Global Water Resources(GWRS -2.92%) reported fiscal second quarter ended June 30, 2025, results on August 13, 2025, with revenue up 5.4% year over year to $6.9 million in adjusted EBITDA and the closing of a major Tucson acquisition. The call also highlighted 3.8% organic service connection growth year over year, $35.4 million in infrastructure investment year to date, and regulatory and legislative developments supporting long-term portfolio expansion. Key insights include acquisition integration, rate case progress, and growth drivers tied to regional legislation and infrastructure milestones.
Tucson acquisition expands Global Water Resources portfolio at favorable terms
The Tucson acquisition added approximately 2,200 connections and $7.7 million in rate base at a 1.05x rate base multiple, closing after the fiscal second quarter ended June 30, 2025. This price is notably below peer average acquisition multiples of 1.5x to 2.0x, and the acquired systems are geographically close to existing assets, creating operational synergies.
"First, subsequent to the quarter, we closed the Tucson acquisition, which consisted of seven separate public water systems, adding approximately 2,200 connections and approximately $7.7 million in rate base at a multiple of only 1.05 times that rate base. This is beyond an attractive price and is immediately accretive from a share price perspective, considering our peer group's trade by our estimates between 1.5 to two times rate base."
-- Ron Fleming, President and Chief Executive Officer
The acquisition's below-market price and proximity to existing systems are expected to drive immediate accretion and long-term value through cost synergies and incremental organic growth in Pima County.
Legislation and infrastructure funding support Global Water Resources growth
Newly enacted Arizona legislation, known as Ag to Urban, creates new groundwater access for regional service areas adjacent to historical farmland zoned for urban expansion. Full funding for the Highway 347 expansion is projected to support nearly 90% cumulative population growth in Maricopa by 2040, strengthening demand for regulated water services.
"Second, we recently announced that the Arizona governor has signed meaningful water legislation known as Ag to Urban, which we believe will result in many benefits that will be applicable for Global Water in our service areas, improving aquifer sustainability while creating a new groundwater supply to support additional growth. Based on Global Water's established service areas, created through buying and building utilities in the path of growth, our regional areas coincide with land that has considerable historical farming operations just outside densely populated Metro Phoenix. Thus, we believe the new law will drive even more growth to our service areas."
-- Ron Fleming, President and Chief Executive Officer
These legislative and infrastructure developments position the company to benefit from accelerated population and commercial growth, enhancing long-term service area demand and supporting future expansion.
Rate case progress and operational scale strengthen earnings visibility
Adjusted EBITDA increased 2.1% year over year to $6.9 million, despite a 14% year-over-year decline in Phoenix-area residential building permits. The company implemented the first phase of a $1.1 million annualized rate increase for the Farmers Water Utility and has an additional $6.5 million annual rate increase proposed and under consideration at the Arizona Corporation Commission, with major recommendations due October 1, 2025.
"As we previously announced, we implemented the first phase of a $1.1 million annualized rate increase for our Global Water Farmers Water Utility. This is the second rate case we completed in the last two years, demonstrating our continued execution to the benefit of all stakeholders."
-- Chris Krygier, Chief Operating Officer
Successful rate case execution and ongoing regulatory initiatives provide earnings stability and support the company's ability to offset macroeconomic headwinds and invest in future growth.
Looking Ahead
Management plans to enter settlement negotiations and seek a fair resolution on the $6.5 million annual rate increase for Santa Cruz and Palo Verde utilities after October 1, 2025, when staff and the consumer advocate will file recommendations. Integration of the Tucson acquisition is underway, with additional organic growth expected from approximately 1,400 platted lots in Diamond Bell over the medium term. No explicit quantitative revenue, earnings, or capital expenditure guidance for full-year 2025 or 2026 was provided in the call.
