Analysis HTO
H2O America raised $374 million. The shares come later.
H2O America completed its full-option equity-unit financing. We trace the initial annual distributions and the normal 2029 common-share purchase commitment.
Ticker Byline
H2O America
H2O America owns regulated water utilities. A completed equity-unit financing funds its capital plan alongside the completed Quadvest acquisition and a normal future common-share purchase obligation.
- Ticker
- HTO
- Exchange
- XNAS
- SEC CIK
- 0000766829
H2O America (Nasdaq: HTO), formerly SJW Group, owns water utilities operating in California, Connecticut, Maine and Texas. Its businesses supply water and provide related services. Regulators determine the rates utilities can charge and when investment can begin earning an allowed return.
The company changed its name in May 2025. San Jose Water, Connecticut Water, Maine Water and the Texas operations remain part of the same corporate group.
Profit and per-share results diverge
| Measure | 2026 | 2025 |
|---|---|---|
| Revenue | $250.2 | $240.6 |
| GAAP operating income | $60.5 | $64.6 |
| GAAP net income | $43.0 | $45.1 |
| GAAP diluted EPS | $0.99 | $1.27 |
| Adjusted net income | $45.2 | $45.5 |
| Adjusted diluted EPS | $1.04 | $1.27 |
Adjusted results remove specified real-estate gains and acquisition, merger and integration costs, with tax adjustments. They differ from GAAP profit. Higher water costs, depreciation and acquisition-related expenses weighed on the quarter even as rate increases supported revenue.
For the first nine months, GAAP net income rose to $88.6 million from $86.4 million and adjusted net income rose to $95.3 million from $88.4 million. More shares spread those earnings across a larger ownership base. Actual September common shares were 48.3 million, versus 36.1 million at year-end.
Texas expansion and the annual outlook
Quadvest closed on October 1 for $542.7 million of cash consideration, expanding regulated and wholesale water and wastewater operations around Houston. Funding came from the March common-stock offering and settlement of part of an existing forward stock-sale agreement. Cibolo Valley remained pending in the October 26 outlook.
That outlook narrowed standalone annual adjusted EPS to $3.10–$3.16, preserving the $3.13 midpoint described in the company's original range. Including Quadvest, pending Cibolo Valley and their financing, management expected $2.91–$2.97. It attributed initial dilution to the period before new rates reflect the acquired assets and expected to file a consolidated Texas rate case in the first half of 2027.
The approximately $465 million annual infrastructure plan includes utility plant and capitalizable cloud costs. The $2.7 billion five-year plan also includes the two Texas acquisitions. Nine-month company-funded infrastructure investment was $325.1 million, while the cash-flow statement's company-funded utility-plant purchases were $304.1 million.
Cash dates and new financing
Nine-month operating cash was $184.7 million, versus $181.3 million. September cash of $573.0 million preceded the October acquisition payment and November unit sale. September long-term debt excluding its current portion was $1.881 billion, with another $7.9 million current and $200.3 million on lines of credit.
The November 3 sale included 7.475 million $50 corporate units, raising $373.75 million gross. Each pairs note funding with a common-stock purchase contract normally settling in November 2029. The notes mature in 2031. Initial annual distributions total 7.75%, split between 5.3% note interest and 2.45% contract payments.
The normal stock-settlement formula implies approximately 5.43 million–6.38 million future shares before adjustments. Future issuance, financing costs and the timing of allowed rate recovery can affect how investment growth reaches per-share earnings. Read the report on the completed financing for the latest comparison.
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