Global Water Resources — Q2 2026 Earnings Summary

Financial Performance

• Total revenue increased 24.8% year-over-year to $17.8 million for the three months ended June 30, 2026, driven by $2.1 million in unregulated ICFA revenue, the acquisition of seven Tucson water systems, organic connection growth, increased consumption, and higher rates.
• Regulated revenue grew 9.9% to $15.7 million, attributed to the Tucson acquisition, organic connection growth, increased consumption, and higher rates at GW-Farmers.
• Unregulated revenue was $2.1 million in Q2 2026 compared to $0 in the prior year, resulting from ICFA revenue recognition related to the GW-Hassayampa wastewater reclamation facility.
• Net income increased 70.4% to $2.7 million ($0.10 per diluted share) in Q2 2026, compared to $1.6 million ($0.06 per diluted share) in Q2 2025.
• For the six months ended June 30, 2026, total revenue was $31.1 million (up 16.3% YoY), and net income was $2.4 million ($0.08 per diluted share), up 8.1% from $2.2 million in the prior period.
• Adjusted EBITDA increased 14.6% to $7.9 million in Q2 2026 and 7.6% to $13.5 million for the six-month period.
• Adjusted net income decreased to $1.3 million in Q2 2026 and $0.9 million for the six-month period, primarily due to higher depreciation, amortization, and accretion expenses.
• Depreciation, amortization, and accretion increased 32.7% to $4.4 million in Q2 2026 and 30.4% to $8.7 million for the six months, driven by assets placed in service from the 2025 capital improvement plan.
• Net interest expense increased due to a term loan entered in December 2025 and increased borrowings under the Revolver.
• Cash and cash equivalents were $1.46 million as of June 30, 2026, down from $4.08 million at December 31, 2025.
• Long-term debt, net, was $127.8 million as of June 30, 2026, compared to $129.8 million at December 31, 2025.
• Revolver borrowings were $5.8 million as of June 30, 2026.
• Deferred revenue (ICFA) was $21.9 million as of June 30, 2026.

Guidance and Future Outlook

• Management expects continued organic connection growth driven by Arizona's strong economic outlook and population expansion.
• New rates for GW-Santa Cruz are requested to be effective November 1, 2026, following a settlement agreement proposing a net $1.9 million rate increase; a final decision is expected in Q4 2026.
• GW-Palo Verde intends to refile its rate case in 2027 using a 2026 test year.
• Future rate review filings are planned for Pima County utilities (GW-Saguaro, GW-Ocotillo, GW-Farmers) in the first half of 2027 using a 2026 test year.
• A GW-Santa Cruz rate review filing is planned for the first half of 2028 using a 2027 test year.
• The company plans to continue prudent infrastructure investments across all utilities to build a regulatory record for investment recovery.
• Management anticipates Arizona's economy to accelerate in 2026, supported by job growth (projected 454,000 new jobs through 2034) and population increases.

Business Segments and Product Lines

• Active service connections increased 5.8% YoY to 69,429 as of June 30, 2026.
• Organic active service connection growth rate was 2.6% excluding the Tucson acquisition.
• Water consumption increased 6.1% YoY to 1.2 billion gallons.
• The company invested $6.6 million in infrastructure projects during Q2 2026.
• GW-Hassayampa commissioned a new 60,000-gallon-per-day water reclamation facility in June 2026.
• The company acquired seven water systems from Tucson Water in July 2025.
• The company filed Designation of Assured Water Supply applications to expand supply in GW-Santa Cruz and GW-Ocotillo service areas.

Market and Competitive Landscape

• The Phoenix metropolitan statistical area is the 10th largest in the U.S., with a population of 5.2 million (2025 estimate), projected to reach 6.3 million by 2040.
• TSMC announced an additional $100 billion investment in U.S. semiconductor manufacturing in Arizona, bringing total planned investment to $265 billion, expected to create tens of thousands of jobs.
• The State Route 347 Improvement Project began in June 2026 to support residential and commercial development in Maricopa and western Pinal County.
• The City of Maricopa median home sales price is 25% lower than in the City of Phoenix, influencing organic growth.
• The company monitors macroeconomic effects, including tariffs on operational costs and construction work in progress.

Risks and Challenges

• Increased depreciation expense and net interest expense resulting from 2025 rate base investments.
• Rising medical costs impacting personnel expenses.
• Increased purchased power and chemical costs due to higher consumption and additional processing equipment.
• Potential impacts from tariffs on operational costs and construction work in progress.
• Regulatory uncertainty regarding the timing and outcome of rate case filings and approvals.
• Fluctuations in single-family housing market permit activity.

Management Commentary and Tone

• CEO Ron Fleming described Q2 results as showing "strong year-over-year growth" driven by the Tucson acquisition, organic connection growth, and higher water consumption.
• Management highlighted "continued cost discipline" in general and administrative expenses, noting G&A was slightly lower YoY.
• Management emphasized that increased non-cash depreciation expenses reflect capital deployed into infrastructure that supports growth and service quality.
• Management expressed confidence that the growing rate base from prudent infrastructure investments will support future rate case filings and revenue growth.
• The tone regarding Arizona's economic outlook is positive, citing strong job and population growth forecasts.

Other Key Points

• The company declared three monthly cash dividends of $0.02533 per common share, or $0.30396 on an annualized basis.
• The company secured an extension of its $20 million revolving line of credit to May 18, 2028.
• A settlement agreement was filed with the Arizona Corporation Commission to bifurcate and settle rate cases for GW-Santa Cruz and GW-Palo Verde.
• GW-Palo Verde filed a motion to withdraw its rate application, which was granted on July 29, 2026.
• The company committed to seeking an increase to the temporary bill credit for GW-Palo Verde customers of approximately $0.4 million annually until the next rate case resolution.
• The company operates 39 water and wastewater systems primarily in growth corridors around Phoenix and Tucson.
• The company recycles over 1 billion gallons of water annually.