Global Water Resources (NASDAQ:GWRS) executives highlighted significant capital investment, regulatory developments, and the financial impact of higher expenses during the company’s 2025 year-end earnings call held March 5, 2026. Management emphasized that 2025 featured major initiatives intended to expand rate base over the long term, while also creating near-term pressure on earnings due to depreciation, operating costs, and regulatory lag in Arizona’s rate-setting framework.
Operational update: capital investments and connection growth
President and CEO Ron Fleming described 2025 as a year marked by “large and successful initiatives” aimed at growing rate base. Fleming said that across 2024 and 2025—the test year and post-test year for the Santa Cruz Water Company and Palo Verde Utilities Company rate case—the company increased the “collective rate base of all assets” by $70 million, or 59%.
On customer growth, Fleming reported that total active service connections increased 6.3% year-over-year to 68,577 at Dec. 31, 2025. Excluding the acquisition of seven Tucson water systems, he said the company achieved 3.2% organic total active service connection growth. He also said Global Water invested $67.3 million into infrastructure improvements in existing utilities to provide safe and reliable service, with most 2025 spending tied to post-test year projects at Santa Cruz and Palo Verde that are included in the company’s already-filed 2024 test year rate application.
Housing permits slowed, but management expects long-term growth
Fleming said single-family permitting softened in 2025. He cited data showing the Phoenix Greater Metro Area had about 27,156 building permits issued in 2024, compared with 21,815 in 2025, a decline of nearly 20%. In the Maricopa market specifically, he said 2025 permits were 600, down 39% from the prior year.
Despite the slowdown in permits, Fleming said growth in the Phoenix MSA—particularly in the City of Maricopa—was reflected in the company’s 3.2% organic increase in active connections. He said the company views the permit decline as temporary and expects to benefit from long-term regional growth.
Fleming also referenced two developments he believes support long-term growth in the company’s service areas:
- Arizona’s “Ag-to-Urban” water legislation, signed into law in 2025, which the company believes may improve aquifer sustainability and create a new groundwater supply that could support additional growth.
- Approval of full funding for the Highway 347 expansion connecting Interstate 10 and Metro Phoenix to the City of Maricopa and western Pinal County. Fleming said construction is estimated to begin in summer 2026.
Fleming cited U.S. Census Bureau data released July 1, 2025, stating that the City of Maricopa ranked sixth among the fastest-growing large municipalities, with 7.4% growth in 2024 compared with 7.1% in 2023.
Financial results: revenue rose, but expenses climbed faster
Chief Financial Officer Mike Liebman reported total revenue of $55.8 million in 2025, up $3.1 million, or 5.8%, compared with 2024. He attributed the increase primarily to the July 2025 City of Tucson acquisition, organic growth in active water and wastewater connections, and higher rates in the Farmers and SWR utilities compared with 2024.
Operating expenses increased about $5.3 million, or 12.2%, to $48.6 million from $43.3 million in 2024. Liebman cited several drivers:
- Depreciation, amortization, and accretion rose $2.3 million, which he said was largely due to additional fixed assets placed in service tied to increased capital investments and projects included in the current rate case.
- Operating and maintenance increased about $2.0 million, driven by personnel costs (including costs associated with the Tucson acquisition, medical expenses, and filling a previously vacant position), higher utilities/chemicals/repairs tied to increased consumption and a newly operational plant, and higher contract services.
- General and administrative expenses rose about $1.0 million, driven by higher medical costs, increased professional fees (including legal expenses associated with the Nikola bankruptcy), higher IT spending, increased insurance premiums, and higher municipal licensing fees tied to revenue growth.
“Other expense” increased to $3.2 million in 2025 from $1.5 million in 2024, which Liebman said was primarily due to a $1.3 million loss on asset disposals related to the recommissioning of the Southwest Plant and lower income associated with Buckeye growth premiums.
Net income for 2025 was $3.0 million, or $0.11 per diluted share, down from $5.8 million, or $0.24 per diluted share, in 2024. Adjusted net income (non-GAAP) was $3.9 million, or $0.14 per diluted share, compared with $6.3 million, or $0.26 per diluted share, in 2024. Adjusted EBITDA was $26.5 million, down 0.7% from $26.7 million in the prior year, reflecting adjustments for items including certain non-recurring expenses and non-cash items such as restricted stock expense and the Southwest Plant loss on asset disposals.
Regulatory update: Tucson acquisition approved; rate relief still in progress
Chief Operating Officer Chris Krygier reviewed regulatory activity and said the company made “constructive developments” in 2025. He highlighted:
- Arizona Corporation Commission (ACC) approval in January 2025 to acquire seven public water utility systems from the City of Tucson, which closed in July 2025.
- ACC approval in April 2025 of approximately $1.1 million of new revenues for the Global Water Farmers utility.
On the ongoing Santa Cruz and Palo Verde rate reviews, Krygier said the company is focused on securing rate relief related to significant capital investments and rising expenses. Since the company’s last update in November, management filed testimony supporting a proposed revenue increase of approximately $4.3 million. Krygier said the case schedule was revised to include additional ACC staff testimony due April 15, 2026, and the hearing is now scheduled to begin in August 2026.
Q&A: rate case frustrations and AI use cases
During the question-and-answer session, management addressed investor concerns about the pace and complexity of the current rate case. Fleming said the “primary element” making the case challenging is the recommissioning of the Southwest Plant, which he described as a unique situation stemming from investments made prior to the Great Recession in an area south of Maricopa where customers did not materialize after 2008. With growth returning, the company brought the assets back online and is seeking to move them into rates. Krygier said the company has been engaging with regulatory stakeholders, communities, and customers, and characterized the issue as unusual in his experience.
Asked whether the company could refile or pursue alternative approaches if the case does not conclude as hoped, Krygier said management is evaluating options but had nothing to announce. Fleming added that, in the company’s view, the recovery is a matter of “when, not if,” emphasizing that the assets are in service and providing service to customers.
On artificial intelligence, Fleming said the company is exploring use cases, particularly in the call center to improve customer service and efficiency. He added that expanding AI more broadly across utility operations requires careful consideration due to security issues in a highly regulated and highly automated environment, and said the company is proceeding cautiously.
Looking ahead, Fleming said 2026 will focus on controlling expenses, and the company has reduced the pace of capital investments following the heavy spending in 2025.
About Global Water Resources (NASDAQ:GWRS)
Global Water Resources, Inc (NASDAQ:GWRS) is a publicly traded holding company based in Scottsdale, Arizona, specializing in the ownership and management of water and wastewater utilities. The company provides critical potable water delivery, wastewater collection and treatment, and reclaimed water services to residential, commercial and industrial customers across select communities in Central and Southern Arizona.
The company operates multiple regulated utility systems, serving communities such as Anthem, Biltmore, Florence and San Tan Valley.
