Why Global Water Resources, Inc. (NASDAQ:GWRS) Looks Like A Quality Company

Water is essential, and in the arid Southwest, utilities like Global Water Resources, Inc. (GWRS) thrive as critical infrastructure providers. With a focus on regulated water and wastewater services in Arizona, GWRS has positioned itself as a defensive play with steady growth opportunities. Let’s unpack what makes this company a compelling investment.

Financial Resilience in a Volatile Market

Despite a challenging 2024, GWRS demonstrated operational discipline. Regulated revenue grew 4.9% to $52.7 million, driven by organic connections and rate adjustments, including the GW-Saguaro rate case finalized in mid-2024. While total revenue dipped 0.6%, this was due to the absence of one-time non-recurring revenue from infrastructure deals in 2023. The real story lies in the adjusted metrics: adjusted EBITDA rose 5.2% to $26.7 million, and adjusted net income increased 2% to $6.3 million.

This consistency is reflected in the dividend policy. GWRS raised its dividend in late 2024 to an annualized $0.30396 per share and again in early 2025. A 27.5% drop in net income might worry investors, but it’s attributable to the prior year’s one-time gains—meaning the core business remains robust.

Operational Growth: Connections and Capital

GWRS’s 4.4% rise in active service connections to 64,520 underscores organic demand. The Phoenix metro area’s projected 6.8% increase in single-family housing permits in 2025 (to ~29,652 permits) suggests continued residential growth. Meanwhile, capital expenditures hit $32.3 million in 2024, funding upgrades like the City of Maricopa water security project. This investment aligns with Arizona’s population growth trajectory—expected to reach 5.8 million by 2030—bolstering long-term demand.

Strategic Rate Cases and Acquisitions

Regulatory tailwinds are a key differentiator. In early 2025, GWRS filed two major rate cases:
1. The GW-Farmers rate case seeks $1.1 million in annualized revenue increases, phased in by 2026.
2. The GW-Santa Cruz and GW-Palo Verde case aims for $6.5 million in annualized increases by 2027.

Both are unanimous settlements, reducing regulatory risk. Additionally, the $2.2 million acquisition of seven isolated water systems in Pima County—approved in early 2025—expands GWRS’s footprint, adding ~2,200 connections. Management is also eyeing further acquisitions in Arizona’s Sun Corridor, signaling a disciplined growth strategy.

A Conservative Balance Sheet and Regulatory Tailwinds

GWRS’s conservative financials are a plus. With debt-to-equity at ~0.6x (as of 2024), the company maintains flexibility to fund growth without over-leveraging. Arizona’s 1.4% annual job growth through 2032 supports sustained demand, while the Arizona Corporation Commission’s (ACC) history of approving rate cases (e.g., GW-Saguaro) bodes well for future filings.

Risks to Consider

• Regulatory Delays: While rate cases are settled, ACC approvals could still lag, impacting revenue timing.
• Economic Downturn: A housing slowdown or interest rate spike could pressure capital projects.

Conclusion: A Steady Bet on Water Infrastructure

GWRS’s regulated model, organic and acquisition-fueled growth, and strong balance sheet position it as a quality utility play. Key metrics:
- Adjusted EBITDA growth: 5.2% in 2024.
- Service connections: 4.4% annual growth, with ~2,200 new connections from acquisitions.
- Rate case pipeline: $7.6 million in total requested increases, reflecting regulatory support.

With Arizona’s population set to grow by over 1 million people by 2040, GWRS is well-positioned to capitalize on infrastructure needs. The dividend hike and focus on regulated returns suggest management prioritizes shareholder value. While risks exist, GWRS’s steady execution and defensive profile make it a buy for investors seeking stability in a volatile market.

In short, GWRS isn’t a high-flying stock—it’s a reliable utility play in a water-scarce region with long-term growth drivers. For income-focused investors, this looks like a quality buy.