Global Water Resources Misses Q3 EPS as Depreciation Surges 30%

Global Water Resources reported adjusted earnings per share of $0.03 for the third quarter of 2026, missing the $0.05 consensus estimate and snapping four consecutive quarters of beating EPS expectations. Revenue of $16.3 million came in above the $16.0 million estimate and grew 5% year over year.

Depreciation drove the shortfall. Infrastructure placed in service through the company's 2025 capital improvement program began flowing through the income statement, pushing depreciation, amortization, and accretion up 30.4% year over year. Operating income and net income both fell from the same quarter a year earlier, illustrating how heavily those costs are bearing down on the bottom line.

CEO Ron Fleming acknowledged the squeeze directly: "Assets placed in service under the 2025 and 2026 capital improvement plans increased depreciation expense and continued to affect near-term net income and earnings per share. Operations and maintenance expense also increased, primarily due to rising medical costs and higher costs to power and operate our newly operational plant." Management expects elevated depreciation from ongoing capital programs to keep weighing on near-term EPS.

The near-term relief valve is a regulatory decision. The Arizona Corporation Commission was scheduled to deliberate on November 4, 2026 over an administrative law judge's recommendation to adopt a GW-Santa Cruz rate settlement. If the ACC approves, new rates for GW-Santa Cruz would take effect December 1, offering an earnings tailwind into 2027. Rate reviews for several other subsidiaries, including GW-Palo Verde, GW-Saguaro, GW-Farmers, and GW-Ocotillo, are planned for the first half of 2027, with new rates estimated to arrive in 2028.

On the growth side, total active service connections rose 2.4% year over year to 69,797, with water, wastewater, and recycled water revenue all higher. Fleming characterized the recent slowdown in new connection and permit activity as temporary, attributing it to higher mortgage rates and broader macroeconomic pressures, while pointing to continued Phoenix-area development, particularly in the City of Maricopa, as a foundation for longer-term organic growth. The company also completed a $10.0 million private placement of common stock and expanded its revolving credit facility from $20.0 million to $30.0 million during the quarter.

The monthly dividend remains in place at $0.02533 per common share, payable November 30 to shareholders of record as of November 16. With cash and equivalents down 77.3% year over year to $3.5 million and interest expense rising from December 2025 borrowings, the balance sheet warrants attention alongside whatever rate relief the ACC ultimately delivers.