Global Water(GWRS) - 2025 Q1 - Quarterly Results

Report Overview Q1 2025 Highlights In the first quarter of 2025, Global Water Resources saw a 7.3% increase in total revenue to $12.5 million, driven by organic growth and higher consumption, while net income declined by 14.5% to $0.6 million Q1 2025 Key Financial & Operational Metrics | Metric | Q1 2025 Value | Change vs. Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $12.5 million | ▲ 7.3% | | Net Income | $0.6 million | ▼ 14.5% | | Adjusted EBITDA | $5.6 million | ▲ 4.4% | | Active Service Connections | 65,163 | ▲ 4.3% | | Water Consumption | 0.84 billion gallons | ▲ 24.2% | | Cash and Cash Equivalents | $31.5 million | ▲ from $9.0M at YE 2024 | - The company invested $15.2 million in infrastructure projects to support existing utilities and future growth[5] - Filed general rate case applications for two utilities, requesting a net annual revenue increase of $6.5 million[5][6] Management Commentary Management attributes the 7.3% top-line growth to increased active connections and consumption, highlighting progress on rate cases and a strengthened capital position of approximately $51.5 million for growth opportunities, including the pending acquisition of seven water systems - CEO Ron Fleming credited revenue growth to organic increases in active connections and higher consumption, expressing confidence in future growth through rate increases[4] - The company filed rate cases for GW-Santa Cruz and GW-Palo Verde, requesting a $6.5 million net revenue increase, and received approval for the GW-Farmers case, which will add approximately $1.1 million in annual revenue once phased in[6][7] - CFO Mike Liebman noted that a $30.8 million stock offering and an expanded $20 million credit facility have positioned the company with approximately $51.5 million in capital resources for growth opportunities[9][10] - The acquisition of seven water systems from the City of Tucson is expected to close in mid-2025, adding approximately 2,200 water service connections[10] Subsequent Events Following Q1, the Arizona Corporation Commission (ACC) approved the GW-Farmers rate case, expected to increase annual revenue by about $1.1 million, and the company extended its revolving credit facility's maturity and increased borrowing capacity - On April 22, 2025, the ACC approved the GW-Farmers rate case, with new rates expected to generate an approximate $1.1 million increase in annual revenue, implemented in three stages starting May 1, 2025[5] - The company extended the maturity of its revolving credit facility to May 18, 2027, and increased the available principal from $15 million to $20 million[5] Financial Performance Financial Summary For Q1 2025, total revenues increased 7.3% to $12.5 million, while operating expenses grew 8.3% to $11.2 million, leading to a 14.5% decrease in net income to $0.6 million, though Adjusted EBITDA showed a 4.4% increase to $5.6 million Revenue Analysis Total regulated revenue for Q1 2025 increased by 7.3% to $12.5 million compared to the prior year, primarily driven by a 14.4% increase in water service revenue from organic connection growth, higher consumption, and new rates Revenue Breakdown (Three Months Ended March 31) | Revenue Source | 2025 ($ thousands) | 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Water service | 5,980 | 5,226 | ▲ 14.4% | | Wastewater and recycled water service | 6,477 | 6,384 | ▲ 1.5% | | Total revenue | 12,457 | 11,610 | ▲ 7.3% | - The revenue increase was attributed to organic growth in active connections, increased water consumption (from irrigation, construction, and commercial customers), and higher rates from the GW-Saguaro general rate case effective July 2024[14] Operating Expenses Analysis Total operating expenses rose by 8.3% to $11.2 million, mainly due to a 12.3% rise in operations and maintenance costs from higher chemical and power usage, and a 13.4% increase in depreciation and amortization from an expanded asset base Operating Expenses Breakdown (Three Months Ended March 31) | Expense Category | 2025 ($ thousands) | 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Operations and maintenance | 3,687 | 3,284 | ▲ 12.3% | | General and administrative | 4,187 | 4,125 | ▲ 1.5% | | Depreciation and amortization | 3,328 | 2,934 | ▲ 13.4% | | Total operating expenses | 11,202 | 10,343 | ▲ 8.3% | - Higher O&M costs were due to increased chemical and power purchases from higher consumption, as well as new IT and labor service contracts[16] - The increase in depreciation and amortization was attributable to a larger base of depreciable fixed assets and new vehicle and office leases[18] Other Expense Other expense increased to $0.5 million in Q1 2025 from $0.3 million in Q1 2024, primarily due to a $0.2 million reduction in income from Buckeye growth premiums because of fewer new meter connections - The increase in other expense was mainly caused by a $0.2 million decrease in income from Buckeye growth premiums and a $0.1 million increase in net interest expense[19] Net Income and Adjusted EBITDA Net income for Q1 2025 decreased by 14.5% to $0.6 million, or $0.02 per share, while Adjusted EBITDA, a non-GAAP measure, increased by 4.4% to $5.6 million Profitability Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $0.6 million | $0.7 million | ▼ 14.5% | | EPS (Diluted) | $0.02 | $0.03 | ▼ 33.3% | | Adjusted EBITDA | $5.6 million | $5.4 million | ▲ 4.4% | Consolidated Financial Statements The consolidated financial statements detail the company's financial position as of March 31, 2025, and its performance for the first quarter, showing a significant increase in cash and shareholders' equity due to a stock offering, alongside revenue growth offset by higher expenses Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $443.9 million, up from $405.1 million at year-end 2024, driven by a rise in cash and cash equivalents to $31.5 million following a stock offering, and growth in net utility plant, with total shareholders' equity increasing substantially to $77.2 million Selected Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $31,467 | $9,047 | | Net utility plant | $378,245 | $359,379 | | Total Assets | $443,918 | $405,137 | | Long-term debt, net | $118,876 | $118,518 | | Total shareholders' equity | $77,216 | $47,604 | | Total Capitalization and Liabilities | $443,918 | $405,137 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, the company generated $12.5 million in revenue, a 7.3% increase year-over-year, but due to an 8.3% rise in operating expenses and higher other expenses, operating income slightly decreased to $1.255 million, and net income fell to $0.591 million Statement of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $12,457 | $11,610 | | Total operating expenses | $11,202 | $10,343 | | Operating Income | $1,255 | $1,267 | | Net Income | $591 | $691 | | Diluted EPS | $0.02 | $0.03 | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities was $7.5 million, with $15.2 million used in investing activities, and a positive $29.8 million from financing activities, largely due to a common stock issuance, resulting in a significant increase in total cash to $33.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,477 | $8,068 | | Net cash used in investing activities | ($15,216) | ($5,765) | | Net cash provided by financing activities | $29,758 | $15,806 | | Increase in cash, cash equivalents, and restricted cash | $22,019 | $18,109 | - Financing activities were primarily driven by the issuance of common stock, which provided net proceeds of $31,041 thousand[44] Business Strategy and Outlook Business Strategy The company's near-term growth strategy focuses on increasing service connections, enhancing operational efficiencies, and securing rate increases from the ACC, with a core component being the continued aggregation of water and wastewater utilities through acquisitions to implement its regional "Total Water Management" approach - The company's strategy involves three main pillars: - Increasing service connections - Improving operating efficiencies - Increasing utility rates as approved by the ACC[23] - A key strategic focus is the acquisition and consolidation of water and wastewater utilities to realize benefits of regionalization and environmental stewardship[23] Growth Drivers Organic growth remains strong, with a 4.3% year-over-year increase in active service connections to 65,163, supported by positive population and economic trends in Arizona's "Sun Corridor," including projected job additions and a strong housing market - Active service connections increased by 4.3% to 65,163 as of March 31, 2025, compared to the prior year, driven by organic growth[24] - The Phoenix metropolitan area's population is projected to grow to 5.8 million by 2030, supported by a diverse employment base and low taxes[25] - Despite a Q1 pullback, single-family permits in the Greater Phoenix area are projected to remain strong at 27,333 for 2025, supporting future connection growth[11] Shareholder Information Dividend Policy The company has declared a monthly cash dividend of $0.02533 per common share, corresponding to an annualized dividend of $0.30396 per share - A monthly cash dividend of $0.02533 per common share was declared, payable on May 30, 2025, to holders of record on May 16, 2025[22] - The annualized dividend rate is $0.30396 per common share[22] Conference Call Information Global Water Resources will host a conference call on Thursday, May 15, 2025, at 1:00 p.m. Eastern time to discuss the first quarter 2025 financial results, with a webcast and replay available Conference Call Details | Item | Detail | | :--- | :--- | | Date | Thursday, May 15, 2025 | | Time | 1:00 p.m. Eastern time | | Toll-free dial-in | 1-833-816-1435 | | International dial-in | 1-412-317-0527 | | Conference ID | 10199311 | Appendices About Global Water Resources Global Water Resources, Inc. is a water resource management company that owns and operates 32 water, wastewater, and recycled water systems, primarily in growth areas near Phoenix and Tucson, recognized for its "Total Water Management" (TWM) approach, recycling over 1 billion gallons of water annually - The company operates 32 systems providing water, wastewater, and recycled water services in Arizona[29] - It utilizes an integrated "Total Water Management" (TWM) approach to manage the entire water cycle and maximize the use of recycled water[30] Use of Non-GAAP Measures This report includes the non-GAAP financial measures EBITDA and Adjusted EBITDA, which management defines and presents as useful supplemental indicators of operating performance, while cautioning against their use as alternatives to GAAP measures - The report uses non-GAAP measures EBITDA and Adjusted EBITDA[33] - Adjusted EBITDA is defined as EBITDA excluding non-recurring events, restricted stock expense, and gain/loss on disposal of assets[33] - Management cautions that its calculation of these measures may differ from other companies and should not be used as an alternative to GAAP measures like net income[34] Reconciliation of Net Income to EBITDA and Adjusted EBITDA A reconciliation is provided to bridge the GAAP measure of Net Income to the non-GAAP measures of EBITDA and Adjusted EBITDA, showing that for Q1 2025, Net Income of $0.591 million reconciles to an Adjusted EBITDA of $5.643 million Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $591 | $691 | | Adjustments (Taxes, Interest, D&A) | +$4,890 | +$4,512 | | EBITDA | $5,481 | $5,203 | | EBITDA adjustments (Stock expense, etc.) | +$162 | +$200 | | Adjusted EBITDA | $5,643 | $5,403 | Cautionary Note Regarding Forward-Looking Statements The press release contains forward-looking statements regarding future events and performance, based on current expectations and subject to significant risks and uncertainties, with investors cautioned to consult SEC filings for a comprehensive discussion of risk factors - The report contains forward-looking statements concerning strategies, future performance, growth, rate case outcomes, and acquisitions[36] - Actual results may differ materially from these statements due to a number of risks, uncertainties, and other factors[36] - Investors are advised to consult the "Risk Factors" section of the company's SEC filings (Form 10-K and 10-Q) for a full disclosure of potential risks[36]