Commitments and Contingencies

12 Months Ended

Dec. 31, 2025

Commitments and Contingencies Disclosure [Abstract]

Commitments

On February 1, 2023, the Company acquired all of the equity of Farmers Water Co., an operator of a water utility with service area in Pima County, Arizona. Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium equal to $1,000 (not in thousands) for each new account established within the specified growth premium areas, up to a maximum total aggregate growth premium of $3.5 million. The obligation period of the growth premium commenced on the closing date of the acquisition and ends (i) ten years after the first new account for residential purposes is established on land that was, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area; or (ii) ten years after the date of closing if a new account (as previously described) has not been established. As of December 31, 2025, no new account was established on land that was undeveloped or unplatted at the closing date of the acquisition. The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. The estimated fair value of the remaining liability was $1.2 million as of both December 31, 2025 and December 31, 2024 and is included in Other noncurrent liabilities on the Consolidated Balance Sheets.

Within the service area of its GW-Saguaro utility, the Company is required to pay a growth premium equal to $750 (not in thousands) for each new account established within specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date. As of December 31, 2025, no meters have been installed and no accounts have been established in any of the specified growth premium areas. The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. The fair value of the remaining liability was $0.7 million as of both December 31, 2025 and December 31, 2024 and is included in Other noncurrent liabilities on the Consolidated Balance Sheets.

The Company has previously received certain ICFA advances related to its CP Water utility, which the Company is obligated to repay in the form of specified future ICFA fee reductions when those ICFA fees are due. The liability was $0.9 million as of both December 31, 2025 and December 31, 2024 and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The Company has certain contractual obligations requiring payments at specified periods. The obligations include AIAC refunds, long-term debt and lease obligations. The following table summarizes the Company’s contractual cash obligations as of December 31, 2025:


			Payments Due By Period
(in thousands)	Total		2026		2027		2028		2029		2030		Thereafter
AIAC refunds(1)	$	157,099	$	1,685	$	1,500	$	1,500	$	1,500	$	1,500	$	149,414
Long term debt	134,496		3,942		3,950		32,665		3,898		3,901		86,140
Interest payments on long-term debt(2)	47,943		6,644		6,484		5,673		4,864		4,685		19,593
Finance leases(3)	1,284		506		410		271		97		—		—

Operating leases(4)	4,255		609		607		618		636		656		1,129

Total	$	345,077	$	13,386	$	12,951	$	40,727	$	10,995	$	10,742	$	256,276

(1)The Company pays annual refunds on AIAC over a specific period of time based on operating revenue generated from developer-installed infrastructure. The refund amounts are considered an investment in infrastructure and eligible for inclusion in future rate base. The refund amounts and timing are dependent upon several variables, including new customer connections, customer consumption levels and future rate increases, which are difficult to accurately estimate. Portions of these refund amounts are payable annually over the next two decades, and amounts not paid by the contract expiration dates become nonrefundable and are transferred to CIAC.

(2)Interest on the long-term debt is based on the fixed rates of the Company’s Series A Notes, Series B Notes, 6.91% Senior Secured Notes, WIFA Note, Term Loan, and an immaterial loan payable.

(3)Finance lease payments are inclusive of interest payments totaling $0.1 million.

(4)Operating lease payments are inclusive of interest payments totaling less than $0.8 million.

The Company has entered into various purchase and service agreements whereby it is contractually obligated to make certain minimum payments in future periods. This includes purchase obligations for plant equipment, typically for water and wastewater treatment, with long lead times that require payments made over time.

Contingencies

From time to time, in the ordinary course of business, the Company may be subject to pending or threatened lawsuits in which claims for monetary damages are asserted. The Company intends to continue to defend itself vigorously in such matters. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in its financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any amount accrued related to legal matters. Management is not aware of any legal proceeding of which the ultimate resolution could materially affect the Company’s financial position, results of operations, or cash flows.