H2O America (SJW) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 rose 41% year-over-year to $16.6 million GAAP and $16.7 million adjusted, driven by rate increases and prudent cost management.

• Operating revenue increased 12% to $167.6 million, supported by rate hikes, higher usage, and customer growth.

• Adjusted diluted EPS was $0.50, up 39% year-over-year; GAAP diluted EPS was $0.49, up 36%.

• Infrastructure investment reached $78 million in Q1, on track for a $473 million full-year capital plan and a $2 billion five-year plan.

• Leadership transition is progressing, with new CEO and CFO effective July 1, and a new Chief Human Resources Officer appointed.

Financial highlights

• Q1 2025 revenue was $167.6 million, up 12% from Q1 2024, mainly due to rate increases in California and Connecticut.

• GAAP net income was $16.6 million, a 41% increase year-over-year; adjusted net income was $16.7 million, up 43%.

• Adjusted diluted EPS was $0.50, a 39% increase; GAAP diluted EPS was $0.49, up 36%.

• Water production expenses rose 14% to $59 million, mainly from higher wholesaler costs and production volume.

• General administrative expenses increased by $2 million, mainly due to customer credit losses and insurance costs.

Outlook and guidance

• 2025 adjusted diluted EPS guidance of $2.90–$3.00 reaffirmed, with expectations to be in the top half of the range.

• Long-term EPS growth rate of 5%-7% through 2029 affirmed.

• $473 million capital plan for 2025 underway, with a five-year $2 billion plan focused on timely recovery and regulatory relationships.

• Management expects to meet 2025 customer demand with existing water supplies in all service areas, despite Texas drought.

• Significant investment planned for PFAS treatment and infrastructure renewal.