SJW Corp ((HTO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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H2O America’s recent earnings call painted a picture of robust financial health and strategic foresight, underscored by notable earnings per share (EPS) growth and successful mergers and acquisitions (M&A). While the company celebrated these achievements, it also acknowledged challenges such as rising operating costs and uncertainties in regulatory approvals and acquisitions.
Strong Financial Performance
H2O America reported an impressive adjusted EPS of $1.27 for the third quarter of 2025, marking an 8% increase from the same period in 2024. The year-to-date adjusted EPS stood at $2.53, a 14% rise over the previous year. The company also adjusted its 2025 guidance range for adjusted diluted EPS to $2.95 to $3, reflecting confidence in achieving the upper half of its original projections.
Infrastructure and M&A Developments
The company has made significant strides in infrastructure investment, allocating $358 million towards water and wastewater utilities, which accounts for 74% of its revised $486 million budget. Noteworthy deals include the transformational Quadvest acquisition and the purchase of the Cibolo Valley wastewater treatment plant in Texas, signaling H2O America’s commitment to expanding its footprint.
Recognition for Sustainability Efforts
H2O America was once again recognized by Newsweek as one of America’s greenest companies. The company achieved a remarkable 43% reduction in Scope 1 and 2 emissions from its 2019 baseline and boosted solar generation by 73%, reinforcing its dedication to sustainability.
Increased Operating Expenses
The earnings call also highlighted a 9% rise in other operating expenses, attributed to increased pension costs, salaries, wages, and other inflationary pressures. This increase underscores the challenges of managing costs in a dynamic economic environment.
Higher Water Production Expenses
Water production expenses saw a 3% increase, primarily driven by higher costs for purchased water and groundwater extraction. This reflects the ongoing challenges in managing production costs amidst fluctuating resource prices.
Regulatory and Acquisition Uncertainties
The approval process for the Quadvest acquisition is still in its early stages, with formal approval anticipated by mid-2026. Additionally, there is uncertainty surrounding the potential acquisition of Aquarion, pending regulatory approval, which could impact future growth strategies.
Forward-Looking Guidance
Looking ahead, H2O America reaffirmed its guidance for a 5% to 7% EPS compound annual growth rate (CAGR) through 2029, excluding impacts from the pending Quadvest acquisition, which is expected to be accretive by 2028. The company also highlighted the approval of infrastructure surcharges in Connecticut and a new rate design proposal in Maine, indicating positive regulatory developments.
In summary, H2O America’s earnings call reflected a positive outlook with strong financial performance and strategic investments in infrastructure and sustainability. Despite challenges such as rising costs and regulatory uncertainties, the company remains confident in its growth trajectory and commitment to sustainability.