Global Water Resources, Inc. Q2 FY26 Results

In Q2, we generated strong year-over-year growth. The 9.9% increase in regulated revenue was primarily driven by the Tucson acquisition, the 2.7% organic active connections growth and higher water consumption in a rapidly expanding metropolitan region. Revenue also benefited from higher rates at GW-Farmers following a successful general rate case in Southern Arizona. We expect the additional revenue to help fund current and future customer needs, including high-quality water infrastructure and improved service for the communities we serve. As previously reported, we completed several significant 2025 capital investments to support growth and enhance long-term system reliability. These included recommissioning our Southwest Plant water reclamation facility, capital improvements to stay ahead of community growth, and the acquisition of seven water systems from the City of Tucson. While these projects increased depreciation as assets entered service, they expanded and strengthened our infrastructure, improved customer service capacity, and support long-term shareholder value. Importantly, second quarter general and administrative expense was slightly lower year-over-year, reflecting continued cost discipline. Depreciation, amortization and accretion increased primarily from assets placed in service following our 2025 capital improvement plan and related investments. Although these non-cash expenses can affect near-term net income and earnings per share, they reflect capital deployed into infrastructure that supports growth, service quality, and customer and community needs. Appropriate rate relief remains important to recovering these investments and addressing inflationary pressures across our utilities. In May, we filed testimony supporting a settlement to bifurcate rate cases for GW-Santa Cruz and GW-Palo Verde, our largest water and wastewater utilities. The regulatory hearing has concluded, our legal brief is complete, and we are awaiting the administrative law judge’s recommended opinion and order for commissioner review and vote. As a reminder, the settlement proposes a net $1.9 million rate increase. A final decision is expected in the fourth quarter with new rates for GW-Santa Cruz requested to be effective November 1, 2026. Regarding GW-Palo Verde, we filed a motion to withdraw our rate review application. The motion was granted, and we intend to refile in 2027 using a 2026 test year. A growing rate base from prudent infrastructure investments is expected to support future rate case filings and appropriate rate increases, helping drive revenue growth and fund current and future customer needs. During the quarter, we continued to invest prudently in core service areas where we can deploy our Total Water Management model, including required maintenance capital and new water and wastewater treatment and delivery facilities. For example, our Hassayampa utility commissioned a new 60,000-gallon-per-day water reclamation facility serving a planning and service area in western Maricopa County, Arizona, within Phoenix’s growth corridors. Looking ahead, we expect continued organic connection growth driven by Arizona’s strong economic outlook. On July 16, 2026, TSMC announced an additional $100 billion investment for U.S. semiconductor manufacturing, bringing TSMC’s total planned Arizona investment to a record $265 billion. The funding will support four additional advanced chip manufacturing and packaging facilities in Arizona, totaling 12 U.S. sites, and is expected to create tens of thousands of jobs across the state, including Metro Phoenix and Tucson. Beyond manufacturing, we believe Arizona’s broader economy is positioned to accelerate in 2026, supported by population and job growth. Arizona’s Office of Economic Opportunity projects employment will increase by 454,000 jobs through 2034, an annual growth rate of 1.2%, or four times the national average of 0.3%. We are also pleased that the State Route 347 Improvement Project began in June. The project will widen the 14-mile corridor by adding one lane in each direction and upgrading bridges and intersections to ease congestion. We expect it to support residential and commercial development and increase demand for water, wastewater and recycled water services in the City of Maricopa and western Pinal County. As part of our long-term regulatory planning, we expect to pursue future rate review filings over the next few years. As previously mentioned, we intend to start with GW-Palo Verde, followed by a rate review for, and consolidation of, our Pima County utilities, including GW-Saguaro, GW-Ocotillo, and GW-Farmers. These cases are expected to use a 2026 test year, which we intend to file in the first half of 2027. Finally, we are planning a GW-Santa Cruz rate review filing in the first half of 2028 using a 2027 test year. For the remainder of 2026 and beyond, we plan to continue to make prudent infrastructure investments across all our utilities as we build a strong regulatory record to support appropriate recovery of these investments.