H2o America · NASDAQ:HTO
H2o America — Q2 2024 Earnings Presentation
31 slides from H2o America's earnings presentation, Jul 25, 2024
Slide 1: Financial Results Presentation Second Quarter 2024
Financial Results Presentation Second Quarter 2024
Slide 2: On Today's Call
On Today’s Call Eric W. Thornburg Andrew Walters Chair, President Chief Financial Officer, and CEO Treasurer, and Interim Principal Accounting Officer 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 2Q
Delivered on Our Earnings Growth Strategy in 2Q • Regulatory Progress • Agreement in Principle on all-party settlement agreement in California general rate case (GRC) • Completed Connecticut GRC with notable improvement from proposed to final decision • A Force for Good • Secured state funding in Ca
Slide 5: Our People Make the Difference
Our People Make the Difference 5
Slide 6: 2Q 2024 Financial Results (GAAP)
2Q 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, step changes and customer growth • Higher water production expenses from increase
Slide 7: 2Q 2024 Financial Results (non-GAAP)
2Q 2024 Financial Results (non-GAAP) • 2Q real estate transactions that netted a $0.9 million pre-tax loss have been excluded from non-GAAP results IN MILLIONS 2Q 2024 2Q 2023 CHANGE except for earnings per share (EPS) Revenue $176.2 $156.9 12% increase Adjusted Net Income1 $21.3 $18.3 17% increase
Slide 8: 2Q 2024 Diluted EPS Bridge
2Q 2024 Diluted EPS Bridge *See Appendix for SJW Group’s reconciliations and disclosures for non-GAAP financial measures. 8
Slide 9: Revenue Increased by 12% Compared to 2Q 2023
Revenue Increased by 12% Compared to 2Q 2023 9
Slide 10: Water Production Expenses Increased 14% From 2Q 2023
Water Production Expenses Increased 14% From 2Q 2023 10
Slide 11: Other Operating Expenses Increased 2% From 2Q 2023
Other Operating Expenses Increased 2% From 2Q 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, step changes and customer growth • Higher water production expenses from increas
Slide 13: YTD 2024 Financial Results (Non-GAAP)
YTD 2024 Financial Results (Non-GAAP) • 2Q 2024 real estate transactions that netted a $0.9 million pre-tax loss have been excluded in non-GAAP results IN MILLIONS 2Q 2024 2Q 2023 CHANGE except for earnings per share (EPS) Revenue $325.6 $294.2 11% increase Adjusted Net Income1 $33.0 $28.8 15% incre
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: 2Q 2024 Financing Activity and Income Tax Rate
2Q 2024 Financing Activity and Income Tax Rate • Approximately $33 million in gross equity proceeds was raised at the market YTD 2024 • $350 million bank lines of credit, $217 million drawn, leaving $133 million available • 6.53% average borrowing rate on credit advances in 2Q 2024, 5.96% in 2Q 2023
Slide 16: California Updates
California Updates • 2025 - 2027 San Jose Water GRC • Agreement in principle on all-party settlement agreement • Parties are the Public Advocates Office and Water Rate Advocates GRC Schedule for Transparency, Equity, and Sustainability (WRATES) Application filed with CPUC on • Two policy items to be
Slide 17: California Updates
California Updates • Advanced Metering Infrastructure (AMI) installation 2024 - 2026 • Approximately $100 million project outside the GRC CapEx AMI Benefits with $27 million investment projected in 2024 Customer • Advice letter 610/610A requesting approximately $4.8 Near real-time water usage inform
Slide 18: Connecticut Updates
Connecticut Updates • Final Decision on GRC issued by Public Utilities Regulatory Authority (PURA) on June 28, 2024, effective July 1, 2024 • Provides: Water Infrastructure and Conservation Adjustment • $6.5 million annualized revenue increase with opportunity for additional (WICA) • 9.3% return on
Slide 19: Maine and Texas Updates
Maine and Texas Updates • Maine: • Two Water Infrastructure Charge (WISC) applications filed on June 24, 2024 Texas had the highest population growth of any U.S. state in the 2020 Census. • Texas: Texas Water serves the rapidly • Portions of service areas in severe to extreme drought and water growi
Slide 20: 2024 Guidance
2024 Guidance 2024 Guidance1 2024 Adjusted Diluted EPS (GAAP) $2.66 - $2.76 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 • Factors underlying 2024 guidance: • ROE increase in Cali
Slide 21: Force for Good
Force for Good • San Jose Water secured $15.3 million in customer financial assistance from the State of California water and wastewater arrearage program • The Connecticut PURA approved Connecticut Water’s request to expand eligibility for the Water Rate Assistance Program to more customers with in
Slide 22: Questions
Questions 22
Slide 23: Appendix
Appendix 23
Slide 24: 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 25: 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 26: 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 27: 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 measures representing GAAP earnings adjusted to exclude
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 2024 Earnings Guidance Estimated Diluted EPS Guidance on a GAAP Basis $ 2.66 to 2.76 Adjustments: Loss on sale of real estate investments, net of tax 0.02 0.02 Adjusted EPS Guidance (non-GAAP) $ 2.68 to 2.78 Three months ended June 30, Six months ended J
Slide 29: YTD 2024 Revenue Increased 11%
YTD 2024 Revenue Increased 11% 29
Slide 30: YTD 2024 Water Production Expenses Increased 12%
YTD 2024 Water Production Expenses Increased 12% 30
Slide 31: YTD 2024 Other Operating Expenses Increased 5%
YTD 2024 Other Operating Expenses Increased 5% 31