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What changed in Global Water Resources, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Global Water Resources, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+327 added−308 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in Global Water Resources, Inc.'s 2025 10-K

327 paragraphs added · 308 removed · 243 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

87 edited+16 added−14 removed84 unchanged
Biggest changeThe following table describes current rate case actions as applicable for each of our regulated utilities (in millions): Company Approved Return on Equity Approved Incremental Annual Revenue (1) ($) Filing Date ACC Decision # Rates Effective Approved Rate Cases GW-Santa Cruz (2) 9.2% 1.2 July 22, 2020 78644 July 1, 2022 GW-Palo Verde (2) 9.2% 0.7 July 22, 2020 78644 July 1, 2022 GW-Belmont (2) 9.2% 0.2 July 22, 2020 78644 July 1, 2022 GW-Turner (2) 9.2% 0.1 July 22, 2020 78644 July 1, 2022 GW-Saguaro (3) 9.6% 0.4 June 27, 2023 79383 July 1, 2024 GW-Farmers 9.6% 0.1 July 1, 2018 77269 July 1, 2019 Pending and Anticipated Rate Cases GW-Farmers (4) In process In process June 27, 2024 In process In process GW-Santa Cruz (5) — — Anticipated 2025 — Anticipated 2026 GW-Palo Verde (5) — — Anticipated 2025 — Anticipated 2026 (1) To the extent that the number of active service connections has increased and continues to increase from a rate case’s test year levels, the additional revenues may be greater than the amounts set forth above.
Biggest changeOnce a CC&N is granted, the utility falls under the ACC’s jurisdiction and must abide by the rules and laws under which a public service corporation operates. -14- Table of Contents The following table describes current rate case actions as applicable for each of our regulated utilities (in millions): Company Approved Return on Equity Approved Incremental Annual Revenue (1) ($) Filing Date ACC Decision # Rates Effective Approved Rate Cases GW-Santa Cruz (2) 9.20% 1.2 July 22, 2020 78644 July 1, 2022 GW-Palo Verde (2) 9.20% 0.7 July 22, 2020 78644 July 1, 2022 GW-Belmont (2) 9.20% 0.2 July 22, 2020 78644 July 1, 2022 GW-Turner (2) 9.20% 0.1 July 22, 2020 78644 July 1, 2022 GW-Saguaro (3) 9.60% 0.4 June 27, 2023 79383 July 1, 2024 GW-Farmers (4) 9.60% 1.1 June 27, 2024 80695 May 1, 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.
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.
We are committed to compliance with the NPDWR and are in process of complying with the first PFAS 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.
In those cases, we use well-head, centralized, point-of-use or blending treatment systems to ensure water quality meets potable standards. • Recycled Water. Recycled water is created by taking wastewater and applying advanced tertiary treatment (i.e., screening, biological reduction, and filtration and disinfection processes) to create a high quality, non-potable water source.
In those cases, we use well-head, centralized, point-of-use and/or blending treatment systems to ensure water quality meets potable standards. • Recycled Water. Recycled water is created by taking wastewater and applying advanced tertiary treatment (i.e., screening, biological reduction, and filtration and disinfection processes) to create a high quality, non-potable water source.
While we are not presently regulated to meet source control requirements, we maintain source control through various Codes of Practice that have been accepted by the ACC as enforceable limits on consumer discharges to sanitary sewer systems. We believe we maintain the necessary permits and approvals for the discharges from our water and wastewater facilities.
While we are not presently regulated to meet source control requirements, we maintain source control through various Codes of Practice that have been accepted by the ACC as enforceable limits on consumer discharges to sanitary sewer systems. We maintain the necessary permits and approvals for the discharges from our water and wastewater facilities.
We are also subject to various federal, state and local laws and regulations governing the storage of hazardous materials, the management and disposal of hazardous and solid wastes, discharges to air and water, the cleanup of contaminated sites, dam safety, fire protection service in the areas we serve and other matters relating to the protection of the environment, health and safety.
We are also subject to various federal, state and local laws and regulations governing the storage of hazardous materials, the management and disposal of hazardous and solid wastes, discharges to air and water, the cleanup of contaminated sites, fire protection service in the areas we serve and other matters relating to the protection of the environment, health and safety.
If we seek to extend our service outside Arizona, we will face competition from other regional or national water utilities for these opportunities. Although we believe we compete effectively in our regulated businesses, our competitors may have more resources and experience than we have and may therefore have a competitive advantage.
If we seek to extend our service outside Arizona, we will face competition from other regional or national water utilities for these opportunities. Although we compete effectively in our regulated businesses, our competitors may have more resources and experience than we have and may therefore have a competitive advantage.
Approximately 66% of the recycled water goes towards common area non-potable irrigation and for use at a local farm, which allows for the recycled water to naturally recharge into the aquifer. This reduces the total amount of limited ground or surface water that would otherwise be required within the community by almost 30%.
Approximately 56% of the recycled water goes towards common area non-potable irrigation and for use at a local farm, which allows for the recycled water to naturally recharge into the aquifer. This reduces the total amount of limited ground or surface water that would otherwise be required within the community by almost 30%.
Contaminants of emerging concern (“CECs”) are chemicals and other substances that have no regulatory standard but have been discovered in water or in the environment where they had not previously been detected, or were only present at insignificant levels. We believe CECs may form the basis for additional regulatory initiatives and requirements in the future.
Contaminants of emerging concern (“CECs”) are chemicals and other substances that have no regulatory standard but have been discovered in water or in the environment where they had not previously been detected, or were only present at insignificant levels. CECs may form the basis for additional regulatory initiatives and requirements in the future.
We believe competition for new service areas and acquisitions is based on relationships with municipalities and developers, experience in making acquisitions, the ability to finance and obtain regulatory approval, quality and breadth of products and services, the ability to integrate both water and wastewater service, and implement conservation practices throughout the service areas, price, speed, and ease of implementation.
Competition for new service areas and acquisitions is based on relationships with municipalities and developers, experience in making acquisitions, the ability to finance and obtain regulatory approval, quality and breadth of products and services, the ability to integrate both water and wastewater service, and implement conservation practices throughout the service areas, price, speed, and ease of implementation.
We believe investor-owned utilities that have greater access to capital are generally more capable of making mandated and other necessary infrastructure upgrades to both water and wastewater utilities, addressing increasingly stringent environmental and human health standards, and navigating a wide variety of regulatory processes.
Investor-owned utilities that have greater access to capital are generally more capable of making mandated and other necessary infrastructure upgrades to both water and wastewater utilities, addressing increasingly stringent environmental and human health standards, and navigating a wide variety of regulatory processes.
This technology reads each meter numerous times per day (often hourly) and continuously transmits the meter readings back to a centralized data base through a communications tower and cellular transmission units. The data is then presented to the utility, and is made available to customers, through a simple user interface.
This technology reads each meter numerous times per day (often hourly) and continuously transmits the meter readings back to a centralized database through a communications tower and cellular transmission units. The data is then presented to the utility, and is made available to customers, through a simple user interface.
In areas -6- Table of Contents of water scarcity, such as the arid western U.S., water recycling represents a relatively simple, inexpensive, and energy-efficient means of augmenting water supply as compared to transporting surface water, groundwater, or desalinated water from other locations.
In areas of water scarcity, such as the arid western U.S., water recycling represents a relatively simple, inexpensive, and energy-efficient means of augmenting water supply as compared to -7- Table of Contents transporting surface water, groundwater, or desalinated water from other locations.
See “Risk Factors—Business and Operational Factors— Inadequate water supplies and wastewater capacity could have a material adverse effect upon our ability to achieve the customer growth necessary to increase our revenue ,” included in Part I, Item 1A of this report, for additional information. -16- Table of Contents Technology We use sophisticated technology as a principal means of improving our margins.
See “Risk Factors—Business and Operational Factors—Inadequate water supplies and wastewater capacity could have a material adverse effect upon our ability to achieve the customer growth necessary to increase our revenue,” included in Part I, Item 1A of this report, for additional information. Technology We use sophisticated technology as a principal means of improving our margins.
ITEM 1. Business 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.
ITEM 1. Business Overview GWRI is a water resource management company that owns, operates, and manages thirty-nine water, wastewater, and recycled water public utility systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona.
Most of the GW-Santa Cruz and GW-Palo Verde infrastructure is less than twenty years old. GW-Santa Cruz and GW-Palo Verde provide water, wastewater and recycled water service, respectively, under an innovative public-private partnership memorandum of understanding with the City of Maricopa in Pinal County for approximately 278 square miles of its planning area.
Most of the GW-Santa Cruz and GW-Palo Verde infrastructure is less than twenty years old. GW- -11- Table of Contents Santa Cruz and GW-Palo Verde provide water, wastewater and recycled water service, respectively, under an innovative public-private partnership memorandum of understanding with the City of Maricopa in Pinal County for approximately 278 square miles of its planning area.
The comprehensive technology platform that we use includes supervisory control and data acquisition (SCADA), automated meter infrastructure, and geographical information system (GIS) technologies, which we use to map and monitor our physical assets and water resources on an automated, real-time basis with fewer people than the standard water utility model requires.
The comprehensive technology platform that we use includes supervisory control and data acquisition (SCADA), AMI, and geographical information system (GIS) technologies, which we use to map and monitor our physical assets and water resources on an automated, real-time basis with fewer people than the standard water utility model requires.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results of Operations—Weather and Seasonality,” included in Part II, Item 7 of this report, for additional information . -17- Table of Contents Human Capital Resources Our employees’ significant contributions through innovation and standardization are essential to our realized and continued success.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results of Operations—Weather and Seasonality,” included in Part II, Item 7 of this report, for additional information. Human Capital Resources Our employees’ significant contributions through innovation and standardization are essential to our realized and continued success.
Such additional groundwater and surface water would otherwise need to be treated and distributed in accordance with the Safe Drinking Water Act, which is costly and requires significant energy. • Gaining market and regulatory acceptance of broad utilization of recycled water through agreements with developers, strategic relationships with governments, academic research, and publication as industry experts, coupled with public education and community outreach campaigns. ◦ For example, the Company has public-private partnerships formally adopted through memorandums of understanding with the City of Maricopa, City of Casa Grande, City of Coolidge and Town of Sahuarita.
Such additional groundwater and surface water would otherwise need to be treated and distributed in accordance with the Safe Drinking Water Act, which is costly and requires significant energy. • Gaining market and regulatory acceptance of broad utilization of recycled water through agreements with developers, strategic relationships with governments, academic research, and publication as industry experts, coupled with public education and community outreach campaigns. ◦ For example, the Company has public-private partnerships formally adopted through memoranda of understanding and/or license/franchise agreements with the City of Maricopa, City of Casa Grande, City of Coolidge, and Town of Sahuarita.
In addition, the Company has won numerous awards for education, outreach and conservation in the water industry. • Incorporating automated processes, such as supervisory control and data acquisition, automated meter infrastructure and back-office technologies and “green” billing, which reduce operating costs, improve system availability and reliability, and improve customer satisfaction. ◦ Supervisory Control and Data Acquisition.
In addition, the Company has won numerous awards for education, outreach and conservation in the water industry. • Incorporating automated processes, such as supervisory control and data acquisition, AMI and back-office technologies and “green” billing, which reduce operating costs, improve system availability and reliability, and improve customer satisfaction. ◦ Supervisory Control and Data Acquisition .
Under our highly efficient Total Water Management model, we have achieved much lower per-unit potable water use rates than would be expected for average developments. In 2024, we used approximately 9,042 acre-feet of the annually available 22,900 acre-feet already permitted in the DAWS. In our West Valley service territory (GW-Belmont), we are seeking a DAWS in the future.
Under our highly efficient Total Water Management model, we have achieved much lower per-unit potable water use rates than would be expected for average developments. In 2025, we used approximately 9,501 acre-feet of the annually available 22,900 acre-feet already permitted in the DAWS. For our West Valley service territory (GW-Belmont), we are seeking a DAWS in the future.
To date, the Company has reused approximately 12.5 billion gallons of recycled water in the City of Maricopa. • Integrating and standardizing water, wastewater and recycled water infrastructure delivery systems using a separate recycled water distribution system of purple pipe to maximize effective and safe water reuse, conserve water resources, reduce energy, treatment and consumable costs (e.g., chemicals, filter media, other general materials, and supplies), provide operational efficiencies, and align the otherwise disparate objectives of water sales and conservation. ◦ In addition to the previous example, which relates to the increasing adoption and demand for recycled water usage, the separate recycled water distribution system of purple pipe, and the Company’s water conservation achievements, the Company believes that its model results in additional benefits from an -8- Table of Contents economic perspective due to lower use of power and consumables.
To date, the Company has reused approximately 19.3 billion gallons of recycled water in the City of Maricopa. • Integrating and standardizing water, wastewater and recycled water infrastructure delivery systems using a separate recycled water distribution system of purple pipe to maximize effective and safe water reuse, conserve water resources, reduce energy, treatment and consumable costs (e.g., chemicals, filter media, other general materials, and supplies), provide operational efficiencies, and align the otherwise disparate objectives of water sales and conservation. ◦ In addition to the previous example, which relates to the increasing adoption and demand for recycled water usage, the separate recycled water distribution system of purple pipe, and the Company’s water conservation achievements, the Company believes that its model results in additional benefits from an economic perspective due to lower use of power and consumables.
The application of the Total Water Management model has proven to be effective as a means of water scarcity management that promotes sustainable communities and helps achieve greater dwelling unit density in areas where the availability of sustainable water can be a key constraint on development.
The application -10- Table of Contents of the Total Water Management model has proven to be effective as a means of water scarcity management that promotes sustainable communities and helps achieve greater dwelling unit density in areas where the availability of sustainable water can be a key constraint on development.
Although there has not traditionally been a significant economic incentive or other reward for automation and resource efficiency in our industry, we believe our use of automation in lieu of labor, together with our emphasis on streamlined operations and conservation, will position us well for continued profitable growth and allow us to take advantage of future incentives or rewards that may be available to water utilities that are able to successfully enhance the use of renewable resources.
Although there has not traditionally been a significant economic incentive or other reward for automation and resource efficiency in our industry, we believe our use of automation in lieu of labor, together with our emphasis on streamlined operations and conservation, positions us well for continued profitable growth and allows us to take advantage of future incentives or rewards that may be available to water utilities that are able to successfully enhance the use of renewable resources.
The Company employs a series of technologies that allow for the automation of the billing and remittance process. The Company also provides its customers with over seven ways to pay, with the majority of options being integrated with the Company’s back-office technologies.
The Company employs a series of technologies that allow for the automation of the billing and remittance process. The Company also provides its customers with several ways to pay, with the majority of options being integrated with the Company’s back-office technologies.
The U.S. water industry has traditionally not taken advantage of advances in technology available to enhance revenue, increase operating efficiencies and decrease operating costs (including labor and energy costs). Areas of opportunity include automated meter infrastructure, systems management, and administrative functions, such as customer billing and remittance systems.
The U.S. water industry has traditionally not taken advantage of advances in technology available to enhance revenue, increase operating efficiencies and decrease operating costs (including labor and energy costs). Areas of opportunity include AMI, systems management, and administrative functions, such as customer billing and remittance systems.
Competition As an owner and operator of regulated utilities, we do not face competition within our existing service areas because Arizona law provides the holder of a CC&N for water and wastewater service with an exclusive right to provide that service within the ACC-designated service area, as against other public service corporations.
Competition As an owner and operator of regulated utilities, we do not face competition within our existing service areas because Arizona law provides the holder of a CC&N for water and wastewater service with an exclusive right to provide that service within the ACC-designated service area.
Approximately 89.6% of the active service connections are customers of the Company’s GW-Santa Cruz and GW-Palo Verde utilities, which are located within a single service area. U.S. Water Industry Overview U.S. Water Industry Areas of Business The U.S. water industry has two main areas of business: • Utility Service to Customers .
Approximately 87.3% of the active service connections are customers of the Company’s GW-Santa Cruz and GW-Palo Verde utilities, which are located within a single service area. U.S. Water Industry Overview U.S. Water Industry Areas of Business The U.S. water industry has two main areas of business: • Utility Service to Customers .
The comprehensive technology platform that we use includes automated meter infrastructure technology, which allows us to read water meters remotely rather than physically, improves water resources accounting, allows for identification of high water usage and water theft from disconnected meters.
The comprehensive technology platform that we use includes AMI technology, which allows us to read water meters remotely rather than physically, improves water resources accounting, allows for identification of high water usage and water theft from disconnected meters.
In combination with automated meter infrastructure, this suite of technology has minimized the use of human labor and reduced the potential for human error for the entire billing and remittance process, while providing better customer service. We believe our Total Water Management-based business model provides us with a significant competitive advantage in high growth, water scarce regions.
In combination with AMI, this suite of technology has minimized the use of human labor and reduced the potential for human error for the entire billing and remittance process, while providing better customer service. Our Total Water Management-based business model provides us with a significant competitive advantage in high growth, water scarce regions.
At present, we have obtained a DAWS in the Maricopa/Casa Grande service territory (GW-Santa Cruz) for approximately 22,900 acre-feet of water use. Over time, we anticipate GW-Santa Cruz will apply to increase the DAWS as sufficient increased demand is established in the area.
At present, we have obtained a DAWS in the Maricopa/Casa Grande region (GW-Santa Cruz) for two distinct service areas for approximately 22,900 acre-feet of water use in total. Over time, we anticipate GW-Santa Cruz will apply to increase the DAWS as sufficient increased demand is established in the area.
We offer a comprehensive compensation and benefits package to attract and retain top talent. In addition to competitive base wages, additional benefits include annual bonus opportunities, share-based compensation, Company matched 401(k) plan, healthcare and insurance benefits, flexible spending accounts and paid time off. As of December 31, 2024, we employed 122 full-time individuals and 3 part-time employees.
We offer a comprehensive compensation and benefits package to attract and retain top talent. In addition to competitive base wages, additional benefits include share-based compensation, Company matched 401(k) plan, healthcare and insurance benefits, flexible spending accounts and paid time off. As of December 31, 2025, we employed 126 full-time individuals and 3 part-time employees.
The service areas include approximately 111 square miles and provides water service to Maricopa County west of the Hassayampa River and to two small subdivisions in northern Scottsdale.
The service area includes approximately 111 square miles and provides water service to Maricopa County west of the Hassayampa River and to two small subdivisions in northern Scottsdale.
Water quality tests are conducted at subcontracted laboratory facilities in addition to providing continuous online instrumentation for monitoring parameters, such as turbidity and disinfectant residuals, and allowing for adjustments to chemical treatment based on changes in incoming water quality.
Water quality tests are conducted at contracted laboratory facilities in addition to providing continuous online instrumentation for monitoring parameters, such as turbidity and disinfectant residuals, and allowing for adjustments to chemical treatment based on changes in -12- Table of Contents incoming water quality.
The Company is the water, wastewater, and recycled water provider for the City of Maricopa, which currently has a population of approximately 75,000. A community of this size produces an approximate annual average of 3.9 million gallons of wastewater per day.
The Company is the water, wastewater, and recycled water provider for the City of Maricopa, which currently has a population of approximately 86,000. A community of this size produces an approximate annual average of 4.1 million gallons of wastewater per day.
Since many administrative and support activities can be efficiently centralized to gain economies of scale and sharing of best practices, companies that participate in industry consolidation have the potential to improve operating efficiencies, lower costs, and improve service at the same time. -7- Table of Contents Our Strategy We are a water resource management company that provides water, wastewater, and recycled water utility service.
Since many administrative and support activities can be efficiently centralized to gain economies of scale and sharing of best practices, companies that participate in industry consolidation have the potential to improve operating efficiencies, lower costs, and improve service at the same time. -8- Table of Contents Our Strategy We are a water resource management company that provides water, wastewater, and recycled water utility service, leading in Total Water Management practices, such as water scarcity management and advanced water recycling applications.
We believe our principal competitors for new service areas and acquisitions in Arizona are EPCOR Water Arizona Inc., Arizona Water Company, Central States Water Resources, NW Natural Water Company, LLC, Ullico Inc. and Liberty Utilities.
Our principal competitors for new service areas and acquisitions in Arizona are EPCOR Water Arizona Inc., Arizona Water Company, Central States Water Resources, NW Natural Water Company, LLC, Ullico Inc., Liberty Utilities, Community Water of Arizona and Voyager Water Company.
Our utilities currently possess the high-level regional permits that allow us to implement our business model; thus, we believe we are well-positioned for organic growth in our current service areas that are generally located in Arizona’s population growth corridors: Maricopa County, Pinal County and Pima County.
Revenue from our regulated utilities accounted for all of our total revenue in 2025. Our utilities currently possess the high-level regional permits that allow us to implement our business model; thus, we believe we are well-positioned for organic growth in our current service areas that are generally located in Arizona’s population growth corridors: Maricopa County, Pinal County and Pima County.
For every gallon of recycled water that is directly reused while already on land surface, the need to pump additional scarce groundwater and surface water is eliminated.
For every gallon of recycled water that is directly reused while already on land surface, the need to pump additional scarce groundwater and surface water is -9- Table of Contents reduced.
The Company has implemented automated meter infrastructure for 99% of its active customers with a substantial proportion of its remaining customers in the process of being, or planned to be, upgraded with such functionality. Currently, all meters in our Maricopa service areas allow for automated meter infrastructure.
The Company has implemented AMI for approximately 90% of its active customers with a substantial proportion of its remaining customers in the process of being, or planned to be, upgraded with such functionality. Currently, all meters in our Maricopa service areas allow for AMI.
Reading meters at this frequency provides many benefits to both the utility and the customer. With this data, we can better model demand usage, identify system water loss, identify leaks on the customer side of the meter, monitor for abnormal usage and present interval, hourly, daily, weekly or monthly usage back to the customers. ◦ Back-Office Technologies and Paperless Billing.
With this data, we can better model demand usage, identify system water loss, identify leaks on the customer side of the meter, monitor for abnormal usage and present interval, hourly, daily, weekly or monthly usage back to the customers. ◦ Back-Office Technologies and Paperless Billing .
GW-Hassayampa currently has no active service connections; however, its service area lies directly in the expected path of future growth in the far west valley of metropolitan Phoenix, which we believe should provide opportunities for growth once development commences in this area. GW-Belmont served 622 active service connections as of December 31, 2024.
GW-Hassayampa has two active service connections as of December 31, 2025, and its service area lies directly in the expected path of future growth in the far west valley of metropolitan Phoenix, which we believe should provide opportunities for growth once development commences in this area. GW-Belmont served 662 active service connections as of December 31, 2025.
Serving more than 111,000 people in approximately 36,000 homes within the Company’s 409 square miles of ACC-designated service areas as of December 31, 2024, the Company provides water and wastewater utility service under the regulatory authority of the ACC.
Serving more than 121,000 people in approximately 40,000 homes within the Company’s 418 square miles of ACC-designated service areas as of December 31, 2025, the Company provides water and wastewater utility service under the regulatory authority of the ACC.
We generally expect to recover expenses associated with compliance for environmental and health and safety standards through rate 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 Safe Drinking Water Act The federal Safe Drinking Water Act and regulations promulgated thereunder establish minimum national quality standards for drinking water.
We generally expect to recover expenses associated with compliance for environmental and health and safety standards through rate 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.
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 Consolidated Financial Statements included in Part II, Item 8 of this report.
For a full summary of the Company’s current regulatory activity, including other approved details of recent rate cases, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations—Rate Regulation Updates”, included in Part II, Item 7 of this report and Note 3 — “Regulatory Matters” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report.
GW-Palo Verde served 28,721 active service connections as of December 31, 2024 and revenue from GW-Palo Verde represented approximately 50.7% and 47.9% of our total revenue for the years ended December 31, 2024 and 2023, respectively. The GW-Santa Cruz and GW-Palo Verde service areas include approximately 207 square miles, which we believe provide further opportunities for growth.
GW-Palo Verde served 29,727 active service connections as of December 31, 2025 and revenue from GW-Palo Verde represented approximately 48.7% and 50.7% of our total revenue for the years ended December 31, 2025 and 2024, respectively. The GW-Santa Cruz and GW-Palo Verde service areas include approximately 207 square miles, which provide further opportunities for growth.
We operate in this region through GW-Santa Cruz and GW-Palo Verde, both of which we acquired in 2004. GW-Santa Cruz served 29,121 active service connections as of December 31, 2024 and revenue from GW-Santa Cruz represented -10- Table of Contents approximately 41.0% and 39.3% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
We operate in this region through GW-Santa Cruz and GW-Palo Verde, both of which we acquired in 2004. GW-Santa Cruz served 30,147 active service connections as of December 31, 2025 and revenue from GW-Santa Cruz represented approximately 40.2% and 41.0% of our total revenue for the years ended December 31, 2025 and 2024, respectively.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and proxy statements are accessible through our website, free of charge, as soon as reasonably practicable after these reports are filed electronically with, or furnished to, the SEC.
We electronically file with the SEC our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), proxy statements and the reports filed pursuant to Section 16(a) of the Exchange Act.
We believe we are a leader in Total Water Management practices, such as water scarcity management and advanced water recycling applications. Our long-term goal is to become one of the largest investor-owned operators of integrated water and wastewater utilities in areas of the arid western U.S., where water scarcity management is necessary for long-term economic sustainability and growth.
Our long-term goal is to become one of the largest investor-owned operators of integrated water and wastewater utilities in areas of the arid western U.S., where water scarcity management is necessary for long-term economic sustainability and growth.
GW-Turner served 962 residential and commercial irrigation customers as of December 31, 2024. Pima County We operate in this region through GW-Saguaro and GW-Farmers. We also formed GW-Ocotillo in 2023, in anticipation of the acquisition of water systems in this region from the City of Tucson.
GW-Turner served 962 residential and commercial irrigation customers as of December 31, 2025. Pima County We operate in this region through GW-Saguaro, GW-Farmers and GW-Ocotillo. We formed GW-Ocotillo for the purpose of acquiring water systems in this region from the City of Tucson, which we acquired in July 2025.
The ACC is comprised of five elected members, each serving a four-year term. -13- Table of Contents Companies that wish to provide water or wastewater service apply for a CC&N with the ACC, which, if granted, allows them to serve customers within a geographic area specified by a legal description of the property.
Companies that wish to provide water or wastewater service apply for a CC&N with the ACC, which, if granted, allows them to serve customers within a geographic area specified by a legal description of the property.
Each memorandum of understanding reflects the Company’s intent to deploy Total Water Management. The Company also has 154 ICFAs with landowners or developer entities that include requirements for usage of recycled water and other attributes that support the Company’s Total Water Management model.
Many of these agreements reflect the Company’s intent to deploy Total Water Management. The Company also has 149 ICFAs in effect with landowners or developer entities that include requirements for usage of recycled water and other attributes that support the Company’s Total Water Management model.
Although it is difficult to project the ultimate costs of complying with the above or other pending or future requirements, we do not expect current requirements under the Safe Drinking Water Act to have a material impact on our operations or financial condition, although it is possible new methods of treating drinking water may be required if additional regulations become effective in the future. -12- Table of Contents National Primary Drinking Water Regulations The NPDWR are legally enforceable primary standards and treatment techniques that apply to public water systems and are designed to limit the levels of contaminants in drinking water.
Although it is difficult to project the ultimate costs of complying with the above or other pending or future requirements, we do not expect current requirements under the Safe Drinking Water Act to have a material impact on our operations or financial condition, although it is possible new methods of treating drinking water may be required if additional regulations become effective in the future.
A summary description of our utilities at December 31, 2024 is set forth in the following table and described in more detail below: Company Date of Acquisition (A) or Formation (F) Service Provided Square Miles of Service Area (1) Active Service Connections Average Monthly Rate Per Service Connection PINAL COUNTY GW-Santa Cruz 2004 (A) Water 91 29,121 $ 62 GW-Palo Verde 2004 (A) Wastewater and Recycled Water 116 28,721 78 MARICOPA COUNTY GW-Hassayampa 2005 (F) Wastewater and Recycled Water 43 — — GW-Belmont 2006 (A) Water 111 622 155 GW-Turner 2018 (A) Water 7 962 84 PIMA COUNTY GW-Saguaro 2021 (A) Water 20 1,571 55 GW-Farmers 2023 (A) Water 21 3,494 29 GW-Ocotillo 2023 (F) Water — — — Total 409 64,491 (1) Certified areas may overlap in whole or in part for separate utilities.
A summary description of our utilities at December 31, 2025 is set forth in the following table and described in more detail below: Company Date of Acquisition (A) or Formation (F) Service Provided Square Miles of Service Area (1) Active Service Connections PINAL COUNTY GW-Santa Cruz 2004 (A) Water 91 30,147 GW-Palo Verde 2004 (A) Wastewater and Recycled Water 116 29,727 MARICOPA COUNTY GW-Hassayampa 2005 (F) Wastewater and Recycled Water 43 2 GW-Belmont 2006 (A) Water 111 662 GW-Turner 2018 (A) Water 7 962 PIMA COUNTY GW-Saguaro 2021 (A) Water 20 1,565 GW-Farmers 2023 (A) Water 21 3,510 GW-Ocotillo 2023 (F) Water 9 2,002 Total 418 68,577 (1) Certified areas may overlap in whole or in part for separate utilities.
Throughout the year, and particularly during typically warmer months, demand may vary with temperature, as well as the timing and overall levels of rainfall. In the event that temperatures during the typically warmer months are cooler than normal, or if there is more rainfall than normal, the customer demand for our water may decrease and therefore, adversely affect our revenue.
In the event that temperatures during the typically warmer months are cooler than normal, or if there is more rainfall than normal, the customer demand for our water may decrease and therefore, adversely affect -18- Table of Contents our revenue.
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.
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 service lines. As of December 31, 2025, the evaluation was substantially complete and no lead pipes were found in our water systems.
The ADEQ also regulates the clean closure requirements of facilities. The Maricopa County Environmental Services Department has delegated authority for overseeing ADEQ requirements in Maricopa County. The Pima County Department of Environmental Quality has delegated authority for overseeing ADEQ requirements in Pima County.
The Pima County Department of Environmental Quality has delegated authority for overseeing ADEQ requirements in Pima County.
Communities prefer the approach because it provides a partnering platform which promotes economic development, reduces their traditional dependence on bond financing and ensures long term water sustainability. Our competitive advantage facilitates the execution of our growth strategy.
Communities prefer the approach because it provides a partnering platform which promotes economic development, reduces their traditional dependence on bond financing and ensures long term water sustainability. Our competitive advantage facilitates the execution of our growth strategy. We believe our proven conservation methods lead to successful permitting for more connections in expanded and new service areas.
The DAWS covers approximately 5,300 acre-feet of water use, and in 2024, we pumped approximately 977 acre-feet. -15- Table of Contents Outside of Arizona’s Active Management Areas, the “adequate water supply” program requires a determination of whether there is an adequate water supply—similar to an assured water supply—but it does not necessarily foreclose development when the showing cannot be made.
Outside of Arizona’s Active Management Areas, the “adequate water supply” program requires a determination of whether there is an adequate water supply—similar to an assured water supply—but it does not necessarily foreclose development when the showing cannot be made.
Public water systems have until 2029 to implement solutions that reduce these PFAS if monitoring shows that drinking water levels exceed the applicable MCLs.
Public water systems must also provide the public with information on the levels of these PFAS in their drinking water beginning in 2027. Public water systems have until 2029 to implement solutions that reduce these PFAS if monitoring shows that drinking water levels exceed the applicable MCLs.
The Maricopa Association of Governments is the designated management authority for Section 208 of the Clean Water Act for Maricopa County and administers the requirements of the Regional Water Quality Management Plans and Amendments at the local level. -14- Table of Contents The ADEQ regulates water quality and permits water reclamation facilities, discharges of recycled water, re-use of recycled water and recharge of recycled water.
The Maricopa Association of Governments is the designated management authority for Section 208 of the Clean Water Act for Maricopa County and administers the requirements of the Regional Water Quality Management Plans and Amendments at the local level.
The City of Maricopa continues to grow, as demonstrated by our addition of 13,485 active service connections, which represents 6.1% annualized growth from December 2019 to December 2024. Development in the area is still considered to be affordable, with the median home value being $359,000 compared to $460,000 in the Phoenix Metro area.
The City of Maricopa continues to grow, as demonstrated by our addition of 9,008 active service connections, which represents 3.5% annualized growth from December 2021 to December 2025. Development in the area is still considered to be affordable, with the median home value being $346,350 compared to $450,000 in the Phoenix metropolitan area.
Unless the county government has voted to make the requirement mandatory, a development (outside of Active Management Areas) that cannot demonstrate access to an adequate water supply is generally required only to disclose this fact, although as a practical matter few developments have proceeded on this basis.
Unless the county government has voted to make the requirement mandatory, a development (outside of Active Management Areas) that cannot demonstrate access to an adequate water supply is generally required only to disclose this fact, although as a practical matter few developments have proceeded on this basis. -16- Table of Contents See “Risk Factors—Legal, Regulatory, and Legislative Factors—Our ability to expand into new service areas and to expand current water and wastewater service depends on approval from regulatory agencies.
The American Water Works Association estimates investment needs for buried drinking water infrastructure will total more than $1 trillion over the next 25 years, and the American Society of Civil Engineers expects the U.S. will need to find additional capital investments of up to $434 billion annually, in order to update and grow the nation’s drinking water and wastewater systems.
The American Society of Civil Engineers expects the U.S. will need to find additional capital investments of up to $99 billion annually for the next twenty years in order to update and grow the nation’s drinking water and wastewater systems.
In December 2024, we obtained a DAWS for part of our Pima County service territory (GW-Farmers), effective January 1, 2025.
In December 2024, we obtained a DAWS for part of our Pima County service territory (GW-Farmers), effective January 1, 2025. The DAWS covers approximately 5,300 acre-feet of water use, and in 2025, we pumped approximately 985 acre-feet.
Additionally, the ACC has statutory authority to oversee service quality and consumer complaints and approve or disapprove expansion of service areas.
Additionally, the ACC has statutory authority to oversee service quality and consumer complaints and approve or disapprove expansion of service areas. The ACC is comprised of five elected members, each serving a four-year term.
For additional information on the anticipated acquisition, refer to Note 2 – “Acquisitions” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report. GW-Saguaro served 1,571 active water connections as of December 31, 2024. The service area includes approximately 20 square miles of service area located in Sahuarita, Arizona.
For additional information on the completed acquisition, refer to Note 2 – “Acquisitions” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report. GW-Saguaro and GW-Farmers served 1,565 and 3,510 active water connections, respectively, in Sahuarita, Arizona and unincorporated Pima County, Arizona as of December 31, 2025.
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) Approved incremental annual revenue represents the aggregate annual revenue increase following the final phase-in period, which was effective January 1, 2024.
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 GW-Santa Cruz and GW-Palo Verde rate case will be based on a test year ending December 31, 2024 with updates for changes in post-test year plant.
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. Testimony commenced in the fourth quarter of 2025, and hearings are scheduled to begin in August 2026.
This represents an increase of sixteen employees, or 15% from December 31, 2023 due primarily to the hiring of additional employees throughout the organization as the company continues to grow. Currently, none of our employees participate in collective bargaining agreements, and we consider our employee relations to be good.
This represents an overall increase of four employees, or 3% from December 31, 2024 due primarily to hiring additional employees for the newly acquired water systems from the City of Tucson. Currently, none of our employees participate in collective bargaining agreements, and we consider our employee relations to be good.
The final rule requires that public water systems, such as the Company, must monitor for these PFAS and have three years to complete initial monitoring, followed by ongoing compliance monitoring. Public water systems must also provide the public with information on the levels of these PFAS in their drinking water beginning in 2027.
The EPA also finalized health-based, non-enforceable MCL goals for these PFAS. The final rule requires that public water systems, such as the Company, must monitor for these PFAS and have three years to complete initial monitoring, followed by ongoing compliance monitoring.
For homes connected to a community water system, approximately 80% are provided service by municipally-owned utilities. • Aging Infrastructure in Need of Significant Capital Expenditures . Water infrastructure in the U.S. is aging and requires significant investment and stringent focus on cost control to upgrade or replace aging facilities and to provide service to growing populations.
Municipally-owned utilities provide water and wastewater service for the vast majority of the U.S. population. For homes connected to a community water system, approximately 87% are provided service by municipally-owned utilities. • Aging Infrastructure in Need of Significant Capital Expenditures .
To access these reports, go to our website at www.gwresources.com . The foregoing information regarding our website is provided for convenience and the content of our website is not deemed to be incorporated by reference in this report filed with the SEC.
The foregoing information regarding our website is provided for convenience and the content of our website is not deemed to be incorporated by reference in this report filed with the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. Table of Contents
Our Total Water Management model, an integrated approach to the use of potable and non-potable water to manage the entire water cycle, both conserves water and maximizes its total economic value.
Recycled water can be delivered for all common area irrigation needs, as well as delivered direct to homes where it can be used for outdoor residential irrigation. Our Total Water Management model, an integrated approach to the use of potable and non-potable water to manage the entire water cycle, both conserves water and maximizes its total economic value.
We could also incur remedial costs in connection with any environmental contamination relating to our operations or facilities, releases or our off-site disposal of wastes.
For example, our water and wastewater treatment facilities store and use chlorine and other chemicals and generate wastes that require proper handling and disposal under applicable environmental regulations. We could also incur remedial costs in connection with any environmental contamination relating to our operations or facilities, releases or our off-site disposal of wastes.
Our utilities are regulated by the ACC , as described further under “—Regulation—Arizona Regulatory Agencies” below. As of December 31, 2024, our utilities collectively had 64,520 active service connections offering predictable rate-regulated cash flows. Revenue from our regulated utilities accounted for all of our total revenue in 2024.
Our Regulated Utilities We own and operate regulated water, wastewater, and recycled water utilities in communities principally located in metropolitan Phoenix and Tucson. Our utilities are regulated by the ACC , as described further under “—Regulation—Arizona Regulatory Agencies” below. As of December 31, 2025, our utilities collectively had 68,577 active service connections offering predictable rate-regulated cash flows.
However, 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. Aside from some rights to water through the Central Arizona Project, groundwater (and recycled water derived from groundwater) is the only water supply available to us.
Assured and Adequate Water Supply Regulations We intend to seek access to renewable water supplies as we grow our water resource portfolio. However, 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.
The ADWR regulates surface water extraction, groundwater withdrawal, designations and certificates of assured water supply, extinguishment of irrigation grandfathered water rights, groundwater savings facilities, recharge facilities, recharge permits, recovery well permits, storage accounts and well construction, abandonment or replacement.
The ADWR regulates surface water extraction, groundwater withdrawal, designations and certificates of assured water supply, extinguishment of irrigation grandfathered water rights, groundwater savings facilities, recharge facilities, recharge permits, recovery well permits, storage accounts and well construction, abandonment or replacement. -15- Table of Contents Within each regulatory organization, we have invested in developing cooperative relationships at all levels, from staff to executives to elected and appointed officials, and have adopted a proactive attitude toward regulatory compliance.
Each step is monitored and controlled in order that the stringent requirements for recycled water are continuously met. Recycled water generated by us meets Arizona’s Aquifer Water Quality Standards before it leaves the treatment facility and is recognized as Class A+, the highest quality of recycled water regulated by the ADEQ.
Recycled water generated by us meets Arizona’s Aquifer Water Quality Standards before it leaves the treatment facility and is recognized as Class A+, the highest quality of recycled water regulated by the ADEQ. -17- Table of Contents Recycled water can be used for irrigation, facilities cooling, and industrial applications and in a residential setting for toilet flushing and lawn watering.
Recycled water is highly treated and purified wastewater that is distributed through a separate distribution system of purple pipes for a variety of beneficial, non-potable uses. Recycled water can be delivered for all common area irrigation needs, as well as delivered direct to homes where it can be used for outdoor residential irrigation.
A key component of our water utility business is the use of recycled water. Recycled water is highly treated and purified wastewater that is distributed through a separate distribution system of purple pipes for a variety of beneficial, non-potable uses.
Capital expenditures and operating costs to comply with environmental mandates traditionally have been recognized by state public utility commissions as appropriate for inclusion in establishing rates.
Compliance with governmental regulations is of utmost importance to us, and considerable time and resources are spent ensuring compliance with all applicable federal, state and local laws and regulations. Capital expenditures and operating costs to comply with environmental mandates traditionally have been recognized by the ACC as appropriate for inclusion in establishing rates.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls after we cease to be a smaller reporting company that is a non-accelerated filer, investors could lose confidence in our financial information and the price of our common stock could decline.
Biggest changeIf our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls after we cease to be a smaller reporting company that is a non-accelerated filer, investors could lose confidence in our financial information and the price of our common stock could decline. -35- Table of Contents Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weakness or significant deficiency and management may not be able to remediate any such material weakness or significant deficiency in a timely manner.
In addition, governments or government agencies that regulate our operations may enact legislation or adopt new requirements that could have an adverse effect on our business, including: • restricting ownership or investment; • providing for the expropriation of our assets by the government through condemnation or similar proceedings; • providing for changes to water and wastewater quality standards; • requiring cancellation or renegotiation of, or unilateral changes to, agreements relating to our provision of water and wastewater service; -19- Table of Contents • changing regulatory or legislative emphasis on water conservation in comparison to other goals and initiatives; • promoting an increase of competition among water companies within our designated service areas; • requiring the provision of water or wastewater service at no charge or at reduced prices; • restricting the ability to terminate service to customers whose accounts are in arrears; • restricting the ability to sell assets or issue securities; • adversely changing tax, legal or regulatory requirements, including employment, property ownership or general business regulations; • changing environmental requirements and the imposition of additional requirements and costs on our operations; • changes in the charges applied to raw water abstraction; • changes in rate making policies; or • restrictions relating to water use and supply, including restrictions on use, increased offsetting groundwater replenishment obligations, changes to the character of groundwater rights and settlement of Native American claims.
In addition, governments or government agencies that regulate our operations may enact legislation or adopt new requirements that could have an adverse effect on our business, including: • restricting ownership or investment; • providing for the expropriation of our assets by the government through condemnation or similar proceedings; • providing for changes to water and wastewater quality standards; • requiring cancellation or renegotiation of, or unilateral changes to, agreements relating to our provision of water and wastewater service; • changing regulatory or legislative emphasis on water conservation in comparison to other goals and initiatives; • promoting an increase of competition among water companies within our designated service areas; • requiring the provision of water or wastewater service at no charge or at reduced prices; • restricting the ability to terminate service to customers whose accounts are in arrears; • restricting the ability to sell assets or issue securities; • adversely changing tax, legal or regulatory requirements, including employment, property ownership or general business regulations; • changing environmental requirements and the imposition of additional requirements and costs on our operations; • changes in the charges applied to raw water abstraction; • changes in rate making policies; or • restrictions relating to water use and supply, including restrictions on use, increased offsetting groundwater replenishment obligations, changes to the character of groundwater rights and settlement of Native American claims.
If we are unable to access adequate water supplies, such water shortage could adversely affect our business operations, results of operations, cash flows and financial position in a variety of other ways, which may include, but are not limited to, the following: • water rationing; • adverse changes to water supply mix, causing us to rely on more expensive purchased water; • increased operating costs; • increased risk of contamination to water systems due to the inability to maintain sufficient pressure; • increased capital expenditures for building pipelines to connect to alternative sources of supply, new wells to replace those that are no longer in service or are otherwise inadequate to meet the needs of customers and reservoirs and other facilities to conserve or reclaim water; and • regulatory authorities refusing to approve new service areas if an adequate water supply cannot be demonstrated and restricting new customer connections in existing service areas if there is not sufficient water.
If we are unable to access adequate water supplies, such water shortage could adversely affect our business operations, results of operations, cash flows and financial position in a variety of other ways, which may include, but are not limited to, the following: • water rationing; • adverse changes to water supply mix, causing us to rely on more expensive purchased water; -25- Table of Contents • increased operating costs; • increased risk of contamination to water systems due to the inability to maintain sufficient pressure; • increased capital expenditures for building pipelines to connect to alternative sources of supply, new wells to replace those that are no longer in service or are otherwise inadequate to meet the needs of customers and reservoirs and other facilities to conserve or reclaim water; and • regulatory authorities refusing to approve new service areas if an adequate water supply cannot be demonstrated and restricting new customer connections in existing service areas if there is not sufficient water.
The single-family housing market is affected by a number of national and regional economic factors, including: • interest rates and general levels of economic output; • levels of activity in the local real estate market; • the state of domestic credit markets, mortgage standards and availability of credit; • competition from other builders and other projects in the area and other states; • federal programs to assist home purchasers; • costs and availability of labor and materials; • government regulations affecting land development, home building and mortgage financing; • availability of financing for development and for home purchasers; • changes in the income tax treatment relating to real property ownership; • unexpected increases in development costs; • increased commute times and fuel costs that may adversely affect the desirability of outlying suburbs; • availability of, among other things, other utilities, adequate transportation and school facilities; and • environmental problems with such land.
The single-family housing market is affected by a number of national and regional economic factors, including: • interest rates and general levels of economic output; • levels of activity in the local real estate market; • the state of domestic credit markets, mortgage standards and availability of credit; • competition from other builders and other projects in the area and other states; • federal programs to assist home purchasers; -33- Table of Contents • costs and availability of labor and materials; • government regulations affecting land development, home building and mortgage financing; • availability of financing for development and for home purchasers; • changes in the income tax treatment relating to real property ownership; • unexpected increases in development costs; • increased commute times and fuel costs that may adversely affect the desirability of outlying suburbs; • availability of, among other things, other utilities, adequate transportation and school facilities; and • environmental problems with such land.
Our effective income tax rate could be adversely affected by various factors, many of which are outside of our control, including: • changes in tax laws, regulations, and/or interpretations of such tax laws in multiple jurisdictions, including but not limited to U.S. federal and state regulations or interpretations resulting from the TCJA; • increases in corporate tax rates and the availability of deductions or credits; • tax effects related to purchase accounting for acquisitions; and • resolutions of issues arising from tax examinations and any related interest or penalties.
Our effective income tax rate could be adversely affected by various factors, many of which are outside of our control, including: • changes in tax laws, regulations, and/or interpretations of such tax laws in multiple jurisdictions, including but not limited to U.S. federal and state regulations or interpretations resulting from the OBBBA; • increases in corporate tax rates and the availability of deductions or credits; • tax effects related to purchase accounting for acquisitions; and • resolutions of issues arising from tax examinations and any related interest or penalties.
The market price for our common stock is likely to be volatile, due to many factors, outside our control, including those described elsewhere in this “Risk Factors” section, as well as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our service; • future announcements concerning our business or our competitors’ businesses; • regulatory developments, including those related to the ACC; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the size of our public float; • coverage by or changes in financial estimates by investment analysts or failure to meet their expectations; -33- Table of Contents • the market’s perception towards our reduced disclosure as a result of being a “smaller reporting company” as defined in the Exchange Act; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the U.S., and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war (including the ongoing wars and conflicts between Russia and Ukraine and between Israel and Hamas), other geopolitical uncertainties, public health concerns and responses to such events.
The market price for our common stock is likely to be volatile, due to many factors, outside our control, including those described elsewhere in this “Risk Factors” section, as well as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our service; • future announcements concerning our business or our competitors’ businesses; -34- Table of Contents • regulatory developments, including those related to the ACC; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the size of our public float; • coverage by or changes in financial estimates by investment analysts or failure to meet their expectations; • the market’s perception towards our reduced disclosure as a result of being a “smaller reporting company” as defined in the Exchange Act; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the U.S., and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war (including the ongoing wars and conflicts between Russia and Ukraine and in the Middle East), other geopolitical uncertainties, public health concerns and responses to such events.
Any defects in our systems or significant reliability, quality, or performance problems with respect to our systems or service could have a number of negative effects on our profitability, results of operations, liquidity, and cash flows, including: • loss of revenue; • diversion of management and development resources and the attention of engineering personnel; • significant customer relations problems; • increased repair, support, and insurance expenses; • adverse regulatory actions; and • legal actions for damages by our customers, including but not limited to damages based on commercial losses and effects on human health.
Any defects in our systems or significant reliability, quality, or performance problems with respect to our systems or service could have a number of negative effects on our profitability, results of operations, liquidity, and cash flows, including: • loss of revenue; • diversion of management and development resources and the attention of engineering personnel; • significant customer relations problems; • increased repair, support, and insurance expenses; • adverse regulatory actions; and -26- Table of Contents • legal actions for damages by our customers, including but not limited to damages based on commercial losses and effects on human health.
In addition, our owned utilities and/or the developments that we serve must demonstrate to the ADWR that there -21- Table of Contents exists a 100-year water supply and obtain either a CAWS, which is a certificate issued by the ADWR evidencing sufficient groundwater, surface water, or effluent of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least one hundred years and which applies to a specific subdivision, or a DAWS, which applies to the utility’s entire service area.
In addition, our owned utilities and/or the developments that we serve must demonstrate to the ADWR that there exists a 100-year water supply and obtain either a CAWS, which is a certificate issued by the ADWR evidencing sufficient groundwater, surface water, or effluent of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least one hundred years and which applies to a specific subdivision, or a DAWS, which applies to the utility’s entire service area.
Amounts received as CIAC and expended on construction projects reduce our rate base once utility plants are placed in service. The developer is not required to pay the bulk of the agreed-upon fees until a development receives platting approval. Accordingly, we cannot always accurately predict or control the timing of the collection of our fees.
Amounts received as CIAC and expended on construction projects reduce our rate base once utility plants are placed in service. -21- Table of Contents The developer is not required to pay the bulk of the agreed-upon fees until a development receives platting approval. Accordingly, we cannot always accurately predict or control the timing of the collection of our fees.
For example, our cost structure may be significantly impacted by differences in labor and energy costs in other markets and the significant portion of overall production costs that they represent. -29- Table of Contents If the general public perceives recycled water to be unsafe, we will have difficulty executing our business plan and could face a loss of revenue.
For example, our cost structure may be significantly impacted by differences in labor and energy costs in other markets and the significant portion of overall production costs that they represent. If the general public perceives recycled water to be unsafe, we will have difficulty executing our business plan and could face a loss of revenue.
See “—Operational Factors—We depend on an adequate supply of electricity and chemicals for the delivery of our water, and an interruption in the supply of these inputs or increases in their prices could adversely affect our results of operations.” -24- Table of Contents Additionally, the second largest component of our operating costs after water production is made up of salaries and wages.
See “—Operational Factors—We depend on an adequate supply of electricity and chemicals for the delivery of our water, and an interruption in the supply of these inputs or increases in their prices could adversely affect our results of operations.” Additionally, the second largest component of our operating costs after water production is made up of salaries and wages.
The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause stockholders to lose -34- Table of Contents confidence in our reported financial information, all of which could materially and adversely affect our business and share price.
The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and share price.
Unfavorable regulatory outcomes may include the enactment of more stringent laws and regulations governing our operations, as well as fines, penalties or other sanctions or requirements. The imposition of any of the foregoing could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Unfavorable regulatory outcomes may include the enactment of more stringent laws and regulations governing our operations, as well as fines, penalties or other sanctions or requirements. -30- Table of Contents The imposition of any of the foregoing could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Although we currently conduct environmental screening assessments on new properties that we propose to acquire or use to identify significant sources of contaminants on surrounding properties, these assessments are not comprehensive, nor have they been conducted for all of the property owned or used by us.
Although we currently conduct environmental screening assessments on new properties that we propose to -22- Table of Contents acquire or use to identify significant sources of contaminants on surrounding properties, these assessments are not comprehensive, nor have they been conducted for all of the property owned or used by us.
Legal, Regulatory, and Legislative Factors New or stricter regulatory standards or other governmental actions could increase our regulatory compliance and operating costs, require us to alter our existing distribution or treatment facilities, and/or cause us to build additional facilities, which could cause our profitability to suffer, particularly if we are unable to increase our rates to offset such costs.
New or stricter regulatory standards or other governmental actions could increase our regulatory compliance and operating costs, require us to alter our existing distribution or treatment facilities, and/or cause us to build additional facilities, which could cause our profitability to suffer, particularly if we are unable to increase our rates to offset such costs.
If we are unable to -28- Table of Contents compete effectively for new service areas and acquisitions of existing utilities, our ability to increase our rate base and revenue could be adversely affected. Service interruptions, including due to any disruption or problem at our facilities could increase our expenses.
If we are unable to compete effectively for new service areas and acquisitions of existing utilities, our ability to increase our rate base and revenue could be adversely affected. Service interruptions, including due to any disruption or problem at our facilities could increase our expenses.
Although we make efforts to minimize any adverse impact on our controls, business and operations, we cannot assure that all such impacts have been or will be mitigated, and any such impacts could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Although we make efforts to minimize any adverse impact on our controls, business and operations, we cannot assure that all such impacts have been or will be -32- Table of Contents mitigated, and any such impacts could have a material adverse impact on our business, financial condition, results of operations and cash flows.
In the event that our water supply is contaminated, we may have to -25- Table of Contents interrupt or stop the use of that water supply until we are able to treat the water or to substitute the supply of water from another water source, including, in some cases, through the purchase of water from a supplier.
In the event that our water supply is contaminated, we may have to interrupt or stop the use of that water supply until we are able to treat the water or to substitute the supply of water from another water source, including, in some cases, through the purchase of water from a supplier.
If collection or sewage systems fail, overflow or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, potentially causing damage to persons or property, injury to the environment including aquatic life and economic damages, which may not be recoverable in rates.
If collection or sewage systems fail, overflow or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, potentially causing damage to -29- Table of Contents persons or property, injury to the environment including aquatic life and economic damages, which may not be recoverable in rates.
In addition, the costs of responding to and recovering from a cyber incident may not be covered by insurance. -30- Table of Contents We rely on information technology systems to assist with the management of our business and customer relationships. A disruption or interruption of these systems could adversely affect our business and operations.
In addition, all costs of responding to and recovering from a cyber incident may not be covered by insurance. We rely on information technology systems to assist with the management of our business and customer relationships. A disruption or interruption of these systems could adversely affect our business and operations.
The customers of our regulated utilities are currently located exclusively in the state of Arizona and 86.1% of our active service connections are located in the City of Maricopa, Arizona. As a result, we cannot diversify or mitigate the risks presented by local regulatory, economic, political, demographic and weather conditions in this area.
The customers of our regulated utilities are currently located exclusively in the state of Arizona and 81.9% of our active service connections are located in the City of Maricopa, Arizona. As a result, we cannot diversify or mitigate the risks presented by local regulatory, economic, political, demographic and weather conditions in this area.
Cyber insurance has been obtained to provide coverage for a portion of the losses and damages that may result from a security breach of information technology systems, but such insurance may not cover the total loss or damage caused by a breach.
Cyber insurance has been obtained to provide coverage for a portion of the losses and damages that may result from a security breach of information technology systems, but such insurance is subject to a number of exclusions and may not cover the total loss or damage caused by a breach.
To manage growth effectively, we must: • continue to expand our water management capacity; -23- Table of Contents • retain key management and augment our management team; • continue to enhance our technology, operations and financial and management systems; • manage multiple relationships with our customers, regulators, suppliers and other third parties; and • expand, train and manage our employee base.
To manage growth effectively, we must: • continue to expand our water management capacity; • retain key management and augment our management team; • continue to enhance our technology, operations and financial and management systems; • manage multiple relationships with our customers, regulators, suppliers and other third parties; and • expand, train and manage our employee base.
In many areas of Arizona (including certain areas that we service), water supplies are limited and, in some cases, current usage rates -22- Table of Contents exceed sustainable levels for certain water resources.
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.
If our information technology systems, or that of third parties on which we rely on, are affected by a significant cyber breach, this could result in, among other things, a significant disruption to our operations; costly investigations and remediation; misappropriation of confidential information of the Company or that of our customers, employees, business partners or others; litigation and potential liability; enforcement actions and investigations by regulatory authorities; loss of customers and contracts; harm to our reputation; and a loss of management time, attention and resources from our regular business operations, any of which could have a negative impact on our business, results of operations and cash flows.
If our information technology systems, or that of third parties on which we rely on, are affected by a significant cyberattack, this could result in, among other things, a significant disruption to our operations; costly investigations and remediation; misappropriation of our confidential information or that of our customers, employees, business partners or others; litigation and potential liability; enforcement actions and investigations by regulatory authorities; loss of -31- Table of Contents customers and contracts; harm to our reputation; and a loss of management time, attention and resources from our regular business operations, any of which could have a negative impact on our business, results of operations and cash flows.
We are subject to the jurisdiction and regulations of the ACC, the primary utility regulator in Arizona, and our financial condition depends upon our ability to recover costs in a timely manner from customers through regulated rates.
Legal, Regulatory, and Legislative Factors We are subject to the jurisdiction and regulations of the ACC, the primary utility regulator in Arizona, and our financial condition depends upon our ability to recover costs in a timely manner from customers through regulated rates.
Our operations of regulated utilities are currently located exclusively in the state of Arizona, and more specifically approximately 86.1% of our active service connections are within a single municipality, which increases the impact of local conditions on our results of operations.
Our operations of regulated utilities are currently located exclusively in the state of Arizona, and more specifically approximately 81.9% of our active service connections are within a single municipality, which increases the impact of local conditions on our results of operations.
Arizona law provides for the acquisition of public utility property by governmental agencies through their power of eminent domain, -20- Table of Contents also known as condemnation.
Arizona law provides for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation.
Applicable regulations relate to, among other things, standards and criteria for drinking water quality and for wastewater discharges, customer service and service delivery standards, waste disposal and raw groundwater abstraction limits and rates, and charges for our regulated service.
Applicable regulations, such as standards surrounding PFAS, relate to, among other things, standards and criteria for drinking water quality and for wastewater discharges, customer service and service delivery standards, waste disposal and raw groundwater abstraction limits and rates, and charges for our regulated service.
Our existing indebtedness could affect our business adversely and limit our ability to plan for or respond to growth opportunities, and we may be unable to generate sufficient cash flow to satisfy our liquidity needs. As of December 31, 2024, we had total indebtedness of $122.4 million . In addition, we may incur substantial additional indebtedness in the future.
Our existing indebtedness could affect our business adversely and limit our ability to plan for or respond to growth opportunities, and we may be unable to generate sufficient cash flow to satisfy our liquidity needs. As of December 31, 2025, we had total indebtedness of $133.7 million . In addition, we may incur substantial additional indebtedness in the future.
Pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, could adversely affect our business operations, cash flows and financial position to an extent that is difficult to predict. The occurrence of pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, could adversely affect our business operations, cash flows and financial position.
Pandemics, epidemics or disease outbreaks could adversely affect our business operations, cash flows and financial position to an extent that is difficult to predict. The occurrence of pandemics, epidemics or disease outbreaks could adversely affect our business operations, cash flows and financial position.
In addition, future growth may require us to make significant capital expenditures or incur other significant expenses and may divert the attention of our personnel from our core business operations, any of which could affect our financial performance adversely. Increased operating expenses associated with the expansion of our business may negatively impact our operating income.
In addition, future growth may require us to make significant capital expenditures or incur other significant expenses and may divert the attention of our personnel from our core business operations, any of which could affect our financial performance adversely.
Pursuant to this regulatory mandate, the ACC may impose conditions that could discourage, delay or prevent a transaction involving a change in control of our company. ITEM 1B. Unresolved Staff Comments None.
Pursuant to this regulatory mandate, the ACC may impose conditions that could discourage, delay or prevent a transaction involving a change in control of our company.
Moreover, the results of complex legal proceedings are difficult to predict. Unfavorable outcomes from these claims and/or lawsuits could materially adversely affect GWRI’s business, results of operations and financial condition, and we could incur substantial monetary liability and/or be required to change our business practices.
Unfavorable outcomes from these claims and/or lawsuits could materially adversely affect GWRI’s business, results of operations and financial condition, and we could incur substantial monetary liability and/or be required to change our business practices.
Prior to 2014, we extended water and wastewater infrastructure financing to developers and builders through ICFA contracts. Our investment can be considerable, as we phase-in the construction of facilities in accordance with a regional master plan, as opposed to a single development. Developers and builders pay us agreed-upon fees upon the occurrence of specified development events for their development projects.
Our investment can be considerable, as we phase-in the construction of facilities in accordance with a regional master plan, as opposed to a single development. Developers and builders pay us agreed-upon fees upon the occurrence of specified development events for their development projects.
Our directors, executive officers and stockholders holding more than 5% of our capital stock and their affiliates beneficially own, in the aggregate, approximately 53% of our outstanding common stock, including 42.4% beneficially owned in the aggregate by our former director, William S. Levine, and current director Jonathan L. Levine.
Our directors, executive officers and stockholders holding more than 10% of our capital stock and their affiliates beneficially own, in the aggregate, approximately 42.4% of our outstanding common stock, all of which is held by our former director, William S. Levine, and current director Jonathan L. Levine.
Many climate variability predictions present several potential challenges to water and wastewater utilities, including us, such as: • increased frequency and duration of droughts; • challenges associated with changes in temperature or increases in ocean levels; • potential degradation of water quality; • decreases in available water supply and changes in water usage patterns; • increased precipitation and flooding; • increased frequency and severity of storms and other weather events; • increases in disruptions in service; • increased costs to repair damaged facilities; or • increased costs to reduce risks associated with the increasing frequency and severity of natural events, including to improve the resiliency and reliability of our water and wastewater treatment and conveyance facilities and systems.
Many climate variability predictions present several potential challenges to water and wastewater utilities, including us, such as: • increased frequency and duration of droughts; • challenges associated with changes in temperature or increases in ocean levels; • potential degradation of water quality; • decreases in available water supply and changes in water usage patterns; • increased precipitation and flooding; • increased frequency and severity of storms and other weather events; • increases in disruptions in service; • increased costs to repair damaged facilities; or • increased costs to reduce risks associated with the increasing frequency and severity of natural events, including to improve the resiliency and reliability of our water and wastewater treatment and conveyance facilities and systems. -24- Table of Contents Because of the uncertainty of weather volatility related to climate variability, we cannot predict its potential impact on our business, financial condition, results of operations, cash flows and liquidity.
As a result, our return on our investment and cash flow stream could be adversely affected. Our water and wastewater systems are subject to condemnation by governmental authorities, which may result in the receipt of less than the fair market value of our assets, and a loss of revenue from our operations .
Our water and wastewater systems are subject to condemnation by governmental authorities, which may result in the receipt of less than the fair market value of our assets, and a loss of revenue from our operations .
There is consensus among climate scientists that there will be worsening of weather volatility in the future associated with climate variability.
The issue of climate variability is receiving increasing attention nationally and worldwide. There is consensus among climate scientists that there will be worsening of weather volatility in the future associated with climate variability.
Any failures and shutdowns may limit our ability to supply water in sufficient quantities to customers and to meet the water and wastewater delivery requirements prescribed by applicable utility regulators, which would adversely affect our financial condition, results of operations, cash flows, liquidity and reputation. -27- Table of Contents We may have difficulty accomplishing our growth strategy within and outside of our current service areas.
Any failures and shutdowns may limit our ability to supply water in sufficient quantities to customers and to meet the water and wastewater delivery requirements prescribed by applicable utility regulators, which would adversely affect our financial condition, results of operations, cash flows, liquidity and reputation.
We may experience difficulty in raising the necessary capital due to volatility in the capital markets or increases in the cost of infrastructure finance. In addition, we require regulatory approval from the ACC for some means of raising capital, such as issuance of debt by our regulated utilities, and approval may be denied or delayed.
In addition, we require regulatory approval from the ACC for some means of raising capital, such as issuance of debt by our regulated utilities, and approval may be denied or delayed.
If we cannot maintain an employee base with the skills necessary to conduct our operations, our efficiency, margins and ability to expand our business could be adversely affected.
If we cannot maintain an employee base with the skills necessary to conduct our operations, our efficiency, margins and ability to expand our business could be adversely affected. Increased operating expenses associated with the expansion of our business may negatively impact our operating income.
For example, during the economic downturn beginning in 2008, our utilities experienced an increase in the number of vacant homes, reaching a peak of 4,020 vacant connections as of February 28, 2009, approximately 11.9% of our total connections at the time. Accordingly, in the event of an economic downturn, we may experience a material reduction in revenue.
During periods of economic distress, there may be an increase in home foreclosures and vacancies. For example, during the economic downturn beginning in 2008, our utilities experienced an increase in the number of vacant homes, reaching a peak of 4,020 vacant connections as of February 28, 2009, approximately 11.9% of our total connections at the time.
Unauthorized access to confidential information located or stored on these systems could negatively and materially impact our customers, employees, suppliers and other third parties. Further, third parties, including vendors, suppliers and contractors, who perform certain services for us or administer and maintain our sensitive information, could also be targets of cyberattacks and unauthorized access.
Further, third parties, including vendors, suppliers and contractors, who perform certain services for us or administer and maintain our sensitive information, could also be targets of cyberattacks and unauthorized access.
As a result of these factors, we may not sustain or increase our profitability on an ongoing basis. We face risks associated with the design, construction, and operation of our systems that may adversely affect our business and financial condition. We are responsible for the design, construction, installation, and maintenance of our water treatment, reclamation, and distribution systems.
We face risks associated with the design, construction, and operation of our systems that may adversely affect our business and financial condition. We are responsible for the design, construction, installation, and maintenance of our water treatment, reclamation, and distribution systems.
The ACC has authority, among other things, to determine service areas for utility providers. In order for our owned utilities to provide water or wastewater service, they must obtain a CC&N for a service area before they can service that area.
In order for our owned utilities to provide water or wastewater service, they must obtain a CC&N for a service area before they can service that area.
There is no assurance that these suppliers will continue to produce the chemicals in the quantities and quality and at the times they are needed. Moreover, the replacement of any of these suppliers could lead to significant delays and increase in our costs.
There is no assurance that these suppliers will continue to produce the chemicals in the quantities and quality and at the times they are needed.
The nature of our business exposes us to various liability claims, which may exceed the level of our insurance coverage and thereby not be reimbursed fully by insurance proceeds, or not be covered by our insurance at all, and may also make it difficult for us to obtain insurance coverage at affordable rates.
Acquisitions could also result in dilutive issuance of our equity securities, incurrence of debt and contingent liabilities and fluctuations in quarterly results and expenses. -28- Table of Contents The nature of our business exposes us to various liability claims, which may exceed the level of our insurance coverage and thereby not be reimbursed fully by insurance proceeds, or not be covered by our insurance at all, and may also make it difficult for us to obtain insurance coverage at affordable rates.
We may also be exposed to product liability or breach of contract claims by third parties resulting from our noncompliance. These laws and regulations are complex and change frequently, and these changes may cause us to incur costs in connection with the remediation of actions that were lawful when they were taken.
These laws and regulations are complex and change frequently, and these changes may cause us to incur costs in connection with the remediation of actions that were lawful when they were taken.
Although the U.S. economy and housing market continue to perform well, we cannot predict the overall trajectory of the market. Our growth depends significantly on increased residential and commercial development in our service areas, and if developers or builders are unable to complete additional residential and commercial projects, our revenue may decline.
Our growth depends significantly on increased residential and commercial development in our service areas, and if developers or builders are unable to complete additional residential and commercial projects, our revenue may decline.
An adverse change in any of these conditions would therefore affect our profitability, results of operations, liquidity and cash flows more significantly than if our utilities operated more broadly in other geographic areas.
An adverse change in any of these conditions would therefore affect our profitability, results of operations, liquidity and cash flows more significantly than if our utilities operated more broadly in other geographic areas. If future acquisitions do not achieve sufficient profitability relative to expenses and investment, our business and ability to finance our operations could be materially adversely affected.
The passage of certain initiatives could depress expected population growth, impact our business or growth plans and have a material adverse impact on our financial condition, results of operations or cash flows.
The passage of certain initiatives could depress expected population growth, impact our business or growth plans and have a material adverse impact on our financial condition, results of operations or cash flows. We are subject to environmental risks that may subject us to clean-up costs or litigation that could adversely affect our business, operating results, financial condition, and prospects.
The provision of potable water is subject to, among others, the requirements of the federal Safe Drinking Water Act, and effluent from wastewater treatment facilities must comply with other requirements. Regulated contaminants and associated maximum contaminant levels may change over time, requiring us to alter or build additional treatment facilities.
The provision of potable water is subject to, among others, the requirements of the federal Safe Drinking Water Act, and effluent from wastewater treatment facilities must comply with other requirements.
We are exposed to various risks relating to legal proceedings or claims that could materially adversely affect our operating results. GWRI and its subsidiaries are occasionally a party to lawsuits in the normal course of our business. Responding to lawsuits brought against us — and litigation in general — can be expensive, lengthy, and disruptive to normal business operations.
We are exposed to various risks relating to legal proceedings or claims that could materially adversely affect our operating results. GWRI and its subsidiaries are occasionally a party to lawsuits in the normal course of our business, such as a recently filed class action lawsuit regarding water quality.
Any inability to obtain the necessary regulatory approvals, assured water supplies or environmental permits would limit our ability to expand our water or wastewater service areas. If we chose to expand to states other than Arizona, we may have difficulty acquiring the necessary approvals and permits or complying with environmental, health and safety or quality standards of such states.
In addition, if we choose to expand to states other than Arizona, we may have difficulty acquiring the necessary approvals and permits or complying with environmental, health and safety or quality standards of such states.
Business and Operational Factors The risk of natural adverse weather conditions, pandemic outbreaks, global political events, war or terrorism could disrupt our business, impacting operating costs and capital expenditures. Our facilities are located in areas which have been and could be subject to natural disasters such as drought, floods, fires or earthquakes.
Our facilities are located in areas which have been and could be subject to natural disasters such as drought, floods, fires or earthquakes. Adverse weather conditions or other extreme changes in the weather, including resulting electrical and technological failures, may disrupt our business and adversely affect operating costs and capital expenditures.
Many national builders and developers in our service areas own or control substantial amounts of the developable land in these areas.
Many national builders and developers in our service areas own or control substantial amounts of the developable land in these areas. There can be no assurance that these builders and developers have the financial capability to continue and complete their developments.
See “—Business and Operational Factors — Doing business in jurisdictions other than Arizona may present unforeseen regulatory, legal and operational challenges that could impede or delay our operations or adversely affect our profitability.” We are subject to environmental risks that may subject us to clean-up costs or litigation that could adversely affect our business, operating results, financial condition, and prospects.
See “—Business and Operational Factors — Doing business in jurisdictions other than Arizona may present unforeseen regulatory, legal and operational challenges that could impede or delay our operations or adversely affect our profitability . ” Proposals to change utility policy in Arizona made through legislative, regulatory, or ballot initiatives may impact our growth, business plans, and financial condition.
Climate variability may cause increased volatility in weather and may impact water usage and related revenue or require additional expenditures, all of which may not be fully recoverable in rates or otherwise. The issue of climate variability is receiving increasing attention nationally and worldwide.
As a result of these factors, we may not sustain or increase our profitability on an ongoing basis. Climate variability may cause increased volatility in weather and may impact water usage and related revenue or require additional expenditures, all of which may not be fully recoverable in rates or otherwise.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results of Operations—Weather and Seasonality,” included in Part II, Item 7 of this report, for additional information. -26- Table of Contents If future acquisitions do not achieve sufficient profitability relative to expenses and investment, our business and ability to finance our operations could be materially adversely affected.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results of Operations—Weather and Seasonality,” included in Part II, Item 7 of this report, for additional information.
See “—Business and Operational Factors — Pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, could adversely affect our business operations, cash flows and financial position to an extent that is difficult to predict” for additional information.
See “—Business and Operational Factors — Pandemics, epidemics or disease outbreaks could adversely affect our business operations, cash flows and financial position to an extent that is difficult to predict” for additional information. We are subject to adverse publicity and reputational risks, which make us vulnerable to negative customer perception and could lead to increased regulatory oversight or other sanctions.
Our costs of complying with current and future governmental laws and regulations could adversely affect our business or results of operations. If we fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators and our operations could be curtailed or shut down.
If we fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators and our operations could be curtailed or shut down. We may also be exposed to product liability or breach of contract claims by third parties resulting from our noncompliance.
Our utilities business is subject to seasonal fluctuations and other weather-related conditions, such as droughts, which could adversely affect the supply of and demand for our service and our results of operations. We depend on an adequate water supply to meet the present and future needs of our customers.
Moreover, the replacement of any of these suppliers could lead to significant delays and increase in our costs. -27- Table of Contents Our utilities business is subject to seasonal fluctuations and other weather-related conditions, such as droughts, which could adversely affect the supply of and demand for our service and our results of operations.
Our ability to expand into new service areas and to expand current water and wastewater service depends on approval from regulatory agencies. Failure to obtain required regulatory approvals will adversely affect future growth. In Arizona, the ACC is the regulatory authority that oversees the formation, expansion and ongoing operations of water and wastewater utilities.
As a result, our return on our investment and cash flow stream could be adversely affected. Our ability to expand into new service areas and to expand current water and wastewater service depends on approval from regulatory agencies. Failure to obtain required regulatory approvals will adversely affect future growth.
This would cause us to rely more heavily on regulatory rate increases to increase our revenue.
We may have difficulty accomplishing our growth strategy within and outside of our current service areas. This would cause us to rely more heavily on regulatory rate increases to increase our revenue.
Decisions made by the ACC could have a material adverse impact on our financial condition, results of operations and cash flows. We have significant obligations under ICFAs, yet funds from our ICFAs are dependent on development activities by developers which we do not control, and are also subject to certain regulatory requirements.
We have significant obligations under ICFAs, yet funds from our ICFAs are dependent on development activities by developers which we do not control, and are also subject to certain regulatory requirements. Prior to 2014, we extended water and wastewater infrastructure financing to developers and builders through ICFA contracts.
These types of events, either impacting our facilities or the industry in general, could also cause us to incur additional security and insurance related costs. Our cyber insurance is subject to a number of exclusions and may not cover the total loss or damage caused by a breach.
These types of events, either impacting our facilities or the industry in general, could also cause us to incur additional security and insurance related costs. We have experienced, and expect to continue experiencing, cyberattacks and other attempted intrusions.
A disruption of those communication systems could significantly limit our ability to manage and operate our business efficiently, which in turn could cause our business to suffer and adversely affect our results of operations. -31- Table of Contents Market and Financial Factors We will need additional capital to grow our business, and additional financing may not be available to us on favorable terms when required, or at all.
A disruption of those communication systems could significantly limit our ability to manage and operate our business efficiently, which in turn could cause our business to suffer and adversely affect our results of operations.
Adequate funds to support our growth may not be available when needed or on terms acceptable to us. We may need to raise additional funds to support more rapid expansion, improve our facilities and infrastructure, develop new and enhanced technologies or respond to evolving regulatory standards.
We may need to raise additional funds to support more rapid expansion, improve our facilities and infrastructure, develop new and enhanced technologies or respond to evolving regulatory standards. We may experience difficulty in raising the necessary capital due to volatility in the capital markets or increases in the cost of infrastructure finance.
There can be no assurance that these builders and developers have the financial capability to continue and complete their developments. -32- Table of Contents Foreclosure rates in our service areas, as well as other factors affecting real estate development, could affect the growth of our regulated customer base or result in a decline in our revenue.
Foreclosure rates in our service areas, as well as other factors affecting real estate development, could affect the growth of our regulated customer base or result in a decline in our revenue. A slowdown or severe downturn in the housing market could have an adverse effect on our operating results and financial condition.
As operators of critical infrastructure, we may face a heightened risk of cyberattacks from internal or external sources. For example, a hacker accessed a Florida water treatment plant’s control system and attempted to increase the amount of lye used to treat the water to a potentially dangerous level.
For example, a hacker accessed a Florida water treatment plant’s control system and attempted to increase the amount of lye used to treat the water to a potentially dangerous level. Facilities, information technology systems and other infrastructure facilities and systems and physical assets could be targets of such unauthorized access.
While we have instituted safeguards to protect our information technology systems, those safeguards may not always be effective due to the evolving nature of cyberattacks and cyber vulnerabilities. We cannot guarantee that such protections will be completely successful in the event of a cyberattack.
While we have instituted safeguards to protect our information technology systems, those safeguards may not always be effective due to the evolving nature and intensity of cyberattacks, as well as new and sophisticated tools and methods being used by criminals and cyberterrorists to penetrate and compromise systems.
In the regular course of our business, the Company manages a range of sensitive security, customer and business systems information.
In the regular course of our business, we manage a range of sensitive security, customer and business systems information. As operators of critical infrastructure, we may face a heightened risk of cyberattacks from internal or external sources.
A security breach of our information systems, such as theft or the inappropriate release of certain types of information, including confidential customer, employee, financial or system operating information, could have a material adverse impact on our financial condition, results of operations or cash flows.
Decisions made by the ACC could have a material adverse impact on our financial condition, results of operations and cash flows.
The Company has experienced, and expects to continue experiencing, these types of threats and attempted intrusions. The implementation of additional security measures could increase costs and have a material adverse impact on the Company’s financial results.
We cannot guarantee that our protections will be completely successful in the event of a cyberattack. Further, the implementation of additional security measures could increase costs and have a material adverse impact on our financial results.
Removed
Condemnation also results in a loss of revenue from the operations of the affected utility. Proposals to change utility policy in Arizona made through legislative, regulatory, or ballot initiatives may impact our growth, business plans, and financial condition.
Added
For example, in connection with the current rate case for our GW-Santa Cruz and GW-Palo Verde utilities, which serve approximately 87.3% of our total active service connections as of December 31, 2025, the written testimonies of the ACC Staff and RUCO included recommendations that materially differed from the rate case applications filed by the GW-Santa Cruz and GW-Palo Verde, including relating to net annual revenue and certain write-offs and disallowances.
Removed
Adverse weather conditions or other extreme changes in the weather, including resulting electrical and technological failures, may disrupt our business and adversely affect operating costs and capital expenditures.
Added
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Rate Regulation Updates”, included in Part II, Item 7 of this report for additional information. There can be no assurance that we will be successful in reconciling the differences between the GW-Santa Cruz and GW-Palo Verde rate case applications and the ACC Staff's and RUCO’s testimonies.
Removed
Because of the uncertainty of weather volatility related to climate variability, we cannot predict its potential impact on our business, financial condition, results of operations, cash flows and liquidity.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information regarding cybersecurity-related risks we face, see “Risk Factors—Technology Factors—Our information technology systems may be vulnerable to unauthorized external or internal threats due to hacking, ransomware, viruses or other cybersecurity breaches,” included in Part I, Item 1A of this report. -36- Table of Contents
Biggest changeFor additional information regarding cybersecurity-related risks we face, see “Risk Factors—Technology Factors—Our information technology systems may be vulnerable to unauthorized external or internal threats due to hacking, ransomware, viruses or other cybersecurity breaches,” included in Part I, Item 1A of this report.
The Company is subject to laws and rules issued by multiple government agencies concerning safeguarding and maintaining the confidentiality of its security, customer and business information. The Company employs various aspects of risk assessment regularly, and to -35- Table of Contents the extent possible, continuously.
The Company is subject to laws and rules issued by multiple government agencies concerning safeguarding and maintaining the confidentiality of its security, customer and business information. The Company employs various aspects of risk assessment regularly, and to the extent possible, continuously.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOperated by Nature of Property Type Count County GW-Santa Cruz Water Utility Plant Water Distribution Center 6 Pinal Well Site 17 Pinal Recycled Water Booster Station 1 Pinal GW-Palo Verde Wastewater Utility Plant Lift Station 8 Pinal Wastewater Recycling Facility 3 Pinal Regional Operations Center 1 Pinal GW-Belmont Water Utility Plant Booster Station 1 Maricopa Water Distribution Center 11 Maricopa Well Site 4 Maricopa GW-Saguaro Water Utility Plant Water Distribution Center 3 Pima Well Site 10 Pima Regional Operations Center 1 Pima Water Distribution Main 1 Pima Water Storage 1 Pima GW-Farmers Water Utility Plant Water Distribution Center 3 Pima Well Site 9 Pima Water Storage 2 Pima GW-Turner Water Utility Plant Irrigation System 4 Maricopa Irrigation Well Site 2 Maricopa GWRI Corporate Office Offices 1 Maricopa
Biggest changeOperated by Nature of Property Count County GW-Santa Cruz Water Utility Plant 25 Pinal GW-Palo Verde Wastewater Utility Plant 16 Pinal GW-Belmont Water Utility Plant 16 Maricopa GW-Hassayampa Wastewater Utility Plant 1 Maricopa GW-Saguaro Water Utility Plant 15 Pima GW-Farmers Water Utility Plant 11 Pima GW-Ocotillo Water Utility Plant 34 Pima GW-Turner Water Utility Plant 7 Maricopa GWRI Corporate Office 1 Maricopa -37- Table of Contents
ITEM 2. Properties The following table lists the principal properties that we own or lease as of December 31, 2024. We believe that our existing properties are adequate to meet our current needs.
ITEM 2. Properties The following table lists the principal properties that we own or lease as of December 31, 2025. Water utility plant primarily consists of water distribution centers, well sites, booster stations, water storage and water treatment facilities, Wastewater utility plant primarily consists of lift stations, wastewater recycling facilities and recycled water booster stations.
Added
Our existing properties are adequate to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. -37- Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. -38- Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 37 PART II 38 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 38 ITEM 6. Reserved 38 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 ITEM 7A. Qualitative and Quantitative Disclosures About Market Risk 50 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 38 PART II 39 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 39 ITEM 6. Reserved 39 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 52 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 to 31, 2024 218 $ 12.89 — — November 1 to 30, 2024 649 $ 12.68 — — December 1 to 31, 2024 — $ — — — Total 867 — Unregistered Sales of Equity Securities None.
Biggest changePeriod Total Number of Shares Purchased(1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 to 31, 2025 201 $ 10.23 — — November 1 to 30, 2025 675 $ 8.68 — — December 1 to 31, 2025 — $ — — — Total 876 — (1) Represents shares withheld from employees or board members to satisfy certain tax obligations due in connection with the vesting of restricted stock awards granted under the Global Water Resources, Inc. 2020 Omnibus Incentive Plan.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NASDAQ under the symbol “GWRS” and began trading on April 28, 2016. Shareholders As of March 3, 2025, there were approximately 57 shareholders of record of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NASDAQ under the symbol “GWRS” and began trading on April 28, 2016. Shareholders As of February 27, 2026, there were approximately 57 shareholders of record of our common stock.
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Dividend payments are not mandatory or guaranteed; there can be no assurance that we will continue to pay a dividend in the future.
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Issuer Purchases of Equity Securities The following table presents information with respect to purchases of common stock the Company made during the three months ended December 31, 2025.
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The average price paid per share for the common stock withheld was based on the closing price of the Company’s common stock on the applicable vesting date. Unregistered Sales of Equity Securities No unregistered securities were sold during the year ended December 31, 2025, other than as reported in our Current Reports on Form 8-K filed with the SEC.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRefer to Note 4 — “Revenue Recognition” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information pertaining to how we earn and recognize revenue. -44- Table of Contents The following table summarizes revenue for the years ended December 31, 2024 and 2023 (in thousands): Year Ended Favorable (Unfavorable) December 31, 2024 vs. 2023 2024 2023 $ % Water service Basic charge $ 13,668 $ 12,812 $ 856 6.7 % Consumption 11,660 11,410 250 2.2 % Other 736 638 98 15.4 % Total water service 26,064 24,860 1,204 4.8 % Wastewater and recycled water service Basic 24,773 23,667 1,106 4.7 % Consumption 1,500 1,365 135 9.9 % Other 355 350 5 1.4 % Total wastewater and recycled water service 26,628 25,382 1,246 4.9 % Total regulated revenue 52,692 50,242 2,450 4.9 % Unregulated revenue — 2,786 (2,786) (100.0) % Total revenue $ 52,692 $ 53,028 $ (336) (0.6) % Active water connections 35,799 34,370 1,429 4.2 % Active wastewater connections 28,721 27,421 1,300 4.7 % Total active connections 64,520 61,791 2,729 4.4 % Consumption (in million gallons) Water service 4,155 4,024 131 3.3 % Recycled water 1,359 818 540 66.0 % The increase in regulated revenue for the year ended December 31, 2024 as compared to the year ended December 31, 2023 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.
Biggest changeYear Ended Favorable (Unfavorable) December 31, 2025 vs. 2024 (in thousands) 2025 2024 % Water service Basic charge $ 14,752 $ 13,668 $ 1,084 7.9 % Consumption 13,181 11,660 1,521 13.0 % Other 676 736 (60) (8.2) % Total water service 28,609 26,064 2,545 9.8 % Wastewater and recycled water service Basic 25,290 24,773 517 2.1 % Consumption 1,501 1,500 1 0.1 % Other 358 355 3 0.9 % Total wastewater and recycled water service 27,149 26,628 521 2.0 % Total revenue $ 55,758 $ 52,692 $ 3,066 5.8 % Active water connections 38,848 35,799 3,049 8.5 % Active wastewater connections 29,729 28,721 1,008 3.5 % Total active connections 68,577 64,520 4,057 6.3 % Consumption (in million gallons) Water service 4,275 4,037 238 5.9 % Recycled water 858 857 1 0.1 % The increase in revenue for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily attributable to: • Organic growth in active water and wastewater connections and growth from the acquisition of the seven water systems from the City of Tucson in July 2025. • Increased water consumption, predominantly driven by the increase in active connections and higher usage. • Higher rates for GW-Saguaro, resulting from the GW-Saguaro general rate case, effective July 2024 and January 2025, and higher rates for GW-Farmers, resulting from the GW-Farmers general rate case, effective May 1, 2025 and November 1, 2025. • The increase in wastewater and recycled water service revenue was partially offset by an increase of $0.4 million in bill credits related to the Company's Southwest Plant, which were effective beginning August 2024.
Weather and Seasonality Our ability to meet the existing and future water demands of our customers depends on 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.
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.
Accounting for Rate-Regulated Subsidiaries ASC Topic 980, Regulated Operations (“ASC 980”) provides that rate-regulated subsidiaries account for and report assets and liabilities consistent with the economic effect of the way in which regulators establish rates, if the rates established are designed to recover the costs of providing the regulated service and if the competitive environment makes it probable that such rates can be billed and collected.
Accounting for Rate-Regulated Subsidiaries ASC Topic 980, Regulated Operations (“ASC 980”) provides that rate-regulated entities account for and report assets and liabilities consistent with the economic effect of the way in which regulators establish rates, if the rates established are designed to recover the costs of providing the regulated service and if the competitive environment makes it probable that such rates can be billed and collected.
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.
Regulated 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.
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 due to the warmer temperatures and increased usage by customers for irrigation and other outdoor uses.
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 usage by customers for irrigation and other outdoor uses.
While specific facts and circumstances could change, the Company believes that with the cash on hand and the ability to draw on its $15.0 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.
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.
We are subject to economic 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 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.
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 of utilities.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following management’s discussion and analysis of Global Water Resources, Inc.’s financial condition and results of operations (“MD&A”) relate to the year ended December 31, 2024 and should be read together with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following management’s discussion and analysis of Global Water Resources, Inc.’s financial condition and results of operations (“MD&A”) relate to the year ended December 31, 2025 and should be read together with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this report.
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.
Infrastructure Investment Capital expenditures for infrastructure investment are a component of the rate base on which our regulated utility subsidiaries are allowed to earn a 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.
The Company accounts for the growth premium as additional consideration to the purchase, and the fair value of the growth premium liability is calculated using a discounted cash flow technique, which utilizes unobservable inputs developed by the Company using significant judgement in estimates and assumptions.
The Company accounts for the growth premium as additional consideration to the purchase, and the fair value of the growth premium liability is calculated using a discounted cash flow technique, which utilizes unobservable inputs developed by the Company using significant judgment in estimates and assumptions.
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.
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 transactions below.
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 -41- Table of Contents 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.
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.
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.
The debt instruments 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.
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.
Overview GWRI is a water resource management company that owns, operates, and manages thirty-nine water, wastewater, and recycled water public utility systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona.
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; -39- Table of Contents • 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.
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.
We are required to file rate cases with the ACC to obtain approval for a change in rates. Rate cases and other rate-related proceedings can take a year or more to complete.
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.
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. -47- Table of Contents The Company’s utility subsidiaries operate in rate-regulated environments in which the amount of new investment recovery may be limited.
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.
Recent Accounting Pronouncements A discussion of recently issued and recently issued but not yet adopted accounting pronouncements is included in Note 1 – “Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report and is incorporated herein by reference.
Recent Accounting Pronouncements A discussion of recently issued and adopted accounting pronouncements is included in Note 1 – “Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report and is incorporated herein by reference.
If the assessment of the Company’s ability to fully utilize the deferred tax gain changes, the Company would be required to recognize income tax expense in the period in which the deferred tax gain expires.
If the assessment of the Company’s ability to fully utilize the deferred tax asset changes, the Company would be required to recognize income tax expense in the period in which the deferred tax asset expires.
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. Production and Treatment Costs Our water and wastewater service requires significant production resources and therefore results in significant production costs.
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. -43- Table of Contents Production and Treatment Costs Our water and wastewater service requires significant production resources and therefore results in significant production costs.
Income Taxes Estimation of income taxes includes an evaluation of the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income before they expire. The Company’s assessment is based upon existing tax laws and estimates of future taxable income.
Income Taxes Estimation of income taxes includes an evaluation of the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income before they expire. The -51- Table of Contents Company’s assessment is based upon existing tax laws and estimates of future taxable income.
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.
Debt Covenants The Company’s Senior Secured Notes, Term Loan and Revolver (collectively, the “debt instruments”) 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.
In the -49- Table of Contents event that management’s assessment as to the probability of the inclusion in the ratemaking process is incorrect, the associated regulatory asset or liability will be adjusted to reflect the change in assessment or the impact of regulatory approval of rates.
In the event that management’s assessment as to the probability of the inclusion in the ratemaking process is incorrect, the associated regulatory asset or liability will be adjusted to reflect the change in assessment or the impact of regulatory approval of rates.
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 instruments 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 instruments’ respective agreements.
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 generally been 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.
As of December 31, 2024 and 2023, the Company did not have any off-balance sheet arrangements.
As of December 31, 2025 and 2024, the Company did not have any off-balance sheet arrangements.
Some result in direct obligations on the Company’s balance sheet while others are firm commitments or commitments based on uncertainties and undetermined execution times. Refer to Note 17 — “Commitments and Contingencies” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional details.
Some result in direct obligations on the Company’s balance sheet while others are firm commitments or commitments based on uncertainties and undetermined execution times. Refer to Note 17 — “Commitments and Contingencies” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report, which is incorporated herein by reference, for additional details.
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.
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 expect to file for rate increases every three to five years, in line with common industry practice.
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.
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.
Additionally, an evaluation of the recoverability of deferred tax gains is based on an assessment of the Company’s ability to fully utilize the deferred tax gain before it expires. The Company’s assessment is based upon its ability to acquire qualifying properties.
Additionally, an evaluation of the recoverability of deferred tax assets is based on an assessment of the Company’s ability to fully utilize the deferred tax asset before it expires. The Company’s assessment is based upon its ability to acquire qualifying properties.
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 A Notes”).
The Series A notes (the “Series A Notes”)carry a principal balance of $28.8 million and bear an interest rate of 4.38%, payable semi-annually on June 15 and December 15 of each year, over a twelve-year term, with the principal payment due on June 15, 2028.
Census estimates, the Phoenix metropolitan statistical area (“MSA”) is the 10th largest MSA in the U.S. and had an estimated population of 5.1 million, an increase of 4.6% over the 4.8 million people reported in the 2020 Census.
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.
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.
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 shareholders.
Metropolitan Phoenix continues to grow due to its favorable employment opportunities, 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.
Growth in the Phoenix MSA continues as a result of 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.
Cash from Investing Activities The net cash used in investing activities totaled approximately $32.5 million for the year ended December 31, 2024 compared to $28.6 million for the year ended December 31, 2023.
Cash from Investing Activities The net cash used in investing activities totaled approximately $75.4 million for the year ended December 31, 2025 compared to $32.5 million for the year ended December 31, 2024.
On June 8, 2023, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 230,000 shares of the Company’s common stock at a purchase price of $12.07 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder.
On September 30, 2025, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 1,270,572 shares of the Company’s common stock at a purchase price of $10.30 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder.
In addition, the Company may choose to raise additional funds from time to time through equity or debt financing agreements, which may or may not be needed for additional working capital, capital expenditures and/or strategic acquisitions for 2025 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 the next -49- Table of Contents twelve months and beyond.
Refer to Note 10 - “Debt” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional details.
Refer to Note 10 - “Debt” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional details regarding the WIFA Note, Revolver, Senior Secured Notes and Term Loan.
As of December 31, 2024, 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 In the course of normal business activities, the Company enters into a variety of contractual obligations and commitments.
As of December 31, 2025, the Company was in compliance with its financial debt covenants under the debt instruments. -50- Table of Contents Contractual Obligations and Off-Balance Sheet Arrangements In the course of normal business activities, the Company enters into a variety of contractual obligations and commitments.
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 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.
See “Business—Regulation”, included in Part I, Item 1 of this report for additional information. 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”).
For a summary of the Company’s current regulatory activity, refer to Note 3 – “Regulatory Matters” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report. -43- Table of Contents Comparison of Results of Operations for the Years Ended December 31, 2024 and 2023 The Company is not organized around a specific product or service, geographic region, or regulatory environment.
Comparison of Results of Operations for the Years Ended December 31, 2025 and 2024 The Company is not organized around a specific product or service, geographic region, or regulatory environment. Refer to Note 18 — “Business Segment Information” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional segment information.
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.
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. EIDP, Inc. (“Dupont,” formerly E.I.
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 -48- Table of Contents or claims.
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.
Business Outlook We continue to experience an increasing rate of organic growth evidenced by our year over year organic increase in active connections (i.e., exclusive of acquisition related growth) of 4.4% as of December 31, 2024 as compared to 2.6% for the same period in 2023. According to the most recent U.S.
Business Outlook We continue to experience organic growth exhibited through our year-over-year organic increase in active connections (i.e., exclusive of acquisition-related growth) of 3.2% as of December 31, 2025. According to the 2024 U.S.
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. For the year ended December 31, 2024, the Company received $0.8 million in award disbursements under the WIFA grant.
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 AMI smart meters.
As of December 31, 2024, the Company has no notable near-term cash expenditures, other than 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.
As of December 31, 2025, the Company has no notable near-term cash expenditures, other than for its capital improvement plan and the principal payments for its Series B Notes in the amount of $1.9 million due in both June 2026 and December 2026.
Refer to Note 19 — “Other, Net” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information regarding the Buckeye growth premiums.
Refer to Note 19 — “Other, Net” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information regarding the Buckeye growth premiums. • All of which is partially offset by higher AFUDC-Equity of $0.3 million attributable to the 2025 capital expenditure program.
Series B carries 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 (the “Series B Notes” and collectively with the Series A Notes and the 6.91% Notes, the “Senior Secured Notes”).
The Series B notes (the “Series B Notes”) carry a principal balance of $69.0 million and bear an interest rate of 4.58%, payable semi-annually on June 15 and December 15 of each year, over a 20-year term, with the final principal balance due on June 15, 2036.
Pursuant to the Northern Trust Loan Agreement, the maximum principal amount available for borrowing under the Revolver is $15.0 million with amounts outstanding bearing interest, payable monthly, at a rate equal to the Secured Overnight Financing Rate (SOFR) plus 2.00%. As of December 31, 2024, the Company had no outstanding borrowings under the Revolver.
Pursuant to the Northern Trust Loan Agreement, the amounts outstanding bear interest, payable monthly, at a rate equal to the SOFR plus 2.10%. As of December 31, 2025, the Company had no outstanding borrowings under the Revolver.
Refer to Note 10 - “Debt” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional details. 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%.
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 Company is in the process of preparing for the rate case and intends to request a net increase to its annual revenue requirement of $6.5 million, to be implemented with the first phase beginning in May 2026 and the second phase in January 2027.
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 -44- Table of Contents beginning in May 2026 and the second phase in January 2027.
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.
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.
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.
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. -42- Table of Contents 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.
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.
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.
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 20244.
On April 30, 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 note with a principal amount of $2.4 million (the “WIFA Note”) to improve the utility’s infrastructure, including enhancements to the fluoride treatment system and other projects, of which $0.7 million is forgivable.
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”).
In connection with the underlying assets being placed in service, the forgivable portion of the loan was recognized as CIAC in June 2025. -48- Table of Contents 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”).
For the year ended December 31, 2024, net cash provided by operating activities totaled $21.8 million compared to $25.4 million for the year ended December 31, 2023.
For the year ended December 31, 2025, net cash provided by operating activities totaled $20.2 million compared to $21.8 million for the year ended December 31, 2024. The change in cash from operating activities was primarily driven by the decrease in net income year over year.
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 $17.1 million for the year ended December 31, 2024, an $16.7 million increase, as compared to the $0.4 million in cash provided by financing activities for the year ended December 31, 2023.
Cash from Financing Activities The net cash provided by financing activities totaled $50.9 million for the year ended December 31, 2025, a $33.8 million increase, as compared to $17.1 million in cash provided by financing activities for the year ended December 31, 2024.
Financial and operational data for the Company years ended December 31, 2024 and 2023 is summarized in the following table (in thousands, except for share amounts): Year Ended Favorable (Unfavorable) December 31, 2024 vs. 2023 2024 2023 $ % Revenue $ 52,692 $ 53,028 $ (336) (0.6) % Operating expenses 43,328 40,742 (2,586) (6.3) % Operating income 9,364 12,286 (2,922) (23.8) % Total other expense (1,502) (1,432) (70) (4.9) % Income before income taxes 7,862 10,854 (2,992) (27.6) % Income tax expense (2,073) (2,872) 799 27.8 % Net income $ 5,789 $ 7,982 $ (2,193) (27.5) % Basic earnings per common share $ 0.24 $ 0.33 $ (0.09) (27.3) % Diluted earnings per common share $ 0.24 $ 0.33 $ (0.09) (27.3) % 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.
Year Ended Favorable (Unfavorable) December 31, 2025 vs. 2024 (in thousands, except per share amounts) 2025 2024 $ % Revenue $ 55,758 $ 52,692 $ 3,066 5.8 % Operating expenses 48,602 43,328 (5,274) (12.2) % Operating income 7,156 9,364 (2,208) (23.6) % Total other expense (3,173) (1,502) (1,671) (111.3) % Income before income taxes 3,983 7,862 (3,879) (49.3) % Income tax expense (1,026) (2,073) 1,047 50.5 % Net income $ 2,957 $ 5,789 $ (2,832) (48.9) % Basic earnings per common share $ 0.11 $ 0.24 $ (0.13) (54.2) % Diluted earnings per common share $ 0.11 $ 0.24 $ (0.13) (54.2) % -45- Table of Contents Revenue Operating revenue is substantially derived from regulated water, wastewater, and recycled water service provided to customers based upon tariff rates approved by the ACC.
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.
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.
In February 2025, the Company notified the ACC of its intention to file a rate case for its GW-Santa Cruz and GW-Palo Verde utilities in 2025. The GW-Santa Cruz and GW-Palo Verde rate case will be based on a test year ending December 31, 2024 with updates for changes in post-test year plant.
Rate Regulation Updates 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.
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 this report.
For additional information and risks associated with the access to and quality of water supply, see “Risk Factors—Business and Operational Factors—Inadequate water supplies and wastewater capacity could have a material adverse effect upon our ability to achieve the customer growth necessary to increase our revenue,” included in Part I, Item 1A of this report.
On July 1, 2024, the Company and Northern Trust entered into a fifth amendment to the Northern Trust Loan Agreement, which further amended the scheduled maturity date for the Revolver from July 1, 2025 to July 1, 2026.
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.
Such recovery will take place over an extended period of time because recovery through rate increases is subject to regulatory lag.
Such recovery will take place over an extended period of time because recovery through rate increases is subject to regulatory lag. On July 8, 2025, the Company completed the previously announced acquisition of seven water systems from Tucson Water, the City of Tucson’s water utility, for a purchase price of approximately $8.1 million.
As of December 31, 2024, active service connections increased 2,729, or 4.4%, to 64,520 compared to 61,791 active service connections as of December 31, 2023, primarily due to organic growth in our service areas. Approximately 89.6% of the 64,520 active service connections are serviced by our GW-Santa Cruz and GW-Palo Verde utilities as of December 31, 2024.
As of December 31, 2025, active service connections increased 4,057, or 6.3%, to 68,577 compared to 64,520 active service connections as of December 31, 2024, primarily due to organic growth in our service areas and the recent acquisition of -41- Table of Contents seven water systems from the City of Tucson.
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 $15.0 million Revolver.
Income Tax Expense – The primary driver for the decrease in income tax expense was lower pre-tax income for the year ended December 31, 2025 compared to the year ended December 31, 2024. 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.
Operating Expenses – The following table summarizes operating expenses for the years ended December 31, 2024 and 2023 (in thousands): Year Ended Favorable (Unfavorable) December 31, 2024 vs. 2023 2024 2023 $ % Personnel costs - operations and maintenance $ 5,014 $ 4,411 $ (603) (13.7) % Utilities, chemicals and repairs 3,927 3,767 (160) (4.2) % Other operations and maintenance expenses 4,785 4,491 (294) (6.5) % Total operations and maintenance expense 13,726 12,669 (1,057) (8.3) % Personnel costs - general and administrative 9,173 8,684 (489) (5.6) % Professional fees 1,687 2,018 331 16.4 % Other general and administrative expenses 6,022 5,934 (88) (1.5) % Total general and administrative expense 16,882 16,636 (246) (1.5) % Depreciation and amortization 12,720 11,437 (1,283) (11.2) % Total operating expenses $ 43,328 $ 40,742 $ (2,586) (6.3) % -45- Table of Contents 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.
Refer to Note 3 - "Regulatory Matters" of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information regarding the Southwest Plant bill credits. -46- Table of Contents Operating Expenses Year Ended Favorable (Unfavorable) December 31, 2025 vs. 2024 (in thousands) 2025 2024 $ % Personnel costs - operations and maintenance $ 5,637 $ 5,014 $ (623) (12.4) % Utilities, chemicals and repairs 4,671 3,927 (744) (18.9) % Other operations and maintenance expenses 5,441 4,785 (656) (13.7) % Total operations and maintenance expense 15,749 13,726 (2,023) (14.7) % Personnel costs - general and administrative 9,119 9,173 54 0.6 % Professional fees 1,899 1,687 (212) (12.6) % Other general and administrative expenses 6,837 6,022 (815) (13.5) % Total general and administrative expense 17,855 16,882 (973) (5.8) % Depreciation, amortization and accretion 14,998 12,720 (2,278) (17.9) % Total operating expenses $ 48,602 $ 43,328 $ (5,274) (12.2) % 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 personnel costs were primarily attributable to hiring additional employees for the newly acquired water systems from the City of Tucson, as well as increased medical costs. • Higher utilities, chemicals and repairs were primarily the result of increases in water treatment expenses, chemicals and purchased power.
On November 27, 2024, the Company announced a monthly dividend increase to $0.02533 per share ($0.30396 per share annually) from $0.02508 per share ($0.30096 per share annually).
The Company maintains a monthly dividend program with dividends currently set at $0.02533 per share ($0.30396 per share annually).
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, if any, involved.
There can be no assurance as to the outcome of the AFFF MDL with regard to these remaining defendants, including any decision or resolution thereof, timing, or the ultimate amounts that may be realized, if any. As of February 27, 2026, we received three disbursements totaling approximately $0.5 million, net of attorneys’ fees and other costs.
The increase in other operations and maintenance expenses was primarily driven by higher phone, internet and IT services of $0.3 million. 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 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. • Higher professional fees were primarily attributable to increased legal fees associated with the Nikola bankruptcy. • The increase in other general and administrative expenses was primarily attributable to: ◦ Increased costs associated with third party service providers, significantly driven by new and expanded services, as well as additional licensing fees, resulting from organic and acquisitive growth. ◦ Higher general liability insurance costs. ◦ Higher fees from municipality licensing-type agreements related to increased revenue. ◦ Increased rent expense related to the renewal of our corporate office lease. ◦ Higher credit loss expense as a result of aging receivables.
Conversely, when weather conditions are extremely dry, our business may be affected by government-issued drought- -42- Table of Contents 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 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.
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 this report.
For additional information and risks associated with weather and seasonality, see “Risk Factors—Business and Operational Factors—Our utilities business is subject to seasonal fluctuations and other weather-related conditions, such as droughts, which could adversely affect the supply of and demand for our service and our results of operations,” and “Risk Factors—Business and Operational Factors—Climate variability may cause increased volatility in weather and may impact water usage and related revenue or require additional expenditures, all of which may not be fully recoverable in rates or otherwise,” included in Part I, Item 1A of this report.
Removed
Arizona’s job growth increased by 1.7% during 2024 as compared to the same period for the prior year, ranking the state in the top twenty nationally as of December 31, 2024. Arizona is projected to add 478,000 jobs with an annual growth rate of 1.4% through 2032, exceeding the national average.
Added
Our organic growth continues to be primarily influenced by the comparatively lower cost of housing in the City of Maricopa relative to other areas within the Phoenix MSA. As of December 2025, the median home sales price in the City of Maricopa was 26% lower than in the City of Phoenix.
Removed
According to the state’s commerce authority, Arizona also received $50 billion in 2024r, including contributions from major industry players such as Taiwan Semiconductor, Intel and Procter & Gamble.
Added
An important development during 2025 was the addition of adding the State Route 347 Improvement Project to the Arizona Department of Transportation five-year construction plan. The project represents a transformative investment in regional infrastructure that will enhance safety, improve mobility and support the continued growth of the City of Maricopa and surrounding areas.
Removed
Management believes that Global Water is well-positioned to benefit from the growth expected in the Phoenix metropolitan area due to the availability of lots, existing infrastructure in place within the company’s service areas, and increased activity related to multi-family developments. According to the W.P.
Added
We continue to monitor potential effects on our operations due to changes in the macroeconomic environment, such as the impacts of tariffs on our operational costs and construction work in progress, as well as new home construction in our service areas.
Removed
Carey School of Business Greater Phoenix Blue Chip Real Estate Consensus Panel (the “Greater Phoenix Blue Chip Panel”), the single-family housing market in the Phoenix metropolitan area has experienced a weakness in permits since 2021; however, the outlook for single-family housing is improving. The Greater Phoenix Blue Chip Panel anticipates single-family permit increases in 2025.

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