• Total Revenue: $52.7 million for 2024, down 0.6% compared to 2023.
• Regulated Revenue: $52.7 million for 2024, up 4.9% compared to 2023.
• Operating Expenses: $43.3 million for 2024, up 6.3% from 2023.
• Net Income: $5.8 million for 2024, or $0.24 per diluted share, compared to $8 million, or $0.33 per diluted share in 2023.
• Adjusted Net Income: $6.3 million for 2024, or $0.26 per diluted share, up 2% from 2023.
• Adjusted EBITDA: $26.7 million for 2024, up 5.2% from 2023.
• Active Service Connections: Increased by 4.4% to 64,520 as of December 30, 2024.
• Infrastructure Investment: $32.3 million invested in 2024.
• Building Permits in Phoenix MSA: 27,156 in 2024, up 20.3% from 2023.
• Building Permits in Maricopa: 986 in 2024, up 11.5% from 2023.
• Multifamily Housing Permits in Maricopa: 1,200 units in 2024, up 88.7% from 2023.
• Rate Increase Proposal: Over $7.5 million in rate increases proposed and under consideration.
• Five-Year Growth (2019-2024): Active connections up 40.8%, revenue up 48.4%, EPS up 119%.

• Warning! GuruFocus has detected 9 Warning Signs with GWRS.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Total active service connections increased by 4.4% to 64,520 as of December 30, 2024.
• Global Water Resources Inc (NASDAQ:GWRS) invested $32.3 million into infrastructure improvements in 2024.
• The company maintained a strong compliance record with zero significant compliance events in 2024.
• There was a notable increase in building permits in the Phoenix Greater Metropolitan Statistical Area, indicating strong market demand.
• The company signed a special industrial contract with Procter & Gamble, indicating potential future growth in the industrial sector.

Negative Points

• Total revenue for 2024 decreased by 0.6% compared to 2023, primarily due to non-recurring revenue from infrastructure coordination and financing agreements.
• Operating expenses increased by 6.3% in 2024, driven by higher depreciation, medical expenses, and salary costs.
• Net income for 2024 decreased to $5.8 million from $8 million in 2023.
• High inflation and other cost drivers have impacted earnings growth.
• The company is facing regulatory challenges, requiring new rates to address cost increases and significant investments.

Q & A Highlights

Q: Can you provide more details on the Cost of Service Adjustment (CSA) or formula rates and how it impacts regulatory lag? A: Christopher Krygier, Chief Operating Officer, explained that the CSA is based on a policy statement passed by the commission, modeled after FERC's successful approach. It allows for annual updates to the income statement and balance sheet, reflecting changes in expenses and new investments. This proposal increases transparency and enables more contemporaneous rate adjustments, benefiting both customers and the company. The CSA is proposed as a five-year program, after which a full rate case would be required.

Q: What does a notice to proceed from Procter & Gamble mean for your investments and potential revenue visibility? A: Ron Fleming, CEO, stated that a notice to proceed indicates Procter & Gamble's release of their full construction plans, allowing Global Water to design and permit the necessary utility infrastructure. This initiates a two- to three-year process to design, permit, and construct the utilities, marking the first step after contract execution.

Q: How does the recent acquisition of Tucson assets fit into your growth strategy? A: Christopher Krygier, COO, noted that the acquisition, approved by the Arizona Corporation Commission, is part of building economies of scale in the region. It will increase customer connections from 5,000 to 7,000, representing significant growth since starting with zero customers in 2020.

Q: Can you elaborate on the recent rate case settlement and its implications? A: Christopher Krygier, COO, mentioned that a unanimous settlement was reached for the Global Water Farmers' rate case, authorizing a $1.1 million revenue increase phased in over 2025 and 2026. This settlement reflects the company's successful track record of improving utilities and seeking appropriate rate relief.

Q: What are the main drivers behind the proposed rate increase for Santa Cruz and Palo Verde utilities? A: Christopher Krygier, COO, explained that the proposed $6.5 million rate increase is driven by inflation, capital investments to support organic growth in Maricopa, and rate base recognition of plant investments. The rate case includes a proposal for a Cost of Service Adjustment to address regulatory lag.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.