# Global Water Resources, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Global Water Resources, Inc.](/companies/gwrs.md) (CIK 1434728)
- Form: 10-Q
- Filed: 2025-05-14
- Accepted by EDGAR: May 14, 2025, 16:53 ET
- Period: 2025-03-31
- Accession: 0001434728-25-000169
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1434728/000143472825000169/gwrs-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1434728/000143472825000169/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $12.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $1.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $183.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $591.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.02 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.02 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 24,434,283 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $7.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $15.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $1.8m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $31.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $39.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $443.9m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $25.7m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2025-03-31 | $118.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $3.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $77.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 47,987 characters.

*The following management’s discussion and analysis of Global Water Resources, Inc.’s (the “Company”, “GWRI”, “we”, or “us”) financial condition and results of operations (“MD&A”) relate to the three months ended March 31, 2025 and should be read together with the consolidated financial statements and accompanying notes included in Part I, Item 1 of this report.*

### Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking in nature and may constitute “forward-looking information” within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the words “believes”, “anticipates”, “plans”, “expects”, “intends”, “projects”, “estimates”, “objective”, “goal”, “focus”, “aim”, “should”, “could”, “may”, and similar expressions. These forward-looking statements include future estimates described in “Business Outlook”, “Factors Affecting our Results of Operations”, and “Liquidity and Capital Resources”. These forward-looking statements include, but are not limited to, statements about our strategies; expectations about future business plans, prospective performance, growth, and opportunities; future financial performance; regulatory and ACC proceedings, decisions and approvals, such as the anticipated benefits resulting from rate decisions, including any collective revenue increases due to new water and wastewater rates, our beliefs and expectations pertaining to ACC actions relating to our Southwest Plant, as well as the outcome, timing and other statements regarding our plans, expectations and estimates relating to our rate case and other applications with the ACC, including estimated rate base; our plans relating to future filings of our rate cases with the ACC; acquisition plans and our ability to complete additional acquisitions, including the anticipated acquisition of seven isolated public water systems from the City of Tucson and the expected increase in active water service connections resulting from such acquisition; population and growth projections; technologies, including expected benefits from implementing such technologies; revenue; metrics; operating expenses; trends relating to our industry, market, population and job growth, and housing permits; the adequacy of our water supply to service our current demand and growth for the foreseeable future; liquidity and capital resources; plans and expectations for capital expenditures; cash flows and uses of cash; dividends; depreciation and amortization; tax payments; our ability to repay indebtedness and invest in initiatives; the anticipated impact and resolutions of legal matters; the anticipated impact of new or proposed laws, including regulatory requirements, tax changes, and judicial decisions; and the anticipated impact of accounting changes and other pronouncements.

Forward-looking statements should not be read as a guarantee of future performance or results. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Consequently, actual results may vary materially from what is contained in a forward-looking statement. Investors are cautioned not to place undue reliance on forward-looking information. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks related to legal, regulatory, and legislative matters; risks related to our business and operations; risks related to market and financial matters; risks related to technology; and risks related to the ownership of our common stock, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. These and other factors are discussed in the risk factors described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) as updated from time to time in our subsequent filings with the SEC. Additional risks and uncertainties include, but are not limited to, whether all conditions precedent in the asset purchase agreement to acquire the seven isolated public water systems from the City of Tucson will be satisfied, and other risks to consummation of the acquisition, including circumstances that could give rise to the termination of the asset purchase agreement and the risk that the transaction will not be consummated without undue delay, cost or expense, or at all. Any forward-looking statement speaks only as of the date of this report. Except as required by law, we undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

### Overview

GWRI is a water resource management company that owns, operates, and manages thirty-two water, wastewater, and recycled water public utility systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona. We seek to deploy an integrated approach, referred to as “Total Water Management.” Total Water Management is a comprehensive approach to water utility management that reduces demand on scarce non-renewable water sources and costly renewable water supplies, in a manner that ensures sustainability and greatly benefits communities both environmentally and economically. This approach employs a series of principles and practices that can be tailored to each community:

- Reuse of recycled water, either directly or to non-potable uses, through aquifer recharge, or possibly direct potable reuse in the future;
- Regional planning;
- Use of advanced technology and data;

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- Employing respected subject matter experts and retaining thought leaders;
- Leading outreach and educational initiatives to ensure all stakeholders including customers, development partners, municipalities, regulators, and utility staff are knowledgeable on the principles and practices of the Total Water Management approach; and
- Establishing partnerships with communities, developers, and industry stakeholders to gain support of the Total Water Management principles and practices.

### Business Outlook

We continue to experience organic growth evidenced by our year-over-year organic increase in active connections (i.e., exclusive of acquisition related growth) of 4.3% as of March 31, 2025. According to the 2024 U.S. Census estimates, the Phoenix metropolitan statistical area (“MSA”) is the 10th largest MSA in the U.S. and had an estimated population of 5.2 million, an increase of 7.0% over the 4.8 million people reported in the 2020 Census. The Phoenix MSA continues to grow due to its excellent weather, large and growing universities, a diverse employment base, and low taxes. The Employment and Population Statistics Department of the State of Arizona predicts that the Phoenix metropolitan area will have a population of 5.8 million people by 2030 and 6.5 million by 2040.

A significant contributor to our organic growth is the affordability of housing options in and around the City of Maricopa as compared to Phoenix. Redfin reported the median sale price of a home in March 2025 in the City of Maricopa was approximately $359,000 as compared to approximately $470,000 in the Phoenix housing market. According to the latest data from the National Association of Homebuilders-Wells Fargo, housing affordability remained low through 2024 in the Phoenix MSA.

According to the *First Quarter 2025 Forecast Update* from the Economic and Business Research Center at the University of Arizona (“EBRC”), the Phoenix MSA is forecasted to continue driving Arizona growth. The EBRC’s expected job growth in 2025 for the Phoenix MSA is 2.2%, which it expects will far outpace U.S. gains. In addition, the EBRC expects Phoenix to add residents at a rapid pace (compared to the nation) in 2025 and 2026 with expected growth rates of 1.6% and 1.5%, respectively. However, the Seidman Research Institute’s *Latest State Rankings* report indicates that Arizona’s broader job market experienced a slight contraction of 0.4% beginning in 2025 compared to job growth in 2024.

In October 2024, the Arizona Office of Economic Opportunity projected Arizona to add 478,000 jobs over 2022 levels, with an annual growth rate of 1.4% through 2032, exceeding the national average. According to the Arizona Commerce Authority, Arizona also received $50 billion in investment during 2024, including contributions from major industry players such as Taiwan Semiconductor, Intel and Procter & Gamble.

In the first quarter of 2025, the Arizona State University - W.P. Carey School of Business Greater Phoenix Blue Chip Real Estate Consensus Panel (the “Greater Phoenix Blue Chip Panel”) revised its forecast for single family permits in 2025 and 2026 for the Phoenix MSA. Compared to the prior projections in the fourth quarter of 2024, the revised single family permit figures are 27,333 for 2025 and 26,825 for 2026, reflecting moderate decreases of 7.8% and 10.2%, respectively. The revised forecast for 2025 is still slightly higher than the 27,156 permits for 2024.

While single family permits in the City of Maricopa decreased 42% for the three months ended March 31, 2025 as compared to the same period in the prior year, management believes that we are well-positioned to benefit from the long-term growth expected in the Phoenix MSA due to the availability of lots, existing infrastructure in place within our service areas, and increased activity related to multi-family developments.

### Factors Affecting our Results of Operations

Our financial condition and results of operations are influenced by a variety of industry-wide factors, including but not limited to:

- population and community growth;
- economic and environmental utility regulation;
- the need for infrastructure investment;
- production and treatment costs;
- weather and seasonality; and
- access to and quality of water supply.

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We are subject to regulation by the state regulator, the ACC. The U.S. federal and state governments also regulate environmental, health and safety, and water quality matters. We continue to execute on our strategy to optimize and focus the Company in order to provide greater value to our customers and shareholders by aiming to deliver predictable financial results, making prudent capital investments, and focusing our efforts on earning an appropriate rate of return on our investments.

We continue to monitor the impact of business and economic conditions, including inflationary pressures and changes in tariff policy, on our business and operations. While these conditions did not have a material effect on our business operations, results of operations, cash flows, and financial position for the three months ended March 31, 2025, we are unable to predict the ultimate extent to which our business operations, results of operations, cash flows, and financial position could be impacted.

### Population and Community Growth

Population and community growth in the metropolitan Phoenix area served by our utilities have a direct impact on our earnings. An increase or decrease in our active service connections will affect our revenue and variable expenses in a corresponding manner. As of March 31, 2025, active service connections increased 2,712, or 4.3%, to 65,163 compared to 62,451 active service connections as of March 31, 2024, primarily due to organic growth in our service areas. Approximately 89.7% of the 65,163 active service connections are serviced by our GW-Santa Cruz and GW-Palo Verde utilities as of March 31, 2025.

The graph below presents the historical change in active connections for our ongoing operations over the past five years.

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#### Recent Acquisition Activity

#### Asset Purchase Agreement with City of Tucson

Effective April 25, 2024, GW-Ocotillo, a wholly owned subsidiary of the Company, entered into an asset purchase agreement with the City of Tucson, pursuant to which GW-Ocotillo agreed to acquire seven isolated public water systems from the City of Tucson in an all-cash transaction for a purchase price of $8.4 million. The subject public water systems are located in and around unincorporated Pima County and serve approximately 2,200 water service connections. GW-Ocotillo’s application for a CC&N to provide water service to these water systems was approved by the ACC on January 22, 2025. The Company expects to complete the acquisition in mid-2025, subject to customary closing conditions. The estimated rate base of the seven water systems is approximately $7.8 million.

### Economic and Environmental Utility Regulation

We are subject to extensive regulation of our rates by the ACC, which is charged with establishing rates based on the provision of reliable service at a reasonable cost while also providing an opportunity to earn a fair rate of return on rate base for investors in the state’s utilities. The ACC uses a historical test year to evaluate whether the plant in service is used and useful, to assess whether costs were prudently incurred, and to set “just and reasonable” rates. Rate base is typically the depreciated original cost of the plant in service (net of CIAC and AIAC, which are funds or property provided to a utility under the terms of a main extension agreement, the value of which may be refundable), that has been determined to have been “prudently invested” and “used and useful”, although the reconstruction cost of the utility plant may also be considered in determining the rate base. The ACC also decides on an applicable capital structure based on actual or hypothetical analyses. The ACC determines a “rate of return” on that rate base, which includes the approved capital structure and the actual cost of debt and a fair and reasonable cost of equity based on the ACC’s judgment. The overall revenue requirement for rate making purposes is established by multiplying the rate of return by the rate base and adding reasonably incurred operating expenses for the test year, depreciation, and any applicable pro forma adjustments.

To ensure an optimal combination of access to water and water conservation, balanced with a fair rate of return for investors, our water utility operating revenue is based on two components: a fixed fee and a consumption or volumetric fee. For our water utilities, the fixed fee, or “basic service charge,” provides access to water for residential usage and has generally been set at a level to produce approximately 50% of total water revenue. The volumetric fee is based on the total volume of water supplied to a given customer after the minimum number of gallons, if any, covered by the basic service charge, multiplied by a price per gallon set by a tariff approved by the ACC. A discount to the volumetric rate applies for customers that use less than an amount specified by the ACC. For all investor-owned water utilities, the ACC has, as a policy matter, required the establishment of inverted tier conservation-oriented rates, meaning that the price of water increases as consumption increases. For wastewater utilities, wastewater collection and treatment can be based on volumetric or fixed fees. Our wastewater service is billed based solely on a fixed fee, determined by the size of the water meter installed. Recycled water is sold on a volumetric basis with no fixed fee component.

We are required to file rate cases with the ACC to obtain approval for a change in the rates we charge to customers. Rate cases and other rate-related proceedings can take a year or more to complete. As a result, there is frequently a delay, or regulatory lag, between the time of a capital investment or incurrence of an operating expense increase and when those costs are reflected in rates. We believe it is common industry practice to file for a rate increase every three to five years. Refer to “—Rate Regulation Updates” below and Note 3 – “Regulatory Matters” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional information.

Additionally, our water and wastewater utility operations are subject to extensive regulation by U.S. federal, state, and local regulatory agencies that enforce environmental, health, and safety requirements, which affect all of our regulated subsidiaries. Environmental, health and safety, and water quality regulations are complex, change frequently, and have tended to become more stringent over time. Although it is difficult to project the ultimate costs of complying with pending or future requirements, we do not expect requirements under current regulations to have a material impact on our operations or financial condition, though it is possible new methods of treating drinking water may be required if additional regulations become effective in the future.

For example, on April 10, 2024, the EPA finalized the NPDWR, establishing legally enforceable MCLs for six PFAS in drinking water. We are committed to compliance with the NPDWR and are in process of complying with the first requirement of the rule mandating initial monitoring for all of our utilities. The Company expects that compliance with the NPDWR will require increased capital expenditures for PFAS-contaminated water treatment and other operating costs. If other newer or stricter standards are introduced in the future, they could also increase our operating expenses. We generally expect to recover expenses associated with compliance for environmental and health and safety standards through rate

-22- increases, but this recovery may be affected by “regulatory lag”, that is, the delay between the utility’s test year and the issuance of a rate order approving new rates.

Capital expenditures and operating costs required as a result of water quality standards have been traditionally recognized by the ACC as appropriate for inclusion in establishing rates or in a separate surcharge.

In April 2024, the federal Judicial Panel on Multidistrict Litigation approved the consolidation of approximately 500 separate cases against multiple defendant manufacturers into a single multi-district civil class action lawsuit (“MDL”) known as Aqueous Film-Forming Foams (“AFFF”) Products Liability Litigation MDL No. 2873 (the “AFFF MDL”). The AFFF MDL was filed in the U.S. District Court for the District of South Carolina (the “Court”) and is intended to resolve claims associated with PFAS contamination in water systems from the manufacture and widespread use of AFFF, which is believed to be a significant source of PFAS contamination in water systems. AFFF containing PFAS (and until 2002, perfluorooctanoic acid, a related compound) was widely used in fire suppression systems, firefighting vehicles, and at fire training facilities nationwide. The Company is in the class of plaintiffs in the AFFF MDL, and settlement talks continue to progress with several defendants. Any settlement reached in the AFFF MDL will be subject to the final approval of the Court. There can be no assurance as to the outcome of the AFFF MDL, including any decision or resolution thereof, timing, or the ultimate amounts that may be realized, if any.

### Lead and Copper Rule Improvements

In October 2024, the EPA announced a final rule requiring drinking water systems to identify and replace lead pipes within ten years. In accordance with the 2021 Lead and Copper Rule Revision and in connection with the 2024 Lead and Copper Rule Improvements, the Company has conducted an inventory of its pipes. The inventory has been substantially completed and found no lead pipes in our water systems. While the Company is evaluating the full impact of this new rule, we do not believe it will have a material impact on our results of operations.

### Infrastructure Investment

Capital expenditures for infrastructure investment are a component of the rate base on which our regulated utility subsidiaries are allowed to earn an equity rate of return. Capital expenditures for infrastructure provide a basis for earnings growth by expanding our “used and useful” rate base, which is a component of our permitted return on investment and revenue requirement. We are generally able to recover a rate of return on these capital expenditures (return on equity and debt), together with debt service and certain operating costs, through the rates we charge.

We have an established capital improvement plan to make targeted capital investments to repair and replace existing infrastructure as needed, address operating redundancy requirements, improve our overall financial performance and expand our infrastructure in areas where growth is occurring.

Our capital improvement plan is evidenced by our growth in rate base. Our estimated rate base as of December 31, 2024 was $212.5 million, an increase of $95.5 million or 82% from our rate base included in our 2019 general rate case (Decision No. 78644). Estimated rate base for 2024 includes all investments in plant as well as estimated post-test year plant as part of the 2024 rate case application for our GW-Santa Cruz and GW-Palo Verde utilities, including our Southwest Plant and estimated 2025 investments.

### Production and Treatment Costs

Our water and wastewater service requires significant production resources and therefore results in significant production costs. Although we are permitted to recover these costs through the rates we charge, regulatory lag can decrease our margins and earnings if production costs or other operating expenses increase significantly before we are able to recover them through increased rates. Our most significant costs include labor, chemicals used to treat water and wastewater, and power used to operate pumps and other equipment. Power and chemical costs can be volatile. However, we employ a variety of technologies and methodologies to minimize costs and maximize operational efficiencies.

### Weather and Seasonality

Our ability to meet the existing and future water demands of our customers depends on the availability of an adequate supply of water. Drought, overuse of sources of water, the protection of threatened species or habitats, or other factors may limit the availability of ground and surface water.

Also, customer usage of water and recycled water is affected by weather conditions, particularly during the summer. Our water systems generally experience higher demand in the summer months due to the warmer temperatures and increased

-23- usage by customers for irrigation and other outdoor uses. However, summer weather that is cooler or wetter than average generally suppresses customer water demand and can have a downward effect on our operating revenue and operating income. Conversely, when weather conditions are extremely dry, our business may be affected by government-issued drought-related warnings and/or water usage restrictions that would artificially lower customer demand and reduce our operating revenue.

The limited geographic diversity of our service areas makes the results of our operations more sensitive to the effect of extreme weather patterns. The second and third quarters of the year are generally those in which water service revenue and wastewater service revenue are highest. For additional information and risks associated with weather and seasonality, see “Risk Factors,” included in Part I, Item 1A of the 2024 Form 10-K.

### Access to and Quality of Water Supply

In many areas of Arizona (including certain areas that we service), water supplies are limited and, in some cases, current usage rates exceed sustainable levels for certain water resources. We currently rely predominantly on the pumping of groundwater and the generation and delivery of recycled water for non-potable uses to meet future demands in our service areas. At present, groundwater (and recycled water derived from groundwater) is the primary water supply available to us. In addition, regulatory restrictions on the use of groundwater and the development of groundwater wells, lack of available water rights, drought, overuse of local or regional sources of water, protection of threatened species or habitats, or other factors, including climate change, may limit the availability of ground or surface water. We believe that we have an adequate supply of water to service our current demand and growth for the foreseeable future in our service areas. For additional information and risks associated with the access to and quality of water supply, see “Risk Factors,” included in Part I, Item 1A of the 2024 Form 10-K.

### Rate Regulation Updates

In December 2024, the ACC approved a policy statement (the “Formula Rate Policy Statement”) allowing for Formula Rate Plans (“Formula Rates”) in future rate cases. Formula Rates generally enable utilities to adjust their rates on a semi-regular basis–often annually–based on a pre-approved formula related to specific cost inputs. The Company believes that Formula Rates benefit both customers and utilities by allowing for smaller, more predictable changes in rates for customers as well as minimizing the “regulatory lag” by allowing utilities to recover (or pass back to customers) costs more promptly and invest in infrastructure more efficiently. Utilities with approved Formula Rates will be required to have a full rate case before the ACC at least every five years, unless an alternative schedule is established.

On March 5, 2025, GW-Santa Cruz and GW-Palo Verde each filed a general rate case application with the ACC for water and wastewater rates, respectively. The GW-Santa Cruz and GW-Palo Verde rate case is based on a test year ending December 31, 2024, with updates for changes in post-test year plant. The rate case includes a request for rate increases that, if approved by the ACC, would result in a net annual revenue increase of approximately $6.5 million, to be implemented with the first phase beginning in May 2026 and the second phase in January 2027. The requested rate increases would reflect a proposed resolution of matters relating to the Company’s Southwest Plant with the ACC, including recovery of the Company’s investment and premature revenue collection with respect to the Southwest Plant. The Company also proposed the use of Formula Rates to address revenue increases in the future, that if approved, would allow costs and investments to be updated annually in a smaller, more gradual fashion.

Like all of its rate case proceedings, there can be no assurance that the ACC will approve the Company’s requests, including for Formula Rates, during the proceedings, and the ACC could take other actions as a result of a rate case or Formula Rate proposal. Further, it is possible that the ACC may determine to decrease future rates, whether as a result of the resolution of matters relating to the Company’s Southwest Plant or otherwise. There can also be no assurance as to the timing of when any approved rate increase (if any) would go into effect.

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The following table describes current rate case actions as applicable for each of our regulated utilities (in millions):

| Company Approved Rate Cases | Approved Return on Equity | Approved Incremental Annual Revenue(1) ($) | Filing Date | ACC Decision # | Rates Effective |
| --- | ---: | ---: | --- | ---: | --- |
| GW-Santa Cruz(2) | 9.20% | 1.2 | July 22, 2020 | 78644 | July 01, 2022 |
| GW-Palo Verde(2) | 9.20% | 0.7 | July 22, 2020 | 78644 | July 01, 2022 |
| GW-Belmont(2) | 9.20% | 0.2 | July 22, 2020 | 78644 | July 01, 2022 |
| GW-Turner(2) | 9.20% | 0.1 | July 22, 2020 | 78644 | July 01, 2022 |
| GW-Saguaro(3) | 9.60% | 0.4 | June 27, 2023 | 79383 | July 01, 2024 |
| GW-Farmers(4) | 9.60% | 1.1 | June 27, 2024 | 80695 | May 01, 2025 |
| **Pending Rate Cases** |  |  |  |  |  |
| GW-Santa Cruz(5) | In process | In process | March 5, 2025 | In process | In process |
| GW-Palo Verde(5) | In process | In process | March 5, 2025 | In process | In process |

(1) Approved incremental annual revenue represents the aggregate annual revenue increase following the final phase-in period. To the extent that the number of active service connections has increased and continues to increase from a rate case’s test year levels, the additional revenues may be greater than the amounts set forth above. On the other hand, if active connections decrease or the Company experiences declining usage per customer, the Company may not realize all of the anticipated revenues.

(2) The final phase-in of rates under this rate case was effective January 1, 2024.

(3) The first increase for GW-Saguaro was effective July 1, 2024. The subsequent four increases will be effective on January 1 of each subsequent year. The majority of the revenue increase was phased in on January 1, 2025.

(4) Rates are to be phased-in over three periods, starting with 50% of the increase effective on May 1, 2025 and subsequent 25% portions of the increase effective November 1, 2025 and May 1, 2026.

(5) In March 2025, the Company filed a general rate case application with the ACC related to its GW-Santa Cruz and GW-Palo Verde utilities. The GW-Santa Cruz and GW-Palo Verde rate case is based on a test year ending December 31, 2024, with updates for changes in post-test year plant. A procedural schedule has been set, with testimony expected to commence in the fourth quarter of 2025.

For a full summary of the Company’s current regulatory activity, including other approved details of recent rate cases, refer to Note 3 – “Regulatory Matters” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report.

### Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024

The Company is not organized around a specific product or service, geographic region, or regulatory environment. Refer to Note 17 — “Business Segment Information” of the Notes to the Condensed Consolidated Financial Statements(unaudited) included in Part I, Item 1 of this report for additional segment information.

Financial and operational data for the three months ended March 31, 2025 and 2024 is summarized in the following table (in thousands, except for share amounts):

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|  | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) 2025 vs. 2024 $% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $12,457 | $11,610 | $847 | 7.3% |
| Operating expenses | 11,202 | 10,343 | (859) | (8.3)% |
| Operating income | 1,255 | 1,267 | (12) | (0.9)% |
| Total other expense | (481) | (326) | (155) | (47.5)% |
| Income before income taxes | 774 | 941 | (167) | (17.7)% |
| Income tax expense | (183) | (250) | 67 | 26.8% |
| Net income | $591 | $691 | $(100) | (14.5)% |
| Basic earnings per common share | $0.02 | $0.03 | $(0.01) | (33.3)% |
| Diluted earnings per common share | $0.02 | $0.03 | $(0.01) | (33.3)% |

**Revenue –** Operating revenue is substantially derived from contracts with customers to provide regulated water, wastewater, and recycled water service based upon tariff rates approved by the ACC. Regulated service revenue consists of amounts billed to customers based on approved fixed monthly fees and consumption based fees, as well as unbilled revenue, which is estimated revenue from the last meter reading date to the end of the accounting period utilizing historical customer data recorded. Unregulated revenue represents revenue that is not subject to the ratemaking process of the ACC. Unregulated revenue (if any) is primarily related to the revenue recognized on a portion of ICFA funds received.

The following table summarizes revenue for the three months ended March 31, 2025 and 2024 (in thousands):

| Water service | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) 2025 vs. 2024 $% |  |
| --- | ---: | ---: | ---: | ---: |
| Basic charge | $3,508 | $3,383 | $125 | 3.7% |
| Consumption | 2,346 | 1,723 | 623 | 36.2% |
| Other | 126 | 120 | 6 | 5.0% |
| Total water service | 5,980 | 5,226 | 754 | 14.4% |
| Wastewater and recycled water service |  |  |  |  |
| Basic | 6,205 | 6,178 | 27 | 0.4% |
| Consumption | 193 | 121 | 72 | 59.5% |
| Other | 79 | 85 | (6) | (7.1)% |
| Total wastewater and recycled water service | 6,477 | 6,384 | 93 | 1.5% |
| Total regulated revenue | 12,457 | 11,610 | 847 | 7.3% |
| Total revenue | $12,457 | $11,610 | $847 | 7.3% |
| Active water connections | 36,130 | 34,715 | 1,415 | 4.1% |
| Active wastewater connections | 29,033 | 27,736 | 1,297 | 4.7% |
| Total active connections | 65,163 | 62,451 | 2,712 | 4.3% |
| Consumption (in million gallons) |  |  |  |  |
| Water service | 836,122 | 673,228 | 162,894 | 24.2% |
| Recycled water | 110,084 | 68,987 | 41,097 | 59.6% |

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The increase in regulated revenue for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily attributable to the organic growth in active water and wastewater connections, increased water and recycled water consumption and higher rates for GW-Saguaro, resulting from the GW-Saguaro general rate case, effective July 2024. The increased consumption was predominantly driven by the increase in active connections and higher usage from irrigation, construction and commercial customers.

**Operating Expenses –** The following table summarizes operating expenses for the three months ended March 31, 2025 and 2024 (in thousands):

|  | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) 2025 vs. 2024 $% |  |
| --- | ---: | ---: | ---: | ---: |
| Personnel costs - operations and maintenance | $1,340 | $1,293 | $(47) | (3.6)% |
| Utilities, chemicals and repairs | 1,032 | 791 | (241) | (30.5)% |
| Other operations and maintenance expenses | 1,315 | 1,200 | (115) | (9.6)% |
| Total operations and maintenance expense | 3,687 | 3,284 | (403) | (12.3)% |
| Personnel costs - general and administrative | 2,195 | 2,201 | 6 | 0.3% |
| Professional fees | 467 | 451 | (16) | (3.5)% |
| Other general and administrative expenses | 1,525 | 1,473 | (52) | (3.5)% |
| Total general and administrative expense | 4,187 | 4,125 | (62) | (1.5)% |
| Depreciation and amortization | 3,328 | 2,934 | (394) | (13.4)% |
| Total operating expenses | $11,202 | $10,343 | $(859) | (8.3)% |

*Operations and Maintenance –* Operations and maintenance expenses primarily consist of personnel costs, production costs (primarily chemicals and purchased electrical power), maintenance costs, and property tax.

Higher utilities, chemicals and repairs were primarily due to increased quantities of chemicals and power purchased to operate pumps and other related equipment as a result of increased consumption.

The increase in other operations and maintenance expenses was primarily driven by higher contract IT and labor services as a result of contracts that began in the fourth quarter of 2024.

*General and Administrative –* General and administrative expenses primarily consist of the day-to-day expenses of office operations, personnel costs, legal and other professional fees, insurance, rent, and regulatory fees. General and administrative expenses were up slightly by approximately $62,000 or 1.5%.

*Depreciation and amortization* - The increase for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was substantially attributable to an increase in depreciable fixed assets as well as additional amortization from new leased vehicles and office space in the three months ended March 31, 2025 compared to the same period in the prior year.

**Other Expense –** The increase in other expense was substantially attributable to lower income associated with Buckeye growth premiums of $0.2 million that resulted from fewer new meter connections in the area for the three months ended March 31, 2025 compared to the same period in 2024. In addition, the Company had higher net interest expense of $0.1 million offset by higher AFUDC-Equity of $0.1 million. Refer to Note 18 — “Other, Net” of the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this report for additional information regarding the Buckeye growth premiums.

**Income Tax Expense –** The primary driver for the decrease in income tax expense was lower pre-tax income for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

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### Liquidity and Capital Resources

The Company’s capital resources are primarily provided by internally generated cash flows from operations, debt and equity financing and certain government grants. External debt financing is provided primarily through the issuance of long-term debt or utilization of the Company’s $20.0 million Revolver. Additionally, its regulated utility subsidiaries receive advances and contributions from customers, home builders, and real estate developers to partially fund construction necessary to extend service to new areas.

Significant sources of funds from historical financing activity included:

### Sales of Equity Securities

The Company has historically completed multiple equity raises through sales of its common stock in both public and private offerings, including the recent transaction below.

On March 27, 2025, the Company completed a public offering of 3,220,000 shares of its common stock at a public offering price of $10.00 per share, which included 420,000 shares issued and sold to the underwriters following the exercise in full of their option to purchase additional shares of common stock. Certain existing stockholders, including certain directors and/or their affiliates, purchased an aggregate of 1,439,200 shares of common stock at the public offering price. The public offering resulted in approximately $32.2 million of gross proceeds or $30.8 million of net proceeds, after deducting underwriting discounts, commissions and offering expenses..

Refer to Note 9 - “Equity” of the Notes to the Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this report for additional details.

### WIFA Grant and Note

In December 2023, the Company’s GW-Farmers utility was awarded a $1.6 million grant from WIFA to replace manual read meters with advanced metering infrastructure smart meters.

In April 2024, the Company’s Global Water - Rincon Water Company, Inc. utility (now part of GW-Saguaro) entered into a loan agreement with WIFA for a 4.911% WIFA Note (the “WIFA Note”) in the aggregate principal amount of $2.4 million, maturing April 2044. The Company intends to use the proceeds from the WIFA Note to improve the utility’s infrastructure, including enhancements to the fluoride treatment system and other projects. A portion of the WIFA Note is forgivable, which the Company accounts for as CIAC.

### Revolver

The Company maintains a revolving credit facility with Northern Trust pursuant to a loan agreement entered into between the parties (as amended, the “Northern Trust Loan Agreement”). On April 14, 2025, the Company and Northern Trust entered into a sixth amendment to the Northern Trust Loan Agreement to, among other things, (i) extend the scheduled maturity date from July 1, 2026 to May 18, 2027 and (ii) increase the maximum principal amount available for borrowing under the Revolver from $15.0 million to $20.0 million. Pursuant to the Northern Trust Loan Agreement, the amounts outstanding bear interest, payable monthly, at a rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.00%. As of March 31, 2025, the Company had no outstanding borrowings under the Revolver.

### Senior Secured Notes

On June 24, 2016, the Company issued two series of senior secured notes with a total principal balance of $115.0 million at a blended interest rate of 4.55%. The Series A notes (the “Series A Notes”) carry a principal balance of $28.8 million and bear an interest rate of 4.38% over a twelve-year term, with the principal payment due on June 15, 2028. The Series B notes (the “Series B Notes”) carry a principal balance of $72.8 million and bear an interest rate of 4.58% over a 20-year term, with the principal payment due on June 15, 2036. Additionally, on January 3, 2024, the Company issued $20.0 million aggregate principal amount of 6.91% Senior Secured Notes due on January 3, 2034 (the “6.91% Notes” and collectively with the Series A Notes and the Series B Notes, the “Senior Secured Notes”). The 6.91% Notes accrue interest at 6.91% per annum from the date of issuance, payable semi-annually on January 3 and July 3 of each year, beginning on July 3, 2024, with a balloon payment due on January 3, 2034.

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The Company uses capital resources primarily to:

- fund operating costs;
- fund capital requirements, including construction expenditures;
- make debt and interest payments;
- fund acquisitions; and
- pay dividends.

The Company’s utility subsidiaries operate in rate-regulated environments in which the amount of new investment recovery may be limited. Such recovery will take place over an extended period of time because recovery through rate increases is subject to regulatory lag.

As of March 31, 2025, the Company has no notable near-term cash expenditures, other than for its capital improvement plan, the anticipated acquisition of seven isolated public water systems from the City of Tucson for a purchase price of $8.4 million and the principal payments for its Series B Notes in the amount of $1.9 million due in both June 2025 and December 2025. While specific facts and circumstances could change, the Company believes that with the cash on hand and the ability to draw on its $20.0 million Revolver, it will be able to generate sufficient cash flows to meet its operating cash flow requirements and capital maintenance needs, whilst remaining in compliance with its debt covenants for the next twelve months and beyond. In addition, the Company may choose to raise additional funds from time to time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures and/or strategic acquisitions for 2025 and beyond. However, there are currently no commitments in place for future financing, and there can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. Additional issuances of equity or convertible debt securities will result in dilution to our stockholders.

The Company maintains a monthly dividend program with dividends currently set at $0.02533 per share ($0.30396 per share annually). Although the Company expects that monthly dividends will be declared and paid for the foreseeable future, the declaration of any dividends is at the discretion of the Company’s board of directors and is subject to legal requirements and debt service ratio covenant requirements.

### Cash from Operating Activities

Cash flows provided by operating activities are used for operating needs and to meet capital expenditure requirements. The Company’s future cash flows from operating activities will be affected by economic utility regulation, growth in service connections, customer usage of water, compliance with environmental health and safety standards, production costs, weather, and seasonality.

For the three months ended March 31, 2025, net cash provided by operating activities totaled $7.5 million compared to $8.1 million for the three months ended March 31, 2024. The change in cash from operating activities was primarily driven by lower net income in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

### Cash from Investing Activities

The net cash used in investing activities totaled approximately $15.2 million for the three months ended March 31, 2025 compared to $5.8 million for the three months ended March 31, 2024. The $9.5 million increase in cash used in investing activities was the result of an increase in capital expenditures tied to the Company’s capital expenditure plan for 2025.

The Company continues to invest capital prudently in existing, core service areas where the Company is able to deploy the Total Water Management model as this includes any required maintenance capital expenditures and the construction of new water and wastewater treatment and delivery facilities. The projected capital expenditures and other investments are subject to periodic review and revision to reflect changes in economic conditions and other factors. As a result, the Company may adjust capital expenditures to correspond with any substantial changes in demand for new development in its service areas. Currently, the Company anticipates an elevated level of capital expenditures in 2025 relative to 2024.

### Cash from Financing Activities

The net cash provided by financing activities totaled $29.8 million for the three months ended March 31, 2025, an $14.0 million increase, as compared to the $15.8 million in cash provided by financing activities for the three months ended March 31, 2024. This increase was primarily driven by the $31.0 million issuance of common, net of issuance costs, in the three months ended

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March 31, 2025, compared to a $20.0 million issuance of senior secured notes and subsequent repayment of $2.3 million in Revolver borrowings in the three months ended March 31, 2024.

### Insurance Coverage

The Company carries various property, casualty, and financial insurance policies with limits, deductibles, and exclusions consistent with industry standards. However, insurance coverage may not be adequate or available to cover unanticipated losses or claims. The Company is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance maintained. Such losses could have a material adverse effect on the Company’s short-term and long-term financial condition and the results of operations and cash flows.

### Debt Covenants

The Company’s Senior Secured Notes and Revolver (collectively, the “debt securities”) require the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00. Consolidated EBITDA is calculated as net income plus depreciation and amortization, taxes, interest and other non-cash charges net of non-cash income. The debt securities also contain a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25. Further, the foregoing covenants are subject to various qualifications and limitations as set forth in each of the debt securities’ respective agreements. The debt securities are subject to certain customary events of default after which they could be declared due and payable if not cured within the grace period or, in certain circumstances, could be declared due and payable immediately. As of March 31, 2025, the Company was in compliance with its financial debt covenants under the Senior Secured Notes and the Northern Trust Loan Agreement.

### Contractual Obligations and Off-Balance Sheet Arrangements

A summary of contractual obligations is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Contractual Obligations” of our 2024 Form 10-K. There have been no material changes in our reported contractual obligations from those disclosed in our 2024 Form 10-K.

As of March 31, 2025, the Company did not have any off-balance sheet arrangements.

### Critical Accounting Estimates

A summary of our critical accounting estimates is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of our 2024 Form 10-K. There were no material changes made as of March 31, 2025.

## Controls and procedures

As filed, 1,465 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2025, the disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

#### Changes in Internal Control over Financial Reporting

There was no material change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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## Risk factors

As filed, 241 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” included in Part I, Item 1A of the 2024 Form 10-K. There have been no material changes to such risk factors.

Filed May 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001434728-25-000169. Last ingested by Listed: Nov 3, 2026, 21:57 ET. No prices; not investment advice.