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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-28 · 244 added, 217 removed, 372 unchanged (55% of the section changed)

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Business Strategy

SJW Group focuses its business initiatives in three strategic areas:

H2O America focuses its business initiatives in three strategic areas:

(1) Investing in regional regulated water utility operations to support the health, safety and quality of life of our customers;

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Regional Regulated Activities

SJW Group’s regulated utility operation is conducted through SJWC, CWC, TWC and MWC.

SJW Group plans and applies a diligent and disciplined approach to maintaining and improving its water system infrastructures and also seeks to acquire regulated water systems adjacent to or near its existing service territory.

H2O America’s regulated utility operation is conducted through SJWC, CWC, TWC and MWC.

H2O America plans and applies a diligent and disciplined approach to maintaining and improving its water system infrastructures and also seeks to acquire regulated water systems adjacent to or near its existing service territory.

CWC and TWC also provide regulated wastewater services.

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Regional Non-tariffed Activities

Non-tariffed services provided by SJW Group’s subsidiaries include water system operations, maintenance agreements, antenna site leases under agreements with municipalities and other utilities, wholesale water service to adjacent utilities, wastewater services, and Linebacker © , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.

SJW Group also seeks appropriate non-tariffed business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations.

SJW Group seeks opportunities to fully utilize its capabilities and existing capacity by providing services to other regional water systems, which also will benefit its existing regional customers.

Non-tariffed services provided by H2O America’s subsidiaries include water system operations, maintenance agreements, antenna site leases under agreements with municipalities and other utilities, wholesale water service to adjacent utilities, wastewater services, and Linebacker ® , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.

H2O America also seeks appropriate non-tariffed business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations.

H2O America seeks opportunities to fully utilize its capabilities and existing capacity by providing services to other regional water systems, which also will benefit its existing regional customers.

Out-of-Region Opportunities

SJW Group also from time to time pursues opportunities to participate in out-of-region water and utility related services, particularly regulated water and wastewater businesses.

SJW Group evaluates out-of-region and out-of-state opportunities that meet SJW Group’s risk and return profile.

The factors SJW Group considers in evaluating such opportunities include:

H2O America also from time to time pursues opportunities to participate in out-of-region water and utility related services, particularly regulated water and wastewater businesses.

H2O America evaluates out-of-region and out-of-state opportunities that meet H2O America’s risk and return profile.

The factors H2O America considers in evaluating such opportunities include:

• Potential profitability;

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As part of our pursuit of the above three strategic areas, we consider from time-to-time opportunities to acquire businesses and assets.

However, we cannot be certain we will be successful in identifying and consummating any strategic business combination or acquisitions relating to such opportunities.

In addition, the execution of our business strategy will expose us to different risks than those associated with the current utility operations.

We expect to incur costs in connection with the execution of this strategy and any integration of an acquired business could involve significant costs, the assumption of certain known and unknown liabilities related to the acquired assets, the diversion of management’s time and resources, the potential for a negative impact on SJW Group’s financial position and operating results, entering markets in which SJW Group has no or limited direct prior experience and the potential loss of key employees of any acquired company.

Any strategic combination or acquisition we decide to undertake may also impact our ability to finance our business, affect our compliance with regulatory requirements, and impose additional burdens on our operations.

Any businesses we acquire may not achieve sales, customer growth and projected profitability that would justify the investment.

Any difficulties we encounter in the integration process, including the integration of controls necessary for internal control and financial reporting, could interfere with our operations, reduce our operating margins and adversely affect our internal controls.

SJW Group cannot be certain that any transaction will be successful or that it will not materially harm operating results or our financial condition.

The proposed transactions with Quadvest are an example of this strategy.

Quadvest acquisition

As previously disclosed, H2O America, through its indirect subsidiary, TWC, is set to acquire regulated systems owned by Quadvest, L.P.

for $483,600, and TWOS will acquire systems owned by Quadvest Wholesale LLC for $56,400.

Please see Note 1 4 “Acquisitions” for further discussion.

On the completion of this acquisition, we expect Quadvest will bring operational scale, a strong development pipeline, and increased exposure to one of America’s fastest growing regions, Houston, TX.

Quadvest brings a strong legacy of local relationships and reliable service.

It has been providing water and sewer service in Southeast Texas for nearly 50 years through its operating entities.

On July 9, 2025, TWC filed a request with the PUCT to use FMV to support its acquisition of Quadvest, L.P.

On August 7, 2025, the PUCT appointed three appraisers to determine the FMV.

In December 2025 TWC, received the appraised FMV from the three PUCT appointed appraisers for the assets of Quadvest L.P.

In accordance with Texas’ FMV statute, the purchase price of $483,600 will serve as the ratemaking rate base.

TWC filed its STM application with the PUCT in January 2026.

Reportable Segment

Together, SJWC, excluding the Cupertino service concession arrangement operations, CWC, MWC and TWC are referred to as “Water Utility Services,” which is our single reportable segment.

Other business activities that are not separately reportable segments are SJWC’s Cupertino service concession arrangement operations, TWOS, TWR, NEWUS, SJW Land Company and Chester Realty, Inc.

and are collectively referred to as “Other Services.”

Water Utility Services is our single reportable segment.

Other business activities that are not separately reportable segments are SJWC’s City of Cupertino service concession arrangement operations, H2O America Land Company and Chester Realty, Inc, contract water and sewer operations and other water-related services provided by NEWUS and are collectively referred to as “Other Services.”

Critical Accounting Estimates

SJW Group has identified accounting estimates delineated below as estimates critical to its business operations and the understanding of the results of operations.

H2O America has identified accounting estimates delineated below as estimates critical to its business operations and the understanding of the results of operations.

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period.

SJW Group bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.

For a detailed discussion on the application of these and other accounting policies, see Note 2 of “Notes to Consolidated Financial Statements.” SJW Group’s critical accounting estimates are as follows:

H2O America bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.

For a detailed discussion on the application of these and other accounting policies, see Note 2 of “Notes to Consolidated Financial Statements.” H2O America’s critical accounting estimates are as follows:

Recognition of Regulatory Assets and Liabilities

Generally accepted accounting principles for water utilities include the recognition of regulatory assets and liabilities as permitted by ASC Topic 980.

GAAP for water utilities include the recognition of regulatory assets and liabilities as permitted by ASC Topic 980.

In accordance with ASC Topic 980, Water Utility Services, to the extent applicable, records regulatory assets for incurred costs that are deemed probable of recovery from customers.

Also, Water Utility Services recognizes regulatory liabilities for amounts expected to be refunded to customers in the rate-making process and for amounts collected in advance of the related expenditures.

Also, Water Utility Services recognizes regulatory liabilities for amounts expected to be refunded to customers in the ratemaking process and for amounts collected in advance of the related expenditures.

Regulatory assets or liabilities are also recognized for special revenue programs such as WCMA and WRA in accordance with guidance on alternative revenue programs under ASC Topic 980, including the requirement that such revenues will be collected within 24 months of the year-end in which the revenue is recorded.

A reserve is recorded for amounts SJW Group estimates will not be collected within the 24-month period.

A reserve is recorded for amounts H2O America estimates will not be collected within the 24-month period.

This reserve is based on an estimate of actual usage over the recovery period.

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Such evidence may include regulatory rules and decisions, past practices, and other facts and circumstances that would indicate that recovery or refund is probable.

When such evidence provides sufficient support, the balances are recorded in SJW Group’s financial statements.

When such evidence provides sufficient support, the balances are recorded in H2O America’s financial statements.

It is typical for the CPUC to incorporate any over-collected and/or under-collected balances in balancing or memorandum accounts into customer rates at the time rate decisions are made as part of SJWC’s general rate case proceedings by assessing temporary surcredits and/or surcharges.

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Goodwill is not amortized but is tested for impairment annually on October 1st or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

SJW Group first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

In assessing the qualitative factors, SJW Group considers the impact of these key factors:

H2O America first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

In assessing the qualitative factors, H2O America considers the impact of these key factors:

change in industry and competitive environment, financial performance, macroeconomic conditions, and other relevant Company-specific events.

If SJW Group determines that as a result of the qualitative assessment it is more likely than not (> 50% likelihood) that the fair value is less than carrying amount, then a quantitative test is performed.

SJW Group performed an impairment analysis as of October 1, 2024.

The qualitative assessment found no indicators of impairment and therefore SJW Group did not perform the quantitative impairment test.

If H2O America determines that as a result of the qualitative assessment it is more likely than not (> 50% likelihood) that the fair value is less than carrying amount, then a quantitative test is performed.

H2O America performed an impairment analysis as of October 1, 2025.

The qualitative assessment found no indicators of impairment and therefore H2O America did not perform the quantitative impairment test.

No impairments occurred during the years ended December 31, 2025, 2024 or 2023.

Factors Affecting Our Results of Operations

SJW Group’s financial condition and results of operations are influenced by a variety of factors including the following:

H2O America’s financial condition and results of operations are influenced by a variety of factors including the following:

• Economic utility regulation;

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Pursuant to Texas regulation, TWC employs a historical test year.

To address regulatory risk due to regulatory lag and changing legislation policies and regulations, rate cases may be filed as necessary in Texas, provided there is no current rate case outstanding.

Further, rate cases may not be filed more frequently than once every 12 months.

Additionally, to mitigate regulatory lag for capital improvements, Texas has implemented its first SIC.

The SIC allows TWC to earn a return on some of its capital improvements made after 2020 through a surcharge to its customers.

The SIC is a cost recovery mechanism that was adopted by the PUCT in 2021 and avoids the immediate need for a general rate case.

The PUCT permits the acquisition of utilities using a process termed the Fair Market Value.

This process brings in three appraisers to determine the market value of a system which the acquiring utility can apply as the value of utility plant included in rate base.

In addition, after recent legislation the PUCT adopted rules allowing the application of the Filed Rate Doctrine.

This allows water utilities the option of applying their previously approved rates to the customers of newly acquired systems, which encourages consolidation by minimizing rate case expenses.

To address regulatory risk due to regulatory lag and changing legislation policies and regulations, rate cases may be filed as necessary in Texas, provided it has been more than 12 months since TWC’s most recent application to change rates was filed.

Additionally, to mitigate regulatory lag for capital improvements, Texas implemented its first SIC in 2021.

The SIC allows TWC to earn a return on some of its capital improvements made after 2020 through a monthly surcharge to its customers.

An application for a SIC or SIC amendment may be filed once per year, and the initial approval of a SIC triggers a requirement to file a general rate case within four years of the date of approval.

The PUCT permits the acquisition of utilities using FMV.

This process brings in three appraisers to determine the market value of a system.

The average of the three appraisals is then compared to the purchase price for the acquisition to determine the value of utility plant included in rate base.

In addition, after recent legislation the PUCT adopted rules to allow a water utility to request to apply its current approved rates to the customers of newly acquired systems, which encourages consolidation and minimizes rate case expenses.

During 2025, the Texas legislature passed House Bill 2712 which took effect on September 1, 2025 and allows water utilities to use future test year information for ratemaking purposes beginning with applications filed on or after September 1, 2026.

The legislation was enacted to enable water utilities to seek rate recovery based on projected costs, encourage timely replacement of infrastructure and improve regulatory alignment with capital planning.

Upon implementation of the law, water utilities will be able to utilize the future test year, historical test year or a combination of both when filing a general rate case.

Pursuant to Maine regulations, MWC employs a historical test year.

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In 2025 and 2024, company-funded capital improvements were $489,607 and $353,029, respectively, for additions to, or replacements of, property, plant and equipment for our Water Utility Services.

We plan to spend approximately $451,000 in 2025 and $1,900,000 over the next five years for capital improvements.

SJW Group funds these expenditures through a variety of sources, including earnings received from operations, debt and equity financing, and other borrowings.

SJW Group relies upon lines of credit to fund capital expenditures in the short term and has historically issued long-term debt to refinance our short-term debt.

While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2024 activities, we will have access to the external funding sources necessary to implement

our ongoing capital investment programs in the future.

We plan to spend approximately $458,000 in 2026 which excludes amounts related to the Company’s previously announced acquisition of Quadvest L.P and $2,568,000 over the next five years for capital improvements inclusive of amounts related to the acquisition.

In addition to these capital expenditures, Water Utility Services expects to incur approximately $100,000 over the next five years, including $25,000 in 2026, in capitalizable costs associated with cloud-based computing arrangements.

H2O America funds these expenditures through a variety of sources, including earnings received from operations, debt and equity financing, and other borrowings.

H2O America relies upon lines of credit to fund capital expenditures in the short term and has historically issued long-term debt to refinance our short-term debt.

While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2025 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future.

See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.

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Water Utility Services’ operations are subject to water quality and pollution control regulations issued by the EPA and environmental laws and regulations administered by the respective states and local regulatory agencies.

Under the federal Safe Drinking Water Act, Water Utility Services is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable.

Under the federal SDWA, Water Utility Services is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable.

The EPA promulgates nationally applicable standards, including maximum contaminant levels for drinking water.

Water Utility Services has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations.

However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the Safe Drinking Water Act.

However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the SDWA.

Water Utility Services incur substantial costs associated with compliance with environmental, health and safety and water quality regulation to which our water services are subject.

In April 2024, the EPA issued new national primary drinking water regulations for six PFAS substances.

The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the Safe Drinking Water Act.

The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the SDWA.

The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029.

SJW Group estimates capital expenditures of approximately $300,000 for PFAS treatment based on finalized maximum contaminant levels.

H2O America estimates capital expenditures of approximately $400,000 for PFAS treatment based on finalized maximum contaminant levels.

See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.

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(i) organic population growth within our authorized service areas and (ii) the addition of new customers to our regulated customer base by acquiring regulated water systems adjacent to or near our existing service territories.

We did not have any cash outflows for business acquisitions in 2024.

During 2023 and 2022, we had cash outflows of 7,537 and $433, respectively, for business acquisitions which we believe will allow SJW Group to expand our regulated customer base.

Before entering new regulated markets, we evaluate the regulatory environment to ensure that we will have the opportunity to achieve an appropriate rate of return on our investment while maintaining our high standards for quality, reliability and compliance with environmental, health and safety, and water quality standards.

We did not have any cash outflows for business acquisitions in 2025 or 2024.

During the third quarter of 2025 we announced our anticipated acquisitions of Quadvest L.P and South Central Water Company both of which are expected to close in the second half of 2026.

During 2023, we had cash outflows of $7,537, for business acquisitions which we believe will allow H2O America to expand our regulated customer base.

Before entering new regulated markets, we

evaluate the regulatory environment to ensure that we will have the opportunity to achieve an appropriate rate of return on our investment while maintaining our high standards for quality, reliability and compliance with environmental, health and safety, and water quality standards.

Water Usage Per Customer

Fluctuations in customer demand for water could be due to seasonality, restrictions of use, weather or lifestyle choices, all of which could affect our results of operations.

The following is the change in customer usage in 2024 compared to 2023:

• SJWC residential usage increased 6.7% and business usage increased 5.8%.

• TWC residential and business usage decreased 13.0%.

• CWC residential usage increased 1.1% and business usage increased 2.9%.

• MWC residential usage increased 3.4% and business usage increased 14.6%.

The following is the change in combined residential and business customer usage in 2025 compared to 2024:

Change in customer usage

For the year ended December 31, 2025, SJWC’s residential usage was lower by 14.6% and business usage was higher by 2.5%, respectively, than the amount authorized in our 2022-2024 general rate case.

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The WCMA is a temporary revenue protection mechanism, due to the voluntary 15% water reduction request, which tracks the divergence between authorized versus actual consumption in a balancing account for future recovery.

With the availability of the WRA in Connecticut, which allows for recovery of authorized revenues, decreases in consumption year to year do not present the same financial risk as in our other water utility services utilities.

With the availability of the WCMA in California and the WRA in Connecticut, which allows for recovery of authorized revenues, decreases in consumption year to year do not present the same financial risk as in our other water utility services utilities.

Weather Conditions, Seasonality and Sources of Water Supply

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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 rainfall curtail water usage and sales.

See Item 1 , “Business” and Item 1A , “Risk Factors” for a discussion of SJW Group’s general business and regulatory activities.

SJW Group’s consolidated net income for the year ended December 31, 2024 was $93,967, compared to $84,987 for the same period in 2023.

See Item 1 , “Business” and Item 1A , “Risk Factors” for a discussion of H2O America’s general business, regulatory activities, and information about water supply.

H2O America’s consolidated net income for the year ended December 31, 2025 was $102,578, compared to $93,967 for the same period in 2024.

This represents an increase of $8,611 or 9%, from 2024.

The increase in net income was primarily driven by rate increases in California and Connecticut, higher customer usage, decreases in the allowance for credit losses, lower income tax expense attributable to a tax accounting method change, partially offset by higher water production expenses, higher administrative and general expenses, and higher depreciation and amortization expense primarily related to new utility plant additions.

Operating Revenue

SJW Group has a single reportable segment, Water Utility Services.

All other business activities not separately reportable are included in “Other Services.” Effective in the fourth quarter of 2024, management updated its segment presentation and no longer presents a separate reportable segment for Real Estate Services.

Prior period information has been recast to conform to the current period presentation.

Operating revenue for the Water Utility Services reportable segment and Other Services was as follows:

The increase in net income was primarily driven by higher revenue associated with rate increases in California and Connecticut partially offset by higher administrative and general expenses, higher water production expenses, lower customer usage, and higher depreciation and amortization expense primarily related to new utility plant additions.

Operating Revenue

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(3) Excludes portion attributable to rate increases, which are shown in the rate increase lines above.

The revenue increase consists of $80,535 from Water Utility Services offset by a decrease of $2,459 from Other Services.

The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Connecticut, which resulted in an additional $36,076 in revenue, an increase in rates of $26,057 attributable to water supply costs that are passed through to customers, an increase of $14,861 due to higher usage, an increase of $2,532 from new customers, and increases in services and other revenue of $7,642, partially offset by decreases of $6,633 in other regulatory mechanisms and a decrease of $2,459 in Other Services.

The decrease in Other Services is primarily attributable to lower real estate activity.

The revenue increase consists of $49,045 from Water Utility Services and $620 from Other Services.

The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Maine which resulted in $23,045 of additional revenue, an increase in rates of $22,320 attributable to water supply costs that are passed through to customers, an increase of $3,929 from new customers, and regulatory mechanisms of $5,684, partially offset by decreases of $5,933 due to lower usage.

The revenue increase consists of $54,519 for Water Utility Services which is primarily due to a $44,134 increase in authorized rates in California, Connecticut and Texas, an increase in rates of $23,281 attributable to water supply costs that are passed through to customers, an increase of $1,452 from new customers, and increases in services and other revenue of $859, partially offset by decreases of $7,987 in other regulatory mechanisms, and a decrease of $7,220 due to lower usage.

The revenue decrease of $2,368 from Other Services is primarily attributable to lower real estate activity.

The revenue increase consists of $80,535 for Water Utility Services which is primarily due to an increase in authorized rates in California and Connecticut, which resulted in an additional $36,076 in revenue, an increase in rates of $26,057 attributable to water supply costs that are passed through to customers, an increase of $14,861 due to higher usage, an increase of $2,532 from new customers, and increases in services and other revenue of $7,642, partially offset by decreases of $6,633 in other regulatory mechanisms.

The revenue decrease of $2,459 from Other Services is primarily attributable to lower real estate activity.

Water Utility Services’ Operating Revenue and Customer Counts

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Operating expense is summarized below:

Operating Expense

2025 2024 2023

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Increase/(decrease)

Water production expenses:

Change in surface water use

$ 6,852 1 % $ 5,181 1 %

Change in usage

(3,336) (1) % 10,254 2 %

Change in new customers

429 — % (156) — %

Purchased water and groundwater extraction charge, energy price change and other production expenses, net

24,064 4 % 25,035 5 %

Balancing and memorandum account cost recovery

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$ 45,127 7 % $ 57,008 11 %

Sources of Water Supply

SJWC’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from Valley Water under the terms of a master contract with Valley Water expiring in 2051.

Surface water is sourced from SJWC’s 6,400 acres of watershed in the Santa Cruz mountains.

SJWC’s FCBA mitigates the cost of the water supply from changes and variations in quantities from each of these sources which affect the overall mix of the water supply.

The water rates for purchased water and the groundwater extraction charge may be increased by Valley Water at any time.

If an increase occurs, then SJWC would file an advice letter with the CPUC seeking authorization to increase revenues to offset the rate increase.

CWC’s water sources vary among the individual systems, but overall, approximately 60% of the total dependable yield comes from surface water supplies and 40% from wells.

In addition, CWC has water supply agreements to supplement its water supply with RWA and MDC that expire in 2058 and 2053, respectively.

TWC’s water supply consists of groundwater from wells and purchased treated and raw water from the GBRA.

TWC has long-term agreements with the GBRA, which expire in 2037, 2040, 2044 and 2050.

The agreements, which are take-or-pay contracts, provide TWC with an aggregate of 7,602 acre-feet of water per year from Canyon Lake at prices that may be adjusted periodically by GBRA.

TWC also has raw water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, to provide for 350 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

Forty active production wells located in a Comal Trinity Groundwater Conservation District, a regulated portion of the Trinity aquifer, are charged a groundwater pump tax based upon usage.

In August 2023, SJWTX Holdings Inc.’s unregulated subsidiary, TWR, acquired eight wells and the water rights of KTR, for a total cost of $40,061.

During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations.

Accordingly, SJW Group reclassified $28,386 related to indefinite lived water rights from other intangible assets to utility plant intangible assets and $11,684 from nonutility property to utility plant.

These wells have been projected to yield an additional 6,000 acre-feet per year or more.

TWC staff is currently working on acquiring easements and routing of the waterline and infrastructure needed to get this water into our Triple Peak water system to serve existing customers and planned new developments.

The Texas service area is currently experiencing drought conditions that result in water usage restrictions for customers.

Significant future capital investment of transmission main and storage facilities in addition to developing additional supply sources is planned for 2025 and beyond.

Water sources at MWC vary among the individual systems, but overall, approximately 90% of the total dependable yield comes from surface water supplies and 10% from wells.

MWC has a water supply agreement with the Kennebec Water District expiring in 2040.

The following table presents the sources of water supply:

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Water production in 2025 increased by 0.2 billion gallons from 2024.

The changes are primarily attributable to changes in consumption by customers driven primarily by weather conditions in our service areas.

The changes are primarily attributable to increase in consumption by customers in Connecticut partially offset by decrease in consumption by customers in California.

The contract water rates for SJWC are determined by Valley Water.

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CWC has an agreement with MDC to purchase water from MDC to serve the Unionville system.

The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.

CWC has agreed to purchase 0.28 billion gallons of water annually from MDC at the published retail rate, three dollars and eighty cents per hundred cubic feet as of December 31, 2024.

MWC has an agreement with the Kennebec Water District for potable water service.

The agreement has been in place for 20 years and was extended on November 7, 2020 for a new term of up to 20 years.

The agreement became effective on

October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.

CWC has agreed to purchase 0.28 billion gallons of water annually from MDC at the published retail rate, $3.91 per hundred cubic feet as of December 31, 2025.

MWC had an agreement with the Kennebec Water District for potable water service.

The agreement had previously been in place for 20 years prior to being renewed on November 7, 2020.

The renewal contained an initial term of five years and the ability to renew for up to 20 years at Kennebec Water District’s option.

In November 2025, the agreement was terminated and MWC transitioned from the previously negotiated rate to a standard tariff rate.

MWC guarantees a minimum consumption of 0.05 billion gallons of water annually.

Water sales to MWC are billed at a wholesale discount of twenty cents per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate was one dollar and fifty-one cents per hundred cubic feet as of December 31, 2024.

Through November 2025, water sales to MWC were billed at a wholesale discount of $0.20 per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate was $1.51 per hundred cubic feet as of December 31, 2025.

The various components of operating expenses are discussed below.

Water production expenses

Water production expenses increased $25,035 due to higher per unit costs paid for purchased water, groundwater extraction, energy price charges and other production expenses, $10,254 due to higher customer usage, and an increase of $5,181 as a result of decreased availability of California surface water in 2024 compared to 2023, offset by a decrease of $4,492 in water production balancing and memorandum accounts for the FCBA.

Water production expenses increased $19,139 in 2025 primarily related to increased water pass-through costs including purchased water, groundwater extraction charges and decreased availability of surface water, partially offset by decreased balancing and memorandum account cost recovery and lower customer usage.

SJWC was notified by Valley Water that the unit prices of purchased water and the groundwater extraction charge were increased by 9% and 10%, respectively, effective July 1, 2025.

Effective July 1, 2024, Valley Water increased the unit price of purchased water by approximately 12% and the groundwater extraction charge by approximately 13% for SJWC.

Administrative and General Expense

Administrative and general expenses include payroll related to administrative and general functions, all employee benefits charged to expense accounts, insurance expenses, legal fees, regulatory utility commissions’ expenses, expenses associated with being a public company, and general corporate expenses.

Administrative and general expense increased $7,174 in 2024, or 2% of total operating expenses from 2023, primarily due to expenses associated with certain acquisition evaluation and due diligence activities of $3,393, and an increase for pension expense, contracted work, and inflationary increases, offset by decreases in the allowance for credit losses of $6,082 and higher allocations to construction activities.

Administrative and general expense increased $20,168 in 2025, or 3% of total operating expenses from 2024, The increase was primarily attributable to funds received from the California Extended Water and Wastewater Arrearage Payment Program in the prior year, higher employee expenses, insurance and consulting work.

Maintenance Expense

Maintenance expenses increased $5,572 in 2024 or 1% of total operating expenses from 2023, primarily due to higher maintenance expenses related to contracted work for others, security expenses, and adjustments to certain regulatory assets as a result of the final decision in the Connecticut general rate case.

Maintenance expenses increased $1,594 in 2025, primarily due to higher contracted work.

Property Taxes and Other Non-income Taxes

Property taxes and other non-income taxes for 2024 increased $1,453 from 2023.

The increase was primarily the result of an increase in property taxes due to utility plant additions and payroll taxes due to increases in wages and headcount.

Property taxes and other non-income taxes increased $1,758 in 2025.

The increase was primarily the result of an increase in property taxes due to utility plant additions and higher payroll taxes due to increases in wages and headcount.

Depreciation and Amortization

Depreciation and amortization expense increased $6,987 in 2024 from 2023.

The increases were primarily due to increases in depreciation related to new utility plant additions.

Depreciation and amortization expense increased $2,468 in 2025.

The increase was primarily due to new utility plant additions.

Other Income and Expense

The change in other (expense) income in 2024 compared to 2023 was primarily due to lower income from certain service and other activities, an increase in interest expense due to higher average balances and interest rates, and higher charitable contributions, offset by higher benefits from the non-service component of pension cost.

SJW Group’s consolidated weighted-average cost of long-term debt, including the amortization of debt issuance costs, was 4.12% and 3.97% for the years ended December 31, 2024 and 2023.

The change in other (expense) income in 2025 compared to 2024 was primarily due to higher income from the equity portion of the Allowance for Funds Used During Construction (“AFUDC”), and an increase in pension non-service credit, partially offset by an increase in interest expense related to higher debt balances partially offset by lower interest rates.

AFUDC income increased due to higher construction work in progress balances from ongoing capital projects, resulting in greater capitalization of financing costs.

H2O America’s consolidated weighted-average cost of long-term debt, including the amortization of debt issuance costs, was 4.38% and 4.12% for the years ended December 31, 2025 and 2024.

Cost of borrowing on the lines of credit averaged 5.34% and 6.44% for the years ended December 31, 2025 and 2024, respectively.

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The effective consolidated income tax rate was 11% for 2025 and 9% for 2024.

The increase in the effective income tax rate was primarily due to the year-over-year effect of the higher uncertain tax position reserve release in 2023 and tax deficiencies related to share-based payments in 2024, partially offset by the benefit of a tax accounting method change in 2024.

The increase in the effective income tax rate was primarily due to a lower uncertain tax position reserve release and lower reversals of excess deferred income taxes, and the cumulative catch-up adjustment relating to the accounting method change filed in 2024 that resulted in reduced income tax expense for 2024, partially offset by higher flow through tax benefits.

Please refer to Note 7 , “Income Taxes,” of Notes to Consolidated Financial Statements for a reconciliation of income tax computed at the federal statutory rate to actual income tax expense.

On July 4, 2025, Public Law No.

119-21, referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law.

The OBBBA contains several changes to corporate taxation including the extension of key provisions of the 2017 Tax Cuts and Jobs Act.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others phased in through tax year 2027.

The legislation may be subject to further clarification and the issuance of interpretive guidance.

The Company evaluated the impact of the OBBBA tax legislation for the year ended December 31, 2025, and the impact was not material to the provision for income taxes and deferred tax balances.

Other Comprehensive Income

The change in other comprehensive income in 2024 compared to 2023 was primarily due to the change in the benefit obligation for CWC’s supplemental executive retirement plan primarily as a result of changes in the discount rate and the unrealized gain on its investments.

The change in other comprehensive income in 2025 compared to 2024 was primarily due to the change in the benefit obligation for CWC’s supplemental executive retirement plan primarily as a result of changes in the discount rate.

Non-GAAP Financial Measures

H2O America's net income and diluted EPS are prepared in accordance with GAAP.

Adjusted net income and Adjusted diluted EPS are non-GAAP financial measures representing GAAP earnings adjusted to exclude the effects of non-utility real estate transactions and costs associated with mergers and acquisition activities, if any.

These non-GAAP financial measures are provided as additional information for investors to evaluate the performance of H2O America's business activities excluding these items.

Management also believes these non-GAAP financial measures help investors and analysts better understand our actual results compared to our guidance on a non-GAAP basis.

H2O America uses adjusted net income and/or adjusted diluted EPS as the primary performance measurements when communicating with analysts and investors regarding our outlook and results.

Adjusted net income and Adjusted diluted EPS are also used internally to measure performance.

However, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes.

Further, these non-GAAP financial measures should be considered as a supplement to the financial information prepared on a GAAP basis rather than an alternative to the respective GAAP financial measures.

The following tables reconcile Net Income, and EPS, all as defined under GAAP, to our non-GAAP financial measures of Adjusted Net Income and Adjusted EPS for the years ended December 31, 2025, 2024 and 2023:

Year ended December 31,

2025 2024 2023

Reported GAAP Net Income $ 102,578 93,967 84,987

(Gain)/loss on sale of real estate investments 1

(273) 572 (1,473)

Expense for merger and acquisition activities 2

3,464 3,393 —

Tax effect of above adjustments 3

(882) (1,148) 412

Adjusted Net Income (non-GAAP) $ 104,887 96,784 83,926

Reported GAAP Diluted Earnings Per Share $ 2.92 2.87 2.68

(Gain)/loss on sale of real estate investments, net of tax (0.01) 0.01 (0.03)

Expense for merger and acquisition activities, net of tax 0.08 0.07 —

Adjusted Diluted Earnings Per Share (non-GAAP) $ 2.99 2.95 2.65

1 Included in the "Other, net" line on the consolidated statements of comprehensive income.

2 Included in the "Administrative and general" line on the consolidated statements of income.

3 The tax effect on all adjustments is calculated at the applicable statutory rate.

Liquidity and Capital Resources

Water Utility Services’ business derives the majority of its revenue directly from residential and business customers.

Management believes that the collection rate for its accounts receivables will continue to improve as service disconnections return to normal.

On December 28, 2023, SJWC submitted the application through the State of California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts greater than 60-days past due as of December 31, 2022.

Management asserts that the collection rate for its accounts receivables has improved as the ability to use service disconnections have returned to normal.

days past due as of December 31, 2022.

We received $9,130 in the second quarter of 2024 under the State of California Water and Wastewater Arrearages Payment Program.

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Funds were also generated from borrowings.

In 2024, SJW Group and its subsidiaries obtained $185,329 in funds from new long-term debt and $85,008 in funds from equity issuances.

From these amounts, SJW Group funded its 2024 capital expenditure programs, refinanced certain short and long-term borrowings, and funded working

See Note 4 and Note 6 of “Notes to Consolidated Financial Statements” for discussion on the equity and debt financing activities of SJW Group.

In addition, SJW Group paid cash dividends of $52,132 during the year ended December 31, 2024.

In 2024, the common dividends declared and paid on SJW Group’s common stock represented 55% of net income.

Dividends have been paid on SJW Group’s and its predecessor’s common stock for 325 consecutive quarters and the annual dividend amount has increased in each of the last 57 years.

While historically SJW Group has generally paid dividends equal to approximately 50% to 60% of its net income, SJW Group cannot guarantee that this trend will continue in the future.

In 2025, H2O America and its subsidiaries obtained $185,167 in funds from new long-term debt and $122,808 in funds from equity issuances.

From these amounts, H2O America funded its 2025 capital expenditure programs, refinanced certain short and long-term borrowings, and funded working capital.

See Note 4 and Note 6 of “Notes to Consolidated Financial Statements” for discussion on the equity and debt financing activities of H2O America.

In addition, H2O America paid cash dividends of $58,645 during the year ended December 31, 2025.

In 2025, the common dividends declared and paid on H2O America’s common stock represented 57% of net income.

Dividends have been paid on H2O America’s and its predecessor’s common stock for 329 consecutive quarters and the annual dividend amount has increased in each of the last 58 years.

While historically H2O America has generally paid dividends equal to approximately 50% to 60% of its net income, H2O America cannot guarantee that this trend will continue in the future.

The following table provides a summary of our operating, investing and financing cash flows for the years ended December 31, 2025, 2024 and 2023:

2025 2024 2023

Net cash provided by (used in):

Operating activities $ 244,803 195,526 190,831

Investing activities (520,101) (340,095) (322,272)

Financing activities 284,870 145,960 128,820

Net increase (decrease) in cash and cash equivalents 9,572 1,391 (2,621)

Cash and cash equivalents—beginning of the year

11,114 9,723 12,344

Cash and cash equivalents—end of the year

$ 20,686 11,114 9,723

Cash Flow from Operations

In 2024, SJW Group generated cash flow from operations of $195,526 compared to $190,831 in 2023.

Cash flow from operations is primarily generated by net income from revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes, share-based compensation, allowance for equity funds used during construction, gains on the sale of assets, and other changes in working capital items.

Cash flow from operations increased in 2024 by $4,695.

The increase was primarily due to a combination of the following factors:

(1) an increase of $36,057 due to higher net income adjusted for non-cash items, (2) an increase of $4,060 attributable to tax accruals, and (3) an increase of $2,568 for other assets and liabilities, offset by (4) an up-front service concession fee payments related to Cupertino for $23,900, and (5) a decrease in collections against our regulatory assets and liabilities, which generated a decrease of $14,090.

In 2025, H2O America generated cash flow from operations of $244,803 compared to $195,526 during 2024.

Cash flow from operations are primarily generated by net income from revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes, share-based compensation, allowance for equity funds used during construction, gains on the sale of assets, and other changes in working capital items.

In 2025, the increase in cash flows from operations was primarily attributable to higher net income, changes in working capital balances, changes in regulatory assets and liabilities, proceeds from the PFAS litigation settlement, and the absence of the prior year’s up-front service concession fee payments related to Cupertino.

Cash Flow from Investing Activities

Net cash used in investing activities for the year ended December 31, 2024, increased by $17,823 from the same period in the prior year, primarily as a result of an increase in company-funded capital expenditures of $81,257, an increase for developer-funded capital expenditures of $7,324, and an increase of $1,333 in utility plant retirement costs, offset by higher proceeds from sales of assets of $40,339 (primarily from the sale of SJW Land Company’s Tennessee real estate assets), lower additions to nonutility assets of $24,215, and a decrease of $7,537 in business acquisitions year over year.

Net cash used in investing activities for the year ended December 31, 2025, was $520,101 compared to $340,095 in 2024.

This increase of $180,006 is primarily a result of (1) an increase in company-funded capital expenditures of $136,578, primarily driven by $73,766 of expenditures at TWC and $62,738 at SJWC, (2) proceeds from the sale of real estate investments decreased by $37,771 driven primarily by the prior‑year sale of H2O America Land Company’s Tennessee real estate assets.

and (3) an increase for developer-funded capital expenditures of $5,967.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024, increased by $17,140 from the same period in the prior year, primarily as a result of increase in cash proceeds from long-term debt, an increase in cash receipts of advances and contributions in aid of construction and issuances of common stock, partially offset by an increase in the amount of net repayments on our lines of credit, and an increase in payments of dividends.

SJW Group’s cash management policy includes the issuance of long-term debt to pay down borrowings on our lines of credit.

Net cash provided by financing activities for the year ended December 31, 2025, was $284,870 compared to $145,960 in 2024.

This increase of $138,910 is primarily a result of (1) decrease in long-term debt repayments of $45,114, (2) an increase in net proceeds from common stock equity offerings of $37,800, (3) an increase in cash receipts of advances and contributions in aid of construction of $26,832, (4) an increase in net borrowings on the lines of credit of $20,969, and (5) an increase in proceeds from PFAS litigation settlement $16,949, partially offset by (6) an increase in payments of dividends of $6,513.

H2O America’s cash management policy includes the issuance of long-term debt to pay down borrowings on our lines of credit.

As such, during years when long-term borrowings are high, borrowings on our line of credit tend to be low and when long-term borrowings are low, borrowings on our line of credit tend to be high.

SJW Group and its subsidiaries have unsecured bank lines of credit totaling $350,000 as of December 31, 2024.

H2O America and its subsidiaries have unsecured bank lines of credit totaling $370,000 as of December 31, 2025.

Drawdowns on our lines of credit are restricted by our funded debt not exceeding a percentage of total capitalization as defined in our debt covenants.

SJW Group expects to periodically draw down on its lines of credit as dictated by our funding needs and subsequently repay such borrowings with cash from operations and issuance of long-term debt or equity.

H2O America expects to periodically draw down on its lines of credit as dictated by our funding needs and subsequently repay such borrowings with cash from operations and issuance of long-term debt or equity.

See also “Sources of Capital” below.

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Water Utility Services has budgeted 2026 capital expenditures of approximately $458,000, excluding capital expenditures financed by customer contributions and advances.

The 2025 budget is comprised of as follows:

Additionally, the 2026 budgeted capital expenditures exclude amounts pertaining to the Company’s previously announced acquisition of Quadvest, L.P.

The table below illustrates the Company’s 2026 budgeted capital expenditures:

Budgeted Capital

SJWC $ 212,000

Total capital expenditures $ 458,000

The 2025 capital expenditures budget is concentrated in main replacements.

The 2026 capital expenditures budget is concentrated on distribution system investments.

Water Utility Services’ capital expenditures are incurred in connection with normal upgrading and expansion of existing facilities and to comply with environmental regulations.

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Sources of Capital

SJW Group’s ability to finance future construction programs and sustain dividend payments depends on its ability to maintain or increase internally generated funds and attract external financing.

H2O America’s ability to finance future construction programs, execute on acquisitions and sustain dividend payments depends on its ability to maintain or increase internally generated funds and attract external financing.

The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.

SJW Group’s regulated operations’ financing activity is designed to achieve capital structures consistent with regulatory guidelines in the locations where the companies operate.

H2O America’s regulated operations’ financing activity is designed to achieve capital structures consistent with regulatory guidelines

in the locations where the companies operate.

See current authorized capital structures in Item 1 , “Business” under “Regulation and Rates.”

Short-term Financing Arrangements

SJW Group and its subsidiaries have unsecured line of credit agreements where borrowings are used to refinance existing debt, for working capital, and for general corporate purposes.

H2O America and its subsidiaries have unsecured line of credit agreements where borrowings are used to refinance existing debt, for working capital, and for general corporate purposes.

A summary of the line of credit agreements as of December 31, 2025 and 2024 are as follows:

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Syndicated credit agreement:

August 2, 2029

SJW Group $ 50,000 3,000 47,000 10,000

September 12, 2030

$ 50,000 11,000 39,000 3,000

SJWC 165,000 45,000 120,000 44,000

CTWS 90,000 30,000 60,000 53,000

TWC 20,000 — 20,000 2,500

80,000 13,000 67,000 —

25,000 — 25,000 —

30,000 16,000 14,000 —

Total syndicated credit agreement 350,000 85,000 265,000 77,000

SJWC credit agreement

June 11, 2026 10,000 — 10,000 —

CTWS credit agreement August 2, 2028 10,000 1,834 8,166 2,124

CTWS credit agreement May 15, 2025 40,000 40,000 — 40,000

CTWS credit agreement (1)

May 15, 2025 — — — 40,000

$ 370,000 86,834 283,166 119,124

In August 2024, SJW Group, SJWC, TWC, and CTWS entered into an amendment to its $300,000 credit agreement with JPMorgan Chase Bank and a syndicate of banks, which provided, among other matters, for an extension of the maturity date from August 2, 2028 to August 2, 2029.

CTWS does not intend to renew its $40,000 credit agreement following repayment at maturity in 2025.

Cost of borrowing on the lines of credit averaged 6.44% and 6.29% for the years ended of December 31, 2024 and 2023, respectively.

All of SJW Group’s and subsidiaries’ lines of credit contain customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, acquisitions and investments, restricted payments, asset sales, and fundamental changes.

(1) On July 11, 2025, CTWS repaid the outstanding balance under this credit agreement and concurrently terminated this credit agreement.

Total outstanding borrowings under the unsecured lines of credit as of December 31, 2025 and 2024 were $86,834 and $119,124, respectively.

The weighted-average interest rate on short-term borrowings outstanding at December 31, 2025, was 4.75% compared to 6.08% at December 31, 2024.

Cost of borrowing on the lines of credit averaged 5.34% and 6.44% for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, the unused portion of the lines of credit available for future borrowings was $283,166.

All of H2O America’s and subsidiaries’ lines of credit contain customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, acquisitions and investments, restricted payments, asset sales, and fundamental changes.

All of the lines of credit also include certain customary financial covenants such as a funded debt to capitalization ratio and a minimum interest coverage ratio.

As of December 31, 2024, SJW Group and its subsidiaries were in compliance with all covenants on their lines of credit.

For additional information on SJW Group’s lines of credit, see Note 5 of “Notes to Consolidated Financial Statements.”

As of December 31, 2025, H2O America and its subsidiaries were in compliance with all covenants on their lines of credit.

For additional information on H2O America’s lines of credit, see Note 5 of “Notes to Consolidated Financial Statements.”

Long-term Financing Arrangements

SJW Group’s and its subsidiaries’ long-term debt activities are for purposes of refinancing short-term borrowings, funding capital expenditures and working capital, and repayments of maturing long-term debt.

H2O America’s and its subsidiaries’ long-term debt activities are for purposes of refinancing short-term borrowings, funding capital expenditures and working capital, and repayments of maturing long-term debt.

The following table summarizes the long-term debt issuances and repayments for the year ended December 31, 2025:

Issuance (Repayment) Activity Date Maturity Date

Senior note, Series B, 7.37%

$ (30,000) January 2024

Senior note, Series J, 6.54%

(10,000) February 2024

February 2024

Senior note, Series Q, 5.63%

75,000 July 2024

Senior note, Series R, 5.83%

$ 55,000 November 2025

November 2055

Bank term loan, 4.09% (1,493) 2025

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Senior note, Series 2025, 6.08%

25,000 January 2024

Senior note, Series 2024, 5.78%

50,000 August 2024

State revolving fund loan, 2.00%

60,000 October 2025

First Mortgage Bond, Series G, 8.95%

December 2024

November 2055

State revolving fund loan, 2.00%

State revolving fund loans, various series, 0.00%-2.58% 3,485 2025

Bank term loan, 6.70%

(4,500) December 2024

December 2024

Bank term loan, 6.473%

15,000 December 2024

November 2054

25,000 July 2025

Bank term loan, 6.68%

20,000 December 2024

November 2054

On November 15, 2023, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $25,000 of its 6.46% Senior Notes, Series 2023 (“Series 2023 Notes”).

The Series 2023 Notes are unsecured obligations of CWC and are due on January 15, 2054.

Interest is payable semi-annually in arrears on January 15th and July 15th of each year.

The closing of the notes purchase agreement occurred on January 22, 2024.

On July 31, 2024, SJWC entered into and closed a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $75,000 of its 5.63% Senior Notes, Series Q (“Series Q Notes”).

The Series Q Notes are unsecured obligations of SJWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

On July 31, 2024, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $50,000 of its 5.78% Senior Notes, Series 2024 (“Series 2024 Notes”).

The Series 2024 Notes are unsecured obligations of CWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

The closing of the notes purchase agreement occurred in August 2024.

On December 6, 2024, MWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $15,000 at a fixed interest rate of 6.47%.

The note is an unsecured obligation of MWC due on November 20, 2054.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

40,000 September 2025

September 2055

MWC finances a portion of its capital improvement program through loans under state revolving fund programs, including the Safe Drinking Water Revolving Fund (“SDWSRF”).

In 2024, MWC obtained MPUC approval to issue two First Mortgage Bonds through the Maine Municipal Bond Bank.

The Series X Bond totaled $3,330, inclusive of $598 of principal forgiveness, resulting in a net loan of $2,732;

the issuance was approved on August 22, 2024 and completed on October 1, 2024.

The Series Y Bond totaled $3,596, inclusive of $1,258 of principal forgiveness, resulting in a net loan of $2,337;

the issuance was approved on August 22, 2024 and completed on November 1, 2024.

Each bond constitutes an unsecured obligation of MWC, with the Series X Bond maturing on April 1, 2044 and the Series Y Bond maturing on April 1, 2054, and each bears a fixed interest rate of 1%.

Interest is payable semi-annually in arrears on April 1 and October 1, commencing April 1, 2025.

On December 6, 2024, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $20,000 at a fixed interest rate of 6.47%.

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All of the other terms and conditions remain the same.

The debt and credit agreements of SJW Group and its subsidiaries contain various financial and other covenants.

On May 23, 2025, MWC submitted an application with MPUC seeking approval to issue unsecured notes in an amount up to $25,000.

The MPUC granted approval on June 17, 2025.

On July 10, 2025, MWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $25,000 at a fixed interest rate of 6.70%.

The note is an unsecured obligation of MWC due on July 20, 2055.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

On September 18, 2025, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $40,000 at a fixed interest rate of 6.68%.

This note is an unsecured obligation of TWC due on September 1, 2055.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

On October 28, 2025, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company agreed to sell an aggregate principal amount of $60,000 of its 6.08% Senior Notes, Series 2025 (“Series 2025 Notes”).

The Series 2025 Notes are unsecured obligations of CWC and are due on November 1, 2055.

Interest is payable semi-annually in arrears on May 1st and November 1st of each year, commencing May 1, 2026.

On November 12, 2025, SJWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $55,000 of its 5.83% Senior Notes, Series R (“Series R Notes”).

The Series R Notes are unsecured obligations of SJWC and are due on November 1, 2055.

Interest is payable semi-annually in arrears on May 1st and November 1st of each year, commencing May 1, 2026.

The debt and credit agreements of H2O America and its subsidiaries contain various financial and other covenants.

Non-compliance with these covenants could result in accelerated due dates and termination of the agreements.

In addition, the credit agreements contain customary representations and warranties and are subject to customary events of default, which may result

in the outstanding debt becoming immediately due and payable.

As of December 31, 2024, SJW Group and its subsidiaries were in compliance with all covenants related to its long-term debt agreements.

In addition, the credit agreements contain customary representations and warranties and are subject to customary events of default, which may result in the outstanding debt becoming immediately due and payable.

As of December 31, 2025, H2O America and its subsidiaries were in compliance with all covenants related to its long-term debt agreements.

For additional information, see Note 6 of “Notes to Consolidated Financial Statements.”

Equity Financing Arrangements

In March 2023, SJW Group entered into Amendment No.

1 to the equity distribution agreement (the “Equity Distribution Agreement”), dated November 17, 2021, between SJW Group and J.P.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company offered and sold shares of its common stock, $0.001 par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $240,000.

The Equity Distribution Agreement was replaced by a new equity distribution agreement in October 2024, as discussed below.

Through the Equity Distribution Agreement, SJW Group issued and sold 3,151,433 shares of common stock at a weighted average price of $67.80 for a total net proceeds of $208,838 over the life of the agreement.

On October 29, 2024, SJW Group entered into an equity distribution agreement (the “New Equity Distribution Agreement”) with BofA Securities, Inc., J.P.

On October 29, 2024, H2O America entered into an equity distribution agreement (the “New Equity Distribution Agreement”) with BofA Securities, Inc., J.P.

Morgan Securities LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company may offer and sell shares of its common stock, $0.001 par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $200,000.

Since the inception of the New Equity Distribution Agreement, SJW Group has issued and sold 375,513 shares of common stock at a weighted average price of $55.46 for a total net proceeds of $20,167 and has $179,175 of aggregate gross sales price of shares remaining to issue under the New Equity Distribution Agreement as of December 31, 2024.

For the year ended December 31, 2024, SJW Group issued and sold a total of 1,522,289 shares of common stock with a weighted average price of $57.15 per share and received $85,008 in net proceeds under the aforementioned equity distribution agreements.

Since the inception of the New Equity Distribution Agreement, H2O America has issued and sold 2,763,359 shares of common stock at a weighted average price of $52.39 for a total net proceeds of $142,975 and has $55,239 of aggregate gross sales price of shares remaining to issue under the New Equity Distribution Agreement as of December 31, 2025.

For the year ended December 31, 2025, H2O America issued and sold a total of 2,387,846 shares of common stock with a weighted average price of $51.90 per share and received $122,806 in net proceeds under the New Equity Distribution Agreement.

Credit Rating

The condition of the capital and credit markets or the strength of financial institutions could impact SJW Group’s ability to draw on its lines of credit, issue long-term debt, sell its equity or earn interest income.

In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase SJW Group’s cost of capital.

The condition of the capital and credit markets or the strength of financial institutions could impact H2O America’s ability to draw on its lines of credit, issue long-term debt, sell its equity or earn interest income.

In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase H2O America’s cost of capital.

While our ability to obtain financing will continue to be a risk, we believe that based on our 2025 and 2024 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future.

SJW Group, CTWS and CWC were put on negative watch on September 19, 2023.

Standard & Poor’s noted the change in outlook is due to recent regulatory and legislative developments in Connecticut that are not consistent with Standard & Poor’s view of the regulatory framework for investor-owned utilities.

On July 15, 2025, Standard & Poor’s Ratings Services revised the outlook for H2O America, CTWS and CWC from stable to negative following the announcement of the Quadvest acquisition.

The following table are the current Standard & Poor’s Rating Service assigned company ratings:

Entity Rating Outlook

SJW Group A- Negative

SJWC A Stable

CTWS A- Negative

CWC A- Negative

Off-Balance Sheet Arrangement/Contractual Obligations

SJW Group has no significant contractual obligations not fully recorded on its Consolidated Balance Sheet or not fully disclosed in the Notes to Consolidated Financial Statements.

SJW Group’s contractual obligations and commitments as of December 31, 2024 are as follows:

H2O America has no significant contractual obligations not fully recorded on its Consolidated Balance Sheet or not fully disclosed in the Notes to Consolidated Financial Statements.

H2O America’s contractual obligations and commitments as of December 31, 2025 are as follows:

Total Contractual Obligations Due in

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Connecticut Innovations Revenue Bonds, CWC 22,050 — 9,550 12,500 —

22,050 — — 22,050 —

State revolving fund loans, CWC 308 16 33 33 226

327 16 33 33 245

State revolving fund loans, MWC 16,336 1,249 2,788 2,052 10,247

Senior notes, H2O America

560,000 — — 360,000 200,000

Senior notes, SJW Group 560,000 — — 310,000 250,000

Bank term loans, CTWS 12,212 2,248 1,872 1,601 6,491

Seller financing debt, TWC (2) 29,000 437 1,642 2,639 24,282

29,000 — 1,133 2,145 25,722

Total contractual cash obligation 1,959,688 26,519 53,055 383,966 1,496,148

23 unchanged sentences

The agreement was signed in April 2006 and became effective upon the receipt of all regulatory approvals in 2008 and will remain in effect for a minimum of 50 years upon becoming effective.

CWC will pay RWA $75 per year as part of a capacity agreement, for a total of 14 years, starting on the effective date of the agreement.

In addition, CWC has the option, but is under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement ($3.1 million per billion gallons as of December 31, 2024).

CWC has the option, but is under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement ($3.3 million per billion gallons as of December 31, 2025).

CWC has an agreement with the MDC to purchase water from MDC to serve the Unionville system.

The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the

agreement were placed in service.

The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.

CWC has agreed to purchase 0.28 billion gallons of water annually from MDC.

The rate charged by the MDC at December 31, 2024 were three dollars and eighty cents per hundred cubic feet.

MWC has an agreement with the Kennebec Water District for potable water service.

The rate charged by the MDC at December 31, 2025 were $3.91 per hundred cubic feet.

MWC had an agreement with the Kennebec Water District for potable water service.

The agreement has been in place for 20 years and was extended on November 7, 2020 for a new term of up to 20 years.

In November 2025, the agreement was terminated and MWC transitioned from the previously negotiated rate to a standard tariff rate.

MWC guarantees a minimum consumption of 50 million gallons of water annually.

Water sales to MWC are billed at a wholesale discount of twenty cents per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate was one dollar and fifty-one cents per hundred cubic feet as of December 31, 2024.

Water sales to MWC are billed at a wholesale discount of $0.20 per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate was $1.51 per hundred cubic feet as of December 31, 2025.

TWC has long-term contracts with the GBRA.

2 unchanged sentences

The water rate may be adjusted by GBRA at any time, provided GBRA gives TWC a 60-day written notice on the proposed adjustment.

TWC also has raw water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

TWC also has treated water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

Employee Benefit Arrangements

3 unchanged sentences

The amount of required contributions for years thereafter is not actuarially determinable.

SJWC’s other benefit obligations include employees’ and directors’ postretirement benefits, an Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan, Special Deferral Election Plan and Deferral Election Program for non-employee directors.

SJWC’s other benefit obligations include employees’ postretirement benefits, an Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan, Special Deferral Election Plan and Deferral Election Program for non-employee directors.

Under these benefit plans, SJWC is committed to pay approximately $2,299 annually to former officers and directors.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis