H2O America : Presentation PDF (3c8978c7 7c49 4546 93b9 cc32cdabe444)
HTO
Published on 04/29/2026 at 09:34 am EDT
First Quarter 2026 Financial Results & Update Presentation
On Today's Call
Andrew F. Walters
Chief Executive Officer
Ann P. Kelly
Chief Financial Officer and Treasurer
Bruce A. Hauk
President and Chief Operating Officer
Forward-Looking Statements
Safe Harbor
This presentation 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.
Welcome
Andrew Walters
Chief Executive Officer
A Good Start To 2026
Strong Q1 financial results consistent with internal expectations
GAAP diluted EPS of $0.49; Adjusted diluted EPS of $0.501
Raised $700 million of equity to fund Quadvest acquisition and base capex through 2027
Includes a $400 million equity forward component
Affirming all aspects of financial guidance and growth targets initiated with our year-end 2025 update
Continued to make progress on the regulatory front to execute on our financial plan
1See Appendix for H2O America's reconciliations for non-GAAP financial measures. 5
Financial Update
Ann Kelly
Chief Financial Officer and Treasurer
Financial Highlights
First Quarter 2026 Diluted EPS
2026 Standalone Diluted EPS Guidance of $3.08-3.181
$0.49 GAAP/$0.50 Adjusted (Non-GAAP)
$2.7B 5-year CapEx Plan2
To renew and replace aging infrastructure, improve reliability and service quality, and
comply with environmental regulations
~13% Rate Base CAGR 2026-2030
Non-linear Long-term EPS Growth Rate of 6-8% (off 2025A)
8%+ EPS CAGR expected for the 2026-30 period
1H2O America's earnings guidance is subject to numerous risks and uncertainties, including, without limitation, those factors described in the "Forward-Looking Statements" on slide 3 and the "Risk Factors" section of the company's annual and quarterly reports filed with the Securities and Exchange Commission (SEC). Because we are not able to predict certain potentially material items affecting diluted EPS on a GAAP basis, principally gains or losses on non-utility real estate transactions and expenses for merger and acquisition activities, we are unable to reconcile the fiscal year 2026 adjusted diluted earnings per share, a non-GAAP measure, to the diluted earnings per share, the most directly comparable measure in reliance of the "unreasonable efforts" exception set forth in the SEC rules.
2 Includes expenditures for cloud-based systems recorded as deferred assets; TWC includes elevated level of planned investments in Texas following the anticipated closing of our pending acquisitions.
Q1'26 Adjusted Diluted EPS Flat Compared to Q1'25*
*See Appendix for H2O America's disclosures for non-GAAP financial measures. 8
CapEx + Quadvest = Attractive Rate Base Growth
2026-30 capex budget of $2.7B1 plus the addition of Quadvest drives a projected 13% rate base CAGR
Through 3/31/26, we have invested $85.3 million1 in infrastructure (18% of FY2026 budget)
1Includes expenditures for cloud-based systems recorded as deferred assets; TWC includes elevated level of planned investments in Texas following the anticipated closing of our pending acquisitions.
9
6-8% Long-term EPS CAGR Guidance1
Non-linear, long-term 6-8% EPS growth rate
Anchored off 2025A adjusted diluted EPS of $2.99
Reflects sustainable organic growth beyond 2030 supported by decades of elevated investment needs
2026E & 2027E EPS including Quadvest
Expect to fall below the ranges implied by our 6-8% CAGR
Quadvest dilution off standalone 2026 diluted EPS guidance midpoint of $3.13 could be in the 10-20% range (financing and D&A costs are a drag prior to 2027 TX GRC)
Overall 2026-30E EPS CAGR off '25A
Expect to be at or above the top of 6-8% range driven by:
5-year capex budget of $2.7 billion2
Anticipated Quadvest accretion beginning in 2028
Achieving fair and timely regulatory outcomes
1 H2O America's earnings guidance is subject to numerous risks and uncertainties, including, without limitation, those factors described in the "Forward-Looking Statements" on slide 3 and the "Risk Factors" section of the company's annual and quarterly reports filed with the Securities and Exchange Commission. Because we are not able to predict certain potentially material items affecting diluted EPS on a GAAP basis, principally gains or losses on non-utility real estate transactions and expenses for merger and acquisition activities, we are unable to reconcile the fiscal year 2026 adjusted diluted earnings per share, a non-GAAP measure, to the diluted earnings per share, the most directly comparable measure in reliance of the "unreasonable efforts" exception set forth in the SEC rules.
2 Includes expenditures for cloud-based systems recorded as deferred assets; TWC includes elevated level of planned investments in Texas following the anticipated closing of our pending acquisitions. 10
Financing & Credit Metric Update
Raised $700 million in equity proceeds, including $400 million through an equity forward agreement
Provides the equity necessary to fund the Quadvest and Cibolo Valley acquisitions as well as our normal capex needs through 2027
Until Quadvest closes, we have paid off our bank lines of credit and invested the cash balance ($153 million as of 3/31/26) in cash equivalents
$100-200 million of HoldCo & OpCo level debt for the Quadvest deal is still expected, though timing is flexible given upsized equity offering
2026 financing plan designed to protect our 'A' category rating (S&P downgrade threshold is 11%)
Expect continued deleveraging throughout our 5-year plan
Regulatory and Acquisition Updates
Bruce A. Hauk
President and COO
Regulatory & Legislative Updates
Deferred Cost of Capital filing
maintains 9.81% ROE through 2027, absent WCCM adjustments
WQTA allows for annual recovery
of total capital invested; not limited to completed projects
7.5% annual cap 15% cap between GRCs
Filed on 4/10/26 for cost recovery of Williams Station PFAS remediation project outside of the GRC process. Estimated total capital cost is ~$176M
If approved, rates would adjust annually via rate base filing offsets
2025-27 GRC's 2nd year step rate increase of $17.2M effective 1/1/26
SJWC's 2028-30 GRC will be filed early January 2027
GRC letter of intent filed 3/13/26; within 60 days, CWC plans to seek a
~$26M increase in annual revenues to recover ~$129M of investments
$2.7M WICA revenue increase approved as filed, effective 4/1/26
Initial Water Quality and Treatment Adjustment (WQTA) filing approved ($0.6M increase effective 4/1/26). WQTA is the nation's first mechanism to recover capex needed to treat PFAS and emerging contaminants
Regulatory & Legislative Updates
Rate unification stipulation allows
the consolidation of 10 divisions into a single division and creates a needs-based financial assistance rate program
Expect smaller gap between
TWC's allowed ROE and earned ROE following planned GRC
Stipulation in rate unification application approved Jan. '26; includes an affordability rate
First consolidated WISC application filed 2/27/26; requests a $0.9M increase in annual revenues
First consolidated GRC filed 4/13/26; requests a $9.5M increase in annual revenues to recover ~$36M of investments
$5.1M SIC application filed 10/6/25; second half 2026 decision expected
Quadvest and Cibolo Valley FMV deals pending
TWC plans to file combined TX GRC in early 2027 to recover significant water supply & reliability investments ($300M+ just over the 2024-26 period) and recognize Quadvest's & Cibolo's rate base
Progress on Quadvest
Quadvest L.P.'s Fair Market Value (FMV) determination received late Dec. '25
In accordance with Texas' FMV statute, the purchase price of $483.6M will serve as the ratemaking rate base
Sale-Transfer-Merger (STM) application deemed administratively complete by the Public Utilities Commission of Texas in April '26
Requests approval of the acquisition of Quadvest L.P.'s assets and certification of the value of the rate base
Closing expected second half of 2026
Welcome
Texas PUCT Updates:
Welcome Commissioner Rhode
Appendix
Customer Bill Affordability
1as of 12/31/25, MHI = 2023 US Census weighted average of median household income for zip codes served based on data available through ESRI, escalated to 2025 based on state-
specific U.S. Census historical data. Bill data is based on actual average residential customer usage for the prior 12 months at December 2025 rates in the largest division/service area. 19
Key Statistics by State
1 The authorized capital structure and return on equity shown are those of the largest division of MWC, the Biddeford and Saco division. This return on equity and capital structure will be used for any future Water Infrastructure Surcharge ("WISC") calculations for all divisions until the Maine Public Utilities Commission ("MPUC") has authorized or approved a different return on equity structure in a different proceeding.
2 Estimated by management.
3 The approved Water Cost of Capital Mechanism ("WCCM")-adjusted return on equity is 10.01% less a 20-basis point reduction due to the reimplementation of the Water Conservation Memorandum Account ("WCMA").
4 An approximation of year-end 2025 rate base that includes net utility plant not yet included in rate base pending rate case filings and outcomes.
20
Key Regulatory Filings
* AMI = Advanced Metering Infrastructure; GRC = General Rate Case; WICA = Water Infrastructure Conservation Adjustment; WISC = Water Infrastructure Surcharge; FMV = Fair Market Value 21
Breaking Down the 2026-30 CapEx Plan
Nearly half of 2026-30 budget is distribution system investments
Planned CapEx by State 2026 - 20301 ($ in millions)
Roughly 80% of 2026-30 budget qualify for timely regulatory recovery2
* Other PP&E includes pump station and equipment, reservoir and tanks & other equipment
1Includes expenditures for cloud-based systems recorded as deferred assets; TWC includes elevated level of planned investments in Texas following the anticipated closing of our pending acquisitions.
2Based on budgeted investments or filings that qualify for infrastructure recovery mechanisms, including the recently enacted Water Quality Treatment Adjustment in Connecticut. 22
Adjusted Diluted EPS Bridge from 2025A to 2026 Guidance Midpoint*
Quadvest Acquisition Overview
Transaction Brings Growth, Relationships, and Reliable Service
Provides water and sewer service in Southeast Texas for nearly 50 years through two operating entities, Quadvest LP and Quadvest Wholesale LLC
Over 54,000 active connections and over 87,000 connections under contract and pending development1.
(Regulated)
(Utility-like)
Regulated water and wastewater utility; purchase price of $483.6mm
Water and wastewater infrastructure services for municipal utilities and developers; purchase price of $56.4mm
64 subdivisions serving ~38,000 connections and pipeline of ~61,500 connections under contract
5 subdivisions serving ~16,500 connections and ~25,500 under contract and pending future development
Excellent relationships with leading developers in Houston region that will continue to drive future growth
Constructs, operates and maintains water and wastewater facilities under 30+-year contracts with Municipal Utility Districts
10% CAGR of connections over last five years supports projected double-digit customer growth rate over next five years
Growth fueled by buildout of master planned communities by multiple home builders in one of America's fastest growing regions
H2O America + Quadvest (2030E)
Transaction Strengthens H2O America's Position by Customer Connections Nationwide1
Standalone H2O America (2025A)
H2O America + Quadvest (2025A)
Acquisition creates a more balanced portfolio of water utilities across California, Texas, Connecticut, and Maine
Transaction Enhances Strategic Profile
Enhances Scale
Creates second largest regulated private Texas water and wastewater utility
Strengthens H2O's objective to strategically diversify the business, extend exposure to fast-growing regions, and enhance service nationwide
Increases Exposure to Constructive Texas Market
Strong Texas economic development and growth will continue to support long-term growth for H2O America
Strong relationships with housing developers and customers in Texas present significant capital investment opportunity to continue robust track-record of growth and on-going delivery of reliable and valuable water and wastewater services
Constructive regulatory framework and associated mechanisms, incl. Fair Market Value and infrastructure recovery
Customer Focus
Well positioned to increase value for customers with improved operational excellence, customer service, and infrastructure investment, while maintaining commitment to local expertise
Enhance reliability, customer value, and customer service through shared technology and operational best practices
Continued Commitment to Communities and Employees
Expanding Texas investments with over $750M planned across TWC and Quadvest over the next 5 years, strengthening our local roots and capacity to meet the state's rapid growth.
Company to retain a passionate, dedicated team of locally-based employees and leadership
Shared foundation of values and community engagement expressed through charitable giving, employee volunteerism, and environmental stewardship
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 and acquisition 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.
Reconciliation of Non-GAAP Financial Measures
Three months ended March 31,
2026
2025
Reported GAAP Net Income
$ 19,013
16,551
Adjustments:
(Gain)/loss on sale of real estate investments1
(172)
-
Expense for merger and acquisition activities1
730
254
Tax effect of above adjustments2
(156)
(71)
Adjusted Net Income (non-GAAP)
$ 19,415
$ 16,734
Reported GAAP Diluted Earnings Per Share
$ 0.49
0.49
Adjustments:
(Gain)/Loss on sale of real estate investments, net of tax
-
-
Expense for merger and acquisition activities, net of tax
0.01
0.01
Adjusted Diluted Earnings Per Share (non-GAAP)
$ 0.50
$ 0.50
1 Included in the "Administrative and general" and "Other, net" lines on the consolidated statements of comprehensive income.
2 The tax effect on all adjustments is calculated at the applicable statutory rate.
Disclaimer
H2O America published this content on April 29, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2026 at 13:33 UTC.