GWRS - Earnings call transcript Q3 2017 | Global Water Resources, Inc.

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Operator

Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources, Inc. 2017 Third Quarter Conference Call. At this time, all participants are in a listen-only mode.

will question-and-answer we presentation, the conduct session. the Following to that November this Instructions] XXXX I is everyone like would time. Eastern on [Operator call remind being X:XX PM at X, recorded the now would to Controller. like turn I conference to Jeff over Risenmay, Please go ahead.

Jeff Risenmay

you a everyone. us joining is website on copy we of Thank today. financial results at on third our our which XXXX Good quarter call www.gwresources.com. by Today, for morning our issued press release, available

Mike quarter, questions and Chief President key review and Mr. Mr. the Chief Mr. ended will nine for Speaking will Financial Liebman available three results today the is call. the Fleming months and Officer; Officer. Fleming be September Ron Fleming, events at Executive of of following will Liebman, summarize end XXXX. the XX, Liebman and for financial the the third which Mr.

you and I’d factors may estimates, reflect the the statements. any to-date and investors results materially cautioned to that not begin, performance. reliance are undue projections to hereof to management’s which uncertainty, guarantees forward-looking include view like a statements estimate future number not of are place statements. other involve we as Company’s forward-looking Such forward-looking Accordingly, and today contained those statements, could on cause future assumptions, Before from actual in differ certain of of reflect risks, assumptions These events. statements remind information forward-looking presented expectations, regarding current that

are within within non-GAAP at regarding Form available Risk Certain and Analysis measures filed conditions information our additional may of future call. and Factor included Such www.sec.gov. maybe the sections SEC. XX-K of For that Discussion the latest operation included filings with results affect Management’s today’s also please results, factors and read financial

otherwise turn call tables reconciliation of Unless Mr. earnings in over now on I’ll Ron today’s Fleming. dollars. are included which the measure, comparable a see the our is financial all website. in these U.S. stated, amounts And available release, For please discussed GAAP the measures to

Ron Fleming

Jeff. you Thank everyone, and us today. you, thank morning, Good for joining

to Highlights our quarter million pleased an metric an combined approved to prior total very was result. increased third year. connections are adjusted year-to-date increase XXXX Growth active in and increases, in X.X%. and year-to-date by We driven or report with water consumption rate increase revenue, a $X.X non-GAAP include, compared

XX, at or Our total for to December connections active million, the since share, X,XXX a XXXX, Net share, is the three $X.X $X.X nine finally, totaled million at XXXX. XXXX, quarter. per a represents Water this connections rate. X.X%. dividend Global of $X.XX This non-GAAP months to increased an ended per nearly XX, September the metric the respectively. third XX,XXX end increase XX.X% or which or September annualized quarter. of $X.XX $X.X equivalents and million, cash XX, growth totaled up income and X.X% and a morning, increase Adjusted announced of Cash of active EBITDA, And $X.X end million, was

XX, of at dividend to December XX, record on will first XXXX. on rate XXXX December paid the The monthly holders be new

accelerated our capital program plan. annual total the additional to $XX.X quarter, of bringing Water an invested into I on, Global improvement million. flow invested highlight improvement on million capital capital the wanted progress cash to the In Moving improvement our third $X.X

within similar approximately use reminder, go for XX% liability Valencia asset a the As tax in deferring our offsetting or by these utility. related specific existing investments in condemnation each towards investment

such period quarter, in to of of which from third we received investments the time end made. extension the the the in be can of Additionally XXXX IRS approval an

we into improvement Although, deferral also that to expect expenditures will the our and revenue, Further enhance represent for most will the supports XXXX, XXXX. the investments rate improvements of this our capital in a we to build that investments accelerated the provide and our of any privilege service level end expenses, increase of be reduce existing of and capital communities these the growth we we by serve. customers completed prudent utilities capital means the receive base, have these to importantly, completed

wanted addition to our new seen since this in the growth I consistent, January XXXX. rates, growth highlight annual to further, of of Now organic steady, have phasing utilities

As an to strong Estate are Blue approximately we coming noted permit Carey panel XXXX W.P. and X.X%. Permits XX%. of Year-to-date annualized XXXX XX,XXX Maricopa projects Phoenix Consensus be as Business, to are XX,XXX strong to nearly earlier, nearly after at in single-family data remained XXXX, XXXX. the well. data of an The City for of Greater for increase Chip to Phoenix, Metro realizing Real permit sub permits currently growth of rate School increase XX,XXX. XX,XXX permit forecasted increase for market Permits for are for forecasted continues very

see increase As a XX% that a This organic X% excess in future. XX% realized permits we’ve increase XXXX. foreseeable for reminder, for XXXX XXXX, permits. could data suggests saw year-over-year in growth the Year-to-date of over we in

objective. Before over QX to out performance, to again, XXXX I turning our call the lay financial primary to review want Mike our

to mean. Moving and our partners while and to to approach our will value growth customers and a to taking continue mandate through the service forward meet primary sustainable global water creation disciplined following reliable provide safe,

while managing top to growth, We controllable driving grow recurring expenses. will work operational line revenue creating and EBITDA efficiencies by

plan improvement reduce utilities small existing intended of With greatly targeted necessary. our capital will only which condemnation capital to Valencia make improvement cash in accelerated we completion the of in is our portion of minimize to use intend to the as tax flow CapEx XXXX, the liability,

condemnation reoccurring with remainder benefit. was routinely analyze We we of will over plan, to now the finally, dividend commitment to replacing call Valencia grow will And consolidation liability with our quarter. through demonstrated the Mike. dividend turn I policy assets tax our execute this by we acquisitions accretive however this to look again, will primarily the as defer this the

Mike Liebman

Ron. you, everyone. Hello Thank

to of $X.X increased to and by million made contract professional an of company administrative included attributed revenues of amounts the related consumption, up fees This was to and depreciation and XXXX and by $XXX,XXX increased again higher QX X.X%, primarily also Willow operating $XXX,XXX, lower XXXX, $X.X over to U.S. or $XXX,XXX, Increased XXXX. by same QX are $XX,XXX expenses Our contract organic investments reduction is professional thousand by which compared discussion which primarily It’s Total in investments $XXX,XXX, Inc. XXXX, by to Global X%. by XXXX. related QX financial offset expense order. in refers of operating of million, offset to which to due increase operating and over Notable Company, were compared were compared million can O&M this to were the in is compared by public decreased is a in up period or U.S. by $XX.X of of driven depreciation $XXX,XXX operating This on which by all primarily deferred the increase expenses to connection party XXXX. XXXX. increased of X.X% same $XXX,XXX related maintenance X.X%. today by changes or reduced party X.X% year. QX primarily of was expenses compensation, and and of XXXX the total Operating in costs $XX.X same XXXX. a attributed were expense was compared be revenue period up discussed last Increased expense in rates the Year-to-date fees revenues Adjusted or administrative increases XXXX driven expenses removes QX year. due rate Valley worth $XXX,XXX $XX.X information $XXX,XXX an due in period through a These in general in dollars. increased QX costs. capital fees. This pursuant Year-to-date consolidated reduction to changes by related increase reduced noting, expense, million, XXXX. Notable personal $XX,XXX $X.X included XXXX $XXX,XXX through million costs to to expenses QX X.X%, compensation Resources, precipitation higher driven expenses the reduced million, to million the and growth, general Water for capital which the offset in companies made compared a were last in $X.X chemical the QX fees, expenses. or public deferred by is

were net $X.X X.X% offset our which in to from $XXX,XXX increase million previously from our $XXX,XXX in related of million million QX million results. This $X.X million to FATHOM or top driven is to and $XXX,XXX XXXX event, line liability in primarily million option which of out. investment earn in net of a is QX XXXX. Water interest in share through is the one-time call of million or had Valencia QX in million in the expense million adjusted to improvement concludes a $XX.X $XXX,XXX XXXX. EBITDA $X.X due for on compared loss $X.XX XXXX for the reductions update income as growth QX EBITDA, increased $X.X our of or income of Valencia Global income, acquisition the $X.X This of increases net payoff QX adjust XXXX. and of to reduction the pass Adjusted share Turning million and in $X.XX in increase This up $XXX,XXX and operating back mentioned of XXXX, our expense I’ll in income through These Year-to-date as income, equity now the the compared well in improvement of $XXX,XXX party Sonoran $X.X period same was to operating losses. compared $X.XX XXXX. $XX.X improvements in per non-recurring to per an compared in improvement or expense $X.X million XX.X%, XXXX. $X.X by which the XXXX, Ron. early improvement is earnings tax QX was related Year-to-date to premium QX a of disposition was XXXX gain by expense, XXXX net

Ron Fleming

utility call contiguous located We I to Metro generally areas often, to areas are so corridors. Arizona, highlighting existing Thank today’s talk for by that recent you, service I these Mike. today. large to Water’s announcement surround due Phoenix our Phoenix, strategically conclude do service but and about not Global growth wanted wanted along do infrastructure major large

permitting in this provide that secured and area and for water, service miles area. growth a hundreds recycle model in regional wastewater, reminder Global to master service of future us of square Water and put our along will As to doing allow integrated water plans so, place corridors

a of across model, seen that data owners with we autonomous return and all and that plan are a reported is XX,XXX prepared significantly technology called Bill & was autonomous been worth massive areas. questions. is of the centers, there’s you. Melinda in This it crisis. available industries around technologies, economic starting community downtown acres And a the financial But these footprint and has answer climate manufacturing within housing Mike minutes Investment into The the on of Arizona of improving belief it property speed were would just as Waters’ digital these disclose land housing located existing our out Belmont two cutting infrastructure permits the purchaser designed of investment XX further and community and to we now have reported utilities all are a an long that of through during fresh to is with mixed-use area. markets edge growth development embraces plans lot the growth Belmont point. term push additional master accelerating job recovery areas which available fronts, overall Phoenix. statement the global the acquired this spine While validates or the the in logistics. Gates vehicle remarks. organic said, we’ve news distribution highlight prior and potential a can secured and information of That very days one our focus Global in networks, they highlighting located In service not it ago, high Group infrastructure create west development subsidiary deal our Belmont, new that forward thinking Thank vehicles your at a I communication and concludes new that to

Operator

The from Roth Instructions] question Gerry [Operator Capital. comes first from Sweeney

Gerry Sweeney

Good how and morning doing? Ron are Mike, you

Ron Fleming

Good morning Gerry, how are you?

Gerry Sweeney

clarity. circle lot a there’s back locate information, last Phoenix, to at well. know to I doing more whole get I being or can’t want I want a talk little much it maybe the comment, you about of but not about just not I’m bit

of out? & it Bill Belmont, investment The in is west So development Melinda an to build or Phoenix, made Belmont a is that Gates they an existing development want is which

Ron Fleming

Yes. No, good question.

ours there in planned go. as no entitlements is customers no – an there But development. no of as master is this no existing are residents, So, currently infrastructure, community far it

frankly areas side. one we’ve reported the out been So few obviously of largest a past it’s one together planned master there. put of in and in contiguous decades majority the regional entitled, in Belmont work the general sold wastewater has shelved communities obviously it country is Great over country bit done permitting the planning the large it We a The portion water the is piece of That that and Gates few project on Recession. a land and the was Melinda Foundation. & with was But very it is Bill of fully to reportedly the little

Gerry Sweeney

planned near So, have master is part have and Belmont quite a expansion? large community if land been yet, that and master hasn’t but it of planned I is franchise that community eventual about think existing you that an or you some developed

Ron Fleming

Yes. I’ll one lifetime. more just clarify

a it it’s any the basically a land master has doesn’t have cetera county from all in certainly the or mixed-use et only from Belmont the necessary for future. but infrastructure development process, this the purposes whole, entitle, is It’s means So permits customers. got plan

together for infrastructure no currently have no put But today and our there’s servicing the We development. customers. plan

any water of developments these are have We to systems adjacent customers smaller down that currently but have our some it. area, inside public of that don’t

Mike Liebman

And Belmont service our entire point thing is within to Gerry, all area. the another out

Gerry Sweeney

Right.

it. got Okay,

then and cetera. you if on to to but extension make well? option on Ruling And Letter you Okay. there – can the investment that When jumping expire Letter that the Ruling of that kind an is components like assets may allows Private Private got also obviously there extension the the over et an you how acquisitions does is remember for in as components,

Mike Liebman

as year Ron of extension extension and we the to Gerry. an Yes. our make cap which year years a year total on had three utilities, the additional investments the one mentioned, year get got sale. Great for the And existing did we question it an two in only from

we front, which one of we thereafter, that acquisition end which the obviously would for in prior ability XXXX the On get years five our front. experience gotten us extensions on through we’ve years, with the take would three year seek

believe would of additional get if And lines for we out along with search our so, an years acquisition something not continued five we more. the

Gerry Sweeney

front? you Got is How much several in comment on the hundred hence it. acquisition as consider, going as opportunities Arizona, that just

Ron Fleming

I’ll that. this Yes, is take Ron,

and classes detail, that through Ds the of little but about So, small. right. largest, fairly Arizona. There bit Es is the sizes, They’re Class it’s number talk or a the difficult spread is think the to XXX is generally out Cs, Bs, and through you’re in time companies the Class by too actually XXX are much multiple water in Es get A you state

one Class and have down I and from think that an level those consolidate to B So said there’s the them really utilities bring under we opportunity umbrella. always professional

very now. year their But it was number one decades frankly one that that is stated was As – we’ve utilities that basically Commission, measures just number objective that also place ultimately and B, put commissioners before a by policy this at the evidence the and to this finally policy they’ve E utilities consolidate in of several Corporation for policy Arizona the to policy C, noted levels. last Class those ruling the statement out incent objective D put specific

forward, a for year. CapEx number me. it our kind plan close always is place the focus we’re one tax moving regulatory on with Mike will good, made we since that That timing primary is the statements here and obviously active deferred we forward we’re climate think accelerated bringing of very today that driver. The liability been of it’s front. the best the were have the And So in this kind policy on to be

Gerry Sweeney

did how And couple… you much generated then the payment a Mike, the mentioned Valencia in For quarter?

Mike Liebman

about get Yes. prior $XXX,XXX increase. that or for go that the so $XXX,XXX right compares $XX,XXX for The I I’ll it you can specifically now. and amount was quarter dollar X.X% royalties were over One specific in second, for the Buckeye – year, order

Gerry Sweeney

it. essentially, within growth organic Valencia, Got And that’s right? X.X%. that’s

Mike Liebman

Yes.

last $XXX,XXX front, increase so a over Moving on $X.X $XX,XXX, XX.X% the over million the we’re the year’s year-to-date about at increase.

year-to-date the while as up, up it quarter wasn’t So as so. entire the substantially was

Gerry Sweeney

Got it. it. Got

on lower model. than And just perfect. my Okay, the then a little S&G

G&A reduced mean comp that that think on SG&A around it’s the impact connected that – so I I to the one I is kind – the or correct? Sometimes things with was that some believe it shift of down always of and is price price variable deferred stock stock quarter, it flat maybe the the of ahead

Mike Liebman

that correct. Yes, is

projected. so you’ve I for think XXX,XXX compensation was what in about from that we deferred and only down probably QX recorded

Gerry Sweeney

more mean far. improvements I have that two – to as Got and on up side, we leverage you will it, I and do it little sort have get much to Congrats do control the buckets infrastructure. invest? – just bit where O&M, larger organic is opportunity of of a you you just How any tackling, always keeps better have chunks you left then – perfect. have better bottling growth getting much the cost say other How mean cost trying you’re than

Mike Liebman

of I try – has to I the the continue be think create will we’ve find that Gerry, this mean to to surfacing point. got but great team done mean job honest efficiencies, of new I Yes. to of through value ways a that, to we continue to a majority lot

Ron Fleming

Yes. I will now add to that.

are we and we’re scale have just we right, forward. think O&M you is claiming decreases or the these some that growing year. that of completed revenue step have recently think economies Mike below an improvements do connected capital major completed top moving we because from we line lot VAT achieve be think the through that think But do growth. is will of a it that growth there of and function not I can well or just to is if well, dots there remainder do the this opportunity perspective We

proportionately we revenue new any larger think of will of drop amount So line. down that a do the EBITDA to

Gerry Sweeney

appreciate Perfect. Congrats on it. you. great I quarter really Thank guys.

Ron Fleming

Thanks.

Operator

next Acumen Brian Capital. Instructions] question from [Operator Pow comes from Our

Brian Pow

good Good morning morning Ron, Mike.

Ron Fleming

Good morning, Brian.

Mike Liebman

Hey, Brian.

Brian Pow

or a But where I than more on can us of range to QX? got QX lot you number to coming improvements. just of QX sort bit bit that little be is a going just little that follow-up give QX. want the less a a capital expect sense from I’ve of you maybe the

Mike Liebman

Yes.

Brian. think question, a I great that’s

for we’re the think $X has million of spent kind I million range to junk through it big been that – QX in $X it’s of year-to-date QX.

Brian Pow

working got year, you you And then how or Okay. you for next have to next give number could of sort year? base see us it

Mike Liebman

Yes.

we always like to do what point question some is to with numbers. historical that So,

launching So CapEx $X prior $X average we to million to CapEx our years two XXXX this plan million accelerated $X.X had and about XXXX million. really

Maintenance forward, of years. that in utilities these CapEx interact our brought window relatively to having we stated been the a plan always within assets need these lot don’t capital function fact other the young utilities are of million make have condition. for So to good five-year accelerated $X this a CapEx be has still just improvements we than and coming new, are and that’s in historically they’re less the utilities that in these –

think targeted a the put historical will a together next prior So good million guess think the with good bucks is CapEx years. and $X.X I maintenance near $X capital be million, few to to number few a for that plan just accelerated I improvements,

Brian Pow

of Belmont, it acquisitions? next – put do an kind there discussion do number you Okay, opportunity for some would years what the you about to be you monies could you. of help or that then in there of that some than with Valencia your the differing things other And is to couple Thank spend great.

Ron Fleming

Yes.

actually qualify extend into a – timeframe two are as Mike a existing the pretty just cut, and would clear got. and that years to which specific rules think got in was year this type for know very plant also clarify buckets PLR, utilities we specific our is two I investments Letter the really or they Private noted which is a with that ability wait one to the and timeframe what Ruling to we of existing

fairly the I say further, that there’s So never to that will make ability we to on an and years make that. anything, argument that I cap extend believe we’ve if and and past. never even successful in about three been is suppose, grounds the the we

wouldn’t opportunity. XXXX, the be it but at say coming end I are of of years So about never, that really the this end we will thinking

on Mike about As noted several can years and that the you more open acquisition the extensions of number will get. have we more that side, bit

we there. feel So good

longer – believe the next that there But we we circling project, do few owners years, the is are is long-term trying based will because the know. major requirements project, So takes which on the Belmont don’t I capital than that back just also reposition a to to written. new don’t think this it we articles to that don’t in down believe what be are

with to and working capital soft out. a master be going cost, plans So change we’ll ground, those to before things, be that’s the infrastructure all to them address sorted relatively are all in both have hard but and they permitting require

So I they they right. if think several at if be the even rapidly, delay it’ll five be project to years, for three years all move it’ll

in the they project way are, I we’re to the to when the go and at nothing than activity it. in efforts ready make that’s would other our coming sure So years look reposition

Brian Pow

it. Appreciate thanks. Okay,

Operator

turn concludes back to like the Ron session. remarks. over the to question-and-answer would closing conference This for I

Ron Fleming

in like Thanks, Water. and Thank interest all those Global operator. your look we thank this to you, forward for of again. with to call you continued in I’d and speaking who participating

Operator

concludes This today’s conference call.

your for lines. pleasant participating and have Thank you a disconnect day. may You

Global Water Resources (GWRS) 10 Nov 172017 Q3 Earnings call transcript