Patuxent River Utility Services LLC (“PRUS”)). AWR and its subsidiaries may be collectively referred to as “the Company.” AWR, through its wholly owned subsidiaries, serves over one million people in ten states.

GSWC and BVES are both California public utilities. GSWC engages in the purchase, production, distribution and sale of water throughout California serving approximately 265,200 customer connections. BVES distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,900 customer connections. The California Public Utilities Commission (“CPUC”) regulates GSWC’s and BVES’s businesses in matters including properties, rates, services, facilities, and transactions between GSWC, BVES, and their affiliates.

ASUS, through its wholly owned subsidiaries, operates, maintains and performs construction activities (including renewal and replacement capital work) on water and/or wastewater systems at various U.S. military bases pursuant to initial 50-year firm fixed-price contracts with the U.S. government and one 15-year contract with the U.S. government. These contracts are subject to annual economic price adjustments and modifications for changes in circumstances, changes in laws and regulations, and additions to the contract value for new construction of facilities at the military bases. ASUS also from time to time performs construction services on military bases as a subcontractor.

There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or any of its wholly owned subsidiaries.

Basis of Presentation: The consolidated financial statements and notes hereto are presented in a combined report filed by two separate Registrants: AWR and GSWC. References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. AWR owns all of the outstanding common shares of GSWC, BVES and ASUS. ASUS owns all of the outstanding equity of its subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany transactions and balances have been eliminated in AWR’s consolidated financial statements.

The consolidated financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The December 31, 2025 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. In the opinion of management, all adjustments consisting of normal, recurring items, and estimates necessary for a fair statement of the results for the interim periods have been made. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2025 filed with the SEC.

Related Party and Intercompany Transactions: GSWC, BVES and ASUS provide and/or receive various support services to and from their parent, AWR, and among themselves. GSWC allocates certain corporate office administrative and general costs to its affiliates, BVES and ASUS, using allocation factors approved by the CPUC. GSWC allocated corporate office administrative and general costs to BVES of $0.8 million for each of the three month periods ended June 30, 2026 and 2025, and $1.9 million for each of the six month periods ended June 30, 2026 and 2025. GSWC also allocated corporate office administrative and general costs to ASUS of $1.2 million for each of the three month periods ended June 30, 2026 and 2025, and $2.9 million and $2.8 million during the six month periods ended June 30, 2026 and 2025, respectively.

When necessary, AWR will make capital contributions to its regulated utilities in order to maintain the CPUC-authorized capital structure.

Liquidity and Financing Activities: As of June 30, 2026, GSWC’s 5.5% unsecured private placement notes totaling $65.0 million are scheduled to mature on June 5, 2027. Consequently, this balance has been classified within current liabilities in the accompanying balance sheets. It is management's current intention to refinance this obligation prior to its maturity date either

through the issuance of new long-term debt, an equity contribution by AWR parent, or a combination of the two. While GSWC will actively evaluate long-term financing alternatives and participate in discussions with potential lenders, no formal commitment or refinancing agreement has been executed as of the date these financial statements were issued.

Recent Accounting Pronouncements Not Yet Adopted:

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, (Disaggregation of Income Statement Expenses) requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. The guidance will be effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. Registrant is currently evaluating the impact of adopting this standard.

In September 2025, the FASB issued ASU 2025-06, (Targeted Improvements to the Accounting for Internal-Use Software) removing references to prescriptive and sequential software development stages. This ASU requires entities to begin capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used for the function intended. ASU 2025-06 is effective for annual periods beginning January 1, 2028, with early adoption permitted. Registrant is currently evaluating the impact of adopting this standard.

Note 2 — Revenues

Most of Registrant’s revenues are derived from contracts with customers, including tariff-based revenues from its regulated utilities at GSWC and BVES. ASUS’s initial firm fixed-price long-term contracts with the U.S. government are considered service concession arrangements under ASC 853, Service Concession Arrangements. ASUS’s military base contracts consist primarily of 50-year contracts and one 15-year contract with the U.S. government. Accordingly, the services under these contracts are accounted for under Topic 606—Revenue from Contracts with Customers, and the water and/or wastewater systems are not recorded as Property, Plant and Equipment on Registrant’s balance sheets.

Although GSWC and BVES have a diversified customer base of residential, commercial, industrial, and other customers, revenues derived from residential and commercial customers generally account for approximately 90% of total water and electric revenues. Most of ASUS’s revenues are derived from the U.S. government.

For the three and six months ended June 30, 2026 and 2025, disaggregated revenues from contracts with customers by segment were as follows:

The opening and closing balances of the receivable from the U.S. government, contract assets, and contract liabilities from contracts with customers, which are related entirely to ASUS, are as follows:

Unbilled receivables and Receivable from the U.S. government represent receivables where the right to payment is conditional only by the passage of time.

Contract Assets - Contract assets are assets of ASUS and its subsidiaries and consist of unbilled revenues recognized from work-in-progress construction projects, where the right to payment is conditional on something other than the passage of time. The classification of this asset as current or noncurrent is based on the timing of when ASUS expects to bill these amounts.

Contract Liabilities - Contract liabilities are liabilities of ASUS and consist of billings in excess of revenue recognized. The classification of this liability as current or noncurrent is based on the timing of when ASUS expects to recognize revenue. Contracted services revenues recognized during the three and six months ended June 30, 2026, which were included in contract liabilities at the beginning of the period were $4.6 million and $8.2 million, respectively. Contracted services revenues recognized during the three and six months ended June 30, 2026 from performance obligations satisfied in previous periods were not material.

As of June 30, 2026, AWR’s aggregate remaining performance obligations, which are entirely from the contracted services segment, were $4.2 billion. ASUS expects to recognize revenue on these remaining performance obligations over the remaining term of each of the contracts, which range from 13 to 48 years. Each of the 50-year contracts with the U.S. government is subject to termination, in whole or in part, prior to the end of its contract term for convenience of the U.S. government. The 50-year contracts provide that, in such an event, the U.S. government would be entitled to repurchase the utility systems and ASUS would be entitled to recover any unrecovered investments under the contracts’ termination and other provisions at the time of termination.

Note 3 — Regulatory Matters

In accordance with accounting principles for rate-regulated enterprises, GSWC and BVES record regulatory assets, which represent probable future recovery of incurred costs from customers through the ratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the ratemaking process. At June 30, 2026, GSWC and BVES had $14.0 million of net regulatory liabilities on the balance sheets, which included $114.9 million of regulatory assets net of $128.9 million of regulatory liabilities. As authorized by the CPUC, the majority of the regulatory assets and liabilities accrue interest at the current 90-day commercial-paper rate. There are $45.8 million of regulatory assets not accruing a carrying cost, which included $27.9 million related to flowed-through deferred income taxes including the gross-up portion on the deferred tax resulting from the excess deferred income tax regulatory liability, and $14.6 million related to memorandum accounts authorized by the CPUC to track unrealized gains and losses on BVES’s purchase power contracts over the term of the contracts. The remaining $3.3 million relates to other regulatory assets that do not provide for a carrying cost. Furthermore, there are $124.3 million of regulatory liabilities not incurring interest that consisted of $66.8 million related to excess deferred income taxes arising from the lower federal income tax rate under the Tax Cuts and Jobs Act enacted in December 2017 that are being refunded to customers, $40.6 million related to the net over funded positions in Registrant’s pension and other retirement obligations (not including the two-way pension balancing accounts, which accrues interest), and $16.9 million related to the Per- and Polyfluoroalkyl Substances (“PFAS”) contamination litigation proceeds memorandum account that also does not accrue interest.

Regulatory assets represent costs incurred by GSWC and/or BVES for which they have received or expect to receive rate recovery in the future. In determining the probability of costs being recognized in other periods, GSWC and BVES consider regulatory rules and decisions, past practices, and other facts or circumstances that would indicate if recovery is probable. If the CPUC determines that a portion of either GSWC’s or BVES’s regulatory assets are not recoverable in customer rates, the applicable utility must determine if it has suffered an asset impairment that requires it to write down the asset’s value. Regulatory assets are offset against regulatory liabilities within each ratemaking area. Amounts expected to be collected or refunded in the next twelve months have been classified as current assets and current liabilities by ratemaking area.

Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:

Regulatory matters are discussed in the consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2025 filed with the SEC. There were no significant changes during the six months ended June 30, 2026 except for routine and recurring activity, including the recovery of regulatory assets through surcharges currently in place.

PFAS Contamination Litigation Proceeds Memorandum Account:

GSWC has been a class member in various class action lawsuits related to PFAS contamination affecting public water systems. A class settlement agreement among Tyco Fire Products LP (“Tyco”) and the class of eligible public water systems was entered into on April 12, 2024 that resolved any claims for PFAS contamination with Tyco. The class settlement agreement between the parties was approved by an order issued by the Federal District Court of South Carolina on November 22, 2024. As a result of the settlement, GSWC received from Tyco $2.2 million, net of legal and other fees, during the second quarter of 2026. In addition to the class settlement with Tyco, in June 2026, GSWC received a settlement payment of $0.9 million, net of legal and other fees, from BASF Corporation (“BASF”) pursuant to a class settlement agreement entered into on May 20, 2024 that resolved any claims for PFAS contamination with BASF. The proceeds received from both settlement agreements have been included in the PFAS contamination litigation proceeds memorandum account and are reflected as regulatory liabilities as of June 30, 2026.

Also, in connection with GSWC’s class settlement agreement entered into with 3M Company in 2023, on June 23, 2026 GSWC was notified that the scheduled and third legal settlement payment of $3.3 million, net of legal and other fees, was paid by 3M Company to a qualified settlement fund and administered by a custodian for the benefit of GSWC. The funds are expected to be disbursed to GSWC in the third quarter of 2026. Accordingly, a $3.3 million receivable has been recognized along with a corresponding regulatory liability as the amount was realizable and collection was virtually certain as of June 30, 2026. Subsequent to quarter-end, on July 23, 2026, GSWC received the third settlement payment of $3.3 million from 3M.

Settlement proceeds received by GSWC have been and may be used for future capital investments or operations and maintenance expenses related to PFAS water contamination to its water systems or any PFAS related litigation against its water systems, which benefit GSWC’s customers. The CPUC has authorized GSWC to track in a memorandum account the settlement payments received by GSWC from lawsuits related to PFAS contamination in its water systems, which include the proceeds received for participation in class action lawsuits. The amounts in the memorandum account have been recorded as a regulatory liability and have been used, and will continue to be used in the future, to offset the incremental investments in replacement and treatment of property, as well as operations and maintenance expenses and other direct expenses related to PFAS contamination.

Note 4 — Earnings per Share/Capital Stock

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 the 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 to calculate basic EPS:

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 directors, and net income. The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used to calculate diluted EPS:

(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in calculating diluted EPS, 160,506 and 158,549 restricted stock units, including performance awards to officers of the Company at June 30, 2026 and 2025, respectively, were deemed to be outstanding and included in the calculation of diluted EPS.

On February 27, 2024, AWR entered into an equity distribution agreement with third-party sales agents, which was subsequently amended on February 20, 2026 (the “Equity Distribution Agreement”), under which AWR could offer and sell its Common Shares, from time to time at its sole discretion, through an at-the-market (“ATM”) offering program having an aggregate gross offering price of up to $200 million over a three-year period and pursuant to AWR’s effective shelf registration statement on Form S-3. AWR used the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, including, but not limited to, repayment of debt and equity contributions to its subsidiaries. During the three months ended June 30, 2026, AWR sold 442,722 Common Shares, through its ATM offering program and raised proceeds of $33.8 million, net of $0.5 million in commissions paid under the terms of the Equity Distribution Agreement. AWR also incurred $0.1 million of other expenses during the three months ended June 30, 2026, which included primarily legal and other costs to support this ATM offering program. There were no Common Shares issued during the three months ended June 30, 2025. During the six months ended June 30, 2026 and 2025, AWR sold 526,959 and 334,548 Common Shares, respectively, through the ATM offering program and raised proceeds of $40.1 million, net of $0.6 million in commissions paid, and $25.8 million, net of $0.4 million in commissions paid, respectively. AWR also incurred $0.2 million of other expenses for each of the six months ended June 30, 2026 and 2025, which was primarily legal and other costs. On June 12, 2026, AWR successfully completed the ATM offering program, reaching the maximum aggregate offering capacity of $200.0 million in gross proceeds raised. In total, AWR sold 2,575,947 Common Shares through the ATM offering program, and no further sales of

Common Shares will be made under this program.

During the six months ended June 30, 2026 and 2025, AWR also issued 26,023 and 23,463 Common Shares, respectively, related to restricted stock units, pursuant to stock-based compensation plans.

During the six months ended June 30, 2026 and 2025, AWR paid $1.4 million and $1.3 million, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. During the six months ended June 30, 2026 and 2025, GSWC paid $1.2 million in each period 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 June 30, 2026 and 2025, AWR paid quarterly dividends to shareholders of approximately $19.8 million, or $0.5040 per share, and $17.9 million, or $0.4655 per share, respectively. During the six months ended June 30, 2026 and 2025, AWR paid quarterly dividends of $39.5 million, or $1.0080 per share, and $35.7 million, or $0.9310 per share, respectively.

During the three and six months ended June 30, 2026, GSWC paid dividends of $11.8 million and $31.5 million, respectively, to AWR. During the three and six months ended June 30, 2025, GSWC paid dividends of $18.0 million to AWR. ASUS paid a $8.0 million dividend to AWR during the three and six months ended June 30, 2026, but did not pay any dividends to AWR during the three and six months ended June 30, 2025.

Note 5 — Derivative Instruments

In May 2025, the CPUC approved a new power purchase contract between BVES and a third party. The contract provides for the purchase of electricity during a delivery period from June 1, 2025 through December 31, 2028 and is subject to the accounting guidance for derivatives and requires mark-to-market accounting. In addition, BVES continues to procure renewable portfolio standard eligible energy and renewable energy credits as a bundled product through a contract that delivers through December 31, 2035. Under this contract, there is an embedded derivative that also requires mark-to-market accounting.

The CPUC authorized the use of regulatory asset and liability memorandum accounts to offset the mark-to-market entries required by the accounting guidance. Accordingly, all unrealized gains and losses generated from derivative instruments in the purchase power contracts are deferred on a monthly basis into a non-interest-bearing regulatory memorandum account that tracks the changes in fair value of the derivatives throughout the terms of the contracts. As a result, these unrealized gains and losses do not impact Registrant’s earnings. As of June 30, 2026, the fair value of the derivative liability was $14.6 million for the power purchase contracts, with a corresponding regulatory asset recorded in the derivative instrument memorandum account as a result of overall fixed prices under BVES’s purchase power contract being higher than future energy prices. The notional volume of obligations remaining under these long-term contracts as of June 30, 2026 was 731,611 megawatt hours.

The accounting guidance for fair value measurements applies to all financial assets and financial liabilities that are measured and reported on a fair value basis. Under the accounting guidance, Registrant has made fair value measurements that are classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

To value the derivatives in the purchase power contracts, BVES utilizes various inputs that include quoted market prices for energy over the duration of its contracts. The market prices used to determine the fair value for the derivative instruments were estimated based on independent sources such as broker quotes and publications that are not observable in or corroborated by the market. When such inputs have a significant impact on the measurement of fair value, the instruments are categorized as Level 3. Accordingly, the valuation of the derivatives within BVES’s purchase power contracts have been classified as Level 3 for all periods presented. The changes in fair values were due to changes in forward market energy prices as of June 30, 2026 and 2025. The following table presents changes in the fair value of the Level 3 derivatives for the three and six months ended June 30, 2026 and 2025:

Note 6 — Fair Value of Financial Instruments

For cash and cash equivalents, accounts receivable, accounts payable and short-term debt, the carrying amount is assumed to approximate fair value due to the short-term nature of these items.

Investments held in a Rabbi Trust for the supplemental executive retirement plan (“SERP”) are measured at fair value and totaled $51.5 million as of June 30, 2026 and $48.4 million as of December 31, 2025. All equity investments in the Rabbi Trust are Level 1 investments in mutual funds. The investments held in the Rabbi Trust are included in “Other Property and Investments” on Registrant’s balance sheets.

The table below estimates the fair value of long-term debt held by AWR and GSWC, respectively. The fair values as of June 30, 2026 and December 31, 2025 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. Changes in the assumptions will produce different results.

(1) Excludes debt issuance costs of approximately $3.1 million and $3.4 million as of June 30, 2026 and December 31, 2025, respectively.

(2) Excludes debt issuance costs of approximately $2.7 million and $3.0 million as of June 30, 2026 and December 31, 2025, respectively.

Note 7 — Income Taxes

AWR’s effective income tax rate (“ETR”) was 25.1% and 23.3% for the three months ended June 30, 2026 and 2025, respectively, and was 25.0% and 23.6% for the six months ended June 30, 2026 and 2025, respectively. GSWC’s ETR was 25.9% and 24.4% for the three months ended June 30, 2026 and 2025, respectively, and was 25.9% and 24.5% for the six months ended June 30, 2026 and 2025, respectively.

The AWR and GSWC ETRs differed from the federal corporate statutory tax rate of 21% primarily due to (i) state taxes; (ii) permanent differences, including certain tax effects from stock compensation; (iii) the ongoing amortization of the excess deferred income tax liability; and (iv) differences between book and taxable income that are treated as flowed-through adjustments in accordance with regulatory requirements (principally from plant, rate-case, and compensation-related items). As regulated utilities, GSWC and BVES treat certain temporary differences as flowed-through to customers in computing their income tax expense consistent with the income tax method used in their CPUC-jurisdiction rate making. Flowed-through items either increase or decrease tax expense and the ETR.

Note 8 — Employee Benefit Plans

The components of net periodic benefit costs for Registrant’s pension plan, postretirement medical benefit plan and SERP for the three and six months ended June 30, 2026 and 2025 were as follows:

Registrant does not expect to contribute to its pension plan in 2026 given its current funded status. Registrant’s policy is to fund the plans annually at a level which is deductible for income tax purposes and is consistent with amounts recovered in customer rates while also complying with ERISA’s funding requirements.

As authorized by the CPUC in the water and electric general rate case decisions, GSWC and BVES each utilize two-way balancing accounts to track differences between the forecasted annual pension expenses in rates, or expected to be in rates, and the actual annual expense recorded in accordance with the accounting guidance for pension costs. During the three months ended June 30, 2026 and 2025, GSWC’s actual pension expense was lower than the amounts included in water customer rates by $0.9 million and $0.4 million, respectively, and $1.8 million and $0.8 million during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, GSWC has a $3.9 million over-collection in its two-way balancing account, which is included as part of regulatory liabilities in Registrant’s balance sheets (Note 3).

BVES’s actual expense was lower than the amounts included in electric customer rates for all periods presented. As a result of receiving a final decision in its electric general rate case in the fourth quarter of 2024, BVES’s actual pension expense approximates the amounts included in electric rates, resulting in an insignificant balance in its pension balancing account as of June 30, 2026.

Note 9 — Contingencies

Environmental Clean-Up and Remediation at GSWC:

GSWC has been involved in environmental remediation and cleanup at one of its plant sites that contained an underground storage tank, which was used to store gasoline for its vehicles. This tank was removed from the ground in July 1990 along with the dispenser and ancillary piping. Since then, GSWC has been involved in various remediation activities at this site.

As of June 30, 2026, the total amount spent to clean-up and remediate the plant site, since inception of the remediation period, amounted to approximately $7.0 million, of which $1.5 million has been paid by the State of California Underground Storage Tank Fund. Amounts paid by GSWC have been included in rate base and approved by the CPUC for recovery. As of June 30, 2026, GSWC has a regulatory asset and an accrued liability for the estimated remaining cost of $1.3 million to complete the clean-up at the site. The estimate includes costs for continued activities of groundwater cleanup and monitoring, future soil treatment and site-closure-related activities. The ultimate cost may vary as there are many unknowns in remediation of underground gasoline spills and this is an estimate based on currently available information. Management believes it is probable that the estimated additional costs will continue to be approved in rate base by the CPUC as approved historically.

Other Litigation:

Registrant is also subject to other ordinary routine litigation incidental to its business, some of which may include claims for compensatory and punitive damages. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against, among other things, property, general liability, employment, and workers’ compensation claims incurred in the ordinary course of business. Insurance coverage may not cover certain claims involving punitive damages. Registrant does not believe the outcome from any pending suits or administrative proceedings will have a material effect on Registrant’s consolidated results of operations, financial position, or cash flows.

Note 10 — Business Segments

AWR has three reportable segments: water, electric and contracted services. GSWC has one segment, water. On a stand-alone basis, AWR has no material assets or liabilities other than its equity investments in its subsidiaries, note payables to bank, deferred taxes and note receivables from affiliate.

GSWC and BVES are CPUC regulated public utilities with business activities conducted in California. Activities of ASUS and its subsidiaries are conducted in California, Florida, Kansas, Maryland, Massachusetts, New Mexico, North Carolina, South Carolina, Texas and Virginia. Some of ASUS’s wholly owned subsidiaries are regulated by the state in which the subsidiary primarily conducts water and/or wastewater operations. Fees charged for operations and maintenance and renewal and replacement services are based upon the terms of the contracts with the U.S. government, which have been filed, as appropriate, with the commissions in the states in which ASUS’s subsidiaries are incorporated.

Registrant evaluates the performance of its reportable segments based on segment net income (loss). Registrant’s chief operating decision maker is the chief executive officer. The chief operating decision maker uses segment net income (loss) as a financial measure as part of the annual operating budget and forecasting process to monitor monthly financial activities of its segments. This financial information is reviewed and evaluated by the chief operating decision maker in making segment operating, capital, and business decisions.

The following tables present information by reportable segment and AWR (parent) that reconcile segment net income (loss) to total consolidated net income (loss) and segment assets to total consolidated assets. The utility plant balances are net of respective accumulated provisions for depreciation. The net property, plant and equipment of the electric segment is presented net of Contributions in Aid of Construction (“CIAC”). Capital additions reflect capital expenditures paid in cash and exclude U.S. government-funded and third-party prime funded capital expenditures for ASUS’s subsidiaries and property installed by developers and conveyed to GSWC and BVES.

(1) Depreciation computed on regulated utilities’ transportation equipment is recorded in other operating expenses and totaled $0.3 million for each of the three months ended June 30, 2026 and 2025, and totaled $0.6 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively.

(2) Other segment items primarily consist of a) non-service cost components related to Registrant’s benefit plans, and b) AFUDC (equity) on certain BVES capital projects while under construction.

(3) Capital additions reflect capital expenditures paid in cash and exclude U.S. government-funded and third-party prime funded capital expenditures for ASUS’s subsidiaries and property installed by developers and conveyed to GSWC and BVES.

The following tables reconcile segment net property, plant and equipment to total consolidated assets (in thousands):

(4) The utility plant balances are net of respective accumulated provisions for depreciation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis provides information on AWR’s consolidated operations and assets, and includes specific references to (i) GSWC, AWR’s regulated water utility segment, (ii) BVES, AWR’s regulated electric utility segment, (iii) ASUS and its subsidiaries, collectively, AWR’s contracted services segment, and (iv) AWR (parent) where applicable.

Included in the following analysis is a discussion of Registrant’s operations in terms of earnings per share by business segment and AWR (parent), which equals each business segment’s earnings divided by AWR’s weighted average number of diluted Common Shares. All of the measures discussed are derived from consolidated financial information of Registrant, but are not presented in our financial statements that are prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). These items constitute “non-GAAP financial measures” under Securities and Exchange Commission rules, which supplement our GAAP disclosures but should not be considered as an alternative to the respective GAAP measures. Furthermore, the non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other registrants.

AWR uses earnings per share by business segment and AWR (parent) as an important measure in evaluating its operating results and believes it provides investors with clarity surrounding the performance of its business segments and the parent company. AWR reviews this measurement regularly and compares it to historical periods and to its operating budget. A reconciliation to AWR’s consolidated diluted earnings per share prepared in accordance with GAAP is included in the discussions under the sections titled “Summary of Second Quarter Results by Segment” and “Summary of Year-to-Date Results by Segment.”

Overview

Factors affecting our financial performance are summarized under “Risk Factors” in our Form 10-K for the period ended December 31, 2025 filed with the SEC.

Although Registrant operates solely in the U.S., geopolitical developments abroad, such as the ongoing U.S. military operation in Iran, could indirectly affect our business through volatility in commodity prices, inflationary pressures, supply chain and operating cost impacts, and potential disruptions in banking systems and capital markets. Management is actively engaged with vendors and business partners to monitor and mitigate financial risks of global uncertainties; however, the scope and duration of any impacts remain uncertain. As of the date of this filing, geopolitical developments during the first half of 2026 have not had a material impact on the Company.

Water and Electric Segments:

GSWC’s revenues, operating income and cash flows are earned primarily through delivering potable water to homes and businesses in California. BVES’s revenues, operating income and cash flows are primarily earned through delivering electricity in the Big Bear area of San Bernardino County, California. Rates charged to GSWC and BVES customers are authorized by the CPUC. These rates are intended to allow recovery of operating costs and a reasonable rate of return on invested capital. GSWC and BVES plan to continue seeking recovery of their operating and supply costs, and receive reasonable returns on invested capital. Capital expenditures in future years at GSWC and BVES are expected to remain at substantially higher levels than depreciation expense. When necessary, GSWC and BVES may obtain funds from external sources in the capital markets and through bank borrowings.

General Rate Case Filings and Other Matters:

Water General Rate Case for the Years 2025–2027

On January 30, 2025, the CPUC issued a final decision in GSWC’s general rate case application for all its water regions and the general office, which determines new water rates for the years 2025 - 2027. Among other things, the approved settlement authorizes GSWC to invest approximately $573.1 million in capital infrastructure over the three-year capital cycle. The $573.1 million of infrastructure investment includes $17.7 million of advice letter capital investments to be filed for revenue recovery during the second and third year attrition increases when those projects are completed. In addition, the approved settlement agreement includes $58.2 million of advice letter capital investments, that began construction in 2023, to be filed for revenue recovery during the second and third year attrition increases when those projects are completed. All of the advice letter projects were allowed to accrue in a memorandum account (i) interest during the construction period at GSWC’s adopted cost of debt until the assets are in service, and (ii) the full rate of return that includes a debt and equity component and all applicable components of the revenue requirement for the projects from the period the assets are in service until the date of the attrition filings.

In December 2025, GSWC received approval from the CPUC to implement its full second-year rate increases, effective January 1, 2026, that will result in higher adopted operating revenues less water supply cost for 2026 of approximately $32.0 million compared to 2025’s adopted operating revenues less water supply cost. Included in the 2026 increase is approximately $11 million related to the advice letter capital projects previously discussed. The assets from the advice letter projects and the related amounts in the memorandum account were added to the adopted rate base for inclusion in the revenue requirement effective January 1, 2026.

The final decision also addressed GSWC’s request for various regulatory mechanisms that were litigated during the proceeding. Among other things, the final decision rejected GSWC’s request for the continuation of a full sales and revenue decoupling mechanism such as the WRAM and a full cost balancing account for water supply such as the MCBA, and instead ordered GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”) and an incremental cost balancing account (“ICBA”) for supply costs. The final decision also adopted GSWC’s M-WRAM rate design proposal authorizing GSWC to increase the revenue requirement recovery in its fixed service charges to between 45-48% of the revenue requirement depending on the ratemaking area representing approximately 65% of GSWC’s fixed costs in aggregate, and approved GSWC’s request for the continuation of a sales reconciliation mechanism that would allow GSWC to adjust its sales forecast throughout the general rate case cycle to address significant fluctuations in consumption. The M-WRAM tracks the difference between the revenue based on actual metered sales through a tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a standard single quantity rate had been in effect. The ICBA for supply costs tracks differences between the authorized per-unit prices and actual per-unit prices for each supply cost (purchased water, pump tax, and purchased power). The M-WRAM and ICBA were effective January 1, 2025.

The new 2026 rates have been reflected in GSWC’s earnings for the six months ended June 30, 2026 resulting in an increase in recorded revenues of $22.5 million largely from the second-year rates and advice letter filings, and an increase in recorded water supply costs of $5.6 million, which combined is a net increase of $16.9 million, compared to the same period in 2025. Due to transitioning from the WRAM to the M-WRAM and from the MCBA to the ICBA effective January 1, 2025, GSWC’s earnings have been and will be subject to future volatility from significant fluctuations in customer consumption, as well as from favorable and unfavorable changes in the water supply source mix compared to the adopted mix. Significant changes in customer consumption are primarily driven by weather conditions, including from such events known as El Niño or La Niña that can result in above average or below average annual precipitation, which significantly impacts outdoor water usage. Water supply mix changes can occur due to various circumstances, including but not limited to, unforeseen changes in groundwater quality and operating conditions of groundwater basins and associated pumping facilities.

Water General Rate Case for the Years 2028–2030

On July 1, 2026, GSWC filed a general rate case application for all its water regions and the general office. This general rate case will determine new water rates for the years 2028 – 2030. Among other things, GSWC requested capital budgets of approximately $1 billion for the three-year rate cycle. GSWC also requested to reinstate the WRAM and MCBA regulatory mechanisms. In an August 2020 decision, the CPUC discontinued the use of WRAM and the MCBA for water utilities, which GSWC implemented in 2008, but was discontinued for GSWC after 2024 as discussed above. A decision in the water general rate case is expected in the fourth quarter of 2027, with new rates to become effective January 1, 2028.

Expansion of GSWC’s Water Operations

In January 2026, GSWC filed an application with the CPUC to acquire the water system assets from Norwalk, a city in Los Angeles County, for a purchase price of $5.25 million. On July 13, 2026, GSWC and Cal Advocates filed a joint motion to adopt a settlement agreement between the two parties that would approve the acquisition of a new water system that serves almost 900 customer connections. If the settlement agreement is approved by the CPUC, the new system will be incorporated into one of GSWC’s existing ratemaking areas. The CPUC is scheduled to issue a proposed decision in the fourth quarter of 2026.

Electric General Rate Case for the Years 2023–2026

On January 16, 2025, the CPUC adopted a final decision in BVES’s general rate case proceeding that set new electric rates retroactive to January 1, 2023 and approved the settlement agreement reached between BVES, Cal Advocates and another intervenor in its entirety. Among other things, the settlement agreement, (i) settled and adopted the revenue requirements for each of the four years 2023 through 2026, and the rate increases for 2024 through 2026 are not subject to an earnings test, (ii) authorized BVES to invest approximately $52.5 million in capital infrastructure included in base rates over the four-year rate cycle and at least an additional $23.1 million (plus an allowance for funds used during construction, or “AFUDC”) to be filed for revenue recovery through advice letters when the projects are completed; (iii) adopted a cost of capital that increased BVES’s adopted return on equity from 9.6% to 10.0%, lowered the cost of debt from 6.6% to 5.51%, and maintained the capital structure of 57% equity and 43% debt, and (iv) approved for recovery the requested capital expenditures and other incremental operating costs already incurred prior to 2023 in connection with BVES’s wildfire mitigation plans that were previously not included in customer rates.

The final decision provides for an increase in adopted operating revenues of $3.3 million in 2026. With regards to the advice letter projects authorized in the general rate case as previously discussed, BVES completed and placed in service capital projects totaling approximately $28 million, including AFUDC. During 2025 and 2026, BVES filed various advice letters for these capital projects and the CPUC approved them at actual cost. Accordingly, BVES has implemented new rates to recover the revenue requirement associated with these advice letter projects that are expected to generate additional annual operating revenues of approximately $4 million.

Electric General Rate Case for the Years 2027–2030

On January 30, 2026, BVES filed a new general rate case application that will determine new electric rates for the years 2027 through 2030. Among other things, BVES requested (i) capital budgets of approximately $133 million for the four-year rate cycle, and another approximately $17 million, plus AFUDC, for capital projects to be filed for revenue recovery through advice letters when the projects are completed, and (ii) a capital structure for BVES of 60% equity and 40% debt, a return on equity of 11.30%, an embedded cost of debt of 5.92%, and a return on rate base of 9.15%.

Contracted Services Segment:

ASUS’s revenues, operating income and cash flows are earned by providing water and/or wastewater services, including operation and maintenance services and construction of facilities for the water and/or wastewater systems at various military installations, pursuant to an initial 50-year, firm-fixed-price contract, additional firm-fixed-price contracts, task order agreements and subcontracts with third party prime contractors on military bases. Currently, ASUS has one subsidiary that has entered into a task order agreement with the U.S. government that has a term of 15 years. The contract prices for each of the contracts and recurring task order agreements are subject to annual economic price adjustments. Additional revenues generated by contract operations are primarily dependent on annual economic price adjustments, and new construction activities under contract modifications with the U.S. government or agreements with other third-party prime contractors. ASUS’s subsidiaries expect to continue to enter into U.S. government-awarded contract modifications and agreements with third-party prime contractors for new construction projects at the military bases served.

Early in 2026, the U.S. government experienced partial shutdowns affecting mainly the Department of Homeland Security and other federal departments. Amid the U.S. government shutdowns, the subsidiaries of ASUS have not experienced and are not expected to experience any earnings impact to their existing operations and maintenance and renewal and replacement services, as utility privatization contracts are an “excepted service.” Management expects that any impact of any future government shutdowns on ASUS and its operations through its subsidiaries will likely be limited to (a) the timing of funding to pay for services rendered, (b) delays in the processing of economic price adjustments (“EPAs”) and/or requests for equitable adjustments (“REAs”), (c) the timing of the issuance of contract modifications for new construction work not already funded by the U.S. government, (d) the timing of construction work associated with delays in receiving construction permits from furloughs at government agencies, and/or (e) delays in solicitation for and/or awarding of new contracts under the Department of Defense contracting programs. In the event a U.S. government shutdown extends for an unprecedented and much longer period than that experienced in early 2026, ASUS’s liquidity and earnings could be impacted.

Summary of Second Quarter Results by Segment

The table below sets forth a comparison of the second quarter of 2026 diluted earnings per share contribution reported by business segment and for the parent company with amounts reported during the same period in 2025.

:

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

For the three months ended June 30, 2026, AWR’s recorded consolidated diluted earnings were $1.09 per share, as compared to $0.87 per share for the same period in 2025, an increase of $0.22 per share or 25.3%, primarily generated from higher earnings at the water utility segment resulting largely from, among other factors, the implementation of new customer rate increases approved by the CPUC. In addition, there was an increase in construction activities that resulted in higher earnings at the contracted services segment.

On June 12, 2026, AWR successfully completed its at-the-market (“ATM”) offering program, which was originally established on February 27, 2024. AWR reached the maximum aggregate offering capacity of $200 million in gross proceeds raised that resulted in the total sale of 2,575,947 Common Shares through this ATM offering program. No further sales of Common Shares will be made under this program, and AWR has no plans to issue additional equity through, at least, the end of 2029 to support its current operations.

The following is a computation and reconciliation of diluted earnings per share from the measure of net income (loss) by business segment and for the parent company (as disclosed in Note 10 to the Unaudited Consolidated Financial Statements) to AWR’s consolidated fully diluted earnings per Common Share (as recorded), for the three months ended June 30, 2026 and 2025:

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

Water Segment:

For the three months ended June 30, 2026, recorded diluted earnings from the water utility segment were $0.91 per share, as compared to $0.73 per share for the same period in 2025, an increase of $0.18 per share, or 24.7%. This growth stems largely from CPUC-approved rate increases effective January 1, 2026, which boosted 2026 full-year adopted operating revenues less water supply costs by $32.0 million over 2025 adopted amounts, including $11.0 million for capital projects approved through advice letter filings, as previously discussed. To a lesser extent, 2026 second-quarter earnings also benefited from a 4% increase in water consumption and a lower reliance on purchased water included in the water supply source mix compared to 2025 second-quarter. Due to the CPUC’s approval of a modified revenue decoupling mechanism and an incremental water supply cost balancing account effective January 1, 2025, GSWC’s earnings face future volatility from consumption fluctuations and water supply mix changes.

It is uncertain whether the second quarter’s trend of higher customer demand and a favorable water supply source mix will continue throughout the remainder of 2026, or if their positive earnings effects will reverse. Consumption changes depend on factors like climate change, conservation, and weather conditions. For example, El Niño or La Niña weather events could cause fluctuating precipitation that shifts outdoor water use. Additionally, water supply mix changes can occur due to unforeseen changes in groundwater quality and operating conditions of groundwater basins and associated pumping facilities. Any of these factors could directly impact GSWC’s future net earnings.

The following discussion analyzes the primary variances in the water segment’s earnings between the two periods.

• An increase in water operating revenues of $11.4 million was largely a result of (i) the CPUC-authorized second-year rate increases effective January 1, 2026, (ii) additional revenues for the recovery of capital projects approved in various advice letter filings effective January 1, 2026, (iii) additional revenues for increases in the per-unit water supply costs incurred, which, as noted below, result in no net impact to earnings, and (iv) an increase in water consumption for the three months ended June 30, 2026 of approximately 4% favorably impacting net earnings when compared to the same period in 2025. These increases were partially offset by a decrease of $1.6 million in billed surcharges. CPUC-approved surcharges are billed to customers to recover previously incurred costs. Changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.
• An increase in water supply costs of $0.7 million, which consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. The increase in water supply costs compared to the same period in 2025 was largely because of (i) an overall increase in per-unit water supply costs that are covered in current rates, as noted above, resulting in no net impact to earnings, and (ii) an increase in the production of water resulting from higher customer consumption. These increases were partially offset by the impact of an actual water supply source mix that included less purchased water during the second quarter of 2026 as compared to the same period in 2025 due primarily to wells being brought back online in certain customer service areas.
• An overall increase in operating expenses of $0.2 million (excluding supply costs) due largely to increases in (i) overall labor costs, (ii) depreciation and amortization expenses, which are impacted by increasing capital additions placed in service and are reflected and recovered in customer rates, and (iii) property and other non-income taxes; partially offset by a decrease in surcharges of $1.6 million. As noted above, changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.
• An overall increase in interest expense (net of interest income) of $0.9 million resulting largely from (i) the impact of capitalizing debt costs related to certain advice letter projects approved by the CPUC in the latest general rate case effective January 1, 2025 that was recorded in 2025 with no similar item in 2026, and (ii) a decrease in interest income earned on regulatory assets due to decreasing regulatory balances as GSWC recovers the amounts through surcharges. The advice letter projects discussed are now included in adopted rate base and are part of the rate increases effective January 1, 2026.
• An overall increase in other income (net of other expense) of $2.0 million due largely to gains totaling $4.3 million generated on investments held to fund one of the Company’s retirement plans during the three months ended June 30, 2026, as compared to gains on investments of $2.7 million recorded during the same period in 2025 due to financial market conditions, and a decrease in the non-service cost components related to GSWC’s benefit plans resulting from changes in actuarial assumptions. However, as a result of GSWC’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefits costs related to the pension plan have no material impact to earnings.
• Changes in certain flowed-through income taxes and permanent items included in GSWC’s income tax expense for the three months ended June 30, 2026 as compared to the same period in 2025 unfavorably impacted the water segment’s earnings. As a regulated utility, GSWC treats certain temporary differences as being flowed-through in computing its income tax expense consistent with the income tax method used in its CPUC-jurisdiction rate making. Changes in the magnitude of flowed-through items either increase or decrease tax expense, thereby affecting diluted earnings per share.
• A decrease in earnings of approximately $0.02 per share due to the dilutive effects from the issuance of equity under AWR’s ATM offering program as previously discussed.

Electric Segment:

Diluted earnings from the electric utility segment increased $0.01 per share for the second quarter of 2026 as compared to the same period in 2025 largely resulting from an increase of $0.7 million in electric revenues due to the CPUC-authorized fourth-year rate increases in 2026 and additional revenues approved largely after the second quarter of 2025 to recover the cost plus AFUDC of certain advice letter capital projects. This increase was partially offset by a decrease in billed surcharges of $0.4 million. As previously discussed, changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.

The net increase in electric revenues discussed above was partially offset by an overall increase in operating expenses and interest expense (net of interest and other income), partially offset by a decrease in surcharges as discussed above.

Contracted Services Segment:

Diluted earnings from the contracted services segment increased $0.03 per share for the second quarter of 2026 when compared to the same period in 2025 largely resulting from (i) an increase in construction activities, (ii) an increase in management fee revenues resulting from the resolution of various economic price adjustments, and (iii) a decrease in interest expense (net of interest income) due to lower average borrowing levels and average interest rates. These favorable variances were partially offset by an increase in overall operating expenses (excluding construction expenses). The contracted services segment is expected to contribute $0.63 to $0.67 per share for the full year of 2026.

Summary of Year-to-Date Results by Segment

The table below sets forth a comparison of the year-to-date diluted earnings per share by business segment and for the parent company with amounts reported during the same period in 2025:

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

For the six months ended June 30, 2026, AWR’s recorded consolidated diluted earnings were $1.86 per share, as compared to $1.57 per share recorded for the same period in 2025, an increase of $0.29 per share or 18.5%, primarily generated from higher earnings at the water utility segment resulting from, among other factors, the implementation of new customer rate increases approved by the CPUC. In addition, there was an increase in construction activities that resulted in higher earnings at the contracted services segment. AWR’s consolidated diluted earnings for the six months ended June 30, 2026 were negatively impacted by approximately $0.04 per share due to the continued dilutive effects from the issuance of equity under AWR’s ATM offering program. On June 12, 2026, AWR successfully completed the ATM offering program, reaching the maximum aggregate offering capacity of $200 million in gross proceeds raised, and no further sales of Common Shares will be made under this program.

The following is a computation and reconciliation of diluted earnings per share from the measure of net income (loss) by business segment and for the parent company (as disclosed in Note 10 to the Unaudited Consolidated Financial Statements) to AWR’s consolidated fully diluted earnings per Common Share, for the six months ended June 30, 2026 and 2025:

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

Water Segment:

For the six months ended June 30, 2026, recorded diluted earnings from the water utility segment were $1.47 per share, as compared to $1.25 per share for the same period in 2025, an increase of $0.22 per share. The discussion below presents the major variances in earnings for the two periods.

• An increase in water operating revenues of approximately $22.5 million largely as a result of (i) the CPUC-authorized second-year rate increases effective January 1, 2026, (ii) additional revenues for the recovery of capital projects approved in various advice letter filings effective January 1, 2026, (iii) additional revenues for increases in the per-unit water supply costs incurred, which, as noted below, result in no net impact to earnings, and (iv) an increase in water consumption for the six months ended June 30, 2026 of 2.2% when compared to the same period in 2025. As a result of transitioning to the M-WRAM effective January 1, 2025, GSWC’s revenues and earnings will continue to be subject to future volatility from fluctuations in customer consumption. These increases were partially offset by a decrease in billed surcharges of $2.0 million. As previously discussed, changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.
• An increase in water supply costs of $5.6 million, which consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. The increase in water supply costs compared to the same period in 2025 was largely because of (i) an overall increase in the per-unit water supply costs that are covered in current rates, as noted above, resulting in no net impact to earnings, (ii) an increase in overall water volume compared to the same period in 2025 resulting from higher customer consumption, and (iii) the impact of an actual water supply source mix that included more purchased water during the six months ended June 30, 2026 compared to the same period in 2025 as a result of certain wells being temporarily offline in a few customer service areas during the first quarter of 2026. Due to transitioning to the ICBA effective January 1, 2025, GSWC’s

earnings have been and will be subject to future volatility from favorable and unfavorable changes in the water supply source mix compared to the adopted mix incorporated in the revenue requirement.

• An overall increase in operating expenses of $2.6 million (excluding supply costs) mainly due to increases in (i) overall labor costs and other employee-related benefits, (ii) other operation and maintenance expenses, (iii) regulatory costs, (iv) depreciation and amortization expenses, which are impacted by increasing capital additions placed in service and are reflected and recovered in customer rates, and (v) property and other non-income taxes; partially offset by a decrease in surcharges of $2.0 million. As noted above, changes in revenues from billed surcharges are offset by equal changes in operating expenses, resulting in no net impact to earnings.
• An overall increase in interest expense (net of interest income) of $1.7 million resulting largely from (i) the impact of capitalizing debt costs related to certain advice letter projects approved by the CPUC in the latest general rate case effective January 1, 2025 that was recorded in 2025 with no similar item in 2026, and (ii) a decrease in interest income earned on regulatory assets due to decreasing regulatory balances as GSWC recovers the amounts through surcharges; partially offset by overall lower average borrowing levels and interest rates. The advice letter projects discussed are now included in adopted rate base and are part of the rate increases effective January 1, 2026.
• An overall increase in other income (net of other expenses) of $1.7 million due primarily to gains of $3.1 million generated on investments held to fund one of the Company’s retirement plans as compared to gains of $2.2 million recorded during the same period in 2025, due to financial market conditions and a decrease in the non-service cost components related to GSWC’s benefit plans resulting from changes in actuarial assumptions. However, as a result of GSWC’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefits costs related to the pension plan have no material impact to earnings.
• Changes in certain flowed-through income taxes and permanent items included in GSWC’s income tax expense for the six months ended June 30, 2026 as compared to the same period in 2025 unfavorably impacted the water segment’s earnings as previously discussed in the quarterly results.
• A decrease in earnings of approximately $0.03 per share due to the dilutive effects from the issuance of equity under AWR’s ATM offering program previously discussed.

Electric Segment:

Diluted earnings from the electric utility segment increased $0.02 per share for the six months ended June 30, 2026 as compared to the same period in 2025, largely resulting from an increase of $4.4 million in electric revenues due largely to the CPUC-authorized fourth-year rate increases in 2026, additional revenues approved to recover the cost plus AFUDC of certain advice letter capital projects that were effective during the second quarter of 2025, and an increase in billed surcharges of $1.2 million. As previously discussed, changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.

The increase in electric revenues discussed above was partially offset by (i) an overall increase in operating expenses of $2.1 million, mostly from an increase in surcharges of $1.2 million discussed above, other operation and maintenance-related activities, and depreciation and amortization expenses, which are impacted by increasing capital additions placed in service and are reflected and recovered in customer rates, and (ii) an increase in interest expense (net of interest and other income) of $0.8 million compared to the same period in 2025. The increase in interest expense at the electric segment between periods is primarily due to lower AFUDC recognized in 2026 related to certain advice letter projects approved by the CPUC in the latest general rate case, together with lower interest income earned on regulatory assets, and an increase in interest expense from higher average borrowing levels. The advice letter projects discussed are now included in adopted rate base and are part of the increase in 2026 revenues.

Contracted Services Segment:

Diluted earnings from the contracted services segment increased $0.05 per share for the six months ended June 30, 2026 as compared to the same period in 2025, largely due to (i) an increase in construction activities, (ii) an increase in management fee revenues resulting from the resolution of various economic price adjustments, and (iii) a decrease in interest expense (net of interest income) due to lower average borrowing levels and average interest rates. These favorable variances were partially offset by an increase in overall operating expenses (excluding construction expenses). Furthermore, there was a decrease in contracted services earnings of approximately $0.01 per share due to the dilutive effects from the issuance of equity under AWR’s ATM offering program that was previously discussed. The contracted services segment is expected to contribute $0.63 to $0.67 per share for the full year of 2026.

The following discussion and analysis for the three and six months ended June 30, 2026 and 2025 provides information on AWR’s consolidated operations and, where necessary, includes specific references to AWR’s individual segments and subsidiaries: GSWC, BVES, and ASUS and its subsidiaries.

Consolidated Results of Operations — Three Months Ended June 30, 2026 and 2025 (amounts in thousands, except per share amounts):

Operating Revenues:

General

GSWC and BVES rely upon approvals by the CPUC of rate increases to recover operating expenses and to provide for a return on invested and borrowed capital used to fund utility plant. ASUS relies on economic price and equitable adjustments by the U.S. government in order to recover operating expenses and provide a profit margin for ASUS. Current operating revenues and earnings may be negatively impacted if ASUS’s subsidiaries do not receive adequate price adjustments in a timely manner. ASUS’s earnings are also impacted by the level of construction projects at its subsidiaries, which may or may not continue at current levels in future periods.

Water

For the three months ended June 30, 2026, revenues from water operations increased by $11.4 million to $131.1 million as compared to the same period in 2025. The increase in water revenues during the second quarter of 2026 is primarily a result of (i) the CPUC-approved second-year rate increases effective January 1, 2026, (ii) additional revenues approved to recover the advice letter capital projects that were added to adopted rate base for inclusion in the revenue requirement effective January 1, 2026, (iii) additional revenues for increases in the per-unit water supply costs incurred, which result in no net impact to earnings, and (iv) an increase in water consumption as further described below. These increases were partially offset by a decrease in billed surcharges of $1.6 million compared to the same period in 2025. CPUC-approved surcharges are billed to customers to recover previously incurred costs. Changes in billed surcharge revenues are offset by equal changes in operation expenses, resulting in no impact to earnings.

Water consumption for the three months ended June 30, 2026 was higher by approximately 4% as compared to the same period in 2025. Prior to 2025, changes in consumption did not have a significant impact on recorded revenues due to the CPUC-approved full revenue decoupling mechanism, known as the WRAM, which adjusted volumetric revenues to adopted levels authorized by the CPUC. As previously discussed, the final decision in the latest general rate case rejected GSWC’s request for the continuation of the WRAM, and instead ordered GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”). Without having a full revenue decoupling mechanism, GSWC’s revenues and earnings will be subject to future volatility as a result of fluctuations in customer consumption.

Electric

Electric revenues for the three months ended June 30, 2026 increased by $0.7 million to $13.6 million largely resulting from an increase in revenues from fourth-year electric rate increases implemented in 2026 as compared to the same period of 2025, and an increase in additional revenues from the approval of certain advice letter projects that were implemented after the second quarter of 2025. These increases were partially offset by a decrease in billed surcharges of $0.4 million. Changes in billed surcharge revenues are offset by equal changes in operation expenses, resulting in no impact to earnings.

Billed electric usage for the second quarter of 2026 was 7.8% lower than the same period in 2025; however, due to the CPUC-approved Base Revenue Requirement Adjustment Mechanism, which adjusts certain revenues to adopted levels authorized by the CPUC, changes in electric usage do not have a significant impact on earnings.

Contracted Services

Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining water and/or wastewater systems at various military bases. For the three months ended June 30, 2026, revenues from contracted services increased by $6.2 million to $36.6 million as compared to $30.4 million for the same period in 2025. The increase was primarily due to an increase in construction activities and an increase in management fees from economic price adjustments.

ASUS’s subsidiaries expect to continue to enter into U.S. government-awarded contract modifications, agreements with third-party prime contractors for new construction projects at the military bases served and task order agreements. Earnings and cash flows from modifications to the initial 15- and 50-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue at current levels in future periods.

Operating Expenses:

Supply Costs

Total supply costs at the regulated utilities comprise the largest portion of total consolidated operating expenses. Supply costs accounted for 32.0% and 32.9% of total operating expenses for the three months ended June 30, 2026 and 2025, respectively.

Water segment supply costs

Two of the principal factors affecting water supply costs are the amount of water produced and the source of the water. Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. Overall actual percentages of purchased water for the three months ended June 30, 2026 and 2025 were 40.7% and 43.2%, respectively.

Effective January 1, 2025, GSWC transitioned from a full cost balancing account for water supply known as the MCBA to an incremental cost balancing account (“ICBA”) for supply costs. The ICBA does not include the impact from changes in water supply source mix compared to the adopted mix incorporated in the revenue requirement, but allows GSWC to track differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Without the MCBA mechanism in place there may be volatility to Registrant’s earnings as a result of changes in water supply source mix. As of June 30, 2026, the balances recorded in the ICBA were not significant.

Supply costs for the water segment consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. For the three months ended June 30, 2026 and 2025, water supply costs consisted of the following amounts (in thousands):

• The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $0.2 million and $(0.1) million for the three months ended June 30, 2026 and 2025, respectively.

Water purchased costs for the second quarter of 2026 decreased to $23.5 million as compared to $23.9 million for the same period in 2025. Although there was an increase in customer consumption, the actual water supply source mix included less purchased water during the three months ended June 30, 2026 compared to the same period in 2025 due primarily to wells being brought back online in certain customer service areas. As a result of the increase in water produced from GSWC's wells, there was an increase in power purchased for pumping of $0.1 million and $1.1 million groundwater production assessment compared to the same period in 2025.

Electric segment supply costs

Supply costs for the electric segment consist primarily of purchased power for resale, the cost of natural gas used by BVES’s generating unit, the cost of renewable energy credits and changes in the electric supply cost balancing account. For the three months ended June 30, 2026 and 2025, electric supply costs consisted of the following amounts (in thousands):

• The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $0.2 million and $(0.1) million for the three months ended June 30, 2026 and 2025, respectively.

For the three months ended June 30, 2026, the cost of power purchased for resale to BVES’s electric customers decreased by $0.7 million to $2.8 million as compared to $3.5 million during the same period in 2025 due to lower customer usage and lower overall average prices per megawatt-hour, including fixed costs. The change in the electric supply cost balancing account in 2026 when compared to 2025 is also due to lower customer usage.

Other Operation

The primary components of other operation expenses include payroll costs, materials and supplies, chemicals and water treatment costs and outside-service costs of operating the regulated water systems, including the costs associated with water transmission and distribution, pumping, water quality, meter reading, billing, and operations of district offices and the electric system. Registrant’s contracted services operations incur many of the same types of expenses. For the three months ended June 30, 2026 and 2025, other operation expenses by business segment consisted of the following (dollar amounts in thousands):

The decrease in other operation expenses at the water segment was largely due to a decrease in billed surcharges of $0.5 million compared to the same period in 2025 from surcharges implemented in 2025 to recover balances previously tracked in CPUC-authorized balancing and memorandum accounts. Billed surcharges had a corresponding and offsetting change in other operation expenses, resulting in no net impact to earnings. There was also a decrease in water treatment and chemical costs as compared to the same period in 2025.

The increase in other operation expenses at the electric segment was primarily due to higher operation-related outside service costs. The increase at the contracted services segment was largely due to higher labor and fuel costs.

Administrative and General

Administrative and general expenses include payroll costs related to administrative and general functions, all employee-related benefits, insurance expenses, outside legal and consulting fees, regulatory-utility-commission expenses, expenses associated with being a public company and general corporate expenses charged to expense accounts. For the three months ended June 30, 2026 and 2025, administrative and general expenses by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

Administrative and general expenses decreased at the water segment due largely to a decrease in billed surcharges of $1.1 million compared to the same period in 2025. The surcharges were implemented in 2025 to recover balances previously tracked in CPUC-authorized balancing and memorandum accounts. Billed surcharges had a corresponding and offsetting change in administrative and general expenses, resulting in no net impact to earnings. This decrease was partially offset by higher labor costs and other employee-related benefits, and outside services costs including related to various regulatory filings.

Administrative and general expenses decreased at the electric segment due largely to a decrease in outside-service costs, as well as a decrease in billed surcharges of $0.2 million to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts. Changes in revenues from billed surcharges had a corresponding and offsetting change in administrative and general expenses, resulting in no impact to earnings.

Administrative and general expenses increased at the contracted services segment primarily due to higher labor costs.

Depreciation and Amortization

For the three months ended June 30, 2026 and 2025, depreciation and amortization by business segment consisted of the following (dollar amounts in thousands):

The overall increase in depreciation and amortization expense resulted primarily from capital additions to utility plant and other fixed assets placed in service.

Maintenance

For the three months ended June 30, 2026 and 2025, maintenance expense by business segment consisted of the following (dollar amounts in thousands):

Maintenance expense increased at the water segment due primarily to higher overall maintenance activities compared to the same period in 2025.

Maintenance expense decreased at the electric services segment due largely to a decrease in billed surcharges of $0.2 million to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts. Changes in revenues from billed surcharges had a corresponding and offsetting change in maintenance expense, resulting in no impact to earnings.

Property and Other Taxes

For the three months ended June 30, 2026 and 2025, property and other taxes by business segment consisted of the following (dollar amounts in thousands):

Property and other taxes increased at both the water and electric segments due mainly to higher property taxes from capital additions.

ASUS Construction

For the three months ended June 30, 2026, construction expenses for contracted services were $16.7 million, an increase of $3.9 million compared to the same period in 2025, primarily resulting from an increase in new construction activities as compared to the same period of 2025.

Interest Expense

For the three months ended June 30, 2026 and 2025, interest expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

AWR’s borrowings consist of revolving credit facilities, while GSWC and BVES borrowings consist of revolving credit facilities and long-term debt issuances. Interest expense at the water segment increased as compared to the same period in 2025 due primarily to the impact of capitalizing debt costs in 2025 related to certain advice letter projects approved in the latest water general rate case, with no similar item in 2026. Interest expense at the electric segment increased as compared to the same period in 2025 due primarily to lower AFUDC recognized in 2026. In 2025, BVES recognized higher levels of AFUDC related to certain advice letter projects approved in the latest electric general rate case. The interest expense at the contracted services segment and AWR (parent) decreased as compared to the same period in 2025 primarily due to lower average borrowing levels and lower interest rates. The overall combined average interest rates were 4.99% and 5.10% for the three months ended June 30, 2026 and 2025, respectively.

Interest Income

For the three months ended June 30, 2026 and 2025, interest income by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

For the three months ended June 30, 2026, interest income decreased at both the water and electric segments when compared to the same period in 2025 largely due to decreases in interest income earned on regulatory assets. Regulatory asset balances will decrease as surcharges are approved and implemented. As a result of receiving final CPUC decisions in early 2025 for both the water and electric general rate cases, surcharges were implemented during 2025 to recover balances previously tracked in CPUC-authorized balancing and memorandum accounts.

Other Income and (Expenses), net

For the three months ended June 30, 2026 and 2025, other income and (expenses), net by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

For the three months ended June 30, 2026, other income (net of other expense) increased largely because of gains of $4.3 million recorded on investments held to fund one of the Company’s retirement plans in 2026, compared to gains of $2.7 million recorded in 2025, and a decrease in the non-service cost components related to GSWC’s benefit plans resulting from changes in actuarial assumptions. However, as a result of GSWC’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefits costs related to the pension plan have no material impact to earnings.

The decrease in other income for the electric segment is due primarily to a decrease in AFUDC (equity) earned on certain CPUC-approved advice letter projects while under construction compared to same period in 2025 as projects were completed and placed into service. The decrease in other income for AWR (parent) is due primarily to a decrease in non-regulated-related activities.

Income Tax Expense

For the three months ended June 30, 2026 and 2025, income tax expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

• not meaningful

AWR’s ETR was 25.1% and 23.3% for the three months ended June 30, 2026 and 2025, respectively. GSWC’s ETR was 25.9% and 24.4% for each of the periods ended June 30, 2026 and 2025, respectively. The increase in the ETRs during the three months ended June 30, 2026 was primarily due to changes in certain flowed-through income taxes at the regulated utilities.

Consolidated Results of Operations — Six Months Ended June 30, 2026 and 2025 (amounts in thousands, except per share amounts):

Operating Revenues:

General

GSWC and BVES rely upon approvals by the CPUC of rate increases to recover operating expenses and to provide for a return on invested and borrowed capital used to fund utility plant. ASUS relies on economic price and equitable adjustments by the U.S. government in order to recover operating expenses and provide a profit margin for ASUS. Current operating revenues and earnings can be negatively impacted if ASUS’s subsidiaries do not receive adequate rate relief or adjustments in a timely manner. ASUS’s earnings are also impacted by the level of additional construction projects at its subsidiaries, which may or may not continue at current levels in future periods.

Water

For the six months ended June 30, 2026, revenues from water operations increased by $22.5 million to $244.2 million as compared to the same period in 2025. The increase in water revenues during the six months of 2026 is primarily a result of the (i) the CPUC-approved second-year rate increases effective January 1, 2026, (ii) additional revenues approved to recover the advice letter capital projects that were added to adopted rate base for inclusion in the revenue requirement effective January 1, 2026, (iii) additional revenues for increases in the per-unit water supply costs incurred, which result in no net impact to earnings, and (iv) an increase in water consumption as further described below. These increases were partially offset by a decrease in billed surcharges of $2.0 million compared to the same period in 2025. CPUC-approved surcharges are billed to customers to recover previously incurred costs. Changes in billed surcharge revenues are offset by equal changes in operation expenses, resulting in no impact to earnings.

Water consumption for the six months ended June 30, 2026 was higher by 2.2% as compared to the same period in 2025. Prior to 2025, changes in consumption did not have a significant impact on recorded revenues due to the CPUC-approved full revenue decoupling mechanism, known as the WRAM, which adjusted volumetric revenues to adopted levels authorized by the CPUC. As previously discussed, the final decision in the latest general rate case rejected GSWC’s request for the continuation of the WRAM, and instead ordered GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”). Without having a full revenue decoupling mechanism, GSWC’s revenues and earnings will be subject to future volatility as a result of significant fluctuations in customer consumption.

Electric

Electric revenues for the six months ended June 30, 2026 increased by $4.4 million to $32.3 million largely resulting from an increase in revenues from fourth-year electric rate increases implemented in 2026 as compared to the same period of 2025, an increase in additional revenues from the approval of certain advice letter projects that were implemented after the second quarter of 2025, and an increase in billed surcharges of $1.2 million. As previously discussed, changes in billed surcharge revenues are offset by equal changes in operating expenses, resulting in no net impact to earnings.

Electric usage for the six months ended June 30, 2026 was lower by 6.1% compared to the same period in 2025; however, due to the CPUC-approved Base Revenue Requirement Adjustment Mechanism, which adjusts certain revenues to adopted levels authorized by the CPUC, changes in usage do not have a significant impact on earnings.

Contracted Services

Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining the water and/or wastewater systems at various military bases. For the six months ended June 30, 2026, revenues from contracted services increased by $12.6 million to $74.0 million as compared to $61.4 million for the same period in 2025. The increase was primarily due to an increase in construction activities and an increase in management fees from economic price adjustments.

ASUS’s subsidiaries expect to continue to enter into U.S. government-awarded contract modifications, agreements with third-party prime contractors for new construction projects at the military bases served and task order agreements. Earnings and cash flows from modifications to the initial 15- and 50-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue at current levels in future periods.

Operating Expenses:

Supply Costs

Total supply costs at the regulated utilities comprise the largest portion of total consolidated operating expenses. Supply costs accounted for approximately 30.7% and 30.9% of total operating expenses for the six months ended June 30, 2026 and 2025, respectively.

Water segment supply costs

Two of the principal factors affecting water supply costs are the amount of water produced and the source of the water. Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. The overall actual percentages of purchased water for the six months ended June 30, 2026 and 2025 were 43.0% and 41.6%, respectively.

Effective January 1, 2025, GSWC transitioned from a full cost balancing account for water supply known as the MCBA to an incremental cost balancing account (“ICBA”) for supply costs. The ICBA does not include the impact from changes in water supply source mix compared to the adopted mix incorporated in the revenue requirement, but allows GSWC to track differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Without the MCBA mechanism in place there may be volatility to Registrant’s earnings as a result of changes in water supply source mix. As of June 30, 2026, the balances recorded in the ICBA were not significant.

Supply costs for the water segment consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. For the six months ended June 30, 2026 and 2025, water supply costs consisted of the following amounts (in thousands):

• The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $(0.1) million and $(1.9) million for the six months ended June 30, 2026 and 2025, respectively.

Water purchased costs for the six months ended June 30, 2026 increased to $44.9 million as compared to $40.2 million for the same period in 2025 due primarily to higher wholesale water per-unit prices that are being recovered in current rates, and an actual water supply source mix that included more purchased water during the six months ended June 30, 2026 compared to the same period in 2025 resulting from wells being temporarily offline in a few customer service areas during the first quarter of 2026, with some wells coming back online in the second quarter. Power purchased for pumping and groundwater production assessment increased as a result of higher customer consumption and water production compared to the same period in 2025, as well as increases in electricity provider rates and pump tax rates that are also being recovered in current rates.

Electric segment supply costs

Supply costs for the electric segment consist primarily of purchased power for resale, the cost of natural gas used by BVES’s generating unit, the cost of renewable energy credits and changes in the electric supply cost balancing account. For the six months ended June 30, 2026 and 2025, electric supply costs consisted of the following amounts (in thousands):

• The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $(0.1) million and $(1.9) million for the six months ended June 30, 2026 and 2025, respectively.

For the six months ended June 30, 2026, the cost of power purchased for resale to BVES’s electric customers decreased to $7.6 million as compared to $9.5 million during the same period in 2025 largely because of lower customer usage and lower overall average prices per megawatt-hour including fixed costs. The change in the electric supply cost balancing account during the six months ended June 30, 2026 compared to the same period in 2025 was also due to lower customer usage.

Other Operation

The primary components of other operation expenses include payroll costs, materials and supplies, chemicals and water treatment costs and outside-services costs of operating the regulated water systems, including the costs associated with water transmission and distribution, pumping, water quality, meter reading, billing, and operations of district offices and the electric

system. Registrant’s contracted services operations incur many of the same types of expenses. For the six months ended June 30, 2026 and 2025, other operation expenses by business segment consisted of the following (dollar amounts in thousands):

For the six months ended June 30, 2026, the decrease in other operation expenses at the water segment was largely due to a decrease of $0.6 million in billed surcharges to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts, partially offset by an increase in water conservation spending. Changes in billed surcharges had a corresponding and offsetting change in other operation expenses, resulting in no net impact to earnings.

The increase at the electric segment was due primarily to higher operation-related outside services costs. The increase at the contracted services segment was largely due to higher labor, fuel, and chemicals for treatment costs.

Administrative and General

Administrative and general expenses include payroll costs related to administrative and general functions, all employee-related benefits, insurance expenses, outside legal and consulting fees, regulatory-utility-commission expenses, expenses associated with being a public company and general corporate expenses charged to expense accounts. For the six months ended June 30, 2026 and 2025, administrative and general expenses by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

Administrative and general expenses decreased at the water segment largely due to a decrease in billed surcharges of $1.4 million compared to the same period in 2025. The surcharges were implemented in 2025 to recover balances previously tracked in CPUC-authorized balancing and memorandum accounts. Changes in billed surcharges had a corresponding and offsetting change in administrative and general expenses, resulting in no net impact to earnings. This decrease was partially offset by higher labor costs and other employee-related benefits, and outside services costs including related to various regulatory filings.

Administrative and general expenses increased at the electric segment due, in part, to an increase of $0.4 million in billed surcharges to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts, partially offset by lower outside services costs. Changes in billed surcharges had a corresponding and offsetting change in administrative and general expenses, resulting in no impact to earnings.

Administrative and general expenses increased at the contracted services segment primarily due to higher labor, employee-related benefit, and outside services costs.

Depreciation and Amortization

For the six months ended June 30, 2026 and 2025, depreciation and amortization by business segment consisted of the following (dollar amounts in thousands):

Overall depreciation and amortization expense increased largely due to capital additions to utility plant and other fixed assets placed in service.

Maintenance

For the six months ended June 30, 2026 and 2025, maintenance expense by business segment consisted of the following (dollar amounts in thousands):

Maintenance expense increased at the water segment due to an overall increase in maintenance activities as compared to the same prior in 2025.

Maintenance expense increased at the electric segment due, in large part, to an increase of $0.8 million in billed surcharges to recover previously incurred vegetation management costs that had been tracked in CPUC-authorized memorandum accounts, partially offset by lower outside services costs. Changes in billed surcharges had a corresponding and offsetting change in maintenance expense, resulting in no impact to earnings. There was also an increase in maintenance activity compared to the same period in 2025.

Maintenance expense increased at the contracted services segment due to higher planned and unplanned maintenance-related activities compared to the same period in 2025.

Property and Other Taxes

For the six months ended June 30, 2026 and 2025, property and other taxes by business segment consisted of the following (dollar amounts in thousands):

Property and other taxes increased at the water and electric segments largely due to an increase in property taxes resulting from capital additions and higher assessed values.

ASUS Construction

For the six months ended June 30, 2026, construction expenses for contracted services were $34.1 million, an increase of $8.3 million compared to the same period in 2025, primarily resulting from an increase in new construction activities during 2026.

Interest Expense

For the six months ended June 30, 2026 and 2025, interest expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

AWR’s borrowings consist of bank notes under revolving credit facilities, while GSWC and BVES borrowings consist of revolving credit facilities and long-term debt issuances. Interest expense at the water segment increased as compared to the same period in 2025 due primarily to the impact of capitalizing debt costs in 2025 related to certain advice letter projects approved in the latest water general rate case, with no similar item in 2026; partially offset by decreases in overall borrowing levels and average interest rates. Interest expense at the electric segment increased as compared to the same period in 2025 due

primarily to lower AFUDC recognized in 2026, together with an increase in interest expense from higher average borrowing levels. During 2025, BVES recognized higher levels of AFUDC related to certain advice letter projects approved by the CPUC in the latest general rate case that was recorded in 2025. The interest expense at the contracted services segment decreased as compared to the same period in 2025 resulting primarily from lower average borrowing levels and lower interest rates. The interest expense at AWR (parent) decreased as compared to the same period in 2025 resulting primarily from lower average interest rates, partially offset by higher average borrowings. The overall combined average interest rates were 5.02% and 5.12% for the six months ended June 30, 2026 and 2025, respectively.

Interest Income

For the six months ended June 30, 2026 and 2025, interest income by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

The decreases in interest income at both the water and electric segment when compared to the same period in 2025 is largely due to decreases in interest income earned on regulatory assets. Regulatory asset balances will decrease as surcharges are approved and implemented. As a result of receiving final CPUC decisions in early 2025 for both the water and electric general rate cases, surcharges were implemented during 2025 to recover balances previously tracked in CPUC-authorized balancing and memorandum accounts.

Other Income and (Expenses), net

For the six months ended June 30, 2026 and 2025, other income and (expenses), net by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

• not meaningful

For the six months ended June 30, 2026, other income (net of other expenses) increased at the water segment largely because of gains of $3.1 million recorded on investments held to fund one of the Company’s retirement plans in 2026, compared to gains of $2.2 million recorded in 2025, and a decrease in non-service costs components related to GSWC’s benefit plans resulting from changes in actuarial assumptions. However, as a result of GSWC’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefits costs related to the pension plan have no material impact to earnings. The decrease in other income for the electric segment is due primarily to less AFUDC (equity) earned on certain CPUC-approved advice letter projects while under construction in 2025. The capital projects were approved for recovery through advice letters that were completed and placed in service in 2025. The decrease in other income for AWR (parent) is due primarily to a decrease in non-regulated-related activities.

Income Tax Expense

For the six months ended June 30, 2026 and 2025, income tax expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):

Consolidated income tax expense for the six months ended June 30, 2026 increased by $5.7 million primarily due to the increase in consolidated pretax income as compared to the same period in 2025. AWR’s ETR was 25.0% and 23.6% for the six months ended June 30, 2026 and 2025, respectively. GSWC’s ETR was 25.9% and 24.5% for the six months ended June 30, 2026 and 2025, respectively. The increase in GSWC’s ETR was due largely due to changes in certain flowed-through income taxes.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are important to the portrayal of Registrant’s financial condition, results of operations and cash flows and require the most difficult, subjective or complex judgments of Registrant’s management. The need to make estimates about the effect of items that are uncertain is what makes these judgments difficult, subjective and/or complex. Management makes subjective judgments about the accounting and regulatory treatment of many items. These judgments are based on Registrant’s historical experience, terms of existing contracts, its observance of trends in the industry, and information available from other outside sources, as appropriate. Actual results may differ from these estimates under different assumptions or conditions.

The critical accounting policies used in the preparation of Registrant’s financial statements are ones that it believes affect the more significant judgments and estimates used in the preparation of its consolidated financial statements presented in this report and are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” included in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC. There have been no material changes to Registrant’s critical accounting policies.

Liquidity and Capital Resources

AWR

AWR’s regulated business is capital intensive and requires considerable capital resources. A portion of these capital resources is provided by internally generated cash flows from operations. AWR anticipates that interest expense will increase in future periods due to the need for additional external capital to fund construction programs at its regulated utilities and if market interest rates increase. In addition, as the capital investment programs continues to increase, AWR and its subsidiaries anticipate they will need to access external financing more often. External financing may also be needed to cover costs incurred in connection with capital investments that are not covered in rates due to delays in obtaining approval of general rate cases by the CPUC.

AWR funds its operating expenses and pays dividends on its outstanding Common Shares primarily through dividends from its wholly owned subsidiaries. The ability of GSWC and BVES to pay dividends to AWR is restricted by California law. Under these restrictions, approximately $962.2 million was available for GSWC to pay dividends to AWR on June 30, 2026. Approximately $122.5 million was available for BVES to pay dividends to AWR as of June 30, 2026. ASUS’s ability to pay dividends to AWR is dependent upon state laws in which each ASUS subsidiary operates, as well as ASUS’s ability to pay dividends under California law.

When necessary, AWR obtains funds from external sources through the capital markets and from bank borrowings. Access to external financing on reasonable terms depends on the credit ratings of AWR and GSWC and current business conditions, including that of the water utility industry in general, as well as conditions in the debt or equity capital markets.

In February 2024, AWR entered into an equity distribution agreement, which was subsequently amended on February 20, 2026 (the “Equity Distribution Agreement”) with third-party sales agents, under which AWR could offer and sell Common Shares, from time to time at its sole discretion, through an ATM offering program having an aggregate gross offering price of up to $200 million over a three-year period and pursuant to AWR’s effective shelf registration statement on Form S-3. AWR used the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, including, but not limited to, repayment of debt and making equity contributions to its subsidiaries. During the six months ended June 30, 2026, AWR sold 526,959 Common Shares through the ATM offering program and raised net proceeds of $39.9 million, bringing the total raised through June 30, 2026 to $40.7 million, net of $0.6 million of commissions paid under the terms of the Equity Distribution Agreement. On June 12, 2026, AWR successfully completed the program, reaching the maximum aggregate offering capacity of $200 million in gross proceeds raised. AWR has no plans to issue additional equity through, at least, the end of 2029 to support its current operations.

In June 2023, AWR and GSWC each entered into credit agreements with an original term of five years provided by a syndicate of banks and financial institutions. Both credit agreements, as amended, are scheduled to mature in June 2029. As of June 30, 2026, the credit agreements provide AWR and GSWC unsecured revolving credit facilities with borrowing capacities of $195.0 million and $200.0 million, respectively. Under the terms of the credit agreements, as of June 30, 2026, the borrowing capacities for AWR and GSWC may be expanded up to an additional $30.0 million and $75.0 million, respectively, subject to the lenders’ approval. AWR’s credit facility primarily provides support to AWR (parent) and ASUS, while GSWC’s credit agreement provides support to its water operations and capital expenditures. As of June 30, 2026, AWR’s outstanding borrowings under its credit facility of $77.0 million have been classified as non-current liabilities on AWR’s Consolidated Balance Sheet. The CPUC requires GSWC to completely pay off all borrowings under its revolving credit facility within a 24-month period after which GSWC may again borrow under its facility. GSWC’s pay-off period for its credit facility currently ends in November 2027. As of June 30, 2026, there were $38.0 million of outstanding borrowings under GSWC’s facility and have been classified as non-current liabilities in both AWR’s Consolidated Balance Sheet and GSWC’s Balance Sheet.

As of June 30, 2026, GSWC has unsecured private placement notes of $65.0 million that will mature on June 5, 2027. Consequently, this balance has been classified within current liabilities in the accompanying balance sheets. It is management's current intention to refinance this obligation prior to its maturity date either through the issuance of new long-term debt, an equity contribution by AWR parent, or a combination of the two. While GSWC will actively evaluate long-term financing alternatives and participate in discussions with potential lenders, no formal commitment or refinancing agreement has been executed as of the filing of this Form 10-Q.

BVES has a separate revolving credit facility without a parent guaranty that supports its electric operations and capital expenditures, which provides a borrowing capacity of $65.0 million and matures in December 2028. BVES has an option to expand the borrowing capacity by up to an additional $25.0 million, subject to lender’s approval. BVES’s revolving credit facility is considered a short-term debt arrangement by the CPUC. Therefore, pursuant to the CPUC’s requirements, borrowings under this credit facility are required to be fully paid off within a 24 month period, after which BVES may borrow under the credit facility again. BVES’s next pay-off period currently ends in May 2028. As of June 30, 2026, there were $4.0 million outstanding borrowings under BVES’s credit facility and have been classified as non-current liabilities in AWR’s Consolidated Balance Sheet.

Our primary sources of liquidity to fund operations continue to be from the recovery of costs charged to customers at our regulated utilities and the collection of payments from the U.S government. We believe that capital investment costs associated with our capital programs at our regulated utilities will continue to be recovered through water and electric rates charged to customers, as well as funds from credit facilities from our regulated utilities. In addition, AWR’s credit facility will continue to be used to support ASUS’s operations and AWR (parent). The long-term capital-intensive nature of our regulated utilities have required us to continually seek future financing opportunities beyond the short-term. Future long-term financing at GSWC and BVES is expected to consist of both long-term debt and equity issuances in order to manage to the CPUC-authorized capital structure. Under the current financing applications authorized by the CPUC, GSWC and BVES have $588.0 million and $82.0 million, respectively, remaining and available under each utility’s authorized applications that provide for long-term financing and which are expected to be used over the next 1-6 years to pay down outstanding borrowings under their respective credit facilities and support operations.

Management believes that AWR’s and GSWC’s sound capital structures and strong credit ratings, combined with its financial discipline, will enable AWR to access the debt and equity markets. However, unpredictable financial market conditions in the future and delays in receiving rate case decisions may limit its access or impact the timing of when to access the market, in which case AWR may choose to temporarily reduce its capital spending.

AWR’s ability to pay cash dividends on its Common Shares depends primarily upon cash flows from its subsidiaries. AWR intends to continue paying quarterly cash dividends on or about March 1, June 1, September 1 and December 1, subject to earnings and financial conditions, regulatory requirements and such other factors as the Board of Directors may deem relevant. On July 28, 2026, AWR’s Board of Directors approved an 8.2% increase in the third quarter dividend of $0.5455 per share from $0.5040 per share on AWR’s Common Shares. Dividends on the Common Shares will be paid on September 2, 2026 to shareholders of record at the close of business on August 17, 2026. Registrant has paid Common Share dividends every year since 1931 and has increased the dividends received by shareholders each calendar year for 72 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. AWR’s quarterly dividend rate has grown at a compound annual growth rate (“CAGR”) of 8.4% over the last five years since the third quarter of 2021, and is on pace to achieve a 10-year CAGR of 8.7% in its calendar year dividend payments through 2026. AWR’s current policy is to achieve a CAGR in the dividend of more than 7% over the long-term.

Cash Flows from Operating Activities:

Cash flows from operating activities have generally provided sufficient cash to fund operating requirements, including a portion of capital expenditures at GSWC and BVES, and construction expenses at ASUS, and to pay dividends. AWR’s future cash flows from operating activities are expected to be affected by a number of factors, including, among other things, utility regulation; delays in receiving approvals of general rate cases, changes in tax law; maintenance expenses; inflation; newly imposed tariffs; compliance with environmental, health and safety standards; production costs; customer growth; per-customer usage of water and electricity; weather and seasonality; conservation efforts; compliance with local governmental requirements, including mandatory restrictions on water use; the customers’ ability to pay utility bills; and required cash contributions to pension and post-retirement plans. Future cash flows from contracted services subsidiaries will depend on new business activities, existing operations, the construction of new and/or replacement infrastructure at military bases, timely economic price and equitable adjustment of prices, and timely collection of payments from the U.S. government and other prime contractors operating at the military bases, and any adjustments arising out of an audit or investigation by federal governmental agencies. For further information regarding the risks faced by Registrant, see Item 1A, Risk Factors, in our annual report on Form 10-K for the period ended December 31, 2025.

ASUS funds its operating expenses primarily through internal operating sources, which include U.S. government funding under 15- and 50-year contracts for operations and maintenance costs and construction activities, as well as investments by, or

loans from, AWR. ASUS, in turn, provides funding to its subsidiaries. ASUS’s subsidiaries may also from time to time provide funding to ASUS or other subsidiaries of ASUS.

Cash flows from operating activities are primarily generated by net income, adjusted for non-cash expenses such as depreciation and amortization, and deferred income taxes. Cash generated by operations varies during the year. Net cash provided by operating activities of AWR was $116.6 million for the six months ended June 30, 2026 as compared to $109.6 million for the same period in 2025. The net increase in operating cash flows was largely due to the timing of cash receipts and disbursements related to working capital items. In particular, the implementation of new rates and surcharges at our regulated utilities added to cash flows from operations. The increase in cash flows from operating activities also resulted from differences at ASUS in the timing of vendor payments and the receipt of cash for construction work at military bases. The billings (and cash receipts) for this construction work generally occur at completion of the work or in accordance with a billing schedule contractually agreed to with the U.S. government and/or other prime contractors. Thus, cash flow from construction-related activities may fluctuate from period to period with such fluctuations representing timing differences of when the work is being performed and when the cash is received for payment of the work. In addition, during the first half of 2026, AWR received approximately $4 million in PFAS contamination litigation proceeds as plaintiffs in class action lawsuits.

The increases in cash flows from operating activities discussed above were partially offset by, among other things, the timing of accounts payable disbursements and of income tax payments. The timing of income tax payments have contributed to a decrease in operating cash flows as income tax installment payments were made for the six months ended June 30, 2026, while in 2025 no payments were made as a result of wildfire tax relief legislation, which allowed for the postponement of income tax payment deadlines until October 15, 2025.

Cash Flows from Investing Activities:

Net cash used in investing activities was $96.7 million for the six months ended June 30, 2026 as compared to $118.3 million for the same period in 2025, which is mostly related to capital expenditures at the regulated utilities. GSWC and BVES invest capital to provide essential services to their regulated customer bases, while working with the CPUC to have the opportunity to earn a fair rate of return on investment. AWR’s infrastructure investment plan consists of both infrastructure renewal programs (to replace infrastructure, including those to mitigate wildfire risk) and major capital investment projects (to construct new water treatment, supply and delivery facilities and electric facilities). The regulated utilities may also be required from time to time to relocate existing infrastructure in order to accommodate local infrastructure improvement projects. Projected capital expenditures and other investments are subject to periodic review and revision.

For the year 2026, the regulated utilities’ company-funded capital expenditures are estimated to be approximately $185 - $220 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues.

Cash Flows from Financing Activities:

AWR’s financing activities include primarily: (i) the proceeds from the issuance of Common Shares, (ii) the issuance and repayment of long-term debt and notes payable to banks, and (iii) the payment of dividends on Common Shares. In order to finance new infrastructure, GSWC also receives customer advances (net of refunds) for, and contributions in aid of, construction. Borrowings on AWR’s credit facility are primarily used to support AWR (parent) and its contracted services subsidiary, and borrowings on GSWC and BVES’s credit facilities are used to fund GSWC and BVES capital expenditures, respectively, until long-term financing is arranged. AWR may also from time to time make equity contributions to GSWC and to BVES. Overall debt levels are expected to increase to fund the costs of the capital expenditures that will be made by the regulated utilities.

Net cash used by financing activities was $17.0 million for the six months ended June 30, 2026 as compared to cash provided of $2.3 million during the same period in 2025. The decrease in net cash provided by financing activities was due primarily to a decrease in total capital (debt and equity) raised and needed in 2026 as compared to 2025 due, in large part, to an increase in cash flows from operating activities and decrease in capital expenditures. In 2025, both GSWC and BVES issued long-term debt totaling $100.0 million and $50.0 million, respectively, with a large portion of the proceeds used to pay down outstanding borrowings under their respective credit facilities. During the six months ended June 30, 2026, AWR had net payments on its credit facilities of $22.0 million. Credit facilities have been used to support its operations and ongoing capital expenditure programs. There was also an increase in the proceeds from the issuance of common shares under AWR’s ATM offering program in 2026 as compared to 2025. For the six months ended June 30, 2026, AWR sold 526,959 Common Shares through its ATM offering program and raised proceeds net of issuance costs of $39.9 million, while during the six months ended June 30, 2025, AWR sold 334,548 Common Shares through its ATM offering program and raised proceeds net of issuance costs of $25.6 million. On June 12, 2026, AWR successfully completed the program, reaching the maximum aggregate offering capacity of $200 million in gross proceeds raised. AWR has no plans to issue additional equity through the end of 2029 to support its current operations and likely beyond 2029 based on current estimates.

GSWC

GSWC funds its operating expenses, payments on its debt, dividends to AWR on its outstanding common shares, and a portion of its construction expenditures through internal sources. Internal sources of cash flow are provided primarily by retention of a portion of earnings from operating activities. Internal cash generation is influenced by, among other things, factors such as weather patterns, conservation efforts, environmental regulation, litigation, changes in tax law and deferred taxes, changes in supply costs and regulatory decisions affecting GSWC’s ability to recover these supply costs, timing of rate relief, increases in maintenance expenses and capital expenditures, surcharges authorized by the CPUC to enable GSWC to recover expenses previously incurred from customers, and CPUC requirements to refund amounts previously charged to customers. Internal cash flows may also be impacted by delays in receiving payments from GSWC customers. For further information regarding the risks faced by Registrant, see Item 1A, Risk Factors, in our annual report on Form 10-K for the period ended December 31, 2025.

GSWC may, at times, utilize external sources for long-term financing, as well as obtain funds from equity investments from its parent, AWR, to help fund a portion of its operations and construction expenditures. GSWC has its own separate credit agreement that provides for a $200.0 million unsecured revolving credit facility to support GSWC’s operations and capital expenditures. GSWC’s borrowing capacity under this credit agreement may be expanded up to an additional $75.0 million, subject to the lenders’ approval.

In March 2025, the CPUC issued a final decision in GSWC’s financing application, which among other things, approved GSWC’s request to issue up to $750.0 million of additional long-term debt and equity securities. Under the current financing application authorized by the CPUC, GSWC has $588.0 million remaining and available that provides for long-term financing and which are expected to be used over the next 1 to 6 years to pay down portions of the outstanding borrowings under GSWC’s credit facility and support its operations and capital program. As of June 30, 2026, GSWC has unsecured private placement notes of $65.0 million that will mature on June 5, 2027. Consequently, this balance has been classified within current liabilities in GSWC’s balance sheet. It is management's current intention to refinance this obligation prior to its maturity date either through the issuance of new long-term debt or from an equity contribution by AWR parent. While GSWC will actively evaluate long-term financing alternatives and participate in discussions with potential lenders, no formal commitment or refinancing agreement has been executed as of the filing of this Form 10-Q.

In addition, GSWC receives advances and contributions from customers, home builders and real estate developers to fund construction necessary to extend service to new areas. Advances for construction are generally refundable at a rate of 2.5% in equal annual installments over 40 years. Utility plant funded by advances and contributions is excluded from rate base. GSWC amortizes contributions in aid of construction at the same composite rate of depreciation for the related property.

Cash Flows from Operating Activities:

Net cash provided by operating activities was $85.5 million for the six months ended June 30, 2026 as compared to $83.3 million for the same period in 2025. The increase in operating cash flow was due primarily to (i) new water rates implemented effective January 1, 2026 that were approved in the latest general rate case proceeding, and (ii) the implementation, in May 2025, of the WRAM/MCBA surcharges related to the recovery of all pre-2025 revenue and supply cost activity with the majority to be recovered over 18 months. In addition, during the second quarter, GSWC received approximately $3.1 million in PFAS contamination litigation proceeds as a plaintiff in class action lawsuits. These increases in cash flows from operating activities were partially offset by, among other things, the timing of accounts payable disbursements and of income tax payments. The timing of income tax payments have contributed to a decrease in operating cash flows as income tax installment payments were made for the six months ended June 30, 2026, while in 2025 no payments were made as a result of wildfire tax relief legislation, which allowed for the postponement of income tax payment deadlines until October 15, 2025. The timing of other cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.

Cash Flows from Investing Activities:

Net cash used in investing activities was $84.8 million for the six months ended June 30, 2026 as compared to $101.0 million for the same period in 2025, which is mostly related to spending under GSWC’s infrastructure investment plans that are consistent with capital budgets authorized in its general rate cases.

Cash Flows from Financing Activities:

Net cash used by financing activities was $1.8 million for the six months ended June 30, 2026 as compared to $15.7 million net cash provided for the same period in 2025. The decrease in net cash provided by financing activities was due primarily to a decrease in total capital (debt and equity) raised and needed in 2026 as compared to 2025 due, in large part, to an increase in cash flows from operating activities and decrease in GSWC's capital expenditures.

During 2025, GSWC issued long-term debt of $100.0 million and issued common shares to AWR (parent) in exchange for a contribution of $50.0 million with funds used to pay down its credit facility. During the six months ended June 30, 2026, GSWC had net borrowings on its credit facility of $25.0 million, while during the six months ended June 30, 2025, GSWC had net payments on its credit facility of $115.0 million. In addition, GSWC paid dividends to AWR of $31.5 million as compared to $18.0 million paid during the same period in 2025.

Contractual Obligations and Other Commitments

Registrant has various contractual obligations, which are recorded as liabilities in the consolidated financial statements. Other items, such as certain purchase commitments, are not recognized as liabilities in the consolidated financial statements but are required to be disclosed. In addition to contractual maturities, Registrant has certain debt instruments that contain an annual sinking fund or other principal payments. Registrant believes that it will be able to refinance debt instruments at their maturity through public issuance, or private placement, of debt or equity. Annual payments to service debt are generally made from cash flows from operations.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” section of the Registrant’s Form 10-K for the year ended December 31, 2025 filed with the SEC for a discussion of contractual obligations and other commitments. Besides BVES’s debt issuance described above, there have been no material changes to Registrant’s contractual obligations and other commitments.

Contracted Services

Under the terms of the contracts with the U.S. government, each contract’s price is subject to an EPA on an annual basis. In the event that ASUS (i) is managing more assets at specific military bases than were included in the U.S. government’s request for proposal, (ii) is managing assets that are in substandard condition as compared to what was disclosed in the request for proposal, (iii) prudently incurs costs not contemplated under the terms of the contract, and/or (iv) becomes subject to new regulatory requirements, such as more stringent water-quality standards, ASUS is permitted to file, and has filed, REAs. The timely filing for and receipt of EPAs and/or REAs continues to be critical in order for ASUS’s subsidiaries to recover increasing costs of operating, maintaining, renewing and replacing the water and/or wastewater systems at the military bases it serves.

During sequestration or automatic spending cuts, and also during the U.S. government partial shutdowns in early 2026, the subsidiaries of ASUS have not experienced and are not expected to experience any earnings impact to their existing operations and maintenance and renewal and replacement services, as utility privatization contracts are an “excepted service.” With the expiration of sequestration, similar issues including further sequestration pursuant to the Balanced Budget and Emergency Deficit Control Act may arise as part of the fiscal uncertainty and/or future debt-ceiling limits imposed by Congress. Management expects that any future impact on ASUS and its operations through its subsidiaries will likely be limited to (a) the timing of funding to pay for services rendered, (b) delays in the processing of EPAs and/or REAs, (c) the timing of the issuance of contract modifications for new construction work not already funded by the U.S. government, (d) the timing of construction work associated with delays in receiving construction permits from furloughs at government agencies, and/or (e) delays in solicitation for and/or awarding of new contracts under the Department of Defense contracting programs. In the event a U.S. government shutdown extends for an unprecedented and much longer period than that experienced in early 2026, ASUS’s liquidity and earnings could be impacted.

At times, the Defense Contract Auditing Agency and/or the Defense Contract Management Agency may, at the request of a contracting officer, perform audits/reviews of contractors for compliance with certain government guidance and regulations, such as the Federal Acquisition Regulations and Defense Federal Acquisition Regulation Supplements. Certain audit/review findings, such as system deficiencies for government-contract-business-system requirements, may result in delays in the resolution of filings submitted to and/or the ability to file new proposals with the U.S. government.

Regulatory Matters

An update on various regulatory matters is included in the discussion under the section titled “Overview” in this Form 10-Q’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The discussion below focuses on key regulatory matters and developments.

General Rate Cases and Changes in Rates During 2026

Water Segment:

Rates that GSWC is authorized to charge are determined by the CPUC in general rate cases. In January 2025, the CPUC issued a final decision in GSWC’s latest general rate case proceeding that set new rates for the years 2025 - 2027. In December 2025, GSWC received approval from the CPUC to implement its full second-year rate increases, effective January 1, 2026, that will result in higher adopted operating revenues less water supply cost for 2026 of approximately $32.0 million compared to 2025’s adopted operating revenues less water supply cost. Included in the 2026 increase is nearly $11 million related to advice letter capital projects. The assets from the advice letter projects and the related amounts in a memorandum account were added to the adopted rate base for inclusion in the revenue requirement effective January 1, 2026.

Water General Rate Case for the years 2028–2030

On July 1, 2026, GSWC filed a general rate case application for all its water regions and the general office. This general rate case will determine new water rates for the years 2028 – 2030. Among other things, GSWC requested capital budgets of approximately $1 billion for the three-year rate cycle. GSWC also requested to reinstate regulatory mechanisms to accommodate fully decoupled revenues and sales and to track differences between recorded and CPUC-authorized supply-related expenses. In an August 2020 decision, the CPUC discontinued the use of the WRAM and the MCBA at water utilities, which GSWC implemented in 2008, but was discontinued for GSWC after 2024. A decision in the water general rate case is expected in the fourth quarter of 2027, with new rates to become effective January 1, 2028.

Electric Segment:

Rates that BVES is authorized to charge are determined by the CPUC in general rate cases. In January 2025, the CPUC issued a final decision in BVES’s general rate case proceeding that set new rates for the years 2023 - 2026, retroactive to January 1, 2023. Among other things, the final decision provided for an increase in adopted operating revenues of $3.3 million in 2026. Accordingly, new electric rates for 2026, which is the fourth year in the rate cycle, have been implemented and reflected in BVES results for the six months ended June 30, 2026.

Furthermore, with regards to the advice letter projects authorized in the general rate case as previously discussed, BVES completed and placed in service capital projects totaling approximately $28 million, including AFUDC. During 2025 and 2026, BVES filed various advice letters for these capital projects and the CPUC approved them at actual cost. Accordingly, BVES has implemented new rates to recover the revenue requirement associated with these advice letter projects that are expected to generate additional annual operating revenues of approximately $4 million.

Electric General Rate Case for the Years 2027–2030

On January 30, 2026, BVES filed a new general rate case application that will determine new electric rates for the years 2027 through 2030. Among other things, BVES requested (i) capital budgets of approximately $133 million for the four-year rate cycle, and another approximately $17 million, plus AFUDC, for capital projects to be filed for revenue recovery through advice letters when the projects are completed, and (ii) a capital structure for BVES of 60% equity and 40% debt, a return on equity of 11.30%, an embedded cost of debt of 5.92%, and a return on rate base of 9.15%.

Energy Savings Assistance (“ESA”) and California Alternate Rates for Energy (“CARE”) Programs and Budgets for the Years 2028 – 2033

On June 12, 2026, BVES filed an application to request budgets for its ESA and CARE Programs for program years 2028 – 2033. In the application, BVES is requesting budgets of $0.7 million and $6.8 million over the six year cycle for ESA and CARE, respectively.

See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Matters” section of the Registrant’s Form 10-K for the year-ended December 31, 2025 filed with the SEC for a discussion of other regulatory matters.

Environmental Matters

AWR’s subsidiaries are subject to stringent environmental regulations. GSWC and ASUS are required to comply with the safe drinking water standards established by the U.S. EPA pursuant to section 1412 of the Public Health Service Act, as amended by the Safe Drinking Water Act, and codified at 40 CFR Part 141. GSWC is also required to comply with the safe drinking water standards promulgated by the Division of Drinking Water (“DDW”), under the California State Water Resources Control Board. The DDW, acting on behalf of the U.S. EPA, administers the U.S. EPA’s program for drinking water standards in California. Similarly, ASUS is required to comply with the drinking water standards that are administered by the relevant state agencies in the states in which it operates. The U.S. EPA regulates contaminants that may have adverse health effects that are known or likely to occur at levels of public health concern, and the regulation of which will provide a meaningful opportunity for health risk reduction.

Per- and Polyfluoroalkyl Substances (“PFAS”) Contamination Litigation Proceeds Memorandum Account:

GSWC has been a plaintiff in various class action lawsuits (against 3M Company, DuPont, and others) related to PFAS contamination affecting public water systems. A class settlement agreement among Tyco Fire Products LP (“Tyco”) and the class of eligible public water systems was entered into on April 12, 2024 and resolved any claims for PFAS contamination with Tyco. The class settlement agreement between the parties was approved by an order issued by the Federal District Court of South Carolina on November 22, 2024. As a result of the settlement, GSWC received from Tyco $2.2 million, net of legal and other fees, during the second quarter of 2026. In addition to the class settlement with Tyco, in June 2026, GSWC received a settlement payment of $0.9 million, net of legal and other fees, from BASF Corporation (“BASF”) pursuant to a class settlement agreement entered into on May 20, 2024 that resolved any claims for PFAS contamination with BASF.

Also, in connection with GSWC’s class settlement agreement entered into with 3M Company, on June 23, 2026, GSWC was notified that the third legal settlement payment of $3.3 million, net of legal and other fees, was paid by 3M Company to a qualified settlement fund and administered by a custodian for the benefit of GSWC. The funds are expected to be disbursed to GSWC in the third quarter of 2026.

Settlement proceeds received by GSWC have been and may be used for future capital investments or operations and maintenance expenses related to PFAS water contamination to its water systems or any PFAS related litigation against its water systems, which benefit GSWC’s customers. The CPUC has authorized GSWC to track in a memorandum account the settlement payments received by GSWC from lawsuits related to PFAS contamination in its water systems, which include the proceeds received for participation in class action lawsuits. The amounts in the memorandum account have been recorded as a regulatory liability and have been used, and will continue to be used in the future, to offset the incremental investments in replacement and treatment of property, as well as operations and maintenance expenses and other direct expenses related to PFAS contamination. As of June 30, 2026, GSWC has a $16.9 million regulatory liability related to the PFAS contamination litigation proceeds memorandum account.

Proceeds received from the defendants will not be sufficient to pay for all PFAS-related liabilities that will ultimately be incurred by GSWC, whether related to capital investments, operation and maintenance expenses, or litigation brought against GSWC. However, the CPUC has also authorized GSWC to track incremental expenses, including laboratory testing and monitoring costs, customer and public notification costs and chemical and operating treatment costs, incurred as a result of PFAS contamination in a separate memorandum account to be filed with the CPUC for future recovery.

GSWC continues to monitor contaminant levels for PFAS compounds in accordance with final U.S. EPA regulations. On May 18, 2026, the U.S. EPA announced two proposed rules concerning PFAS in drinking water for public comment, to retain the 4 ppt drinking water standards for PFOA and PFOS, rescind standards for four other PFAS (PFHxS, PFNA, HFPO-DA, and Hazard Index mixtures), and extend compliance deadlines until 2031.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental Matters” section of the Registrant’s Form 10-K for the year-ended December 31, 2025 filed with the SEC for a discussion of environmental matters applicable to AWR and its subsidiaries.

Water Supply

Water year 2025-26 (“WY2026”), which began on October 1, 2025, has resulted in average precipitation, above average reservoir levels, and snowpack that peaked early in the season in mid-February. Dry conditions have prevailed since February with last reported snow levels in early June which were below average levels for that time of year. As of July 23, 2026, the average level for the State’s major reservoirs is at 106% of the historical average for this time of the year. As of July 28, 2026, the U.S. Drought Monitor reported that less than one percent of California was considered in a “Severe Drought” condition and only 6.5% was in “Moderate Drought” condition, as compared to a year ago where approximately 23% of California was considered in “Severe Drought” and 6% in “Extreme Drought.” Changes in weather patterns will continue to impact drought conditions in California.

The State Water Project (“SWP”) allocation for WY2026 was increased to 45% on May 14, 2026. The allocation was initially set at 10% in December and later increased to 30% in January. Invasive golden mussels native to southeast Asia were detected in the SWP conveyance network in mid-2025 and have impacted groundwater basin spreading operations that are critical water recharge facilities used to manage groundwater extractions in Southern California. As such, the Los Angeles County Department of Public Works, which owns and operates key spreading facilities in the San Gabriel Basin have already placed a moratorium on allowing SWP into their spreading basins. Basin agencies are working on mitigation plans to address this impact to basin management.

Prolonged drought conditions continue in the Colorado River System, which has experienced historically low reservoir levels in Lake Mead and Lake Powell since 2023. Reservoir levels for Lake Mead and Lake Powell are at only 27% and 22% of capacity, respectively, as of July 19, 2026. Projected inflow scenarios for the Colorado River are expected at continued low flow levels and a “Level 2 Shortage Condition” will continue into 2027 with a possibility of a “Level 3 Shortage Condition” in late 2027. Increasing shortage levels based on Lake Mead water pool elevations will impose increasing mandatory water reductions to the lower Colorado River States. Urgent action to reduce water demand on the lower river by 2 to 4 million acre feet annually has been requested by the U.S. Bureau of Reclamation (the “Bureau”), which resulted in a multi-year agreement known as the “California Colorado River Contractor Forbearance Agreement for 2024-2026” by the Imperial Irrigation District, Coachella Valley Water District, Metropolitan Water District (“MWD”), Palo Verde Irrigation District and the City of Needles. Operational agreements on how the Colorado River is managed will expire in the fall of 2026. The Bureau and basin states are in discussions regarding post-2026 river operations. An Environmental Impact Study (“EIS”) that considered various operational scenarios for the next 10 years is expected in late July 2026. GSWC will continue to monitor developments related to the Colorado River System and assess its impact on MWD and GSWC’s systems that utilized water sources provided by MWD member agencies.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Water Supply” section of Registrant’s Form 10-K for the year-ended December 31, 2025 filed with the SEC for a discussion of water supply issues. The discussion above focuses on significant matters and changes since December 31, 2025.

Other Climate Change Matters

Climate change is one area that we focus on as we develop and execute our business strategy and financial planning, both in the short- and long-term. The risks posed by climate variability increase the need for us to plan for and address supply resiliency. Climate change has also impacted electric utilities in California increasing wildfire risks and requires the need to develop robust wildfire mitigation plans. We address these and other climate change risks by planning, assessing, mitigating, and investing in our infrastructure for the long-term benefit of our communities. See “Item 1. Business Overview” section of Registrant’s Form 10-K for the year ended December 31, 2025 filed with the SEC for a discussion of climate change planning, risks and opportunities.

Cybersecurity Matters

Cyberattacks represent a threat to water, wastewater and electric utility systems and thereby the safety and security of our communities. We continue to increase our investments in information and operational technology to monitor and address threats and attempted cyberattacks to improve our posture in addressing security vulnerabilities. See “Item 1A. Risk Factors” and “Item 1C. Cybersecurity” section of Registrant’s Form 10-K for the year-ended December 31, 2025 filed with the SEC for a discussion of cybersecurity matters.

New Accounting Pronouncements

Registrant is subject to newly issued requirements as well as changes in existing requirements issued by the Financial Accounting Standards Board. See Note 1 to the Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Registrant is exposed to certain market risks, including fluctuations in interest rates, commodity price risk primarily relating to changes in the market price of electricity at BVES, and other economic conditions. Market risk is the potential loss arising from adverse changes in prevailing market rates and prices.

The quantitative and qualitative disclosures about market risk are discussed in Item 7A-Quantitative and Qualitative Disclosures About Market Risk, contained in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.

There have been no material changes to our quantitative and qualitative disclosures about market risk from what was previously disclosed in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Registrant has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), of the effectiveness, as of the end of the fiscal quarter covered by this report, of the design and operation of Registrant’s “disclosure controls and procedures” as defined in Rule 13a-15(e) and 15d-15(e) promulgated by the SEC under the Exchange Act. Based upon that evaluation, the CEO and the CFO concluded that Registrant’s disclosure controls and procedures, as of the end of such fiscal quarter, were adequate and effective to ensure that information required to be disclosed by Registrant in the reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Registrant’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls over Financial Reporting

There has been no change in Registrant’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended June 30, 2026, that has materially affected, or is reasonably likely to materially affect, Registrant’s internal control over financial reporting.

PART II

Item 1. Legal Proceedings

Registrant is subject to ordinary routine litigation incidental to its business that may include claims for compensatory and punitive damages. No legal proceedings are pending that management believes to be material. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against, among other things, property, general liability, employment, and workers’ compensation claims incurred in the ordinary course of business. Insurance coverage may not cover certain claims involving punitive damages.

Item 1A. Risk Factors

There have been no material changes to the risk factors from what was previously disclosed in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds

The following table provides information about repurchases of Common Shares by AWR during the second quarter of 2026:

(1) None of the Common Shares were purchased pursuant to any publicly announced stock repurchase program.

(2) These Common Shares were acquired on the open market for employees pursuant to GSWC’s 401(k) plan and for participants in the Common Share Purchase and Dividend Reinvestment Plan.

(3) Neither the 401(k) plan nor the Common Share Purchase and Dividend Reinvestment Plan contain a maximum number of Common Shares that may be purchased in the open market.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Item 4. Mine Safety Disclosure

Not applicable

Item 5. Other Information

(a) On July 28, 2026, AWR’s Board of Directors approved an 8.2% increase in the third quarter dividend of $0.5455 per share from $0.5040 per share on AWR’s Common Shares. Dividends on the Common Shares will be paid on September 2, 2026 to shareholders of record at the close of business on August 17, 2026.

(b) There have been no material changes during the second quarter of 2026 to the procedures by which shareholders may nominate persons to the Board of Directors of AWR.

(c) Certain of our officers have made, and may from time to time make, elections to participate in our 401(k) plan or our common share purchase and dividend reinvestment plan, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K). During the quarter ended June 30, 2026, no officer or director adopted, terminated, or modified any Rule 10b5-1 plans or non-Rule 10b5-1 plans.

Item 6. Exhibits

(1) Filed concurrently herewith

(2) Furnished concurrently herewith