H2O America (SJW) Q2 2026 earnings summary

Executive summary

• Q2 2026 operating revenue increased 6% year-over-year to $210.5 million, with net income up 8% to $26.6 million and adjusted net income up 17% to $30.7 million; diluted EPS was $0.62 and adjusted diluted EPS was $0.72, both down from prior year due to higher share count.

• Year-to-date 2026 net income rose 11% to $45.6 million, with adjusted net income up 17% to $50.1 million; YTD GAAP diluted EPS at $1.12 and adjusted at $1.23.

• Major infrastructure investments continue, with $207 million deployed YTD out of a $483 million CapEx budget; $2.7 billion planned through 2030.

• Progressing toward closing the $540 million Quadvest acquisition by Q3/Q4 2026, expected to be accretive by 2028 and to increase Texas’s share of the customer base from 8% in 2025 to 26% by 2029.

• Declared a quarterly cash dividend of $0.44 per share, annualized to $1.76, marking 58 consecutive years of increases.

Financial highlights

• Q2 2026 adjusted diluted EPS was $0.72 (down from $0.75 in Q2 2025); YTD adjusted EPS was $1.23 (down from $1.25 in 2025).

• Q2 2026 operating expenses rose 9% year-over-year to $167.7 million, mainly from higher water production, depreciation, and admin costs.

• Effective tax rate for Q2 2026 was 13%, down from 16% in Q2 2025, due to higher flow-through tax benefits.

• Weighted average diluted shares outstanding increased to 42.9 million in Q2 2026 from 34.9 million in Q2 2025, reflecting equity issuance.

• Cash flow from operations for the first half of 2026 was $104.4 million, flat year-over-year.

Outlook and guidance

• Reiterated 2026 adjusted diluted EPS guidance of $3.08–$3.18 and long-term EPS CAGR target of 6–8% for 2026–2030, anchored off 2025’s $2.99 EPS.

• Five-year capital investment plan of $2.7 billion and pending Texas acquisitions expected to drive a 13% rate base CAGR from 2025 year-end base of $2.8 billion.

• Guidance excludes initial EPS dilution from pending acquisitions until new rates are implemented post-2027 rate case.

• No additional M&A beyond Quadvest and Cibolo Valley included in current plan; expect to avoid further equity issuance through at least 2027, using $400 million forward agreement and $100–$200 million in new debt for Quadvest funding.