Global Water Resources, Inc.

What they do

The company provides regulated water and wastewater utility service under the Arizona Corporation Commission (ACC), serving over 121,000 people in approximately 40,000 homes across 418 square miles of ACC-designated service areas. It deploys a 'Total Water Management' approach that includes recycled water reuse, regional planning, advanced technology, and stakeholder partnerships to reduce demand on non-renewable water sources. Approximately 87.3% of active service connections are customers of its GW-Santa Cruz and GW-Palo Verde utilities, located within a single service area.

Revenue drivers

• Regulated water and wastewater utility service — Generates revenue from rates approved by the ACC for water and wastewater service; GW-Santa Cruz and GW-Palo Verde account for 87.3% of active connections. Regulated revenue was $15.7 million in Q2 2026, up 9.9% year-over-year.
• Infrastructure coordination and financing agreements (ICFA) — Recognized $2.1 million in unregulated revenue from ICFA in Q2 2026, a key contributor to total revenue growth.
• Acquisitions and organic connection growth — Acquired seven water systems from Tucson Water in July 2025, contributing to revenue. Organic active service connection growth was 2.7% year-over-year as of Q2 2026.
• Higher rates and consumption — Revenue benefited from higher rates at GW-Farmers following a general rate case in Southern Arizona, and water consumption increased 6.1% year-over-year to 1.2 billion gallons in Q2 2026.

Recent performance

In Q2 2026, total revenue increased 24.8% year-over-year to $17.8 million, driven by ICFA revenue, the Tucson Water acquisition, organic growth, higher consumption, and increased rates. Net income rose to $2.7 million, or $0.10 per diluted share, from $1.6 million in Q2 2025. Adjusted EBITDA increased to $7.9 million, up $1.0 million year-over-year. For the six months ended June 30, 2026, revenue was $31.1 million, with Q2 contributing $17.8 million. The company declared monthly dividends of $0.02533 per share, annualizing to $0.30396 per share.

Strategy

Management focuses on deploying Total Water Management to sustainably manage water resources and support growth. Key initiatives include filing settlement agreements to bifurcate and settle rate cases for GW-Santa Cruz and GW-Palo Verde, seeking to expand assured water supply through Designation of Assured Water Supply applications, and investing in infrastructure projects. The company recommissioned its Southwest Plant water reclamation facility and continues capital investments to enhance system reliability and support organic growth. It also secured an extension of its $20 million revolving credit facility to May 18, 2028.

Risks

• Regulatory and rate case risk — Financial condition depends on ACC-approved rates; the GW-Santa Cruz rate case and GW-Palo Verde rate case refiling are pending, and adverse decisions could materially impact results.
• Water supply constraints — Arizona faces water scarcity, with the Colorado River over-allocated and groundwater overdraft; this could affect the company's ability to serve growth and increase costs.
• High capital spending requirements — The utility industry requires significant capital investment; increased depreciation and interest expenses from rate base investments have been partially offsetting revenue growth.
• Acquisition integration risk — Integration of acquired systems, like the Tucson Water acquisition, may involve unexpected costs or operational challenges.

Outlook

Management expects the GW-Santa Cruz settlement, if approved, to increase annual revenue requirement by approximately $2.3 million, with new rates effective November 1, 2026. GW-Palo Verde's rate case will be refiled in 2027 using a 2026 test year without formula rates. The company anticipates continued organic connection growth, supported by population and job growth in the Phoenix and Tucson metropolitan areas, and expects to fund growth through infrastructure investments and the extended credit facility.