Service Connections and Revenue - As of December 31, 2024, the total active service connections reached 64,491, with a significant annualized growth of 6.1% from December 2019 to December 2024, adding 13,485 connections[43]. - GW-Santa Cruz and GW-Palo Verde contributed approximately 41.0% and 50.7% of total revenue for the years ended December 31, 2024, respectively[45]. - GW-Belmont served 622 active service connections and has agreements to serve approximately 100,000 anticipated home sites at full build-out[49]. - GW-Saguaro served 1,571 active water connections, while GW-Farmers served 3,494 active connections as of December 31, 2024[52]. - The company anticipates a net increase to its annual revenue requirement of 1.1 million, with rates phased in starting May 1, 2025[70]. Regulatory Compliance and Environmental Standards - The company achieved a compliance rate of 99.9% for meeting state and federal drinking water standards in 2024[56]. - The company expects increased capital expenditures for PFAS-contaminated water treatment due to compliance with the new NPDWR regulations[64]. - The company has completed an inventory of its pipes and found no lead pipes, in line with the new Lead and Copper Rule Improvements[65]. - The company is committed to regulatory compliance and has developed cooperative relationships with regulatory agencies to ensure adherence to environmental standards[75]. - Regulatory compliance costs may increase due to new or stricter standards, potentially impacting profitability if rate increases are not approved[103]. - The company may incur significant costs to comply with environmental laws, which could adversely affect its business operations[105]. Financial Performance - Total revenue for the year ended December 31, 2024, was 53,028,000 in 2023[322]. - Net income for 2024 was 7,982,000 in 2023[322]. - Operating income decreased to 12,286,000 in 2023, reflecting a decline of 23.5%[322]. - Total assets increased to 361,095,000 in 2023, representing an increase of 12.2%[320]. - Cash and cash equivalents rose significantly to 3,087,000 in 2023, an increase of 194.5%[328]. - Total current liabilities increased to 14,217,000 in 2023, marking a rise of 56.5%[320]. - Long-term debt increased to 101,341,000 in 2023, an increase of 16.9%[320]. - Capital expenditures for 2024 were 22,312,000 in 2023, reflecting a 45.0% increase[327]. - Dividends declared per common share remained steady at $0.30 for both 2024 and 2023[322]. Operational Efficiency and Technology - The company employs sophisticated technology including SCADA and automated meter infrastructure to enhance operational efficiency and customer service[90]. - The company focuses on decentralized treatment facilities to optimize efficiency in providing water and wastewater services[91]. - The company intends to increase the use of recycled water to meet future demands, although current infrastructure and permits are limited in most service areas[76]. - The company emphasizes the use of recycled water for non-potable purposes, which is critical for its business strategy[172]. Competition and Market Risks - The company faces competition from other water and wastewater utilities for new service areas and acquisitions, including EPCOR Water Arizona Inc. and Arizona Water Company[93]. - The company relies predominantly on groundwater and recycled water, which may not be sufficient to meet future demands[130]. - The company has not yet obtained material surface water rights, which may limit its ability to support customer growth[131]. - Future acquisitions may not achieve sufficient profitability, posing risks to the company's financial health and operational focus[155][156]. - The company faces competition for new service areas and acquisitions, which could limit revenue growth opportunities[164][165]. Legal and Regulatory Risks - The company is subject to comprehensive regulation by the Arizona Corporation Commission (ACC), which influences its ability to recover costs and set rates[111]. - The company faces risks related to the design, construction, and operation of its systems, which could adversely affect its financial condition[138]. - The company is exposed to various legal risks that could materially adversely affect its operating results[122]. - Changes in utility policy through legislative initiatives in Arizona could impact the company's growth and financial condition[119]. - The company’s financial statements are subject to rate regulation by the Arizona Corporation Commission (ACC), which impacts the rates charged for water and wastewater services[314]. Human Resources - The company employed 122 full-time individuals and 3 part-time employees as of December 31, 2024, representing a 15% increase from the previous year[97]. Customer Demand and Seasonal Variability - Customer demand for water is generally higher during warmer months, influenced by irrigation and outdoor water use, which can affect revenue if temperatures are cooler or rainfall is higher than normal[95]. - Seasonal fluctuations in water demand can adversely affect profitability, with cooler temperatures or excessive rainfall potentially decreasing water usage[154]. Cybersecurity and Technology Risks - The company’s information technology systems are vulnerable to cybersecurity threats, which could materially impact its financial condition[173]. - The company has obtained cyber insurance, but it may not cover all losses or damages from a security breach[174].
Global Water(GWRS) - 2024 Q4 - Annual Report