Global Water Resources (GWRS -1.56%), an Arizona-based regulated utility specializing in water, wastewater, and recycled water service, reported its second quarter 2025 earnings on August 13, 2025. The key news was a modest revenue beat -- rising to $14.2 million (GAAP) versus an analyst consensus of $14.1 million (GAAP) -- while earnings per share (GAAP) came in directly in line at $0.06, down from $0.07 last year. While the top line grew and operations remained stable, Net income (GAAP) edged down on higher operating and infrastructure-related costs. Overall, the quarter reflected steady growth and continued investment, tempered by earnings pressure from rising expenses and rate timing.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.06 | $0.06 | N/A | (0.0%) |
| Revenue (GAAP) | $14.2 million | $14.1 million | $13.5 million | 5.2% |
| Adjusted EBITDA | $6.9 million | $6.8 million | 1.5% | |
| Net Income | $1.6 million | $1.7 million | (5.9%) | |
| Active Service Connections | 65,639 | 63,256 | 3.8% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About the Business and Strategic Focus
Global Water Resources is a regulated utility that delivers water, wastewater, and recycled water services in fast-growing communities across Arizona. Its business spans 39 utility systems, serving both residential and commercial accounts.
The company’s core strategy centers on a "total water management" approach. That means capturing and recycling water, deploying advanced meter and automation technology, and closely integrating planning with community development. Key success factors include Service connections grew 3.8% year-over-year to 65,639 as of Q2 2025, achieving regulatory approval for rate cases by the Arizona Corporation Commission (ACC), including the GW-Farmers general rate case approved on April 22, 2025, and managing costs as it invests in infrastructure and new acquisitions.
Quarter Review: Financial and Operating Highlights
Revenue (GAAP) grew 5.4% in Q2 2025 and exceeded analyst expectations by $0.1 million (GAAP). Water service revenue posted the most growth, up 10.5% (GAAP) in Q2 2025, driven by an increase in service connections and higher consumption volumes. Wastewater and recycled water revenue (GAAP) was flat, increasing by 0.5% compared to Q2 2024, partly due to $0.2 million in customer bill credits effective beginning August 2024. The quarter included only a partial benefit from new rates that took effect in May 2025, so management expects additional uplift in upcoming periods as higher rates phase in, with new rates for GW-Farmers beginning May 1, 2025, and further increases for GW-Santa Cruz and GW-Palo Verde anticipated following the Q4 2025 rate case hearing.
Adjusted EBITDA -- a non-GAAP measure of core profitability before interest, taxes, depreciation, and amortization -- rose slightly year over year. However, net income (GAAP) fell to $1.6 million from $1.7 million in Q2 2024, and earnings per share (GAAP) declined from $0.07 to $0.06. Key cost pressures stemmed from aggressive infrastructure project spending, which increased depreciation charges by 10.7% (GAAP). Total operating expenses (GAAP) rose 8.5%, surpassing the rate of revenue growth. Personnel costs grew 14.5% due to more staff and higher benefits costs (GAAP), while operations and maintenance spending was up 12.4%, primarily due to additional contracts with IT service providers and one-time costs related to wastewater disposal. General and administrative costs also moved higher, mainly on outside service provider fees and information technology contracts. These expense increases compressed margins despite strong top-line performance.
Service connections -- the measure of the company’s active customer accounts -- increased 3.8% to 65,639, marking consistent organic expansion. Total water consumption climbed 8.2% to 1.2 billion gallons. Notably, In July 2025, the company closed the acquisition of seven water systems from Tucson Water, adding new service territory and forecast annual revenue of approximately $1.5 million. Management continued to invest, with $20.2 million of capital deployed during the quarter and $35.4 million for the first half of 2025. This infrastructure spending supports both network reliability and future revenue generation.
On the regulatory side, State authorities approved a new GW-Farmers rate case, with new rates beginning May 1, 2025, expected to yield around $1.1 million in annual revenue once fully phased in for GW-Farmers, with phased implementation beginning in Q2 2025. The company filed a key rate case for its two largest utilities, targeting an additional $6.5 million per year in net revenue above 2024 test year levels -- Hearings on this case are expected to commence in the fourth quarter of 2025, with new rates for GW-Santa Cruz and GW-Palo Verde expected in mid-2026, following the general rate case based on the 2024 test year. Management also highlighted ongoing commitment to technology upgrades, including remote metering and modern IT systems intended to drive future efficiency and sustainability. Water recycling infrastructure proved significant, as the company now recycles over 1 billion gallons annually, helping address Arizona’s severe water scarcity and advancing regional sustainability goals.
For its capital base, net utility plant (GAAP) rose to $401.7 million at June 30, 2025, from $359.4 million at December 31, 2024, demonstrating the effect of heavy reinvestment. Cash and equivalents increased to $10.2 million at June 30, 2025, while long-term debt remained stable at $116.8 million at June 30, 2025. The company expanded its credit facility in the first quarter of 2025, providing flexibility for continued capital projects and integration of new acquisitions.
The company declared a monthly dividend of $0.02533 per share. This is unchanged from the prior year and represents an annualized payout of $0.30396 per share as declared in August 2025.
Looking Forward
However, it indicated that regulatory approvals and acquisitions are expected to be the main growth drivers over the next several quarters. The full impact of newly approved rates will be seen in results for the second half of 2025 and beyond, while The outcome of the pending large rate case for GW-Santa Cruz and GW-Palo Verde could significantly affect profitability by mid-2026.
Investors should track the pace of growth in new service connections, water consumption trends, and the company's ability to manage rising costs as capital projects are completed. Monitoring the integration and performance of the recent Tucson Water acquisition will also be important for assessing returns on investment. No change was announced to the dividend outlook for the year.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
