H2o America · NASDAQ:HTO
H2o America — Q4 2024 Earnings Presentation
37 slides from H2o America's earnings presentation, Feb 26, 2025
Slide 1: 2024 Financial Results Presentation
2024 Financial Results Presentation
Slide 2: On Today’s Call
On Today’s Call Eric W. Thornburg Andrew Walters Bruce A. Hauk Chair, President Chief Financial Officer Chief Operating Officer and CEO and Treasurer 2
Slide 3: Forward-Looking Statements
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 SJW Group and its subsidiaries that are based on current expectations, estimates, forecasts, and projections
Slide 4: Delivering on Our Earnings Growth Strategy in 2024
Delivering on Our Earnings Growth Strategy in 2024 • Regulatory Progress • Constructive outcome in San Jose Water 2025 to 2027 general rate case and deferral of cost of capital filing until 2026 • Increase in infrastructure recovery mechanism in Maine and filed a petition to unify Maine’s ten rate d
Slide 5: Work Smarter, Not Just Harder
Work Smarter, Not Just Harder • Challenges: • Aging pipe and other infrastructure • Evolving regulatory requirements • Climate change • Water system resiliency • Our Approach: • Long-term investment strategy • Financial discipline and steadfast commitment to affordability • Leverage our scale, opera
Slide 6: Financial Update
Financial Update Andrew Walters Chief Financial Officer and Treasurer 6
Slide 7: Financial Highlights
Financial Highlights 2024 EPS $2.0 billion1 $2.87 GAAP / $2.95 Adjusted 5-year CapEx Plan ~25% Increase from prior CapEx plan Adjusted Earnings Per Share $2.90 - $3.00 Extending 5% - 7% Earnings Growth through 2029 Nonlinear and anchored off 2022 reported EPS of $2.43 2024 Adjusted EPS 2025 Guidance
Slide 8: 2024 Financial Results
2024 Financial Results IN MILLIONS 2024 2023 CHANGE except for earnings per share (EPS) Revenue $748.4 $670.4 12% increase GAAP Net Income $94.0 $85.0 11% increase Adjusted Net Income1 $96.8 $83.9 15% increase Diluted EPS $2.87 $2.68 7% increase Adjusted Diluted EPS1 $2.95 $2.65 11% increase 1 See A
Slide 9: 2024 Adjusted Diluted EPS Bridge
2024 Adjusted Diluted EPS Bridge* *See Appendix for SJW Group’s reconciliations and disclosures for non-GAAP financial measures. 9
Slide 10: 2024 Revenue Increased 12%
2024 Revenue Increased 12% 10
Slide 11: 2024 Water Production Expenses Increased 14%
2024 Water Production Expenses Increased 14% 11
Slide 12: 2024 Other Operating Expenses Increased 8%
2024 Other Operating Expenses Increased 8% 12
Slide 13: 2024 Financing Activity and Income Tax Rate
2024 Financing Activity and Income Tax Rate • Approximately $87 million in gross equity proceeds raised at the market to fund growth and capital investment • $350 million bank lines of credit, $119 million drawn, leaving $231 million available • $160 million raised in 2024 through long-term debt off
Slide 14: 2025 Guidance
2025 Guidance 2025 Guidance1 Adjusted Diluted EPS (non-GAAP) $2.90 to $3.00 5-Year Capex Plan $2.0 billion2 Equity Issuance, Excluding Acquisition Growth $120M - $140M 25% increase from prior plan 2025 CapEx2 $473M3 • Long-term Growth Rate: 5% - 7% • Expect to be in the top half of the range • Nonli
Slide 15: SJW Group EPS - 2024 Actual to 2025 Guidance
SJW Group EPS - 2024 Actual to 2025 Guidance1 1 SJW Group’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 rep
Slide 16: Substantial Capital Plan Drives Earnings Growth
Substantial Capital Plan Drives Earnings Growth 25% increase in 5-Year capital plan 6.6% Net Utility Plant Growth Timely Recovery driven by infrastructure, PFAS and Through Regulatory Mechanisms2 additional water supply investments1 $2.0B $ 1.6B Forward-Looking Infrastructure Test Year Recovery Mech
Slide 17: State Updates
State Updates Bruce A. Hauk Chief Operating Officer 17
Slide 18: California Updates
California Updates 2025 – 2027 San Jose Water General Rate Case (GRC) • Approved on December 19, 2024 with new rates effective on January 1, 2025 2025 to 2027 GRC • Approves settlement agreement negotiated with Public Advocates Authorizes $53.1 million in Office that provides for continued delivery
Slide 19: California Updates
California Updates 2025 Cost of Capital filing deferred • One-year deferment granted, next filing due May 2026 • Maintains Water Cost of Capital Mechanism (WCCM) through 2026 Cost of Capital filing deferred • Expected return on equity (ROE) of 9.81% for 2025, 10.01% prior maintains 9.81% ROE to 20 b
Slide 20: Connecticut Updates
Connecticut Updates Water Infrastructure and Conservation Adjustment (WICA) • Largest WICA spend to date in 2024, $41.9 million WICA • WICA increase approved by the Connecticut Public Utilities WICA surcharge 3.43% Regulatory Authority (PURA) and effective October 1, 2024 effective October 1, 2024 •
Slide 21: Maine Updates
Maine Updates Rate Tariff Unification • Petitioned the Maine Public Utilities Commission (MPUC) to unify the company’s 10 rate districts on December 31, 2024 Rate unification application • Improve administrative efficiency filed with MPUC • Minimize regulatory lag • Addresses system needs across the
Slide 22: Texas Updates
Texas Updates • Drought conditions persisted in 2024 • Conservation measures in place Texas had the highest • Water usage down in 2024 compared to 2023 population growth of any U.S. state in the 2020 Census. • 6,000 acre-feet of additional water supply expected Texas Water serves the rapidly to be o
Slide 23: Substantial Infrastructure Investment
Substantial Infrastructure Investment $4731 million budgeted for infrastructure spending in 2025, ~34% Planned CapEx by State 2025 – 20291 ($M) increase over 2024 actual spend $1,019 • Distribution system investments in Texas to maximize available supply • PFAS treatment in California and $504 $391
Slide 24: Force for Good
Force for Good Eric W. Thornburg Chair, President and Chief Executive Officer 24
Slide 25: Force for Good
Force for Good • Scope 1 and Scope 2 emissions reduced nearly one-third since 2019 • On track to meet 50% reduction by 2030 • Connecticut Water Platinum recognition for construction safety • Recognized 21 years for safety consecutive years • SJW Group named one of ‘America’s Most Responsible Compani
Slide 26: Execution Strategy and Strong Leadership
Execution Strategy and Strong Leadership Ann Kelly, Chief Accounting Officer • Previously at American Electric Power Douwe Busschops, Chief Information Officer • Previously at Veolia North America 26
Slide 27: Questions
Questions 27
Slide 28: Appendix
2 : SW Group 28
Slide 29: PFAS Update
PFAS Update • Support U.S. EPA’s standards for PFAS in drinking water • Will comply with the new regulations within the time frame specified by the EPA • $300 million CapEx estimate for treatment at EPA’s finalized maximum contaminant levels • Party to class action settlements with PFAS manufacturer
Slide 30: 2023-25 Regulatory Filings Pending and Approved
2023-25 Regulatory Filings Pending and Approved Revenue Revenue State Docket # Type* Filing Date Order Date Status Requested Approved Comments (annualized) (annualized) CA Advice Letter 601 WCCM 11/14/23 Effective 01/01/24 WCCM trigger adjusting ROR for 10/13/23 2024 CA Advice Letter 603 Group Insur
Slide 31: 2023-25 Regulatory Filings Pending and Approved
2023-25 Regulatory Filings Pending and Approved Revenue Revenue State Docket # Type* Filing Date Order Date Status Requested Approved Comments (annualized) (annualized) ME 2023-00065 GRC Biddeford-Saco 3 03/31/23 01/05/24 Effective 01/01/24 $2.9M $2.6M Retroactive to 01/01/24 ME 2023-00163 WISC Camd
Slide 32: 4Q 2024 Adjusted Diluted EPS Bridge
4Q 2024 Adjusted Diluted EPS Bridge* *See Appendix for SJW Group’s reconciliations and disclosures for non-GAAP financial measures. 32
Slide 33: Revenue Increased by 15% Compared to 4Q 2023
Revenue Increased by 15% Compared to 4Q 2023 33
Slide 34: Water Production Expenses Increased 15% From 4Q 2023
Water Production Expenses Increased 15% From 4Q 2023 34
Slide 35: Other Operating Expenses Increased 14% From 4Q 2023
Other Operating Expenses Increased 14% From 4Q 2023 35
Slide 36: Non-GAAP Financial Measures
Non-GAAP Financial Measures SJW Group'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 t
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Three months ended December 31, Twelve months ended December 31, 2024 2023 2024 2023 Reported GAAP Net Income $ 22,920 18,949 $ 93,967 84,987 Adjustments: Gain (loss) on sale of real estate investments1 (397) — 572 (1,473) Expense for merger and acquisit