H2O America (SJW) Q4 2025 earnings summary

Executive summary

• Delivered 2025 diluted EPS of $2.92 and adjusted diluted EPS of $2.99, near the top end of guidance, reflecting strong strategic and financial execution.

• Announced transformative Quadvest acquisition, expected to add $483.6 million to rate base and significantly expand Texas operations; Cibolo Valley acquisition also progressing.

• Achieved record $501 million in CapEx in 2025, a 41% increase over 2024, with a 5-year CapEx plan of $2.7 billion (31% higher than prior plan).

• Increased quarterly dividend by 4.8%, marking the 58th consecutive annual increase, with $1.76 per share annualized for 2026.

• Updated long-term EPS growth target to 6%-8% CAGR, with expectations to be at or above the top end from 2026-2030.

Financial highlights

• 2025 adjusted diluted EPS: $2.99, up from $2.95 in 2024; net income for 2025 was $102.6 million, a 9% increase year-over-year.

• 2026 standalone EPS guidance: $3.08-$3.18, excluding Quadvest and Cibolo Valley impacts.

• 2025 CapEx: $501 million, exceeding the $486 million budget.

• Five-year CapEx plan increased by 31% to $2.7 billion, supporting a projected 13% rate base CAGR from 2026–2030.

• FFO to debt ratio in 2025 was 11.2%, above S&P's downgrade threshold.

Outlook and guidance

• 2026 standalone EPS guidance excludes pending acquisitions due to timing and financing uncertainty.

• Long-term EPS CAGR target increased to 6%-8%, with expectations to reach the top end over 2026–30.

• Five-year CapEx plan (2026-2030) set at $2.7 billion, targeting 1% annual pipeline replacement and expanded PFAS treatment.

• Rate base expected to grow from $2.8 billion (2025) to $5.1 billion (2030), a 13% CAGR.

• Nonlinear EPS growth expected, with dilution from Quadvest in 2026-2027, accretion beginning in 2028.