Global Water(US:GWRS)2025-11-12 21:48Service Connections and Growth - As of September 30, 2025, active service connections increased by 4,241, or 6.6%, to 68,130 compared to 63,889 active service connections as of September 30, 2024[87]. - The company experienced a year-over-year organic increase in active connections of 3.5% as of September 30, 2025[80]. - Approximately 87.2% of the active service connections are serviced by GW-Santa Cruz and GW-Palo Verde utilities as of September 30, 2025[87]. - Active water connections increased by 8.9% to 38,631 in Q3 2025, compared to 35,464 in Q3 2024[120]. - The increase in revenue was primarily driven by the acquisition of seven water systems from the City of Tucson and organic growth in active connections[120]. Financial Performance - Revenue for the three months ended September 30, 2025, increased by 8.4% to $15,519,000 compared to $14,321,000 in 2024[119]. - Total revenue for the nine months ended September 30, 2025, was $42,217,000, a 7.0% increase from $39,441,000 in 2024[128]. - Operating expenses rose by 21.9% to $12,597,000 in Q3 2025, up from $10,337,000 in Q3 2024[122]. - Total operating expenses for the nine months ended September 30, 2025, were $35,420,000, an increase of 12.8% from $31,393,000 in 2024[130]. - Net income decreased by 41.3% to $1,717,000 in Q3 2025, down from $2,925,000 in Q3 2024[119]. - Basic earnings per share for the nine months ended September 30, 2025, decreased by 31.8% to $0.15 from $0.22 in 2024[128]. Acquisitions and Investments - The acquisition of seven water systems from the City of Tucson was completed for an amended purchase price of approximately $8.1 million, expected to generate approximately $1.5 million in annual revenue[91]. - The Company completed the acquisition of seven water systems from Tucson Water for approximately $8.1 million on July 8, 2025[147]. - The Company expects elevated levels of capital expenditures in 2025 compared to 2024, driven by its capital expenditure plan[153]. Infrastructure and Capacity - The Company has significant unused capacity in its water supply systems, particularly in the north, to support future growth despite regulatory constraints in certain areas[107]. - The Company is working with development partners to address long-term water resource constraints in Pinal County, ensuring adequate supply for current and future demand[108]. - Capital expenditures for infrastructure investment are crucial for earnings growth, with the Company maintaining a capital improvement plan to enhance financial performance[101]. Regulatory and Legal Matters - The Company is involved in a multi-district civil class action lawsuit related to PFAS contamination, with 3M expected to make annual payments through 2036, totaling approximately $0.4 million received as of November 10, 2025[98]. - The Company filed a general rate case application on March 5, 2025, requesting a net annual revenue increase of approximately $6.5 million, with an adjusted rate base of approximately $164.6 million[110]. - The ACC Staff recommended a net annual revenue decrease of approximately $7.1 million in the ongoing rate case, contrasting with the Company's request[111]. Economic and Market Conditions - The company continues to monitor the impact of macroeconomic conditions, including inflationary pressures and changes in tariff policy, on its operations[86]. - The population of the Phoenix metropolitan area is projected to grow from 5.2 million in 2024 to 5.8 million by 2030 and 6.5 million by 2040[80]. - The company expects to benefit from the anticipated long-term growth of the Phoenix MSA, supported by ample lot availability and strong existing infrastructure[82]. Cash Flow and Financing - For the nine months ended September 30, 2025, net cash provided by operating activities totaled $17.5 million, an increase from $15.8 million for the same period in 2024, primarily driven by increases in payments received related to ICFA contracts[151]. - The net cash used in investing activities was approximately $57.7 million for the nine months ended September 30, 2025, compared to $19.2 million for the same period in 2024, reflecting a $38.6 million increase due to higher capital expenditures and the acquisition of seven water systems[152]. - The net cash provided by financing activities totaled $46.7 million for the nine months ended September 30, 2025, a $26.0 million increase compared to $20.7 million for the same period in 2024, mainly due to $43.8 million from common stock issuances[155]. - As of September 30, 2025, the Company had outstanding borrowings of $6.9 million under its $20.0 million Revolver, with a weighted average interest rate of 6.43%[144]. - The Company received gross proceeds of approximately $13.1 million from a securities purchase agreement for the issuance of 1,270,572 shares of common stock at a price of $10.30 per share on September 30, 2025[140]. Operational Efficiency - Higher personnel costs were attributed to filling vacant positions and hiring for newly acquired systems, alongside increased medical costs[123]. - Depreciation and amortization increased significantly due to an 11.3% rise in depreciable fixed assets[135]. - The second and third quarters typically see the highest water service revenue, influenced by seasonal weather patterns affecting customer demand[106]. - As of June 30, 2025, the Company completed an inventory of its service lines and found no lead pipes, in compliance with the EPA's Lead and Copper Rule Improvements[99]. Grants and Funding - The Company was awarded a $1.6 million grant from WIFA in December 2023 to replace manual read meters with advanced metering infrastructure smart meters[142].