Global Water(US:GWRS)2021-05-06 00:17Service Connections and Growth - Total service connections increased by 3,813, or 8.2% (10.1% annualized growth), from 46,590 as of March 31, 2020, to 50,403 as of March 31, 2021[117] - Active service connections rose by 3,935, or 8.5% (10.3% annualized growth), to 50,162 compared to 46,227 as of March 31, 2020[118] - Active water connections increased by 8.8% to 26,094 as of March 31, 2021, from 23,983 as of March 31, 2020[165] - The Phoenix metropolitan area is projected to grow to a population of 5.7 million by 2030 and 6.5 million by 2040[113] - The company believes it is well-positioned to benefit from growth in the Phoenix metropolitan area due to the availability of lots and existing infrastructure[114] Financial Performance - Total revenues for the three months ended March 31, 2021, increased by $1.0 million, or 12.5%, to $9.3 million compared to $8.2 million for the same period in 2020, driven by an 8.5% increase in active service connections[162] - Water services revenue rose by $0.6 million, or 17.7%, to $4.0 million for the three months ended March 31, 2021, primarily due to increased consumption and growth in connections[163] - Wastewater and recycled water services revenue increased by $0.4 million, or 8.7%, to $5.2 million for the three months ended March 31, 2021, reflecting an 8.2% increase in active wastewater connections[167] - Operating expenses for the three months ended March 31, 2021, totaled $8.2 million, an increase of $1.8 million, or 27.8%, compared to $6.4 million for the same period in 2020[169] - General and administrative costs surged by $1.4 million, or 67.1%, to $3.5 million for the three months ended March 31, 2021, primarily due to higher stock appreciation rights expense[173] - Net loss for the three months ended March 31, 2021, was $0.2 million compared to net income of $0.4 million for the same period in 2020, attributed to a decrease in operating income[179] Regulatory and Rate Changes - The company is subject to extensive regulation by the Arizona Corporation Commission (ACC), which influences its rate-setting process[121] - The settlement agreement from the rate case proceedings resulted in a collective revenue requirement increase of $3.6 million, phased in from 2015 to 2021[137] - The rate increases included a 9.5% return on common equity, contributing to a 15% revenue increase in 2011[136] Capital Investments and Agreements - The company has made significant capital investments in its territories over the last fifteen years, with no comparable investments expected in the near term[130] - The company has entered into approximately 154 infrastructure coordination and financing agreements (ICFAs) covering about 275 square miles[140] - Rate Decision No. 74364 changed the accounting treatment of ICFA funds, with 70% recorded as hook-up fee liability and 30% as deferred revenue[141] - The company has agreed not to enter into new ICFAs and will utilize hook-up fee tariffs as an industry standard in Arizona[143] Cash Flow and Debt Management - For the three months ended March 31, 2021, net cash provided by operating activities totaled $4.8 million, an increase of $1.6 million compared to $3.2 million for the same period in 2020[186] - Net cash used in investing activities was $3.3 million for the three months ended March 31, 2021, a decrease of $0.3 million from $3.5 million for the same period in 2020[187] - Net cash used in financing activities totaled $0.7 million for the three months ended March 31, 2021, compared to $10.1 million in cash provided by financing activities for the same period in 2020[188] - The company issued senior secured notes with a total principal balance of $115.0 million at a blended interest rate of 4.55%[189] - As of March 31, 2021, the company was in compliance with its financial debt covenants, maintaining a debt service coverage ratio of at least 1.10 to 1.00[190] - The company entered into a revolving credit line agreement for up to $10.0 million with a maturity date of April 30, 2022, bearing an interest rate of LIBOR plus 2.00%[192] - As of March 31, 2021, the fair market value of the company's long-term debt was $123.3 million[199] - The company has no outstanding borrowings under the Northern Trust credit line as of March 31, 2021[194] Customer Assistance and Disconnections - The company resumed customer disconnections on February 9, 2021, after a voluntary pause during 2020 due to COVID-19[112] - The company expanded its customer assistance program in 2020, increasing the annual maximum benefit and including additional qualifying categories[112] Tax Implications - In 2020, the aggregate annual revenue reductions for certain utilities due to the Tax Cuts and Jobs Act (TCJA) was approximately $1.0 million[150] - The final year of the TCJA phase-in will see revenue reductions of approximately $415,000 for Santa Cruz, $669,000 for Palo Verde, $16,000 for Greater Tonopah, and $5,000 for Northern Scottsdale[150] Acquisitions - The company acquired Red Rock Utilities for $5.9 million, adding over 1,650 connections and approximately 9 square miles of service area[157] Credit Facilities - The company extended the maturity date of its revolving line of credit from April 30, 2022, to April 30, 2024[158] - As of March 31, 2021, the company has sufficient cash on hand and access to a $10.0 million revolving credit line to meet operating cash flow requirements for at least the next twelve months[183] Accounting Policies - There have been no significant changes to the company's critical accounting policies from those disclosed in the most recent Annual Report[197]