H2o America · NASDAQ:HTO
H2o America — Q3 2023 Earnings Presentation
31 slides from H2o America's earnings presentation, Oct 30, 2023
Slide 1: Financial Results Presentation Third Quarter 2023
Financial Results Presentation Third Quarter 2023
Slide 2: On Today's Call
On Today’s Call Eric W. Andrew Walters Thornburg Chief Financial Officer Chair, President and Treasurer and CEO 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements Safe Harbor This presentation contains forward-looking statements within (9) catastrophic events such as fires, earthquakes, explosions, the meaning of the Private Securities Litigation Reform Act of floods, ice storms, tornadoes, hurricanes, terrorist acts, 1995, as amend
Slide 4: Delivering on Our Growth Strategy in 2023
Delivering on Our Growth Strategy in 2023 • Constructive regulatory outcomes • Connecticut Water Infrastructure and Conservation Adjustment (WICA) approved and effective October 1 • California Water Conservation Memorandum Account (WCMA) reimplementation approved, retroactive to April 20, 2023 • Cus
Slide 5: Future Growth Strategy
Future Growth Strategy • Substantial CapEx Investments • Five-year plan to invest $1.6 billion in water/wastewater infrastructure and PFAS remediation, subject to regulatory approval • Managing OpEx • Investment in infrastructure to manage OpEx • Constructive regulatory outcomes • California Water C
Slide 6: Financial Results: 3Q 2023
Financial Results: 3Q 2023 • Quarter-over-quarter results comparison was impacted by the delay in San Jose Water Company’s 2022 to 2024 general rate case decision • Reimplementation of WCMA and Water Conservation Expense Memorandum Account (WCEMA) not reflected in 3Q results • Customer usage down in
Slide 7: 3Q 2023 Diluted EPS Bridge
3Q 2023 Diluted EPS Bridge Change in EPS ($): Q3 2023 - Q3 2022 $0.19 $0.62 7 7 (0:12) || $(0.09) iz $1.13 $(0.07) $(0.01) $0.82 30.2022 Revenue Increases Higher Usage, Net Water Supply Costs Income Tax Regulatory _Interest Expense Other 30.2023 & Mix Expense Mechanisms SWeroup 7
Slide 8: Revenue Increased 16% From 3Q 2022
Revenue Increased 16% From 3Q 2022 8
Slide 9: Water Production Expenses Increased 12% From 3Q 2022
Water Production Expenses Increased 12% From 3Q 2022 9
Slide 10: Other Operating Expenses Increased 1% From 3Q 2022
Other Operating Expenses Increased 1% From 3Q 2022 10
Slide 11: Financial Results: YTD 2023
Financial Results: YTD 2023 • Year-to-date results comparison was impacted by the delay in San Jose Water Company’s 2022 to 2024 general rate case decision • WCMA and WCEMA not reflected in results from April 11 to September 30, 2023 IN MILLIONS YTD 2023 YTD 2022 CHANGE except for EPS Revenue $499.0
Slide 12: YTD 2023 Diluted EPS Bridge
YTD 2023 Diluted EPS Bridge 12
Slide 13: 2023 YTD Financing Activity and Income Tax Rate
2023 YTD Financing Activity and Income Tax Rate • $76.8 million in equity issued at the market • $11.8 million in 3Q • Raised $50 million target for general corporate purposes • Additional amount raised for acquisitions closed in 3Q23 • $221.6 million available on bank lines of credit, and $128.4 mi
Slide 14: California Updates
California Updates • WCCM 2024 • Advice Letter 601 filed on October 13, notifying CPUC that 2024 WCCM was triggered on September 30, 2023 2024 WCCM • Advice Letter filing expected in December with proposed WCCM-adjusted rates to be effective January 1, 2024 Adjustment • ROE of 10.01% on January 1, 2
Slide 15: California Updates
California Updates • Water Supply Mix Full Cost Balancing Account (FCBA) • FCBA authorized retroactive to January 1, 2022 • CPUC’s authorization recognizes challenge with predicting Customers benefiting water supply availability and benefits to customers and utility from FCBA • Tracks actual versus
Slide 16: Connecticut Updates
Connecticut Updates • General rate case (GRC) filed with Public Utilities Regulatory Authority (PURA) on October 3, 2023 • Requesting $21.4 million, or 18.1%, annualized revenue Connecticut Water WICA increase • Proposing expansion of customer assistance programs 7.38% cumulative WICA as of October
Slide 17: Maine Updates
Maine Updates • $1.5 million annualized temporary rate increase authorized by Maine Public Utilities Commission in the Biddeford-Saco division on August 25, 2023 Maine Water WISC • Related to the rate filing on March 31, 2023 Water Infrastructure • Requests annualized revenue increase of $2.9 millio
Slide 18: Texas Updates
Texas Updates • Closed on two significant acquisitions on August 14, 2023 • KT Water Development by Texas Water Company • 570 customer connections • Public Utilities Commission of Texas (PUCT) expected to provide final approval in 4Q23 • KT Water Resources by Texas Water Resources • Texas Water Reso
Slide 19: Texas Updates
Texas Updates • Growing interest from developers in our service area as outstanding development units (potential Texas had the highest connections) increase to 22,000 units from 15,000 at population growth of any U.S. year-end 20221 state in the 2020 Census. • Connections quadrupled since 2006 Texas
Slide 20: Guidance Increased
Guidance Increased Guidance 2023 Diluted EPS $2.65 - $2.701 Equity issuance, excluding acquisition growth $40 - $50 million 5-Year CapEx $1.6B2 • Factors underlying 2023 guidance increase: • Executed on initiatives implemented to address anticipated challenges • Higher customer water usage • Income
Slide 21: Commitment to Sustainability
Commitment to Sustainability • Infrastructure investments reducing greenhouse gas emissions and operating expenses • Owned solar generation in California and Connecticut • 6,197 MWh/year by year-end 2024 • Generating annual operating expense savings • Water system efficiencies • Enterprise wide proc
Slide 22: ESG Updates and Awards
ESG Updates and Awards • MSCI Rating: ‘A’ from ‘BBB’ • GRESB public disclosure assessment • Ranked in the top third of our comparison group • Institutional Shareholder Services • B corporate rating – Prime Status • Top Workplace in Connecticut • As voted by employees • National Association of Clean
Slide 23: Welcome
Welcome SJW Group Board • Director Denise L. Kruger Texas Water Company • President Aundrea Williams 23
Slide 24: Questions
Questions 24
Slide 25: Appendix
Appendix 25
Slide 26: PFAS Update
PFAS Update • Supporting U.S. EPA’s proposed standard for per- and polyfluoroalkyl substances (PFAS) in drinking water • Part of class action settlements against PFAS manufacturers for approximately $11.5 billion • Advocating that all affected water and wastewater utilities have access to available
Slide 27: 2023 Regulatory Filings Pending and Approved
2023 Regulatory Filings Pending and Approved Order Revenue Revenue State Docket # Type* Filing Date Date Status Requested Approved Comments (annualized) (annualized) CA AL 586 GRC 11/18/22 Effective 01/01/23 $18.4M $18.4M CA A2105004 Cost of Capital 05/03/21 6/29/23 Effective 07/31/23 ($0.4M) ($0.4M
Slide 28: 2023 Regulatory Filings Pending and Approved cont'd
2023 Regulatory Filings Pending and Approved cont’d Order Revenue Revenue State Docket # Type* Filing Date Date Status Requested Approved Comments (annualized) (annualized) CT 20-12-30WI04 2022 WICA Rec. 01/25/23 03/29/23 Effective 04/01/23 $(173K) $(173K) Reconciles 2022 over 12 mos CT 20-12-30WI05
Slide 29: YTD Revenue Increased 11%
YTD Revenue Increased 11% Change in Revenue ($M): YTD 2023 - YTD 2022 $54.7 $3.0 $0.1 $499.0 | | $(7.3) $(0.8) YTD 2022 Revenue Increases Customer Growth Other Lower Usage Regulatory Mechanisms YTD 2023 SW Group) 29
Slide 30: YTD Water Production Expenses Increased 7%
YTD Water Production Expenses Increased 7% 30
Slide 31: YTD Other Operating Expenses Increased 4%
YTD Other Operating Expenses Increased 4% 31