H2o America · NASDAQ:HTO
H2o America — Q3 2024 Earnings Presentation
33 slides from H2o America's earnings presentation, Oct 28, 2024
Slide 1: Financial Results Presentation Third Quarter 2024
Financial Results Presentation Third 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 (9) catastrophic events such as fires, earthquakes, explosions, floods, This presentation contains forward-looking statements within the ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, meaning of the Private Securities Litigation Reform Act
Slide 4: Delivered on Our Earnings Growth Strategy in 3Q
Delivered on Our Earnings Growth Strategy in 3Q • Regulatory Progress • Settlement agreement negotiated with the Public Advocates Office in California general rate case filed with CPUC • Infrastructure recovery mechanism (IRM) filed in Texas, and IRM surcharges approved in Connecticut and Maine • Ca
Slide 5: Meeting the Challenges Ahead
Meeting the Challenges Ahead 5
Slide 6: 3Q 2024 Financial Results (GAAP)
3Q 2024 Financial Results (GAAP) • Rate increases in California and Connecticut service areas were the largest contributors to the increase in revenue, including pass-through water costs • Higher water production expenses from increased average costs IN MILLIONS 3Q 2024 3Q 2023 CHANGE except for ear
Slide 7: 3Q 2024 Financial Results (Non-GAAP)
3Q 2024 Financial Results (Non-GAAP) • 3Q merger and acquisition expenses and real estate transactions that netted a $0.3 million after-tax loss have been excluded from non-GAAP results IN MILLIONS 3Q 2024 3Q 2023 CHANGE except for earnings per share (EPS) Revenue $225.1 $204.8 10% increase Adjusted
Slide 8: 3Q 2024 Diluted EPS Bridge
3Q 2024 Diluted EPS Bridge *See Appendix for SJW Group’s reconciliations and disclosures for non-GAAP financial measures. 8
Slide 9: Revenue Increased by 10% Compared to 3Q 2023
Revenue Increased by 10% Compared to 3Q 2023 9
Slide 10: Water Production Expenses Increased 16% From 3Q 2023
Water Production Expenses Increased 16% From 3Q 2023 10
Slide 11: Other Operating Expenses Increased 8% From 3Q 2023
Other Operating Expenses Increased 8% From 3Q 2023 11
Slide 12: YTD 2024 Financial Results (GAAP)
YTD 2024 Financial Results (GAAP) • Rate increases were the largest contributor to the increase in revenue • Each utility contributed to the revenue increase through one or more means, including infrastructure recovery and customer growth • Higher water production expenses from increased average cos
Slide 13: YTD 2024 Financial Results (Non-GAAP)
YTD 2024 Financial Results (Non-GAAP) • 2024 real estate transactions and merger and acquisition expenses that netted a $0.9 million after-tax loss have been excluded in non-GAAP results IN MILLIONS YTD 2024 YTD 2023 CHANGE except for earnings per share (EPS) Revenue $550.6 $499.0 10% increase Adjus
Slide 14: YTD 2024 Diluted EPS Bridge
YTD 2024 Diluted EPS Bridge *See Appendix for SJW Group’s reconciliations and disclosures for non-GAAP financial measures. 14
Slide 15: 3Q 2024 Financing Activity and Income Tax Rate
3Q 2024 Financing Activity and Income Tax Rate • Approximately $65 million in gross equity proceeds raised at the market year to date • $350 million bank lines of credit, $93 million drawn, leaving $257 million available • $125 million raised in 3Q through long-term debt offerings to pay down line o
Slide 16: California Updates
California Updates 2025 – 2027 San Jose Water General Rate Case (GRC) • Settlement agreement negotiated with Public Advocates Office filed on August 19, 2024 2025 to 2027 GRC • Two policy items to be fully litigated Application filed with CPUC on January 2, 2024 • Constructive agreement provides for
Slide 17: California Updates
California Updates Cupertino Agreement • New 12-year agreement with the City of Cupertino effective on October 1, 2024, can be extended eight years AMI Benefits • Replaces previous agreement Customer Near real-time water usage Advanced Metering Infrastructure (AMI) Installation information Earlier i
Slide 18: Connecticut Updates
Connecticut Updates Water Infrastructure and Conservation Adjustment (WICA) • WICA increase approved by the Connecticut Public Utilities WICA Regulatory Authority (PURA) and effective October 1, 2024 WICA surcharge is 3.43% • Annualized revenue increase of $4.3 million for $41.9 million in effective
Slide 19: Maine Updates
Maine Updates General Rate Case • On October 25, 2024, GRC application filed for Consolidation of Rate Tariffs Camden/Rockland Division requesting a revenue increase of approximately $1.1 million, or 15.9% Plan to petition the Maine • Decision expected in 2Q 2025 Public Utilities Commission regardin
Slide 20: Texas Updates
Texas Updates System Improvement Charge • Application filed on September 12, 2024, requesting Texas had the highest $4.3 million in annualized revenue; decision targeted population growth of any U.S. state in the 2020 Census.1 first half of 2025 Texas Water serves the rapidly 3009 Water System ~270
Slide 21: Reaffirming Non-GAAP Guidance
Reaffirming Non-GAAP Guidance 2024 Guidance1 Diluted EPS (GAAP) $2.65 - $2.75 2024 Adjusted EPS Forecast Adjusted Diluted EPS (non-GAAP) $2.68 - $2.78 (non-GAAP)3 Equity Issuance, Excluding Acquisition Growth $55M - $65M $2.68 - $2.78 Five-Year CapEx $1.6B2 • Remaining Factors Underlying 2024 Guidan
Slide 22: Force for Good
Force for Good • SJW Group named one of America’s Greenest Companies 2025 by Newsweek • San Jose Water receives grant through Grid Resilience and Innovation Partnerships program for advancing clean energy infrastructure • Greenhouse gas emission reduction of 20% 2019 to 2022 • Less than 10% non-reve
Slide 23: Welcome and Thank You
Welcome and Thank You Connecticut Public Utilities Regulatory Authority Welcome: • Commissioner David Arconti Thank you: • Commissioner Jack Betkoski 23
Slide 24: Questions
2 : S/W Group 24
Slide 25: Appendix
2 : SW Group 2%
Slide 26: 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 27: 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 28: 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
Slide 29: 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 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2024 Earnings Guidance Estimated Diluted EPS Guidance on a GAAP Basis $ 2.65 to 2.75 Adjustments: Loss on sale of real estate investments, net of tax 0.02 0.02 Expense for merger and acquisition activities 0.01 0.01 Adjusted EPS Guidance (non-GAAP) $ 2.6
Slide 31: YTD 2024 Revenue Increased 10%
YTD 2024 Revenue Increased 10% 31
Slide 32: YTD 2024 Water Production Expenses Increased 14%
YTD 2024 Water Production Expenses Increased 14% 32
Slide 33: YTD 2024 Other Operating Expenses Increased 6%
YTD 2024 Other Operating Expenses Increased 6% 33