Summary of Global Water Resources Conference Call Company Overview - **Company**: Global Water Resources (NasdaqGM:GWRS) - **Date of Conference**: September 17, 2025 Key Points Industry Context - The water utility industry is experiencing a transition with a focus on integrating agricultural water usage into residential supply, particularly in Arizona [doc id='30'][doc id='31']. Weather Impact - Comparison of weather conditions: 3Q 2024 had over 1.5 inches of rain, while 3Q 2025 recorded over 3 inches, indicating a wetter season [doc id='2']. - Revenue from utilities is largely stable due to fixed wastewater and water fees, minimizing weather-related revenue fluctuations [doc id='2']. Tucson Acquisition - The acquisition of the Tucson water system is projected to generate approximately $1.5 million in annualized revenue, with a 5% rate increase planned for the following year [doc id='4']. - Integration of the Tucson utility is proceeding smoothly without major surprises [doc id='4']. Rate Case Cycles - The company is considering a formula rates proposal that could lead to annual rate adjustments for some utilities, while others may remain on a two to three-year cycle [doc id='5'][doc id='6']. - Continuous capital investment is necessary to keep up with costs and maintain service quality [doc id='5']. Growth Opportunities - There are about 300 investor-owned utilities in Arizona, presenting significant acquisition opportunities [doc id='7']. - Organic customer growth remains strong at just under 4% year-to-date, despite a slowdown in new construction permits [doc id='9']. Construction Trends - A noted slowdown in single-family and multifamily construction permits, attributed to macroeconomic factors such as interest rates and affordability [doc id='9'][doc id='11']. - Anticipation of a rebound in permits due to potential Fed rate reductions and ongoing business growth in the region [doc id='14']. Economic Development - Major investments in Arizona include a $65 billion investment from Taiwan Semiconductor Manufacturing Company and a $1.9 billion expansion by Mayo Clinic, expected to create thousands of jobs [doc id='22']. - The business boom in Arizona is expected to drive organic growth for the company [doc id='17']. Agricultural to Urban Transition - Legislation has been signed to facilitate the conversion of agricultural water usage to residential use, which is expected to benefit the utility by increasing customer base while reducing overall water consumption [doc id='30']. - Agriculture currently consumes 74% of the available water supply in Arizona, indicating significant potential for urban growth [doc id='31']. Financial Outlook - The company has recently completed an equity raise to support its growth strategy, with plans to access capital markets as needed [doc id='28']. - The water utility sector may see a rebound in stock prices with potential interest rate reductions, which could enhance valuations [doc id='36']. Conclusion - The conference highlighted the strategic focus on growth through acquisitions, integration of new utilities, and adapting to macroeconomic changes while maintaining a stable revenue model through fixed fees and ongoing capital investments [doc id='36'][doc id='37'].

Core Insights - Global Water Resources, Inc. has been invited to present at the Janney Water Utilities Conference on September 17, 2025, highlighting its role in the water resource management sector [1][3]. Financial Performance - In Q2 2025, the company reported a revenue increase of 5.4% to $14.2 million, with net income at $0.06 per share, supporting its monthly-paid dividend of $0.30396 per share on an annualized basis [4]. Market Position and Strategy - The company is recognized for its leadership in utility consolidation, automation, and water resource management, with an active M&A program expanding its portfolio in major metro growth corridors around Phoenix and Tucson, Arizona [5]. Water Management Practices - Global Water Resources operates 39 systems providing water, wastewater, and recycled water services, recycling over 1 billion gallons of water annually, totaling 18.5 billion gallons since 2004 [8]. Recognition and Awards - The company has received national recognition as a 'Utility of the Future Today' for its effective water reuse practices and has been awarded for its leadership in public asset management strategies [10][11]. Total Water Management (TWM) - The company implements Total Water Management (TWM), an integrated approach to managing the entire water cycle, which enhances the beneficial use of recycled water and promotes smart water management programs [9].

Industry Overview - The Zacks Utility - Water Supply industry provides essential drinking water and wastewater services across the U.S., managing nearly 2.2 million miles of aging pipelines [3] - The industry is capital-intensive, benefiting from lower interest rates that reduce financing costs for infrastructure investments [3][5] Current Trends - The U.S. water industry is fragmented with over 50,000 community water systems, leading to inefficiencies; consolidation through mergers and acquisitions is necessary for improving service quality [4] - Aging infrastructure is a significant concern, with the American Society of Civil Engineers estimating a need for $1.25 trillion in investments over the next 20 years [6] Financial Performance - The Zacks Utility Water Supply industry has underperformed compared to the S&P 500 and the broader utility sector, gaining only 5% over the past 12 months compared to the sector's 9% and the S&P 500's 15.4% [10] - The industry is currently trading at a trailing 12-month EV/EBITDA of 10.55X, significantly lower than the S&P 500's 17.7X and the sector's 15.15X [13] Company Highlights - California Water Service Group plans to invest $2.06 billion from 2025 to 2027 to strengthen its infrastructure [19] - Global Water Resources focuses on Total Water Management, optimizing the use of recycled water, with a long-term earnings growth rate pegged at 15% [23][24] - The York Water Company plans to invest $94.5 million from 2025 to 2026 and has seen a 1.5% increase in the Zacks Consensus Estimate for 2025 earnings per share [27][28]

Industry Overview - The Zacks Utility - Water Supply industry includes companies providing drinking water and wastewater services to various customers, including military bases [1] - Water utilities are essential for maintaining healthy living conditions by ensuring a constant supply of clean potable water and reliable sewer services [2] Investment Requirements - Water utility operators manage nearly 2.2 million miles of aging pipelines and require significant investments for maintenance and expansion, estimated at $1.25 trillion over the next 20 years [3] - The need for massive investments presents growth opportunities for operators in the water supply sector [3][4] Company Comparisons - Consolidated Water (CWCO) has a market capitalization of $534.5 million, while Global Water Resources (GWRS) has a market cap of $275.56 million [5] - CWCO's 2025 earnings estimate is $1.05 per share on revenues of $133.09 million, indicating a year-over-year decrease of 6.3% in earnings and 0.7% in revenues. GWRS's 2025 earnings estimate is 22 cents per share on revenues of $55.85 million, reflecting a 15.4% decline in earnings but a 6% growth in revenues [6] Financial Metrics - CWCO has a debt-to-capital ratio of 0.06%, significantly lower than GWRS's 61.14%, while the industry average is 50.04% [7] - The current ratio for CWCO is 5.24, indicating strong financial flexibility, compared to GWRS's 1.09 and the industry average of 0.9 [8] Dividend Yield - CWCO's dividend yield is 1.67%, while GWRS offers a higher yield of 3.03%, both exceeding the Zacks S&P 500 Composite average of 1.15% [11] Earnings Surprise History - CWCO has delivered an average earnings surprise of 40.1% over the last four quarters, whereas GWRS has experienced a negative earnings surprise of 6.1% [12] Stock Performance - In the past six months, CWCO shares have increased by 21.9%, while GWRS shares have decreased by 13%. The industry overall has risen by 11.5% during the same period [10][13] Conclusion - Both CWCO and GWRS are viable options for investment, focusing on water and wastewater services with potential for expansion. However, CWCO is favored due to its superior debt management, liquidity, and stock performance compared to GWRS [15]

Group 1 - The conference call for Global Water Resources, Inc. (NASDAQ:GWRS) regarding Q2 2025 earnings took place on August 14, 2025, at 1:00 PM ET [1]. - Key participants in the call included Ron Fleming (President and CEO), Mike Liebman (CFO), and Christopher Krygier (COO) [4]. - The financial results for Q2 2025 were released via press release prior to the call, and the document is available on the company's website [3]. Group 2 - Ron Fleming will summarize key operational events of the year during the call [4]. - Mike Liebman will review the financial results for the second quarter [4]. - Christopher Krygier will discuss strategic initiatives related to Arizona Corporation Commission activity [4].

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $14,200,000, an increase of $700,000 or 5.4% compared to Q2 2024, driven by a 3.8% increase in active service connections, increased consumption, and higher rates [14] - Operating expenses for Q2 2025 were $11,600,000, up $900,000 or 8.5% from Q2 2024, with notable increases in depreciation, personnel costs, and other operating expenses [15] - Net income for Q2 2025 was $1,600,000 or $0.06 per diluted share, compared to $1,700,000 or $0.07 per diluted share in Q2 2024 [16] - Adjusted EBITDA for Q2 2025 was $6,900,000, an increase of approximately $100,000 or 2.1% from Q2 2024 [17] Business Line Data and Key Metrics Changes - Total active service connections increased by 3.8% to 65,639 as of June 30, 2025, with an annualized growth rate of 3.5% [10] - The Tucson acquisition added approximately 2,200 connections and $7,700,000 in rate base, expected to generate around $1,500,000 in annual revenue [6] Market Data and Key Metrics Changes - The single-family dwelling unit market in the Phoenix area saw a 14% decrease in building permits in Q2 2025 compared to 2024, with the City of Maricopa experiencing a 24% decrease [12] - Despite the decrease in permits, population growth in the City of Maricopa was strong, with a 7.4% increase in 2024, indicating potential for future revenue growth [9] Company Strategy and Development Direction - The company aims for long-term value creation through acquisitions, infrastructure investments, and regulatory strategies, with a focus on sustainable growth [6][10] - The recent acquisition of Tucson's water systems is expected to enhance operational efficiency and customer service while expanding the utility portfolio in Pima County [20] - The company is processing rate cases to address cost increases and support future growth, with a proposed $6,500,000 annual rate increase under consideration [13][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the mixed economic environment, including high inflation and interest rates, but expressed confidence in the company's growth strategy and operational performance [24] - The company believes that the recent legislative changes in Arizona will drive growth in service areas and improve aquifer sustainability [7] Other Important Information - The company invested $35,400,000 in infrastructure improvements year-to-date, focusing on major utilities in Pinal County [11] - The Highway 347 expansion project is expected to support growth in the City of Maricopa, which is projected to grow nearly 90% by 2040 [8] Q&A Session Summary - The Q&A session did not take place as the call concluded without any questions being addressed [29][30]

Core Insights - Global Water Resources (GWRS) reported second-quarter 2025 adjusted earnings of 6 cents per share, matching the Zacks Consensus Estimate but down 14.3% from 7 cents per share in the same quarter last year due to increased depreciation expenses related to capital improvement plans [1][8] Revenue Performance - Total operating revenues for the second quarter reached $14 million, aligning with the Zacks Consensus Estimate and reflecting a year-over-year increase of 5.4%, driven by organic connection growth, increased consumption, and higher rates [2][8] - Water Services contributed $7.36 million to total revenues, marking a 10.5% increase from $6.67 million in the prior year [2] - Wastewater and recycled water services generated $6.87 million in revenues, a slight increase of 0.5% from $6.84 million in the same quarter last year [3] Operational Metrics - Water consumption rose by 8.2% to 1.2 billion gallons, while total active service connections increased by 3.8% to 65,639 as of June 30, 2025 [4][8] - Net income for the second quarter decreased to $1.6 million from $1.7 million in the previous year [4] Financial Position - As of June 30, 2025, GWRS had cash and cash equivalents of $10.2 million, up from $9.04 million at the end of 2024 [5] - The company's net long-term debt decreased to $116.8 million from $118.5 million as of December 31, 2024 [5] - Cash flow from operating activities in the first half of 2025 was approximately $8.8 million, down from $13.6 million in the same period last year [5] Market Position - GWRS currently holds a Zacks Rank of 3 (Hold) [6]

Group 1 - Global Water Resources, Inc. (GWRS) reported quarterly earnings of $0.06 per share, matching the Zacks Consensus Estimate, but down from $0.07 per share a year ago [1] - The company posted revenues of $14.24 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 1.00% and up from $13.51 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus revenue estimates three times [2] Group 2 - The stock has underperformed, losing about 12.3% since the beginning of the year, while the S&P 500 has gained 9.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the coming quarter is $0.09 on revenues of $15.2 million, and $0.22 on revenues of $55.95 million for the current fiscal year [7] Group 3 - The Zacks Industry Rank for Utility - Water Supply is currently in the top 35% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Global Water Resources was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it will perform in line with the market [6]

[Report Information](index=1&type=section&id=Report%20Information) Global Water Resources, Inc is classified as a non-accelerated filer and a smaller reporting company - Global Water Resources, Inc is a **non-accelerated filer** and a **smaller reporting company**[4](index=4&type=chunk) Key Metrics | Metric | Value | | :--- | :--- | | Common shares outstanding as of August 12, 2025 | 27,473,277 shares | | Common stock par value | $0.01 per share | [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, reflecting growth in total assets and equity alongside a year-over-year decrease in net income [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet shows an increase in total assets, primarily driven by growth in net utility plant, and a significant rise in shareholders' equity Financial Position Summary | Metric (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Net utility plant | 401,749 | 359,379 | | Cash and cash equivalents | 10,220 | 9,047 | | Total assets | 449,382 | 405,137 | | **Capitalization and Liabilities** | | | | Total shareholders' equity | 76,740 | 47,604 | | Long-term debt, net | 116,803 | 118,518 | | Total capitalization | 193,543 | 166,122 | | Total current liabilities | 20,006 | 22,258 | | Total other liabilities | 235,833 | 216,757 | | Total capitalization and liabilities | 449,382 | 405,137 | [Condensed Consolidated Statements of Operations (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) The operations statement reveals a year-over-year revenue increase, but higher operating expenses led to a slight decline in net income Operating Performance Summary | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | 14,241 | 13,510 | 26,698 | 25,120 | | Operating income | 2,620 | 2,797 | 3,875 | 4,064 | | Net income | 1,612 | 1,730 | 2,203 | 2,421 | | Basic earnings per share | 0.06 | 0.07 | 0.08 | 0.10 | | Diluted earnings per share | 0.06 | 0.07 | 0.08 | 0.10 | | Dividends per share | 0.08 | 0.08 | 0.15 | 0.15 | [Condensed Consolidated Statements of Shareholders' Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(unaudited)) Shareholders' equity increased significantly due to the issuance of common stock, which raised substantial net proceeds - Total shareholders' equity was **$76,740 thousand** as of June 30, 2025, a significant increase from $47,604 thousand on December 31, 2024, primarily due to the issuance of **3,220,000 common shares** for net proceeds of **$30,783 thousand**[18](index=18&type=chunk) Shareholders' Equity Summary | Metric (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common shares outstanding | 27,830,545 | 24,570,994 | | Common stock | 273 | 240 | | Additional paid-in capital | 76,469 | 47,366 | | Retained earnings | — | — | | Total shareholders' equity | 76,740 | 47,604 | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash flow from operations decreased, while cash used in investing activities increased significantly, offset by strong cash generation from financing activities Cash Flow Summary | Cash Flow Activity (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | 8,827 | 13,571 | | Net cash used in investing activities | (35,395) | (12,211) | | Net cash provided by financing activities | 27,788 | 13,573 | | Increase in cash, cash equivalents, and restricted cash | 1,220 | 14,933 | | Cash, cash equivalents, and restricted cash at end of period | 12,376 | 19,696 | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies, recent acquisitions, regulatory matters, and other key financial components [1. Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements](index=10&type=section&id=1.%20Description%20of%20Business%2C%20Basis%20of%20Presentation%2C%20Significant%20Accounting%20Policies%2C%20and%20Recent%20Accounting%20Pronouncements) This note outlines the basis for the financial statements and discusses the potential impact of new accounting standards on future disclosures - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosure Improvements) and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures for Comprehensive Income) on its financial statement disclosures[25](index=25&type=chunk)[26](index=26&type=chunk) [2. Acquisitions](index=10&type=section&id=2.%20Acquisitions) This note details the company's recent acquisition of seven water systems in Tucson to expand its service area and customer base in Pima County - On July 8, 2025, the company's subsidiary GW-Ocotillo acquired seven water systems from Tucson Water for approximately **$8.2 million in cash**, serving about **2,200 water connections** with a current rate base of approximately **$7.7 million**[27](index=27&type=chunk) [3. Regulatory Matters](index=11&type=section&id=3.%20Regulatory%20Matters) This note details recent decisions and activities by the Arizona Corporation Commission (ACC) that affect the company's revenue requirements and rate structures - GW-Santa Cruz and GW-Palo Verde filed rate case applications on March 5, 2025, with hearings expected to begin in the **fourth quarter of 2025**[28](index=28&type=chunk) - The ACC approved the GW-Farmers rate case on April 29, 2025, with a **$1.1 million annual revenue increase**, a **9.6% return on equity**, and rates effective in three phases starting May 1, 2025[29](index=29&type=chunk) - The ACC approved the rate case for GW-Saguaro and six other utilities on June 20, 2024, resulting in a collective annual revenue increase of approximately **$351 thousand**, effective in five phases starting July 1, 2024[30](index=30&type=chunk) [4. Revenue Recognition](index=12&type=section&id=4.%20Revenue%20Recognition) This note provides a breakdown of revenue by source and customer class, along with policies for contract balances and credit loss allowances Revenue by Source | Revenue Source (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 7,368 | 6,668 | 13,348 | 11,894 | | Total wastewater and recycled water service revenue | 6,873 | 6,842 | 13,350 | 13,226 | | Total regulated revenue | 14,241 | 13,510 | 26,698 | 25,120 | Contract Balances | Contract Balance (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable, net | 3,830 | 3,233 | | Deferred revenue - ICFA | 22,449 | 21,517 | Allowance for Credit Losses | Credit Loss Allowance (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Beginning balance | (163) | (122) | | Credit loss expense | (59) | (103) | | Write-offs | 56 | 90 | | Recoveries | (4) | (28) | | Ending balance | (170) | (163) | [5. Earnings Per Share](index=13&type=section&id=5.%20Earnings%20Per%20Share) This note provides the calculation for basic and diluted earnings per share, including the impact of dilutive securities - For the three and six months ended June 30, 2025, approximately **130,000 share-based awards** were excluded from the diluted EPS calculation because their effect was anti-dilutive[38](index=38&type=chunk) Weighted-Average Shares Outstanding | Metric (in thousands of shares) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic weighted-average common shares | 27,463 | 24,199 | 25,925 | 24,188 | | Effect of dilutive securities | 42 | 110 | 62 | 118 | | Diluted weighted-average common shares | 27,505 | 24,309 | 25,987 | 24,306 | [6. Utility Plant](index=14&type=section&id=6.%20Utility%20Plant) This note details the composition of the company's utility plant assets and provides information on depreciation expenses - Depreciation expense for the three and six months ended June 30, 2025, was **$3.2 million** and **$6.4 million**, respectively, an increase from the prior year periods[39](index=39&type=chunk) Utility Plant Composition | Utility Plant (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Transmission and distribution plant | 342,068 | 321,075 | | Equipment | 75,931 | 67,917 | | Office buildings and other structures | 68,858 | 67,313 | | Construction in progress | 73,095 | 54,388 | | Land | 2,315 | 2,300 | | Total utility plant | 562,267 | 512,993 | [7. Taxes, prepaid expenses and other current assets](index=14&type=section&id=7.%20Taxes%2C%20prepaid%20expenses%20and%20other%20current%20assets) This note provides a detailed breakdown of taxes, prepaid expenses, and other current assets as of the reporting date Current Assets Breakdown | Current Assets (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ICFA receivable | 2,191 | 1,871 | | Prepaid expenses | 697 | 648 | | Buckeye growth premium receivable | 615 | 738 | | Prepaid insurance | 303 | 533 | | Income taxes receivable | 149 | 149 | | Other current assets | 14 | 141 | | Total taxes, prepaid expenses and other current assets | 3,969 | 4,080 | [8. Goodwill](index=14&type=section&id=8.%20Goodwill) This note explains the changes in goodwill during the reporting period, primarily related to a reclassification to regulatory assets for a rate case - In March 2025, the company reclassified approximately **$3.0 million of goodwill** to regulatory assets to establish an acquisition premium related to the GW-Farmers rate case[42](index=42&type=chunk) Goodwill Reconciliation | Goodwill Movement (in thousands of USD) | Amount | | :--- | :--- | | Balance at December 31, 2024 | 9,486 | | Reclassification to regulatory assets | (2,959) | | Other adjustments | (245) | | Balance at June 30, 2025 | 6,282 | [9. Equity](index=15&type=section&id=9.%20Equity) This note discloses the details of the company's public offering of common stock completed in March 2025 - On March 27, 2025, the company completed a public offering of **3,220,000 shares** of common stock at **$10.00 per share**, raising gross proceeds of approximately **$32.2 million** and net proceeds of approximately **$30.8 million**[43](index=43&type=chunk) - Certain existing shareholders, including directors and their affiliates, purchased **1,439,200 shares** of common stock[43](index=43&type=chunk) [10. Debt](index=15&type=section&id=10.%20Debt) This note details the company's debt arrangements, including updates on its WIFA loan and revolving credit facility - The final disbursement of the WIFA loan was received in May 2025, with an outstanding balance of **$1.6 million** as of June 30, 2025[44](index=44&type=chunk) - The company's revolving credit facility with Northern Trust was amended on April 14, 2025, extending the maturity date to May 18, 2027, and increasing the maximum borrowing amount from **$15 million to $20 million**[45](index=45&type=chunk) - As of June 30, 2025, and December 31, 2024, the company had **no outstanding borrowings** under the revolving credit facility[45](index=45&type=chunk) [11. Accrued Expenses and Other Current Liabilities](index=15&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note presents a detailed breakdown of accrued expenses and other current liabilities as of the reporting date Current Liabilities Breakdown | Current Liabilities (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued project liabilities | 4,536 | 5,858 | | Other taxes | 1,550 | 1,648 | | AIAC refund, current portion | 1,431 | 1,431 | | Interest | 1,186 | 1,180 | | Accrued payroll | 1,036 | 991 | | Dividends payable | 695 | 614 | | Customer advances | 545 | 556 | | Accrued franchise fees | 350 | 353 | | Other accrued liabilities | 1,190 | 1,170 | | Total accrued expenses and other current liabilities | 12,519 | 13,801 | [12. Fair Value](index=16&type=section&id=12.%20Fair%20Value) This note provides information on financial assets and liabilities measured at fair value and explains the valuation methods used - The estimated fair value of the contingent consideration (growth premium) related to the GW-Farmers acquisition was **$1.2 million**, and for the GW-Saguaro utilities was **$0.7 million**, remaining unchanged as of June 30, 2025, and December 31, 2024[48](index=48&type=chunk)[49](index=49&type=chunk) Fair Value Measurements | Fair Value Measurement (in thousands of USD) | Total at June 30, 2025 | Total at December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | HUF funds - restricted cash | 507 | 870 | | Certificates of deposit - restricted | 1,649 | 1,239 | | **Liabilities** | | | | Contingent consideration | 1,923 | 1,942 | Fair Value of Long-Term Debt | Long-Term Debt (in thousands of USD) | Carrying Value at June 30, 2025 | Fair Value at June 30, 2025 | Carrying Value at Dec 31, 2024 | Fair Value at Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Long-term debt | 116,803 | 115,145 | 118,518 | 118,702 | [13. Income Taxes](index=17&type=section&id=13.%20Income%20Taxes) This note provides the company's effective tax rate for the reporting periods and explains the primary reasons for rate changes - The increase in the effective tax rate for the second quarter of 2025 was primarily due to differences between book and taxable compensation expense related to **share-based compensation**[53](index=53&type=chunk) - The increase in the effective tax rate for the first half of 2025 was mainly due to a **reduction in deferred tax assets** in the prior year period[53](index=53&type=chunk) - The company is evaluating the impact of the "One Big Beautiful Bill Act" but does not expect a material impact on its results of operations, cash flows, or financial condition[54](index=54&type=chunk) Effective Tax Rate | Effective Tax Rate | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Effective tax rate | 27.7% | 25.7% | 26.6% | 24.9% | [14. Share-based Compensation](index=17&type=section&id=14.%20Share-based%20Compensation) This note details the share-based compensation expenses for employees and non-employees during the reporting periods Share-based Compensation Expense | Share-based Compensation (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total employee share-based compensation | 192 | 268 | 369 | 551 | | Total non-employee share-based compensation | (2) | 53 | (5) | 44 | | Total share-based compensation | 190 | 321 | 364 | 595 | [15. Transactions With Related Parties](index=17&type=section&id=15.%20Transactions%20With%20Related%20Parties) This note discloses transactions between the company and its related parties, including an employee medical benefits plan and stock purchases - The company provides medical benefits to employees through a plan sponsored by an affiliate of a significant shareholder and director, with medical claims paid totaling **$0.5 million** and **$1.0 million** for the three and six months ended June 30, 2025, respectively[56](index=56&type=chunk) - Certain directors and their affiliates purchased a total of **1,439,200 common shares** in the March 2025 public offering[57](index=57&type=chunk) [16. Commitments and Contingencies](index=17&type=section&id=16.%20Commitments%20and%20Contingencies) This note details the company's commitments and contingencies, including growth premiums, ICFA repayment obligations, and asset retirement obligations - As of June 30, 2025, the estimated fair value of the growth premium liability related to the Farmers Water Co acquisition was **$1.2 million**[58](index=58&type=chunk) - The carrying value of the growth premium liability within the GW-Saguaro utility service area was **$0.7 million**[59](index=59&type=chunk) - The company has an obligation to repay ICFA advances related to the CP Water utility through future ICFA fee reductions, with a liability of **$0.9 million**[60](index=60&type=chunk) - As of June 30, 2025, the estimated liability for asset retirement obligations was **$1.0 million**, an increase from $0.7 million at December 31, 2024[61](index=61&type=chunk) - Management is not aware of any legal proceedings that would have a material effect on the company's financial condition, results of operations, or cash flows[62](index=62&type=chunk) [17. Business Segment Information](index=18&type=section&id=17.%20Business%20Segment%20Information) This note states that the company operates as a single segment and provides a reconciliation of non-GAAP measures used by management - The company operates as a **single operating and reportable segment**, providing regulated water, wastewater, and recycled water services primarily within one geographic region in Arizona[63](index=63&type=chunk) Reconciliation of Non-GAAP Measures | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | 1,612 | 1,730 | 2,203 | 2,421 | | EBITDA | 6,826 | 6,565 | 12,307 | 11,768 | | Adjusted EBITDA | 6,935 | 6,793 | 12,577 | 12,197 | [18. Other, Net](index=20&type=section&id=18.%20Other%2C%20Net) This note presents the components of "Other, Net" for the reporting periods, primarily consisting of the Buckeye growth premium and AFUDC-Equity Components of Other, Net | Other, Net (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Buckeye growth premium | 615 | 480 | 1,233 | 1,257 | | AFUDC-Equity | 277 | 237 | 556 | 444 | | Other | (3) | 55 | (2) | 73 | | Total Other, Net | 889 | 772 | 1,787 | 1,774 | [19. Supplemental Cash Flow Information](index=20&type=section&id=19.%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow data, including cash paid for interest and income taxes, and non-cash activities Supplemental Cash Flow Data | Supplemental Cash Flow Info (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash paid for interest (net of capitalized amounts) | 2,839 | 2,290 | | Cash paid for income taxes | 1,027 | — | | Operating cash flows used for operating leases | 192 | 153 | | Capital expenditures (accrued in accounts payable and accrued liabilities) | 5,067 | 710 | | Utility plant constructed and contributed by developers | 15,424 | 2,645 | | Increase in asset retirement obligations | 278 | — | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, covering business outlook, key performance factors, and a comparative analysis of liquidity and capital resources [Overview](index=21&type=section&id=Overview) The company is a water resource management firm that owns and operates 39 utility systems in Arizona using a "Total Water Management" approach - GWRI is a water resource management company that owns, operates, and manages **39 water, wastewater, and recycled water utility systems** in the Phoenix and Tucson metropolitan areas of Arizona[71](index=71&type=chunk) - The company employs a **"Total Water Management"** approach to reduce reliance on scarce water resources and ensure sustainability through recycled water reuse and regional planning[71](index=71&type=chunk)[76](index=76&type=chunk) [Business Outlook](index=22&type=section&id=Business%20Outlook) The company continues to experience organic growth and is optimistic about long-term prospects despite a recent downturn in housing permit forecasts - As of June 30, 2025, the company's active connections **grew by 3.8% year-over-year**, demonstrating organic growth[72](index=72&type=chunk) - The Phoenix metropolitan area's population is projected to reach **5.8 million by 2030** and **6.5 million by 2040**[72](index=72&type=chunk) Phoenix Metro Housing Permit Forecast | Phoenix Metro Area Housing Permit Forecast | 2025 | 2026 | | :--- | :--- | :--- | | Single-family permits | 24,010 | 24,090 | | Multi-family permits | 10,559 | 10,728 | Housing Equivalent Permits (Y-o-Y Change) | Housing Equivalent Permits (Y-o-Y Change) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | City of Maricopa single-family permits | 177 | 233 | (24)% | 365 | 558 | (35)% | | Phoenix Metro single-family permits | 5,929 | 6,898 | (14)% | 12,337 | 14,433 | (15)% | | City of Maricopa multi-family equivalent permits | 86 | 776 | (89)% | 290 | 1,176 | (75)% | [Factors Affecting our Results of Operations](index=22&type=section&id=Factors%20Affecting%20our%20Results%20of%20Operations) This section discusses various factors influencing the company's performance, including growth, acquisitions, regulation, investment, costs, weather, and water supply [Population and Community Growth](index=23&type=section&id=Population%20and%20Community%20Growth) Population and community growth in the Phoenix metropolitan area directly drive revenue and variable expense growth through an increase in active service connections - As of June 30, 2025, active service connections increased by **2,383, or 3.8%**, to **65,639**, primarily due to organic growth in the service area[80](index=80&type=chunk) - Approximately **89.8%** of active service connections are served by the GW-Santa Cruz and GW-Palo Verde utilities[80](index=80&type=chunk) [Recent Acquisition Activity](index=24&type=section&id=Recent%20Acquisition%20Activity) The company recently acquired seven water systems in Tucson to expand its customer base and improve operational efficiency through integration and upgrades - On July 8, 2025, the company completed the acquisition of seven water systems from Tucson Water, serving approximately **2,200 water connections** and expected to generate about **$1.5 million** in annual revenue[84](index=84&type=chunk) - This acquisition brings the company's total customer count in Pima County to approximately **7,200**, and the company plans to upgrade these systems by installing AMI smart water meters[84](index=84&type=chunk) [Economic and Environmental Utility Regulation](index=24&type=section&id=Economic%20and%20Environmental%20Utility%20Regulation) The company is extensively regulated by the ACC and must comply with environmental rules, which may increase costs but are typically recoverable through rates - The ACC sets **"just and reasonable" rates** by evaluating the "used and useful" nature of utility plant and the "prudence" of costs using a historical test year[85](index=85&type=chunk) - Revenue for the company's water utilities consists of a fixed fee and a consumption-based volumetric fee, while wastewater services are based on a fixed fee[86](index=86&type=chunk) - The EPA has finalized Maximum Contaminant Levels (MCLs) for six PFAS, and the company expects compliance to **increase capital expenditures and operating costs**[89](index=89&type=chunk) - The company has completed its service line inventory, found **no lead pipes**, and does not expect the new Lead and Copper Rule to materially impact its results of operations[93](index=93&type=chunk) [Infrastructure Investment](index=25&type=section&id=Infrastructure%20Investment) Infrastructure investment is a key driver of earnings growth by expanding the "used and useful" rate base, which is supported by a capital improvement plan - Capital expenditures are a component of the rate base, and the company recovers a return on equity and debt service costs on these investments through rates[94](index=94&type=chunk) - As of December 31, 2024, the company's estimated rate base was **$212.5 million**, an **82% increase** since 2019[96](index=96&type=chunk) [Production and Treatment Costs](index=25&type=section&id=Production%20and%20Treatment%20Costs) Significant production costs are incurred for water and wastewater services, and while generally recoverable, regulatory lag can impact profits during periods of cost increases - The company's most significant costs include **labor, water and wastewater treatment chemicals, and electricity** for operating pumps and other equipment[97](index=97&type=chunk) - **Regulatory lag** can lead to decreased profit margins and earnings when production costs or other operating expenses increase significantly[97](index=97&type=chunk) [Weather and Seasonality](index=26&type=section&id=Weather%20and%20Seasonality) Customer water consumption is influenced by weather, with higher demand in summer, and the company's geographic concentration makes it sensitive to extreme weather patterns - Customer water usage is affected by weather conditions, with **higher demand in the summer** due to increased temperatures and outdoor uses like irrigation[99](index=99&type=chunk) - The geographic concentration of the company's service areas makes its operations **more sensitive to extreme weather patterns**[100](index=100&type=chunk) - The **second and third quarters** are typically the highest revenue periods for water and wastewater services[100](index=100&type=chunk) [Access to and Quality of Water Supply](index=26&type=section&id=Access%20to%20and%20Quality%20of%20Water%20Supply) The company relies on groundwater and recycled water, faces water resource constraints in parts of Pima County, and expects a new "farm-to-city" program to support sustainability - The company primarily relies on **groundwater and recycled water supplies** to meet future demand in its service areas[101](index=101&type=chunk) - Water resource constraints exist in areas near the City of Maricopa in Pima County, which could affect developers' ability to obtain final plat approval[101](index=101&type=chunk) - Arizona's **"farm-to-city" program** (Senate Bill 1611), signed in June 2025, allows agricultural water rights to be converted for new development, which is expected to promote water sustainability and regional growth[102](index=102&type=chunk) [Rate Regulation Updates](index=26&type=section&id=Rate%20Regulation%20Updates) The ACC has approved a "formula rate plan" policy to allow for more predictable rate adjustments, and the company has filed a new rate case seeking a significant revenue increase - In December 2024, the ACC approved a **"Formula Rate Policy Statement"** allowing utilities to adjust rates annually based on a pre-approved formula to reduce "regulatory lag"[103](index=103&type=chunk) - On March 5, 2025, GW-Santa Cruz and GW-Palo Verde filed a rate case requesting a net annual revenue increase of approximately **$6.5 million**, to be implemented in two phases starting May 2026[105](index=105&type=chunk) - The company has proposed adopting a **formula rate** in the future for smaller, more gradual annual updates to costs and investments[105](index=105&type=chunk) Recent Rate Case History | Company | Approved ROE | Approved Incremental Annual Revenue (in millions of USD) | Application Date | ACC Decision No | Rate Effective Date | | :--- | :--- | :--- | :--- | :--- | :--- | | GW-Santa Cruz | 9.20% | 1.2 | July 22, 2020 | 78644 | July 1, 2022 | | GW-Palo Verde | 9.20% | 0.7 | July 22, 2020 | 78644 | July 1, 2022 | | GW-Farmers | 9.60% | 1.1 | June 27, 2024 | 80695 | May 1, 2025 | [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=28&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue grew 5.4% to $14.2 million, but an 8.5% increase in operating expenses led to a 6.3% decline in operating income and a 6.8% drop in net income - Revenue growth was primarily driven by organic growth in active water and wastewater connections, increased water and recycled water consumption, and rate increases for GW-Saguaro and GW-Farmers[111](index=111&type=chunk) - The increase in operations and maintenance personnel costs was mainly due to higher salaries and medical costs from filling vacant positions[113](index=113&type=chunk) - The increase in depreciation and amortization was primarily attributable to an increase in depreciable fixed assets and additional amortization from a new office lease[115](index=115&type=chunk) Q2 Operating Results Summary | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 14,241 | 13,510 | 731 | 5.4% | | Operating expenses | 11,621 | 10,713 | (908) | (8.5)% | | Operating income | 2,620 | 2,797 | (177) | (6.3)% | | Net income | 1,612 | 1,730 | (118) | (6.8)% | | Basic earnings per share | 0.06 | 0.07 | (0.01) | (14.3)% | Q2 Revenue Breakdown | Revenue Detail (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 7,368 | 6,668 | 700 | 10.5% | | Total wastewater and recycled water service revenue | 6,873 | 6,842 | 31 | 0.5% | | Active water connections | 36,382 | 35,128 | 1,254 | 3.6% | | Active wastewater connections | 29,257 | 28,128 | 1,129 | 4.0% | | Water consumption (million gallons) | 1,201 | 1,110 | 91 | 8.2% | | Recycled water consumption (million gallons) | 289 | 232 | 57 | 24.5% | Q2 Operating Expense Breakdown | Operating Expense Detail (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operations and maintenance personnel costs | 1,356 | 1,184 | (172) | (14.5)% | | Utilities, chemicals, and repairs | 1,183 | 1,084 | (99) | (9.1)% | | Depreciation and amortization | 3,317 | 2,996 | (321) | (10.7)% | | Total operations and maintenance expenses | 3,917 | 3,485 | (432) | (12.4)% | | Total general and administrative expenses | 4,387 | 4,232 | (155) | (3.7)% | | Total operating expenses | 11,621 | 10,713 | (908) | (8.5)% | [Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=31&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue grew 6.3% to $26.7 million, but an 8.4% increase in operating expenses led to a 4.7% decline in operating income and a 9.0% drop in net income - Revenue growth was primarily driven by organic growth in active water and wastewater connections, increased water and recycled water consumption, and rate increases for GW-Saguaro and GW-Farmers[119](index=119&type=chunk) - The increase in utilities, chemicals, and repairs expense was mainly due to **higher electricity purchases ($0.2 million)** and **increased chemical costs ($0.1 million)** to support higher consumption and equipment operation[122](index=122&type=chunk) - The increase in depreciation and amortization was primarily attributable to a **6.7% increase in depreciable fixed assets** and additional amortization from a new office lease[125](index=125&type=chunk) H1 Operating Results Summary | Metric (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 26,698 | 25,120 | 1,578 | 6.3% | | Operating expenses | 22,823 | 21,056 | (1,767) | (8.4)% | | Operating income | 3,875 | 4,064 | (189) | (4.7)% | | Net income | 2,203 | 2,421 | (218) | (9.0)% | | Basic earnings per share | 0.08 | 0.10 | (0.02) | (20.0)% | H1 Revenue Breakdown | Revenue Detail (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 13,348 | 11,894 | 1,454 | 12.2% | | Total wastewater and recycled water service revenue | 13,350 | 13,226 | 124 | 0.9% | | Active water connections | 36,382 | 35,128 | 1,254 | 3.6% | | Active wastewater connections | 29,257 | 28,128 | 1,129 | 4.0% | | Water consumption (million gallons) | 2,037 | 1,783 | 254 | 14.2% | | Recycled water consumption (million gallons) | 399 | 301 | 98 | 32.5% | H1 Operating Expense Breakdown | Operating Expense Detail (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operations and maintenance personnel costs | 2,696 | 2,477 | (219) | (8.8)% | | Utilities, chemicals, and repairs | 2,215 | 1,875 | (340) | (18.1)% | | Depreciation and amortization | 6,645 | 5,930 | (715) | (12.1)% | | Total operations and maintenance expenses | 7,604 | 6,769 | (835) | (12.3)% | | Total general and administrative expenses | 8,574 | 8,357 | (217) | (2.6)% | | Total operating expenses | 22,823 | 21,056 | (1,767) | (8.4)% | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company funds its operations through cash flow, debt, equity, and grants, and believes its current resources are sufficient for future needs - The company's primary capital sources are **internal operating cash flow, debt and equity financing, and government grants**[128](index=128&type=chunk) - On March 27, 2025, the company raised approximately **$30.8 million in net proceeds** from a public offering of common stock[130](index=130&type=chunk) - WIFA awarded a **$1.6 million grant** to the GW-Farmers utility for smart water meter replacement[131](index=131&type=chunk) - The revolving credit facility was increased to **$20 million** with its maturity extended to May 18, 2027, and had **no outstanding balance** as of June 30, 2025[133](index=133&type=chunk) - The company expects its existing cash and **$20 million revolving credit facility** to be sufficient to meet its operational and capital needs for the next 12 months and beyond, while remaining in compliance with debt covenants[137](index=137&type=chunk) - The company maintains a monthly dividend program, currently set at **$0.02533 per share** (annualized at $0.30396)[138](index=138&type=chunk) - For the six months ended June 30, 2025, net cash provided by operating activities was **$8.8 million**, net cash used in investing activities was **$35.4 million**, and net cash provided by financing activities was **$27.8 million**[140](index=140&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) - As of June 30, 2025, the company was in **compliance with the financial debt covenants** under its senior secured notes and Northern Trust loan agreement[146](index=146&type=chunk) [ITEM 3. Qualitative and Quantitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section states that disclosures about market risk are not applicable - This section is **not applicable**[149](index=149&type=chunk) [ITEM 4. Controls and Procedures](index=35&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, and no material changes were made to internal controls - As of June 30, 2025, the company's disclosure controls and procedures were determined to be **effective**[149](index=149&type=chunk) - There were **no material changes** to the company's internal controls during the fiscal quarter ended June 30, 2025[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=37&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material impact - The company is **not involved in any legal proceedings** expected to have a material impact on it[151](index=151&type=chunk) [ITEM 1A. Risk Factors](index=37&type=section&id=ITEM%201A.%20Risk%20Factors) This section updates risk factors, highlighting regulatory dependence for expansion and water resource limitations in Pima County - The company's expansion into new service areas and existing water/wastewater services **depend on regulatory approvals**, and failure to obtain them would adversely affect future growth[152](index=152&type=chunk) - **Water resource limitations** near the City of Maricopa in Pima County could affect developers' ability to obtain final plat approval, thereby limiting future growth[153](index=153&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses that no unregistered equity securities were sold and details stock repurchases to cover employee tax obligations - There were **no sales of unregistered securities** during the three months ended June 30, 2025[155](index=155&type=chunk) - The shares purchased represent shares withheld from employees or board members to satisfy tax obligations related to the vesting of restricted stock awards[158](index=158&type=chunk) Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | May 1, 2025 to May 31, 2025 | 11,347 | $10.41 | [ITEM 3. Defaults Upon Senior Securities](index=38&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that no defaults upon senior securities occurred during the reporting period - There were **no defaults upon senior securities**[159](index=159&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable - Mine safety disclosures are **not applicable**[160](index=160&type=chunk) [ITEM 5. Other Information](index=38&type=section&id=ITEM%205.%20Other%20Information) This section discloses that no Rule 10b5-1 trading plans were adopted or terminated by directors or officers during the period - During the three months ended June 30, 2025, **no director or officer** of the company adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement[161](index=161&type=chunk) [ITEM 6. Exhibits](index=39&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including corporate charters, loan agreement amendments, and XBRL files - Exhibits include the company's Articles of Incorporation, Amended Bylaws, the Sixth Modification Agreement with Northern Trust Company, and **XBRL-related files**[162](index=162&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report was duly signed on behalf of the company by its Chief Financial Officer - The report was signed on August 13, 2025, by **Michael J. Liebman, Chief Financial Officer and Corporate Secretary**, on behalf of Global Water Resources, Inc[167](index=167&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) Global Water Resources reported **5.4% revenue growth** to **$14.2 million** in Q2 2025, with net income at **$1.6 million**, alongside operational expansion, strategic investments, and regulatory successes [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Global Water Resources reported a 5.4% increase in total revenue to $14.2 million for Q2 2025, driven by organic connection growth, increased consumption, and higher rates, though net income decreased to $1.6 million ($0.06 per share) due to increased depreciation expense, while Adjusted EBITDA saw a modest increase of 2.1% to $6.9 million Q2 2025 Financial Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :------------------- | :------------------ | :------------------ | :--------- | | Total Revenue | $14.2 | $13.5 | 5.4% | | Net Income | $1.6 | $1.7 | -5.9% | | EPS | $0.06 | $0.07 | -14.3% | | Adjusted EBITDA | $6.9 | $6.8 | 2.1% | - The decline in **net income** was primarily due to **increased depreciation expense** resulting from the company's **capital improvement plan**[5](index=5&type=chunk) [Q2 2025 Operational Highlights](index=1&type=section&id=Q2%202025%20Operational%20Highlights) The company experienced significant operational growth in Q2 2025, with active service connections increasing by 3.8% and water consumption rising by 8.2%, alongside substantial investments in infrastructure projects to support existing utilities and future growth Q2 2025 Operational Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------------------------- | :----------- | :----------- | :--------- | | Total Active Service Connections | 65,639 | 63,256 | 3.8% | | Water Consumption | 1.2 billion gallons | 1.1 billion gallons | 8.2% | - Invested **$20.2 million** in infrastructure projects to support existing utilities and continued growth[5](index=5&type=chunk) [Other Key Highlights](index=1&type=section&id=Other%20Highlights) Global Water Resources extended its revolving credit facility to May 2027 and increased its borrowing capacity to $20 million, declared monthly cash dividends of $0.02533 per share, secured key regulatory approvals for GW-Farmers expected to generate an additional $1.1 million in annual revenue, and completed a significant acquisition of seven water systems from Tucson Water projected to add $1.5 million in annual revenue - Extended maturity date of revolving credit facility to **May 18, 2027**, and increased principal amount available for borrowing from **$15 million to $20 million**[5](index=5&type=chunk) - Declared three monthly cash dividends of **$0.02533 per common share**, totaling **$0.30396 per common share** on an annualized basis[5](index=5&type=chunk) - The Arizona Corporation Commission (ACC) issued Decision No. 80695 for GW-Farmers, with new rates expected to generate approximately **$1.1 million in increased annual revenue**, phased in starting **May 1, 2025**[5](index=5&type=chunk) - Completed the acquisition of seven water systems from Tucson Water in July, valued at approximately **$7.7 million**, expected to generate approximately **$1.5 million in annual revenue**[5](index=5&type=chunk) - The City of Maricopa was estimated by the U.S. Census Bureau to be the **6th fastest growing large city** in the country, with a **7.4% population increase in 2024**[5](index=5&type=chunk) [Management Commentary & Strategic Outlook](index=2&type=section&id=Management%20Commentary) Management attributes Q2 growth to organic connections and rate cases, details strategic initiatives and regulatory progress, and underscores Arizona's robust economic outlook as a key growth driver [Q2 Performance Drivers](index=2&type=section&id=Q2%20Performance%20Drivers) Global Water Resources' Q2 top-line growth was primarily fueled by organic connection growth, increased water consumption, and a successful rate case strategy, including the approval of the GW-Farmers general rate case - Top-line growth in Q2 was primarily driven by **organic connection growth**, **increased consumption**, and **successful rate case strategy**[6](index=6&type=chunk) - Received approval for the GW-Farmers general rate case, with **50% of the approved rate increase effective May 1, 2025**, supporting improvements for customers and the Sahuarita community[6](index=6&type=chunk) [Strategic Initiatives & Regulatory Updates](index=2&type=section&id=Strategic%20Initiatives%20%26%20Regulatory%20Updates) The company anticipates significant regional growth catalysts, including the Arizona Department of Transportation's plan for State Route 347 improvements and the new 'ag-to-urban' bill (Senate Bill 1611), which is expected to support water management and development, while the general rate case for GW-Santa Cruz and GW-Palo Verde is progressing, aiming for approximately $6.5 million in additional net annual revenue to maintain high-quality services - Arizona Department of Transportation's inclusion of State Route 347 improvements in its **$11.6 billion five-year plan** is seen as a major milestone and catalyst for sustainable growth, potentially driving increased demand for water services[7](index=7&type=chunk) - Arizona's Senate Bill 1611, the new 'ag-to-urban' bill, effective **September 26, 2025**, is expected to support water management, economic development, and housing accessibility, with up to **384,000 acres eligible for conversion**[8](index=8&type=chunk) - The general rate case for GW-Santa Cruz and GW-Palo Verde is proceeding, with testimony and a hearing expected in **Q4 2025**, seeking approximately **$6.5 million in additional net annual revenue**[9](index=9&type=chunk) - The company expects appropriate rates to capture **2025 capital investments** upon the anticipated completion of the Pinal County utilities' rate case around **mid-2026**[10](index=10&type=chunk) [Arizona Growth & Economic Outlook](index=2&type=section&id=Arizona%20Growth%20%26%20Economic%20Outlook) Arizona's robust economic outlook, characterized by strong job growth and unprecedented investment commitments from major industry leaders, is expected to drive organic connection growth for Global Water Resources, particularly in the Metro Phoenix area - Arizona's strong economic outlook, with employment expected to rise by **478,000 jobs through 2032** (**1.4% annual growth**), is anticipated to support organic connection growth[11](index=11&type=chunk) - The state received **$50 billion in investment commitments last year**, including TSMC's **$165 billion planned investment** in Metro Phoenix and Apple's multi-billion dollar plans, significantly reshaping the region[11](index=11&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Summary) This section details a **5.4% revenue increase** to **$14.2 million**, an **8.5% rise** in operating expenses, and a **6.8% decrease** in net income to **$1.6 million**, while Adjusted EBITDA grew by **2.1%** [Revenue Analysis](index=2&type=section&id=Revenue) Total regulated revenue increased by 5.4% to $14.2 million in Q2 2025, primarily driven by organic growth in active water and wastewater connections, increased consumption, and higher rates from recent general rate cases for GW-Saguaro and GW-Farmers Three Months Ended June 30, Revenue (in thousands) | Service Type | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------- | :------ | :------ | :--------- | :--------- | | Water service | $7,368 | $6,668 | $700 | 10.5% | | Wastewater and recycled water service | $6,873 | $6,842 | $31 | 0.5% | | Total regulated revenue | $14,241 | $13,510 | $731 | 5.4% | | Total revenue | $14,241 | $13,510 | $731 | 5.4% | - Revenue increase was primarily attributable to **organic growth in active water and wastewater connections**, **increased water and recycled water consumption**, and **higher rates** for GW-Saguaro (effective July 2024 and January 2025) and GW-Farmers (effective May 1, 2025)[12](index=12&type=chunk)[13](index=13&type=chunk) [Operating Expenses Analysis](index=3&type=section&id=Operating%20Expenses) Total operating expenses increased by 8.5% to $11.6 million in Q2 2025, mainly due to higher personnel costs, increased IT service provider contracts, one-time wastewater disposal costs, and higher depreciation and amortization Three Months Ended June 30, Operating Expenses (in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------- | :------ | :------ | :--------- | :--------- | | Personnel costs - operations and maintenance | $1,356 | $1,184 | ($172) | (14.5)% | | Utilities, chemicals and repairs | $1,183 | $1,084 | ($99) | (9.1)% | | Other operations and maintenance expenses | $1,378 | $1,217 | ($161) | (13.2)% | | Total operations and maintenance expense | $3,917 | $3,485 | ($432) | (12.4)% | | Personnel costs - general and administrative | $2,236 | $2,185 | ($51) | (2.3)% | | Professional fees | $441 | $482 | $41 | 8.5% | | Other general and administrative expenses | $1,710 | $1,565 | ($145) | (9.3)% | | Total general and administrative expense | $4,387 | $4,232 | ($155) | (3.7)% | | Depreciation and amortization | $3,317 | $2,996 | ($321) | (10.7)% | | Total operating expenses | $11,621 | $10,713 | ($908) | (8.5)% | [Operations and Maintenance](index=3&type=section&id=Operations%20and%20Maintenance) Higher operations and maintenance costs were primarily due to increased salaries and wages from filling vacant positions, higher medical costs, additional IT service provider contracts, and one-time wastewater disposal costs - Higher personnel costs were attributable to **increased salaries and wages** from filling vacant positions and **increased medical costs**[15](index=15&type=chunk) - Other operations and maintenance expenses increased due to **additional contracts with IT service providers** and **one-time wastewater disposal costs**[15](index=15&type=chunk) [General and Administrative](index=3&type=section&id=General%20and%20Administrative) The increase in general and administrative expenses was mainly driven by higher costs associated with various service providers - Increase in other general and administrative expenses was primarily due to **higher costs associated with various service providers**[16](index=16&type=chunk) [Depreciation and Amortization](index=3&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expenses rose due to an increase in depreciable fixed assets and additional amortization from a new office lease in Pima County - Increase in depreciation and amortization was substantially attributable to an **increase in depreciable fixed assets** and **additional amortization from a new office lease** in Pima County in December 2024[17](index=17&type=chunk) [Other Income (Expense)](index=3&type=section&id=Other%20Expense) Other expense decreased to $0.4 million in Q2 2025 from $0.5 million in the prior year, primarily due to higher income from Buckeye growth premiums resulting from an increase in new meter connections - Other expense decreased by **$0.1 million**, primarily due to **higher income associated with Buckeye growth premiums** from increased new meter connections[18](index=18&type=chunk) [Net Income & Adjusted EBITDA](index=3&type=section&id=Net%20Income) Net income for Q2 2025 decreased by 6.8% to $1.6 million, or $0.06 per share, compared to $1.7 million, or $0.07 per share, in Q2 2024, while Adjusted EBITDA, however, increased by 2.1% to $6.9 million Q2 2025 Net Income and Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------- | :------ | :------ | :--------- | :--------- | | Net Income | $1,612 | $1,730 | ($118) | -6.8% | | EPS | $0.06 | $0.07 | ($0.01) | -14.3% | | Adjusted EBITDA | $6,935 | $6,793 | $142 | 2.1% | [Business Operations & Strategy](index=4&type=section&id=Business%20Strategy) The company's strategy focuses on increasing service connections, improving efficiencies, and securing rate increases, supported by a consistent dividend policy and favorable regional growth trends [Dividend Policy](index=4&type=section&id=Dividend%20Policy) Global Water Resources recently declared a monthly cash dividend of $0.02533 per common share, which translates to an annualized dividend of $0.30396 per share - Declared a monthly cash dividend of **$0.02533 per common share**, payable on **August 29, 2025**, to holders of record on **August 15, 2025**, equivalent to **$0.30396 per share** on an annualized basis[21](index=21&type=chunk) [Business Strategy](index=4&type=section&id=Business%20Strategy) The company's near-term growth strategy focuses on increasing service connections, improving operating efficiencies, and securing utility rate increases, while long-term, Global Water plans to continue aggregating water and wastewater utilities through strategic acquisitions and consolidation to realize benefits of regionalization and environmental stewardship - Near-term growth strategy involves **increasing service connections**, **improving operating efficiencies**, and **increasing utility rates** as approved by the ACC[22](index=22&type=chunk) - Plans to continue **aggregating water and wastewater utilities** through strategic acquisitions and entity consolidation to achieve benefits of consolidation, regionalization, and environmental stewardship[22](index=22&type=chunk) [Connection Rates & Growth Trends](index=4&type=section&id=Connection%20Rates) Active service connections increased by 3.8% year-over-year, primarily driven by organic growth in the company's service areas, supported by the Phoenix metropolitan area's significant population increase and lower housing costs in areas like the City of Maricopa, despite a recent decrease in housing permits Active Service Connections | Date | Active Service Connections | | :----------- | :------------------------- | | June 30, 2025 | 65,639 | | June 30, 2024 | 63,256 | | Change | +2,383 (3.8%) | - The Phoenix MSA is the **10th largest MSA in the U.S.** with an estimated population of **5.2 million in 2024**, a **7.0% increase since 2020**, and is projected to reach **5.8 million by 2030** and **6.5 million by 2040**[24](index=24&type=chunk) - Organic growth is heavily influenced by the nearly **30% lower median home sales price** in the City of Maricopa compared to the City of Phoenix as of June 2025[25](index=25&type=chunk) - Despite a decrease in single-family and multi-family permits in **H1 2025** due to macroeconomic challenges, management believes the company is well-positioned for long-term growth in the Phoenix MSA due to available lots and existing infrastructure[26](index=26&type=chunk) [Company Information & Financial Statements](index=4&type=section&id=Company%20Information%20%26%20Financial%20Statements) This section provides an overview of Global Water Resources' operations and Total Water Management approach, defines non-GAAP measures, includes cautionary notes on forward-looking statements, and presents condensed consolidated financial statements [About Global Water Resources](index=5&type=section&id=About%20Global%20Water%20Resources) Global Water Resources is a leading water resource management company operating 39 systems providing water, wastewater, and recycled water services primarily in growth corridors around metropolitan Phoenix and Tucson, recognized for its Total Water Management (TWM) approach which integrates the entire water cycle to maximize beneficial use of recycled water and promote conservation - Global Water Resources owns and operates **39 systems** providing water, wastewater, and recycled water service, primarily in growth corridors around metropolitan Phoenix and Tucson[29](index=29&type=chunk) - The company implements **Total Water Management (TWM)**, an integrated approach to managing the entire water cycle, maximizing recycled water use, and enabling smart water management programs for conservation[30](index=30&type=chunk) - Received national recognition as a **'Utility of the Future Today'** for superior water reuse practices and Cityworks' Excellence in Departmental Practice Award for public asset management[31](index=31&type=chunk) [Use of Non-GAAP Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Measures) This section defines non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and Adjusted Net Income, which management uses as supplemental indicators of operating performance and overall corporate performance, while cautioning investors that these should not replace GAAP measures - **EBITDA** is defined as net income before interest, income taxes, depreciation, and amortization[33](index=33&type=chunk) - **Adjusted EBITDA** excludes gains/losses related to nonrecurring events, restricted stock expense, and disposal of assets[33](index=33&type=chunk) - **Adjusted Net Income** reflects net income excluding amortization related to ICFA intangible assets and their tax effect[33](index=33&type=chunk) - Management believes these non-GAAP measures provide useful supplemental information for investors but should not be construed as alternatives to GAAP measures[34](index=34&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=6&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a standard disclaimer regarding forward-looking statements, highlighting that they involve assumptions, risks, and uncertainties that could cause actual results to differ materially from expectations, and investors are cautioned not to place undue reliance on these statements, which are subject to various political, economic, business, market, and regulatory factors - Forward-looking statements reflect the company's expectations regarding future events and involve assumptions, risks, uncertainties, and other factors that could cause actual results to differ materially[35](index=35&type=chunk) - These statements are based on current beliefs and are subject to political, economic, business, market, regulatory, and other factors, as detailed in SEC filings[35](index=35&type=chunk) [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows an increase in total assets to $449.4 million as of June 30, 2025, from $405.1 million at December 31, 2024, primarily driven by an increase in net utility plant, with total shareholders' equity also increasing significantly to $76.7 million Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Net utility plant | $401,749 | $359,379 | | Total Assets | $449,382 | $405,137 | | Total shareholders' equity | $76,740 | $47,604 | | Long-term debt, net | $116,803 | $118,518 | | Total Capitalization | $193,543 | $166,122 | | Total current liabilities | $20,006 | $22,258 | | Total other liabilities | $235,833 | $216,757 | | Total Capitalization and Liabilities | $449,382 | $405,137 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, total revenue increased to $14.2 million, while operating income slightly decreased to $2.6 million, with net income at $1.6 million, resulting in basic and diluted EPS of $0.06 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | | Total revenue | $14,241 | $13,510 | | Total operating expenses | $11,621 | $10,713 | | Operating Income | $2,620 | $2,797 | | Income Before Income Taxes | $2,229 | $2,328 | | Net Income | $1,612 | $1,730 | | Basic earnings per common share | $0.06 | $0.07 | | Diluted earnings per common share | $0.06 | $0.07 | | Dividends declared per common share | $0.08 | $0.08 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was $8.8 million, a decrease from $13.6 million in the prior year, while net cash used in investing activities significantly increased to $35.4 million due to higher capital expenditures, and net cash provided by financing activities was $27.8 million, largely due to the issuance of common stock Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $8,827 | $13,571 | | Net cash used in investing activities | ($35,395) | ($12,211) | | Net cash provided by financing activities | $27,788 | $13,573 | | Increase in cash, cash equivalents, and restricted cash | $1,220 | $14,933 | | Cash, cash equivalents, and restricted cash — End of period | $12,376 | $19,696 | [Reconciliation of Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The reconciliation shows that Adjusted EBITDA increased to $6.9 million in Q2 2025 from $6.8 million in Q2 2024, and Adjusted Net Income remained consistent with Net Income in Q2 2025, as there were no ICFA intangible amortization expenses or related tax effects Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | | Net Income | $1,612 | $1,730 | | Income tax expense | $617 | $598 | | Interest income | ($216) | ($266) | | Interest expense | $1,496 | $1,507 | | Depreciation and amortization | $3,317 | $2,996 | | EBITDA | $6,826 | $6,565 | | EBITDA adjustments | $109 | $228 | | Adjusted EBITDA | $6,935 | $6,793 | Reconciliation of Net Income to Adjusted Net Income (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | | Net Income | $1,612 | $1,730 | | ICFA intangible amortization expense | — | $81 | | Income tax effect of items above | — | ($20) | | Adjusted Net Income | $1,612 | $1,791 | [Conference Call & Contact Information](index=4&type=section&id=Conference%20Call) Global Water Resources will host a conference call on August 14, 2025, to discuss its Q2 2025 results, with details provided for dial-in and webcast access, and contact information for the company's CFO and Investor Relations is also included - Conference call to discuss Q2 2025 results scheduled for **Thursday, August 14, 2025, at 1:00 p.m. Eastern time**[27](index=27&type=chunk) - Dial-in numbers: Toll-free **1-833-816-1435**, International **1-412-317-0527**, Conference ID: **10201420**, Webcast available via **www.gwresources.com**[27](index=27&type=chunk) - Company Contact: Michael J. Liebman, CFO and SVP, Tel **(480) 999-5104**, Investor Relations: Ron Both or Grant Stude, Encore Investor Relations, Tel **(949) 432-7450**[36](index=36&type=chunk)