H2O America (NASDAQ:HTO) reported third-quarter 2026 GAAP diluted earnings per share of $0.99 and adjusted diluted EPS of $1.04, compared with adjusted EPS of $1.27 in the prior-year quarter. For the first nine months of 2026, GAAP diluted EPS was $2.13 and adjusted diluted EPS was $2.30, versus $2.53 for the same period of 2025.
Chair and Chief Executive Officer Andrew Walters said the company’s quarterly and year-to-date performance was consistent with internal expectations and supported its financial guidance and longer-term growth plans. The company narrowed its standalone 2026 adjusted EPS guidance to $3.10 to $3.16, retaining the prior midpoint of $3.13.
Quadvest Acquisition and Texas Growth
Walters announced that H2O America completed its acquisition of Houston-based Quadvest at the beginning of October. The company expects the acquisition to begin contributing accretion in 2028. Quadvest adds an experienced operating team, a development pipeline and community relationships to H2O America’s Texas Water Company subsidiary, Walters said.
President and Chief Operating Officer Bruce Hauk said Quadvest served approximately 62,200 active water and wastewater connections at the end of September, up 14% so far in 2026. That follows 16% connection growth during 2025. Connections under contract and pending development increased to 98,300 at the end of September from 87,000 at the end of 2025, despite the conversion of roughly 7,700 connections into active customers during the first nine months of the year.
Hauk said the company expects the combination of Quadvest, Cibolo Valley and its existing Hill Country operations to help Texas grow from 8% of H2O America’s consolidated customer base currently to 26% by 2029. The Public Utility Commission of Texas approved the Cibolo Valley sale-transfer-merger filing in September, and the company expected that acquisition to close in early November.
Capital Spending and Financial Drivers
H2O America revised its 2026 company-funded capital investment plan to approximately $465 million from $483 million. Kelly said the reduction primarily reflected higher developer-funded capital spending in Texas, partially offset by planned Quadvest capital expenditures following the acquisition’s closing. The company said the change shifts spending into the 2027-to-2030 period and does not alter its planned $766 million of Texas capital investment from 2026 through 2030 or its consolidated five-year capital budget of $2.7 billion.
Through the first nine months of 2026, the company invested $325 million in company-funded infrastructure improvements. Its 2026-to-2030 plan, including Quadvest, is expected to support a 13% rate base compound annual growth rate from an estimated year-end 2025 rate base of $2.8 billion. The company continues to target long-term organic EPS growth of 6% to 8%, while expecting nonlinear growth during the five-year planning period.
Kelly said adjusted net income rose 8% through September 30, but weighted-average diluted shares outstanding increased roughly 20% following use of the company’s at-the-market equity program in 2025 and an equity issuance in March 2026. The net year-to-date EPS impact of raising equity in March, including offsets from reduced interest expense and interest income on the funds, was a reduction of $0.17 per share.
During the third quarter, higher revenues added $0.25 per share, largely due to rate relief and pass-through water supply costs. Those benefits were partly offset by higher water production expenses of $0.13 per share, higher other operating expenses of $0.16 per share, and $0.22 per share of dilution from the higher share count.
Rate Cases and Regulatory Developments
The company said its Connecticut and Maine general rate cases continue to advance. In Connecticut, H2O America is seeking a $28.8 million annual revenue increase associated with approximately $145 million of infrastructure investments made since its last rate case through the end of 2026. A proposed decision is anticipated in mid-December, with a final decision expected in late January and rates targeted to take effect in February 2027.
In Maine, the company is seeking a $9.5 million annual revenue increase to recover approximately $36 million in infrastructure investments. Evidentiary hearings are scheduled to begin in early January, with new rates expected to take effect by May 2027.
In California, H2O America continues to pursue approval for a planned $176 million ion-exchange PFAS remediation project at San Jose Water’s Williams Station. Evidentiary hearings are scheduled for late January, and the company expects a proposed decision in the second quarter of 2027. Hauk also noted that California Senate Bill 1153, which addresses water utilities’ wildfire preparedness requirements and liability limitations, was signed into law in September.
Texas Water plans to file a combined general rate case during the first half of 2027, rather than early in the year, after the later-than-expected closings of Quadvest and Cibolo Valley and increased documentation scrutiny in recent regulatory proceedings. Hauk said the filing will seek recovery for supply and reliability investments and recognize the acquired companies’ rate base.
Walters said H2O America remains focused on balancing customer affordability with investments in infrastructure resilience, water quality and cybersecurity. He said approximately 80% of the company’s planned 2026-to-2030 capital investments qualify for timely regulatory recovery.
