H2O America Revenue Rises 4% to $250.2 Million as Quarterly Profit Falls
Key Facts
H2O America reported a 4% increase in operating revenue in the third quarter of 2026 to $250.2 million, compared with $240.6 million in the same period of 2025, while net income and earnings per share declined from year-earlier levels. Net income under GAAP was about $43.0 million, down 5% from $45.1 million. Adjusted net income was $45.2 million, down 1% from $45.5 million. Diluted earnings per share were $0.99 under GAAP and $1.04 on an adjusted basis, compared with $1.27 for each measure in the third quarter of 2025. The company’s shares closed at $58.48 on October 26, according to EL7 data.
The company said revenue growth came mainly from price increases, which added $16.2 million to revenue during the quarter. This was partly offset by lower customer consumption, which reduced revenue by $4.1 million, and the impact of regulatory mechanism adjustments, which lowered it by $2.6 million. These factors show that revenue growth relied on pricing despite countervailing pressure from consumption and regulatory adjustments. At the same time, higher revenue did not translate into net income growth during the period, as both GAAP and adjusted income declined year over year. Adjusted income fell 1%, compared with a 5% decline in GAAP net income.
H2O America attributed the decline in earnings per share to a greater extent to a higher share count, after using its at-the-market sales program throughout 2025 and issuing common shares in early March 2026. It said the impact of the larger share count was more pronounced on earnings per share than on net income. This is consistent with adjusted diluted earnings per share falling to $1.04 from $1.27 a year earlier, alongside a smaller decline in adjusted net income, to $45.2 million from $45.5 million. GAAP earnings per share were $0.99, compared with $1.27 in the year-earlier period. The company’s statement does not support describing the results as below analyst estimates, as it contains no comparison with those estimates.
In its 2026 guidance, the company initiated a range for adjusted diluted earnings per share of $2.91–$2.97, including the effects of the Quadvest and Cibolo Valley acquisitions and their financing. By contrast, it narrowed its standalone guidance range, which excludes the effects of the two acquisitions and their financing, to $3.10–$3.16 per share. The difference between the ranges incorporates the deals and their financing into the full-year outlook, while the standalone guidance presents the company’s performance without those effects. The company closed its acquisition of Quadvest on October 1, 2026. It said Quadvest’s active customer connections increased 14% during 2026, or 7,700 connections.
The expansion came alongside substantial infrastructure investment. Company-funded investment totaled $325.1 million through the end of the third quarter, within a revised annual plan of about $465 million for 2026. H2O America kept its total plan of $2.7 billion for 2026 to 2030 unchanged. These figures place the acquisition and the expansion of the customer base within a multiyear capital spending program, alongside financing for deal costs. The company also declared a quarterly cash dividend of $0.44 per share, payable on December 1 to shareholders of record on November 9. It expects the annual dividend to be $1.76 per share in 2026, compared with $1.68 in 2025.
Before the results announcement, Investing.com reported that analyst estimates for earnings per share had fallen 11% over the two months preceding October 26, and that the average price target was $65.14, compared with a share price of $58.90 when the report was published. These figures reflect estimates made before the announcement and do not establish that the share move on October 26 came in response to the results; the stock closed at $58.48 that day, while the company issued its statement on October 26. Among economic data published on October 27, U.S. durable goods orders rose 1.8% month over month in September, after a revised 0.1% increase in August. U.S. Census Bureau data attributed the increase largely to a 28.4% jump in orders for civilian aircraft and parts during September.
The company had scheduled a conference to discuss its third-quarter results for October 27, 2026, at 10 a.m. Eastern time. On monetary policy, the Federal Reserve was scheduled to conclude its meeting on October 28, following meetings on October 27 and 28. The Associated Press expected the Fed to leave interest rates unchanged, noting that the prevailing rate was about 3.9% and that investors saw virtually no chance of an increase. The central bank meeting forms part of the broader market context in the days after the company’s announcement, while annual guidance and announced investments remain H2O America’s key indicators for the period ahead.