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    GWRS
    Earnings call· Jun 2026(Q2 FY26)

    Global Water Resources Q2 FY26 earnings call GWRS

    Aug 13, 2026 Source

    Executive summary

    Global Water Resources, Inc. Q2 FY26 — Rate Case Progress and Organic Growth Drive Optimism

    Global Water Resources reported strong Q2 FY26 revenue and adjusted EBITDA growth, driven by unregulated ICFA revenue, acquisitions, and organic connection growth. The company is navigating increased operating expenses from prior capital investments and rising medical costs, which have impacted net income. Significant progress on rate cases, particularly for GW-Santa Cruz, is expected to provide meaningful earnings growth in the coming years, supported by ongoing economic development in the Phoenix metro area.

    Highlights

    5

    • Total revenue increased 24.8% to $17.8 million in Q2 FY26.

    • Adjusted EBITDA increased 15% to $7.9 million in Q2 FY26.

    • Total active service connections increased 5.8% to 69,429 year-over-year.

    • Regulated revenue increased 9.9% to $15.7 million in Q2 FY26.

    • G&A costs remained relatively flat at $4.3 million in Q2 FY26.

    Concerns

    4

    • Depreciation and operating expenses from 2025 capital investments adversely impacted net income and EPS in Q2 FY26.

    • Medical expenses continue to grow at an unprecedented pace.

    • Phoenix MSA single-family building permits decreased 4.7% in Q2 FY26 compared to Q2 FY25.

    • Higher interest expense and lower interest income increased other expense by $0.4 million in Q2 FY26.

    Guidance & targets

    6
    CategoryTargetConfidence
    Net increased revenues
    $1.9 million
    high materiality
    High
    New rates
    2028
    medium materiality
    Medium
    Rate review filings
    First half of 2027
    medium materiality
    High
    Next GW-Santa Cruz rate review filing
    2028
    low materiality
    Medium
    G&A costs run rate
    flat
    medium materiality
    High
    Capital expenditure
    lower than 2025
    medium materiality
    Medium

    Operational metrics

    27
    Total active service connections
    69,429up 5.8% YoY
    as of June 30, 2026

    Total active service connections increased 5.8% to 69,429 as of June 30, 2026, from the 12 months prior.

    Annualized total active service connection growth rate (excluding acquisitions)
    2.6%
    2026

    In 2026, we achieved an annualized 2.6% total active service connection growth rate, excluding the acquisition of the seven Tucson Water systems.

    Infrastructure improvements investment
    $6.6 million
    Q2 2026

    Specifically, we invested $6.6 million into infrastructure improvements in existing utilities in the second quarter of 2026 to provide safe and reliable service.

    Single-family dwelling unit building permits (Phoenix MSA)
    5,653down 4.7% YoY
    Q2 2026

    In the second quarter of 2026, this market realized 5,653 building permits, representing a 4.7% decrease compared to the same period in 2025.

    Single-family dwelling unit building permits (Maricopa market)
    185up 5.7% YoY
    Q2 2026

    Meanwhile, the Maricopa market realized 185 building permits, representing a 5.7% increase from the same period in 2025.

    Organic increase in active connections
    2.7%
    YoY

    reflected in the company's 2.7% year-over-year organic increase in active connections.

    Total revenue
    $17.8 millionup 24.8% YoY
    Q2 2026

    Total revenue for the second quarter of 2026 was $17.8 million, which was up $3.5 million, or 24.8%, compared to Q2 2025.

    Total revenue
    $31.1 millionup 16.3% YoY
    YTD 2026

    Total revenue for the year-to-date period increased $4.4 million, or 16.3%, to $31.1 million.

    Unregulated revenue (ICFA)
    $2.1 million
    Q2 2026

    primarily attributable to unregulated revenue recognition of $2.1 million related to infrastructure coordination and financing agreements, also known as ICFAs

    Regulated revenue
    $15.7 millionup 9.9% YoY
    Q2 2026

    Now turning to regulated revenue, which excludes ICFA revenue, for Q2 was $15.7 million, which was up $1.4 million, or 9.9%, compared to Q2 '25.

    Regulated revenue
    $28.9 millionup 8.4% YoY
    YTD 2026

    Regulated revenue for the year-to-date period increased $2.2 million, or 8.4%, to $28.9 million.

    Operating expenses
    $13.3 millionup 14.1% YoY
    Q2 2026

    Operating expenses for Q2 2026 increased approximately $1.7 million, or 14.1%, to $13.3 million compared to $11.6 million in Q2 2025.

    Operating expenses
    $26.2 millionup 14.6% YoY
    YTD 2026

    Operating expenses for the year-to-date period increased approximately $3.3 million, or 14.6%, to $26.2 million compared to the same period in 2025.

    Depreciation, amortization, and accretion increase
    $1.1 million
    Q2 2026

    Notable changes in operating expenses included depreciation, amortization, and accretion increased $1.1 million for Q2

    Depreciation, amortization, and accretion increase
    $2.0 million
    YTD 2026

    and $2 million for the year-to-date period.

    Operations and maintenance costs increase
    $0.6 million
    Q2 2026

    Operations and maintenance costs increased approximately $0.6 million for Q2

    Operations and maintenance costs increase
    $1.1 million
    YTD 2026

    and $1.1 million for the year-to-date period.

    G&A costs
    $4.3 millionrelatively flat YoY
    Q2 2026

    G&A costs remained relatively flat at $4.3 million in Q2 '26 compared to $4.4 million in Q2 '25.

    G&A costs
    $8.8 millionup $0.2 million YoY
    YTD 2026

    G&A costs for the year-to-date period increased $0.2 million to $8.8 million.

    Other expense
    $0.8 millionup $0.4 million YoY
    Q2 2026

    Other expense for Q2 '26 was $0.8 million compared to $0.4 million in Q2 '25.

    Other expense
    $1.6 millionup $0.7 million YoY
    YTD 2026

    Other expense for the year-to-date period was $1.6 million compared to $0.9 million in the same prior year period.

    Adjusted EBITDA
    $7.9 millionup 15% YoY
    Q2 2026

    Adjusted EBITDA for Q2 of '26 was $7.9 million compared to $6.9 million in Q2 of '25, an increase of $1 million, or 15%.

    Adjusted EBITDA
    $13.5 millionup 8% YoY
    YTD 2026

    Adjusted EBITDA for the year-to-date period was $13.5 million compared to $12.6 million in the prior year period, an increase of $0.9 million, or 8%.

    Arizona Commerce Authority projected new jobs
    26,000
    FY26

    So there was about 26,000 projected new jobs coming, and there was an investment of more than $109 billion in the community statewide.

    Arizona Commerce Authority investment
    $109 billion
    FY26

    So there was about 26,000 projected new jobs coming, and there was an investment of more than $109 billion in the community statewide.

    Target capital structure
    50-50
    ongoing

    we try to have a pretty smooth capital structure at 50-50 equity debt.

    Organic active connection growth rate
    3.2%
    last three months

    I can just tell you over the last three months, our actual organic growth rate ticked back up to 3.2%, so north of 3%, which we hadn't seen in a few years.

    Industry KPIs

    1
    MetricValueDetails
    Adjusted operating EPS$0.10per diluted share

    Deals & partnerships

    1
    Tucson Wateracquisition of seven water systems

    Acquisition of seven water systems from Tucson Water in July 2025, contributing to revenue growth.

    Capital programs

    2
    2025 Capital Investmentscompleted
    Start: 2025

    Benefit: recommission our Southwest Plant Water Reclamation Facility

    In 2025, we had a near-record year for capital investments that were critical to complete. This included the investment necessary to recommission our Southwest Plant Water Reclamation Facility, which was originally constructed 20 years ago but was mothballed during the Great Recession.

    Infrastructure Improvementsunderway
    Period spend: $6.6 million

    Benefit: provide safe and reliable service

    Specifically, we invested $6.6 million into infrastructure improvements in existing utilities in the second quarter of 2026 to provide safe and reliable service.

    Risks & headwinds

    5
    Increased operating expenses from 2025 capital investmentssecond quarter of 2026

    increase certain operating expenses and, most notably, depreciation expense

    Mitigation: seek to obtain appropriate rate increases

    Rising medical expensesQ2 2026

    continue to grow at an unprecedented pace

    Mitigation: seek to obtain appropriate rate increases

    Decline in Phoenix MSA building permitssecond quarter of 2026

    4.7% decrease compared to the same period in 2025

    Mitigation: believe the decline in permits is temporary

    Higher interest expense and lower interest incomeQ2 2026 and YTD 2026

    increase of $0.4 million for Q2 2026; increase of $0.7 million for YTD 2026

    Cyberattacks on water and wastewater infrastructurerecent events

    not impacted

    What to watch in Q3 FY26

    4

    GW-Santa Cruz Rate Case Decision

    later this year
    CurrentHearing concluded, pending recommended opinion and order
    TargetCommission open meeting decision

    Why it matters

    This decision will implement a $1.9 million net revenue increase, significantly impacting future earnings.

    Once the recommendation is issued, it will appear at a Commission open meeting, which we estimate will happen later this year. Recall that the unanimous settlement agreement contemplates net increased revenues of approximately $1.9 million effective November 1, 2026.

    Q&A highlights

    6

    How will major regional developments like Intel, TSMC, and SR 347 improvements impact Global Water's growth?

    Management is optimistic about continued growth, citing a slight upward trajectory in permits, a record economic development year in FY26 for Arizona ($109 billion investment, 26,000 projected jobs), and the strategic importance of the SR 347 widening for affordability and access to the Phoenix market.

    “the Arizona Commerce Authority in FY '26, which ended in June, they just put a report out last month where it was the biggest economic development year yet. So there was about 26,000 projected new jobs coming, and there was an investment of more than $109 billion in the community statewide.”

    asked by Brandon B. Rogers · answered by Michael Liebman

    2 min read6 chapters

    Detailed Narrative

    01

    Rate Case Progress

    The company is making significant progress on rate reviews, with a unanimous settlement agreement for GW-Santa Cruz expected to yield a $1.9 million net revenue increase effective November 1, 2026. While GW-Palo Verde's rate case is delayed, a new schedule provides a clearer path to setting appropriate rates in 2028. This regulatory activity is crucial for recovering inflationary expenses and investments, including the recommissioned Southwest Plant.

    02

    Capital Investments & Impact

    Global Water made near-record capital investments in 2025, including recommissioning the Southwest Plant Water Reclamation Facility. While these investments grow the rate base and ensure service reliability, they have increased operating expenses, particularly depreciation, which adversely impacted net income and EPS in Q2 FY26. The company views these as necessary for long-term growth and recovery through future rate increases.

    03

    Organic Growth & Economic Development

    Total active service connections grew 5.8% year-over-year to 69,429. Despite a 4.7% decrease in single-family building permits in the Phoenix MSA in Q2 FY26, the company's organic connection growth was 2.7% year-over-year, with the Maricopa market seeing a 5.7% increase in permits. Management believes the permit decline is temporary, citing significant economic development in the Phoenix area, including projects by Intel and TSMC, and the State Route 347 widening, which are expected to accelerate growth.

    04

    Financial Performance Drivers

    Q2 FY26 total revenue increased 24.8% to $17.8 million, primarily driven by $2.1 million in unregulated ICFA revenue recognition, the acquisition of seven Tucson Water systems, organic connection growth, and higher rates. Regulated revenue alone grew 9.9% to $15.7 million. Adjusted EBITDA increased 15% to $7.9 million for the quarter.

    05

    Cost Management

    The company is actively working to control G&A expenses, which remained relatively flat at $4.3 million in Q2 FY26 compared to $4.4 million in Q2 FY25. This focus on G&A control is a key strategy for 2026 to mitigate the impact of rising operating costs, such as medical expenses, and the increased depreciation from prior capital investments.

    06

    Acquisition Integration & Future Filings

    Following significant acquisitions over the past five years, the company is currently focused on integrating these systems and filing for necessary rate reviews to recover capital investments. Future rate applications are planned for four utilities in H1 2027 (GW-Palo Verde, GW-Saguaro, GW-Farmers, GW-Ocotillo) and for GW-Santa Cruz in 2028, all targeting new rates in subsequent years.

    AI-generated summary of the company’s earnings call. Not investment advice.