Global Water Resources NASDAQ: GWRS reported higher second-quarter revenue and earnings, supported by regulated revenue growth, infrastructure-related revenue recognition, acquisitions and customer growth, while management emphasized that rising depreciation, operating costs and delayed rate recovery continue to pressure profitability.
Total revenue for the second quarter of 2026 rose 24.8% year over year to $17.8 million. For the first six months of the year, revenue increased 16.3% to $31.1 million. Chief Financial Officer Mike Liebman said the increases reflected $2.1 million of unregulated revenue recognition related to Infrastructure Coordination and Financing Agreements, or ICFAs, as well as the July 2025 acquisition of seven Tucson Water systems, organic connection growth, increased consumption and higher rates.
Regulated revenue, which excludes ICFA revenue, increased 9.9% to $15.7 million in the quarter and grew 8.4% to $28.9 million for the year-to-date period.
Second-Quarter Earnings and Expenses
Net income rose to $2.7 million, or $0.10 per diluted share, from $1.6 million, or $0.06 per diluted share, a year earlier. Year-to-date net income was $2.4 million, or $0.08 per diluted share, compared with $2.2 million, or $0.08 per diluted share, in the prior-year period.
Adjusted EBITDA increased 15% to $7.9 million in the second quarter. For the first half, adjusted EBITDA rose 8% to $13.5 million.
Operating expenses increased 14.1% to $13.3 million during the quarter. Depreciation, amortization and accretion expense rose by $1.1 million, largely due to utility plant placed into service following the company’s 2025 capital-improvement program and the commissioning of related projects. Operations and maintenance costs increased approximately $600,000, driven by rising medical expenses, higher purchased power costs associated with newly operational plants and increased consumption, and a loss on disposal of utility plant.
General and administrative expenses were relatively unchanged, declining to $4.3 million from $4.4 million a year earlier. Liebman said management’s goal is to keep those costs “as flat as possible” for the remainder of the year. Other expense increased to $800,000 from $400,000, primarily due to higher interest expense and lower interest income.
President and Chief Executive Officer Ron Fleming said major capital investments completed in 2025, including the recommissioning of the Southwest Plant water reclamation facility, expanded rate base and were necessary to support reliable service. However, the investments also increased depreciation and certain operating expenses, affecting net income and earnings per share under Arizona’s historical test-year regulatory framework.
Rate Cases and Regulatory Timeline
The company said it continues to seek rate increases intended to recover inflationary expenses and earn returns on its utility investments.
Chief Operating Officer Chris Krygier said the rate-case settlement for Global Water-Santa Cruz Water Company concluded its hearing on Aug. 3 and is awaiting a recommended opinion and order from an administrative law judge. The matter is expected to go before the Arizona Corporation Commission later in 2026.
The unanimous settlement contemplates approximately $1.9 million in net revenue increases, effective Nov. 1, 2026, if approved.
Global Water has also begun preparing rate-review filings for four utilities during the first half of 2027:
- Global Water-Palo Verde Utilities Company;
- Global Water-Saguaro District Water Company;
- Global Water-Farmers Water Company; and
- Global Water-Ocotillo Water Company.
Those cases are expected to use a 2026 test year and 2027 post-test year, with estimated new rates in 2028. The company is also preliminarily planning its next Santa Cruz rate review, using a potential 2027 test year for a 2028 filing and estimated rates taking effect in 2029.
Connections, Development and Capital Spending
Total active service connections increased 5.8% from a year earlier to 69,429 as of June 30. Excluding the Tucson Water system acquisition, Global Water recorded an annualized 2.6% total active connection growth rate in 2026. The company invested $6.6 million in infrastructure improvements at existing utilities during the quarter.
Organic active connections increased 2.7% year over year, as permitting activity moderated in the Phoenix metropolitan area. Single-family building permits in the Phoenix metro statistical area declined 4.7% in the second quarter from the prior-year period to 5,653. In Maricopa, permits rose 5.7% to 185.
Fleming said organic growth over the most recent three months had increased to 3.2%, above the company’s earlier growth pace. He also cited greater development activity involving multifamily apartment projects and commercial properties, which he said has contributed to revenue growth that is not solely tied to meter connections.
Management pointed to regional economic-development activity, housing affordability and the planned widening of State Route 347 as potential long-term growth drivers. Fleming said major employer projects and related residential development typically progress on a two- to three-year cycle from announcement to broader economic effects.
On capital spending, Liebman said the company does not provide formal guidance, but indicated that 2027 capital expenditures are expected to be lower than the elevated 2025 investment level and closer to the company’s historical norms. Regarding financing, he said Global Water generally seeks to maintain a roughly 50-50 debt-and-equity capital structure, while considering equity-market conditions, debt rates and potential dilution.
Liebman also said Global Water and its utility subsidiaries were not affected by recent cyberattacks targeting water and wastewater infrastructure in the U.S.
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.
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