H2O America Q1 FY2025 earnings call

Key points include: Strong financial results with GAAP net income up 41% and adjusted net income up 43% in Q1 2025. Rate cases in San Jose Water, Connecticut, Maine, and Texas were either delivered, approved, or progressing. $78 million invested in infrastructure in Q1, on track for 2025 capital plan. Leadership transition is progressing smoothly, with a new CFO to take over in July and a new CHRO joining last week. Focus on operating efficiency, business transformation, and Advanced Metering Infrastructure (AMI) with investments in standardized platforms and AMI projects in various states.

In the first quarter of 2025, SJW Group reported revenue of $167.6 million, a 12% increase from the $149.4 million in 2024. This growth was primarily due to rate increases in California and Connecticut, pass-through water costs, and customer usage. San Jose Water's 2025-2027 general rate case was effective January 1. Connecticut Waters had approved water infrastructure and conservation adjustment filings. Maine Water's rate case for the Camden Rockland division was progressing. Texas Water had second system improvement charge applications before regulators. $78 million was invested in water and wastewater utility infrastructure across 4 states in Q1, on track for the 2025 capital plan.

Affirmed 2025 adjusted diluted EPS guidance of $2.90 to $3. Affirmed 5%-7% earnings growth rate through 2029, expecting to be in the top half. Affirmed equity issuances of $120 million to $140 million planned through the ATM and a $473 million capital plan in 2025. Also, affirmed the long-term growth strategy focusing on timely recovery of a $2 billion 5-year capital plan.

Regulatory changes could materially impact results. Texas drought could affect water usage and revenue. Economic conditions could impact the cost of materials and components used in infrastructure investments.

Q: Richard Sunderland asked about revenue uptick, Texas drought impact, and WQTA earnings impact.

A: Ann Kelly stated they are trending on plan for 2025, expecting to be in the $2.90 to $3 range. Eric Thornburg mentioned Texas drought was assumed in the 2025 business plan. Bruce Hauk discussed WQTA's potential earnings impact, noting it's a mechanism to recover environmental improvement costs with a 10% cap.

Q: Angie Storozynski inquired about M&A opportunities.

A: Andrew Walters responded there are opportunities in states SJW Group operates in, particularly Texas, with continued activity expected. Emphasized focus on financial discipline to ensure accretive acquisitions within stated goals