H2O America Reports 9% Revenue Increase to $183.3 Million in Q1 2026

H2O America reported a 9% increase in operating revenue for the first quarter of 2026, reaching $183.3 million compared to $167.6 million in the same period of 2025. The company's net income also rose by 15% to $19.0 million, up from $16.6 million year-over-year. Basic earnings per share increased slightly to $0.50 from $0.49, while diluted earnings per share remained stable at $0.49. The growth in revenue was attributed to a combination of increased customer counts, higher water consumption, and rate adjustments, including a $4.0 million increase in pass-through water costs and a $7.8 million rise from other rate increases.

Operating expenses for H2O America also increased, rising 11% to $145.9 million from $131.7 million in the prior year. This increase was primarily driven by higher production expenses, which accounted for $66.4 million, up from $59.0 million, reflecting increased costs associated with purchased water and groundwater extraction. Administrative and general expenses also rose, contributing to the overall increase in operating costs. The company noted that the seasonal nature of water sales and the impact of weather conditions significantly influence its financial performance.

In terms of strategic developments, H2O America is in the process of acquiring Quadvest, L.P. and Quadvest Wholesale, LLC, with a total purchase price of approximately $540 million. This acquisition is expected to enhance the company's operational scale and market presence, particularly in the rapidly growing Houston area. The company has filed the necessary applications with the Public Utility Commission of Texas to facilitate the acquisition, which is anticipated to close in the near future, subject to regulatory approvals.

H2O America serves approximately 409,000 water and wastewater service connections, catering to a population of over 1.6 million across California, Connecticut, Maine, and Texas. The company reported a slight increase in customer counts and noted that its water supply conditions remained stable, although challenges related to climate change and regulatory compliance persist. The company’s employee headcount increased to 1,200, reflecting its growth and expansion efforts.

Looking ahead, H2O America anticipates continued revenue growth driven by customer expansion and strategic rate increases. The company plans to invest approximately $458 million in capital expenditures for 2026, focusing on upgrading and expanding its utility infrastructure. However, management cautioned that actual results may vary due to various risks, including regulatory changes, market conditions, and the successful integration of acquired operations. The company remains committed to maintaining its dividend policy, having paid dividends for 330 consecutive quarters, although future payments may be influenced by financial performance and capital needs.