Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 08, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37756 | |
Entity Registrant Name | Global Water Resources, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-0632193 | |
Entity Address, Address Line One | 21410 N. 19th Avenue #220 | |
Entity Address, City or Town | Phoenix, | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85027 | |
City Area Code | 480 | |
Local Phone Number | 360-7775 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | GWRS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,171,517 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001434728 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
PROPERTY, PLANT AND EQUIPMENT: | ||
Land | $ 1,480,000 | $ 1,480,000 |
Depreciable property, plant and equipment | 408,806,000 | 344,043,000 |
Construction work-in-progress | 46,095,000 | 66,039,000 |
Other | 697,000 | 697,000 |
Less accumulated depreciation | (139,454,000) | (124,522,000) |
Net property, plant and equipment | 317,624,000 | 287,737,000 |
CURRENT ASSETS: | ||
Cash and cash equivalents | 5,289,000 | 6,561,000 |
Accounts receivable — net | 3,077,000 | 2,139,000 |
Customer payments in-transit | 571,000 | 462,000 |
Unbilled revenue | 3,055,000 | 2,557,000 |
Taxes, prepaid expenses, and other current assets | 2,038,000 | 2,439,000 |
Total current assets | 14,030,000 | 14,158,000 |
OTHER ASSETS: | ||
Goodwill | 10,923,000 | 4,957,000 |
Intangible assets — net | 8,765,000 | 10,139,000 |
Regulatory asset | 2,984,000 | 3,169,000 |
Restricted cash | 2,376,000 | 1,001,000 |
Right-of -use asset | 1,706,000 | 1,891,000 |
Other noncurrent assets | 44,000 | 34,000 |
Total other assets | 26,798,000 | 21,191,000 |
TOTAL ASSETS | 358,452,000 | 323,086,000 |
CURRENT LIABILITIES: | ||
Accounts payable | 661,000 | 2,173,000 |
Accrued expenses | 9,578,000 | 8,056,000 |
Customer and meter deposits | 1,742,000 | 1,682,000 |
Long-term debt — current portion | 3,880,000 | 3,833,000 |
Leases — current portion | 523,000 | 505,000 |
Total current liabilities | 16,384,000 | 16,249,000 |
NONCURRENT LIABILITIES: | ||
Line of credit | 15,000 | 0 |
Long-term debt | 103,258,000 | 104,945,000 |
Long-term lease liabilities | 1,374,000 | 1,616,000 |
Deferred revenue - ICFA | 19,656,000 | 20,974,000 |
Regulatory liability | 6,094,000 | 6,371,000 |
Advances in aid of construction | 113,729,000 | 93,656,000 |
Contributions in aid of construction — net | 35,650,000 | 26,404,000 |
Deferred income tax liabilities, net | 8,112,000 | 5,949,000 |
Acquisition liability | 3,080,000 | 1,773,000 |
Other noncurrent liabilities | 2,020,000 | 755,000 |
Total noncurrent liabilities | 292,988,000 | 262,443,000 |
Total liabilities | 309,372,000 | 278,692,000 |
Commitments and contingencies (Refer to Note 16) | ||
SHAREHOLDERS’ EQUITY: | ||
Common stock, $0.01 par value, 60,000,000 shares authorized; 24,478,252 and 24,095,139 shares issued as of September 30, 2023 and December 31, 2022, respectively. | 240,000 | 239,000 |
Treasury stock, 306,735 and 224,093 shares at September 30, 2023 and December 31, 2022, respectively. | (2,000) | (2,000) |
Paid in capital | 47,321,000 | 44,157,000 |
Retained earnings | 1,521,000 | 0 |
Total shareholders’ equity | 49,080,000 | 44,394,000 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 358,452,000 | $ 323,086,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, issued (in shares) | 24,478,252 | 24,095,139 |
Treasury stock (in shares) | 306,735 | 224,093 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
REVENUES: | ||||
Total revenues | $ 14,532 | $ 11,893 | $ 40,660 | $ 33,629 |
OPERATING EXPENSES: | ||||
Operations and maintenance | 3,587 | 2,775 | 9,557 | 8,260 |
General and administrative | 3,923 | 3,923 | 11,934 | 11,579 |
Depreciation and amortization | 3,185 | 2,429 | 8,545 | 7,199 |
Total operating expenses | 10,695 | 9,127 | 30,036 | 27,038 |
OPERATING INCOME | 3,837 | 2,766 | 10,624 | 6,591 |
OTHER INCOME (EXPENSE): | ||||
Interest expense | (1,260) | (1,093) | (3,709) | (3,355) |
Allowance for equity funds used during construction | 263 | 0 | 778 | 0 |
Other - Net | 682 | 625 | 1,630 | 2,251 |
Total other expense | (315) | (468) | (1,301) | (1,104) |
INCOME BEFORE INCOME TAXES | 3,522 | 2,298 | 9,323 | 5,487 |
INCOME TAX EXPENSE | (888) | (612) | (2,484) | (805) |
NET INCOME | $ 2,634 | $ 1,686 | $ 6,839 | $ 4,682 |
Basic earnings per common share (in dollars per share) | $ 0.11 | $ 0.07 | $ 0.28 | $ 0.20 |
Diluted earnings per common share (in dollars per share) | 0.11 | 0.07 | 0.28 | 0.20 |
Dividends declared per common share (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.22 | $ 0.22 |
Weighted average number of common shares used in the determination of: | ||||
Basic (in shares) | 24,171,228 | 23,467,035 | 24,046,493 | 22,937,265 |
Diluted (in shares) | 24,231,801 | 23,595,459 | 24,144,384 | 23,111,881 |
Water services | ||||
REVENUES: | ||||
Total revenues | $ 7,520 | $ 5,824 | $ 18,916 | $ 15,854 |
Wastewater and recycled water services | ||||
REVENUES: | ||||
Total revenues | 6,494 | 6,069 | 18,958 | 17,770 |
Unregulated revenues | ||||
REVENUES: | ||||
Total revenues | $ 518 | $ 0 | $ 2,786 | $ 5 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Paid-in Capital | Retained Earnings |
Balance at the beginning (in shares) at Dec. 31, 2021 | 22,832,013 | ||||
Balance, at the beginning at Dec. 31, 2021 | $ 30,029 | $ 228 | $ (2) | $ 29,803 | $ 0 |
Balance at the beginning (in shares) at Dec. 31, 2021 | (182,445) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | (1,670) | (781) | (889) | ||
Stock option exercise (in shares) | 250 | ||||
Stock option exercise | 3 | 3 | |||
Stock compensation | 389 | 389 | |||
Net income | 889 | 889 | |||
Balance at the ending (in shares) at Mar. 31, 2022 | 22,832,263 | ||||
Balance, at the ending at Mar. 31, 2022 | 29,640 | $ 228 | $ (2) | 29,414 | 0 |
Balance at the ending (in shares) at Mar. 31, 2022 | (182,445) | ||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 22,832,013 | ||||
Balance, at the beginning at Dec. 31, 2021 | 30,029 | $ 228 | $ (2) | 29,803 | 0 |
Balance at the beginning (in shares) at Dec. 31, 2021 | (182,445) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 4,682 | ||||
Balance at the ending (in shares) at Sep. 30, 2022 | 24,089,811 | ||||
Balance, at the ending at Sep. 30, 2022 | 45,034 | $ 239 | $ (2) | 44,797 | 0 |
Balance at the ending (in shares) at Sep. 30, 2022 | (224,100) | ||||
Balance at the beginning (in shares) at Mar. 31, 2022 | 22,832,263 | ||||
Balance, at the beginning at Mar. 31, 2022 | 29,640 | $ 228 | $ (2) | 29,414 | 0 |
Balance at the beginning (in shares) at Mar. 31, 2022 | (182,445) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | (1,674) | 433 | (2,107) | ||
Stock option exercise (in shares) | 107,548 | ||||
Stock compensation | 45 | 45 | |||
Treasury stock (in shares) | (40,756) | ||||
Treasury stock | (257) | (257) | |||
Net income | 2,107 | 2,107 | |||
Balance at the ending (in shares) at Jun. 30, 2022 | 22,939,811 | ||||
Balance, at the ending at Jun. 30, 2022 | 29,861 | $ 228 | $ (2) | 29,635 | 0 |
Balance at the ending (in shares) at Jun. 30, 2022 | (223,201) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | (1,149) | 537 | (1,686) | ||
Stock compensation | 45 | 45 | |||
Treasury stock (in shares) | (899) | ||||
Treasury stock | (282) | (282) | |||
Issuance of Common Stock (in shares) | 1,150,000 | ||||
Issuance of Common Stock | 14,873 | $ 11 | 14,862 | ||
Net income | 1,686 | 1,686 | |||
Balance at the ending (in shares) at Sep. 30, 2022 | 24,089,811 | ||||
Balance, at the ending at Sep. 30, 2022 | $ 45,034 | $ 239 | $ (2) | 44,797 | 0 |
Balance at the ending (in shares) at Sep. 30, 2022 | (224,100) | ||||
Balance at the beginning (in shares) at Dec. 31, 2022 | 24,095,139 | 24,095,139 | |||
Balance, at the beginning at Dec. 31, 2022 | $ 44,394 | $ 239 | $ (2) | 44,157 | 0 |
Balance at the beginning (in shares) at Dec. 31, 2022 | (224,093) | (224,093) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | $ (1,778) | (1,778) | |||
Stock compensation | 299 | 299 | |||
Net income | 2,466 | 2,466 | |||
Balance at the ending (in shares) at Mar. 31, 2023 | 24,095,139 | ||||
Balance, at the ending at Mar. 31, 2023 | $ 45,381 | $ 239 | $ (2) | 44,456 | 688 |
Balance at the ending (in shares) at Mar. 31, 2023 | (224,093) | ||||
Balance at the beginning (in shares) at Dec. 31, 2022 | 24,095,139 | 24,095,139 | |||
Balance, at the beginning at Dec. 31, 2022 | $ 44,394 | $ 239 | $ (2) | 44,157 | 0 |
Balance at the beginning (in shares) at Dec. 31, 2022 | (224,093) | (224,093) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 6,839 | ||||
Balance at the ending (in shares) at Sep. 30, 2023 | 24,478,252 | 24,478,252 | |||
Balance, at the ending at Sep. 30, 2023 | $ 49,080 | $ 240 | $ (2) | 47,321 | 1,521 |
Balance at the ending (in shares) at Sep. 30, 2023 | (306,735) | (306,735) | |||
Balance at the beginning (in shares) at Mar. 31, 2023 | 24,095,139 | ||||
Balance, at the beginning at Mar. 31, 2023 | $ 45,381 | $ 239 | $ (2) | 44,456 | 688 |
Balance at the beginning (in shares) at Mar. 31, 2023 | (224,093) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | (1,794) | (55) | (1,739) | ||
Stock option exercise (in shares) | 152,113 | 82,642 | |||
Stock option exercise | 0 | ||||
Stock compensation | (47) | (47) | |||
Issuance of Common Stock (in shares) | 230,000 | ||||
Issuance of Common Stock | 2,748 | $ 1 | 2,747 | ||
Net income | 1,739 | 1,739 | |||
Balance at the ending (in shares) at Jun. 30, 2023 | 24,477,252 | ||||
Balance, at the ending at Jun. 30, 2023 | 48,027 | $ 240 | $ (2) | 47,101 | 688 |
Balance at the ending (in shares) at Jun. 30, 2023 | (306,735) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Dividends declared | (1,801) | (1,801) | |||
Stock option exercise (in shares) | 1,000 | ||||
Stock option exercise | 9 | 9 | |||
Stock compensation | 211 | 211 | |||
Net income | $ 2,634 | 2,634 | |||
Balance at the ending (in shares) at Sep. 30, 2023 | 24,478,252 | 24,478,252 | |||
Balance, at the ending at Sep. 30, 2023 | $ 49,080 | $ 240 | $ (2) | $ 47,321 | $ 1,521 |
Balance at the ending (in shares) at Sep. 30, 2023 | (306,735) | (306,735) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||||||
Dividends declared (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.07 | $ 0.07 | $ 0.07 | $ 0.07 | $ 0.22 | $ 0.22 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 6,839 | $ 4,682 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred compensation | 698 | 786 |
Depreciation and amortization | 8,545 | 7,199 |
Right of use amortization | 240 | 104 |
Amortization of deferred debt issuance costs and discounts | 33 | 33 |
(Gain) Loss on disposal of fixed assets | (83) | (3) |
Provision for credit losses | 73 | 79 |
Deferred income tax expense | 2,164 | 542 |
Changes in assets and liabilities | ||
Accounts receivable | (938) | (433) |
Other current assets | (165) | (717) |
Accounts payable and other current liabilities | 2,261 | 1,170 |
Other noncurrent assets | 293 | 335 |
Other noncurrent liabilities | 2,702 | 5,961 |
Net cash provided by operating activities | 22,662 | 19,738 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (18,578) | (25,324) |
Cash paid for acquisitions, net of cash acquired | (6,246) | (85) |
Other cash flows from investing activities | 0 | (24) |
Net cash used in investing activities | (24,824) | (25,433) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Dividends paid | (5,372) | (5,075) |
Advances in aid of construction | 8,370 | 2,145 |
Refunds of advances for construction | (1,076) | (1,105) |
Proceeds from stock option exercise | 10 | 3 |
Payments for taxes related to net shares settlement of equity awards | (367) | 0 |
Principal payments under finance lease | (388) | 0 |
Line of credit borrowings, net | 15 | 0 |
Loan borrowings | 242 | 0 |
Loan repayments | 0 | (103) |
Repayments of bond | (1,917) | (1,917) |
Proceeds from sale of stock | 2,748 | 14,892 |
Net cash provided by financing activities | 2,265 | 8,840 |
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 103 | 3,145 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period | 7,562 | 13,443 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period | 7,665 | 16,588 |
Supplemental Cash Flow Information [Abstract] | ||
Cash and cash equivalents | 5,289 | 15,613 |
Restricted Cash | 2,376 | 975 |
Total cash, cash equivalents, and restricted cash | $ 7,665 | $ 16,588 |
Basis of Presentation, Corporat
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements | BASIS OF PRESENTATION, CORPORATE TRANSACTIONS, SIGNIFICANT ACCOUNTING POLICIES, AND RECENT ACCOUNTING PRONOUNCEMENTS Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements of Global Water Resources, Inc. (the “Company”, “GWRI”, “we”, “us”, or “our”) and related disclosures as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 are unaudited. The December 31, 2022 condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These financial statements follow the same accounting policies and methods of their application as the Company’s most recent annual consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022. In the Company’s opinion, these financial statements include all normal and recurring adjustments necessary for the fair statement of the results for the interim period. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year, due to the seasonality of our business. The Company prepares its financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Arizona Corporation Commission (“ACC”) Rate Case On July 3, 2023, Global Water-Palo Verde Utilities Company, Inc. (“Palo Verde”) and Global Water-Santa Cruz Water Company, Inc. (“Santa Cruz”) filed an application with the ACC for approval of an accounting order to defer and record as a regulatory asset the depreciation expense recorded for the Company’s Southwest Plant, plus the carrying cost at the authorized rate of return set in Palo Verde’s and Santa Cruz’s most recent rate order, until the plant is considered for recovery in the utilities’ next rate case. On June 27, 2023, seven of the Company’s 13 regulated utilities, all located in Pima County, each filed a rate case application with the ACC for water rates based on a 2022 test year. There can be no assurance that the ACC will approve the requested rate increase or any increase or the consolidation of water rates described above, and the ACC could take other actions as a result of the rate case. Further, it is possible that the ACC may determine to decrease future rates. There can also be no assurance as to the timing of when an approved rate increase (if any) would go into effect. On July 27, 2022, the ACC issued Rate Decision No. 78644 relating to the Company’s previous rate case. Pursuant to Rate Decision No. 78644, the ACC approved, among other things, a collective annual revenue requirement increase of approximately $2.2 million (including the acquisition premiums discussed below) based on 2019 test year service connections, and phased-in over approximately two years. The ACC also approved: (i) the consolidation of water and/or wastewater rates to create economies of scale that are beneficial to all customers when rates are consolidated; (ii) acquisition premiums relating to the Company’s acquisitions of its Red Rock and Global Water-Turner Ranches Irrigation, Inc. (“Turner Ranches”) utilities, which increase the rate base for such utilities and result in an increase in the annual collective revenue requirement; (iii) the Company’s ability to annually adjust rates to flow through certain changes in tax expense, primarily related to income taxes, without the necessity of a rate case proceeding; and (iv) a sustainable water surcharge, which will allow semiannual surcharges to be added to customer bills based on verified costs of new water resources. Refer to Note 2 – “Regulatory Decision and Related Accounting and Policy Changes” for additional information. Private Placement Offering of Common Stock On June 8, 2023, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 230,000 shares of the Company’s common stock at a purchase price of $12.07 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder. The Company received gross proceeds of approximately $2.8 million from the offering. One of the Company’s directors purchased an aggregate of 30,000 shares of common stock in the offering at the purchase price. Public Offering of Common Stock On August 1, 2022, the Company completed a public offering of 1,150,000 shares of common stock at a public offering price of $13.50 per share, which included 150,000 shares issued and sold to the underwriter following the exercise in full of its option to purchase additional shares of common stock. The Company received net proceeds of approximately $14.9 million from the offering after deducting underwriting discounts and commissions and offering expenses paid by the Company. Certain of the Company’s directors and/or their affiliates purchased an aggregate of 652,000 shares of common stock at the public offering price. Significant Accounting Policies Basic and Diluted Earnings per Common Share Basic earnings per share (“EPS”) in each period of this report were calculated by dividing net income by the weighted-average number of shares during those periods. Diluted EPS includes additional weighted-average common stock equivalents (options and restricted stock awards), if dilutive. Unless otherwise noted, the term “earnings per share” refers to basic EPS. A reconciliation of the denominator used in basic and diluted EPS calculations is shown in the following table: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Basic weighted average common shares outstanding 24,171 23,467 24,046 22,937 Effect of dilutive securities: 2017 Option grant 54 99 72 114 2019 Option grant 7 21 14 30 2020 Restricted stock awards — 8 6 31 2021 Restricted stock awards — — 6 — Total dilutive securities 61 128 98 175 Diluted weighted average common shares outstanding 24,232 23,595 24,144 23,112 Anti-dilutive shares excluded from earnings per diluted shares (1) 138 133 94 133 (1) Shares excluded from the dilutive-effect calculation because the outstanding awards’ exercise prices were greater than the average market price of the Company’s common stock. Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changed the impairment model for certain financial assets that have a contractual right to receive cash, including trade and loan receivables. The new model required recognition based upon an estimation of expected credit losses rather than recognition of losses based on the probability of occurrence. The Company is a public business entity that qualifies as a smaller reporting company, and therefore ASU 2016-13 was effective for annual reporting periods beginning after December 15, 2022. The Company adopted the standard utilizing the modified retrospective method for its trade receivables and unbilled revenue on January 1, 2023. Based on the composition of the Company’s trade receivables and unbilled revenue, and expected future losses, the adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements. |
Regulatory Decision and Related
Regulatory Decision and Related Accounting and Policy Changes | 9 Months Ended |
Sep. 30, 2023 | |
Regulated Operations [Abstract] | |
Regulatory Decision and Related Accounting and Policy Changes | REGULATORY DECISION AND RELATED ACCOUNTING AND POLICY CHANGES The Company’s regulated utilities and certain other balances are subject to regulation by the ACC and meet the requirements for regulatory accounting found within Accounting Standards Codification (“ASC 980”), Regulated Operations . In accordance with ASC 980, rates charged to utility customers are intended to recover the costs of the provision of service plus a reasonable return in the same period. Changes to the rates are made through formal rate applications with the ACC, which the Company has done for all of the operating utilities and which are described below. On July 3, 2023, Global Water-Palo Verde Utilities Company, Inc. (“Palo Verde”) and Global Water-Santa Cruz Water Company, Inc. (“Santa Cruz”) filed an application with the ACC for approval of an accounting order to defer and record as a regulatory asset the depreciation expense recorded for the Company’s Southwest Plant, plus the carrying cost at the authorized rate of return set in Palo Verde’s and Santa Cruz’s most recent rate order, until the plant is considered for recovery in the utilities’ next rate case. The Southwest Plant was substantially constructed prior to 2009 to provide water, wastewater, and recycled water utility service for the area southwest of the City of Maricopa. Due to the unprecedented collapse of the housing market during the Great Recession, the nearly completed plant remained idle for well over a decade. The total cost of the Southwest Plant was approximately $38.4 million. In July 2023, $27.5 million related to the water production plant and a portion of the wastewater processing plant was placed in service, with the remaining parts of the Southwest Plant to be placed in service once sufficient flows, provided by connection growth, are established. There can be no assurance, however, that the ACC will approve the application as submitted and the ACC could take other actions regarding the application. On June 27, 2023, seven of the Company’s 13 regulated utilities each filed a rate case application with the ACC for increased water rates based on a 2022 test year. In addition to a rate increase, the Company requested, among other things, the consolidation of water rates for certain of its utilities, including Global Water-Mirabell Water Company, Inc. (“Mirabell”), Global Water-Lyn Lee Water Company, Inc. (“Lyn Lee”), Global Water-Francesca Water Company, Inc. (“Francesca”), Global Water-Tortolita Water Company, Inc. (“Tortolita”), Global Water-Rincon Water Company, Inc. (“Rincon”), Global Water-Las Quintas Serenas Water Company, Inc. (“Las Quintas Serenas”), and Global Water-Red Rock Water Company, Inc. (“Red Rock”), each located in Pima County. Of the Company’s utilities, these utilities filing rate applications make up approximately 3% of the Company’s active service connections. There can be no assurance that the ACC will approve the requested rate increase or any increase or the consolidation of water rates described above, and the ACC could take other actions as a result of the rate case. Further, it is possible that the ACC may determine to decrease future rates. There can also be no assurance as to the timing of when an approved rate increase (if any) would go into effect. On July 27, 2022, the ACC issued Rate Decision No. 78644 relating to the Company’s previous rate case. Pursuant to Rate Decision No. 78644, the ACC approved, among other things, a collective annual revenue requirement increase of approximately $2.2 million (including the acquisition premiums discussed below) based on 2019 test year service connections, and phased-in over approximately two years, as follows: Incremental Cumulative August 1, 2022 $ 1,457,462 $ 1,457,462 January 1, 2023 $ 675,814 $ 2,133,277 January 1, 2024 $ 98,585 $ 2,231,861 To the extent that the number of active service connections has increased and continues to increase from 2019 levels, the additional revenues may be greater than the amounts set forth above. On the other hand, if active connections decrease or the Company experiences declining usage per customer, the Company may not realize all of the anticipated revenues. Rate Decision No. 78644 also addressed the primary impacts of the Federal Tax Cuts and Jobs Act (the “TCJA”) on the Company, which includes the reduction of the federal income tax rate from 35 percent to 21 percent beginning on January 1, 2018. The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers. Rate Decision No. 78644 approved an adjustor mechanism for income taxes (as described below) that permits the Company to flow through potential changes to state and federal income tax rates as well as refund or collect funds related to TCJA. The ACC also approved: (i) the consolidation of water and/or wastewater rates to create economies of scale that are beneficial to all customers when rates are consolidated; (ii) acquisition premiums relating to the Company’s acquisitions of its Red Rock and Turner Ranches utilities, which increase the rate base for such utilities and result in an increase in the annual collective revenue requirement included in the table above; (iii) the Company’s ability to annually adjust rates to flow through certain changes in tax expense, primarily related to income taxes, without the necessity of a rate case proceeding; and (iv) a sustainable water surcharge, which will allow semiannual surcharges to be added to customer bills based on verified costs of new water resources. Finally, Rate Decision No. 78644 required the Company to work with ACC staff and the Residential Utility Consumer Office to prepare a Private Letter Ruling request to the Internal Revenue Service (“IRS”) to clarify whether the failure to eliminate the deferred taxes attributable to assets condemned in a transaction governed by Section 1033 of the Internal Revenue Code (“IRC”) would violate the normalization provisions of Section 168(i)(9) of the IRC. The IRS accepted the request and issued its Private Letter Ruling, dated September 22, 2023. The Private Letter Ruling determined that the deferred taxes attributable to assets condemned in a transaction governed by Section 1033 of the IRC must be eliminated and failure to do so would violate the normalization provisions of Section 168(i)(9) of the IRC. As required by Rate Decision No. 78644, the Private Letter Ruling has been provided to the ACC. Within 90 days after receiving the ruling, ACC Staff is required to prepare, for ACC consideration, a memorandum and proposed order regarding guidance issued within the Private Letter Ruling. The Private Letter Ruling was consistent with the adjustments used to determine the revenue requirements in Rate Decision No. 78644. Accordingly, the Company has requested that no further action be taken by the ACC. However, there can be no assurance provided until the ACC process is complete. Certain accounting implications related to Rate Decision No. 78644 were recognized and recorded as of June 30, 2022, and are as follows: • Reclassification of Red Rock Water, Red Rock Wastewater, and Turner Ranches acquisition premiums of approximately $0.8 million in the aggregate from goodwill to regulatory assets to be included in rate base. The premiums are to be amortized over 25 years. • Reversal of the 2017 TCJA tax reform regulatory liability of approximately $0.8 million, which was recorded as a reduction to income tax expense for approximately $0.7 million, and as a reduction to interest expense for approximately $0.1 million. • Write-off of approximately $0.3 million in capitalized rate case costs. Infrastructure Coordination and Financing Agreements Infrastructure Coordination and Financing Agreements (“ICFAs”) are agreements with developers and homebuilders where the Company provides services to plan, coordinate, and finance the water and wastewater infrastructure that would otherwise be required to be performed or subcontracted by the developer or homebuilder. Rate Decision No. 74364, issued by the ACC in February 2014, established the policy for the treatment of ICFA funds and also prohibited the Company from entering into any new ICFAs. Rate Decision No. 74364 requires a hook-up fee (“HUF”) tariff to be established for all ICFAs that come due and are paid subsequent to December 31, 2013, which is a set amount per equivalent dwelling unit determined by the ACC based on the utility and meter size. In addition, since ICFA funds are generally received in installments, Rate Decision No. 74364 prescribes that 70% of funds received must be recorded as a HUF liability, with the remaining 30% to be recorded as deferred revenue, until the HUF liability is fully funded. The Company is responsible for assuring that the full HUF tariff, which is the set amount determined by the rate decision, is funded in the HUF liability, even if it results in recording less than 30% of the overall ICFA funds as deferred revenue. Refer to Note 3 – “Revenue Recognition - Unregulated Revenue” for additional information. The Company accounts for the portion allocated to the HUF as a contribution in aid of construction (“CIAC”). However, in accordance with the ACC directives, the CIAC is not deducted from rate base until the HUF funds are expended for utility plant. Such funds are segregated in a separate bank account and used for plant. A HUF liability is established and amortized as a reduction of depreciation expense over the useful life of the related plant once the HUF funds are utilized for the construction of plant. For facilities required under a HUF or ICFA, the utilities must first use the HUF moneys received, after which, it may use debt or equity financing for the remainder of construction. Regulatory Assets and Liabilities Regulatory assets and liabilities are the result of operating in a regulated environment in which the ACC establish rates that are designed to permit the recovery of the cost of service and a return on investment. The Company capitalizes and records regulatory assets for costs that would otherwise be charged to expense if it is probable that the incurred costs will be recovered in future rates. Regulatory assets are amortized over the future periods that the costs are expected to be recovered. Final determination of whether a regulatory asset can be recovered is decided by the ACC in regulatory proceedings. If the Company determines that a portion of the regulatory assets is not recoverable in customer rates, the Company would be required to recognize the loss of the assets disallowed. If costs expected to be incurred in the future are currently being recovered through rates, the Company records those expected future costs as regulatory liabilities. The Company’s regulatory assets and liabilities consist of the following (in thousands): Recovery Period September 30, 2023 December 31, 2022 Regulatory Assets Income taxes recoverable through future rates (1) Various $ 1,423 1,482 Rate case expense surcharge (2) 2 years 284 467 Acquisition premiums (3) 25 years 1,277 1,220 Total regulatory assets $ 2,984 $ 3,169 Regulatory Liabilities Income taxes payable through future rates (1) 493 508 Acquired ICFAs (4) 4,896 5,863 Depreciation adjustment (5) 705 — Total regulatory liabilities $ 6,094 $ 6,371 (1) The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers. (2) Rate Decision No. 78743, issued on October 24, 2022, approved approximately $0.5 million in rate case expenses to be recovered through a rate case expense surcharge over a two-year period. (3) Rate Decision No. 78319, issued on December 3, 2021, approved an acquisition premium to be amortized over 25 years related to the acquisition of the Company’s Rincon utility. Amortization will begin once the Company receives a decision on the recently filed rate case and the acquisition premium is approved to be included in customer rates. The acquisition premium balance as of September 30, 2023 was approximately $0.5 million. Rate Decision No. 78644, issued on July 27, 2022, approved acquisition premiums related to the acquisitions of the Company’s Turner Ranches and Red Rock utilities. Amortization began in 2022 as the acquisition premiums were included in customer rates as approved in the decision. The acquisition premium balance as of September 30, 2023 was approximately $0.8 million. (4) The acquired ICFA regulatory liability relates to the offset of intangible assets related to ICFA contracts obtained in connection with the Santa Cruz, Palo Verde, and Sonoran Utility Services, LLC (“Sonoran”) acquisitions. When ICFA funds are received, a portion of the funds reduce the acquired ICFA liability as a partial offset to the amortization expense recognition of the related intangible asset. (5) Rate Decision No. 78644 issued on July 27, 2022, approved an adjustment to update previously approved depreciation rates. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | REVENUE RECOGNITION Regulated Revenue The Company’s operating revenues are primarily attributable to regulated services based upon tariff rates approved by the ACC. Regulated service revenues consist of amounts billed to customers based on approved fixed monthly fees and consumption fees, as well as unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing historical customer data recorded as accrued revenue. The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized. The unbilled revenue estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage). The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has the right to invoice for the volume of consumption, service charge, and other authorized charges. The Company satisfies its performance obligation to provide water, wastewater, and recycled water services over time as the services are rendered. Regulated services may be terminated by the customers at will, and, as a result, no separate financing component is recognized for the Company’s collections from customers, which generally require payment within 15 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay. Total revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales taxes. Unregulated Revenue Unregulated revenues represent those revenues that are not subject to the ratemaking process of the ACC. For the three and nine months ended September 30, 2023, unregulated revenues primarily related to the revenues recognized on a portion of ICFA funds received. ICFAs are agreements with developers and homebuilders where the Company provides services to plan, coordinate, and finance the water and wastewater infrastructure that would otherwise be required to be performed or subcontracted by the developer or homebuilder. Services provided within these agreements include coordination of construction services for water and wastewater treatment facilities as well as financing, arranging, and coordinating the provision of utility services. In return, the developers and homebuilders pay the Company an agreed-upon amount per dwelling unit for the land legally described in the agreement, or a portion thereof. Under ICFA agreements, the Company has a contractual obligation to ensure physical capacity exists through its regulated utilities for the provision of water and wastewater utility service to the land when needed. This obligation persists regardless of connection growth. As these arrangements are with developers and not with the end water or wastewater customer, revenue recognition coincides with the completion of the Company’s performance obligations under the agreement with the developer and the regulated utilities’ ability to provide fitted capacity for water and wastewater service. Fees for these services are typically a negotiated amount per equivalent dwelling unit for the for the land legally described in the agreement, or a portion thereof. Payments are generally due in installments, with a portion due upon signing of the agreement, a portion due upon completion of certain milestones, and the final payment due upon final plat approval or sale of the subdivision. The payments are non-refundable. The agreements are generally recorded against the land with the appropriate recorder’s office and must be assumed in the event of a sale or transfer of the land. The regional planning and coordination of the infrastructure in the various service areas has been an important part of the Company’s business model. Rate Decision No. 74364 requires a HUF tariff to be established for all ICFAs that come due and are paid subsequent to December 31, 2013, which is a set amount per equivalent dwelling unit determined by the ACC based on the utility and meter size. As ICFA funds are generally received in installments, Rate Decision No. 74364 prescribes that 70% of funds received must be recorded as a HUF liability, with the remaining 30% to be recorded as deferred revenue, until the HUF liability is fully funded. The Company is responsible for assuring that the full HUF tariff, which is the set amount determined by the rate decision, is funded in the HUF liability, even if it results in recording less than 30% of the overall ICFA funds as deferred revenue. Refer to Note 2 – “Regulatory Decision and Related Accounting and Policy Changes” for additional information on the accounting treatment of HUF. The Company believes that these services are not distinct in the context of the contract because they are highly interdependent with the regulated utilities’ ability to provide fitted capacity for water and wastewater services. The Company concluded that the goods and services provided under ICFA contracts constitute a single performance obligation. ICFA revenue is recognized at a point in time when the regulated utilities have the necessary capacity in place within their infrastructure to provide water/wastewater services to the developer. The Company exercises judgment when estimating the number of equivalent dwelling units that the regulated utilities have capacity to serve. As of September 30, 2023 and December 31, 2022, ICFA deferred revenue recorded on the consolidated balance sheet totaled $19.7 million and $21.0 million, respectively, which represents deferred revenue recorded for ICFA funds received on contracts. For the three and nine months ended September 30, 2023, ICFA revenue recognized totaled $0.5 million and $2.8 million, respectively. No ICFA revenue was recognized for the three months or nine months ended September 30, 2022. Disaggregated Revenues For the three and nine months ended September 30, 2023 and 2022, disaggregated revenues from contracts with customers by major source and customer class are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 REGULATED REVENUE Water Services Residential $ 4,900 $ 4,104 $ 13,261 $ 11,395 Irrigation 1,393 955 2,739 2,283 Commercial 457 295 1,184 907 Construction 537 246 1,036 586 Other water revenues 233 224 696 683 Total water revenues 7,520 5,824 18,916 15,854 Wastewater and recycled water services Residential 5,630 5,488 16,725 15,858 Commercial 317 73 906 600 Recycled water revenues 469 428 1,062 1,017 Other wastewater revenues 78 80 265 296 Total wastewater and recycled water revenues 6,494 6,069 18,958 17,770 TOTAL REGULATED REVENUE 14,014 11,893 37,874 33,624 UNREGULATED REVENUE ICFA revenues 518 — 2,786 — Rental revenues — — — 5 TOTAL UNREGULATED REVENUE 518 — 2,786 5 TOTAL REVENUE $ 14,532 $ 11,893 $ 40,660 $ 33,629 Contract Balances The Company’s contract assets and liabilities consist of the following (in thousands): September 30, 2023 December 31, 2022 CONTRACT ASSETS Accounts receivable Water services $ 1,916 $ 1,179 Wastewater and recycled water services 1,303 1,124 Total contract assets $ 3,219 $ 2,303 CONTRACT LIABILITIES Deferred revenue - ICFA $ 19,656 $ 20,974 Total contract liabilities $ 19,656 $ 20,974 Remaining Performance Obligations Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately $19.7 million and $21.0 million at September 30, 2023 and December 31, 2022, respectively. Deferred revenue - ICFA is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred. Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue - ICFA. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | LEASES The Company measures the lease liability at the present value of future lease payments, excluding variable payments based on usage or performance, and calculates the present value using implicit rates. Leases with an initial term of twelve months or less are not recorded on the balance sheet. During the year ended December 31, 2022, the Company entered into nine new finance leases for vehicles with either 48 or 60 month terms, all of which include a purchase option. In January 2022, the Company entered into a five-year finance lease for office equipment which expires on January 31, 2027. There is no purchase option in the lease agreement but the Company controls and obtains substantially all of the benefit from the identified asset. In December 2021, the Company entered into a new five-year corporate office lease agreement with a commencement date of May 1, 2022. The new monthly rent expense increased to $23,750 for each full calendar month commencing on May 1, 2022 through April 30, 2025 and will increase to $41,572 for each calendar month commencing on May 1, 2025 through April 30, 2027. On March 1, 2022 the Company amended the terms of the lease to incorporate construction of tenant improvements. Rent expense arising from the operating leases totaled approximately $100,000 and $97,000 for the three months ended September 30, 2023 and 2022, respectively. Rent expense arising from the operating leases totaled approximately $295,000 and $223,000 for the nine months ended September 30, 2023 and 2022, respectively. The right-of-use (“ROU”) asset recorded represents the Company’s right to use an underlying asset for the lease term and ROU lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 443 $ 405 Operating Lease 1,263 1,486 Total $ 1,706 $ 1,891 Lease liabilities at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 534 $ 597 Operating Lease 1,363 1,524 Total $ 1,897 $ 2,121 At September 30, 2023, the remaining aggregate annual minimum lease payments are as follows (in thousands): Finance Lease Obligations Operating Lease Obligations 2023 (remaining period) $ 57 $ 74 2024 199 294 2025 171 431 2026 125 499 2027 25 166 Thereafter — — Subtotal 577 1,464 Less: amount representing interest (43) (101) Total $ 534 $ 1,363 |
Leases | LEASES The Company measures the lease liability at the present value of future lease payments, excluding variable payments based on usage or performance, and calculates the present value using implicit rates. Leases with an initial term of twelve months or less are not recorded on the balance sheet. During the year ended December 31, 2022, the Company entered into nine new finance leases for vehicles with either 48 or 60 month terms, all of which include a purchase option. In January 2022, the Company entered into a five-year finance lease for office equipment which expires on January 31, 2027. There is no purchase option in the lease agreement but the Company controls and obtains substantially all of the benefit from the identified asset. In December 2021, the Company entered into a new five-year corporate office lease agreement with a commencement date of May 1, 2022. The new monthly rent expense increased to $23,750 for each full calendar month commencing on May 1, 2022 through April 30, 2025 and will increase to $41,572 for each calendar month commencing on May 1, 2025 through April 30, 2027. On March 1, 2022 the Company amended the terms of the lease to incorporate construction of tenant improvements. Rent expense arising from the operating leases totaled approximately $100,000 and $97,000 for the three months ended September 30, 2023 and 2022, respectively. Rent expense arising from the operating leases totaled approximately $295,000 and $223,000 for the nine months ended September 30, 2023 and 2022, respectively. The right-of-use (“ROU”) asset recorded represents the Company’s right to use an underlying asset for the lease term and ROU lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 443 $ 405 Operating Lease 1,263 1,486 Total $ 1,706 $ 1,891 Lease liabilities at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 534 $ 597 Operating Lease 1,363 1,524 Total $ 1,897 $ 2,121 At September 30, 2023, the remaining aggregate annual minimum lease payments are as follows (in thousands): Finance Lease Obligations Operating Lease Obligations 2023 (remaining period) $ 57 $ 74 2024 199 294 2025 171 431 2026 125 499 2027 25 166 Thereafter — — Subtotal 577 1,464 Less: amount representing interest (43) (101) Total $ 534 $ 1,363 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | PROPERTY, PLANT AND EQUIPMENT Depreciable property, plant, and equipment at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Equipment $ 60,200 $ 55,178 Office buildings and other structures 64,353 54,647 Transmission and distribution plant 284,253 234,218 Total property, plant, and equipment $ 408,806 $ 344,043 Depreciation of property, plant and equipment is computed based on the estimated useful lives as follows: Useful Lives Equipment 3 to 30 years Office buildings and other structures 30 years Transmission and distribution plant 10 to 50 years |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Accounts Receivable | ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Billed receivables $ 3,219 $ 2,303 Less provision for credit losses (142) (164) Accounts receivable — net $ 3,077 $ 2,139 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill The goodwill balance was $10.9 million at September 30, 2023 and is related to the Turner, Red Rock, Mirabell, Francesca, Tortolita, Lyn Lee, Las Quintas Serenas, Rincon, Twin Hawks, and Farmers acquisitions. As of June 30, 2022, the Company reclassified approximately $0.8 million of goodwill to regulatory assets related to Red Rock Water, Red Rock Wastewater, and Turner Ranches acquisition premiums as a result of Rate Decision No. 78644 (refer to Note 2 - “Regulatory Decision and Related Accounting and Policy Changes” for additional information). The Farmers acquisition contributed approximately $6.0 million to the change in the goodwill balance (refer to Note 15 - “Acquisitions” for additional information). There were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to the acquisitions. As of September 30, 2023 and December 31, 2022, the goodwill balance consisted of the following (in thousands): December 31, 2022 Balance Acquisition Activity Adjustments Subsequent to Acquisition Date September 30, 2023 Balance Goodwill $ 4,957 $ 5,956 $ 10 $ 10,923 Intangible Assets As of September 30, 2023 and December 31, 2022, intangible assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Gross Accumulated Net Gross Accumulated Net INDEFINITE LIVED INTANGIBLE ASSETS: CP Water Certificate of Convenience & Necessity service area 1,532 $ 1,532 $ 1,532 $ 1,532 Intangible trademark 13 13 13 13 Franchise contract rights 139 139 132 132 Organizational costs 87 87 87 87 Total indefinite lived intangible assets 1,771 1,771 1,764 1,764 DEFINITE LIVED INTANGIBLE ASSETS: Acquired ICFAs 17,978 (16,105) 1,873 17,978 (14,785) 3,193 Sonoran contract rights 7,406 (2,285) 5,121 7,406 (2,224) 5,182 Total definite lived intangible assets 25,384 (18,390) 6,994 25,384 (17,009) 8,375 Total intangible assets $ 27,155 $ (18,390) $ 8,765 $ 27,148 $ (17,009) $ 10,139 A Certificate of Convenience & Necessity (“CC&N”) is a permit issued by the ACC allowing a public service corporation to serve a specified area, and preventing other public service corporations from offering the same services within the specified area. The CP Water CC&N intangible asset was acquired through the acquisition of CP Water Company in 2006. This CC&N permit has no outstanding conditions that would require renewal. Franchise contract rights and organizational costs relate to the 2018 acquisition of Red Rock and the 2023 acquisition of Farmers. Franchise contract rights are agreements with Pima and Pinal counties for Red Rock and Pima county for Farmers that allow the Company to place infrastructure in public right-of-way and permits expected to be renewable indefinitely. The organizational costs represent fees paid to federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation and preparing it to conduct business. Acquired ICFAs and contract rights related to the 2005 acquisition of Sonoran assets are amortized when cash is received in proportion to the amount of total cash expected to be received under the underlying agreements. Due to the uncertainty of the timing of when cash will be received under ICFA agreements and contract rights, the Company cannot reliably estimate when the remaining intangible assets’ amortization will be recorded. There was $1.4 million of amortization recorded for these balances for both the three and nine months ended September 30, 2023. There was $0.1 million of amortization recorded for these balances for both the three and nine months ended September 30, 2022. |
Transactions With Related Parti
Transactions With Related Parties | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Transactions With Related Parties | TRANSACTIONS WITH RELATED PARTIES The Company provides medical benefits to employees through its participation in a pooled plan sponsored by an affiliate of a significant shareholder and director of the Company. Medical claims paid to the plan were approximately $0.3 million for the three months ended September 30, 2023 and $0.4 million for the three months ended September 30, 2022. Medical claims paid to the plan were approximately $0.6 million for the nine months ended September 30, 2023 and $0.7 million for the nine months ended September 30, 2022. Refer to Note 1 — “Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements — Corporate Transactions” (specifically the “Public Offering of Common Stock” and “Private Placement Offering of Common Stock” sections) for additional information regarding other related party disclosures. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | ACCRUED EXPENSES Accrued expenses at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Property taxes $ 1,890 $ 1,195 Interest 1,707 483 Accrued Bonus 895 557 Customer prepayments 836 588 Accrued project liabilities 812 1,585 Asset retirement obligations 697 697 Dividend payable 600 593 Deferred compensation 377 818 Accrued payroll 263 50 Accrued sales taxes 247 152 Accrued professional fees 224 60 Other accrued liabilities 1,030 1,278 Total accrued expenses $ 9,578 $ 8,056 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value | FAIR VALUE Fair Value of Financial Instruments FASB ASC 820, Fair Value Measurement , establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels, as follows: • Level 1 - Quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs other than Level 1 that are either directly or indirectly observable. • Level 3 - Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that the Company believes market participants would use. Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 were as follows (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Asset/Liability Type: HUF Funds - restricted cash (1) $ 1,533 $ — $ — $ 1,533 $ 161 $ — $ — $ 161 Demand Deposit (2) 1 — — 1 50 — — 50 Certificate of Deposit - Restricted (1) — 843 — 843 — 840 — 840 Acquisition Liability (3) — — 2,146 2,146 — — 838 838 Total $ 1,534 $ 843 $ 2,146 $ 4,523 $ 211 $ 840 $ 838 $ 1,889 (1) HUF Funds - restricted cash and Certificate of Deposit - Restricted are presented on the Restricted cash line item of the Company’s consolidated balance sheets and are valued at amortized cost, which approximates fair value. The increase was primarily driven by additional funds received in growth areas of several utilities. (2) Demand Deposit is presented on the Cash and cash equivalents line item of the Company’s consolidated balance sheets and is valued at amortized cost, which approximates fair value. (3) As part of the Red Rock acquisition, the Company is required to pay to the seller a growth premium equal to $750 (not in thousands) for each new account established within three specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date. The fair value of the acquisition liability was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. In addition, as part of the Farmers acquisition, the Company is required to pay the seller a growth premium equal to $1,000 (not in thousands) for each new account established in the service area, up to a total aggregate growth premium of $3.5 million. The obligation period of the growth premium commences on the closing date of the acquisition and ends ten years after the first new account for residential purposes is established on land that is, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area or ten years after the date of closing if a new account (as previously described) has not been established. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The outstanding balances and maturity dates for short-term (including the current portion of long-term debt) and long-term debt as of September 30, 2023 and December 31, 2022 are as follows (in thousands): September 30, 2023 December 31, 2022 Short-term Long-term Short-term Long-term BONDS AND NOTES PAYABLE - 4.380% Series A 2016, maturing June 2028 $ — 28,750 $ — $ 28,750 4.580% Series B 2016, maturing June 2036 3,833 74,750 3,833 76,667 3,833 103,500 3,833 105,417 OTHER Debt issuance costs — (437) — (472) Loan Payable 47 195 — — Total debt $ 3,880 $ 103,258 $ 3,833 $ 104,945 Debt is measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 as follows (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Long-term debt (3) — 100,113 — 100,113 — 103,611 — 103,611 (3) The fair value of debt was estimated based on interest rates considered available for instruments of similar terms and remaining maturities. 2016 Senior Secured Notes On June 24, 2016, the Company issued two series of senior secured notes with an aggregate total principal balance of $115.0 million at a blended interest rate of 4.55%. Series A carries a principal balance of $28.8 million and bears an interest rate of 4.38% over a twelve-year term, with the principal payment due on June 15, 2028. Series B carries a principal balance of $78.6 million and bears an interest rate of 4.58% over a 20-year term. Series B was interest only for the first five years, with $1.9 million principal payments paid semiannually thereafter beginning December 2021. The senior secured notes are collateralized by a security interest in the Company’s equity interest in its subsidiaries, including all payments representing profits and qualifying distributions. The senior secured notes require the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00. Consolidated EBITDA is calculated as net income plus depreciation and amortization, taxes, interest and other non-cash charges net of non-cash income. Consolidated debt service is calculated as interest expense, principal payments, and dividend or stock repurchases. The senior secured notes also contain a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25. However, for the quarter ended June 30, 2021 through the quarter ending March 31, 2024, the debt service ratio drops to 1.20. The debt service ratio increases to 1.25 for any fiscal quarter during the period from and after June 30, 2024. As of September 30, 2023, the Company was in compliance with its financial debt covenants. Note Purchase Agreement On October 26, 2023, the Company entered into a note purchase agreement with Jackson National Life Insurance Company pursuant to which the Company will, subject to customer closing conditions, issue an aggregate principal amount of $20,000,000 of 6.91% Senior Secured Notes due on January 3, 2034 (the “Notes”). The Company plans to use the proceeds from the Notes offering to refinance existing indebtedness, to support capital investments associated with growth and for general corporate purposes. Revolving Credit Line On April 30, 2020, the Company entered into an agreement with Northern Trust for a two-year revolving line of credit initially up to $10.0 million with an initial maturity date of April 30, 2022 (as amended, the “Northern Trust Loan Agreement”). This credit facility, which may be used to refinance existing indebtedness, to acquire assets to use in and/or expand the Company’s business, and for general corporate purposes, initially bore an interest rate equal to London Interbank Offered Rate (LIBOR) plus 2.00% and had no unused line fee. On April 30, 2021, the Company and Northern Trust entered into an amendment to the Northern Trust Loan Agreement pursuant to which, among other things, the maturity date for the Company’s revolving credit line was extended from April 30, 2022 to April 30, 2024. On July 26, 2022, the Company and Northern Trust entered into a second amendment to the Northern Trust Loan Agreement, which, among other things, further extended the scheduled maturity date for the revolving line of credit from April 30, 2024 to July 1, 2024, increased the maximum principal amount available for borrowing from $10.0 million to $15.0 million, and replaced the LIBOR interest rate provisions with provisions based on the Secured Overnight Financing Rate (SOFR). On June 28, 2023, the Company and Northern Trust entered into a third amendment to the Northern Trust Loan Agreement, which, among other things, (i) further amended the scheduled maturity date for the revolving line of credit from July 1, 2024 to July 1, 2025 and (ii) added a quarterly facility fee equal to 0.35% of the average daily unused amount of the revolving line of credit. On October 26, 2023, the Company and Northern Trust entered into a fourth amendment to the Northern Trust Loan Agreement, which, among other things, further amended the terms and conditions set forth in the Loan Agreement to make certain conforming changes to reflect the issuance of the Notes and related matters. The Northern Trust Loan Agreement requires the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00. The Northern Trust Loan Agreement also contains a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25. However, for the quarter ending June 30, 2021 through the quarter ending March 31, 2024, the ratio drops to 1.20. As of September 30, 2023, the Company was in compliance with its financial debt covenants. As of September 30, 2023 and December 31, 2022, the outstanding borrowings on this credit line were approximately $15,000 and $0, respectively. There were approximately $4,000 and $9,812 unamortized debt issuance costs as of September 30, 2023 and December 31, 2022, respectively. In 2020, ASU 2020-04 was issued establishing ASC 848, Reference Rate Reform, and in 2021 ASU 2021-01, Reference Rate Reform (Topic 848): Scope was issued (collectively, “ASC 848”). ASC 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. In 2022, ASU 2022-06, Deferral of the Sunset Date of Topic 848 (ASU 2022-06) was issued to defer the sunset date of ASC 848 to December 31, 2024. ASU 2022-06 was effective immediately for all companies. The Company continues to evaluate the impact of ASC 848. At September 30, 2023, the remaining aggregate annual maturities of debt obligations are as follows (in thousands): Debt 2023 (remaining period) $ 1,917 2024 3,836 2025 3,839 2026 3,843 2027 3,847 2028 32,568 Thereafter 57,287 Subtotal 107,137 Less: amount representing interest — Total $ 107,137 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ended September 30, 2023, the Company recorded tax expense of $0.9 million as compared to $0.6 million for the three months ended September 30, 2022. The $0.3 million increase in tax expense was primarily driven by the increase in pre-tax income for the three months ended September 30, 2023. For the nine months ended September 30, 2023, the Company recorded tax expense of $2.5 million as compared to $0.8 million for the nine months ended September 30, 2022. The $1.7 million increase in tax expense was primarily driven by the increase in pre-tax income for the nine months ended September 30, 2023, partially offset by a tax benefit of approximately $0.7 million from the reversal of the regulatory liability related to Rate Decision No. 78622 (refer to Note 2 - “Regulatory Decision and Related Accounting and Policy Changes” for additional information) for the nine months ended September 30, 2022. |
Deferred Compensation Awards
Deferred Compensation Awards | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Deferred Compensation Awards | DEFERRED COMPENSATION AWARDS Stock-based compensation Stock-based compensation related to option awards is measured based on the fair value of the award. The fair value of stock option awards is determined using a Black-Scholes option-pricing model. The Company recognizes compensation expense associated with the options over the vesting period. 2017 stock option grant In August 2017, GWRI’s Board of Directors granted stock options to acquire 465,000 shares of GWRI’s common stock to employees throughout the Company. The options were granted with an exercise price of $9.40, the market price of the Company’s common shares on the NASDAQ Global Market at the close of business on August 10, 2017. The options vested over a four-year period, with 25% having vested in August 2018, 25% having vested in August 2019, 25% having vested in August 2020, and 25% having vested in August 2021. The options have a 10-year life. The Company expensed the $1.1 million fair value of the stock option grant ratably over the four-year vesting period. As of August 2021, these options were fully expensed. As of September 30, 2023, 128,454 options have been exercised and 69,225 options have been forfeited with 267,321 options outstanding. 2019 stock option grant In August 2019, GWRI’s Board of directors granted stock options to acquire 250,000 shares of GWRI’s common stock to employees throughout the Company. The options were granted with an exercise price of $11.26, the market price of the Company’s common shares on the NASDAQ Global Market at the close of business on August 13, 2019. The options vest over a four-year period, with 25% having vested in August 2020, 25% having vested in August 2021, 25% having vested in August 2022, and 25% vesting in August 2023. The options have a 10-year life. The Company will expense the $0.8 million fair value of the stock option grant ratably over the four-year vesting period. Stock-based compensation expense of $20,000 and $45,000 was recorded for the three months ended September 30, 2023 and 2022, respectively, and $92,000 and $135,000 was recorded for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, 42,217 options have been exercised and 30,520 options have been forfeited with 177,263 options outstanding. Phantom stock/Restricted stock units compensation Restricted stock units are granted in the first quarter based on the prior year’s performance and vest over a three-year period. The units are credited quarterly using the closing price of the Company’s common stock on the applicable record date for the respective quarter. The following table details total awards granted and the number of units outstanding as of September 30, 2023, along with the amounts paid to holders of the phantom stock units (“PSUs”) and/or restricted stock units (“RSUs”) for the three and nine months ended September 30, 2023 and 2022 (in thousands, except unit amounts): Amounts Paid For the Three Months Ended September 30, Amounts Paid For the Nine Months Ended September 30, Grant Date Units Granted Units Outstanding 2023 2022 2023 2022 Q1 2019 32,190 — $ — $ — $ — $ 45 Q1 2020 22,481 — — 25 — 86 Q1 2021 (1) 27,403 4,267 27 31 85 105 Q1 2022 (1) 22,262 10,669 23 26 70 56 Q1 2023 (1) 30,366 24,249 31 — 62 — Total 134,702 39,185 $ 81 $ 82 $ 217 $ 292 (1) Pursuant to the Global Water Resources, Inc. 2020 Omnibus Incentive Plan, effective May 7, 2020, long-term incentive awards are no longer granted in the form of PSUs and are granted as RSUs instead. Stock appreciation rights compensation The following table details the recipients of the stock appreciation rights (“SARs”) awards, the grant date, units granted, exercise price, outstanding units as of September 30, 2023 and amounts paid during the three and nine months ended September 30, 2023 and 2022 (in thousands, except unit and per unit amounts): Amounts Paid For the Three Months Ended September 30, Amounts Paid For the Nine Months Ended September 30, Recipients Grant Date Units Granted Exercise Price Units Outstanding 2023 2022 2023 2022 Members of Management (1)(2) Q1 2015 299,000 $ 4.26 45,500 — — $ 165 $ 62 Members of Management (1)(3) Q3 2017 103,000 $ 9.40 17,000 — — — — Members of Management (1)(4) Q1 2018 33,000 $ 8.99 8,250 — — — — Total 435,000 70,750 $ — $ — $ 165 $ 62 (1) The SARs vest ratably over 16 quarters from the grant date. (2) The exercise price was determined to be the fair market value of one share of GWR Global Water Resources Corp. stock on the grant date of February 11, 2015. (3) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of August 10, 2017. (4) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of March 12, 2018. For the three months ended September 30, 2023 and 2022, the Company recorded approximately $0.0 million and $0.1 million of negative compensation expense related to the PSUs/RSUs and SARs, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded approximately $0.0 million and $0.2 million of negative compensation expense related to the PSUs/RSUs and SARs, respectively. These are liability awards, so when the stock price decreases, cumulative compensation expense is reduced, which can lead to negative compensation in a given period. Based on GWRI’s closing share price on September 29, 2023 (the last trading date of the quarter), deferred compensation expense to be recognized over future periods is estimated for the years ending December 31 as follows (in thousands): RSUs / PSUs 2023 (remaining period) $ 155 2024 214 2025 120 Total $ 489 Restricted stock compensation two |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | SUPPLEMENTAL CASH FLOW INFORMATIONThe following is supplemental cash flow information for the nine months ended September 30, 2023 and 2022 (in thousands): For the Nine Months Ended September 30, 2023 2022 Supplemental cash flow information: Cash paid for interest - net of amounts capitalized $ 2,343 $ 2,072 Cash paid for income taxes $ 276 $ 1,402 Non-cash financing and investing activities: Capital expenditures included in accounts payable and accrued liabilities $ 2,251 $ 2,692 Business acquisition through issuance of contingent consideration payable $ 1,330 $ — Finance lease additions $ 94 $ — |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | ACQUISITIONS Acquisition of Farmers Water Company On February 1, 2023, the Company acquired all of the equity of Farmers, an operator of a water utility with service area in Pima County, Arizona, for a total consideration of $7.6 million consisting of $6.2 million in cash plus a growth premium estimated at $1.4 million. The acquisition added approximately 3,300 active water service connections and approximately 21.5 square miles of service area in Sahuarita, Arizona and the surrounding unincorporated area of Pima County. The acquisition was accounted for as a business combination under ASC 805, “Business Combinations” and the purchase price was allocated to the acquired utility assets and liabilities based on the acquisition-date fair values. Fair values are determined in accordance with ASC 820 “Fair Value Measurement,” which allows for the characteristics of the acquired assets and liabilities to be considered, particularly restrictions on the use of the asset and liabilities. Regulation is considered both a restriction on the use of the assets and liabilities, as it relates to inclusion in rate base, and a fundamental input to measuring the fair value in a business combination. Substantially all the Company’s operations are subject to the rate-setting authority of the ACC and are accounted for pursuant to accounting guidance for regulated operations. The rate-setting and cost recovery provisions currently in place for the Company’s regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. As such, the fair value of the Company’s assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying values and does not reflect any net valuation adjustments. Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium equal to $1,000 for each new account established in the service area, up to a total aggregate growth premium of $3.5 million. The obligation period of the growth premium commences on the closing date of the acquisition and ends (i) ten years after the first new account for residential purposes is established on land that is, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area or (ii) ten years after the date of closing if a new account (as described above) has not been established. A preliminary purchase price allocation of the net assets acquired in the transaction is as follows (in thousands): Net assets acquired: Cash $ 28 Accounts receivable 72 Property, plant and equipment 10,386 Construction work-in-progress 126 Prepaids 8 Intangibles (1) 7 Other taxes (35) Other accrued liabilities (44) Developer deposits (22) AIAC (1,481) CIAC (7,425) Total net assets assumed 1,620 Goodwill 5,956 Total purchase price $ 7,576 (1) Intangibles consist of franchise contract rights and organization costs. Refer to Note 7 — “Goodwill & Intangible Assets” for additional information regarding the intangibles. The goodwill reflects the value paid primarily for the long-term potential for connection growth as a result of the Company’s increased scale and diversity, opportunities for synergies, and an improved risk profile. While the Company uses the best available estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, such estimates are inherently uncertain and subject to refinement. Events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. As a result, during the one-year measurement period from the acquisition date, the Company may record adjustments to the assets acquired and liabilities |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Commitments The Company has operating and finance leases for vehicles, office equipment, and office space. Refer to Note 4 – “Leases” for additional information. On October 16, 2018, the Company completed the acquisition of Red Rock, an operator of a water and a wastewater utility with service areas in the Pima and Pinal counties of Arizona. Under the terms of the purchase agreement, the Company is obligated to pay to the seller a growth premium equal to $750 for each new account established within three specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date or twenty years from the acquisition date. As of September 30, 2023, no meters have been installed and no accounts have been established in any of the three growth premium areas. Contingencies From time to time, in the ordinary course of business, the Company may be subject to pending or threatened lawsuits in which claims for monetary damages are asserted. Management is not aware of any legal proceeding of which the ultimate resolution could materially affect the Company’s financial position, results of operations, or cash flows. |
Basis of Presentation, Corpor_2
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The Company prepares its financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Principles of Consolidation | The condensed consolidated financial statements of Global Water Resources, Inc. (the “Company”, “GWRI”, “we”, “us”, or “our”) and related disclosures as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 are unaudited. The December 31, 2022 condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These financial statements follow the same accounting policies and methods of their application as the Company’s most recent annual consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022. In the Company’s opinion, these financial statements include all normal and recurring adjustments necessary for the fair statement of the results for the interim period. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year, due to the seasonality of our business. |
Basic and Diluted Earnings per Common Share | Basic and Diluted Earnings per Common ShareBasic earnings per share (“EPS”) in each period of this report were calculated by dividing net income by the weighted-average number of shares during those periods. Diluted EPS includes additional weighted-average common stock equivalents (options and restricted stock awards), if dilutive. Unless otherwise noted, the term “earnings per share” refers to basic EPS. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changed the impairment model for certain financial assets that have a contractual right to receive cash, including trade and loan receivables. The new model required recognition based upon an estimation of expected credit losses rather than recognition of losses based on the probability of occurrence. The Company is a public business entity that qualifies as a smaller reporting company, and therefore ASU 2016-13 was effective for annual reporting periods beginning after December 15, 2022. The Company adopted the standard utilizing the modified retrospective method for its trade receivables and unbilled revenue on January 1, 2023. Based on the composition of the Company’s trade receivables and unbilled revenue, and expected future losses, the adoption of ASU 2016-13 did not have a material impact on its consolidated financial statements. |
Basis of Presentation, Corpor_3
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of the denominator used in basic and diluted EPS calculations is shown in the following table: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Basic weighted average common shares outstanding 24,171 23,467 24,046 22,937 Effect of dilutive securities: 2017 Option grant 54 99 72 114 2019 Option grant 7 21 14 30 2020 Restricted stock awards — 8 6 31 2021 Restricted stock awards — — 6 — Total dilutive securities 61 128 98 175 Diluted weighted average common shares outstanding 24,232 23,595 24,144 23,112 Anti-dilutive shares excluded from earnings per diluted shares (1) 138 133 94 133 |
Regulatory Decision and Relat_2
Regulatory Decision and Related Accounting and Policy Changes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Regulated Operations [Abstract] | |
Schedule of Collective Revenue Requirement Phased-in Over Time | Pursuant to Rate Decision No. 78644, the ACC approved, among other things, a collective annual revenue requirement increase of approximately $2.2 million (including the acquisition premiums discussed below) based on 2019 test year service connections, and phased-in over approximately two years, as follows: Incremental Cumulative August 1, 2022 $ 1,457,462 $ 1,457,462 January 1, 2023 $ 675,814 $ 2,133,277 January 1, 2024 $ 98,585 $ 2,231,861 |
Schedule of Regulatory Assets | The Company’s regulatory assets and liabilities consist of the following (in thousands): Recovery Period September 30, 2023 December 31, 2022 Regulatory Assets Income taxes recoverable through future rates (1) Various $ 1,423 1,482 Rate case expense surcharge (2) 2 years 284 467 Acquisition premiums (3) 25 years 1,277 1,220 Total regulatory assets $ 2,984 $ 3,169 Regulatory Liabilities Income taxes payable through future rates (1) 493 508 Acquired ICFAs (4) 4,896 5,863 Depreciation adjustment (5) 705 — Total regulatory liabilities $ 6,094 $ 6,371 (1) The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers. (2) Rate Decision No. 78743, issued on October 24, 2022, approved approximately $0.5 million in rate case expenses to be recovered through a rate case expense surcharge over a two-year period. (3) Rate Decision No. 78319, issued on December 3, 2021, approved an acquisition premium to be amortized over 25 years related to the acquisition of the Company’s Rincon utility. Amortization will begin once the Company receives a decision on the recently filed rate case and the acquisition premium is approved to be included in customer rates. The acquisition premium balance as of September 30, 2023 was approximately $0.5 million. Rate Decision No. 78644, issued on July 27, 2022, approved acquisition premiums related to the acquisitions of the Company’s Turner Ranches and Red Rock utilities. Amortization began in 2022 as the acquisition premiums were included in customer rates as approved in the decision. The acquisition premium balance as of September 30, 2023 was approximately $0.8 million. (4) The acquired ICFA regulatory liability relates to the offset of intangible assets related to ICFA contracts obtained in connection with the Santa Cruz, Palo Verde, and Sonoran Utility Services, LLC (“Sonoran”) acquisitions. When ICFA funds are received, a portion of the funds reduce the acquired ICFA liability as a partial offset to the amortization expense recognition of the related intangible asset. (5) Rate Decision No. 78644 issued on July 27, 2022, approved an adjustment to update previously approved depreciation rates. |
Schedule of Regulatory Liabilities | The Company’s regulatory assets and liabilities consist of the following (in thousands): Recovery Period September 30, 2023 December 31, 2022 Regulatory Assets Income taxes recoverable through future rates (1) Various $ 1,423 1,482 Rate case expense surcharge (2) 2 years 284 467 Acquisition premiums (3) 25 years 1,277 1,220 Total regulatory assets $ 2,984 $ 3,169 Regulatory Liabilities Income taxes payable through future rates (1) 493 508 Acquired ICFAs (4) 4,896 5,863 Depreciation adjustment (5) 705 — Total regulatory liabilities $ 6,094 $ 6,371 (1) The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers. (2) Rate Decision No. 78743, issued on October 24, 2022, approved approximately $0.5 million in rate case expenses to be recovered through a rate case expense surcharge over a two-year period. (3) Rate Decision No. 78319, issued on December 3, 2021, approved an acquisition premium to be amortized over 25 years related to the acquisition of the Company’s Rincon utility. Amortization will begin once the Company receives a decision on the recently filed rate case and the acquisition premium is approved to be included in customer rates. The acquisition premium balance as of September 30, 2023 was approximately $0.5 million. Rate Decision No. 78644, issued on July 27, 2022, approved acquisition premiums related to the acquisitions of the Company’s Turner Ranches and Red Rock utilities. Amortization began in 2022 as the acquisition premiums were included in customer rates as approved in the decision. The acquisition premium balance as of September 30, 2023 was approximately $0.8 million. (4) The acquired ICFA regulatory liability relates to the offset of intangible assets related to ICFA contracts obtained in connection with the Santa Cruz, Palo Verde, and Sonoran Utility Services, LLC (“Sonoran”) acquisitions. When ICFA funds are received, a portion of the funds reduce the acquired ICFA liability as a partial offset to the amortization expense recognition of the related intangible asset. (5) Rate Decision No. 78644 issued on July 27, 2022, approved an adjustment to update previously approved depreciation rates. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | For the three and nine months ended September 30, 2023 and 2022, disaggregated revenues from contracts with customers by major source and customer class are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 REGULATED REVENUE Water Services Residential $ 4,900 $ 4,104 $ 13,261 $ 11,395 Irrigation 1,393 955 2,739 2,283 Commercial 457 295 1,184 907 Construction 537 246 1,036 586 Other water revenues 233 224 696 683 Total water revenues 7,520 5,824 18,916 15,854 Wastewater and recycled water services Residential 5,630 5,488 16,725 15,858 Commercial 317 73 906 600 Recycled water revenues 469 428 1,062 1,017 Other wastewater revenues 78 80 265 296 Total wastewater and recycled water revenues 6,494 6,069 18,958 17,770 TOTAL REGULATED REVENUE 14,014 11,893 37,874 33,624 UNREGULATED REVENUE ICFA revenues 518 — 2,786 — Rental revenues — — — 5 TOTAL UNREGULATED REVENUE 518 — 2,786 5 TOTAL REVENUE $ 14,532 $ 11,893 $ 40,660 $ 33,629 |
Schedule of Contract Assets and Liabilities | The Company’s contract assets and liabilities consist of the following (in thousands): September 30, 2023 December 31, 2022 CONTRACT ASSETS Accounts receivable Water services $ 1,916 $ 1,179 Wastewater and recycled water services 1,303 1,124 Total contract assets $ 3,219 $ 2,303 CONTRACT LIABILITIES Deferred revenue - ICFA $ 19,656 $ 20,974 Total contract liabilities $ 19,656 $ 20,974 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Right-of-use Assets and Lease Liabilities | ROU assets at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 443 $ 405 Operating Lease 1,263 1,486 Total $ 1,706 $ 1,891 Lease liabilities at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Financing Lease $ 534 $ 597 Operating Lease 1,363 1,524 Total $ 1,897 $ 2,121 |
Schedule of Remaining Aggregate Annual Minimum Finance Lease Payments | At September 30, 2023, the remaining aggregate annual minimum lease payments are as follows (in thousands): Finance Lease Obligations Operating Lease Obligations 2023 (remaining period) $ 57 $ 74 2024 199 294 2025 171 431 2026 125 499 2027 25 166 Thereafter — — Subtotal 577 1,464 Less: amount representing interest (43) (101) Total $ 534 $ 1,363 |
Schedule of Remaining Aggregate Annual Minimum Operating Lease Payments | At September 30, 2023, the remaining aggregate annual minimum lease payments are as follows (in thousands): Finance Lease Obligations Operating Lease Obligations 2023 (remaining period) $ 57 $ 74 2024 199 294 2025 171 431 2026 125 499 2027 25 166 Thereafter — — Subtotal 577 1,464 Less: amount representing interest (43) (101) Total $ 534 $ 1,363 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Depreciable property, plant, and equipment at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Equipment $ 60,200 $ 55,178 Office buildings and other structures 64,353 54,647 Transmission and distribution plant 284,253 234,218 Total property, plant, and equipment $ 408,806 $ 344,043 Depreciation of property, plant and equipment is computed based on the estimated useful lives as follows: Useful Lives Equipment 3 to 30 years Office buildings and other structures 30 years Transmission and distribution plant 10 to 50 years |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable as of September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Billed receivables $ 3,219 $ 2,303 Less provision for credit losses (142) (164) Accounts receivable — net $ 3,077 $ 2,139 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | As of September 30, 2023 and December 31, 2022, the goodwill balance consisted of the following (in thousands): December 31, 2022 Balance Acquisition Activity Adjustments Subsequent to Acquisition Date September 30, 2023 Balance Goodwill $ 4,957 $ 5,956 $ 10 $ 10,923 |
Schedule of Finite-lived Intangible Assets | As of September 30, 2023 and December 31, 2022, intangible assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Gross Accumulated Net Gross Accumulated Net INDEFINITE LIVED INTANGIBLE ASSETS: CP Water Certificate of Convenience & Necessity service area 1,532 $ 1,532 $ 1,532 $ 1,532 Intangible trademark 13 13 13 13 Franchise contract rights 139 139 132 132 Organizational costs 87 87 87 87 Total indefinite lived intangible assets 1,771 1,771 1,764 1,764 DEFINITE LIVED INTANGIBLE ASSETS: Acquired ICFAs 17,978 (16,105) 1,873 17,978 (14,785) 3,193 Sonoran contract rights 7,406 (2,285) 5,121 7,406 (2,224) 5,182 Total definite lived intangible assets 25,384 (18,390) 6,994 25,384 (17,009) 8,375 Total intangible assets $ 27,155 $ (18,390) $ 8,765 $ 27,148 $ (17,009) $ 10,139 |
Schedule of Indefinite-lived Intangible Assets | As of September 30, 2023 and December 31, 2022, intangible assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Gross Accumulated Net Gross Accumulated Net INDEFINITE LIVED INTANGIBLE ASSETS: CP Water Certificate of Convenience & Necessity service area 1,532 $ 1,532 $ 1,532 $ 1,532 Intangible trademark 13 13 13 13 Franchise contract rights 139 139 132 132 Organizational costs 87 87 87 87 Total indefinite lived intangible assets 1,771 1,771 1,764 1,764 DEFINITE LIVED INTANGIBLE ASSETS: Acquired ICFAs 17,978 (16,105) 1,873 17,978 (14,785) 3,193 Sonoran contract rights 7,406 (2,285) 5,121 7,406 (2,224) 5,182 Total definite lived intangible assets 25,384 (18,390) 6,994 25,384 (17,009) 8,375 Total intangible assets $ 27,155 $ (18,390) $ 8,765 $ 27,148 $ (17,009) $ 10,139 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses at September 30, 2023 and December 31, 2022 consist of the following (in thousands): September 30, 2023 December 31, 2022 Property taxes $ 1,890 $ 1,195 Interest 1,707 483 Accrued Bonus 895 557 Customer prepayments 836 588 Accrued project liabilities 812 1,585 Asset retirement obligations 697 697 Dividend payable 600 593 Deferred compensation 377 818 Accrued payroll 263 50 Accrued sales taxes 247 152 Accrued professional fees 224 60 Other accrued liabilities 1,030 1,278 Total accrued expenses $ 9,578 $ 8,056 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 were as follows (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Asset/Liability Type: HUF Funds - restricted cash (1) $ 1,533 $ — $ — $ 1,533 $ 161 $ — $ — $ 161 Demand Deposit (2) 1 — — 1 50 — — 50 Certificate of Deposit - Restricted (1) — 843 — 843 — 840 — 840 Acquisition Liability (3) — — 2,146 2,146 — — 838 838 Total $ 1,534 $ 843 $ 2,146 $ 4,523 $ 211 $ 840 $ 838 $ 1,889 (1) HUF Funds - restricted cash and Certificate of Deposit - Restricted are presented on the Restricted cash line item of the Company’s consolidated balance sheets and are valued at amortized cost, which approximates fair value. The increase was primarily driven by additional funds received in growth areas of several utilities. (2) Demand Deposit is presented on the Cash and cash equivalents line item of the Company’s consolidated balance sheets and is valued at amortized cost, which approximates fair value. (3) As part of the Red Rock acquisition, the Company is required to pay to the seller a growth premium equal to $750 (not in thousands) for each new account established within three specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date. The fair value of the acquisition liability was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions. Significant inputs used in the fair value calculation are as follows: year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate. In addition, as part of the Farmers acquisition, the Company is required to pay the seller a growth premium equal to $1,000 (not in thousands) for each new account established in the service area, up to a total aggregate growth premium of $3.5 million. The obligation period of the growth premium commences on the closing date of the acquisition and ends ten years after the first new account for residential purposes is established on land that is, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area or ten years after the date of closing if a new account (as previously described) has not been established. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Balances and Maturity Dates for Short Term and Long Term Debt | The outstanding balances and maturity dates for short-term (including the current portion of long-term debt) and long-term debt as of September 30, 2023 and December 31, 2022 are as follows (in thousands): September 30, 2023 December 31, 2022 Short-term Long-term Short-term Long-term BONDS AND NOTES PAYABLE - 4.380% Series A 2016, maturing June 2028 $ — 28,750 $ — $ 28,750 4.580% Series B 2016, maturing June 2036 3,833 74,750 3,833 76,667 3,833 103,500 3,833 105,417 OTHER Debt issuance costs — (437) — (472) Loan Payable 47 195 — — Total debt $ 3,880 $ 103,258 $ 3,833 $ 104,945 |
Schedule of Liabilities Measured on Recurring Basis | Debt is measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 as follows (in thousands): September 30, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Long-term debt (3) — 100,113 — 100,113 — 103,611 — 103,611 (3) The fair value of debt was estimated based on interest rates considered available for instruments of similar terms and remaining maturities. |
Schedule of Aggregate Annual Maturities of Debt and Minimum Lease Payments under Capital Lease Obligations | At September 30, 2023, the remaining aggregate annual maturities of debt obligations are as follows (in thousands): Debt 2023 (remaining period) $ 1,917 2024 3,836 2025 3,839 2026 3,843 2027 3,847 2028 32,568 Thereafter 57,287 Subtotal 107,137 Less: amount representing interest — Total $ 107,137 |
Deferred Compensation Awards (T
Deferred Compensation Awards (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Total Awards Granted, Number of Units Outstanding and Amounts Paid to PSU Holders | The following table details total awards granted and the number of units outstanding as of September 30, 2023, along with the amounts paid to holders of the phantom stock units (“PSUs”) and/or restricted stock units (“RSUs”) for the three and nine months ended September 30, 2023 and 2022 (in thousands, except unit amounts): Amounts Paid For the Three Months Ended September 30, Amounts Paid For the Nine Months Ended September 30, Grant Date Units Granted Units Outstanding 2023 2022 2023 2022 Q1 2019 32,190 — $ — $ — $ — $ 45 Q1 2020 22,481 — — 25 — 86 Q1 2021 (1) 27,403 4,267 27 31 85 105 Q1 2022 (1) 22,262 10,669 23 26 70 56 Q1 2023 (1) 30,366 24,249 31 — 62 — Total 134,702 39,185 $ 81 $ 82 $ 217 $ 292 (1) Pursuant to the Global Water Resources, Inc. 2020 Omnibus Incentive Plan, effective May 7, 2020, long-term incentive awards are no longer granted in the form of PSUs and are granted as RSUs instead. |
Schedule of Recipients of SARs Awards, Grant Date, Units Granted, Exercise Price, Outstanding Shares and Amounts Paid | The following table details the recipients of the stock appreciation rights (“SARs”) awards, the grant date, units granted, exercise price, outstanding units as of September 30, 2023 and amounts paid during the three and nine months ended September 30, 2023 and 2022 (in thousands, except unit and per unit amounts): Amounts Paid For the Three Months Ended September 30, Amounts Paid For the Nine Months Ended September 30, Recipients Grant Date Units Granted Exercise Price Units Outstanding 2023 2022 2023 2022 Members of Management (1)(2) Q1 2015 299,000 $ 4.26 45,500 — — $ 165 $ 62 Members of Management (1)(3) Q3 2017 103,000 $ 9.40 17,000 — — — — Members of Management (1)(4) Q1 2018 33,000 $ 8.99 8,250 — — — — Total 435,000 70,750 $ — $ — $ 165 $ 62 (1) The SARs vest ratably over 16 quarters from the grant date. (2) The exercise price was determined to be the fair market value of one share of GWR Global Water Resources Corp. stock on the grant date of February 11, 2015. (3) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of August 10, 2017. (4) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of March 12, 2018. |
Schedule of Estimated Future Compensation Expense | Based on GWRI’s closing share price on September 29, 2023 (the last trading date of the quarter), deferred compensation expense to be recognized over future periods is estimated for the years ending December 31 as follows (in thousands): RSUs / PSUs 2023 (remaining period) $ 155 2024 214 2025 120 Total $ 489 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | The following is supplemental cash flow information for the nine months ended September 30, 2023 and 2022 (in thousands): For the Nine Months Ended September 30, 2023 2022 Supplemental cash flow information: Cash paid for interest - net of amounts capitalized $ 2,343 $ 2,072 Cash paid for income taxes $ 276 $ 1,402 Non-cash financing and investing activities: Capital expenditures included in accounts payable and accrued liabilities $ 2,251 $ 2,692 Business acquisition through issuance of contingent consideration payable $ 1,330 $ — Finance lease additions $ 94 $ — |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | A preliminary purchase price allocation of the net assets acquired in the transaction is as follows (in thousands): Net assets acquired: Cash $ 28 Accounts receivable 72 Property, plant and equipment 10,386 Construction work-in-progress 126 Prepaids 8 Intangibles (1) 7 Other taxes (35) Other accrued liabilities (44) Developer deposits (22) AIAC (1,481) CIAC (7,425) Total net assets assumed 1,620 Goodwill 5,956 Total purchase price $ 7,576 (1) Intangibles consist of franchise contract rights and organization costs. Refer to Note 7 — “Goodwill & Intangible Assets” for additional information regarding the intangibles. |
Basis of Presentation, Corpor_4
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements - Corporate Transactions (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Jun. 08, 2023 USD ($) $ / shares shares | Aug. 01, 2022 USD ($) $ / shares shares | Jul. 27, 2022 USD ($) | Jul. 14, 2015 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 27, 2023 utility | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of regulated utilities that filed a rate case with the ACC | utility | 7 | ||||||||
Number of regulated utilities | utility | 13 | ||||||||
Revenue recognition increase | $ 2,200 | ||||||||
Phase-in period | 2 years | ||||||||
Share repurchase | $ 2,748 | $ 14,892 | |||||||
Growth premiums received | $ 700 | $ 600 | $ 1,600 | $ 2,200 | |||||
Valencia Water Company | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Growth premium receivable for each new water meter installed | $ 3,000 | ||||||||
Period for maximum payout of growth premium receivable | 20 years | ||||||||
Maximum payout of growth premium receivable | $ 45,000 | ||||||||
Private Placement Offering | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of common stock to be issued and sold (in shares) | shares | 230,000 | ||||||||
Purchase price (in dollars per share) | $ / shares | $ 12.07 | ||||||||
Gross proceeds from sale of stock | $ 2,800 | ||||||||
Private Placement Offering | Affiliates | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of common stock issued (in shares) | shares | 30,000 | ||||||||
Public Offering | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Purchase price (in dollars per share) | $ / shares | $ 13.50 | ||||||||
Number of common stock issued (in shares) | shares | 1,150,000 | ||||||||
Share repurchase | $ 14,900 | ||||||||
Public Offering | Affiliates | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of common stock issued (in shares) | shares | 652,000 | ||||||||
Underwriter | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Number of common stock issued (in shares) | shares | 150,000 |
Basis of Presentation, Corpor_5
Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements - Reconciliation of the Denominator Used in Basic and Diluted EPS Calculations (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Basic weighted average common shares outstanding (in shares) | 24,171,228 | 23,467,035 | 24,046,493 | 22,937,265 |
Effect of dilutive securities (in shares) | 61,000 | 128,000 | 98,000 | 175,000 |
Diluted weighted average common shares outstanding (in shares) | 24,231,801 | 23,595,459 | 24,144,384 | 23,111,881 |
Antidilutive shares excluded from earnings per diluted share (in shares) | 138,000 | 133,000 | 94,000 | 133,000 |
2017 Option grant | Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities (in shares) | 54,000 | 99,000 | 72,000 | 114,000 |
2019 Option grant | Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities (in shares) | 7,000 | 21,000 | 14,000 | 30,000 |
2020 Restricted stock awards | Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities (in shares) | 0 | 8,000 | 6,000 | 31,000 |
2021 Restricted stock awards | Restricted Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 6,000 | 0 |
Regulatory Decision and Relat_3
Regulatory Decision and Related Accounting and Policy Changes - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Jun. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Jul. 31, 2023 USD ($) | Jul. 03, 2023 USD ($) | Jun. 27, 2023 utility | Dec. 31, 2022 USD ($) | |
Public Utilities, General Disclosures [Line Items] | |||||||
Construction work-in-progress | $ 46,095 | $ 46,095 | $ 66,039 | ||||
Number of regulated utilities that filed a rate case with the ACC | utility | 7 | ||||||
Number of regulated utilities | utility | 13 | ||||||
Number of regulated utilities filing rate applications as a percentage of active service connection | 3% | ||||||
Regulatory asset | 2,984 | 2,984 | $ 3,169 | ||||
Regulatory assets, amortization period (in years) | 25 years | ||||||
Change in income tax expense | $ 300 | $ 1,700 | |||||
Write off of capitalized interest | $ 300 | ||||||
Percentage of hook up fee liability to be recorded on ICFA receipts | 70% | ||||||
Percentage of deferred revenue to be recorded on ICFA receipts | 30% | ||||||
Tax Cuts and Jobs Act | |||||||
Public Utilities, General Disclosures [Line Items] | |||||||
Reversal of regulatory liabilities | 800 | ||||||
Change in income tax expense | 700 | ||||||
Decrease in interest expense | 100 | ||||||
Acquisition Premiums | |||||||
Public Utilities, General Disclosures [Line Items] | |||||||
Regulatory asset | $ 800 | ||||||
Water Plant | |||||||
Public Utilities, General Disclosures [Line Items] | |||||||
Construction work-in-progress | $ 38,400 | ||||||
Plant placed in service | $ 27,500 |
Regulatory Decision and Relat_4
Regulatory Decision and Related Accounting and Policy Changes - Schedule of Collective Revenue Requirement Phased-in Over Time (Details) | Jul. 27, 2022 USD ($) |
Regulated Operations [Abstract] | |
Approved collective revenue increase | $ 2,200,000 |
Incremental | |
Incremental year one | 1,457,462 |
Incremental year two | 675,814 |
Incremental year three | 98,585 |
Cumulative | |
Cumulative year one | 1,457,462 |
Cumulative year two | 2,133,277 |
Cumulative year three | $ 2,231,861 |
Regulatory Decision and Relat_5
Regulatory Decision and Related Accounting and Policy Changes - Schedule of Regulatory Assets and Regulatory Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Oct. 24, 2022 | Dec. 03, 2021 |
Regulatory Liability [Line Items] | ||||
Regulatory asset | $ 2,984 | $ 3,169 | ||
Regulatory liability | 6,094 | 6,371 | ||
Income taxes payable through future rates | ||||
Regulatory Liability [Line Items] | ||||
Regulatory liability | 493 | 508 | ||
Acquired ICFAs | ||||
Regulatory Liability [Line Items] | ||||
Regulatory liability | 4,896 | 5,863 | ||
Depreciation adjustment | ||||
Regulatory Liability [Line Items] | ||||
Regulatory liability | 705 | 0 | ||
Income taxes recoverable through future rates | ||||
Regulatory Liability [Line Items] | ||||
Regulatory asset | $ 1,423 | 1,482 | ||
Rate case expense surcharge | ||||
Regulatory Liability [Line Items] | ||||
Recovery Period | 2 years | 2 years | ||
Regulatory asset | $ 284 | 467 | $ 500 | |
Acquisition premiums | ||||
Regulatory Liability [Line Items] | ||||
Recovery Period | 25 years | |||
Regulatory asset | $ 1,277 | $ 1,220 | ||
Acquisition premiums | Rincon Water Company, Inc. | ||||
Regulatory Liability [Line Items] | ||||
Recovery Period | 25 years | |||
Regulatory asset | 500 | |||
Acquisition premiums | Turner Ranches Irrigation, Inc. and Red Rock Utilities Company | ||||
Regulatory Liability [Line Items] | ||||
Regulatory asset | $ 800 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||||
Required payment period | 15 days | ||||
Deferred revenue | $ 19,656 | $ 19,656 | $ 20,974 | ||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 14,532 | $ 11,893 | 40,660 | $ 33,629 | |
Unregulated Operation | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 518 | 0 | 2,786 | 5 | |
ICFA revenues | Unregulated Operation | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | $ 518 | $ 0 | $ 2,786 | $ 0 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 14,532 | $ 11,893 | $ 40,660 | $ 33,629 |
Regulated Operation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,014 | 11,893 | 37,874 | 33,624 |
Regulated Operation | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 7,520 | 5,824 | 18,916 | 15,854 |
Regulated Operation | Water Services | Residential | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 4,900 | 4,104 | 13,261 | 11,395 |
Regulated Operation | Water Services | Irrigation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 1,393 | 955 | 2,739 | 2,283 |
Regulated Operation | Water Services | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 457 | 295 | 1,184 | 907 |
Regulated Operation | Water Services | Construction | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 537 | 246 | 1,036 | 586 |
Regulated Operation | Water Services | Other water revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 233 | 224 | 696 | 683 |
Regulated Operation | Wastewater and recycled water services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 6,494 | 6,069 | 18,958 | 17,770 |
Regulated Operation | Wastewater and recycled water services | Residential | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 5,630 | 5,488 | 16,725 | 15,858 |
Regulated Operation | Wastewater and recycled water services | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 317 | 73 | 906 | 600 |
Regulated Operation | Wastewater and recycled water services | Recycled water revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 469 | 428 | 1,062 | 1,017 |
Regulated Operation | Wastewater and recycled water services | Other wastewater revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 78 | 80 | 265 | 296 |
Unregulated Operation | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 518 | 0 | 2,786 | 5 |
Unregulated Operation | ICFA revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 518 | 0 | 2,786 | 0 |
Unregulated Operation | Rental revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 0 | $ 0 | $ 0 | $ 5 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Capitalized Contract Cost [Line Items] | ||
Accounts receivable | $ 3,219 | $ 2,303 |
Deferred revenue - ICFA | 19,656 | 20,974 |
Total contract liabilities | 19,656 | 20,974 |
Water services | ||
Capitalized Contract Cost [Line Items] | ||
Accounts receivable | 1,916 | 1,179 |
Wastewater and recycled water services | ||
Capitalized Contract Cost [Line Items] | ||
Accounts receivable | $ 1,303 | $ 1,124 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 24 Months Ended | 36 Months Ended | ||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 lease | Apr. 30, 2027 USD ($) | Apr. 30, 2025 USD ($) | Jan. 31, 2022 | Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | |||||||||
Number of finance leases entered into | lease | 9 | ||||||||
Finance lease term | 5 years | ||||||||
Operating lease term | 5 years | ||||||||
Operating leases rent expense | $ 100 | $ 97 | $ 295 | $ 223 | |||||
Subsequent Event | Forecast | |||||||||
Lessee, Lease, Description [Line Items] | |||||||||
Operating leases monthly rental expense related to new agreement | $ 41,572 | $ 23,750 | |||||||
Minimum | |||||||||
Lessee, Lease, Description [Line Items] | |||||||||
Finance lease term | 48 months | ||||||||
Maximum | |||||||||
Lessee, Lease, Description [Line Items] | |||||||||
Finance lease term | 60 months |
Leases - Schedule of Right-of-U
Leases - Schedule of Right-of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Right-of-use assets | ||
Financing Lease | $ 443 | $ 405 |
Operating Lease | 1,263 | 1,486 |
Total | 1,706 | 1,891 |
Lease liabilities | ||
Financing Lease | 534 | 597 |
Operating Lease | 1,363 | 1,524 |
Total | $ 1,897 | $ 2,121 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total | Total |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total | Total |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Leases — current portion, Long-term lease liabilities | Leases — current portion, Long-term lease liabilities |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Leases — current portion, Long-term lease liabilities | Leases — current portion, Long-term lease liabilities |
Leases - Schedule of Remaining
Leases - Schedule of Remaining Aggregate Annual Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finance Lease Obligations | ||
2023 (remaining period) | $ 57 | |
2024 | 199 | |
2025 | 171 | |
2026 | 125 | |
2027 | 25 | |
Thereafter | 0 | |
Subtotal | 577 | |
Less: amount representing interest | (43) | |
Total | 534 | $ 597 |
Operating Lease Obligations | ||
2023 (remaining period) | 74 | |
2024 | 294 | |
2025 | 431 | |
2026 | 499 | |
2027 | 166 | |
Thereafter | 0 | |
Subtotal | 1,464 | |
Less: amount representing interest | (101) | |
Total | $ 1,363 | $ 1,524 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Depreciable property, plant and equipment | $ 408,806 | $ 344,043 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable property, plant and equipment | $ 60,200 | 55,178 |
Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 30 years | |
Office buildings and other structures | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable property, plant and equipment | $ 64,353 | 54,647 |
Useful life | 30 years | |
Transmission and distribution plant | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable property, plant and equipment | $ 284,253 | $ 234,218 |
Transmission and distribution plant | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Transmission and distribution plant | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 50 years |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Billed receivables | $ 3,219 | $ 2,303 |
Less provision for credit losses | (142) | (164) |
Accounts receivable — net | $ 3,077 | $ 2,139 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Feb. 01, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2022 | |
Indefinite-lived Intangible Assets [Line Items] | |||||||
Goodwill | $ 10,923 | $ 10,923 | $ 4,957 | ||||
Regulatory asset | 2,984 | 2,984 | $ 3,169 | ||||
Goodwill, acquired during period | 5,956 | ||||||
Amortization of intangible assets | $ 1,400 | $ 100 | $ 1,400 | $ 100 | |||
Farmers Water Company | |||||||
Indefinite-lived Intangible Assets [Line Items] | |||||||
Goodwill | $ 5,956 | ||||||
Goodwill, acquired during period | $ 6,000 | ||||||
Acquisition Premiums | |||||||
Indefinite-lived Intangible Assets [Line Items] | |||||||
Regulatory asset | $ 800 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
December 31, 2022 Balance | $ 4,957 |
Acquisition Activity | 5,956 |
Adjustments Subsequent to Acquisition Date | 10 |
September 30, 2023 Balance | $ 10,923 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
INDEFINITE LIVED INTANGIBLE ASSETS: | ||
Indefinite lived intangible assets | $ 1,771 | $ 1,764 |
DEFINITE LIVED INTANGIBLE ASSETS: | ||
Gross Amount | 25,384 | 25,384 |
Accumulated Amortization | (18,390) | (17,009) |
Net Amount | 6,994 | 8,375 |
Total intangible assets, Gross Amount | 27,155 | 27,148 |
Total intangible assets, Net Amount | 8,765 | 10,139 |
Acquired ICFAs | ||
DEFINITE LIVED INTANGIBLE ASSETS: | ||
Gross Amount | 17,978 | 17,978 |
Accumulated Amortization | (16,105) | (14,785) |
Net Amount | 1,873 | 3,193 |
Sonoran contract rights | ||
DEFINITE LIVED INTANGIBLE ASSETS: | ||
Gross Amount | 7,406 | 7,406 |
Accumulated Amortization | (2,285) | (2,224) |
Net Amount | 5,121 | 5,182 |
CP Water Certificate of Convenience & Necessity service area | ||
INDEFINITE LIVED INTANGIBLE ASSETS: | ||
Indefinite lived intangible assets | 1,532 | 1,532 |
Intangible trademark | ||
INDEFINITE LIVED INTANGIBLE ASSETS: | ||
Indefinite lived intangible assets | 13 | 13 |
Franchise contract rights | ||
INDEFINITE LIVED INTANGIBLE ASSETS: | ||
Indefinite lived intangible assets | 139 | 132 |
Organizational costs | ||
INDEFINITE LIVED INTANGIBLE ASSETS: | ||
Indefinite lived intangible assets | $ 87 | $ 87 |
Transactions With Related Par_2
Transactions With Related Parties (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Affiliates | Medical Benefits Pool Plan | ||||
Related Party Transaction [Line Items] | ||||
Medical claims paid | $ 0.3 | $ 0.4 | $ 0.6 | $ 0.7 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Property taxes | $ 1,890 | $ 1,195 |
Interest | 1,707 | 483 |
Accrued Bonus | 895 | 557 |
Customer prepayments | 836 | 588 |
Accrued project liabilities | 812 | 1,585 |
Asset retirement obligations | 697 | 697 |
Dividend payable | 600 | 593 |
Deferred compensation | 377 | 818 |
Accrued payroll | 263 | 50 |
Accrued sales taxes | 247 | 152 |
Accrued professional fees | 224 | 60 |
Other accrued liabilities | 1,030 | 1,278 |
Total accrued expenses | $ 9,578 | $ 8,056 |
Fair Value (Details)
Fair Value (Details) - USD ($) | 9 Months Ended | ||
Feb. 01, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Demand deposit | $ 1,000 | $ 50,000 | |
Acquisition liability | 2,146,000 | 838,000 | |
Total | 4,523,000 | 1,889,000 | |
Farmers Water Company | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Growth premium receivable for each new water meter installed | $ 1,000 | ||
Maximum payout of growth premium receivable | $ 3,500,000 | ||
Growth premium, obligation period | 10 years | ||
Red Rock Utilities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Growth premium payable | $ 750 | ||
Period for maximum payout of growth premium after first meter install (in years) | 10 years | ||
Period for maximum payout of growth premium after acquisition date (in years) | 20 years | ||
HUF Funds - restricted cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | $ 1,533,000 | 161,000 | |
Certificate of Deposit - Restricted | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 843,000 | 840,000 | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Demand deposit | 1,000 | 50,000 | |
Acquisition liability | 0 | 0 | |
Total | 1,534,000 | 211,000 | |
Level 1 | HUF Funds - restricted cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 1,533,000 | 161,000 | |
Level 1 | Certificate of Deposit - Restricted | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 0 | 0 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Demand deposit | 0 | 0 | |
Acquisition liability | 0 | 0 | |
Total | 843,000 | 840,000 | |
Level 2 | HUF Funds - restricted cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 0 | 0 | |
Level 2 | Certificate of Deposit - Restricted | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 843,000 | 840,000 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Demand deposit | 0 | 0 | |
Acquisition liability | 2,146,000 | 838,000 | |
Total | 2,146,000 | 838,000 | |
Level 3 | HUF Funds - restricted cash | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | 0 | 0 | |
Level 3 | Certificate of Deposit - Restricted | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Restricted cash | $ 0 | $ 0 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Balances and Maturity Dates for Short Term and Long Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Jun. 24, 2016 |
Short-term | |||
Bonds and notes payable | $ 3,880 | $ 3,833 | |
Loan Payable | 47 | 0 | |
Total debt | 3,880 | 3,833 | |
Long-term | |||
Loan Payable | 195 | 0 | |
Total debt | 103,258 | 104,945 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 4.55% | ||
Short-term | |||
Bonds and notes payable | 3,833 | 3,833 | |
Debt issuance costs | 0 | 0 | |
Long-term | |||
Bonds and notes payable | 103,500 | 105,417 | |
Debt issuance costs | $ (437) | (472) | |
Senior Notes | Series A Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 4.38% | 4.38% | |
Short-term | |||
Bonds and notes payable | $ 0 | 0 | |
Long-term | |||
Bonds and notes payable | $ 28,750 | 28,750 | |
Senior Notes | Series B Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 4.58% | 4.58% | |
Short-term | |||
Bonds and notes payable | $ 3,833 | 3,833 | |
Long-term | |||
Bonds and notes payable | $ 74,750 | $ 76,667 |
Debt - Schedule of Liabilities
Debt - Schedule of Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 100,113 | $ 103,611 |
Level 1 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 0 |
Level 2 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 100,113 | 103,611 |
Level 3 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 0 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Details) | 33 Months Ended | |||||||
Jun. 28, 2023 | Apr. 30, 2020 USD ($) | Jun. 24, 2016 USD ($) debt_instrument | Mar. 31, 2024 | Oct. 26, 2023 USD ($) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jul. 26, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Outstanding borrowings | $ 15,000 | $ 0 | ||||||
Unamortized debt issuance costs | $ 4,000 | $ 9,812 | ||||||
Northern Trust Loan Agreement | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolving line of credit, maximum borrowing capacity | $ 10,000,000 | $ 15,000,000 | ||||||
Facility fee on unused amount of line of credit (as a percent) | 0.35% | |||||||
Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of debt instruments | debt_instrument | 2 | |||||||
Debt instrument, face amount | $ 115,000,000 | |||||||
Debt instrument, interest rate | 4.55% | |||||||
Debt service coverage ratio | 110% | |||||||
Debt service coverage ratio limiting dividend payment | 125% | |||||||
Future debt service coverage ratio | 120% | |||||||
Debt service coverage ratio for dividend payments | 1.25 | |||||||
Senior Notes | Series A Senior Secured Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 28,800,000 | |||||||
Debt instrument, interest rate | 4.38% | 4.38% | ||||||
Debt instrument, term | 12 years | |||||||
Senior Notes | Series B Senior Secured Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 78,600,000 | |||||||
Debt instrument, interest rate | 4.58% | 4.58% | ||||||
Debt instrument, term | 20 years | |||||||
Debt Instrument, principal payments | $ 1,900,000 | |||||||
Senior Notes | Senior Secured Notes Due January 3, 2034 | Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 20,000,000 | |||||||
Debt instrument, interest rate | 6.91% | |||||||
Line of Credit | Northern Trust Loan Agreement | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, term | 2 years | |||||||
Debt service coverage ratio | 110% | |||||||
Line of Credit | Northern Trust Loan Agreement | Revolving Credit Facility | Subsequent Event | Forecast | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt service coverage ratio | 120% | |||||||
Line of Credit | Northern Trust Loan Agreement | Revolving Credit Facility | Northern Trust | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt service coverage ratio | 125% | |||||||
Line of Credit | Northern Trust Loan Agreement | Revolving Credit Facility | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as a percent) | 2% |
Debt - Schedule of Aggregate An
Debt - Schedule of Aggregate Annual Maturities of Debt (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt | |
2023 (remaining period) | $ 1,917 |
2024 | 3,836 |
2025 | 3,839 |
2026 | 3,843 |
2027 | 3,847 |
2028 | 32,568 |
Thereafter | 57,287 |
Total | $ 107,137 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 888 | $ 612 | $ 2,484 | $ 805 |
Change in income tax expense | $ 300 | $ 1,700 | ||
Reversal of regulatory liability | $ 700 |
Deferred Compensation Awards -
Deferred Compensation Awards - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2019 | Aug. 31, 2017 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 3 years | |||||
PSUs/ RSUs and SARs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 0 | $ (100,000) | $ 0 | $ (200,000) | ||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 200,000 | $ 300,000 | $ 700,000 | $ 900,000 | ||
Units granted (in shares) | 6,000 | 0 | 6,000 | 0 | ||
Restricted Stock | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 2 years | |||||
Restricted Stock | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 3 years | |||||
2017 Option grant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock, options granted (in shares) | 465,000 | |||||
Split-adjusted exercise price of options (in dollars per share) | $ 9.40 | |||||
Fair value of the stock option expense | $ 1,100,000 | |||||
Options exercised (in shares) | 128,454 | |||||
Options forfeited (in shares) | 69,225 | |||||
Number of options outstanding (in shares) | 267,321 | 267,321 | ||||
2017 Option grant | Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Expiration period | 10 years | |||||
2017 Option grant | Stock Option | Vesting In August 2018 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2017 Option grant | Stock Option | Vesting In August 2019 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2017 Option grant | Stock Option | Vesting In August 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2017 Option grant | Stock Option | Vesting In August 2021 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2019 Option grant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock, options granted (in shares) | 250,000 | |||||
Split-adjusted exercise price of options (in dollars per share) | $ 11.26 | |||||
Fair value of the stock option expense | $ 800,000 | |||||
Options exercised (in shares) | 42,217 | |||||
Options forfeited (in shares) | 30,520 | |||||
Number of options outstanding (in shares) | 177,263 | 177,263 | ||||
2019 Option grant | Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expiration period | 10 years | |||||
Stock-based compensation expense | $ 20,000 | $ 45,000 | $ 92,000 | $ 135,000 | ||
2019 Option grant | Stock Option | Vesting In August 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Award vesting period | 4 years | |||||
Vesting percentage | 25% | |||||
2019 Option grant | Stock Option | Vesting In August 2021 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2019 Option grant | Stock Option | Vesting In August 2022 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% | |||||
2019 Option grant | Stock Option | Vesting In August 2023 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 25% |
Deferred Compensation Awards _2
Deferred Compensation Awards - Schedule of Total Awards Granted and Number of Units Outstanding (Details) - Phantom stock/Restricted stock units - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 134,702 | |||
Units Outstanding (in shares) | 39,185 | 39,185 | ||
Amounts Paid | $ 81 | $ 82 | $ 217 | $ 292 |
Q1 2019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 32,190 | |||
Amounts Paid | 45 | |||
Q1 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 22,481 | |||
Amounts Paid | 25 | 86 | ||
Q1 2021 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 27,403 | |||
Units Outstanding (in shares) | 4,267 | 4,267 | ||
Amounts Paid | $ 27 | 31 | $ 85 | 105 |
Q1 2022 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 22,262 | |||
Units Outstanding (in shares) | 10,669 | 10,669 | ||
Amounts Paid | $ 23 | $ 26 | $ 70 | $ 56 |
Q1 2023 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 30,366 | |||
Units Outstanding (in shares) | 24,249 | 24,249 | ||
Amounts Paid | $ 31 | $ 62 |
Deferred Compensation Awards _3
Deferred Compensation Awards - Schedule of Recipients of SARs Awards, Grant Date, Units Granted, Exercise Price, Outstanding Shares and Amounts Paid (Details) - Stock Appreciation Rights (SARs) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) qtr $ / shares shares | Sep. 30, 2022 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 435,000 | |||
Units Outstanding (in shares) | 70,750 | 70,750 | ||
Amounts Paid | $ | $ 0 | $ 0 | $ 165 | $ 62 |
Number of periods the award will vest | qtr | 16 | |||
Q1 2015 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 299,000 | |||
Exercise Price (in dollars per share) | $ / shares | $ 4.26 | |||
Units Outstanding (in shares) | 45,500 | 45,500 | ||
Amounts Paid | $ | $ 0 | 0 | $ 165 | 62 |
Q3 2017 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 103,000 | |||
Exercise Price (in dollars per share) | $ / shares | $ 9.40 | |||
Units Outstanding (in shares) | 17,000 | 17,000 | ||
Amounts Paid | $ | $ 0 | 0 | $ 0 | 0 |
Q1 2018 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units Granted (in shares) | 33,000 | |||
Exercise Price (in dollars per share) | $ / shares | $ 8.99 | |||
Units Outstanding (in shares) | 8,250 | 8,250 | ||
Amounts Paid | $ | $ 0 | $ 0 | $ 0 | $ 0 |
Deferred Compensation Awards _4
Deferred Compensation Awards - Schedule of Estimated Future Compensation Expense (Details) - RSUs / PSUs $ in Thousands | Sep. 30, 2023 USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
2023 (remaining period) | $ 155 |
2024 | 214 |
2025 | 120 |
Total | $ 489 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest - net of amounts capitalized | $ 2,343 | $ 2,072 |
Cash paid for income taxes | 276 | 1,402 |
Non-cash financing and investing activities: | ||
Capital expenditures included in accounts payable and accrued liabilities | 2,251 | 2,692 |
Business acquisition through issuance of contingent consideration payable | 1,330 | 0 |
Finance lease additions | $ 94 | $ 0 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||
Feb. 01, 2023 USD ($) mi² service_connection | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Business Acquisition [Line Items] | |||||
Growth premiums received | $ 700,000 | $ 600,000 | $ 1,600,000 | $ 2,200,000 | |
Farmers Water Company | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration transferred | $ 7,600,000 | ||||
Purchase price | 6,200,000 | ||||
Growth premiums received | $ 1,400,000 | ||||
Number of active water connections | service_connection | 3,300 | ||||
Square miles of approved service area | mi² | 21.5 | ||||
Growth premium receivable for each new water meter installed | $ 1,000 | ||||
Maximum payout of growth premium receivable | $ 3,500,000 | ||||
Growth premium, obligation period | 10 years |
Acquisitions - Schedule of Reco
Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Feb. 01, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 10,923 | $ 4,957 | |
Farmers Water Company | |||
Business Acquisition [Line Items] | |||
Cash | $ 28 | ||
Accounts receivable | 72 | ||
Property, plant and equipment | 10,386 | ||
Construction work-in-progress | 126 | ||
Prepaids | 8 | ||
Intangibles | 7 | ||
Other taxes | (35) | ||
Other accrued liabilities | (44) | ||
Developer deposits | (22) | ||
AIAC | (1,481) | ||
CIAC | (7,425) | ||
Total net assets assumed | 1,620 | ||
Goodwill | 5,956 | ||
Total purchase price | $ 7,576 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Oct. 16, 2018 USD ($) |
Red Rock Utilities | |
Loss Contingencies [Line Items] | |
Growth premium receivable for each new water meter installed | $ 750 |