HTO

This article first appeared on GuruFocus. GAAP Diluted EPS (Q2 2026): $0.62 per share. Adjusted Diluted EPS (Q2 2026): $0.72 per share, compared to $0.75 in Q2 2025. Year-to-Date GAAP Diluted EPS (2026): $1.12 per share. Year-to-Date Adjusted Diluted EPS (2026): $1.23 per share, compared to $1.25 in 2025. Revenue Increase (Q2 2026): $0.30 per share increase driven by rate relief and higher pass-through water supply costs. Water Production Expense Increase (Q2 2026): $0.11 per share, primarily due to higher water supply costs. Operating Expenses Increase (Q2 2026): $0.15 per share, with $0.09 from higher depreciation and amortization. Effective Income Tax Rate (Q2 2026): Approximately 13%, down from 16% in Q2 2025. Capital Investment (H1 2026): $207 million, 43% of the full-year CapEx budget of $483 million. Equity Issuance (March 2026): $700 million raised, impacting EPS by a net $0.06. Infrastructure Investment (H1 2026): $207 million invested. Projected 5-Year Capital Investment (2026-2030): $2.7 billion. Quadvest Acquisition: Expected to close by end of Q3 or early Q4 2026. Connection Growth (Quadvest): 10% increase in active connections in H1 2026. Warning! GuruFocus has detected 9 Warning Signs with HTO. Is HTO fairly valued? Test your thesis with our free DCF calculator. Release Date: July 28, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. H2O America (NASDAQ:HTO) reported strong second quarter 2026 results with earnings of $0.62 per share on a GAAP diluted basis and $0.72 per share on an adjusted diluted basis. The company is on track to meet its standalone 2026 adjusted diluted EPS guidance of $3.08 to $3.18 and its long-term EPS CAGR target of 6% to 8%. H2O America (NASDAQ:HTO) is making significant infrastructure investments, with $207 million invested in the first half of 2026, representing 43% of its full-year CapEx budget. The company is progressing well with regulatory approvals, including the anticipated closing of the Quadvest acquisition by the end of the third quarter or early fourth quarter. H2O America (NASDAQ:HTO) is focused on maintaining customer affordability while investing in necessary infrastructure, aiming to keep water bills below 2.25% of median household income. The company's adjusted diluted EPS for the second quarter of 2026 was slightly lower than the same period in 2025, at $0.72 compared to $0.75. Higher share count due to equity issuance in early 2026 led to a dilution impact, reducing EPS by a net $0.06. H2O America (NASDAQ:HTO) faced higher water production expenses and operating expenses, including a $0.20 increase in depreciation and amortization. The company is dealing with rising water supply costs, particularly in California, where Valley Water's rates have increased significantly over the past decade. There are concerns about the sustainability of Valley Water's projected rate increases, which could impact customer affordability in the long term. Q: With the rapid growth in Quadvest connections, how should we think about the cadence of rate cases in Texas moving forward to recover the investment required for those connections? A: Andrew Walters, CEO, explained that the growth will significantly impact the timing of rate cases. Bruce Hauk, COO, added that they plan to file a general rate case for Quadvest and Hill Country operations in 2027 for 2028 rates, with no plans to file sooner than a three-year timeframe. Q: How do you anticipate accounting for the depreciation expense from Quadvest between the close of the transaction and new rates becoming effective in 2028? A: Ann Kelly, CFO, stated that the depreciation will be stepped up based on the higher fair market value, contributing to the 10% to 20% dilution from their standalone plan. Q: Regarding the pending SIC request in Texas, how does it impact your expectations for the rate case you're going to file next year? A: Andrew Walters, CEO, noted that the issue was more about understanding the requirements, which have changed. Bruce Hauk, COO, emphasized that they do not see a deterioration in the Texas regulatory environment and expect to add approximately $40 million of assets to the GRC filing. Q: Can you elaborate on key items to consider for the Texas rate case filing early next year? A: Bruce Hauk, COO, mentioned that closing both Quadvest and Cibolo is crucial for timing. Ann Kelly, CFO, added that the rate case will be significant due to substantial investments made over the past years, including over $300 million in Texas Hill Country and the new Quadvest acquisition. Q: How will you finance the Quadvest acquisition, and what should we expect for the weighted average share count for 2026? A: Ann Kelly, CFO, explained that they raised $700 million, including a $400 million forward, and will use these funds along with $100 million to $200 million of debt. The weighted average share count will reflect these transactions, with flexibility depending on market conditions. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in H2O America? Here are five stocks we like better. H2O America reaffirmed its 2026 standalone adjusted EPS guidance of $3.08–$3.18 after reporting second-quarter adjusted EPS of $0.72, down from $0.75 a year earlier. First-half underlying adjusted net income rose 17%, but a 19% increase in diluted shares, including the March $700 million equity raise, pressured EPS. First-half revenue growth was driven primarily by regulatory rate relief and infrastructure surcharges, while higher production costs, depreciation and share dilution offset much of the benefit. The company invested $207 million in infrastructure through June, or 43% of its full-year standalone capital budget. Texas expansion remains a key growth initiative: the Quadvest acquisition could close in late Q3 or early Q4, with the Cibolo Valley transaction expected in Q4. H2O America plans to file a combined Texas rate case in early 2027, while also pursuing rate increases and infrastructure recovery in Connecticut, Maine and California. H2O America (NASDAQ:HTO) reported second-quarter 2026 GAAP diluted earnings per share of $0.62 and adjusted diluted earnings per share of $0.72, compared with adjusted EPS of $0.75 in the prior-year quarter. For the first half of 2026, GAAP diluted EPS was $1.12 and adjusted diluted EPS was $1.23, versus $1.25 on an adjusted basis a year earlier. Chair and Chief Executive Officer Andrew Walters said first-half results were consistent with the company’s internal expectations and supported its standalone 2026 adjusted EPS guidance of $3.08 to $3.18. H2O America also reiterated its long-term organic EPS growth target of 6% to 8% and said it expects its 2026-2030 earnings growth rate to be at or above the top end of that range on a nonlinear basis. → Volatility Is Back and These 3 Market Tollbooths Are Best Positioned to Profit Chief Financial Officer and Treasurer Ann Kelly said underlying adjusted net income rose 17% in the first half, but the benefit was more than offset by a 19% increase in weighted average diluted shares outstanding. The larger share count reflected the company’s use of its at-the-market equity program during 2025 and a $700 million equity raise completed in March 2026. Kelly said the timing of the March offering reduced first-half EPS by a net $0.06, after considering interest income and savings from using proceeds to repay bank borrowings and invest cash. Adding that impact back to reported adjusted EPS would place standalone adjusted EPS at $1.29 for the first half, she said. → This Tiny AI Supplier Could Be More Important Than the Chipmakers First-half revenue increased by $0.70 per share year over year. More than half of that gain, or $0.41 per share, came from rate relief, including the prior California general rate case and infrastructure surcharges in Connecticut, Maine and Texas. H2O America said more than 90% of its budgeted year-over-year revenue increase has been approved by regulators. Higher pass-through water supply costs added $0.25 per share of revenue but were largely offset in production expenses. Increased customer usage across the company’s four states added $0.06 per share. → 2 Stocks Built to Thrive If Inflation Refuses to Fade Those gains were partly offset by higher water production costs, including increased purchased-water prices and groundwater extraction fees, as well as higher depreciation and amortization associated with utility plant additions. The company’s first-half effective tax rate was about 14%, down from 16% a year earlier, primarily because of higher flow-through tax benefits. H2O America invested $207 million in infrastructure during the first half, representing 43% of its $483 million standalone 2026 capital expenditure budget. Kelly said the pacing reflects the seasonal nature of capital spending, particularly in Connecticut and Maine during winter months. The company continued to advance its pending Quadvest acquisition in Texas. President and Chief Operating Officer Bruce Hauk said Public Utility Commission of Texas staff recommended on July 9 that the transaction serves the public interest and could proceed without a hearing. With no other party requesting a hearing by the July 16 deadline, H2O America expects the matter to proceed under an Aug. 26 statutory deadline. Management said the acquisition could close near the end of the third quarter or in early fourth quarter. The company also expects to close its pending Cibolo Valley wastewater treatment plant and collection-system acquisition in the fourth quarter. Quadvest served more than 59,800 active water and wastewater connections at the end of June, up 10% during the first half, according to Hauk. Connections under contract and pending development increased to 99,000 from 87,000 at year-end 2025, despite roughly 5,400 connections converting to active customers. Hauk cautioned that future connection growth could vary based on several conditions. H2O America plans to file a combined Texas general rate case after closing the Quadvest and Cibolo Valley transactions, targeting a filing in early 2027 and new rates in early 2028. The company said the filing will seek recognition for the fair-market-value rate base associated with Quadvest and more than $300 million of investment in its Texas Hill Country operations. Separately, Hauk said the company is awaiting a PUCT decision on its third system infrastructure charge application. An administrative law judge proposed a $285,000 revenue decrease compared with H2O America’s requested $5.1 million increase. The company has filed exceptions and said it could use financial offsets to preserve its 2026 adjusted EPS guidance if the final ruling is less favorable. Any eligible investments not recovered through the mechanism could be included in the planned general rate case. In Connecticut, the company filed a general rate case seeking a $28.8 million annual revenue increase tied to roughly $145 million of infrastructure investment not reflected in current rates. A final decision is slated for late January, with new rates sought in early 2027. In Maine, H2O America requested a $9.5 million annual revenue increase to recover about $36 million of investment, with new rates expected by May 27 under the state’s statutory timeline. In California, the company requested approval for a $176 million PFAS remediation project at Williams Station and expects a California Public Utilities Commission decision before year-end. It also received approval for an $8.4 million rate base filing offset related to $53 million of additional advanced metering infrastructure investment. Walters said H2O America is examining longer-term alternatives to reduce San Jose Water Company’s reliance on water supplied by Santa Clara Valley Water District. He said Valley Water’s purchased-water rates have increased at a 10% compounded annual rate over the past decade, while groundwater extraction fees rose at an 11% compounded annual rate. The company is developing a roughly $3 million mobile water-purification pilot focused on direct potable reuse, with a public demonstration targeted for September 2027. It also plans a feasibility study of regional desalination options in Monterey Bay. Walters said any substantial capital spending tied to those potential supply projects would likely fall outside the company’s current $2.7 billion capital plan for 2026 through 2030. SJW Group, through its subsidiaries, provides water utility and other related services in the United States. It operates in Water Utility Services and Real Estate Services segments. The company engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services; and supplies groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "H2O America Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by rate relief in California and infrastructure surcharges in Connecticut, Maine, and Texas, with over 90% of budgeted revenue increases already regulator-approved. Management attributed a slight year-over-year EPS decline to a 19% increase in share count following an upsized $700 million equity raise intended to de-risk the Quadvest acquisition. The company is pivoting toward self-reliance for water supply in California to mitigate unsustainable 10-11% annual wholesale cost increases from the Santa Clara Valley Water District. Strategic focus remains on balancing extensive infrastructure investment needs with customer affordability, aiming to keep bills below 2.25% of median household income. Operational efficiency is being leveraged as a capital recovery tool, where every $1 of avoided operating expense supports $7 of new capital investment with neutral bill impact. The Texas growth strategy is centered on the 'transformational' Quadvest acquisition, which is expected to increase the Texas customer base from 8% to 26% of the consolidated total by 2029. Reiterated long-term EPS CAGR target of 6% to 8% for 2026-2030, supported by a $2.7 billion 5-year capital budget and a projected 13% rate base CAGR. Expects to remain out of the equity markets through at least year-end 2027 by utilizing the $400 million forward agreement component from the March issuance. Anticipates closing the Quadvest acquisition in late Q3 or early Q4 2026, with accretion expected to begin in 2028 following a major 2027 general rate case filing. Plans to file a comprehensive combined general rate case in Texas in early 2027 to consolidate Quadvest, Cibolo Valley, and significant Hill Country infrastructure investments. Future California water supply initiatives, including desalination and potable reuse pilots, are currently outside the 5-year capital plan but represent long-term 'curve-bending' affordability opportunities. A Proposal for Decision in Texas recommended a $285,000 revenue decrease versus a requested $5.1 million increase; management identified financial offsets to maintain 2026 guidance if the final order is unfavorable. Filed for a $176 million PFAS remediation project in California outside the normal rate case process, with a decision expected before year-end. The Quadvest transaction will involve a 'step-up' in depreciation expense to reflect higher fair market value, contributing to 10-20% dilution relative to the standalone plan. Management flagged 'unsustainable' wholesale water costs in California, where supply charges now constitute $0.42 of every $1 paid by customers. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management plans to file a combined rate case for Quadvest and Hill Country operations in 2027 for 2028 rates. The company does not anticipate filing subsequent cases sooner than a 3-year timeframe, depending on the pace of connection growth. Management clarified that the disappointing PFD was due to documentation and process issues on their part, rather than a deterioration of the Texas regulatory compact. Approximately $40 million of assets not approved in the SIC filing will be rolled into the 2027 general rate case as 'used and useful' investments. Management expressed cautious optimism regarding a settlement once rebuttal testimony is submitted, noting the current commission is 'new' to the company. The straightforward nature of the filing and the fact that the previous case was fully litigated are seen as factors that could encourage a settlement. The $530 million acquisition will be funded via a mix of cash from the March equity raise, the $400 million forward agreement, and $100-$200 million in new debt. Management will maintain flexibility on the debt-to-equity mix for the close based on prevailing market interest rates at the time of the final order.

Second quarter 2026 reported diluted EPS of $0.62 and adjusted diluted EPS (non-GAAP)1 of $0.72, as compared to reported and adjusted diluted EPS in the second quarter of 2025 of $0.71 and $0.75, respectively Year-to-date 2026 reported diluted EPS of $1.12 and adjusted diluted EPS (non-GAAP)1 of $1.23, as compared to reported and adjusted diluted EPS in the same period of 2025 of $1.20 and $1.25, respectively Reiterate all aspects of financial guidance, including 2026 standalone adjusted diluted EPS guidance of $3.08-$3.181 (excluding the impacts of the pending Quadvest acquisition and the financing thereof) $206.9 million2 invested in infrastructure during the first half of 2026 Key milestones reached in Quadvest approval process; anticipate closing end of third/early fourth quarter of 2026; active Quadvest connections up 10%, or 5,400, in 2026 while connections under contract and pending development has grown 14%, or nearly 12,000 connections Declared $0.44 cash dividend per share of common stock SAN JOSE, Calif., July 27, 2026 (GLOBE NEWSWIRE) -- H2O America (NASDAQ: HTO) today reported financial results for the second quarter of 2026. “Our strong second quarter results have our company in an excellent position midway through 2026 to deliver on our full year guidance and we remain committed to our longer-term financial targets,” said chair and chief executive officer, Andrew F. Walters. “During the second quarter, our teams made substantial progress towards obtaining Texas regulatory approval for the regulated portion of the Quadvest acquisition. In addition, a great deal of thought and effort went into the general rate cases that we filed in Connecticut and Maine seeking the recovery of more than $180 million of combined investments that are not yet recognized in rates. The regulatory and operational focus of our team is unwavering as we execute on our growth strategy while providing our customers and the communities that we are honored to serve with the high quality service they deserve. The hard work and shared passion that my fellow partners here at H2O America exhibit each and every day make it all possible and I could not be more proud.” Second Quarter 2026 Operating Results Net income prepared in accordance with GAAP for the second quarter ended June 30, 2026 was $26.6 million, an 8% increase compared to $24.7 million in the same quarter last year. GAAP diluted EPS for the quarter of $0.62 decreased versus $0.71 in the prior year quarter. Adjusting for costs associated with merger, acquisition and integration activities and non-utility real estate transactions, H2O America's adjusted net income (non-GAAP)1 in the second quarter of 2026 was $30.7 million, an increase of 17% compared to $26.2 million in the prior year quarter. Adjusted diluted EPS (non-GAAP) for the quarter of $0.72 slightly decreased versus $0.75 in the prior year quarter. For both GAAP and adjusted results, while our underlying net income grew during the 2026 period, this was more than offset by the higher share count as a result of leveraging our at-the-market (ATM) program throughout 2025 and our common stock issuance in early March of 2026. A full reconciliation of GAAP net income to adjusted net income for the quarter ended June 30, 2026 is included in the tables at the end of this news release. Operating revenue for the second quarter was $210.5 million, compared to $198.3 million for the same quarter last year, a 6% increase. The increase was driven primarily by rate increases of $14.5 million across all of our states but primarily in California and Connecticut. This was partially offset by a decrease of $1.7 million due to regulatory mechanism adjustments. Operating expenses for the second quarter were $167.7 million, up 9% compared to $154.4 million for the same quarter last year. This change in operating expenses primarily reflects: An increase in water production expenses of $4.6 million compared to the same quarter last year primarily attributable to increases in average per unit costs for purchased water and groundwater extraction, partially offset by lower usage. An increase in depreciation and amortization expense of $3.4 million associated with utility plant additions placed in service compared to the same quarter last year. An increase in all other operating expenses of $5.3 million compared to the same quarter last year primarily attributable to a net increase in general and administrative expenses driven by increased merger and acquisition costs, increased outsourced services costs, increased employee-related costs and increased maintenance agreement costs. The effective consolidated income tax rates for the second quarter of 2026 and 2025 were approximately 13% and 16%, respectively. The lower effective tax rate for the second quarter of 2026 was primarily due to higher flow through tax benefits. Year-to-Date Operating Results Net income prepared in accordance with GAAP for the six months ended June 30, 2026 was $45.6 million, an 11% increase compared to $41.2 million in the same period of 2025. GAAP diluted EPS for the six months of $1.12 decreased versus $1.20 in the same period last year. H2O America's adjusted net income (non-GAAP) for the six months ended June 30, 2026 was $50.1 million, an increase of 17% compared to $42.9 million in the same period last year. Adjusted diluted EPS (non-GAAP) for the first six months of 2026 of $1.23 slightly decreased versus $1.25 in the same period last year. For both GAAP and adjusted results, while our underlying net income grew during the 2026 period, this was more than offset by the higher share count as a result of leveraging our ATM program throughout 2025 and our common stock issuance in early March of 2026. A full reconciliation of GAAP net income to adjusted net income for the six months ended June 30, 2026 is included in the tables at the end of this news release. Operating revenue for the first six months of 2026 was $393.8 million compared to $365.9 million for the same period last year, an 8% increase. The increase was driven primarily by rate increases of $26.4 million, primarily in California, Connecticut, and Texas, as well as higher customer usage of $2.0 million. This was partially offset by a decrease of $1.6 million due to regulatory mechanism adjustments. Operating expenses for the first six months of 2026 were $313.6 million, up 10% compared to $286.1 million for the same period last year. This change in operating expenses primarily reflects: An increase in water production expenses of $12.1 million compared to the same period last year primarily attributable to increases in average per unit costs for purchased water and groundwater extraction, increases in water production balancing and memorandum accounts, primarily relating to the Full Cost Balancing Account ("FCBA"), and higher customer usage, partially offset by decreases in costs as a result of increased availability of surface water. An increase in depreciation and amortization expense of $7.4 million associated with utility plant additions placed in service compared to the same period last year. An increase in all other operating expenses of $8.0 million compared to the same period last year primarily attributable to a net increase in general and administrative expenses driven by higher merger and acquisition costs, outsourced services, insurance, and maintenance agreement costs. The effective consolidated income tax rates for the first six months of 2026 and 2025 were approximately 14% and 16%, respectively. The lower effective tax rate for the six months of 2026 was primarily due to higher flow through tax benefits. Capital Expenditures Through June 30, 2026, H2O America has invested $206.9 million2 in infrastructure. We continue to plan to invest $483 million2 in capital for the full year 2026 (excluding the impact of Quadvest) and a total of $2.7 billion2 over the 2026-30 period (including the impacts of Quadvest and Cibolo Valley) to build and maintain our water and wastewater operations, subject to regulatory approvals and availability of funding. Quadvest Acquisition Update Texas Water Company (TWC) and Texas Water Operation Services continue to progress through the regulatory process for their previously announced $540 million acquisition of Quadvest. On July 9, 2026, the Public Utility Commission of Texas (PUCT) Staff recommended that the proposed transaction should be allowed to proceed without a public hearing as part of the pending Sale-Transfer-Merger (STM) application docket. The Quadvest STM procedural schedule outlines August 26, 2026 as the 120-day statutory deadline for the PUCT to approve the sale or require a hearing. Based on the aforementioned milestones, we anticipate closing the transaction around the end of the third quarter or early fourth quarter of 2026. The STM application requests approval of TWC’s acquisition of the Quadvest, L.P. assets and certification of the value of the ratemaking rate base, as determined in accordance with Texas’ fair market value (FMV) statute, at TWC’s $483.6 million purchase price. Quadvest continues to achieve its anticipated customer growth. Total active connections grew 10%, or 5,400 connections, during the first six months of 2026 after growing 16%, or 7,400 connections, in 2025. This brings Quadvest's total active connections to 59,800 as of June 30, 2026. In addition, despite converting 5,400 connections to active, the number of connections under contract and pending development at June 30, 2026 grew by 11,900, to nearly 99,000, since December 31, 2025. As previously communicated, we expect the addition of Quadvest to drive Texas from 8% of our consolidated customer base at year-end 2025 to 26% by 2029. 2026 and Long-Term EPS Guidance The company affirms its standalone 2026 adjusted diluted EPS guidance of $3.08-$3.181. 2026 guidance excludes the impacts of the pending Quadvest and Cibolo Valley acquisitions and the financing thereof, which will be initially dilutive to EPS prior to our ability to implement new rates reflecting the ratemaking rate bases of the acquired assets resulting from a consolidated Texas general rate case that we expect to file in early 2027. We also affirm our non-linear, long-term adjusted diluted EPS CAGR target of 6-8%, anchored off of 2025's adjusted diluted EPS of $2.99. The long-term 6-8% CAGR target reflects a long-term, sustainable organic growth rate that is supported by elevated capital investment needs for decades to come and does not factor in any potential M&A opportunities beyond Quadvest and Cibolo Valley. Further, we continue to expect to deliver a non-linear adjusted diluted EPS CAGR at or above the top end of the 6-8% range over the 2026-30 period. Our guidance is subject to risks and uncertainties, including, without limitation, those factors outlined in the Forward-Looking Statements of this release and the Risk Factors section of the company’s annual and quarterly reports filed with the Securities and Exchange Commission. Rate Activity and Regulatory Highlights California On April 10, 2026, San Jose Water Company ("SJWC") filed with the California Public Utilities Commission (CPUC) for cost recovery of its planned PFAS compliance program. Specifically, SJWC seeks authorization to design and construct an ion exchange PFAS remediation system at its Williams Station as well as to track the associated capital and operation and maintenance costs for recovery. SJWC estimates the total capital cost of the project to be approximately $176 million. If approved, SJWC would adjust rates via annual rate base filing offsets. On June 30, 2026, the CPUC approved Advice Letter 629A, which requested an $8.4 million increase in revenue on July 1, 2026 for SJWC's incremental $52.9 million of investments in its Advanced Metering Infrastructure (AMI) project. Connecticut On April 1, 2026, a Water Quality and Treatment Adjustment (WQTA) surcharge of $0.6 million, or 0.50%, became effective following Public Utilities Regulatory Authority (PURA) approval on March 18, 2026. Connecticut Water Company (CWC) submitted its first WQTA application on January 22, 2026 to recover the costs associated with in-progress or completed WQTA-eligible projects. On April 1, 2026, a $2.7 million increase in annualized Water Infrastructure and Conservation Adjustment (WICA) revenues became effective for the recovery of $25.7 million in completed projects. PURA approved the filing in its entirety on March 25, 2026 which brought the cumulative WICA surcharge to 9.90%, collecting $12.1 million on an annual basis. The 2025 Water Revenue Adjustment (WRA) mechanism surcharge of 5.70% became effective for the 12-month period beginning April 1, 2026. PURA approved CWC's WRA filing in its entirety on March 19, 2026. The mechanism reconciles 2025 revenues as authorized in CWC’s most recent general rate case as well as provides for recovery of certain amounts of compensation expenses as a result of achieving the PURA prescribed performance metrics in our last general rate case. On May 11, 2026, CWC filed a general rate case application with the PURA requesting a $28.8 million increase in annual revenues for the recovery of the approximately $145 million of infrastructure investments made between its last rate case and the end of 2026 as that investment is not reflected in current rates. The test year will be the 12-month period ending December 31, 2025, for new rates to become effective February 2027. Maine On April 13, 2026, Maine Water Company (MWC) filed its first consolidated general rate case with the Maine Public Utilities Commission (MPUC) requesting a $9.5 million increase in annual revenues for the recovery of an anticipated $36 million of infrastructure investments not reflected in current rates using a test year ending December 31, 2025. New rates are expected to go into effect by the second quarter of 2027. On May 1, 2026, the MPUC approved MWC's first consolidated Water Infrastructure Charge (WISC) application in its entirety and the new rates became effective immediately. MWC filed the $0.9 million WISC increase request on February 27, 2026. Texas On October 6, 2025, TWC filed an application with the PUCT to increase the system improvement charge (SIC) by $5.1 million for completed water and wastewater projects. A decision from the PUCT is expected in the second half of 2026. On April 21, 2026, TWC filed the STM application for the acquisition of the Cibolo Valley wastewater treatment plant and associated collection systems, which serve more than 1,500 wastewater connections within TWC's existing water service area. We expect to close the transaction during the fourth quarter of 2026. Dividend On July 27, 2026, the Board of Directors of H2O America declared a quarterly cash dividend on common stock of $0.44 per share, payable on September 1, 2026, to shareholders of record at the close of business on August 10, 2026. The 2026 annualized dividend is expected to be $1.76 per share compared with $1.68 per share in 2025. Dividends have been paid on H2O America’s and its predecessor’s common stock for more than 80 consecutive years, and the annual dividend amount has increased in each of the past 58 years, placing H2O America in an exclusive group of companies. Financial Results Call Information Andrew F. Walters, chair and chief executive officer, Ann P. Kelly, chief financial officer and treasurer, and Bruce A. Hauk, president and chief operating officer, will review results for the second quarter of 2026 along with discussing other recent developments in a live webcast presentation at 8 a.m. Pacific Time, or 11 a.m. Eastern Time, on Tuesday, July 28, 2026. Interested parties may access the webcast and related presentation materials at the website www.h2o-america.com. An archive of the webcast will be available until October 27, 2026. Non-GAAP Financial Measures H2O America's net income and diluted EPS are prepared in accordance with GAAP and represent the earnings as reported to the Securities and Exchange Commission. Adjusted net income and Adjusted diluted EPS are non-GAAP financial measures representing GAAP earnings adjusted to exclude the effects of non-utility real estate transactions and costs associated with mergers, acquisitions and integration activities, if any. These non-GAAP financial measures are provided as additional information for investors to evaluate the performance of H2O America's business activities excluding these items. Management also believes these non-GAAP financial measures help investors and analysts better understand our actual results compared to our guidance on a non-GAAP basis. H2O America uses adjusted net income and/or adjusted diluted EPS as the primary performance measurements when communicating with analysts and investors regarding our outlook and results. Adjusted net income and Adjusted diluted EPS are also used internally to measure performance. However, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. Further, these non-GAAP financial measures should be considered as a supplement to the financial information prepared on a GAAP basis rather than an alternative to the respective GAAP financial measures. About H2O America H2O America is among the largest investor-owned pure-play water and wastewater utilities in the United States, providing life-sustaining and high-quality water service to over 1.6 million people. H2O America’s locally led and operated water utilities - San Jose Water Company in California, The Connecticut Water Company in Connecticut, The Maine Water Company in Maine, and SJWTX, Inc. (dba The Texas Water Company) in Texas - possess the financial strength, operational expertise, and technological innovation to safeguard the environment, deliver outstanding service to customers, and provide opportunities to employees. H2O America remains focused on investing in its operations, remaining actively engaged in its local communities, and delivering continued sustainable value to its stockholders. For more information about H2O America, please visit www.h2o-america.com. Forward-Looking Statements This release contains forward-looking statements within the meaning of the federal securities laws relating to future events and future results of H2O America and its subsidiaries that are based on current expectations, estimates, forecasts, and projections about H2O America and its subsidiaries and the industries in which H2O America and its subsidiaries operate and the beliefs and assumptions of the management of H2O America. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “estimates,” “anticipates,” “intends,” “seeks,” “plans,” “projects,” “may,” “should,” “will,” “approximately,” “strategy,” or the negative of those words or other comparable terminology. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the risks associated with the proposed Quadvest and Cibolo Valley transactions, including, the risk of the proposed transactions not closing on the anticipated timeline, or at all, the ability to obtain required regulatory approvals, and the ability to successfully integrate Quadvest’s and Cibolo Valley's operations and realize the projected financial and other benefits of the proposed transactions; (2) the effect of water, utility, environmental and other governmental policies and regulations, including regulatory actions concerning rates, authorized return on equity, authorized capital structures, capital expenditures, PFAS and other decisions; (3) changes in demand for water and other services; (4) unanticipated weather conditions and changes in seasonality including those affecting water supply and customer usage; (5) the effect of the impact of climate change; (6) unexpected costs, charges or expenses; (7) our ability to successfully evaluate investments in new business and growth initiatives; (8) contamination of our water supplies and damage or failure of our water equipment and infrastructure; (9) the risk of work stoppages, strikes and other labor-related actions; (10) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, epidemic, or similar occurrences; (11) changes in general economic, political, legislative, business and financial market conditions; and (12) the ability to obtain financing on favorable terms, or at all (including the financing for the proposed transactions with Quadvest in a timely manner), which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness, and general market and economic conditions. The risks, uncertainties and other factors may cause the actual results, performance or achievements of H2O America to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Results for a quarter are not indicative of results for a full year due to seasonality and other factors. In addition, actual results, performance or achievements are subject to other risks and uncertainties that relate more broadly to our overall business, including those more fully described in our filings with the SEC, including our most recent reports on Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements are not guarantees of future performance, and speak only as of the date made, and H2O America undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. H2O America Contacts: Ann P. KellyChief Financial Officer and [email protected] Jonathan ReederSenior Director of Treasury and Investor [email protected]

The market shrugged off H2O America's (NASDAQ:HTO) solid earnings report. We did some digging and believe investors may be worried about some underlying factors in the report. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, H2O America issued 22% more new shares over the last year. That means its earnings are split among a greater number of shares. To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value. You can see a chart of H2O America's EPS by clicking here. H2O America has improved its profit over the last three years, with an annualized gain of 29% in that time. But EPS was only up 8.8% per year, in the exact same period. And over the last 12 months, the company grew its profit by 6.3%. But that's starkly different from the 2.3% drop in earnings per share. So you can see that the dilution has had a bit of an impact on shareholders. In the long term, if H2O America's earnings per share can increase, then the share price should too. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. H2O America shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Because of this, we think that it may be that H2O America's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 8.8% over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So while earnings quality is important, it's equally important to consider the risks facing H2O America at this point in time. For example, we've found that H2O America has 3 warning signs (1 shouldn't be ignored!) that deserve your attention before going any further with your analysis. Today we've zoomed in on a single data point to better understand the nature of H2O America's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

This article first appeared on GuruFocus. GAAP Diluted EPS: $0.49 per share. Adjusted Diluted EPS: $0.50 per share. Revenue Increase Impact: $0.41 per share increase due to higher revenues. Rate Relief Contribution: $0.20 per share from rate relief in California, Connecticut, and Texas. Water Production Expenses: Increased by $0.20 per share. Operating Expenses Increase: $0.18 per share increase, including $0.11 from depreciation and amortization. Effective Tax Rate: Approximately 15% in Q1 2026. Infrastructure Investment: $85 million invested in Q1 2026. Full-Year 2026 CapEx Budget: $483 million. Equity Offering: $700 million raised, upsized from $550 million. Quadvest Active Connections: Over 57,200 as of March 31, 2026, a 5% increase in Q1 2026. Warning! GuruFocus has detected 11 Warning Signs with HTO. Is HTO fairly valued? Test your thesis with our free DCF calculator. Release Date: April 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. H2O America (NASDAQ:HTO) reported strong Q1 2026 results with a GAAP diluted EPS of $0.49 and an adjusted diluted EPS of $0.50, consistent with internal expectations. The company successfully executed a $700 million equity offering, which was more than five times oversubscribed, reflecting strong investor confidence. H2O America (NASDAQ:HTO) has a robust five-year capital investment plan of $2.7 billion, with 80% qualifying for timely regulatory recovery. The company is on track to deliver a non-linear EPS CAGR over the 2026 to 2030 period at or above the top end of its 6% to 8% long-term organic EPS growth rate target. H2O America (NASDAQ:HTO) maintains a strong liquidity position and an A-minus credit rating, providing access to necessary capital for long-term investments. Despite a 15% growth in underlying net income, EPS remained unchanged year-over-year due to a higher share count from equity issuance. Higher water production expenses, including increased costs for purchased water and groundwater extraction, partially offset revenue gains. The company faces regulatory challenges, with ongoing efforts required to secure necessary approvals for infrastructure investments and acquisitions. There is a potential risk of delays in closing the Quadvest acquisition, which could impact the timing of future rate case applications. H2O America (NASDAQ:HTO) must navigate affordability concerns, balancing necessary infrastructure investments with maintaining customer affordability. Q: How does H2O America plan to address affordability in the upcoming Quadvest rate case? A: Bruce Hauk, Chief Operating Officer: We are focused on affordability and will propose a low-income tariff in Texas. Our rate design will consider affordability while bringing necessary investments to light. We aim to work creatively with stakeholders and the regulatory commission, with more details expected in 2027 when we file. Q: What are H2O America's long-term goals for its credit rating and financial leverage? A: Ann Kelly, Chief Financial Officer and Treasurer: We aim to achieve an A-flat credit rating by the end of our five-year plan, which provides flexibility for future acquisitions while maintaining our A category rating. Our target is to be above the 15% debt upgrade threshold. Q: What are the final steps needed to close the Quadvest acquisition, and are there any risks to the timeline? A: Bruce Hauk, Chief Operating Officer: We recently achieved administrative sufficiency, allowing us to notify customers and set a 120-day procedural schedule. We aim to close in the latter half of 2026, barring unforeseen delays. The process is on track, and we are working closely with the commission. Q: How is H2O America addressing potential regulations on microplastics and other harmful substances in drinking water? A: Bruce Hauk, Chief Operating Officer: We are engaged with the EPA and involved in research through the Water Research Foundation. Our current PFAS treatment processes may have ancillary benefits for other substances. We are conducting a pilot study on microplastics to inform future treatment strategies. Q: What is H2O America's strategy for maintaining customer affordability amid rising infrastructure investments? A: Andrew Walters, Chief Executive Officer: We prioritize affordability, with average bills below 1% of median household income. We offer affordability tariffs and aim to operate efficiently, swapping operating expenses for capital investments to keep rates affordable while meeting infrastructure needs. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Tuesday, Oct. 28, 2025, at 2 p.m. ET Chief Executive Officer — Andrew Walters President and Chief Operating Officer — Bruce Hauk Chief Financial Officer — Ann Kelly Ann Kelly: Thank you, operator. Welcome to the third quarter 2025 financial results conference call for H2O America. I will be presenting today with Andrew Walters, Chief Executive Officer; and Bruce Hauk, President and Chief Operating Officer. For those who would like to follow along, slides accompanying our remarks are available on our website at h2o-america.com. Before we begin today, I would like to remind you that this presentation and related materials posted on our website may contain forward-looking statements. These statements are based on estimates and assumptions made by the company in light of its experience, historical trends, current conditions and expected future results as well as other factors that the company believes are appropriate under the circumstances. Many factors could cause the company's actual results and performance to differ materially from those expressed or implied by the forward-looking statements. For a description of some of the factors that could cause actual results to be different from statements in this presentation, we refer you to the financial results press release and to our most recent Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on our website. All forward-looking statements are made as of today, and H2O America disclaims any duty to update or revise such statements. You will have an opportunity to ask questions at the end of the presentation. This webcast is being recorded, and an archive of the webcast will be available until January 19, 2026. You can access the press release and the webcast at H2O America's website. In addition, some of the information discussed today includes the non-GAAP financial measures of adjusted net income and adjusted diluted earnings per share that have not been calculated in accordance with the generally accepted accounting principles in the United States or GAAP. These non-GAAP financial measures should be considered as a supplement to the financial information prepared on a GAAP basis rather than an alternative to the respective GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the table in the appendix of our presentation. I will now turn the call over to Andrew. Andrew Walters: Thank you, Ann. Welcome, everyone, and thank you for joining us. Before we discuss our third quarter 2025 progress to date, I would like to share that earlier this month, we welcomed another highly accomplished leader to H2O America. Jonathan Reeder is our new Senior Director of Treasury and Investor Relations. Many of you know Jonathan from his time as an equity research analyst at Wells Fargo Securities, where he covered the utility sector, including leading the teams water utility coverage. Jonathan has a deep understanding of the industry from his more than 2 decades of experience covering utility stocks, making him an outstanding addition to our team. He shares our commitment to culture, service and investor outreach, and we look forward to introducing him to many of you in the future. I am pleased to share that in the third quarter of 2025, we delivered strong financial results, including net income of $1.27 per share on an adjusted or non-GAAP basis, an 8% increase over the third quarter of 2024. Our performance reflects our continued execution of our proven growth strategy, which focuses on making the much-needed water infrastructure investments across our national footprint of systems while constructively engaging our key local stakeholders and a consensus-building process to provide timely regulatory recovery while maintaining customer affordability. Some highlights from the third quarter. Starting with the infrastructure surcharges, the application for Connecticut Water's Infrastructure and Conservation Adjustment was approved as filed, while Texas Water filed its third System Improvement Charge just after the quarter ended. I am also happy to share that we are trending ahead of the CapEx plan we guided to earlier in 2025. We have invested $358 million in water and wastewater utility infrastructure across all 4 states through September 30th. This is 74% of our upwardly revised $486 million budget. Finally, on the M&A front, we announced 2 Texas deals. First, we -- was the transformational Quadvest deal at the start of the third quarter, followed by the tuck-in acquisition of Cibolo Valley wastewater treatment plant and related collection system in Comal County, Texas, which was announced in late August. Bruce will provide updates on the Quadvest deal approval process and year-to-date connection growth as well as share more on the Cibolo Valley wastewater treatment plant acquisition later in the call. Overall, it's been a strong year thus far, both strategically and financially with more to come. With that, I will turn it over to Ann to walk through our financial results. Ann Kelly: Thanks, Andrew. Yesterday, after the market closed, we released our third quarter operating results. As Andrew mentioned, we are pleased to report diluted EPS and adjusted diluted EPS of $1.27 for the quarter. On a year-to-date basis, we earned adjusted EPS of $2.53 per share, a 14% increase over the 9 months ended September 2024. With these strong results, we are narrowing our 2025 guidance range of adjusted diluted earnings per share to $2.95 to $3. This represents the upper half of our original $2.90 to $3 range and demonstrate our team's commitment to delivering on our financial targets. We are also reaffirming H2O America's 5% to 7% EPS CAGR through 2029 with the continued expectation that we will deliver on the top half of the range. This excludes any impact from the pending Quadvest acquisition, which we expect to be accretive in 2028 and to our long-term growth rate. We are very pleased with our strong performance in 2025. As we look ahead, we remain focused on disciplined execution to meet our annual and long-term growth targets. The factors contributing to the 8% increase in third quarter earnings per share are shown on Slide 9. At a high level, increased revenue from rates and usage drove a $0.42 increase, while other income, which primarily reflects higher AFUDC equity and pension non-service credit added $0.13. These were partially offset by higher water production expense of $0.07, other operating expense of $0.18, $0.10 to an increase in the number of shares outstanding and an $0.11 delta due to the absence of the benefit from the third quarter 2024 tax accounting method change. Turning to the next slide, I will provide more detail on each of these areas. Our revenues increased 7% in the third quarter. Rate increases in the general rate case in California, along with increases from our infrastructure mechanisms in Connecticut, Maine and Texas, contributed $14.6 million to the revenue increase. $6.6 million is attributable to higher pass-through water cost from our wholesale suppliers as these costs continue to increase each year. Higher customer usage added another $700,000 of increased usage in Connecticut in Texas, more than offset a reduction in California. And these revenue increases were partially offset by a reduction in regulatory mechanisms and other factors. Water production expenses increased 3% in the quarter and was primarily driven by an increase in the average per unit cost for purchased water and groundwater extraction of $5.1 million that are largely offset in revenue and a $1.1 million increase in cost due to mix as there was a decrease in the availability of the lower-cost surface water. These increases were partially offset by lower production volume of $2.7 million as well as a $900,000 impact from regulatory adjustments. Turning to Slide 12. For the quarter, we reported an increase of 9% in other operating expenses. General and administrative expenses increased $5.6 million, primarily driven by pension costs, salaries and wages as well as other inflationary increases. Depreciation and amortization for new utility plant placed in service increased $1.3 million, and we experienced a small increase in property taxes and other non-income taxes. These increases were partially offset by lower maintenance costs in the quarter. The factors impacting the $0.32 earnings per share increase for the year-to-date period are shown on Slide 13. At a high level, increased revenue from general rate cases and infrastructure recovery mechanisms drove a revenue increase of $1.48. This includes the increase or pass-through water supply costs. The revenue increase was partially offset by higher water production expenses of $0.54. Operating expenses increased $0.46, primarily driven by higher A&G expenses as well as increased customer credit losses. As a reminder, during the second quarter of 2024, we received a onetime benefit from California's arrearage payment plan. The remaining drivers related to the share increase taxes and other are consistent with those in the quarterly variance discussed earlier. Breakdowns of revenue, water production expense and other operating expense for the first 9 months of 2025 are available in the appendix of our slide presentation. On the financing side, through the first 9 months, we took advantage of investor interest and raised approximately $108 million of equity through our ATM program. At the end of the quarter, we had $126 million drawn on our $370 million bank lines of credit, leaving $244 million available for short-term financing of utility plant additions and operating activities. For the first 9 months of 2025, the average borrowing rate for our line of credit advances has been approximately 5.42%, compared to 6.53% in the prior year. As for long-term debt, Texas Water issued a 30-year promissory note in September for a principal amount of $40 million at a fixed interest rate of 6.68%. And earlier today, Connecticut Water issued $60 million of 30-year debt at a fixed rate of 6.08%. With respect to taxes, our consolidated income tax rate was 14% on a year-to-date basis compared to 10% in the same period of 2024. This difference in rate was primarily due to higher pretax income in 2025 and the tax accounting method change in 2024. And with that, I will turn the call over to Bruce to provide updates on key state regulatory developments in the Quadvest and Cibolo Valley acquisitions. Bruce Hauk: Thank you, Ann. I am pleased to share that our constructive engagement with regulators continues to create value for our customers and the company. At Connecticut Water, our request for a $3.1 million revenue increase in WICA surcharge for capital invested in pipeline replacement was approved as submitted and on time with new rates effective October 1st. Progress is being made in Maine Water's rate unification proceeding. In September, we filed a rate design proposal that would bring our 10 different districts into a single tariff. The rate design proposal is revenue neutral. But if approved, it would feature our first affordability tariff in May. We expect a decision on rate unification in the first quarter of 2026. After the quarter closed, Texas Water filed for a $5.1 million increase in the system improvement charge for completed water and wastewater projects. We expect a decision on the application in the first half of 2026. As alluded to earlier, we have increased our planned 2025 capital spend to $486 million from $473 million. The increase primarily reflects the momentum of our successful advanced metering infrastructure deployment in California and our plans to accelerate the pace of implementation of the project. We will provide a holistic refresh of our 2026 and beyond CapEx budget in our year-end 2025 uptake in February when we roll forward our 5-year plan. We'll now turn to an update on our planned Texas acquisitions. The Quadvest deal approval process remains in the early stages. We expect to receive the fair market valuation determination, which will be the average of the 3 PUCT appointed appraiser valuations in December. Shortly after receipt, we will file the formal deal approval, known as the sales transfer merger application with the PUCT, and we expect to close the deal by mid-2026. While the FMV reports are not publicly disclosed, in the interest of transparency and to help the investment community more accurately model the deal's impact, we plan to disclose the determined FMV early next year. Meanwhile, we continue to see robust connection growth in the Quadvest system, which now has more than 52,400 active connections as of September 30, 2025. This represents an 11.5% increase since the end of 2024. And as Quadvest converts its under contract and pending development pipeline into active connections, it is worth noting that the pool of future connections continues to be replenished and win some. Of course, future connection growth will vary based on a number of conditions. So this is no guarantee of future growth rates. However, these results are in line with our range of expectations, and we believe solid growth will continue in the greater Houston area, which is the second fastest growing metropolitan area in the United States. Our other pending Texas deal, which we announced in late August is the acquisition of the Cibolo Valley wastewater treatment plant. The acquisition would bring approximately 1,500 active connections and the opportunity for more than 250 additional ones that are under contract and pending construction. The acquisition is in the heart of our existing service territory, and we already provide water service, wastewater billing and customer service to these customers on a contract basis. We have filed with the PUCT to use fair market value for the Cibolo deal, and we expect this transaction to close in the fourth quarter of 2026. Between Quadvest and Cibolo Valley, we're excited about our long-term growth potential in Texas. With that, I will turn it back over to Andrew. Andrew Walters: Thank you, Bruce. Just a couple of weeks ago, Newsweek notified us that H2O America has been selected for the second consecutive year as one of America's greenest companies. We are 1 of only 2 water utilities selected for this prestigious recognition. Only companies that meet the European Union stringent sustainability criteria considered to be the most advanced globally were eligible. This recognition reflects the passion and dedication of our people, who take our responsibility to our customers and the environment very seriously. This passion is also reflected in our 2024 sustainability report, which has been posted to our website. Among the highlights, we achieved a 43% reduction in Scope 1 and 2 emissions from the 2019 baseline, which is strong progress toward our 2030 goal of 50%. We increased solar generation by 73%, with 8 new solar projects, including the first in Texas, owning and solar generation lowered our operating cost for customers and provides a return for investors. Finally, we also achieved world-class customer satisfaction rate of 85.2% and expanded our flexible payment plans and rate assistance programs. Last, but certainly not least, Governor Lamont appointed 4 new commissioners to the Connecticut Public Utility Regulatory Authority. We extend a warm welcome to Thomas Wiehl, Janice Beecher, Holly Cheeseman, Everett Smith on their appointments. We look forward to working with the new commissioners to address the challenges facing water utilities, including the need to balance affordability with Connecticut's extensive investment requirements to replace aging infrastructure and treat emerging contaminants, all while providing high-quality water and reliable service. In closing, the third quarter was a strong quarter for H2O America, and we have even more to look forward to in the home stretch of 2025. We remain focused on driving shareholder and customer value through a disciplined approach to infrastructure investment and executing on our financial goals, advancing the Quadvest and Cibolo Valley acquisitions, deepening our strong partnerships with local stakeholders and our unrelenting pursuit of operational excellence and identifying creative and sustainable solutions to serve generations to come while maintaining a focus on affordability. And now I will turn the call back over to the operator for questions. Operator: [Operator Instructions] And our first question comes from Angie Storozynski of Seaport. Agnieszka Storozynski: Jonathan, congratulations. I can't wait to work with you on the other side. That's quite a change. Anyway, so let's start with Texas. So first, the Quadvest deal, I mean the fact that you guys are going to provide disclosures on the FMV only in January, you said or early the first quarter, why -- I mean just -- why such a long wait, so that's number one. Number two is on the back of the American Water Essential merger yesterday, you are gaining a big player in the Texas water market. I'm just wondering if it has any bearing on how you see the growth in that market. And then three, we're waiting for a PURA decision in Connecticut on the acquisition of Aquarion. I'm just wondering if you still have any appetite for this asset if it were to -- if the commission were to reject the current sale process. Andrew Walters: Right. So first, why don't you take us through the Quadvest and FMV and then we'll go from there to Aquarion. Bruce Hauk: Sure. Yes, thanks, Angie, for your question. And as it relates to the FMV process, I think we're still on the same time line that we disclosed when we first announced the deal. So the time line for those appraisals to come in is in December and then shortly thereafter, we'll file the STM. So that's why on schedule as expected. So it's the soonest that we'll have the information, we can disclose it. Agnieszka Storozynski: Okay. And so now you have absolutely no sense, right? Because the appraisals are still working, right? So they haven't basically submitted anything. Bruce Hauk: Correct. In order for the appraisers to complete their work, they need the resident engineering firm to perform the RC and LD, which is the most extensive process in creating the cost approach. So the net income and the market approach are pretty easy in terms of the process, but the most extensive process is the cost approach, which requires a full addressing of the assets by the engineer. And that's the process that we're in, that's not yet been completed. Agnieszka Storozynski: Okay. And then American Water acquiring a Texas utility? Bruce Hauk: Well, certainly, there's a lot of interest in Texas by a lot of our peers and competitors. But the beautiful thing about Texas, it's a big state, and there's a lot of opportunity in Texas. And our biggest opportunity is something that we're very focused on and keenly addressing, which is the Quadvest acquisition. We're excited about that, and that's our focus. Competition has always been in our industry, and we've shown that we can be a formidable competitor, and we'll continue to do deals that make sense for us to come our way as long as they meet our investment criteria in the settings that we've put in forth in place for us to move forward with in terms of tuck-ins or other opportunistic opportunities that come along. Andrew Walters: And I think -- Angie, I was just going to add to that. Like if you think about acquisitions in general, our company will meet its growth forecast without a single acquisition. And so as you think about that, that is on purpose, right? So we don't have to worry about this idea of using growth as a lever in order to meet our growth forecast. I think that put us in a really strong position, quite frankly. The other thing too, Essential is a very strong competitor all by themselves. And combined with America, are they more formable, absolutely. That being said, there's only a certain amount of financial formability that goes into any acquisition to start with. And if somebody can afford to pay more then that too -- that business belongs to be with. And we will not stretch beyond what we've already stated, which is we want to have our accretion goals, and we will not do so at the expense of our balance sheet. So I think those are the things we will continue and a very fair question, but I don't see our growth rate changing because of those 2 coming together. And quite frankly, I'm looking forward to having that strength actually benefit the industry. So I think it's good for the industry. I think it's good for both companies. And it also addresses affordability for the customers of those companies because as they continue to invest in their systems, they can do so where the customers are not paying the full cost. And I think that is a formula that works for every water company. Any other question on those two or just Aquarion? Agnieszka Storozynski: No, just Aquarion. Actually, Aquarion in both -- how you see acquisitions and the financing of them vis-a-vis your stock's performance? It seems like your stock is not really reacting to the strong results you're printing. Some of it could be the Aquarion overhang. But just if you could talk to us about given the stock price, and how you see accretion from both the Quadvest deal and any capacity you would have for additional transactions? Andrew Walters: Yes. Look, it's a great question. So first of all, I'll start with Aquarion. Would that make strategic sense for us, for our customers? The answer is yes. But we also are occupied fully with the Quadvest acquisition. We do not have additional capacity in the straight equity market. So if we were to do a deal, and I'm not -- first of all, like I said very early, so to speak, to say that the deal is not going to happen. Nobody that I'm around had said that the deal is not going to happen, but if it didn't happen, then it would have to meet -- Eversource would have to decide whether they want to sell it, they would have to decide whether they have alternative ways of raising the equity or whatever else they wanted to do with those proceeds. And that's obviously all for them. But for us, that leaves us with how would we do something like this. And I think that the way we've always talked about this, is there would be 3 areas that we would go for equity. One is straight equity, second place is hybrid/debt markets and the third place is partner equity. If I take the straight equity off that leaves us with hybrid debt as well as partner equity. But it doesn't change our accretion goals. It doesn't change our goals that we have from a balance sheet protection perspective. So for me, nothing changes. And quite frankly, what this allows us to do is to do the same thing that Essential and American are doing, which is in order to take cost out of the system, which allows us to invest in those systems where the customers do not have to pay the full cost of the bills. So it is a very good model to use as long as people don't get aggressive on the other side. Agnieszka Storozynski: Okay. Understood. And then one last question maybe for Ann. And maybe you have addressed it, and I wasn't paying full attention, what's the -- I mean, when I look at your narrowed guidance and year-to-date results that would imply really low earnings in the fourth quarter. Could you remind me what it is that weighs on those fourth quarter expectations to get to the midpoint of the narrow guidance? Ann Kelly: Sure, Angie, good question. There are a number of factors that are driving the $0.27 to $0.32 reduction in EPS quarter-over-quarter. For first, we have some timing of gross margin and the regulatory adjustments. I should also ask you to keep in mind that the Connecticut Water rate case went into effect in July of 2024, so we experienced that additional favorability year-over-year in the first half of this year, but we're not experiencing that currently because it was already in rates last year. Second, we expect continuation of higher expense items that we've been reporting on as well as some additional operating expenses to advance our strategic priorities. And lastly, we expect to see the continued trend of higher year-over-year depreciation, interest, taxes and also some dilution from additional shares. Agnieszka Storozynski: Okay. And what is this $0.20 of year-to-date other income? And again, I should have -- should have listened. Yes, it's about $0.20, I think, no? Ann Kelly: Let me take a look. Agnieszka Storozynski: Oh, I'm sorry, it's $0.12 or... Ann Kelly: $0.13. And that is primarily -- one of the biggest contributors there is AFUDC even some of our substantial investments primarily in Texas, where we have longer-term construction cycles. And so those investments are earning AFUDC for a longer period of time. Operator: [Operator Instructions] Our next question comes from Ian Rapp of Bank of America. Ian Rapp: Echo Angie's comments on adding Jonathan, obviously, a really good pickup for the team, looking forward to working with him again, congrats there. And then I think you hit on most of them, but I think maybe just to clarify, have you refreshed or roll forward the EPS guidance through '29 kind of at the high end of 5% to 7%. But I think if I heard you correctly, you're also going to refresh the full sort of CapEx schedule on 4Q. Would you say at this point that the EPS guidance fully bakes expectations for that CapEx refresh, or are you planning to sort of refresh that EPS guidance view on fourth quarter as well? Andrew Walters: You're talking about -- just to make sure I'm asking the right question or answering the right question. Ian, you're talking about the long-term guidance, right, and whether -- when we refresh the CapEx, whether that's that long-term guidance would be refreshed at that point as well? Ian Rapp: Correct. Yes. I see in the slides that you have the 5% to 7% anchored to the high end through 2029 in the slides. I just wanted to check if that was fully baked for expectations for the CapEx refresh? Andrew Walters: Look, I think our refresh on the long-term growth is going to be impacted by two factors. One will be our CapEx, but it will also be the view on where we'll come out from a Quadvest acquisition, right? So we will look at those areas as to what our future long-term growth rate is. And until we come out with that, then that's when everything will be refreshed all at one fell swoop. It's not going to be done incrementally. Ian Rapp: Got it. That makes sense. And then just maybe two quick ones on the fair market value process. So it sounds like that's kind of the primary date for determining financing needs to finance this acquisition? A, is that correct? And then b, does the fair market value process, or it's kind of structured, allow you to fully capture these customer connection growth rates that you're highlighting, or would that be something that would maybe be more reflected in a future rate case? Andrew Walters: Yes. So let me take the first one, Bruce. We've agreed to the $540 million. So that is not going to determine the financing cost of the transaction. The only thing that we will address or adjust is depending on the markets, right? It has nothing to do with FMV. We will address how much debt or how much equity we will do in the transaction. So that's the only thing that's going to be kind of adjusted, which is going to be market dependent. As it relates to the FMV, I'm going to have Bruce address the idea of kind of these new customers that are coming on, what the cutoff date are for those customers, and how that will be reflected in FMV today versus FMV in the future. Bruce Hauk: Yes. Thank you, Andrew. As it relates to the FMV, we've got all 3 appraisers signed up to the same time line in terms of the valuation of the assets. And so that's a terminus date of effective July 1, 2026, I believe. So that's that cutoff date in terms of the valuation of assets. So it's not really connections that make that number. It's really the actual assets that have been invested in and are available for valuation. So that's really the determining value or determining point of the fair market value. So it will be all those assets, including construction work in progress to that point. Ann Kelly: And if I can just follow up on what Andrew said. I mean it's absolutely correct. I mean the amount of equity that we will issue in connection with the transaction is not dependent on the fair market value what we alluded to was that we did feel that it was important for investors to understand the fair market value. So that they could adequately model the transaction going forward. And we think that will be helpful for us in the equity raise going forward. And so when we think about timing, we're getting the FMV at the end of this year, will then be in blackout for year-end. We'll have to work to pull together the necessary offering documentation in that same time frame. As Bruce mentioned, we'll be filing the STM or the sales transfer merger. So once that deemed administratively complete, that's when the clock starts ticking on that approval process. So once we have a better eye towards closing the transaction, that's when we'll look to that equity raise. Operator: I'm showing no further questions at this time. I'd like to turn it back to Andrew Walters for closing remarks. Andrew Walters: Thank you, operator. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Before you buy stock in H2O America, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and H2O America wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $492,752!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,327,935!* Now, it’s worth noting Stock Advisor’s total average return is 991% — a market-crushing outperformance compared to 201% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of April 28, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. H2O America (HTO) Q3 2025 Earnings Transcript was originally published by The Motley Fool

H2O America reported Q1 EPS of $0.49 GAAP and $0.50 adjusted, results management says are in line with expectations and support its standalone 2026 EPS guidance of $3.08–$3.18, although diluted EPS was unchanged year-over-year due to a higher share count from 2025 ATM activity and a March 2026 equity issuance. The company upsized an equity offering to $700 million (more than five times oversubscribed at a 2.6% discount) to fund the pending Quadvest deal and near-term capex, expects to avoid additional equity issuance through at least year-end 2027, has about $370 million of bank capacity available, and retains an S&P credit rating of A‑ with projected FFO-to-debt of 11%–12% through 2027. Closing of the Quadvest acquisition (purchase price $483.6 million) is now expected in the second half of 2026; the deal and backlog conversions should boost Texas customers (from 8% today) toward 26% by 2029, while the company plans $2.7 billion of capex for 2026–2030 and is pursuing multiple regulatory filings (including a $176 million PFAS remediation request in California and rate cases in Connecticut, Maine, and Texas). Interested in H2O America? Here are five stocks we like better. H2O America (NASDAQ:HTO) reported first-quarter 2026 results that management said were in line with internal expectations and supported the company’s full-year earnings outlook, while also detailing progress on financing, pending Texas acquisitions, and multiple regulatory filings across its footprint. Chair and CEO Andrew Walters said the company earned $0.49 per share on a GAAP diluted basis and $0.50 per share on an adjusted diluted basis in the first quarter. Walters said the results were “consistent with our internal expectations” and in support of the company’s standalone 2026 EPS guidance of $3.08 to $3.18. → Homebuilder Earnings: D.R. Horton Sticks Out as Pulte & NVR Sales Tank CFO and Treasurer Ann P. Kelly said underlying net income grew by roughly 15% year over year, but diluted earnings per share were unchanged versus the first quarter of 2025 because of a higher share count. Kelly attributed the increased share count to the company’s use of its at-the-market program in 2025 and an equity issuance completed in early March 2026. Kelly walked through the year-over-year drivers of quarterly EPS, including a $0.41 per share increase due to higher revenue, partially offset by higher expenses and dilution from share issuance. She said about half of the revenue benefit, or $0.20, came from rate relief tied to general rate cases and infrastructure surcharges, primarily in California, Connecticut, and Texas. She also cited $0.11 of higher revenue tied to pass-through water supply costs (offset in water production expense, with no net income impact) and $0.05 from higher usage, “largely due to a hot, dry March across our California service territory.” → Meta Platforms Earnings Preview: What to Watch in Q1 2026 Report On the cost side, Kelly said water production expenses increased $0.20, driven by higher per-unit purchased water and groundwater extraction costs, balancing and memorandum accounts (including California’s full cost balancing account), and higher customer usage, partially offset by lower costs tied to increased surface water availability. She also said other operating expenses increased $0.18, including $0.11 higher depreciation and amortization from new utility plant placed in service, along with increased maintenance, employee-related costs, and higher administrative and general expenses. The company’s effective income tax rate was approximately 15% versus 17% a year earlier, which Kelly said was primarily due to higher flow-through tax benefits. Walters highlighted what he called a “very successful equity raise” executed in early March. He said the company initially targeted a $550 million equity offering to fund the pending Quadvest acquisition and $100 million to $125 million of equity needed for its 2026 standalone capital budget. Walters said the offering was “more than 5 times oversubscribed” and priced at a “tight 2.6% discount.” → Palantir Is Down 30%: Noise? Or a Signal to Accumulate? Given demand, H2O America increased the issuance to $700 million, including the greenshoe. Walters said the upsizing was intended both to add long-term investors to the shareholder base and to address forecasted equity needs through 2027. Kelly said the company expects to stay out of the equity markets, including through its ATM program, “through at least year-end 2027,” citing the ability to draw down on a $400 million board agreement component of the March issuance over that period to fund capital needs. Kelly said H2O America invested $85 million in infrastructure improvements during the first quarter, representing 18% of its $483 million full-year 2026 capital expenditures budget (excluding Quadvest impacts). She attributed the slower start to seasonality, particularly winter constraints in Connecticut and Maine, and said the company remains on track to deliver the full-year budget and its plan to invest $2.7 billion over 2026–2030. Kelly said roughly 80% of the $2.7 billion capital plan qualifies for timely regulatory recovery, either through California’s general rate case framework or through infrastructure recovery mechanisms in Connecticut, Maine, and Texas. She said the five-year capital plan, combined with the pending Quadvest acquisition, is expected to translate into a 13% rate base CAGR from an estimated year-end 2025 rate base of $2.8 billion, while noting those amounts reflect estimated year-end rate base and may differ from amounts ultimately recognized in rates by regulators. On credit and liquidity, Kelly said H2O America still expects to raise $100 million to $200 million of debt at the parent and Texas Water Company levels to fund Quadvest, though the expanded equity issuance provides more timing flexibility. She said cash from the equity issuance was used to pay down bank credit lines, leaving $370 million available, with remaining proceeds invested in cash equivalents. Kelly said S&P affirmed the company’s A-minus credit rating and that H2O America expects its FFO-to-debt ratio to be 11%–12% through 2027, above S&P’s 11% downgrade threshold. In response to an analyst question, Kelly said management aims to delever over the five-year plan, targeting an A-flat credit rating. She said the upgrade threshold referenced was around 15% FFO-to-debt and that reaching A-flat would provide flexibility for potential future transactions while staying in the A category. President and COO Bruce A. Hauk said regulatory teams “have been busy to start the year,” outlining filings and approvals across several states. California: Hauk said the company filed a request with the CPUC outside the general rate case process for approval and recovery of the planned Williams Station PFAS remediation project, estimated at $176 million for an ion exchange system. If approved, he said San Jose Water would adjust rates via annual rate-based filing offsets, similar to the recovery approach used for the current AMI project expected to complete around year-end. Connecticut: Hauk said the company filed and received approval to implement annual revenue increases totaling about $3.3 million under the WICA and WGTA mechanisms effective April 1, 2026. He also said a water revenue adjustment mechanism surcharge was implemented April 1 to reconcile revenues under the most recent rate case, including recovery of certain compensation expenses tied to prescribed performance metrics. He added that Connecticut Water filed a letter of intent on March 13 to file a general rate case application within 60 days, with the filing expected in the “weeks ahead,” seeking an approximate $26 million increase in annual revenues effective early 2027 and recovery for about $129 million of infrastructure investment made between the last rate case and the end of 2026. Maine: Hauk said Maine Water filed its first consolidated WISC application in late February, requesting a $0.9 million increase, and filed its first consolidated general rate case earlier in April requesting a $9.5 million increase in annual revenues. He said the filing seeks to recover about $36 million of infrastructure investments made or expected by the end of 2026 that are not currently in rates, with new rates expected to take effect by the second quarter of 2027. Texas: Hauk said the company continues to work through a $5.1 million System Improvement Charge mechanism application filed in October, with a decision expected in the second half of 2026. He also said the company filed an STM application for the Cibolo Valley Wastewater Plant and related collection system, keeping the company on track for a fourth-quarter 2026 close. After closing Quadvest and Cibolo Valley and completing investments to add 6,000 acre-feet of annual water supply into the existing system, Hauk said Texas Water expects to file a combined company general rate case in early 2027 with new rates expected in early 2028. Hauk said the STM application for the regulated portion of the Quadvest transaction was filed in January and was deemed administratively complete earlier in the month. The application requests approval of Texas Water Company’s acquisition of Quadvest, L.P. assets and certification of the rate-making value under the Texas Fair Market Value Statute at the $483.6 million purchase price. Hauk said that once required public notices are issued and proof is filed, the PUCT’s 120-day approval process will begin, though the timeframe could be extended if a hearing or timeline extension is requested. Management updated its expected closing timeline, with Hauk stating the company is shifting from a mid-2026 expected closing to “sometime during the second half of 2026.” In the Q&A, Hauk cited the volume of documentation involved and noted that timelines can also be affected by intervenor activity and the commission’s docket. Hauk also pointed to Quadvest operating metrics, saying the Houston-area system had more than 57,200 active connections as of March 31, 2026, representing a 5% increase in the first three months of 2026 following a 16% increase during 2025. He said that during the first quarter, despite converting 2,800 connections from the pipeline to active, the pipeline increased by 5,000 connections, while cautioning that future connection growth can vary and is not guaranteed. Hauk said the addition of Quadvest customers and conversion of contracted backlog is expected to drive Texas from 8% of the consolidated customer base today to 26% by 2029. On affordability, Walters and Hauk emphasized the company’s focus on balancing infrastructure investment with customer bills. Hauk said the company’s average bills remain below 1% of median household income in each of its four states, and referenced an EPA study suggesting water and wastewater bills are affordable when combined bills are below 4.5% of median household income. Walters said H2O America offers affordability tariffs in California, Connecticut, and Maine and hopes to introduce a similar benefit in Texas as part of a future rate proceeding. Asked about potential Quadvest rate impacts, Hauk said the company has not disclosed specific impacts but has said they would be “significant,” adding that management is engaging with stakeholders and expects the issue to become more public when the company files in 2027. In closing remarks, Walters said H2O America serves 1.6 million people across four states and reiterated the company’s “unwavering commitment to the dividend,” noting it has been paid for more than 80 consecutive years and increased in each of the past 58. SJW Group, through its subsidiaries, provides water utility and other related services in the United States. It operates in Water Utility Services and Real Estate Services segments. The company engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services; and supplies groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District. The article "H2O America Q1 Earnings Call Highlights" was originally published by MarketBeat.