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Analogy 1: Think of it as your electric company, but for water services.

Analogy 2: Essentially, it's the American Water Works (AWK) of the national water utility sector.

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• Municipal Water Supply: Provision of safe, potable drinking water to residential, commercial, and industrial customers within service territories.
• Wastewater Treatment: Collection and purification of sewage and industrial wastewater to meet environmental discharge standards.
• Water Infrastructure Management: Design, construction, and maintenance of pipelines, pumping stations, and treatment facilities.
• Water Quality Services: Advanced testing and monitoring of water sources and distribution systems for purity and regulatory compliance.
• Water Resource Consulting: Advisory services for sustainable water management, conservation, and efficiency for various clients.

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As "H2O America" (symbol: HTO) is a fictional company, its customer base cannot be identified from real-world financial data. However, assuming H2O America operates as a large, integrated water solutions provider as its name suggests, it would plausibly serve a range of industrial and municipal clients with advanced water treatment, supply, and wastewater management services across the United States. For the purpose of this exercise, we will assume it primarily sells to other companies.

Based on this assumed business model, H2O America's major customers would plausibly include:

• The Coca-Cola Company (Symbol: KO) - As a global beverage giant, Coca-Cola requires vast quantities of high-quality water for its products and extensive water management solutions for its bottling plants. H2O America could provide purified water supply, wastewater treatment, and process water optimization services for such an enterprise.
• Duke Energy Corporation (Symbol: DUK) - A major electric power holding company in the United States, Duke Energy's power generation facilities (including thermal and nuclear plants) are significant consumers of water for cooling systems, steam generation, and emissions control. H2O America could provide industrial water services, including supply of treated water and management of complex wastewater streams.
• Dow Inc. (Symbol: DOW) - A leading global materials science company, Dow's chemical manufacturing processes are highly water-intensive and require precise water quality. H2O America could provide specialized water treatment technologies, ultra-pure water systems, and industrial wastewater reclamation services to Dow's various production facilities.

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Andrew F. Walters, Chief Executive Officer

Andrew F. Walters is set to become the Chief Executive Officer of H2O America (NASDAQ: HTO) effective July 1, 2025. He has over 26 years of experience in leadership, finance, banking, private equity, operations, and strategy roles. Before his appointment as CEO, Walters served as the company's chief financial officer and treasurer for three years, starting in January 2022. He first joined H2O America in 2014, overseeing human resources, information technology, business development, and strategy, and assisted with regional operations and investor relations. In 2019, he developed the strategy and led the company's announcement to purchase Connecticut Water Service Inc. in a $1.1 billion transaction. Prior to joining H2O America, Walters served as a Managing Director at JP Morgan in private equity infrastructure investing and at Citigroup in investment banking. At Citigroup, he held leadership roles in Asia and the U.S., managing infrastructure and transportation investment banking teams across Asia Pacific and the Americas. During his career, he has executed over $50 billion in transactions through mergers, acquisitions, joint ventures, equity offerings, IPOs, private equity fundraising, and debt offerings.

Ann Kelly, Chief Financial Officer and Treasurer

Ann Kelly is the Chief Financial Officer and Treasurer for H2O America (NASDAQ: HTO). She is a seasoned utility executive with deep expertise in financial and accounting leadership. Before being named CFO, Kelly served as the company's chief accounting officer. Prior to joining H2O America in 2024, Ann was the chief financial officer for American Electric Power (AEP), a large electric company serving 5.6 million customers across 11 states. She is also a Certified Compensation Professional (CCP) through WorldatWork.

Bruce A. Hauk, President and Chief Operating Officer

Bruce A. Hauk currently serves as President and Chief Operating Officer for H2O America (NASDAQ: HTO). He joined H2O America in August 2022 as chief corporate development & strategy officer. Hauk has led teams and driven results in all areas of water utilities at both state and national levels, including regulatory, customer service, and operations. Before joining H2O America, Bruce was president of NextEra Water and held many leadership roles at American Water, including deputy chief operating officer.

Kristen A. Johnson, President of Shared Services, SVP and Chief Administrative Officer

Kristen Johnson serves as President of Shared Services, Senior Vice President, and Chief Administrative Officer at H2O America (NASDAQ: HTO).

Willie Brown, Vice President and General Counsel

Willie Brown is the Vice President and General Counsel of H2O America (NASDAQ: HTO).

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Key Risks to H2O America (HTO)

1. Capital Intensity, Debt, and Shareholder Dilution: H2O America's strategy of aggressive expansion and substantial investments in infrastructure requires significant capital, leading to higher debt and ongoing issuance of equity. This dilutes shareholder value and can limit per-share growth, even amidst top-line revenue increases. This capital-intensive approach also includes financing acquisitions, which further contributes to increased leverage and dilution risk.
2. Rising Operating Expenses and Water Production Costs: The company faces upward pressure on its operating expenses, including general and administrative costs, pension expenses, salaries, and the impact of inflation. Furthermore, increasing per-unit costs for purchased water and shifts away from lower-cost surface water directly impact the company's water production expenses, potentially pressuring profit margins.
3. Regulatory and Acquisition Integration Risks: As a regulated water utility, H2O America's financial performance is significantly influenced by regulatory actions regarding rates, authorized return on equity, and capital structures. Uncertainties in regulatory timing and the ability to secure fair returns on its substantial capital expenditure plans, including the estimated $2 billion five-year capital plan, pose ongoing risks. Additionally, significant acquisitions, such as Quadvest, introduce integration risks, the need for regulatory approvals, and potential impacts on the company's credit profile due to financing through a mix of debt and equity.

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• U.S. Water Utilities Market: This market recorded revenues of $563.7 billion in 2024.
• U.S. Water and Wastewater Treatment Market: This market was valued at USD 64.27 billion in 2024 and is predicted to increase to approximately USD 123.76 billion by 2034, growing at a Compound Annual Growth Rate (CAGR) of 6.80% from 2025 to 2034.
• U.S. Water Infrastructure and Management Market: This market was valued at USD 120.2 billion in 2024 and is expected to reach USD 179.6 billion by 2032, growing at a CAGR of 5.3% from 2025 to 2032.

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Expected Drivers of Future Revenue Growth for H2O America (HTO) over the Next 2-3 Years:

• Strategic Acquisitions and Market Expansion: H2O America is actively pursuing and completing strategic acquisitions, particularly in high-growth regions. The company's significant expansion in Texas through the acquisitions of Quadvest and Cibolo Valley wastewater assets is a key driver. These acquisitions are expected to more than double H2O America's connections in Texas, positioning the state to become its second-largest utility operation by 2028 and projected to comprise approximately 26% of H2O America's total service base by 2029, up from approximately 7% standalone. This expansion into the fast-growing Houston metro area leverages demographic tailwinds, with Houston's population projected to grow by 1.2 million people by 2030, increasing demand for water and wastewater services.
• Significant Infrastructure Investments and Capital Expenditure: H2O America is committed to substantial capital investments in its water and wastewater utility infrastructure. The company plans to invest over $500 million in Texas over the next five years. Its consolidated five-year capital spending plan is approximately $2.1 billion, an increase of 6%. These investments are aimed at modernizing infrastructure, enhancing operational capabilities, and addressing critical needs such as PFAS remediation, which is expected to support continued rate base growth.
• Rate Increases and Regulatory Recoveries: Revenue growth is expected to be driven by approved rate increases and successful regulatory outcomes. H2O America's Q3 2025 revenue increase was partly attributed to rate adjustments and higher customer usage. The company has secured key regulatory approvals, including a $3.1 million annualized revenue increase in Connecticut, and continues to work with regulatory bodies on fair market value appraisals for its pending acquisitions. Their strategy involves constructive engagement with local stakeholders to achieve timely regulatory recovery while maintaining customer affordability.
• Organic Customer Growth and Demographic Trends: Beyond acquisitions, H2O America anticipates revenue growth from organic customer additions, particularly in areas experiencing population growth. The company's expansion into regions like Houston benefits from strong demographic tailwinds, which translates into an increasing customer base. For example, active connections related to the Quadvest acquisition increased by 11.5%, or 5,400 connections, between December 31, 2024, and September 30, 2025. The strong ties with builders and developers in these growing markets are also expected to support future connection growth.
• Operational Efficiencies and Technological Advancements: Investments in technology and efficiency improvements are expected to contribute to future revenue growth by enhancing the company's operational performance and profitability. The ongoing and planned implementation of advanced metering infrastructure (AMI) is projected to reduce operational costs and improve billing accuracy. Furthermore, investments in standardized enterprise-wide platforms are anticipated to support long-term operational efficiency, potentially improving net margins and overall financial health, which indirectly supports revenue growth by enabling sustained investment and competitive service offerings.

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Share Issuance

• Since December 2020, H2O America's total shares outstanding increased from 28.5 million to 33.1 million.
• In the first nine months of 2025, approximately $108 million was raised through an at-the-market (ATM) program.
• In Q3 2025, H2O America issued 492,859 shares, generating $24.4 million in net proceeds through its at-the-market program.

Outbound Investments

• H2O America entered into an agreement to acquire Quadvest's assets in the Houston area, a strategic move expected to be accretive by 2028.
• The company announced two strategic acquisitions in Texas, including the "transformational Quad West deal" and the Cibolo Valley wastewater treatment plant acquisition, as of Q3 2025.
• Upon completion of the Quadvest acquisition, Texas operations are projected to become the second largest investor-owned water and wastewater utility in the state.

Capital Expenditures

• H2O America anticipates spending $473 million on capital expenditures in 2025 as part of a five-year, $2 billion plan.
• Through September 30, 2025, the company had invested $357.8 million in infrastructure, which represents approximately 74% of its increased 2025 capital expenditures forecast of $486.0 million.
• Significant capital expenditures of $450 million are planned for San Jose between 2025 and 2027 to improve water delivery and install smart meters.