In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of the results for the interim periods.

The unaudited interim financial information has been prepared in accordance with accounting principles generally accepted in the United States of America and in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). The Notes to Consolidated Financial Statements in H2O America’s 2024 Annual Report on Form 10-K, filed with the SEC on February 28, 2025, should be read in conjunction with the accompanying unaudited condensed consolidated financial statements.

In May 2025, the Company changed the corporate name from SJW Group to H2O America and the trading symbol from SJW to HTO on the Nasdaq Global Select Market. H2O America is a holding company that conducts its business through the following wholly owned subsidiaries: San Jose Water Company (“SJWC”), SJWTX Holdings, Inc., SJW Land Company, SJWNE LLC, and National Water Utility Service, LLC (“NWU”). SJWTX Holdings, Inc., is a holding company for its wholly owned subsidiaries, SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”). SJWNE LLC is the holding company for Connecticut Water Service, Inc. (“CTWS”) whose wholly owned subsidiaries are The Connecticut Water Company (“CWC”), The Maine Water Company (“MWC”), New England Water Utility Services, Inc. (“NEWUS”), and Chester Realty, Inc.

Water sales are seasonal in nature and influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. Due to the seasonal nature of the water business, the operating results for interim periods are not indicative of the operating results for a 12-month period. Revenue is generally higher in the warm, dry summer months when water usage and sales are greater, and lower in the winter months when cooler temperatures and increased precipitation curtail water usage resulting in lower sales.

H2O America’s revenue components are as follows:


	Three months ended September 30,			Nine months ended September 30,
	2025		2024	2025		2024
Revenue from contracts with customers	$	243,522	216,677	$	606,162	539,790
Alternative revenue programs, net	3,996		7,369	6,347		6,847
Other balancing and memorandum accounts and regulatory mechanisms, net	(7,804)		(1,432)	(8,792)		(1,019)
Rental income	836		2,449	2,687		5,001
	$	240,550	225,063	$	606,404	550,619

Nonutility Properties

The major components of nonutility properties as of September 30, 2025 and December 31, 2024, are as follows:


	September 30, 2025		December 31, 2024
Land	$	915	915

Buildings and improvements	399		399

Subtotal	1,314		1,314
Less: accumulated depreciation	101		98
Total	$	1,213	1,216

Fair Value Measurement

The following instruments are not measured at fair value on H2O America’s condensed consolidated balance sheets as of September 30, 2025, but require disclosure of their fair values: cash and cash equivalents, accounts receivable and accounts payable. The estimated fair value of such instruments as of September 30, 2025 approximates their carrying value as reported

on the condensed consolidated balance sheets. There have been no changes in valuation techniques during the three and nine months ended September 30, 2025. The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1.

The fair value of H2O America’s long-term debt was $1,603,773 and $1,490,024 as of September 30, 2025 and December 31, 2024, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company. Of the total fair value of long-term debt at September 30, 2025 and December 31, 2024, $1,586,432 and $1,473,393, respectively, would be categorized as Level 2 in the fair value hierarchy and $17,341 and $16,631, respectively, would be categorized as Level 3 in the fair value hierarchy.

CTWS’s additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust. The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $2,566 and $2,812 as of September 30, 2025 and December 31, 2024, respectively, and are categorized as Level 1 in the fair value hierarchy.

Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards under H2O America’s long-term incentive plans and shares potentially issuable under H2O America’s employee stock purchase plan. For the three months ended September 30, 2025 and 2024, 4,954 and 485 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively. For the nine months ended September 30, 2025 and 2024, 38,734 and 5,289 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively.

New Accounting Standards

The recently issued accounting standards that have not yet been adopted by the company as of September 30, 2025 are as follows:

Standard

Description

Date of Adoption

Application

Effect on the Condensed Consolidated Financial Statements

Accounting Standards Update (“ASU”) 2023-09 “Improvements to Income Tax Disclosures”

The ASU amends certain income tax disclosure requirements, including adding requirements to present the reconciliation of income tax expense computed at the statutory rate to actual income tax expense using both percentages and amounts and providing a disaggregation of income taxes paid. Further, certain disclosures are eliminated, including the current requirement to disclose information on changes in unrecognized tax benefits in the next 12 months.

H2O America will adopt the ASU beginning with its annual financial statements for the year ending December 31, 2025.

Prospective, with retrospective application also permitted.

The standard is expected to only result in updates to disclosure and is not expected to have a material impact on the Company’s financial position and results of operations.

ASU 2024-03 “Disaggregation of Income Statement Expenses”

The ASU requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The ASU requires disclosure of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in interim and annual reporting periods. Further, other amounts already required to be disclosed in accordance with current U.S. GAAP would be included in the same disclosure as the other disaggregation requirements. Additionally, the ASU requires qualitative descriptions of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclosure of selling expenses in annual periods and an entity’s definition of selling expenses.

The ASU is effective for H2O America for its annual financial statements for the year ending December 31, 2027 and for interim reporting periods for the year ending December 31, 2028. Early adoption is permitted.

Prospective, with retrospective application also permitted.

The standard is expected to only result in updates to disclosure and is not expected to have a material impact on the Company’s financial position and results of operations.