Global Water 2025 Q3 Earnings Revenue Grows 8.4% as Net Income Falls 41.3%

Global Water (GWRS) reported Q3 2025 results showing revenue growth but a sharp decline in net income. The company’s shares fell post-earnings amid mixed market reactions. Management highlighted strategic acquisitions and rate increases as key drivers for top-line expansion while cautioning about near-term margin pressures.

Revenue

Total revenue rose 8.4% to $15.52 million in Q3 2025, driven by the acquisition of seven Tucson Water systems, organic connection growth, and rate hikes. The company added 6.6% in active connections year-over-year, reaching 68,130, reflecting strong demand in its Phoenix and Tucson service areas.

Earnings/Net Income

Net income plummeted 41.3% to $1.72 million ($0.06 EPS), dragged down by higher depreciation, interest, and operating costs tied to capital expenditures and integration of new systems. The EPS decline reflects operational challenges, particularly higher depreciation and interest costs, which outweighed revenue gains.

Post-Earnings Price Action Review

The strategy of buying GWRS shares post-earnings and holding for 30 days showed mixed performance over three years, yielding 18.78% total return. Quarterly returns varied, with Q3 2023 at 5.56%, Q4 2023 at -2.50%, Q1 2024 at 7.51%, and Q2 2024 at 3.25%. Volatility stemmed from market sentiment, industry trends, and regulatory uncertainties.

CEO Commentary

CEO Ron Fleming attributed revenue growth to the Tucson acquisition and rate cases, emphasizing long-term consolidation opportunities. He noted challenges like higher capital costs and Buckeye growth premium declines but expressed optimism about Arizona’s economic outlook, citing 1.3% annual employment growth through 2033.

Guidance

The GW-Santa Cruz and GW-Palo Verde rate case is expected to conclude by mid-2026, with a December 15 hearing. Management highlighted growth drivers such as Arizona’s Ag-to-Urbans program, Highway 347 infrastructure, and population projections for Phoenix (5.8 million by 2030). Rate case outcomes remain uncertain.

Additional News

1. Tucson Acquisition Integration: The July acquisition of seven Tucson Water systems is projected to contribute ~$1.5M annually, bolstering Southern Arizona operations.

2. Ag-to-Urban Program: Arizona’s new initiative allows agricultural landowners to convert water rights for urban development, creating long-term demand for GWRS services.

3. Highway 347 Expansion: The state’s infrastructure project is expected to accelerate construction and residential growth in Phoenix, aligning with GWRS’s organic connection expansion.

4. Dividend Update: A monthly dividend of $0.02533 per share was declared, maintaining shareholder returns despite near-term margin pressures.

Guidance Reiteration

The company reaffirmed its focus on rate case execution, infrastructure investment, and regional consolidation. While revenue growth is expected to continue, net income remains vulnerable to regulatory delays and capital intensity.

Risk Factors

Key risks include regulatory uncertainties in rate cases, rising interest costs, and macroeconomic headwinds affecting construction and housing permits. Management emphasized its ability to balance affordability and shareholder returns but warned of potential short-term volatility.