H2O America (SJW) Q3 2024 earnings summary

Executive summary

• Achieved 10% year-over-year revenue growth and 7% net income growth in Q3 2024, driven by rate increases, customer growth, and regulatory progress across all utilities.

• Adjusted diluted EPS rose to $1.18 in Q3 2024, up 4% year-over-year; year-to-date adjusted net income was $72.0M, up 11%.

• Invested $252M in infrastructure year-to-date, representing 76% of the 2024 capital budget.

• Recognized for sustainability and workplace excellence, including being named one of America's Greenest Companies 2025 and Connecticut Water's Top Workplace award.

• Continued focus on affordability, operational efficiency, and stakeholder engagement to address industry challenges such as new water quality standards and aging infrastructure.

Financial highlights

• Q3 2024 revenue was $225.1M (up 10% year-over-year); net income was $38.7M (up 7%); diluted EPS was $1.17 (up 4%).

• Adjusted Q3 2024 net income was $39.0M; adjusted diluted EPS was $1.18.

• Year-to-date 2024 revenue reached $550.6M (up 10%); net income was $71.0M (up 8%); adjusted net income was $72.0M; adjusted diluted EPS was $2.21.

• Water production expenses increased 16% in Q3 and 14% year-to-date, mainly from higher supply costs and usage.

• Other operating expenses rose 8% in Q3 and 6% year-to-date, driven by maintenance, admin, and depreciation.

Outlook and guidance

• Reaffirmed 2024 GAAP diluted EPS guidance of $2.65–$2.75 and adjusted EPS of $2.68–$2.78.

• Five-year capital expenditure plan of $1.6B–$1.62B, including $230M for PFAS treatment.

• Long-term EPS growth rate targeted at 5%–7%, anchored off 2022 EPS of $2.43.

• Guidance excludes real estate sales and M&A activities; Texas drought and usage restrictions may impact revenue.

• Pending regulatory decisions in California and Maine may impact future rates.