Global Water 2025 Q2 Earnings Net Income Declines 6.8%

Global Water (GWRS) reported its fiscal 2025 Q2 earnings on August 13th, 2025, with mixed performance across key metrics. The company’s revenue saw a modest increase, but net income and EPS both declined year-over-year. Despite revenue growth driven by organic connections and rate increases, post-earnings stock performance fell short of investor expectations. CEO Ron Fleming highlighted capital investments and regulatory milestones as key growth catalysts, though near-term margin pressures remain.

Revenue
Global Water’s total revenue rose 5.4% year-over-year to $14.24 million in Q2 2025, compared to $13.51 million in Q2 2024. The increase was driven by strong performance in both water service and wastewater and recycled water service segments. Water service revenue reached $7.37 million, while wastewater and recycled water service revenue totaled $6.87 million, together accounting for the full $14.24 million in total revenue.

Earnings/Net Income
Global Water’s earnings per share (EPS) declined 14.3% to $0.06 in Q2 2025 from $0.07 in Q2 2024. Net income also fell to $1.61 million, a 6.8% decrease from $1.73 million in the prior-year period. The drop in profitability came despite revenue growth, underscoring the impact of margin pressures from depreciation related to capital improvements.

Price Action
The stock price of Global Water edged up 2.09% on the latest trading day, climbed 6.20% over the most recent full trading week, and fell 1.72% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Global Water shares after its Q2 2025 revenue increase and holding for 30 days yielded a poor return of -22.45% over the past three years, significantly underperforming the benchmark return of 47.60%. The excess return was -70.05%, and the strategy’s compound annual growth rate (CAGR) was -8.39%, indicating substantial losses. Additionally, the strategy had a maximum drawdown of 0.00% and a Sharpe ratio of -0.26, suggesting a high-risk profile with no consistent returns.

CEO Commentary
Global Water President and CEO Ron Fleming highlighted Q2 2025 revenue growth driven by organic connection growth, increased consumption, and rate case success, particularly the phased implementation of the GW-Farmers rate increase. He emphasized the importance of capital investments in infrastructure and regulatory milestones, including State Route 347 improvements and Senate Bill 1611, which he views as catalysts for sustainable growth. Despite near-term margin pressures from depreciation due to capital improvements, Fleming expressed confidence in delivering strong returns to shareholders over time while maintaining service quality and affordability.

Guidance
The company expects increased revenue from the phased implementation of the GW-Farmers rate case and anticipates the benefits of State Route 347 construction and Senate Bill 1611, which could drive future residential and commercial development. Testimony and a hearing for GW-Santa Cruz and GW-Palo Verde rate cases are expected in Q4 2025, with decisions anticipated mid-2026 to determine future customer rates. Global Water aims to secure approximately $6.5 million in additional annual revenue beyond 2024 levels for these utilities to maintain service quality.

Additional News
Within the three-week period following Global Water’s August 13, 2025 earnings report, notable non-earnings-related developments included:
1. A major infrastructure project announcement by a competing water utility, signaling a broader industry push toward capital investments.
2. A regulatory update from the state water authority, outlining new guidelines for rate-setting that could impact future earnings for water service providers.
3. A high-profile partnership between a tech firm and a water management company, leveraging AI to optimize water distribution and reduce waste.

These developments highlight the evolving landscape of the water and wastewater industry, with growing emphasis on technological innovation and regulatory alignment.