Global Water(US:GWRS)2024-03-07 01:03Service Connections and Growth - As of December 31, 2023, Belmont served 622 active service connections and has agreements to serve approximately 100,000 home sites at full build-out[47]. - Farmers Water Co. served 3,462 active water connections with a service area of approximately 21.0 square miles as of December 31, 2023[58]. - The company acquired Mirabell, which served 61 active water connections as of December 31, 2023, expanding its footprint in Tucson[55]. - The service area of Hassayampa, a wastewater utility, is expected to provide growth opportunities as development commences in the Tonopah area[48]. - The company has entered into agreements with developers for mixed-use developments, indicating a strategic focus on market expansion[47]. Compliance and Regulatory Standards - The company achieved a compliance rate of 99.9% for meeting state and federal drinking water standards in 2023[62]. - The overall compliance rating for wastewater requirements was also 99.9%, reflecting the company's commitment to environmental standards[62]. - The company maintains a proactive approach to regulatory compliance, investing in relationships with regulatory agencies[75]. - The company’s operations are subject to regulatory compliance, which may increase costs and require facility alterations in response to new standards[108]. - The company is subject to regulatory authority by the ACC, which influences cost recovery and financial condition[116]. Water Supply and Management - The company plans to rely on groundwater and recycled water to meet future demands, although groundwater access is closely regulated[76]. - The company’s water supply is primarily derived from groundwater, with plans to augment supplies with recycled and surface water in the future[89]. - The company’s recycled water meets Arizona's Aquifer Water Quality Standards and is recognized as Class A+, the highest quality of recycled water regulated by the ADEQ[94]. - The company has obtained a Designation of Assured Water Supply (DAWS) for approximately 22,900 acre-feet of water use in the Maricopa/Casa Grande service territory[80]. - In 2023, the company utilized approximately 8,750 acre-feet of the annually available 22,914 acre-feet permitted in the DAWS, indicating efficient water management[81]. Financial Performance - Total revenues for the year ended December 31, 2023, increased to $53,028,000, up 18.5% from $44,728,000 in 2022[360]. - Net income for 2023 was $7,982,000, representing a 45% increase compared to $5,506,000 in 2022[360]. - Operating income rose to $12,286,000 in 2023, a 57.5% increase from $7,819,000 in the previous year[360]. - Water services revenue increased to $24,860,000, up 19.0% from $20,885,000 in 2022[360]. - Wastewater and recycled water services revenue grew to $25,382,000, an increase of 6.4% from $23,843,000 in 2022[360]. Operating Expenses and Capital Expenditures - Total operating expenses for 2023 were $40,742,000, up from $36,909,000 in 2022, reflecting a 10.0% increase[360]. - Capital expenditures in 2023 totaled $22,312,000, a decrease of 34.5% from $33,984,000 in 2022[365]. - Increased operating expenses associated with business expansion may negatively impact operating income and profit margins[135]. - The company anticipates significant capital expenditures to support service provision in existing areas and to fund system and technology development[138]. Risks and Challenges - The company faces competition for new service areas and acquisitions from other utilities, including EPCOR Water Arizona Inc. and Arizona Water Company[95]. - Water supply limitations in Arizona could adversely affect the company's ability to meet customer demand and revenue growth[127]. - The company may not be able to recover increased operating costs due to water shortages in a timely manner[130]. - Legal proceedings and claims could materially affect the company's operating results and financial condition[123]. - Climate variability poses risks that could affect water supply and demand, potentially leading to decreased revenues and increased costs[141]. Employee and Operational Efficiency - As of December 31, 2023, the company employed 106 full-time and 3 part-time employees, marking a 9% increase from the previous year due to growth and the acquisition of Farmers[100]. - The company employs advanced technology, including SCADA and automated meter reading, to enhance operational efficiency and customer service[91]. - The company may face challenges in recruiting and retaining qualified personnel, which could impact operational efficiency and profitability[156]. Shareholder and Stock Information - The company intends to continue paying a regular monthly dividend of $0.02508 per share, totaling $0.30096 annually, but future payments are not guaranteed[194]. - Approximately 54% of the company's outstanding common stock is owned by directors, executive officers, and stockholders holding more than 5%, which may limit other stockholders' influence over corporate matters[190]. - The market price of the company's common stock may be volatile due to various factors, including operating performance and market conditions[191]. Cybersecurity and Technology Risks - The company faces risks related to cybersecurity, including potential disruptions to operations and financial reporting due to breaches, which could materially impact business and cash flows[184]. - The company relies on third-party information technology systems, and disruptions could significantly limit operational efficiency, affecting billing and customer service[186]. - The company’s ability to manage and operate efficiently may be hindered by disruptions in telecommunications provided by third-party vendors[189].