H2o America (HTO) risk factors, FY2025 10-K

Risks Relating To Quadvest Acquisition

1. 01The following discusses certain risk factors relating to the proposed transactions with Quadvest, and does not include all of the risk factors associated with the proposed transactions and H2O America after the proposed transactionsNew
2. 02Our proposed transactions with Quadvest are subject to the receipt of consents and clearances from regulatory authorities that may impose conditions that could have an adverse effect on H2O America or, if not obtained, could prevent completion of the proposed transactionsNew
3. 03As a condition to the consummation of the proposed transactions, the sale of the Regulated Business must be approved by the PUCT. While we expect the transaction to receive PUCT approval by mid-2026, the exact timeline for this approval process is unknown and may not occur until later, if at allNew
4. 04We may be unable to successfully integrate Quadvest’s business with ours and realize the anticipated benefits of the acquisition, which could negatively impact the future business and financial results of H2O AmericaNew
5. 05Failure to complete the proposed transactions as currently contemplated or at all could negatively impact the stock price, business operations and financial results of H2O AmericaNew
6. 06The asset purchase agreements with Quadvest may be terminated in certain circumstances, which would result in the benefits of the proposed transactions not being realized, and under certain circumstances, we may be required to pay a termination feeNew
7. 07Failure to obtain financing for the proposed transactions on favorable terms or at all could negatively impact the operating results and financial condition of H2O AmericaNew

Risks Relating To Regulatory and Legal Matters

1. 08Our business is regulated and may be adversely affected by changes to the regulatory environment63% rewritten
2. 09Recovery of regulatory assets is subject to adjustment by regulatory agencies and could impact the operating results of Water Utility Services
3. 10Water Utility Services is subject to litigation risks concerning water quality and contamination
4. 11Water Utility Services is subject to possible litigation or regulatory enforcement action concerning water discharges to Waters of the United States (“WOTUS”)
5. 12Streamflow regulations in Connecticut could potentially impact our ability to serve our customers
6. 13New or more stringent environmental and water quality regulations could increase Water Utility Services’ water quality compliance costs, hamper Water Utility Services’ available water supplies, and increase future capital expenditures22% rewritten
7. 14The impact of climate change and climate change laws and regulations have been passed and are being proposed that require compliance with greenhouse gas emissions standards, as well as other climate change initiatives, which could increase Water Utility Services’ operating costs and affect our business
8. 15We may be at risk for litigation under the principle of inverse condemnation for activities in the normal course of business that have a damaging effect on private property69% rewritten
9. 16sued under the doctrine of inverse condemnation and held liable if its facilities, operations or property, such as mains, fire hydrants, power lines and other equipment, or wildfires in our Santa Cruz Mountain watershed result in damage to private propertyNew
10. 17Our water utility property and systems are subject to condemnation and other proceedings through eminent domain
11. 18Regulatory agencies may disagree with our valuation and characterization of certain of our assets

Risks Relating To Business Operations

1. 19The adequacy of our water supplies depends upon a variety of factors beyond our control. Interruption in the water supply may adversely affect our reputation and earnings
2. 20The concentration of our business in California, Texas and Connecticut makes us susceptible to adverse developments affecting these states58% rewritten
3. 21We face competition from other utilities and service providers which might hinder our growth opportunities and mitigate our future profitability
4. 22Fluctuations in customer demand for water due to seasonality, restrictions of use, weather, and lifestyle can adversely affect operating results
5. 23A contamination event or other decline in source water quality could affect the water supply of Water Utility Services and therefore adversely affect our business and operating results
6. 24Operating under contract water and waste systems subject us to risks
7. 25The necessity for ongoing physical and technological security has resulted, and may continue to result, in increased operating costs
8. 26A failure of our reservoirs, storage tanks, mains or distribution networks could result in losses and damages that may adversely affect our financial condition and reputation
9. 27Our business and financial performance may be adversely affected by high inflation
10. 28Work stoppages and other labor relations matters could adversely affect our business and operating results34% rewritten
11. 29If we fail to maintain safe work sites, we can be exposed to not only people impacts but also to financial losses such as penalties and other liabilities

Risks Relating To Our Finances and Corporate Matters

1. 30We may not have sufficient cash flow or capital resources to fund capital expenditures of our business, and our access to liquidity through the capital markets may be limited25% rewritten
2. 31We have incurred substantial additional indebtedness that may reduce our business and operational flexibility and increase our borrowing costs
3. 32H2O America has committed to certain “ring-fencing” measures which will enhance CTWS’s separateness from H2O America, which may limit H2O America’s ability to influence the management and policies of CTWS (beyond the limitations included in other existing governance mechanisms)37% rewritten
4. 33Our business strategy, which includes acquiring water systems and expanding non-tariffed services, will expose us to new risks which could have a material adverse effect on our business
5. 34An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and financial condition
6. 35Adverse investment returns and other factors may increase our pension costs and pension plan funding requirements
7. 36H2O America’s dividend policy is subject to the discretion of our board of directors and may be limited by legal and contractual requirements
8. 37H2O America is a holding company that depends on cash flow from its subsidiaries to meet its financial obligations and pay dividends on its common stock
9. 38Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also make it more difficult for stockholders to influence our policies or may reduce the rights of stockholders
10. 39We may not be able to maintain adequate insurance coverage at reasonable costs, or at all, to cover all losses incurred in our operations
11. 40We operate in areas subject to natural disasters, and we may be the target of terrorist activities and other physical threats
12. 41Our operations, liquidity, and earnings may be adversely affected by wildfires and risk of fire hazards
13. 42If our surface water supply is compromised, we may have to interrupt the use of that water supply until we are able to substitute the flow of water from an alternative water source
14. 43The price of our common stock may be volatile and may be affected by market conditions beyond our control
15. 44We must continue to attract and retain qualified technical and managerial personnel in order to succeed