H2O AMERICA 10-K

Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of H2O America Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of H2O America and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for the financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 52 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impact of Rate Regulation on the Financial Statements — Refer to Note 3 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s water and wastewater services. Management has determined it meets the requirements under generally accepted accounting principles to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as depreciable utility plant; regulatory assets and liabilities; operating revenues; operation and maintenance expense; and depreciation expense. The Commissions establish rates for the purpose of permitting the recovery of the cost of service and a return on investment. The Company’s rates are subject to regulatory ratemaking processes. The Company records deferred costs and credits on the consolidated balance sheets as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the ratemaking process in a period different from when the costs and credits are incurred. Accounting for such costs and credits is based on management’s judgment and prior historical ratemaking practices, and it occurs when management determines that it is probable that these costs and credits will be recognized in the future revenue of the Company through the ratemaking process. We identified the impact of rate regulation as a critical audit matter due to the significant judgments that underlie the Company’s financial statement line items and disclosure impacted by rate regulation and the high degree of subjectivity involved in assessing the impact of regulatory decisions on the financial statements. Management judgments include assessing the probability of (1) recovery in future rates of incurred costs and (2) the requirement to refund amounts to customers. Given that management’s accounting judgements are based on consideration of evidence, such as regulatory rules and decisions, past practice, and the uncertain outcomes of future regulatory decisions, auditing these judgements required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and pervasive impact on the financial statements. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the impact of rate regulation include the following, among others: • We tested the effectiveness of management’s controls over the initial recognition of amounts as utility plant and regulatory assets or liabilities and the evaluation of the probability of (1) the recovery in future rates of costs incurred as utility plant and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the monitoring and evaluation of regulatory developments that may affect the probability of recovering costs in future rates or of a future reduction in rates, and controls over relevant computations impacting certain regulatory asset or liability balances. • We read regulatory orders issued by the Commissions to the Company, regulatory statutes, and other publicly available information to evaluate management’s determination of the accounting impacts of any new or revised regulatory decisions and their impact on measurement of related regulatory assets and liabilities. • We obtained supporting documentation from management regarding the evidence, such as regulatory rules and decisions, past practices, and other facts and circumstances, used in the measurement of regulatory assets and liabilities for compliance with the related orders. We reconciled the underlying data or inputs used in the measurement to rate decisions approved by the Commissions and tested the mathematical accuracy of the calculations. • We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates. 53 Table of Contents • We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded, and regulatory developments, were appropriate and consistent with the information obtained in our procedures. /s/ Deloitte & Touche LLP San Jose, California February 26, 2026 We have served as the Company’s auditor since 2020. 54 Table of Contents H2O America and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2025 2024 Assets Utility plant: Land $ 44,600 44,657 Depreciable plant and equipment 4,688,644 4,249,314 Construction work in progress 269,272 179,486 Intangible assets 51,683 51,604 Total utility plant 5,054,199 4,525,061 Less: accumulated depreciation and amortization 1,120,232 1,036,450 Net utility plant 3,933,967 3,488,611 Nonutility properties 1,683 1,314 Less: accumulated depreciation and amortization 103 98 Net nonutility properties 1,580 1,216 Current assets: Cash and cash equivalents 20,686 11,114 Accounts receivable: Customers, net of allowances for uncollectible accounts of $ 722 and $ 1,172 in 2025 and 2024, respectively 62,471 68,679 Income tax 2,720 5,953 Other 7,710 7,059 Accrued unbilled revenue 68,971 60,847 Prepaid expenses 11,634 10,297 Current regulatory assets 8,315 18,172 Other current assets 8,086 8,593 Total current assets 190,593 190,714 Other assets: Regulatory assets, less current portion 246,547 224,055 Investments 19,711 18,087 Postretirement benefit plans 80,967 66,422 Goodwill 640,311 640,311 Other 35,890 28,893 Total other assets 1,023,426 977,768 Total assets $ 5,149,566 4,658,309 See Accompanying Notes to Consolidated Financial Statements. 55 Table of Contents H2O America and Subsidiaries CONSOLIDATED BALANCE SHEETS (Continued) (in thousands, except share and per share data) December 31, 2025 2024 Capitalization and Liabilities Capitalization: Stockholders’ equity: Common stock, $ 0.001 par value; authorized 70,000,000 shares in 2025 and 2024; issued and outstanding 36,118,242 shares in 2025 and 33,629,169 shares in 2024 $ 36 34 Additional paid-in capital 958,188 827,796 Retained earnings 581,080 537,184 Accumulated other comprehensive income 1,467 1,960 Total stockholders’ equity 1,540,771 1,366,974 Long-term debt, less current portion 1,866,819 1,706,904 Total capitalization 3,407,590 3,073,878 Current liabilities: Lines of credit 86,834 119,124 Current portion of long-term debt 23,504 3,648 Accrued groundwater extraction charges, purchased water and power 29,321 25,118 Accounts payable 75,427 56,256 Accrued interest 18,241 17,476 Accrued payroll 19,109 15,193 Current regulatory liabilities — 1,122 Other current liabilities 20,942 23,236 Total current liabilities 273,378 261,173 Deferred income taxes 307,893 276,043 Advances for construction 201,413 155,397 Contributions in aid of construction 342,697 340,738 Postretirement benefit plans 45,878 45,063 Regulatory liabilities, less current portion 546,797 483,719 Other noncurrent liabilities 23,920 22,298 Commitments and contingencies Total capitalization and liabilities $ 5,149,566 4,658,309 See Accompanying Notes to Consolidated Financial Statements. 56 Table of Contents H2O America and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31 (in thousands, except share and per share data) 2025 2024 2023 Operating revenue $ 800,590 748,439 670,363 Operating expense: Production Expenses: Purchased water 126,343 158,568 135,982 Power 21,769 11,457 9,602 Groundwater extraction charges 112,076 73,146 62,980 Other production expenses 50,973 48,851 47,636 Total production expenses 311,161 292,022 256,200 Administrative and general 125,998 105,830 98,656 Maintenance 32,895 31,301 25,729 Property taxes and other non-income taxes 37,686 35,928 34,475 Depreciation and amortization 115,323 112,855 105,868 Total operating expense 623,063 577,936 520,928 Operating income 177,527 170,503 149,435 Other (expense) income: Interest on long-term debt and other interest expense ( 72,575 ) ( 71,390 ) ( 66,144 ) Pension non-service credit (cost) 6,436 3,769 ( 1,230 ) Other, net 3,545 55 8,882 Income before income taxes 114,933 102,937 90,943 Provision for income taxes 12,355 8,970 5,956 Net income 102,578 93,967 84,987 Other comprehensive income: Unrealized (loss) gain on investment, net of taxes of $ 0 in 2025, $( 163 ) in 2024 and $ 166 in 2023 — ( 442 ) 530 Adjustment to pension benefit plans, net of taxes of $ 0 in 2025, $ 0 in 2024 and $ 80 in 2023 ( 493 ) 611 ( 216 ) Comprehensive income $ 102,085 94,136 85,301 Earnings per share —Basic $ 2.93 2.87 2.69 —Diluted $ 2.92 2.87 2.68 Weighted average shares outstanding —Basic 35,002,252 32,701,292 31,575,197 —Diluted 35,102,487 32,779,573 31,663,274 See Accompanying Notes to Consolidated Financial Statements. 57 Table of Contents H2O America and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) Common Stock Additional Paid-in Capital Retained Earnings Other Comprehensive Income (Loss) Total Stockholders’ Equity Number of Shares Amount Balances, December 31, 2022 30,801,912 $ 31 651,004 458,356 1,477 1,110,868 Net income — — — 84,987 — 84,987 Unrealized gain on investment, net of tax effect of $ 166 — — — — 530 530 Adjustment to pension benefit plans, net of taxes of $ 80 — — — — ( 216 ) ( 216 ) Share-based compensation — — 4,647 ( 55 ) — 4,592 Issuance of restricted and deferred stock units 67,164 — ( 2,259 ) — — ( 2,259 ) Employee stock purchase plan 34,122 — 2,141 — — 2,141 Common stock issuance, net of costs 1,119,806 1 80,658 80,659 Dividends paid ($ 1.52 per share) — — — ( 47,905 ) — ( 47,905 ) Balances, December 31, 2023 32,023,004 32 736,191 495,383 1,791 1,233,397 Net income — — — 93,967 — 93,967 Unrealized loss on investment, net of tax effect of $( 163 ) — — — — ( 442 ) ( 442 ) Adjustment to pension benefit plans, net of taxes of — — — — — 611 611 Share-based compensation — — 5,623 ( 34 ) — 5,589 Issuance of restricted and deferred stock units 41,023 — ( 1,212 ) — — ( 1,212 ) Employee stock purchase plan 42,853 — 2,188 — — 2,188 Common stock issuance, net of costs 1,522,289 2 85,006 — — 85,008 Dividends paid ($ 1.60 per share) — — — ( 52,132 ) — ( 52,132 ) Balances, December 31, 2024 33,629,169 34 827,796 537,184 1,960 1,366,974 Net income — — — 102,578 — 102,578 Adjustment to pension benefit plans, net of taxes of — — — — — ( 493 ) ( 493 ) Share-based compensation — — 6,444 ( 37 ) — 6,407 Issuance of restricted and deferred stock units 50,366 — ( 989 ) — — ( 989 ) Employee stock purchase plan 50,861 — 2,131 — — 2,131 Issuance of common stock, net of issuance costs 2,387,846 2 122,806 — — 122,808 Dividends paid ($ 1.68 per share) — — — ( 58,645 ) — ( 58,645 ) Balances, December 31, 2025 36,118,242 $ 36 958,188 581,080 1,467 1,540,771 See Accompanying Notes to Consolidated Financial Statements. 58 Table of Contents H2O America and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31 (in thousands) 2025 2024 2023 Operating activities: Net income $ 102,578 93,967 84,987 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 120,490 115,050 108,138 Deferred income taxes 5,183 10,355 ( 8,510 ) Stock-based compensation 6,444 5,623 4,647 Allowance for equity funds used during construction ( 6,237 ) ( 2,362 ) ( 2,114 ) Loss on sale of nonutility properties and other assets — 572 — Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts receivable and accrued unbilled revenue ( 3,234 ) ( 12,663 ) ( 10,869 ) Accounts payable and other current liabilities 9,280 4,241 492 Accrued groundwater extraction charges, purchased water and power 4,204 639 4,772 Tax receivable and payable, and other accrued taxes ( 18,280 ) ( 18,355 ) ( 22,415 ) Postretirement benefits ( 5,682 ) ( 4,400 ) ( 1,549 ) Regulatory assets and liabilities excluding income tax temporary differences and postretirement benefits 7,374 ( 1,812 ) 12,278 Up-front service concession payments — ( 23,900 ) — Other noncurrent assets and liabilities 26,114 21,042 20,756 Proceeds from litigation settlement, net 7,823 — — Other changes, net ( 11,254 ) 7,529 218 Net cash provided by operating activities 244,803 195,526 190,831 Investing activities: Additions to utility plant: Company-funded ( 489,607 ) ( 353,029 ) ( 271,772 ) Contributions in aid of construction ( 30,146 ) ( 24,179 ) ( 16,855 ) Additions to nonutility assets and real estate investments — ( 29 ) ( 24,244 ) Payments for business acquisitions — — ( 7,537 ) Cost to retire utility plant, net of salvage ( 3,149 ) ( 3,430 ) ( 2,097 ) Proceeds from sale of real estate investments and release of escrow deposit 2,801 40,572 233 Net cash used in investing activities ( 520,101 ) ( 340,095 ) ( 322,272 ) Financing activities: Borrowings from lines of credit 436,530 242,000 146,415 Repayments of lines of credit ( 468,821 ) ( 295,260 ) ( 134,493 ) Long-term borrowings 185,167 185,329 70,000 Repayments of long-term borrowings ( 3,861 ) ( 48,975 ) ( 4,347 ) Dividends paid ( 58,645 ) ( 52,132 ) ( 47,905 ) Receipts of advances and contributions in aid of construction 59,902 33,070 22,425 Refunds of advances for construction ( 4,404 ) ( 2,963 ) ( 2,763 ) Issuance of common stock, net of issuance costs 122,808 85,008 80,659 Proceeds from litigation settlement, net 16,949 — — Other changes, net ( 755 ) ( 117 ) ( 1,171 ) Net cash provided by financing activities 284,870 145,960 128,820 Net change in cash and cash equivalents 9,572 1,391 ( 2,621 ) Cash and cash equivalents, beginning of year 11,114 9,723 12,344 Cash and cash equivalents, end of year $ 20,686 11,114 9,723 Cash paid (refunded) during the year for: Interest $ 79,428 73,268 67,508 Interest, net of amounts capitalized $ 72,093 69,744 64,608 Income taxes $ 3,238 ( 598 ) 23,020 Supplemental disclosure of non-cash activities: Accrued payables for additions to utility plant $ 48,146 41,692 35,904 Utility property installed by developers $ 3,686 2,465 3,341 Proceeds receivable from sale of real estate investments $ — 2,801 — Accrued selling expenses on sale of real estate investments $ — 2,177 — Seller financing in asset acquisition, net of discount $ — — 15,400 See Accompanying Notes to Consolidated Financial Statements. 59 Table of Contents H2O AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 2025, 2024 and 2023 (Dollars in thousands, except share and per share data and where otherwise noted) Note 1. Organization and Operations The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of H2O America, its wholly owned subsidiaries, and one variable interest entity in which one H2O America subsidiary is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The accounting policies of H2O America’s subsidiaries comply with the applicable uniform system of accounts prescribed by the respective regulators and conform to generally accepted accounting principles for rate-regulated public utilities. H2O America is a holding company that conducts its business through the following wholly owned subsidiaries: San Jose Water Company (“SJWC”), H2O America TX Holdings, Inc., H2O America Land Company, H2O America NE LLC, and National Water Utility Service, LLC (“NWU”). H2O America TX Holdings, Inc. is a holding company for its wholly owned subsidiaries, SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”). H2O America NE LLC is the holding company for Connecticut Water Service, Inc. (“CTWS”) whose wholly owned subsidiaries are The Connecticut Water Company (“CWC”), The Maine Water Company (“MWC”), New England Water Utility Services, Inc. (“NEWUS”), and Chester Realty, Inc. NWU is the contracting entity for shared services among the H2O America affiliates formed in October 2024. H2O America, through its wholly owned subsidiaries, primarily provides water utility and other related services in California, Connecticut, Maine and Texas. H2O America has business in property management and real estate investment activity conducted by H2O America Land Company and Chester Realty, Inc. TWC is a public utility in the business of providing water service in Bandera, Blanco, Comal, Hays, Kendall, Medina and Travis Counties in the growing region between San Antonio and Austin, Texas. TWC additionally provides wastewater service in Comal and Kendall counties. TWC also holds a 25 % equity interest in Acequia Water Supply Corporation (“Acequia”). Acequia has been determined to be a variable interest entity within the scope of Accounting Standards Codification (“ASC”) Topic 810—“Consolidation” with TWC as the primary beneficiary. As a result, Acequia has been consolidated with TWC. TWOS was created for non-tariffed service operations and TWR was formed to hold wholesale water supply assets. Water sales are seasonal in nature and influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. 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. Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Depreciable Utility Plant and Equipment The major components of depreciable plant and equipment as of December 31, 2025 and 2024 are as follows: 2025 2024 Source of supply $ 243,335 228,621 Pumping plant 331,134 301,280 Water treatment plant 396,061 367,836 Transmission and distribution plant 3,323,482 3,015,978 General plant 394,632 335,599 Total depreciable plant and equipment $ 4,688,644 4,249,314 60 Table of Contents Depreciation is computed using the straight-line method over the estimated remaining service lives of groups of assets. The estimated service lives of depreciable plant and equipment are as follows: Useful Lives Source of supply 20 to 100 years Pumping plant 5 to 70 years Water treatment plant 5 to 62 years Transmission and distribution plant 10 to 100 years General plant 5 to 68 years For the years 2025, 2024 and 2023, depreciation expense as a percentage of the beginning of the year balance of depreciable plant was 2.75 %, 2.9 % and 2.9 %, respectively. Depreciation expense for utility plant for the years ended December 31, 2025, 2024 and 2023 was $ 114,265 , $ 111,575 and $ 104,325 , respectively. The cost of utility plant retired (less salvage) is charged to accumulated depreciation and no gain or loss is recognized. To the extent H2O America recovers retirement costs through rates during the life of the associated asset and before the costs are incurred, these amounts result in a regulatory liability being reported based on the amounts previously recovered through customer rates until the costs to retire those assets are incurred. Allowance For Funds Used During Construction (“AFUDC”) AFUDC represents the capitalized costs of borrowed funds or a return on equity funds used to finance utility plant under construction and is capitalized as part of construction work in progress. AFUDC is recorded to the extent approved by the respective states’ utility regulators and is recovered through water rates as the utility plant depreciates. The amount of AFUDC debt capitalized in 2025, 2024 and 2023 was $ 7,335 , $ 3,524 and $ 2,900 , respectively. Interest on long-term debt is presented net of AFUDC debt capitalized on the Consolidated Statements of Comprehensive Income. The amount of AFUDC equity capitalized in 2025, 2024 and 2023 was $ 6,237 , $ 2,362 and $ 2,114 , respectively, reflected in “Other, net” on the Consolidated Statements of Comprehensive Income. Intangible Assets Finite-lived intangible assets are recorded at cost and are amortized using the straight-line method over the estimated useful life of the asset, ranging from 3 to 70 years. Indefinite-lived intangibles assets are not amortized, but instead are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. (see Note 8 , “Intangible Assets”). Nonutility Properties and Real Estate Investments Nonutility properties and real estate investments are recorded at cost and consist primarily of land and buildings. Net gains and losses from the sale of nonutility properties and real estate investments are recorded as a component of other (expense) income and operating expense, respectively, in the Consolidated Statements of Comprehensive Income. Nonutility property is property that is neither used nor useful in providing water utility services to customers and is excluded from rate base for rate-setting purposes. SJWC recognizes gain or loss on the disposition of nonutility property in accordance with California Public Utilities Commission (“CPUC”) Code Section 790, whereby the net proceeds are reinvested back into property that is useful in providing water utility services to customers. CTWS and TWC do not have regulatory restrictions on the use of proceeds from the sale of nonutility property. There is no depreciation associated with Water Utility Services nonutility property as it is all undeveloped land. The major components of nonutility properties and real estate investments are as follows as of December 31: 2025 2024 Land $ 914 915 Wholesale water supply assets — — Buildings and improvements 769 399 Subtotal 1,683 1,314 Less: accumulated depreciation and amortization 103 98 Total $ 1,580 1,216 Depreciation on buildings and improvements for real estate investments is computed using the straight-line method over the estimated useful lives of the assets, ranging from 7 to 39 years. 61 Table of Contents Business Combinations and Asset Acquisitions H2O America applies the provisions of Financial Accounting Standards Board (“FASB”) ASC Topic 805—“Business Combinations” for the accounting related to business and asset acquisitions. First, H2O America applies the guidance in Topic 805 to determine whether a transaction represents a business combination or an acquisition of assets. If the transaction is a business combination, Topic 805 requires H2O America to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. If the transaction is an acquisition of assets, the cost of the transaction, including transaction costs, is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill. While H2O America uses best available estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, such estimates are inherently uncertain and subject to refinement. For business combinations, Topic 805 provides for a measurement period from the acquisition date of up to one year, during which we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to the Consolidated Statements of Comprehensive Income. Accounting for business combinations and asset acquisitions requires H2O America to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed and pre-acquisition contingencies. Although H2O America believes that the assumptions and estimates we make are reasonable and appropriate, they are based in part on historical experience and information obtained from the acquired company’s management and are inherently uncertain. Events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to: future expected cash flows from services; historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; the expected use of the acquired assets; and discount rates. See Note 14 , “Acquisitions” for further information on business combinations and asset acquisitions. Impairment of Long-Lived Assets and Goodwill In accordance with the requirements of FASB ASC Topic 360—“Property, Plant and Equipment,” the long-lived assets of H2O America, including property, plant and equipment and finite-lived intangible assets, are reviewed for impairment when changes in circumstances or events indicate that the carrying amount of the assets may not be recoverable. In assessing qualitative factors, H2O America considers the impact of these key factors: change in industry and competitive environment, financial performance, and other relevant company-specific events. When such changes in circumstances or events occur, the company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. To the extent an impairment exists, the asset is written down to its estimated fair value with a corresponding charge to operations in the period in which the impairment is identified. No impairments occurred during 2025 and 2024. 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. Indefinite-lived intangible assets, other than goodwill, are not amortized but are tested for impairment annually on October 1 st or more frequently if an event occurs or circumstances change that would, more likely than not, reduce the fair value of indefinite-lived intangible assets below their carrying amount. In performing impairment tests of goodwill and indefinite-lived intangible assets, 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 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. As of October 1, 2025, H2O America performed qualitative assessments of both goodwill and indefinite-lived intangible assets and found no indicators of impairment and therefore did not perform quantitative impairment tests. No impairments of goodwill or indefinite-lived intangible assets occurred during 2025, 2024 or 2023. Cash and Cash Equivalents Cash and cash equivalents primarily consisted of cash on deposit with banks and short-term, highly liquid investments with original maturities of three months or less. Accounts Receivable Accounts receivable are recorded at the invoiced amounts. The allowance for uncollectible accounts is H2O America’s best estimate of credit losses in its existing accounts receivable and is determined based on current expected losses. The estimate is 62 Table of Contents based on historical loss information adjusted for current conditions. Accounts balances are written off against the allowance when it is probable the receivable will not be recovered or is over a certain number of days outstanding. During the second quarter of 2024, H2O America recorded a reduction to its allowance for credit losses of $ 7,822 , of which $ 3,960 resulted in a reduction to regulatory assets and $ 3,862 was recorded through administrative and general expense. Financial Instruments and Investments The following instruments are not measured at fair value on the company’s Consolidated Balance Sheets but require disclosure of fair values: cash and cash equivalents, accounts receivable, accounts payable, and lines of credit. The estimated fair value of such instruments approximates their carrying value as reported on the Consolidated Balance Sheets. The fair value of such financial instruments are determined using the income approach based on the present value of estimated future cash flows. The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1. The fair value of long-term debt is discussed in Note 6 , “Long-Term Debt” and pension plan assets in Note 11 , “Benefit Plans.” H2O America has investments in company owned life insurance which are valued at cash surrender value of the policies as reported by the insurer. The value of these contracts is based principally on a referenced pool of investment funds that actively redeem shares, are observable and measurable, and are presented in “Investments” on H2O America’s Consolidated Balance Sheets. As of December 31, 2025 and 2024, the value of the company owned life insurance was $ 9,870 and $ 8,944 , respectively, of which $ 4,852 and $ 4,294 , respectively, was related to assets to fund CTWS’ supplemental retirement plan agreements. See discussion on pension plans in Note 11 , “Benefit Plans.” Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the effect of temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using current tax rates in effect. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. To the extent permitted by the regulators, investment tax credits resulting from public utility plant additions are deferred and amortized over the estimated useful lives of the related property. In addition, investment tax credits resulting from other asset additions are recognized in the year the property is put in service. Advances for Construction and Contributions in Aid of Construction In California, advances for construction received after 1981 are primarily refunded ratably over 40 years. In Connecticut and Maine, advances for construction are refunded as services are connected to the main over periods not exceeding 15 years and in Texas advances for construction are primarily non-refundable. Estimated refunds for the next five years and thereafter are shown below: Estimated Refunds 2026 $ 2,569 2027 2,535 2028 2,615 2029 2,592 2030 2,549 Thereafter 45,627 As of December 31, 2025, advances for construction totaled $ 201,413 including $ 108,311 in non-refundable advances and $ 34,615 in advances that will be refunded based on service connections made, though the timing of these refunds cannot be estimated. As of December 31, 2024, advances for construction totaled $ 155,397 including $ 64,920 in non-refundable advances and $ 31,983 in advances that will be refunded based on service connections made, though the timing of these refunds cannot be estimated. As of December 31, 2025 and 2024, the fair value of the advances for construction refunded ratably over 40 years is $ 51,356 and $ 43,718 , respectively. Contributions in aid of construction represent funds or property received from developers that are not refundable under applicable regulations. Depreciation applicable to utility plant constructed with these contributions is charged to contributions in aid of construction. 63 Table of Contents Asset Retirement Obligation H2O America’s asset retirement obligation is recorded as a liability included in other non-current liabilities. It reflects principally the retirement costs of wells and other anticipated clean-up costs, which by law, must be remediated upon retirement. As of December 31, 2025 and 2024, the asset retirement obligation is as follows: 2025 2024 Estimated future retirement costs $ 4,220 4,303 Discount rate 6 % 6 % Retirement obligation, present value $ 930 887 Revenue H2O America recognizes revenue under ASC Topic 606—“Revenue from Contracts with Customers” for metered revenue of Water Utility Services, which includes billings to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period. H2O America satisfies its performance obligation upon delivery of water to the customer at which time the customer consumes the benefits provided by the company. The customer is generally billed on a quarterly, monthly, or bi-monthly basis after water delivery has occurred. The customer is charged both a service charge which is based upon meter size and covers a portion of the fixed costs of furnishing water to the customer and a consumption charge based on actual water usage. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. As the company has the right to bill for services that it has provided, H2O America estimates the dollar value of deliveries during the unbilled period and recognizes the associated revenue. Actual results could differ from those estimates, which may result in an adjustment to revenue when billed in a subsequent period. H2O America also recognizes revenue under ASC Topic 980-605-25—“Alternative Revenue Programs.” Under programs established by the CPUC and Public Utilities Regulatory Authority of Connecticut (“PURA”), allowing for automatic adjustment of future rates, the company recognizes revenue when it is objectively determinable, probable of recovery and expected to be collected within 24 months of the year-end in which the revenue is recognized. A reserve, based on an estimate of actual usage over the recovery period, is recorded for any amounts H2O America estimates will not be collected within the 24-month period. H2O America’s alternative revenue programs include SJWC’s Water Conservation Memorandum Account (“WCMA”) and CWC’s Water Rate Adjustment mechanism (“WRA”). See further discussion on WCMA and WRA in Note 3 , “Regulatory Matters.” H2O America’s revenues also reflect the impact of other balancing and memorandum accounts and other regulatory mechanisms that are accounted for under FASB ASC Topic 980—“Regulated Operations.” Balancing and memorandum accounts are recognized when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process. See further discussion in Note 3 , “Regulatory Matters.” H2O America also recognizes revenue from rental income, which represents lease rental income. Tenants pay monthly in accordance with lease agreements and H2O America recognizes the income ratably over the lease term as this is the most representative of the pattern in which the benefit is expected to be derived from H2O Americas underlying asset. Detail of H2O America’s revenue components are as follows for the years ended December 31: 2025 2024 2023 Revenue from contracts with customers $ 805,594 736,326 678,168 Alternative revenue programs, net 6,672 6,181 3,634 Other balancing and memorandum accounts and regulatory mechanisms, net ( 11,919 ) ( 153 ) ( 17,123 ) Rental income 243 6,085 5,684 $ 800,590 748,439 670,363 64 Table of Contents Revenue also includes a surcharge collected from regulated customers that is paid to the CPUC. This surcharge is recorded both in operating revenue and administrative and general expenses. For the years ended December 31, 2025, 2024 and 2023, the surcharge was $ 3,927 , $ 3,668 and $ 4,085 , respectively. Share-Based Compensation H2O America calculates the fair value of service-based and performance-based restricted stock awards based on the grant date fair value of the company’s stock price reduced by the present value of the dividends expected to be declared on outstanding shares. H2O America utilizes the Monte Carlo valuation model, which requires the use of subjective assumptions, to compute the fair value of market-vesting restricted stock units. The compensation cost for service-based restricted stock awards is charged to income on a straight-line basis over the requisite service period, which is the vesting period. For performance-based stock awards, compensation expense is charged to income on a straight-line basis over the requisite service period based on expected attainment of performance targets. Changes in the estimates of the expected attainment of performance targets will result in a change in the number of shares that are expected to vest which may cause a cumulative catch up for the amount of share-based compensation expense during each reporting period in which such estimates are altered. Forfeitures are accounted for as they occur. Earnings per Share Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards under H2O America’s long-term incentive plans, shares potentially issuable under the performance stock plans assumed through the business combination with CTWS, and shares potentially issuable under H2O America’s employee stock purchase plans. Restricted common stock units of 40,452 , 8,075 and 14,193 as of December 31, 2025, 2024 and 2023, respectively, were excluded from the diluted earnings per share calculation as their effect would have been antidilutive. Related-Party Transaction The Force for Good Foundation, established in 2024, is a non-consolidated not-for-profit corporation funded by H2O America that has made and continues to make contributions to selected charitable organizations. H2O America made contributions of $ 4,400 and $ 3,000 in 2025 and 2024 respectively, which are included as an expense in the “Other, net” line of the Consolidated Statements of Comprehensive Income. New Accounting Standards Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements ASU 2023-09 “Improvements to Income Tax Disclosures” The ASU amends certain income tax disclosure requirements, including adding requirements to present the reconciliation of income tax expense computed at the statutory rate to actual income tax expense using both percentages and amounts and providing a disaggregation of income taxes paid. Further, certain disclosures are eliminated, including the current requirement to disclose information on changes in unrecognized tax benefits in the next 12 months. The ASU was adopted with the annual financial statements for the year ended December 31, 2025. Prospective, with retrospective application also permitted. The standard only resulted in updates to disclosure and did not have a material impact on the Company’s financial position and results of operations. 65 Table of Contents Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements ASU 2024-03 “Disaggregation of Income Statement Expenses” The ASU requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The ASU requires disclosure of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in interim and annual reporting periods. Further, other amounts already required to be disclosed in accordance with current U.S. GAAP would be included in the same disclosure as the other disaggregation requirements. Additionally, the ASU requires qualitative descriptions of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclosure of selling expenses in annual periods and an entity’s definition of selling expenses. The ASU is effective for H2O America for its annual financial statements for the year ending December 31, 2027 and for interim reporting periods for the year ending December 31, 2028. Early adoption is permitted. Prospective, with retrospective application also permitted. The standard is expected to only result in updates to disclosure and is not expected to have a material impact on the Company’s financial position and results of operations. ASU 2025-06 “Intangibles-Goodwill and Other-Internal-Use Software (subtopic 350-40)” The ASU updates the accounting for internal-use software by removing project stage references and introduces a new capitalization threshold based on management authorization and project completion probability. The guidance requires evaluation of significant development uncertainty, including novel functionality and unresolved performance requirements. ASU 2025-06 clarifies that capitalized internal-use software costs are subject to the property, plant and equipment disclosure requirements under ASC 360-10. The ASU is effective for H2O America for its annual financial statements for the year ending December 31, 2028 and for interim reporting periods for the year ending December 31, 2028. Prospective, retrospective or on a modified transition approach with early adoption permitted. H2O America is currently evaluating the impact of ASU 2025-06 on its financial statements and will adopt ASU 2025-06 in fiscal year ended December 31, 2028. 66 Table of Contents Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements ASU 2025-10 “Government Grants (Topic 832)” The ASU establishes accounting for government grants received by business entities and includes guidance for (1) a grant related to an asset and (2) a grant related to income. The ASU requires that a government grant should not be recognized until it is probable that a business entity will comply with the conditions attached to the grant and the grant will be received. Additionally, the ASU requires that a grant related to an asset be recognized on the balance sheet as the business entity incurs the related costs for which the grant is intended to compensate either as deferred income or an adjustment to the cost basis of the related asset. A grant related to income or a grant recognized as deferred income should be recognized in earnings on a systematic and rational basis over the periods in which the related costs are incurred that the grant is intended to compensate. The ASU is effective for H2O America for annual reporting periods beginning after December 15, 2028 and interim reporting periods within those annual reporting periods. Early adoption is permitted. Retrospective adoption with modified prospective and modified retrospective application also permitted. H2O America is currently evaluating the impact of ASU 2025-10 on its financial statements and will adopt ASU 2025-10 in fiscal year ended December 31, 2029. ASU 2025-11 “Interim Reporting (Topic 270)” The ASU provides clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The ASU includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The ASU is effective for H2O America for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Prospective, with retrospective application also permitted. H2O America is currently evaluating the disclosure impact of ASU 2025-11; however, the standard is not expected to impact the consolidated financial position, results of operations or cash flows. Note 3. Regulatory Matters Regulation Water Utility Services, excluding non-tariffed activities, are subject to rate regulation based on cost recovery and meets the criteria of accounting guidance for rate-regulated operations under ASC Topic 980, which affects the timing of the recognition of certain revenues and expenses. H2O America’s consolidated financial statements reflect the actions of regulators in the rate-making process. The ratemaking process is intended to provide revenues sufficient to recover normal operating expenses, provide funds for replacement of water infrastructure and produce a fair and reasonable return on stockholder common equity. Water Utility Services, excluding non-tariffed activities, recognizes 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 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. Application of ASC Topic 980, including determining whether recovery is probable, requires significant judgment by management and includes assessing evidence that may exist prior to regulatory 67 Table of Contents authorization, including regulatory rules and decisions, historical ratemaking practices, and other facts and circumstances that would indicate that recovery or refund is probable. If the regulated utility determines that it is no longer probable that regulatory assets or liabilities would be recovered or refunded through the regulatory process, or if the utility ceased to be subject to rate regulation, the affected regulatory assets and liabilities would be derecognized with a corresponding adjustment to income in the period in which that determination was made. SJWC has established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes. SJWC’s Full Cost Balancing Account (“FCBA”) tracks water supply costs and energy consumption. The Monterey Water Revenue Adjustment (“MWRAM”) balancing account tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate would have been in effect. SJWC also maintains memorandum accounts to track impacts due to catastrophic events, certain unforeseen water quality expenses related to new federal and state water quality standards, energy efficiency, water conservation, water tariffs, and other approved activities or as directed by the CPUC. The Water Contamination Litigation Memorandum Account (“WCLMA”) allows SJWC to track net proceeds and costs resulting from water contamination litigation. The WCMA allows SJWC to track lost revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reduction, both mandatory and voluntary. SJWC records the lost revenue captured in the WCMA balancing accounts, including amounts related to a 20 -basis point reduction in the authorized return on equity per the terms of the WCMA. Applicable drought surcharges collected are used to offset the revenue losses tracked in the WCMA. Mandatory water conservation requirements from Santa Clara Valley Water District (“Valley Water”) ended on April 11, 2023, which also ended SJWC’s Mandatory Conservation Plan, that included drought allocations and surcharges. On October 2, 2023, the CPUC approved the continuation of WCMA and Water Conservation Expense Memorandum Account under the voluntary call for conservation effective April 20, 2023. All balancing accounts and memorandum accounts not included for recovery or refund in current customer rates will be reviewed by the CPUC in SJWC’s next general rate case or at the time an individual account balance reaches a threshold of 2 % of authorized revenue, whichever occurs first. On December 19, 2024, the CPUC issued General Rate Case Decision No. 24-12-077, which approved a recovery of $ 15,792 in balancing and memorandum accounts from customers through a 12-month surcharge effective January 1, 2025. CWC has been authorized by PURA to utilize WRA, a decoupling mechanism, to mitigate risks associated with changes in demand. The WRA is used to reconcile actual water demands with the demands projected in the most recent general rate case and allows the company to implement a surcharge or sur-credit as necessary to recover or refund the revenues approved in the general rate case. The WRA allows the company to defer, as a regulatory asset or liability, the amount by which actual revenues deviate from the revenues allowed in the most recent general rate proceedings. 68 Table of Contents Regulatory Assets and Liabilities Regulatory assets and liabilities are comprised of the following as of December 31: 2025 2024 Regulatory assets: Income tax temporary differences (a) (q) $ 204,384 180,103 MWRAM (b) 8,553 9,985 Business combinations debt premium (c) (q) 9,772 12,313 Employee benefit costs (d) (q) 5,823 6,370 Catastrophic event memorandum accounts (“CEMA”) (p) 127 986 Revenue adjustment mechanisms (e) (q) 7,931 5,024 Customer Assistance Program (“CAP”) balancing account (f) 3,696 6,599 Water supply costs (i) 847 — Unrecognized pensions and other postretirement benefits (g) (q) — 3,177 2022 general rate case interim memorandum account (h) — 3,392 Other (j) 13,729 14,278 Total regulatory assets 254,862 242,227 Less: current regulatory asset (k) 8,315 18,172 Total regulatory assets, less current portion $ 246,547 224,055 Regulatory liabilities: Cost of removal (l) $ 394,391 364,398 Future income tax benefits due to customers (m) 82,285 84,128 Unrecognized pensions and other postretirement benefits (g) 32,996 27,872 PFAS legal settlement proceeds (r) 24,682 — Employee benefit costs (d) 8,771 1,137 Revenue adjustment mechanisms (e) — 1,122 Water supply costs (i) — 3,386 Other (n) 3,672 2,798 Total regulatory liabilities 546,797 484,841 Less: current regulatory liabilities (o) — 1,122 Total regulatory liabilities, less current portion $ 546,797 483,719 ___________________________________ (a) Consists primarily of temporary income tax differences that are flowed through to customers, which will be recovered in future rates as these temporary differences reverse. The company expects to recover regulatory assets related to plant depreciation income tax temporary differences over the lives of the plant assets, which are between 5 to 100 years. (b) MWRAM is described in the previous section. (c) Consists of debt fair value adjustments recognized through purchase accounting for the completed merger with CTWS in 2019. (d) Includes deferrals of pension and other postretirement benefit expense, cost of accrued benefits for vacation, and group health insurance. (e) Consists of WRA and WCMA, which are described in the previous section. (f) Represents costs associated with SJWC’s CAP. (g) Represents actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain pension and other postretirement benefit plans. (h) Represents the difference between revenues collected in interim rates in effect as of January 1, 2022 and revenues that would result from rates authorized in SJWC’s 2022 general rate case retroactive to January 1, 2022. (i) Reflects primarily SJWC’s FCBA which tracks differences in actual water supply costs compared to amounts assumed in base rates, including applicable changes and variations in costs and quantities that affect the overall mix of the water supply. (j) Other includes other balancing and memorandum accounts and regulatory mechanisms, deferred costs for certain information technology activities, asset retirement obligations, tank painting, well reconditioning and rate case expenses. (k) Primarily relates to SJWC’s balancing and memorandum account surcharge in accordance with Decision No. 24-12-077 and the current portion of CWC’s deferred well redevelopment and rate case costs. (l) Represents amounts collected in rates from customers for estimated costs to retire assets at the end of their expected useful lives before the costs are incurred. (m) On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act”) was signed into law. The Tax Act included a reduction in the federal income tax rate from 35% to 21%. The rate reduction was effective on January 1, 2018 and resulted in a regulatory liability for the excess deferred income taxes. The benefit of amortization of excess deferred income taxes flows back to the customers under current normalization rules and agreed upon methods with the commissions. 69 Table of Contents (n) Other includes other balancing and memorandum accounts and regulatory mechanisms, and other regulatory mechanisms. (o) Primarily relates to the current portion of WRA. (p) The CPUC has authorized water utilities to activate CEMA accounts in order to track savings and costs related to SJWC’s response to catastrophic events, which includes external labor and materials, increases in bad debt from suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage. The balances primarily relate to expenses associated with SJWC’s response to COVID-19, including bad debt. (q) Generally not earning a return either by interest on the regulatory asset or as a component of rate base at the allowed rate of return. (r) Primarily relates to legal settlements received by SJWC and CWC from ongoing PFAS water contamination litigation against manufacturers which will be used to offset future costs incurred, recorded as Contributions in Aid of Construction (“CIAC”), or returned to customers through future rates. WCLMA has been established to track net proceeds and costs resulting from water contamination litigation related to SJWC. Note 4. Capitalization H2O America is authorized to issue 70,000,000 shares of common stock of $ 0.001 par value per share. At December 31, 2025 and 2024, 36,118,242 and 33,629,169 , respectively, shares of common stock were issued and outstanding. As of December 31, 2025 and 2024, 1,000,000 shares of preferred stock of $ 0.001 par value per share were authorized for H2O America. At December 31, 2025 and 2024, no shares of preferred stock were issued or outstanding. 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, 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 aforementioned equity distribution agreements. Note 5. Lines of Credit 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: 2025 2024 Maturity Date Line Limit Amounts Outstanding Unused Portion Amounts Outstanding Syndicated credit agreement: September 12, 2030 H2O America $ 50,000 11,000 39,000 3,000 SJWC 165,000 45,000 120,000 44,000 CTWS — — — 30,000 CWC 80,000 13,000 67,000 — MWC 25,000 — 25,000 — SJWTX 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 (1) May 15, 2025 — — — 40,000 $ 370,000 86,834 283,166 119,124 70 Table of Contents (1) CTWS repaid the outstanding balance under this credit agreement and concurrently terminated this credit agreement. Total outstanding borrowings under the unsecured lines of credits 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. 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. 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, 2025, H2O America and its subsidiaries were in compliance with all covenants on the lines of credit. Syndicated Credit Agreement In August 2022, H2O America, SJWC, TWC, and CTWS have entered into a $ 300,000 credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent (“JP Morgan”), Wells Fargo Bank, National Association, as Documentation Agent, and a syndicate of banks with a term of five years . The Credit Agreement was subsequently amended to extend the maturity date from August 2027 to August 2028 and further amended to extend the maturity date to August 2029. On September 12, 2025, H2O America and its subsidiaries, SJWC, SJWTX, CWC and MWC, entered into an Amended and Restated Credit Agreement to extend and increase the revolving credit facility with JPMorgan Chase Bank and Wells Fargo Securities, LLC. Pursuant to the amended agreement, the total commitment under the facility was increased from $ 300,000 to $ 350,000 , and the maturity date was extended from August 2029 to September 12, 2030. Under the terms of the Credit Agreement, each of H2O America, SJWC, SJWTX, CWC and MWC is a borrower with several and not joint liability. Each borrower has an initial borrowing entitlement, or sublimit, which can be periodically adjusted from time to time as set forth in the Credit Agreement. The initial sublimit of each borrower is as presented in the table above. Borrowings under the Credit Agreement bear interest at either the Alternative Base Rate (as defined in the Credit Agreement and hereinafter referred to as “ABR”) or the Adjusted Term Secured Overnight Financing Rate (as defined in the Credit Agreement and hereinafter referred to as “SOFR”). ABR borrowings (which are borrowings bearing interest at a rate determined by reference to ABR) will bear interest at a rate per annum equal to ABR plus the applicable rate. SOFR borrowings (which are borrowings bearing interest at a rate determined by reference to SOFR) will bear interest at a rate per annum equal to SOFR plus the applicable rate. The applicable rate and pricing is variable depending on credit ratings of the borrower. The Credit Agreement includes a financial covenant that requires each of the borrowers to maintain its funded debt to capitalization ratio at or below 70 %. As of December 31, 2025 and 2024, there were $ 85,000 and $ 77,000 , respectively, in outstanding borrowings under the Credit Agreement. CTWS Credit Agreements Upon acquisition, CTWS held effective credit agreements with CoBank, ACB and Citizens Bank, N.A., (a former subsidiary of RBS Citizens, N.A. that was a party to the original credit agreement) that provided up to $ 40,000 and $ 75,000 , respectively, in available borrowings. The credit agreement between CTWS and Citizens Bank, N.A. was amended in December 2019 which reduced available borrowings from $ 75,000 to $ 10,000 . The credit agreement between CTWS and Citizens Bank, N.A., was further amended in August 2023 which extended the termination date from December 2023 to August 2, 2028. On July 11, 2025, CTWS repaid the outstanding balance of $ 25,000 under its credit agreement with CoBank, ACB and concurrently terminated the credit agreement. As of December 31, 2025 and 2024, there were $ 1,834 and $ 2,124 , respectively, in outstanding borrowings under the CTWS credit agreement with Citizens Bank, N.A. SJWC Credit Agreement On June 11, 2025, SJWC entered into a $ 10,000 credit agreement with JPMorgan Chase Bank, N.A., with a maturity date of June 11, 2026. There were no outstanding borrowings under the credit agreement between SJWC and JPMorgan Chase Bank, N.A., as of December 31, 2025 and 2024. 71 Table of Contents Note 6. Long-Term Debt Long-term debt as of December 31 was as follows: Description Rate Maturity 2025 2024 H2O America Senior notes (a) 2.47 % - 3.53 % 2029 - 2039 $ 560,000 560,000 SJWC: Senior notes (a) 3.00 % - 7.20 % 2026 - 2055 560,000 505,000 California Pollution Control Financing Authority Revenue Bond 4.75 % 2046 70,000 70,000 Total SJWC 630,000 575,000 CTWS bank term loans 4.09 %, 4.15 % 2027, 2037 12,212 14,389 CWC: Connecticut Innovations Revenue Bonds, variable rate 2028 - 2029 22,050 22,050 Senior notes (a) 3.07 % - 6.46 % 2037 - 2055 330,000 270,000 State revolving fund loans 2.00 % 2044 308 327 Bank term loans 4.04 % - 4.75 % 2028 - 2036 96,295 96,295 Total CWC 448,653 388,672 TWC: Senior note (a) 6.27 % 2036 15,000 15,000 Bank term loans 4.01 % - 6.68 % 2041 - 2055 105,000 65,000 Seller financing debt (b) 2053 29,000 29,000 Total TWC 149,000 109,000 MWC: State revolving fund loans 0.00 % - 2.23 % 2026 - 2054 16,336 12,763 Bank term loans 3.89 % - 6.47 % 2026 - 2055 85,000 60,000 Total MWC 101,336 72,763 Total debt 1,901,201 1,719,824 Unamortized debt premium and discount, net ( 1,644 ) ( 56 ) Unamortized debt issuance costs ( 9,234 ) ( 9,216 ) Current portion ( 23,504 ) ( 3,648 ) Total long-term debt, less current portion $ 1,866,819 1,706,904 ___________________________________ (a) Senior notes held by institutional investors are unsecured obligations of H2O America, SJWC, CWC, TWC and MWC and require interest-only payments until maturity. To minimize issuance costs, the companies’ debt has primarily been placed privately. (b) Debt does not contain a stated interest rate but is discounted using an effective rate of 5.61 %. The following is a table of the consolidated company’s schedule of principal payments: Year 2026 $ 23,950 2027 3,207 2028 44,699 2029 325,624 2030 53,201 Thereafter 1,450,520 The estimated fair value of long-term debt as of December 31, 2025 and 2024 was $ 1,716,589 and $ 1,490,024 , respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the 72 Table of Contents same duration and creditworthiness of the company. As of December 31, 2025, $ 1,715,635 of the total fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy, and $ 954 would be categorized as Level 3. As of December 31, 2024, $ 1,473,393 of the total fair value of long-term debt was categorized as Level 2 in the fair value hierarchy, and $ 16,631 was categorized as Level 3. SJWC 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 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. CWC 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 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. TWC and TWR In August 2023, TWR closed on an asset acquisition that included an obligation for a post-closing production payment of $ 29,000 to the seller over a period of up to 29 years. The repayment schedule is based on the quantity of groundwater produced from the acquired wells, subject to certain provisions in the purchase agreement. The difference between the gross obligation of $ 29,000 and the fair value at the date of acquisition is reflected as a debt discount and is being amortized as interest expense using the effective interest method over the life of the obligation. During the third quarter of 2024, TWC assumed the obligation in connection with an asset purchase agreement pursuant to which TWC acquired all of the net assets of TWR. On December 6, 2024, TWC issued a promissory note to CoBank under an existing master loan agreement for a principal amount of $ 20,000 at a fixed interest rate of 6.47 %. This note is an unsecured obligation of TWC due on November 20, 2054. Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year. In January 2025, TWC amended the existing master loan agreement to modify one of the financial covenants. All of the other terms and conditions remain the same. On September 18, 2025, TWC issued a promissory note to a CoBank 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. MWC 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, MWC issued a promissory note to CoBank under an existing master loan agreement for a principal amount of $ 15,000 at a fixed interest rate of 6.47 %. This 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. On May 23, 2025, MWC submitted an application with the 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 CoBank under 73 Table of Contents 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. Financial Covenants 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 outstanding notes 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. Note 7. Income Taxes The components of income tax expense were: 2025 2024 2023 Current: Federal $ 5,276 ( 1,828 ) 10,185 State 1,896 443 4,281 Deferred: Federal 5,360 11,063 ( 8,871 ) State ( 177 ) ( 708 ) 361 $ 12,355 8,970 5,956 The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes of $ 114,933 , $ 102,937 and $ 90,943 in 2025, 2024 and 2023, respectively: 2025 (a) 2024 2023 Income tax at federal statutory rate $ 24,136 21.0 % 21,617 19,098 Increase (decrease) in taxes attributable to: State and local income taxes, net of federal income tax effect (b) 1,326 1.2 % 6,488 6,001 Tax credits ( 208 ) ( 0.2 ) % — — Nontaxable or nondeductible items 543 0.5 % — — Changes in unrecognized tax benefits 331 0.3 % ( 1,053 ) ( 4,330 ) Property flow-through — — % ( 14,793 ) ( 9,045 ) Pension flow-through — — % ( 530 ) ( 597 ) Stock-based compensation — — % 192 ( 491 ) Other adjustments: Impact of rate regulation Flow-through ( 11,933 ) ( 10.4 ) % — — Reversal of excess deferred taxes recognized in regulatory liability ( 1,517 ) ( 1.3 ) % ( 3,227 ) ( 3,625 ) Other items ( 323 ) ( 0.3 ) % 276 ( 1,055 ) $ 12,355 10.8 % 8,970 5,956 (a) ASU 2023-09 “Improvements to Income Tax Disclosures” was adopted prospectively with the annual financial statements for the year ended December 31, 2025. Accordingly, the table above was updated for the year ended December 31, 2025 to present disclosures as per the new ASU. (b) Majority of the tax expense reported in this category relates to California. State flow-through adjustments are included in this category for the year ended December 31, 2025. 74 Table of Contents The components of the net deferred tax liability as of December 31 were as follows: 2025 2024 Deferred tax assets: Advances and contributions $ 28,183 26,744 Unamortized investment tax credit 1,141 1,061 Pensions, postretirement benefits and stock-based compensation 11,749 12,529 Debt premium, net 2,734 3,446 California franchise tax 257 503 Deferred revenue — — Tax related regulatory liability 22,572 23,112 Other 9,560 6,337 Total deferred tax assets 76,196 73,732 Deferred tax liabilities: Utility plant 304,002 277,085 Pension and postretirement 9,272 9,068 Deferred gain and other-property 608 608 Regulatory asset - business combinations debt premium, net 2,734 3,446 Intangibles 2,193 2,443 Deferred revenue 2,330 1,418 Tax related regulatory asset 57,503 50,728 Other 5,447 4,979 Total deferred tax liabilities 384,089 349,775 Net deferred tax liabilities $ 307,893 276,043 Management evaluates the realizability of deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods in which the deferred tax assets are expected to reverse. Based on all available evidence, management believes it is more likely than not that H2O America will realize the benefits of its deferred tax assets. Net operating loss carryforwards expire beginning in 2032 and ending in 2043. As of December 31, 2025, the estimated amount of net operating loss carryforwards available to offset future taxable income for Connecticut purposes is $ 20,739 . The estimated state tax credit carryforwards are $ 907 , which will expire beginning in 2028 and ending in 2049. The change in the net deferred tax liabilities of $ 31,850 included non-cash items primarily consisting of regulatory assets and liabilities relating to income tax temporary differences. The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $ 4,094 and $ 3,707 as of December 31, 2025 and 2024, respectively. The amount of tax benefits, net of any federal benefits for state taxes that would impact the effective rate, if recognized, is approximately $ 3,514 and $ 3,150 as of December 31, 2025 and 2024, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2025 2024 2023 Balance at beginning of year $ 3,707 4,511 9,004 Increase related to tax positions taken during the current year 663 658 231 Increase related to tax positions taken during a prior year 113 380 364 Reductions related to statute expiration ( 389 ) ( 1,701 ) ( 1,191 ) Reductions related to tax positions taken in a prior year — ( 141 ) ( 3,897 ) Balance at end of year $ 4,094 3,707 4,511 75 Table of Contents The decrease in gross unrecognized tax benefits in 2023 was primarily due to the release of uncertain tax position reserve relating to repairs tax deductions. In April 2023, the IRS issued additional tax guidance that has allowed H2O America to revisit certain historical income tax reserves. Pursuant to the issuance of this guidance, which provided additional clarification regarding some of the uncertain tax areas, the company re-evaluated the risk relating to repair deductions. The result of the analysis led to a release of uncertain tax position reserve. The release relates to repairs expenditures which are more likely than not to be sustained on audit. The net release due to re-evaluation of the reserve was $ 3,125 . H2O America’s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $ 283 as of December 31, 2025. H2O America has not accrued any penalties for unrecognized tax benefits. The amount of interest recognized in 2025 was a decrease to expense of $ 33 . H2O America files U.S. federal income tax returns and income tax returns in various states and is subject to ordinary statute of limitation of three years for federal and three or four years for different state returns. However, due to tax attribute carryforwards, H2O America is subject to examination for tax years 2012 forward for state returns of CTWS and its subsidiaries. The statute of limitations for H2O America returns is closed for these extended years and remains open for 2022 and forward for federal and 2021 or 2022 and forward for different states. Income Taxes paid (net of refunds) for the year ending December 31, 2025 were as below: 2025 Federal $ 2,000 State 1,238 Foreign — Total $ 3,238 Income Taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions: State: 2025 California $ 400 Connecticut 521 Maine * Tennessee 219 Texas * Total $ 1,140 *Jurisdiction below the threshold for the period presented 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. Note 8. Intangible Assets Utility plant intangible assets consist of $ 28,386 of indefinite-lived water rights, $ 13,400 related to the purchase premium for customer relationships, and other intangibles of $ 9,897 as of December 31, 2025. Other intangibles primarily consist of $ 4,371 for service area expansions by TWC, $ 1,400 for customer relationships and $ 1,040 incurred in conjunction with Valley Water water contracts related to the operation of SJWC. Amortization expense for the intangible assets was $ 1,095 , $ 1,429 and $ 1,310 for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense for 2026 through 2030 and thereafter is anticipated to be approximately $ 1,095 per year. 76 Table of Contents The components of intangible assets as of December 31, 2025 and 2024 are as follows: 2025 2024 Utility Plant Intangible Assets: Indefinite-lived water rights $ 28,386 28,386 Purchase premium customer relationships 13,400 13,400 Other intangibles 9,897 9,818 Utility plant intangible assets 51,683 51,604 Less: Accumulated amortization Purchase premium customer relationships 5,561 4,667 Other intangibles 5,059 4,858 Utility plant net intangible assets $ 41,063 42,079 Note 9. Commitments SJWC purchases water from Valley Water under terms of a master contract expiring in 2051. Delivery schedules for purchased water are based on a contract year beginning July 1, and are negotiated every three years under terms of the master contract with Valley Water. For the years ended December 31, 2025, 2024 and 2023, SJWC purchased from Valley Water 15.9 billion gallons ($ 120,322 ), 17.0 billion gallons ($ 117,698 ) and 18.3 billion gallons ($ 111,173 ), respectively, of contract water. On June 12, 2024, the Valley Water Board of Directors approved treated water deliveries reflecting the contractual delivery schedule reduced by 23 % through June 30, 2025. Based on current prices and estimated deliveries, SJWC is committed to purchase from Valley Water a minimum of 90 % of the reduced delivery schedule, or 18.9 billion gallons ($ 148,795 ) of water at the current contract water rate of $ 7.872 million per billion gallons for the year ending December 31, 2026. Additionally, SJWC purchases non-contract water from Valley Water on an “as needed” basis if the water supply is available. SJWC operates the Cupertino municipal water system under a service concession arrangement. The system is adjacent to the SJWC service area and has approximately 4,700 service connections. The original agreement commenced in October 1997 and expired on September 30, 2024. Effective October 2024, SJWC entered into a new 12-year agreement with the City of Cupertino subject to an additional term of eight years if agreed to by the parties. SJWC paid an upfront concession fee of $ 22.1 million in 2024 and agreed to pay, beginning in 2024, an annual investment rent of $ 1.8 million, subject to annual adjustment based on a specified construction cost index. The concession fees are amortized as reductions to operating revenue over the applicable contract term and the annual investment rent payments are amortized as reductions to operating revenue over the annual period to which they relate. Under the terms of the agreement, SJWC assumes responsibility for all maintenance and operating costs of the system, while receiving all payments for water service. CWC is able, but under no obligation, to purchase up to one million gallons of water per day from RWA, 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 fifty years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service. CWC agrees to purchase 0.28 billion gallons of water annually from MDC. The rate charged by the MDC at December 31, 2025 was $ 3.91 per hundred cubic feet. TWC has multiple long-term contracts with the GBRA. The terms of the agreements expire in 2037, 2040, 2044 and 2050, respectively. The agreements, which are take-or-pay contracts, provide TWC with 7,602 acre-feet per year of water supply from Canyon Lake. The water rate may be adjusted by GBRA at any time, provided they give TWC a 60-day written notice on the proposed adjustment. TWC also has treated water supply agreements with the Lower Colorado River Authority and West Travis County Public Utility Agency 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. 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 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. 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. 77 Table of Contents As of December 31, 2025, SJWC had 396 employees, of whom 242 were members of unions. In the final quarter of 2025, SJWC executed three-year bargaining agreements with the International Union of Operating Engineers (“OE”), representing certain employees in the engineering department, and the Utility Workers of America (“UWUA”), representing the majority of all nonadministrative employees at SJWC covering the period from January 1, 2026 through December 31, 2028. The agreements include a 3 % wage increase provided in 2026, 3 % in 2027 and 4.0 % in 2028 for the union employees. Note 10. Contingencies H2O America and its subsidiaries are subject to ordinary routine litigation incidental to its business. In October 2023, CWC, a subsidiary of H2O America, was named as a defendant in a putative class action lawsuit alleging that the water provided by CWC contained contaminants. The case is currently pending in the State of Connecticut Superior Court. CWC is vigorously defending itself in this lawsuit. H2O America is unable to provide a reasonable estimate of loss, if any, at this time. SJWC and CWC are plaintiffs in a lawsuit against manufacturers and/or sellers of PFAS compounds for damages, contribution and reimbursement of costs incurred and continuing to be incurred to address the presence of such PFAS compounds in public water supply systems owned and operated by these utility subsidiaries and throughout their respective service areas. The lawsuit is part of Multi-District Litigation (“MDL”), that commenced on December 7, 2018, in the United States District Court for the District of South Carolina. MWC has submitted timely claims as a settlement class member. On February 8, 2024, the MDL court approved settlements involving defendants The Chemours Company, Corteva, Inc., and DuPont de Nemours, Inc. to resolve claims brought in the MDL against them by public water systems, including SJWC and CWC. On March 29, 2024, the MDL court approved a similar settlement involving defendant 3M Company. On November 22, 2024, the MDL court approved settlements involving defendants Tyco Fire Products LP, and BASF Corporation. H2O America is entitled to a portion of the settlements and is monitoring and evaluating the ongoing litigation and settlement activity with the PFAS defendants for potential impacts to the various claims that these utility subsidiaries have asserted. For the year ended December 31, 2025, the Company received cash proceeds of $ 25.1 million, in connection with legal settlements with 3M Company and DuPont de Nemours, Inc. related to PFAS contamination. The proceeds were allocated as follows: SJWC received $ 17 million; CWC received $ 7.6 million; and MWC received $ 0.5 million, which includes $ 0.3 million payable to contract operators. The proceeds are compensatory in nature and are intended to compensate the Company for costs incurred, or to be incurred, to address the presence of PFAS compounds in public water supply systems or to be refunded to customers through rate reductions, and have been recorded as a regulatory liability subject to regulatory approval. H2O America is entitled to receive additional cash proceeds from 3M Company in the subsequent eight years , pursuant to the terms of the settlement agreement. In addition, the Company is party to class action settlements with Tyco Fire Products LP and BASF Corporation. H2O America is monitoring and evaluating the ongoing litigation and settlement activity with the PFAS defendants for potential impacts to the various claims that these utility subsidiaries have asserted. However, the amount of any additional proceeds is not estimable as of the date of this filing. Note 11. Benefit Plans Pension Plans H2O America maintains noncontributory defined benefit pension plans for its eligible employees. SJWC employees hired before March 31, 2008 and CWC and MWC employees hired before January 1, 2009 are entitled to benefits under the pension plans based on the employee’s years of service and compensation. For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee. Effective January 1, 2023, TWC employees became eligible to participate under SJWC’s cash balance plan. Interest is credited based on the annual yield on 30-year Treasury bonds as of October for the preceding plan year with a minimum annual rate of 3.25 % and a maximum annual rate of 6.00 %. For the year ended December 31, 2025, the interest credits assumption was 4.25 %. Certain employees hired before March 1, 2012, and covered by a plan merged into the CWC plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation. CTWS employees hired on or after January 1, 2009 are entitled to an additional 3.0 % of eligible compensation to their company sponsored savings plan. H2O America does not have multi-employer plans. The pension plans are administered by their respective committees which oversee plan governance and are responsible for establishing investment objectives, policies, and guidelines to achieve the goals of income generation and long-term capital 78 Table of Contents preservation. H2O America engages third-party investment professionals to assist with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence. Effective in 2025, the pension plan committees appointed a discretionary investment manager that qualifies as an “investment manager” under Section 3(38) of the employee retirement income security act of 1974. Under this arrangement, the investment manager has discretionary authority to make investment decisions and to select, appoint, monitor, and terminate underlying investment managers within the parameters established by the pension plans’ investment policies. The pension plan committees retain oversight responsibility and continue to monitor the performance of the investment manager, including reviews of investment results and compliance with the plans’ investment guidelines. Investment managers are not permitted to invest outside of the asset class or strategy authorized under those guidelines. The committees ensure that the plans establish a target mix that is expected to achieve its investment objectives by assuring a broad diversification of investment assets among investment types, while minimizing volatility of the target asset mix, unless market conditions make such a change appropriate to reduce risk. The pension plans require a minimum portion of plan assets to be allocated to fixed income securities and provide guidelines and restrictions on equity investments for the assets. Plan assets are marked to market at each measurement date, resulting in unrealized actuarial gains or losses. Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes. Generally, it is expected of the investment managers that the performance of the assets held in the pension plans, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three -to- five-year period and/or full market cycle. These standards include specific absolute and risk-adjusted performance standards over a three -to- five-year period and/or full market cycle. The expected long-term rate of return on the pension plan assets is between 6.50 % and 6.75 % for the year ended December 31, 2025. H2O America calculates the market-related value of defined benefit pension plan assets, which is defined under FASB ASC Topic 715—“Compensation—Retirement Benefits,” as a balance used to calculate the expected return on plan assets, using fair value. The fair value is based on quoted prices in active markets for identical assets and significant observable inputs. Certain senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CWC are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (collectively, “SERP”). SJWC’s senior management hired on or after March 31, 2008 are eligible to receive additional retirement benefits under SJWC’s Cash Balance Executive Supplemental Retirement Plan (“Cash Balance Executive Supplemental Retirement Plan”). Both of the plans are non-qualified plans in which only senior management and other designated members of management may participate. The annual cost of the plans has been included in the determination of the net periodic benefit cost shown below. The SERP and Cash Balance Executive Supplemental Retirement Plan had a projected benefit obligation of $ 43,644 and $ 40,328 as of December 31, 2025 and 2024, respectively, and net periodic pension cost of $ 3,212 , $ 3,879 and $ 3,257 for 2025, 2024 and 2023, respectively. For the years ended December 31, 2025, 2024 and 2023, the amounts not recognized as a component of net periodic benefit cost was $( 493 ), $ 169 , and $ 314 , respectively, recorded as other comprehensive income on the consolidated financial statements. SJWC’s non-qualified deferred compensation plans (“NQDCs”) are unfunded. By contrast, CWC’s non-qualified deferred compensation plans are funded, including SERP, through investments consisting primarily of life insurance contracts and assets are held in a Rabbi Trust. As of December 31, 2025 and 2024, total investments made to fund CWC’s SERP were $ 7,887 and $ 7,336 , respectively, which is included in “Investments” in H2O America’s Consolidated Balance Sheets. The life insurance contracts are valued at cash surrender value of the policies as reported by the insurer. As of December 31, 2025 and 2024, the value of the life insurance contracts was $ 4,852 and $ 4,294 , respectively. The following tables summarize the fair values of the Rabbi Trust investment assets to fund CWC’s SERP by major categories as of December 31, 2025 and 2024: Fair Value Measurements at December 31, 2025 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds $ 354 354 — — Mutual funds 1,844 1,844 — — Fixed income 593 593 — — Total $ 2,791 2,791 — — 79 Table of Contents Fair Value Measurements at December 31, 2024 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds $ 28 28 — — Mutual funds 2,062 2,062 — — Fixed income 722 722 — — Total $ 2,812 2,812 — — Other Postretirement Benefits In addition to providing pension and savings benefits, the company also provides health care and life insurance benefits for eligible retired employees under the respective employer-sponsored postretirement benefits other than pension plans. The benefits are paid by the company and not from plan assets due to limitations imposed by Internal Revenue Service. Flexible Spending Plan H2O America sponsors flexible spending account plans for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plans. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $ 3.3 and $ 5 , respectively. Savings Plans for Employees H2O America also sponsors salary deferral plans which are defined contribution plans that allow employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. H2O America contributions were $ 4,928 , $ 4,221 and $ 3,902 in 2025, 2024 and 2023, respectively. All of the company’s contributions are invested at the direction of the employees in funds offered under the plans. Special Deferral Election Plans and Deferral Election Program H2O America maintains a special deferral election plan and a deferred compensation plan and agreements for senior management and a deferral election program for non-employee directors allowing for the deferral of a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Senior management and non-employee directors have to make an election on the deferral and distribution method of the deferrals before services are rendered. CWC’s deferred compensation plan allows the company to make discretionary contributions. Senior management and non-employee directors had deferred $ 8,767 and $ 8,216 under the plans as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, $ 6,552 and $ 6,276 , respectively, of the total amount deferred is related to CWC agreements. Assumptions Utilized on Actuarial Calculations Net periodic cost for the defined benefit plans and other postretirement benefits was calculated using the following assumptions: Pension Benefits Other Postretirement Benefits 2025 2024 2023 2025 2024 2023 % % % % % % Discount rate 5.55 - 5.63 4.99 - 5.03 4.95 - 5.24 5.48 - 5.58 4.95 - 5.01 4.96 - 5.21 Expected return on plan assets 6.50 , 6.75 6.25 , 6.75 6.00 , 6.75 4.20 , 6.50 4.20 , 6.25 4.20 , 6.00 Rate of compensation increase 4.50 , 5.00 4.50 , 5.00 4.50 , 5.00 N/A N/A N/A The expected rate of return on plan assets was determined based on a review of historical returns, for the pension plans and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class. These expected future returns were then blended based on the pension plans’ target asset allocations. 80 Table of Contents Benefit obligations for the defined benefit plans and other postretirement benefits were calculated using the following assumptions as of December 31: Pension Benefits Other Postretirement Benefits 2025 2024 2025 2024 % % % % Discount rate 5.35 - 5.54 5.55 - 5.63 5.11 - 5.43 5.48 - 5.58 Rate of compensation increase 4.50 - 5.00 4.50 - 5.00 N/A N/A H2O America utilized each plan’s projected benefit stream in conjunction with the FTSE Pension Discount Curve in determining the discount rate used in calculating the pension and other postretirement benefits liabilities at the measurement date. H2O America has adopted MP-2021, Mortality Improvement Scales to determine mortality assumptions. The tables and scales reflect increasing life expectancies of participants in the United States. See also “Reconciliation of Funded Status” below. For other postretirement benefits, the assumed healthcare cost trend rate for 2025 is 8.00 %, grading down gradually to 4.50 % by 2033. Net Periodic Pension Costs Net periodic costs for the defined benefit plans and other postretirement benefits for the years ended December 31 were as follows: Pension Benefits Other Postretirement Benefits 2025 2024 2023 2025 2024 2023 Components of net periodic benefit cost Service cost $ 6,571 6,662 7,569 $ 624 665 638 Interest cost 15,600 14,451 14,234 1,351 1,181 1,268 Expected return on assets ( 19,777 ) ( 17,852 ) ( 15,440 ) ( 1,179 ) ( 1,068 ) ( 860 ) Amortization of prior service cost 15 15 15 — — — Amortization of actuarial (gain) loss ( 1,801 ) ( 71 ) 2,210 ( 856 ) ( 643 ) ( 350 ) Recognition of significant event — — — — — — Net periodic benefit cost $ 608 3,205 8,588 $ ( 60 ) 135 696 81 Table of Contents Reconciliation of Funded Status For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The projected benefit obligations and the funded status of the defined benefit pension and other postretirement plans as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2025 2024 2025 2024 Change in benefit obligation Benefit obligation at beginning of year $ 287,044 297,834 $ 25,080 24,264 Service cost 6,571 6,662 624 665 Interest cost 15,600 14,451 1,351 1,181 Actuarial loss (gain) 4,860 ( 14,816 ) ( 2,332 ) ( 146 ) Implicit rate subsidy — — ( 109 ) ( 336 ) Plan participants contributions — — 149 183 Administrative expenses paid ( 101 ) ( 146 ) — — Benefits paid and settlements ( 20,832 ) ( 16,941 ) ( 1,042 ) ( 731 ) Benefit obligation at end of year $ 293,142 287,044 $ 23,721 25,080 Change in plan assets Fair value of assets at beginning of year $ 307,947 285,504 $ 23,225 21,207 Actual return on plan assets 30,763 31,523 2,562 2,879 Employer contributions 5,675 8,007 7 7 Plan participants contributions — — 149 183 Administrative expenses paid ( 101 ) ( 146 ) ( 48 ) ( 71 ) Benefits paid and settlements ( 20,832 ) ( 16,941 ) ( 987 ) ( 980 ) Fair value of plan assets at end of year 323,452 307,947 24,908 23,225 Funded status at end of year $ 30,310 20,903 $ 1,187 ( 1,855 ) For the year ended December 31, 2025, the net actuarial loss on the benefit obligation was related primarily to a loss from changes in the discount rate of $ 4,219 and a $ 873 gain from pension data changes. For the year ended December 31, 2024, the net actuarial gain on the benefit obligation was related primarily to a gain from changes of discount rate of $ 21,129 and a $ 6,005 loss from pension data changes. The amounts recognized on the balance sheet as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2025 2024 2025 2024 Noncurrent assets $ 73,954 61,231 $ 7,013 5,191 Current liabilities ( 2,958 ) ( 2,308 ) ( 129 ) ( 146 ) Noncurrent liabilities ( 40,686 ) ( 38,020 ) ( 5,697 ) ( 6,900 ) $ 30,310 20,903 $ 1,187 ( 1,855 ) As of December 31, 2025 and 2024, the accumulated benefit obligation of the defined benefit pension plans was $ 269,908 and $ 263,607 , respectively. 82 Table of Contents The following table provides selected information about plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets as of December 31: 2025 2024 Pension Benefits: Plans with projected benefit obligation in excess of plan assets: Projected benefit obligation $ 43,644 40,328 Fair value of plan assets — — Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation 40,890 38,053 Fair value of plan assets — — Other Postretirement Benefits: Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation 15,874 16,891 Fair value of plan assets 10,047 9,844 H2O America recognizes regulatory assets and liabilities that represent actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain of its pension and other postretirement benefit plans, in accordance with ASC Topic 980. H2O America had no recorded regulatory assets as of December 31, 2025, and $ 3,177 as of December 31, 2024. Regulatory liabilities were $ 32,996 and $ 27,872 as of December 31, 2025 and 2024, respectively. As of December 31, 2024, the amount deferred in regulatory assets that has not yet been recognized as a component of net periodic benefit cost included a net loss of $ 3,150 and prior service cost of $ 27 . As of December 31, 2025 and 2024, the amounts deferred in regulatory liabilities that have not yet been recognized as components of net periodic benefit cost include net gain of $ 32,996 and $ 27,872 , respectively. Plan Assets Plan assets as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2025 2024 2025 2024 Fair value of assets at end of year: Debt securities $ 169,758 116,987 $ 8,656 5,368 52 % 38 % 36 % 23 % Equity securities 146,967 179,103 15,716 16,737 45 % 58 % 63 % 72 % Cash and equivalents 6,727 11,857 536 1,120 2 % 4 % 2 % 5 % Total $ 323,452 307,947 $ 24,908 23,225 83 Table of Contents The following tables summarize the fair values of plan assets by major categories as of December 31, 2025 and 2024: Fair Value Measurements at December 31, 2025 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 7,263 7,263 — — Equity securities (a) 162,683 162,683 — — Fixed Income (b) 178,414 171,622 6,792 — Total $ 348,360 341,568 6,792 — ___________________________________ (a) Actively managed portfolio of equity securities with the goal to exceed the benchmark performance. (b) Actively managed portfolio of fixed income securities with the goal to exceed the benchmark performance. Fair Value Measurements at December 31, 2024 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 12,977 12,977 — — Equity securities 195,840 195,840 — — Fixed Income 122,355 46,549 75,806 — Total $ 331,172 255,366 75,806 — In 2026, H2O America expects to make required and discretionary cash contributions of up to $ 7,682 to the pension plans and other postretirement benefit plans. Benefits expected to be paid in the next five years and in the aggregate for the five years thereafter are: Pension Plans Other Postretirement Benefit Plans 2026 $ 19,103 $ 1,578 2027 20,009 1,659 2028 20,148 1,667 2029 20,855 1,675 2030 21,449 1,693 2031 - 2035 116,122 9,023 Note 12. Equity Plans Common Stock H2O America’s long-term incentive plans provide employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or subsidiary the opportunity to acquire an equity interest in H2O America. H2O America also maintains stock plans in connection with its acquisition of CTWS which are no longer granting new stock awards. In addition, shares are issued to employees under H2O America’s employee stock purchase plan. On April 26, 2023, H2O America adopted the successor plans, the 2023 Long-Term Incentive Plan and the 2023 Employee Stock Purchase Plan, to replace the Amended and Restated Long-Term Incentive Plan (the “Predecessor Incentive Plan”) and the 2014 Employee Stock Purchase Plan (the “Predecessor ESPP”), respectively. The Predecessor Incentive Plan terminated on April 23, 2023 and the Predecessor ESPP terminated on July 31, 2023. Each outstanding award under the Predecessor Incentive Plan will remain outstanding under the Predecessor Incentive Plan and shall be governed solely by the terms of the documents evidencing such awards. The 2023 Long-Term Incentive Plan reserves a total of 1,142,000 shares of H2O America’s common 84 Table of Contents stock for issuance to employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the H2O America and its subsidiaries. The 2023 Employee Stock Purchase Plan reserves for a total of 500,000 shares of H2O America’s common stock for issuance for eligible employees to purchase common stock at a discount through accumulated payroll deductions. Remaining reserves for both of the predecessor plans were terminated with the adoption of the successor plans. A participant in the plans generally may not receive plan awards covering an aggregate of more than 600,000 shares of common stock in any calendar year. Additionally, awards granted under the plans may be conditioned upon the attainment of specified Company performance goals. The types of awards included in the plans are restricted stock awards, restricted stock units, performance shares, or other share-based awards. In addition, shares are issued to employees under the employee stock purchase plan (“ESPP”) that was approved by H2O America stockholders. As of December 31, 2025, 2024 and 2023, 1,213,202 , 1,142,770 and 1,080,759 shares have been issued pursuant to the plans, and 278,565 , 191,177 and 150,704 shares are issuable upon the vesting of outstanding restricted stock units, performance-based stock units, and deferred restricted stock units for the years ended 2025, 2024 and 2023, respectively. The remaining shares available for issuance under the plans are 862,815 as of December 31, 2025. The compensation costs charged to income is recognized on a straight-line basis over the requisite service period. A summary of compensation costs charged to income and proceeds from share-based compensation, which are recorded to additional paid-in capital and common stock, by award type, are presented below for the years ended December 31: 2025 2024 2023 Compensation costs charged to income: ESPP $ 360 557 378 Restricted stock and deferred restricted stock 6,084 5,066 4,269 Total compensation costs charged to income $ 6,444 5,623 4,647 ESPP proceeds $ 2,131 2,188 2,141 Restricted Stock and Deferred Restricted Stock A summary of H2O America’s outstanding restricted and deferred restricted stock awards under the Plan as of December 31, 2025, and changes during the year ended December 31, 2025, are presented below: Units Weighted- Average Grant- Date Fair Value Outstanding as of January 1, 2025 191,177 $ 65.36 Granted 175,037 48.65 Issued ( 70,611 ) 63.53 Forfeited ( 17,038 ) 58.29 Outstanding as of December 31, 2025 278,565 $ 52.32 Shares vested as of December 31, 2025 30,162 $ 79.89 A summary of the status of H2O America’s nonvested restricted and deferred restricted stock awards under the plans as of December 31, 2025, and changes during the year ended December 31, 2025, are presented below: Units Weighted- Average Grant- Date Fair Value Nonvested as of January 1, 2025 159,156 $ 64.30 Granted 175,037 48.65 Vested ( 76,725 ) 68.03 Forfeited ( 9,065 ) 58.29 Nonvested as of December 31, 2025 248,403 $ 52.34 Total fair value of restricted stock awards for all plans that were vested for the years ended 2025, 2024 and 2023 were $ 1,478 , $ 4,788 and $ 4,170 , respectively. As of December 31, 2025, the total unrecognized compensation costs related to restricted and 85 Table of Contents deferred restricted stock plans amounted to $ 8,939 . This cost is expected to be recognized over a weighted-average period of 1.14 years. For the years ended December 31, 2025, 2024 and 2023, 29,413 , 33,670 and 15,955 , respectively, of performance-based and market-based restricted stock awards were issued upon the attainment of certain performance metrics and service-based vesting under the Plan. Based upon actual attainment relative to the target performance metric, the number of shares issuable can range between 0 % to 150 % of the target number of shares for performance-based restricted stock awards, or between 0 % and 200 % of the target number of shares for market-based restricted stock awards. As of December 31, 2025, 7,805 performance-based and market-based restricted stock awards vested and 28,598 remained outstanding. Employee Stock Purchase Plan The ESPP allows eligible employees to purchase shares of H2O America’s common stock at 85 % of the fair value of shares on the purchase date. Under the ESPP, employees can designate up to a maximum of 10 % of their base compensation for the purchase of shares of common stock, subject to certain restrictions. A total of 500,000 shares of H2O America’s common stock have been reserved for issuance under the ESPP. The remaining shares available for issuance under the ESPP are 406,286 as of December 31, 2025. For the year ended December 31, 2025, 2024 and 2023, a total of 50,861 , 42,853 and 34,122 shares, respectively, were issued under the ESPP. The plan has no look-back provisions. Note 13. Segment Reporting H2O America’s single reportable segment provides water utility and utility-related services to its customers through H2O America’s subsidiaries, SJWC, CWC, TWC, MWC, and Acequia, which are aggregated and referred to as “Water Utility Services.” Water Utility Services’ activities are water utility operations with both regulated and non-tariffed businesses. Other business activities that do not comprise separately reportable segments primarily include SJWC’s City of Cupertino service concession arrangement operations, property management and investment activity conducted by H2O America Land Company and Chester Realty, Inc., contract water and sewer operations and other water-related services provided by NEWUS are referred to as “Other Services.” H2O America’s operating segments have been determined based on information used by the chief operating decision maker. H2O America’s chief operating decision makers (“CODM”) include the Chair and Chief Executive Officer; the Chief Financial Officer and Treasurer; the President and Chief Operating Officer; the President of Shared Services and Senior Vice President and Chief Administrative Officer; and the Vice President and General Counsel. However, ultimate decision-making authority rests with the Chair and Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis that is accompanied by certain disaggregated information about operating revenue, expenses, net income, and total assets. The CODM uses the net income to assess the financial performance of the segments and allocate resources (including employees, financial, or capital resources) in the budgeting and forecasting process. Previously, H2O America presented a separate reportable segment for Real Estate Services and also presented a disaggregation of regulated and non-tariffed activities within the Water Utility Services reportable segment. Considering the sale of the Tennessee properties, as discussed in Note 2, which were part of the Real Estate Services segment, management has updated its segment presentation and has recast the prior periods presented to conform with the current period presentation. Under the current presentation, the activities of Water Utility Services previously presented as “non-tariffed” are generally presented as “Other Services” along with the real estate activity. Certain allocated assets, such as goodwill, revenue and expenses have been included in the reportable segment amounts. Certain corporate costs and expenses are not allocated to Water Utility Services or Other Services and are shown separately to reconcile to the applicable consolidated amounts. 86 Table of Contents For the year ended December 31, 2025 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 787,099 13,491 — 800,590 Less: Production expenses 305,460 5,701 — 311,161 Administrative and general 119,665 1,306 5,027 125,998 Maintenance 30,124 2,771 — 32,895 Property taxes and other non-income taxes 37,521 47 118 37,686 Depreciation and amortization 114,286 121 916 115,323 Interest on long-term debt and other interest expense 51,463 — 21,112 72,575 Provision (benefit) for income taxes 19,928 1,371 ( 8,944 ) 12,355 Other (3) ( 6,531 ) ( 587 ) ( 2,863 ) ( 9,981 ) Net income (loss) $ 115,183 2,761 ( 15,366 ) 102,578 Capital expenditures $ 519,753 — — 519,753 For the year ended December 31, 2024 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 732,580 15,859 — 748,439 Less: Production expenses 286,763 5,259 — 292,022 Administrative and general 97,420 2,632 5,778 105,830 Maintenance 29,249 2,052 — 31,301 Property taxes and other non-income taxes 35,223 317 388 35,928 Depreciation and amortization 111,709 253 893 112,855 Interest on long-term debt and other interest expense 47,485 521 23,384 71,390 Provision (benefit) for income taxes 17,134 1,569 ( 9,733 ) 8,970 Other (3) ( 920 ) 191 ( 3,095 ) ( 3,824 ) Net income (loss) $ 108,517 3,065 ( 17,615 ) 93,967 Capital expenditures $ 377,208 29 — 377,237 87 Table of Contents For the year ended December 31, 2023 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 652,045 18,318 — 670,363 Less: Production expenses 251,898 4,302 — 256,200 Administrative and general 93,255 2,777 2,624 98,656 Maintenance 23,972 1,757 — 25,729 Property taxes and other non-income taxes 33,469 926 80 34,475 Depreciation and amortization 104,329 646 893 105,868 Interest on long-term debt and other interest expense 42,743 329 23,072 66,144 Provision (benefit) for income taxes 11,293 2,213 ( 7,550 ) 5,956 Other (3) ( 4,279 ) ( 121 ) ( 3,252 ) ( 7,652 ) Net income (loss) $ 95,365 5,489 ( 15,867 ) 84,987 Capital expenditures $ 288,627 24,244 — 312,871 ___________________________________ (1) The “Other Services” category includes the accounts of H2O America Land Co, Chester Reality, Inc., SJWC’s Cupertino service concession arrangement operations, TWOS, TWR, and NEWUS, on a stand-alone basis. (2) The “Unallocated Corporate” category includes the accounts of H2O America, H2O America NE LLC, H2O America TX Holdings, Inc., CTWS, NWU on a stand-alone basis. (3) Primarily comprised of pension non-service credit (cost) and items of miscellaneous non-operating income (expense). H2O America’s assets for the Water Utility Services reportable segment and all other are as follows as of December 31: 2025 2024 Water Utility Services (reportable segment) $ 5,054,235 4,567,182 Other Services 26,707 25,053 Unallocated Corporate 68,624 66,074 Total assets $ 5,149,566 4,658,309 Note 14. Acquisitions Quadvest acquisition On July 7, 2025, the Company, through its indirect subsidiary, TWC, entered into an asset purchase agreement (the “Regulated Business APA”)”, with Quadvest, L.P. (“Quadvest Retail”) and the Company, as guarantor, pursuant to which, and subject to the terms and conditions set forth therein, Quadvest Retail has agreed to sell, and TWC has agreed to acquire, substantially all of the assets of Quadvest L.P. related to the operation of Quadvest L.P.’s water and sewer utility business at a purchase price consisting of a base amount of $ 483,600 , with certain adjustments based on capital expenditures (the “Regulated Business Transaction”). The Regulated Business Transaction will be subject to the satisfaction of various closing conditions set forth in the Regulated Business APA, including satisfaction of the closing conditions with respect to the Wholesale Business Transaction described below. Concurrently on July 7, 2025, the Company, its indirect subsidiaries, TWOS and TWC (together with the Company and TWOS, the “Purchasers”), entered into another asset purchase agreement (the “Wholesale Business APA”), with Quadvest Retail and its affiliate, Quadvest Wholesale, LLC, (“Quadvest Wholesale”) pursuant to which, and subject to the terms and conditions set forth therein, Quadvest Wholesale has agreed to sell, and TWOS has agreed to acquire substantially all of the assets of Quadvest Wholesale related to the operation of Quadvest Wholesale’s wholesale water and sewer business at a purchase price consisting of a base amount of $ 56,400 , with certain adjustments based on capital expenditures (the “Wholesale Business 88 Table of Contents Transaction”). The Wholesale Business Transaction will be subject to the satisfaction of various closing conditions set forth in the Wholesale Business APA, including the simultaneous closing of the Regulated Business Transaction described above. On July 9, 2025, TWC filed a request with the PUCT to use FMV to support its acquisition of Quadvest Retail. On August 7, 2025, the PUCT appointed three appraisers to determine the FMV. In December 2025, TWC received the appraised FMV from the PUCT-appointed appraisers for the assets of Quadvest Retail. In accordance with Texas’ FMV statute, the purchase price of $ 483.6 million will serve as the ratemaking rate base. TWC filed its STM application with the PUCT in January 2026. Note 15. Subsequent Event None. 89 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I H2O America (Parent Only) CONDENSED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2025 2024 Assets Investments in subsidiaries $ 2,037,519 1,877,922 Current assets: Cash and cash equivalents 175 1,306 Intercompany receivables 6,680 1,473 Intercompany notes receivable 102,780 74,119 Other current assets 4,372 1,177 Total current assets 114,007 78,075 Other assets Other 287 222 Total other assets 287 222 Total assets $ 2,151,813 1,956,219 Capitalization and Liabilities Capitalization: Stockholders’ equity: Common stock, $ 0.001 par value; authorized 70,000,000 shares in 2025 and 2024; issued and outstanding 36,118,242 shares in 2025 and 33,629,169 shares in 2024 $ 36 34 Additional paid-in capital 958,188 827,796 Retained earnings 581,080 537,184 Accumulated other comprehensive income 1,467 1,960 Total stockholders’ equity 1,540,771 1,366,974 Long-term debt, less current portion 557,832 557,430 Total capitalization 2,098,603 1,924,404 Current liabilities: Line of credit 11,000 3,000 Intercompany payables — 2,210 Intercompany notes payable 966 — Accounts payable 3,274 1,588 Accrued interest 3,258 3,224 Income tax payable 31,661 16,871 Other current liabilities 408 765 Total current liabilities 50,567 27,658 Deferred income taxes 815 2,488 Other noncurrent liabilities 1,828 1,669 Total capitalization and liabilities $ 2,151,813 1,956,219 See Accompanying Notes to Schedule I 90 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I H2O America (Parent Only) CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31 (in thousands) 2025 2024 2023 Operating revenue $ — — — Operating expense: Administrative and general 4,664 5,568 2,239 Property taxes and other non-income taxes 118 388 80 Total operating expense 4,782 5,956 2,319 Operating loss ( 4,782 ) ( 5,956 ) ( 2,319 ) Other (expense) income: Interest on long-term debt and other interest expense ( 17,862 ) ( 18,022 ) ( 17,692 ) Interest income on intercompany notes receivable 6,292 6,756 3,862 Other, net ( 4,613 ) ( 3,456 ) 1,034 Loss before income taxes and equity earnings from subsidiaries ( 20,965 ) ( 20,678 ) ( 15,115 ) Income tax benefit ( 6,015 ) ( 5,727 ) ( 4,294 ) Equity earnings from subsidiaries, net of taxes 117,528 108,918 95,808 H2O America net income 102,578 93,967 84,987 Other comprehensive income, net ( 493 ) 169 314 H2O America comprehensive income $ 102,085 94,136 85,301 See Accompanying Notes to Schedule I 91 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I H2O America (Parent Only) CONDENSED STATEMENTS OF CASH FLOWS Years ended December 31 (in thousands) 2025 2024 2023 Operating activities: Net income $ 102,578 93,967 84,987 Adjustments to reconcile net income to net cash used in operating activities: Earnings from investment in subsidiaries ( 117,666 ) ( 108,918 ) ( 95,808 ) Deferred income taxes ( 1,644 ) ( 618 ) 718 Stock-based compensation 842 687 696 Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts payable and other current liabilities 1,329 1,724 281 Intercompany receivables ( 18,387 ) ( 652 ) ( 6,018 ) Tax payable and other accrued taxes 14,761 452 1,550 Accrued interest 34 ( 31 ) 47 Return on capital from investments in subsidiaries 59,400 90,600 50,550 Proceeds from litigation settlement, net — — — Other changes, net ( 2,677 ) 532 607 Net cash provided by operating activities 38,570 77,743 37,610 Investing activities: Proceeds to subsidiaries for notes receivable ( 237,246 ) ( 173,374 ) ( 148,392 ) Repayments from subsidiaries for notes receivable 208,585 169,001 91,740 Investments in subsidiaries ( 84,037 ) ( 97,000 ) ( 25,500 ) Net cash used in investing activities ( 112,698 ) ( 101,373 ) ( 82,152 ) Financing activities: Borrowings from subsidiaries for notes payable 1,121 27,098 700 Repayments to subsidiaries for notes payable ( 155 ) ( 28,824 ) ( 3,140 ) Borrowings from lines of credit 133,000 35,000 10,000 Repayments of lines of credit ( 125,000 ) ( 42,000 ) — Issuance of common stock, net of issuance costs 122,808 85,008 80,659 Proceeds from litigation settlement, net — — — Debt issuance costs ( 132 ) ( 82 ) ( 46 ) Dividends paid ( 58,645 ) ( 52,132 ) ( 47,905 ) Net cash provided (used in) by financing activities 72,997 24,068 40,268 Net change in cash and cash equivalents ( 1,131 ) 438 ( 4,274 ) Cash and cash equivalents, beginning of year 1,306 868 5,142 Cash and cash equivalents, end of year $ 175 1,306 868 Cash paid (refunded) during the year for: Interest $ 17,713 17,919 17,465 Income taxes $ ( 9,676 ) — ( 4,870 ) Supplemental disclosure of non-cash activities: Share-based compensation from investment in subsidiaries $ 6,707 5,879 3,778 See Accompanying Notes to Schedule I 92 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I H2O America (Parent Only) NOTES TO CONDENSED FINANCIAL STATEMENTS Years ended December 31, 2025, 2024 and 2023 (Dollars in thousands, except share and per share data) Financing Activities See Note 5 , “Lines of Credit” and Note 6 , “Long-term Debt” for additional information on H2O America’s revolving credit facility and outstanding debt. The following is a table of the H2O America’s schedule of principal payments on long-term debt: Year 2026 $ — 2027 — 2028 — 2029 310,000 2030 50,000 Thereafter 200,000 Restrictions on Dividends and Other Distributions H2O America is a legal entity separate and distinct from its various subsidiaries. As a holding company with no significant operations of its own, H2O America’s principal sources of funds are dividends or other distributions from its operating subsidiaries, borrowings and the issuance of equity. The rights of H2O America and, consequently, its creditors and shareholders, to participate in any distribution of assets of any of its subsidiaries are subject to certain prior claims of creditors of such subsidiary. The abilities of certain of H2O America’s subsidiaries to transfer funds to H2O America in the form of cash dividends, loans or advances are subject to certain contractual and regulatory restrictions. H2O America and its subsidiaries are subject to debt covenants that could limit their respective abilities to pay dividends. For a discussion on these covenants, see Note 6 , “Long-term Debt” to H2O America and Subsidiaries Notes to Consolidated Financial Statements. In addition, CTWS and its regulated subsidiaries are prohibited from paying dividends if not in compliance with minimum equity requirements under commitments made by H2O America as part of the approval granted by the PURA and the Maine Public Utilities Commission in connection with the acquisition of CTWS. As of December 31, 2025, the restricted net assets of H2O America’s subsidiaries were approximately $ 501,724 or 33 % of consolidated net assets of H2O America. 93 Table of Contents H2O America and Subsidiaries FINANCIAL STATEMENT SCHEDULE Schedule II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Years ended December 31, 2025, 2024 and 2023 (in thousands) Description 2025 2024 2023 Allowance for doubtful accounts: Balance, beginning of period $ 1,172 6,551 5,753 (Credited) charged to expense 3,636 ( 1,338 ) 3,594 (Credited) charged to regulatory asset — ( 3,960 ) 1,628 Accounts written off ( 5,179 ) ( 3,874 ) ( 5,479 ) Recoveries of accounts written off 1,093 3,793 1,055 Balance, end of period $ 722 1,172 6,551 Reserve for litigation and claims: Balance, beginning of period $ 615 1,888 1,768 Charged to expense 97 206 971 Revision to accrual, due to settlements 114 ( 39 ) ( 166 ) Payments ( 411 ) ( 1,440 ) ( 685 ) Balance, end of period $ 415 615 1,888 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.