H2o America · NASDAQ:HTO
H2o America — Q1 2024 Earnings Presentation
23 slides from H2o America's earnings presentation, Apr 26, 2024
Slide 1: Financial Results Presentation First Quarter 2024
Financial Results Presentation First Quarter 2024
Slide 2: On Today's Call
On Today’s Call Eric W. Thornburg Andrew Walters Chair, President Chief Financial Officer and CEO and Treasurer 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements Safe Harbor This presentation contains forward-looking statements within the (9) catastrophic events such as fires, earthquakes, explosions, floods, meaning of the Private Securities Litigation Reform Act of 1995, as ice storms, tornadoes, hurricanes, terrorist acts, physi
Slide 4: Delivered on Our Earnings Growth Strategy in 1Q
Delivered on Our Earnings Growth Strategy in 1Q • Constructive Regulatory Outcomes • Maine Water Biddeford-Saco Division general rate case (GRC) • Texas system improvement charge • Capital Expenditure (CapEx) • $69 million invested year to date, or approximately 21% of $332 million budgeted in 2024
Slide 5: Financial Results: 1Q 2024
Financial Results: 1Q 2024 • Rate increases were the largest contributor to the increase in revenue • Connecticut and California have usage revenue protection mechanisms • Higher water production expenses IN MILLIONS 1Q 2024 1Q 2023 CHANGE except for earnings per share (EPS) Revenue $149.4 $137.3 9%
Slide 6: 1Q 2024 Diluted EPS Bridge
1Q 2024 Diluted EPS Bridge Change in EPS ($): Q1 2024 - Q1 2023 $0.05 rae | o $(0.13) | | $(0.05) || $(0.08) || (0.04) $0.36 $(0.04) $(0.02) | $(0.03) 10 2023 Revenue Higher Usage Higher Depreciation and Interest Expense Higher Admin & Higher Other 10 2024 Increases Production Costs Amortization Gen
Slide 7: Revenue Compared to 1Q 2023
Revenue Compared to 1Q 2023 Change in Revenue ($M): Q1 2024 - Q1 2023 $10.0 $1.8 $0.8 $149.4 $137.3 | $(0.5) 10 23 Revenue Increases Higher Usage Customer Growth Other 1024 GWeroup 7
Slide 8: Water Production Expenses Increased 10% From 1Q 2023
Water Production Expenses Increased 10% From 1Q 2023 8
Slide 9: Other Operating Expenses Increased 7% From 1Q 2023
Other Operating Expenses Increased 7% From 1Q 2023 9
Slide 10: 1Q 2024 Financing Activity and Income Tax Rate
1Q 2024 Financing Activity and Income Tax Rate • Approximately $7 million in equity issued at the market in 1Q 2024 • $350 million bank lines of credit, $211 million drawn, leaving $139 million available • 6.54% average borrowing rate on credit advances in 1Q 2024, 5.74% in 1Q 2023 • Effective incom
Slide 11: California Updates
California Updates • 2025 - 2027 GRC application filed with the California Public Utilities Commission (CPUC) on January 2, 2024 • Proposes three-year $540 million CapEx program GRC Schedule ▪ Addresses per- and polyfluoroalkyl substances (PFAS) Application filed with CPUC on ▪ Reduces operating exp
Slide 12: California Updates
California Updates • Water Cost of Capital Mechanism (WCCM) adjustment effective January 1, 2024 • Return on equity (ROE) increase of 70 basis points (bps) to 10.01%, WCCM Adjustment less 20 bps for reauthorization of the Water Conservation Memorandum Account (WCMA), for a new ROE of 9.81% Change in
Slide 13: Connecticut Updates
Connecticut Updates • Filed GRC with Public Utilities Regulatory Authority (PURA) on October 3, 2023 • Requesting $21.4 million, or 18.1%, annualized revenue increase Water Infrastructure and • Proposing expansion of customer assistance programs Conservation Adjustment (WICA) • Decision expected in
Slide 14: Maine Updates
Maine Updates • On January 5, 2024, the Maine Public Utilities Commission (MPUC) approved a stipulation agreement between Maine Water and the Office of the Public Advocate (OPA) on the Biddeford-Saco Division Biddeford-Saco Division (BSD) rate application filed in March GRC 2023 Application filed re
Slide 15: Texas Updates
Texas Updates • Strong developer interest in our service area • ~22,0001 outstanding development units (potential connections) Texas had the highest • Serves three of the five fastest-growing counties in the population growth of any U.S. U.S.2 state in the 2020 Census. • >28,000 water connections an
Slide 16: 2024 Guidance Reaffirmed
2024 Guidance Reaffirmed Guidance 2024 2024 Diluted EPS $2.68 - $2.78 EPS Forecast Equity issuance, excluding acquisition growth $55M - $65M $2.68 - $2.781 Five-Year CapEx $1.6B2 • Factors underlying 2024 guidance: • ROE increase in California from 9.31% to 9.81% (net of a 20 bps reduction for reimp
Slide 17: 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 • $230 million CapEx estimate for treatment at EPA’s finalized maximum contaminant levels • Party to class action settlements with PFAS manufacturer
Slide 18: Force for Good
Force for Good • Scope 1 and Scope 2 greenhouse gas emissions reduced 20% from 2019 to 2022 • USA Today awards Connecticut Water as a Top Workplace USA for 2024 • Only two water utilities recognized • Named to the 2024 Newsweek Excellence Index • Highest-ranked water utility 18
Slide 19: Welcome and Thank You
Welcome and Thank You California Public Utilities Commission • Commissioner Matt Baker • Commissioner Genevieve Shiroma San Jose Water Company Tanya Moniz-Witten • Tanya Moniz-Witten, President SJW Group • Nazan Riahei, Vice President, Corporate Communications Nazan Riahei 19
Slide 20: Questions
Questions 20
Slide 21: Appendix
Appendix 21
Slide 22: Meeting Long-Term Investment Needs
Meeting Long-Term Investment Needs $1.6 billion in infrastructure investment planned for 2024 - 2028 Timely Recovery 2024 Budgeted CapEx Through Regulatory Mechanisms in 20241 in millions ~65% Texas California $49 $169 Maine $20 $3322 Connecticut $94 ~35% 1 Based on budgeted investments or filings t
Slide 23: 2023/24 Regulatory Filings Pending and Approved
2023/24 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 10/13/23 11/14/23 Effective 01/01/24 WCCM trigger adjusting ROR for 2024 CA Advice Letter 603 Group Insur