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Global Water(GWRS) - 2024 Q2 - Earnings Call Transcript
GWRSGlobal Water(GWRS)2024-08-08 21:45
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Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was 13.5million,anincreaseof13.5 million, an increase of 500,000 or 3.9% compared to Q2 2023, primarily driven by a 4.9% organic growth in service areas [14] - Operating expenses for Q2 2024 were 10.7million,upapproximately10.7 million, up approximately 700,000 or 7.2% from Q2 2023 [15] - Net income for Q2 2024 was 1.7millionor1.7 million or 0.07 per diluted share, consistent with Q2 2023 [15] - Adjusted EBITDA for Q2 2024 was 6.8million,slightlyupfrom6.8 million, slightly up from 6.7 million in Q2 2023 [16] Business Line Data and Key Metrics Changes - Total active service connections increased by 4.9% to 63,256 as of June 30, 2024, with a year-over-year regulated revenue growth rate of 5.3% [5] - The single-family dwelling unit market in the Phoenix metro area saw a 43% increase in building permits issued in the first half of 2024 compared to Q2 2023 [6] - Multifamily housing unit permits in the City of Maricopa increased by 273% in the first half of 2024 compared to the same period in 2023 [8] Market Data and Key Metrics Changes - The industrial manufacturing sector in Arizona saw 40.7billioninvestedin2023,surpassingthepreviousrecordsetin2022[9]−TheCityofMaricopaispreparingalargeindustrialcomplex,indicatingstronginterestfrombusinesseslookingtorelocatetoArizona[10]CompanyStrategyandDevelopmentDirection−Thecompanyaimstoachieveefficiencyandconsolidationinthewatermanagementindustry,focusingonexpandingitstotalwatermanagementplatform[22]−Thecompanyisinatestyearforitslargestutilities,withplanstofilearatecaseinthefirsthalfof2025[21]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedthathighinflationandcostdrivershaveimpactedearningsgrowthbutemphasizedthat2024isatestyearfortheirlargestutilities[12]−ThereisastrongconsensusonahousingshortageinMetroPhoenix,whichisexpectedtodrivedemandforhousingunits[7]OtherImportantInformation−TheArizonaCorporationCommissionapprovedabillcreditthatwillreducerevenuebyapproximately40.7 billion invested in 2023, surpassing the previous record set in 2022 [9] - The City of Maricopa is preparing a large industrial complex, indicating strong interest from businesses looking to relocate to Arizona [10] Company Strategy and Development Direction - The company aims to achieve efficiency and consolidation in the water management industry, focusing on expanding its total water management platform [22] - The company is in a test year for its largest utilities, with plans to file a rate case in the first half of 2025 [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that high inflation and cost drivers have impacted earnings growth but emphasized that 2024 is a test year for their largest utilities [12] - There is a strong consensus on a housing shortage in Metro Phoenix, which is expected to drive demand for housing units [7] Other Important Information - The Arizona Corporation Commission approved a bill credit that will reduce revenue by approximately 570,000 annually, effective August 1, 2024 [17] - The company is actively pursuing the Tucson acquisition, with a target for approval by the end of the year or early next year [26] Q&A Session Summary Question: Discussion on acquisition pipeline - Management indicated that there are still opportunities for acquisitions in Arizona, which remains highly fragmented with over 300 utilities [24] Question: Timeline for Tucson acquisition approval - The company is targeting either the end of the year or early in the first quarter for the Tucson acquisition approval [26]