Global Water Resources, Inc. Quarterly Report Released - Here’s What You Should Know

Global Water Resources, Inc.
Investor Summary – Q2 2025

Key Financial Metrics

• Total assets as of June 30, 2025: $449.4 million (up from $405.1 million at December 31, 2024).
• Net utility plant: $401.7 million, up from $359.4 million as of year-end 2024.
• Revenues for Q2 2025: $14.2 million (Q2 2024: $13.5 million; +5.4%).
  • Six months ended June 30, 2025: $26.7 million (2024: $25.1 million; +6.3%).
• Operating income, Q2 2025: $2.6 million (Q2 2024: $2.8 million; -6.3%).
  • Six months ended June 30, 2025: $3.9 million (2024: $4.1 million; -4.7%).
• Net income, Q2 2025: $1.6 million (Q2 2024: $1.7 million; -6.8%).
  • Six months ended June 30, 2025: $2.2 million (2024: $2.4 million; -9.0%).
• EPS, Q2 2025: $0.06 basic/diluted (Q2 2024: $0.07).
  • Six months ended June 30, 2025: $0.08 (2024: $0.10).
• Adjusted EBITDA, Q2 2025: $6.94 million (Q2 2024: $6.79 million).
  • Six months ended June 30, 2025: $12.6 million (2024: $12.2 million).
• Operating cash flow, H1 2025: $8.8 million (H1 2024: $13.6 million).
• Capital expenditures, H1 2025: $35.4 million (H1 2024: $12.2 million).
• Cash & equivalents at June 30, 2025: $10.2 million.
• Long-term debt (net): $116.8 million.
• Share count at August 12, 2025: 27,473,277 shares.

Segment/Operational Metrics

• Active water connections: 36,382 (+3.6% Y/Y).
• Active wastewater connections: 29,257 (+4.0% Y/Y).
• Water service revenue, Q2 2025: $7.4 million (+10.5%).
• Wastewater & recycled water service revenue, Q2 2025: $6.9 million (+0.5%).
• Six months: water service revenue $13.3 million (+12.2%); wastewater & recycled water $13.4 million (+0.9%).

Selected Recent Developments

• Acquisition: Completed acquisition of seven water systems from City of Tucson via subsidiary GW-Ocotillo in July 2025.
• Equity Financing: Completed public offering of 3,220,000 shares in March 2025, netting $31.0 million.
• GW-Farmers utility was awarded a $1.6 million grant from WIFA for infrastructure replacement in December 2023.
• Filed rate case applications for GW-Santa Cruz and GW-Palo Verde utilities in March 2025, with approval pending.
• New rates effectively began for GW-Farmers and GW-Saguaro in 2025.

Risks

• Regulatory Risk: Operations are subject to ACC and EPA regulation, including new PFAS limits from EPA finalized in April 2024, which may require additional expensive water treatment capital expenditures. The outcome of pending rate cases may impact earnings, as future revenues hinge on regulatory approval (see March 2025 filings for GW-Santa Cruz and GW-Palo Verde, approvals pending).
• Water Supply Constraints: In some service areas, especially in Pinal County, Arizona, water supply constraints could restrict expansion and possibly limit future growth as outlined under Item 1A with reference to Senate Bill 1611 and related regulatory updates.
• Economic/Construction Slowdown: Year-over-year declines in new building (single family permits in City of Maricopa down 24% for Q2 and 35% for the six months) and multi-family permits down 89% and 75%, respectively. Management notes these external factors contributed to softer organic growth despite overall increases in active connections.
• Cost Inflation: Higher personnel, utilities, chemicals, and contract services costs led to an 8.5% year-over-year increase in operating expenses for Q2 and 8.4% for the first six months ($22.8 million vs. $21.1 million). Salaries and contract labor increases are specific cited contributors.
• Legislative & Tax Risk: New federal tax law (“One Big Beautiful Bill Act,” July 2025) introduces significant changes to U.S. tax code, increasing effective corporate tax rates and impacting the company's tax profile.

Management Discussion and Outlook

• Growth: Performance continues to be supported by organic connection growth (+3.8% total connections Y/Y). However, management notes near-term pressure from lower construction activity.
• Strategic Capex: $35.4 million in capex heavily focused on core regulated service areas. Major investments are intended to support infrastructure and compliance with heightened regulatory standards (notably, PFAS and lead/copper rules).
• Rate Cases & Revenue: Management is proactively seeking regulatory recovery for investments and cost increases, with several rate cases in process or recently approved (GW-Farmers, GW-Santa Cruz, GW-Palo Verde, GW-Saguaro).
• Liquidity: Enhanced through equity issuance, with $10.2 million in cash and an undrawn revolver; no major anticipated near-term outlays except for ordinary capex and dividend program ($0.08/share quarterly; $0.15/share year-to-date).
• Acquisitions: Ongoing focus on disciplined acquisitions in growth corridors, as evidenced by the Tucson systems transaction completed in July.
• Insurance: Management confirms adequate insurance coverage to mitigate the impact of catastrophic events.
• Debt: Debt levels are stable, with $116.8 million in long-term debt on favorable terms, and no covenant issues reported.
• Housing Market: Despite a soft housing market and permit declines, Phoenix MSA remains a relatively affordable housing market, underpinning long-term organic demand.

Conclusion
Global Water Resources delivered stable operating results with continued revenue growth from active connection increases, though margins are pressured by higher operating costs and a challenging development environment. Pending regulatory decisions, water resource constraints, and regulatory-driven capital spending requirements represent the most important risks. Recent equity financing has bolstered liquidity and enabled continued investment. Management maintains a cautious but constructive outlook, supported by recurring rate-regulated revenue and a sustainable dividend policy.

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