GWRS - Earnings call transcript Q3 2018 | 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. 2018 Third Quarter Conference Call. At this time, all participants are in a listen-only mode.

will question-and-answer we presentation, the conduct session. a Following that you to will be up for at provided Instructions queue time for questions. would recorded XXXX [Operator call I like everyone remind Instructions] that is being X:XX on at X, November P.M. to this Eastern time. conference like Krupa, the to Heather I would turn over now to Controller. ahead. go Please

Heather Krupa

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

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

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

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

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

Ron Fleming

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

to Highlights our quarter employees pleased streak, we and very compliance without results. safety extended third over since are days foremost, year-to-date XXXX regulatory days achieved and now our and XXX first incident We nearly a non-recordable and compliance as achievements exceptional safety dedication report having in the our and quarter, These performance accident of remarkable both operationally. the consecutive and recordable our show XXX financially we violation. last care include deliver employees

due X.X% connections by with on monthly reductions offset up cash million million $X was other total primarily Ranches our the revenue increased and of for organic an increased from increase approved The company declared growth per $X.XX million dividends. Water from or to $XX.X or and net annualized and proceeds of purposes. share. acquisition excluding to X.X%, anticipate X.X%. to X.X% three reform, tax income equity to due We today working connections $XXX,XXX, organic regulated that corporate announcing the Net net We to X.X% revenue Regulated to tax partially an reform the Sanitation of Our was the increased rate active basis. due Company. and reductions of using acquisitions, general increase capital, raised X%. $X.X fund are offerings And proceeds raise dividend Turner

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

the adds operator quarter, non-potable pursuing and existing began irrigation benefit. with another Subsequent areas of more miles rate. Arizona. company which by making $X gives of and internal provide the the quarter. second Valencia a of Turner, deferring Mesa, realize Pinal of end the than strategic us will X,XXX operating continue The an wastewater annual extension gain take from revenue consolidation Rock investments of until to capital to in connections defer We the nine the grow by the the initiatives. end the and to an utilities the of in of Utilities, with received million new defer acquisition growth Pima more which the that service area tax acquired in water acquisition counties approximately service in taxable in that today XXXX, We company disposition Company service Arizona, intend additional to utility we and the to which a of of our generates and year completed full phase-in acquisitions Red gains facility the water Importantly, square gain than Water utility from advantage revenue, investing

we numerous and manage to Sabo the financial In year primary throughout while utility, continue Board level quarter, changes operational internal personnel the our we Counsel, promoted to and at objectives. both Tim our Lastly, Regulatory as made growth Controller. the Krupa achieving appointed to our high and Heather

the As Hill Trevor December XXXX. Board announced effective a XX, days from few is retiring ago,

and Water company, want In mentor to a and of look an XXXX, current gratitude. a of plan owe appointed immeasurable, Tedesco, Lead Global Dave also this part to him and of being compensation for of since strong Board I are and contributions entire him As in share appointed David the thank with behalf Board Director. member this to course our the transition our and of response forward role. his me the was debt very new and addition, retirement committee, a Chairman, Trever’s we Board enormous over working the friend. in Board of rest of On to the Independent and XXXX co-founder, the as I leader, our

annualized quarter, an growth north in on, new achieved continues Red Metro-Phoenix closed that on growth stands total Ranches XX% Rock, to subsequent permit the very which basis. connection Turner remains we in growth rate strong. to at housing data in XXXX, Year-to-date, QX, of annualize growth our and of to single-family X.X%, organic want an Including area. accelerate highlight that both confirming further. Moving service I closed

to in Arizona, Pinal nearly and Blue Maricopa For permits to housing increase Homebuilders the permits nearly of XX,XXX Chip XXXX and Central the single utility Association family by reports its that permitted Global In area, XX% Arizona permits wastewater Water up Permits in are grew Maricopa, XXXX. Home units XX% where Association in of XXXX. in County service Central and are XX,XXX to Greater over County XX,XXX Builders the that reported combined, largest City water Phoenix the has forecasted permits XXXX. year-to-date of

greater our service and disciplined Mike customers the Global mandate taking and reliable to following safe, want our review to call the primary third I primary Water quarter performance approach to detail, turning creation while again to financial through lay be to a in out Before provide partners, objectives. our to continue needs. over will to growth and sustainable the value

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

with policy. core continue will over our we pursue now will the acquisitions committed and and to both We targeted make big opportunities improvements tuck-ins Mike. turn the regional to finally, this assets. pursue benefit. And routinely will growth strong call similar position such our capital accretive dividend small. And to necessary, will are as analyze of we I will Accretive as and consolidation we complement

Mike Liebman

QX which Turner connection Ranches growth benefits million, compared growth, by These acquisition revenue as Hello tax is everyone. driven increase X.X% were to increased of revenues of primarily by were to reduction for a up due the XXXX. $X Total Ron. X.X% result and you, or $XXX,XXX This was organic quarter of rates. the offset Thank X.X% connection of a reform.

Specifically, QX, revenue XXXX, impact reform. of we by tax $XXX,XXX reduced in the to reflect

through recognized impact of for remove the $X.X was you revenue or QX reduction compared rate of QX $XXX,XXX were tax $XX.X by by up increased tax up period organic total were reform. Turner of XX.X% of and XXXX. revenues primarily the million the million, ICFA million if offset by Year-to-date, growth was This or impact same Regulated X.X% $X.X XXXX, the year-to-date, in However, due the revenues QX acquisition XXXX. reform, connection increased to to revenue in which X.X%. driven or of strong revenues,

impact in with expenses the of of you general of operating of include $XXX,XXX, decline an increase to operating the driven compared $X increased $X.XX in Turner had well as increase compensation reform, in changes deferred of as in stock million the tax the were in administrative QX and or period to is This increase QX compared XXXX primarily increased million to XXXX. increase XXXX. year-to-date associated $X.XX $X.X If of which change price the the revenues QX a of where of QX acquisition increase same of This $XXX,XXX. of costs in Operating XXXX of Ranches million in was $XXX,XXX. This X.X% by or of we in compared spends in costs in driven remove additional $XXX,XXX, expenses $X.X is price board $X.X an maintenance driven increase stock XXXX. and increased and XX.X%. an in million by by $XX,XXX, of was primarily costs utilities Notable

of is this of be XXXX Additionally, vesting it’s by of will portion a stock-based majority in compared noting to the XXXX. worth vesting XXXX. that larger And completed compensation QX

fees and higher Additionally, had we respectively. of professional and $XX,XXX medical $XX,XXX

expenses Ranches, costs and were Turner was Lastly, we million $XX.X was in our had cost year. operating $XX,XXX. that expense increased Again, costs or increases $XX,XXX, $XXX,XXX, over medical include by $X.X maintenance which of driven by compared of of were of increases the revenue. through million. primarily is expenses prior as Year-to-date, in worth utility acquisition to and Notable and well of property $XX,XXX. increased expense growth increases this $XXX,XXX. with $XX.X associated in This $XX,XXX, pointing changes million tax out of XXXX, driven as increase QX an operating primarily the It’s XX% of operating depreciation expense operating of

cost the made our of years $XXX,XXX, administrative of initiatives of by compensation lastly, increase primarily and also $XXX,XXX, depreciation by increased had $XXX,XXX. associated driven the past And higher capital had of general strategic and in so. we investments $XXX,XXX, which increased with million, driven salary an or deferred wages all higher We primarily over expense $X.X professional by and is fees

which XXXX. $XXX,XXX. increase $XXX,XXX Valencia was Valencia annualized XXXX. for million, rate to an increase increase XXXX, XX.X%, QX was $XXX,XXX This discuss of in to Other all XXXX decrease was service to Valencia a QX compared of $X.X in other growth primarily decrease in attributed to other was the expense. Now primarily X.X% in Year-to-date, to the territory of expense earn-out again $X.X of was or of compared of through of an due was X.X% $XXX,XXX. which QX expense XXXX is earn-out of which million,

of per for in to which Water compared XXXX. I was share the an pass revenue income for net to organic to of in ICFA rates. $X.X tax Fathom, Ranches events reflects with increase share increases non-recurring income, adjusted Turner QX rate. of concludes and growth, $X.XX to compared down Turning investment or is Year-to-date for as G&A This XXXX. which Ranches to increase lower in in connection EBITDA offsetting or in by comp, our to option net increases mentioned XXXX was decrease in acquisition primarily our Adjusted back period per primarily partially of XXXX, share Again, EBITDA was of all $X.XX this million, increase earn-out, reduction Valencia compared is and call $X.XX of associated million such reform, same that to acquisition adjust deferred board increased had also period in or or the the XXXX. due down to QX adjusts a decrease due same $X.X an of $X.X in to now This in million tax organic revenue XXXX per earn-out, on XXXX Year-to-date results. expense $X.X EBITDA, net which attributable the X.X% share the in QX, the the per revenue and compared to QX the and was Adjusted million in and the expense. million was reduction these decline XX.X% connection income the or due growth, due in of were Global update XXXX. of $X $XXX,XXX Ron. revenue a $XXX,XXX million QX equity $XX.X to offset previously and Turner or will $X.XX and reform, Valencia

Ron Fleming

are caused the federal both rate EBITDA and by reductions Thank is control, in reductions Global which Valencia and despite be growth beyond clear, the line top of you, our earn slowdown and connection the reform Mike. strong. It corporate our tax of rates to continued out, very revenue Water's

your of water and that the platform forefront As expertise remain expanding beneficial will address all stakeholders and applying as throughout your to we concludes issues economic new our appreciate and and our growth, We handle utilities achieving important in intent to remarks. highlight now truly regional Global us development in and we our prepared Mike believe mission potentially high advance of water involved. this and efficiency service and utility, to support areas be Arizona, management grow of questions. We investment are resource beyond. available our at I and our we to Water industry to the consolidation. answer Thank you. That

Operator

Instructions] Our ahead. with first question Gerry [Operator Capital. ROTH go with comes Sweeney Please

Gerry Sweeney

happening got slowing. and there you how the situation cetera, versus is maybe happening of But et insight what’s of Do I media on have in elsewhere? peaking wrong, me mean, your in about may a local -- and I’m affordability. a guys the talk -- you correct any if different little permits bit out maybe housing terms I question in housing of the be markets and things what lot in location are a

Ron Fleming

Yes. question. great Sure. It's

So talked XX%. the we north is year-over-year, I housing of say still north in which, will permits, was that to the I about is earlier think the indicator in the of year, up leading earlier going ground, call, meters course, year-over-year and XX%. of number in

at So escalation is the slowing down. of the increase least

City trend finished homebuilders. However, what go transacted what of XX continue it's And next on the to areas. developers to right frankly, the completed and the the months have be been process have to or the in lots Lots that the the based that for be through to in seeing. we are will trajectory Maricopa transacted all still development right near-finished or to homebuilders, in in of then transacted through XX we're our

how that's still. Obviously, point So main the if -- level we us. which good curve year-over-year But project slowdown X%, of possible don't these foreseeable the be are will increase might might about all this pretty pay point data that that the off. much again of locations point. we the and lease it really always as a for slope of a off Maybe and very kind level the indicates would north they can Gerry, do made be that think the affordable. I for future you at

And that -- for under can or minutes XX XXB still or Central -- a Phoenix drive for You ASUs from located. today. buy or true Tucson house sorry And remains you $XXX,XXX.

going are not having the much that as in So housing rate these back that incremental on increases cost as interest low on we – areas. that’s

Gerry Sweeney

Valencia, little over you there little And year the then and obviously, it. of idea counts. rent of a going Got is Any there? going slowdown in bit more on what’s earlier then, to sold

Mike Liebman

Hi, Yes. Gerry, is this Mike.

of -- we’re XXX we But don’t have over is miles. square Buckeye I not control City the think, that. obviously,

to service not continue and of flows. to better naturally But miles going expect to Our feel square next prospects XX we And is the some be that. we XX area XX years, would long-term get is the while that good collecting or over of $XX the million years. over about that there really ebs

seeing of pull versus last a year we’re year. X.X% at so, little And back bit this

we’re just along kind we And one, of on the so, still to right the confident collect able over in long-term. -- that the that for long-term feel being but

Ron Fleming

the that’s XX that – on is talking add Gerry a Town. in going the on reason great reasons small even Buckeye. feel just in right [indiscernible] to we about, confident everything located square And is there Yes. Interstate is Mike one in of location that, the relation, miles It though

just lot they that kind of next, so to come. the where of years in growth the we is to to build that decades and a going developers that know And see location in slots it’s subject though even and

Gerry Sweeney

could other a you $XXX,XXX. then scheduled a switching I or I’m when Red it. little any it that day. rate to the Got Turner couple to are pay Obviously, know not And bit if rates accompany gears But of had to think, sure of report of the I think, -- increases, just reading those of let those franchise? me acquisition. upwards sense scheduled -- Rock, Red Rock

Ron Fleming

was Good Gerry. question. August of increase. Sure. most recent rate Yes. XXXX the

And get that, but of that set then the August are of take scheduled take will first so, for And of that, is months benefits rate once the quarters three that be final, increase. XXXX will those and in to last XX increase benefit it the full to next August of after annualized the rates place, then will it XXXX. through see XXXX

Gerry Sweeney

Okay.

Ron Fleming

XXXX. By

Sorry.

Gerry Sweeney

just remarks effort increase? rate was prepared was Rock of in that inclusive of You Red what August over $X that Is ... that mentioned Or the revenue. that XXXX of million

Ron Fleming

Yes. historical. That was

in increased were there months. you rates pick for of those of a see the up bit August as So little XXXX, five

Gerry Sweeney

Got it.

jump I’ll it. in line. back Perfect. Okay. appreciate I

Mike Liebman

Gerry. Thanks,

Operator

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

Ron Fleming

I Thank the in day. the Thanks. interest of like on we all a again. to good speaking would thank your you, to Global Have with operator. And those participating you forward look Water. call for

Operator

This today’s conference call. concludes

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

Global Water Resources (GWRS) 9 Nov 182018 Q3 Earnings call transcript