H2O America (HTO) M&A Announcement July 08, 2025 08:30 AM ET Speaker0Ladies and gentlemen, thank you for standing by, and welcome to HGO America's Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Ann Kelly, Chief Financial Officer and Treasurer at H2O America.Please go ahead.Speaker1Good morning, ...

Group 1 - H2O America has agreed to acquire Quadvest's assets for $540 million, which will help the company expand its operations in the rapidly growing Texas market [1] - The acquisition will be completed through Texas Water Company (TWC) and Texas Water Operations Services Company, funded by private debt and equity, and is expected to close by mid-2026, pending regulatory approval [1] - The CEO of H2O America stated that integrating Quadvest into TWC provides a strategic opportunity for business diversification and expansion in one of the fastest-growing regions in the U.S. [1] Group 2 - Quadvest is one of the largest water and wastewater treatment companies in Texas, operating over 50 water plants and 27 wastewater treatment facilities [2] - The acquisition will enable H2O America to expand from San Antonio and Austin to the Greater Houston area, with plans to invest over $500 million in Texas over the next five years [2] - H2O America operates other water businesses in Connecticut, Maine, and California, and recently underwent a rebranding from its previous name, SJW Group [2] Group 3 - The U.S. water utility market is experiencing a trend of mergers as companies seek economies of scale to fund the significant investments needed for upgrading aging infrastructure [1] - The value of announced water utility transactions in 2025 has increased by approximately 20%, reaching $7 billion, including Eversource Energy's $2.4 billion sale of Aquarion Water Co. [1]

Core Viewpoint - H2O America is acquiring Quadvest, significantly increasing its connections in Texas and enhancing its operational scale and financial diversification, with expectations for long-term EPS growth and positioning Texas as its second-largest utility operation by 2028 [1][4][7]. Company Overview - H2O America operates a national network of local water and wastewater utilities, focusing on delivering clean, high-quality water to communities [13][15]. - Quadvest is a major water and wastewater utility in Texas, serving over 47,000 active connections and having a strong development pipeline in the Houston area [2][16]. Transaction Details - The acquisition involves TWC acquiring regulated systems from Quadvest for $483.6 million and TWOS acquiring systems for $56.4 million, totaling $540 million [7]. - The transaction will be financed through a mix of privately placed debt and equity, ensuring H2O America maintains a strong balance sheet [7]. Strategic Implications - The combination is expected to increase H2O America's customer base in Texas from approximately 17% to 26% by 2029, enhancing its presence in one of the fastest-growing regions [3]. - The merger will create the second-largest investor-owned water and wastewater utility in Texas, with a combined active pipeline of about 96,000 connections under contract [3][4]. Future Plans - H2O America plans to invest over $500 million in Texas over the next five years, increasing its consolidated five-year capital spending plan to approximately $2.1 billion, a 6% increase [3][7]. - The leadership of TWC will remain intact, with Aundrea Williams continuing as president, ensuring continuity in operations and community engagement [6][5].

矿泉水这门生意，其实是一门距离和定价的博弈。 前段时间有个很离谱的新闻。 在第五届消博会上，出现了一款名为「捷克弗罗明冰河纪水」的饮用水，750毫升装，一瓶988元，顶得 上300多瓶水中贵族了。 价格这么贵，自然是有说法。 这个水，号称是取自捷克国宝级地下水资源保护区，而且水龄超过1.5万年。水质纯净而且非常稀缺。 环球小姐大赛、迪拜七星级帆船酒店、卡塔尔航空头等舱，都是指定用这个水的。 当然，光是万年老水这个噱头肯定是不够的，生产商还别出心裁地在瓶子里塞了三颗天然水晶，说这个 水晶里含有多种对人体有益的矿物质，长期饮用这些矿物质能被人体吸收，有益健康。 我又去淘宝翻了一下，发现这个水还有不带水晶的普通版。 如果是玻璃瓶，750毫升装一瓶75块。如果是塑料瓶还可以更便宜，2瓶1升装的水只要69元。 想想看，只要69元，就能喝到万年老水同款，988品质，加量不加价。 在瓶装水的百年历史上，尽管像「捷克弗罗明冰河纪水」这么魔怔的玩家并不算多，但把平平无奇，毫 无成本的H2O，卖出奢侈品的溢价，却是所有做水人不约而同的梦想。 而其中最成功的，莫过于巴黎水和圣培露。 恰好，这两家公司如今不仅都是雀巢旗下的同门兄弟， ...

Group 1 - The core viewpoint emphasizes the importance of ecological protection in the Yangtze River upstream region, advocating for a strategy of "coordinated protection without large-scale development" to safeguard water quality [1] - The city of Yibin has made significant progress in water management over the past three years, achieving a 100% excellent water quality rate at 22 national and provincial assessment sections and successfully restoring natural spawning grounds for the Yangtze sturgeon [2][6] - Yibin's urban sewage treatment capacity has improved, with daily sewage generation at approximately 300,000 cubic meters and treatment capacity exceeding 400,000 cubic meters, indicating a focus on enhancing both the quantity and quality of sewage treatment [3] Group 2 - The city has implemented a "factory-network integration" model for sewage treatment, consolidating operations under a single entity to improve efficiency and streamline processes [4] - Collaborative efforts among various departments have been established to address pollution sources effectively, with a focus on small river basin management, which is crucial for maintaining water quality in densely populated areas [5][6] - Over the past three years, Yibin has invested 14.25 billion yuan in small river basin governance, constructing or renovating 15 sewage treatment plants and 696 kilometers of sewage pipelines, resulting in a reduction of approximately 29 million tons of sewage discharge annually [6]

Company Announcement - Franklin Electric Co., Inc. has appointed Jennifer Wolfenbarger as Chief Financial Officer (CFO) and Chief Accounting Officer, aiming to shape the company's financial future and oversee fiscal accountability [1][3] Executive Background - Wolfenbarger has held divisional CFO roles at notable manufacturing companies such as Caterpillar, Stryker, and Owens Corning, where she managed strategic planning and financial reporting for a $4 billion global insulation business [2][3] Leadership Perspective - CEO Joe Ruzynski praised Wolfenbarger's exceptional experience and value-driven approach, highlighting her potential to enhance continuous improvement within the company [3] Community Engagement - Throughout her career, Wolfenbarger has contributed to her community by serving as Treasurer on not-for-profit boards and mentoring at Indiana University's Kelley School of Business [3] Company Overview - Franklin Electric is a global leader in producing and marketing systems and components for water and energy movement, serving various sectors including residential, commercial, and industrial applications [4] Recognition - The company has received accolades such as being listed in Newsweek's America's Most Responsible Companies 2024 and Best Places to Work in Indiana 2024, reflecting its commitment to corporate responsibility and employee satisfaction [4]

Company Overview - Artesian Resources (ARTNA) is a water resource management company based in Newark, operating in the Utilities sector with a year-to-date share price change of 6.8% [3] Dividend Information - The company currently pays a dividend of $0.31 per share, resulting in a dividend yield of 3.64%, which is significantly higher than the Utility - Water Supply industry's yield of 2.57% and the S&P 500's yield of 1.52% [3] - Artesian Resources has an annualized dividend of $1.23, reflecting a 4.1% increase from the previous year, and has increased its dividend five times over the last five years, averaging an annual increase of 4.17% [4] Earnings Growth and Future Outlook - The Zacks Consensus Estimate for 2025 projects earnings of $2.16 per share, indicating a 9.09% increase from the previous year [5] - Future dividend growth will depend on earnings growth and the company's payout ratio, which currently stands at 58%, meaning 58% of its trailing 12-month EPS is paid out as dividends [4] Investment Appeal - Artesian Resources is characterized as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [6]

Core Viewpoint - Essential Utilities (WTRG) is experiencing growth through acquisitions, organic ventures, and capital expenditures, which are enhancing its water and wastewater operations [1] Group 1: Investment Plans and Infrastructure - The company plans to invest $7.8 billion from 2025 to 2029 to improve its water and natural gas systems, with an investment of $1.4-$1.5 billion in infrastructure planned for 2025 [2][8] - Essential Utilities has expanded its utility operations significantly since 2015, completing numerous acquisitions that have added over 129,000 customers, with five pending acquisitions expected to add more than 210,000 customers [4][8] Group 2: Operational Stability and Emission Reduction - A majority of the water distributed by the company is self-sourced, which contributes to business stability, and the company aims to reduce annual Scope 1 and 2 emissions by 60% by 2035 compared to 2019 levels [3] - The focus on new and advanced assets is expected to lower operational costs [3] Group 3: Challenges and Risks - Water utilities face risks related to water contamination, which can lead to service disruptions and additional costs for testing and treatment [5] - Weather fluctuations, such as cooler winters and increased rainfall, can negatively impact water demand and the company's performance [6] Group 4: Stock Performance - Over the past six months, WTRG's shares have increased by 3.8%, which is lower than the industry's growth of 17.6% [7][8]

Core Insights - The markets started 2025 strong but have faced increased volatility due to the Trump administration's tariff plans and geopolitical uncertainties, leading to cautious investor behavior [1] Stock Selection Strategy - A conventional method for selecting stocks is focusing on those with steady sales growth, with The Walt Disney Company (DIS), Agnico Eagle Mines Limited (AEM), Adobe Inc. (ADBE), and Xylem Inc. (XYL) highlighted as potential candidates [2][10] - Revenue growth is prioritized over earnings as it indicates an expanding customer base and long-term potential, while stagnant revenue may signal operational challenges [3] - An effective investment strategy should also analyze a company's cash position alongside sales, as strong cash reserves and healthy cash flow provide flexibility for growth and stability [4] Screening Parameters - Stocks are shortlisted based on criteria including 5-Year Historical Sales Growth (%) greater than the industry average and Cash Flow exceeding $500 million [5] - Additional metrics include a Price-to-Sales (P/S) Ratio lower than the industry average, positive % Change in F1 Sales Estimate Revisions, Operating Margin greater than 5%, Return on Equity (ROE) above 5%, and a Zacks Rank of 1 or 2 [6][7][8] Company Highlights - The Walt Disney Company (DIS) has a projected sales growth rate of 4.1% for 2025 and currently holds a Zacks Rank of 2 [11] - Agnico Eagle Mines (AEM) is expected to see a sales growth rate of 24.6% in 2025 and has a Zacks Rank of 1 [12] - Adobe Inc. (ADBE) anticipates a sales increase of 9.5% for fiscal 2025 and holds a Zacks Rank of 2 [12] - Xylem Inc. (XYL) has a projected sales growth of 2.2% for 2025 and also carries a Zacks Rank of 2 [13]

Core Insights - American Water Works Company's subsidiary, Pennsylvania American Water, is acquiring the Indian Creek Valley Water Authority and the Sutersville-Sewickley Municipal Sewage Authority, expanding its customer base by approximately 2,700 metered water connections and 500 wastewater consumers for a total purchase price of $36.05 million [1][9]. Group 1: Acquisitions and Investments - The acquisition of the Indian Creek Valley system is priced at $32.8 million, while the Sutersville-Sewickley wastewater system will be acquired for $3.25 million [1][9]. - Pennsylvania American Water plans to invest $8.9 million in upgrades to the Indian Creek Valley Water Authority's infrastructure and allocate $800,000 for enhancements to the Sutersville-Sewickley wastewater system [2][9]. Group 2: Industry Context - The U.S. water industry is highly fragmented, with over 50,000 community water systems and 14,000 wastewater treatment systems, many of which are struggling with aging infrastructure and operational inefficiencies [4]. - The American Society of Civil Engineers reports that water main breaks occur every two minutes, highlighting the urgent need for infrastructure investment, estimated at $1.25 trillion over the next 20 years [5]. Group 3: Strategic Growth - American Water has been active in strategic acquisitions, completing three acquisitions in three states as of April 30, 2025, with 18 pending acquisitions expected to add another 37,400 customers [6]. - Other companies in the industry, such as Essential Utilities and California Water Service Group, are also pursuing acquisitions to expand their operations and improve service quality [7][8]. Group 4: Financial Performance - Over the past decade, American Water has invested more than $4.27 billion in capital improvements and plans to continue annual investments between $525 million and $625 million, with over $586 million planned for 2025 alone [3]. - In the past six months, shares of American Water have risen 15.2%, compared to the industry's growth of 18.7% [11].