GWR Global Water Resources Corp. Reports Second Quarter 2015 Results

- Decreased operating expenses by over 8% from Q2 2014 -
- Increased Adjusted EBITDA by 30% through first half of 2015 vs. first half of 2014 -
- Increased monthly dividend by nearly 9% -

PHOENIX, AZ, Aug. 13, 2015 /CNW/ - GWR Global Water Resources Corp. (the "Company") (TSX: GWR) (OTCQX: GWGWF) today reported its financial results for the quarter ended June 30, 2015.  See information below regarding today's conference call information.

The Company was established to acquire an equity interest in Global Water Resources, Inc. ("Global Water").  Global Water is a U.S., pure-play, water resource management company based in Phoenix, Arizona, that owns and operates water, wastewater and recycled water utilities.  The Company accounts for its investment in Global Water using the equity method of accounting; therefore, the financial information of Global Water is not consolidated with that of the Company. All references in this press release to consolidated financial information refer to Global Water on a consolidated basis and, unless otherwise indicated, all amounts are in U.S. dollars.

Second Quarter and Year To Date Highlights

  • Grew active service connections by 649 to 44,217 as of June 30, 2015, compared with 43,568 as of December 31, 2014. This represents an annualized 3% increase; 
  • Achieved $0.2 million revenue increase for the quarter ended June 30, 2015 which was $9.1 million compared to $8.9 million in the quarter ended June 30, 2014; and a year to date revenue increase of $0.9 million, which was $16.7 million for the six months ended June 30, 2015 compared to $15.8 million for the same period in 2014.  This represents a 5.4% increase;
  • Achieved $0.6 million (or over 8%) decrease in operating expenses for the quarter ended June 30, 2015, which were $6.8 million compared to $7.4 million for the quarter ended June 30, 2014; and achieved approximately $1.0 million reduction in operating expenses for the six months ended June 30, 2015 compared to the same period in 2014 (after excluding the $50.7 million one-time gain associated with the regulatory order experienced in 2014);
  • Achieved $0.7 million improvement in Adjusted EBITDA for the quarter ended June 30, 2015, which was approximately $4.7 million compared to $4.0 million in the quarter ended June 30, 2014; Achieved $1.8 million (or 30%) improvement in Adjusted EBITDA for the six months ended June 30, 2015, which was approximately $7.9 million compared to $6.1 million for the same period in 2014; and,
  • Commenced a normal course issuer bid which allows the Company to repurchase up to 87,500 common shares, representing approximately 1% of the total issued and outstanding common shares, between May 13, 2015 and May 12, 2016, and repurchased 30,400 shares to date.

 

Highlights Subsequent to Quarter End

  • Completed the sale of Valencia Water Company's assets to the City of Buckeye for $55.0 million in up-front payments and a 20-year growth premium with payments up to an additional $45.0 million;
  • Issued a special cash dividend of CAD $1.55 per share, which was paid on August 12, 2015 to shareholders of record as of the close of business on August 7, 2015; and,
  • Increased the monthly dividend by nearly 9%, reflecting an annualized amount of CAD $0.3396 per share or CAD $0.0283 per share on a monthly basis. This increase will be reflected in the dividend payable August 28, 2015 to shareholders of record as of the close of business on August 14, 2015.

 

"2015 has been an exceptionally strong year for us," stated Ron Fleming, President and CEO of Global Water. "In addition to closing the Buckeye transaction, we continued to demonstrate strong financial performance driven by the phase-in of new rates, increased connections and significant reductions to recurring operating expenses."

"In July 2015, we issued a special dividend and announced an increase to our monthly dividend. Both of these initiatives have further demonstrated our commitment to returning consistent value to our shareholders," continued Mr. Fleming. "As we look towards the second half of the year, we remain confident that we'll be able to continue to deliver on this commitment and are well-positioned for positive long-term results."

Summary of Financial Results

Consolidated Revenues

Consolidated revenues for the three and six months ended June 30, 2015 were $9.1 million and $16.7 million, respectively, compared to $8.9 million and $15.9 million for the three and six months ended June 30, 2014. The increase in both periods is primarily attributed to the phase-in of incremental revenues from the rate case settlement with the Arizona Corporation Commission (ACC), and to customer growth of approximately 3.0% year to date on an annualized basis. The revenue increase in the second quarter was offset by a decline in consumption due to higher precipitation and lower average temperatures during the period.

Operating Expenses

Operating expenses for the three and six months ended June 30, 2015 were $6.8 million and $13.6 million, respectively, compared to $7.4 million and $14.6 million for the three and six months ended June 30, 2014.  Note that the six months ended June 30, 2014 amounts exclude the $50.7 million one-time gain associated with the regulatory order.

The $0.6 million improvement in the second quarter of 2015 represents an 8% decrease in operating expenses from the same period last year, primarily attributed to lower personnel costs associated with the completion of the executive transition plan, lower deferred compensation expenses and reduced contract services expenses related to residual disposal. The $1.0 million decrease in operating expenses for the six months ended June 30, 2015 was also primarily attributed to lower personnel costs associated with the completion of the executive transition plan, lower deferred compensation expenses and reduced contract services expenses related to residual disposal.

Net Income

Global Water realized a net income of $0.4 million and a loss of $0.5 million, respectively, for the three and six months ended June 30, 2015, compared to a net loss of $0.5 million and an income of $65.8 million for the three and six months ended June 30, 2014.

The change in the three months ended June 30, 2015 is primarily attributed to increased revenue due to an increased customer base, rate increases from the ACC settlement and the $0.6 million reduction in total operating expenses. In addition to the revenue and expense improvements, the change in the six months ended June 30, 2015 was also attributed to the $50.7 million gain and $16.1 million tax benefit related to the regulatory order that were recorded by the Company during the six months ended June 30, 2014.  Additionally, there was a one-time event wherein $2.0 million of income was recorded during six months ended June 30, 2014 related to the settlement of outstanding litigation.

EBITDA

EBITDA for the three and six months ended June 30, 2015 was $5.0 million and $7.9 million, respectively, compared to $3.7 million and $58.3 million for the three and six months ended June 30, 2014. The change in EBITDA for the three months ended June 30, 2015 was primarily attributed to the increased rates and reduced general and administrative expenses previously mentioned. For the six months ended June 30, 2015 compared to the six months ended June 30, 2014, the change in EBITDA is primarily attributed to the $50.7 million gain on regulatory order and one-time $2.0 million of income related to the settlement of outstanding litigation, both of which were recorded in the six months ended June 30, 2014.

Adjusted EBITDA for the three and six months ended June 30, 2015 was $4.7 million and $7.9 million, respectively, compared to $4.0 million and $6.1 million for the three and six months ended June 30, 2014. The $0.7 million and $1.8 million increase in Adjusted EBITDA for both the three and six month periods ended June 30, 2015, respectively, was primarily attributed to the rate increase, growth in new connections and reduction in general and administrative expenses.

Business Outlook

Global Water's growth strategy for its regulated water, wastewater and recycled water business is driven by increased service connections, continued operating efficiencies and utility rate increases approved by the ACC.

Arizona's Growth Corridor: Positive Population Trends

The second quarter of 2015 continued to show positive growth in new connections and re-establishing service on previously vacant homes. As of June 30, 2015, total service connections increased to 45,504 compared to 45,235 as of December 31, 2014. The Company's vacancy rate is now at 2.8% after reaching a peak of 11.2% in February of 2009.  Total active connections have increased to 44,217 compared to 43,568 as of December 31, 2014.

The Metropolitan Phoenix area is steadily growing due to low-cost housing, excellent weather, large and growing universities, a diverse employment base and low taxes. Its population has increased throughout 2014 and into 2015, and it continues to grow.

The Arizona Department of Administration – Office of Employment and Population Statistics ("ADOA-EPS") predicts that Maricopa County will have a population of 4.5 million by 2020. This rate of growth, combined with six more years of rate phase-ins, will create the opportunity for Global Water to meaningfully increase its active connections and regulated revenues for the foreseeable future.

Disposition of Non-Core Assets

On July 15th of this year, Global Water completed the transfer of the assets of Valencia Water Company, Inc. to the City of Buckeye. Upon closing the transaction, the City of Buckeye paid Global Water US$55 million and an additional US$198,000 as a result of a working capital adjustment. The agreement also stipulates that Buckeye will pay Global Water a growth premium equal to US$3,000 for each new meter installed within Valencia's prior service area for a 20-year period subject to a maximum payout of US$45 million. The first growth premium payment will occur in mid-November and will include payment for the new water meters installed during the first three quarters of 2015, with all subsequent payments to be made quarterly.

In consideration of this transaction, combined with marked growth and operational progress, on July 28, 2015, the Company announced a special dividend in the amount of CAD $1.55 per share. Furthermore, on July 31, 2015 the Company announced a nearly 9% increase to the monthly cash dividend in the amount of CAD $0.0283 per Share, or an annualized amount of CAD $0.3396 per Share. This marked the third increase to the dividend since it was initiated last year.

Conference Call

Global Water will conduct a conference call on Thursday, August 13, 2015, at 1:00 p.m. EST.  Interested persons may access the call by dialing (647) 427-7450 or toll free at (888) 231-8191.  Shortly after the conclusion of the call, a replay will be available by dialing (416) 849-0833 or (855) 859-2056.  The passcode is 91842440. The replay will expire at midnight (EST) on August 27, 2015.  A copy of the transcript and an audio replay of the conference call, once available, will be archived within the investor section of the Company's web site at www.gwresources.com.

About GWR Global Water Resources Corp.

The Company was incorporated in British Columbia to acquire shares of U.S. based Global Water and to actively participate in the management, business and operations of Global Water through its representation on the board of directors of Global Water and its shared management of Global Water.

About Global Water

Global Water is a pure-play, high-growth water resources company located in Phoenix, Arizona, that owns and operates regulated water, wastewater and recycled water utilities in the metropolitan Phoenix area.

Cautionary Note Regarding Forward-Looking Statements
This press release includes certain forward-looking statements.  These forward-looking statements include, but are not limited to, our plans, objectives, expectations and intentions, and other statements contained in this release that are not historical facts as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or the negative of these terms, or other words of similar meaning.  These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control.  Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors and other factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form. We undertake no obligation to publicly update any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise.

Cautionary Note Regarding Non-GAAP Measures
This press release contains references to "EBITDA". EBITDA is defined for the purposes of this press release as income or loss from continuing operations before interest expense, income tax expense, depreciation and amortization. Management believes that EBITDA is a useful supplemental measure of Global Water's operating performance.  However, EBITDA is not a recognized earnings measure under U.S. GAAP or Canadian GAAP and do not have a standardized meaning prescribed by U.S. GAAP or Canadian GAAP.  Therefore, EBITDA may not be comparable to similar measures presented by other issuers.  EBITDA should not be construed as an alternative to net income or loss.  See "Consolidated Statements of Operations for the eight quarters ended December 31, 2014" in the attached schedules for a reconciliation of EBITDA to net income, the nearest comparable U.S, GAAP measure.



GWR GLOBAL WATER RESOURCES CORP.

BALANCE SHEETS

As of June 30, 2015 and December 31, 2014

(Unaudited)








June 30,
2015


December 31,
2014



(in thousands of US$, except share data)

ASSETS





CURRENT ASSETS:






Cash and cash equivalents


$                              450


$                              189


Other current assets


51


18

Total current assets


501


207






Equity method investment


57,921


59,794

TOTAL ASSETS


$                         58,422


$                         60,001











LIABILITIES AND SHAREHOLDERS' EQUITY





LIABILITIES:






Dividends payable, accounts payable and accrued expenses


$                              196


$                              212


Due to related party


268



Other noncurrent liabilities


229


155


Deferred tax liability


1,635


1,666

Total liabilities


2,328


2,033






COMMITMENTS AND CONTINGENCIES (see Note 9)










SHAREHOLDERS' EQUITY:






Common stock, unlimited shares authorized, 8,737,412 shares
issued and outstanding at June 30, 2015 and December 31, 2014


55,712


55,807


Retained earnings


382


2,161


Total shareholders' equity


56,094


57,968

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$                         58,422


$                         60,001


 

GWR GLOBAL WATER RESOURCES CORP.

STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2015 and 2014

(Unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2015


2014


2015


2014



(in thousands of US$, except share and per share data)

GAIN (LOSS) FROM EQUITY INVESTMENT


$              194


$            (235)


$            (246)


$         31,641

OPERATING EXPENSES


262


262


496


408

OPERATING INCOME (LOSS)


(68)


(497)


(742)


31,233

INCOME (LOSS) BEFORE INCOME TAXES


(68)


(497)


(742)


31,233

INCOME TAX BENEFIT (EXPENSE)


(81)


311


32


(1,526)

NET INCOME (LOSS)


$            (149)


$            (186)


$            (710)


$         29,707










WEIGHTED AVERAGE SHARES:









Basic


8,744,912


8,754,612


8,749,682


8,754,612

Diluted


8,744,912


8,754,612


8,749,682


8,762,348










EARNINGS (LOSS) PER SHARE:









Basic


$           (0.02)


$           (0.02)


$           (0.08)


$             3.39

Diluted


$           (0.02)


$           (0.02)


$           (0.08)


$             3.39


 

GLOBAL WATER RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30, 2015 and December 31, 2014

(Unaudited)








June 30, 2015


December 31, 2014

ASSETS


(in thousands of US$, except share data)

PROPERTY, PLANT AND EQUIPMENT:





Property, plant and equipment


$                       254,790


$                       318,995


Less accumulated depreciation


(60,692)


(78,571)



Net property, plant and equipment


194,098


240,424

CURRENT ASSETS:






Cash and cash equivalents


3,564


6,577


Accounts receivable – net


1,416


1,365


Due from related party


598


457


Accrued revenue


1,830


1,762


Prepaid expenses and other current assets


615


541


Deferred tax assets - current


1,675


1,591


Assets held for sale


56,117




Total current assets


65,815


12,293

OTHER ASSETS:






Goodwill



13,082


Intangible assets – net


12,772


12,772


Regulatory assets


333


400


Deposits


19


25


Bond service fund and other restricted cash


10,043


9,927


Debt issuance costs - net


2,601


2,722


Equity method investment


1,050


1,150


Deferred tax assets


15,057


14,806


Total other assets


41,875


54,884

TOTAL


$                       301,788


$                       307,601

LIABILITIES AND EQUITY (DEFICIT)





CURRENT LIABILITIES:






Accounts payable


$                              982


$                           1,531


Accrued expenses


5,032


6,832


Deferred revenue – current portion


9


13


Customer and meter deposits


1,855


2,601


Long-term debt – current portion


2,683


2,653


Liabilities held for sale


41,871




Total current liabilities


52,432


13,630

NONCURRENT LIABILITIES:






Long-term debt


127,104


127,491


Deferred regulatory gain


19,730


19,730


Regulatory liability


7,859


7,859


Advances in aid of construction


60,940


89,206


Contributions in aid of construction – net


4,520


17,096


Acquisition liability


4,688


4,688


Other noncurrent liabilities


203


221



Total noncurrent liabilities


225,044


266,291



Total liabilities


277,476


279,921

Commitments and contingencies (see Note 12)





EQUITY (DEFICIT):






Common stock, $0.01 par value, 1,000,000 shares authorized,
181,878 and 182,050 shares issued and outstanding at June 30, 2015
and December 31, 2014


2


2


Paid in capital


47,783


50,639


Accumulated deficit


(23,473)


(22,961)



Total equity


24,312


27,680

TOTAL


$                       301,788


$                       307,601


 

GLOBAL WATER RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2015 and 2014

(Unaudited)










Three Months Ended June 30,


Six Months Ended June 30,


2015


2014


2015


2014


(in thousands of US$)

REVENUES:








Water services

$              5,114


$             5,127


$              9,007


$              8,744


Wastewater and recycled water services

3,793


3,612


7,395


6,977


Unregulated revenues

175


116


302


130



Total revenues

9,082


8,855


16,704


15,851









OPERATING EXPENSES:









Operations and maintenance

2,675


2,695


5,146


5,178


General and administrative

1,807


2,280


3,871


4,769


Gain on regulatory order




(50,664)


Depreciation

2,320


2,427


4,632


4,671



Total operating expenses

6,802


7,402


13,649


(36,046)

OPERATING INCOME

2,280


1,453


3,055


51,897









OTHER INCOME (EXPENSE):









Interest income

2


22


4


41


Interest expense

(2,050)


(2,152)


(4,129)


(4,376)


Other

363


(147)


222


1,774



Total other income (expense)

(1,685)


(2,277)


(3,903)


(2,561)









INCOME (LOSS) BEFORE INCOME TAXES

595


(824)


(848)


49,336

INCOME TAX BENEFIT (EXPENSE)

(192)


335


336


16,460

NET INCOME (LOSS)

$                 403


$               (489)


$               (512)


$            65,796


 


GLOBAL WATER RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Eight Quarters Ended June 30, 2015

(Unaudited)




















2015


2014


2013

REVENUES:


Q2


Q1


Q4


Q3


Q2


Q1


Q4


Q3


Water services


$     5,114


$     3,893


$     4,245


$     5,087


$     5,127


$     3,617


$     4,223


$     5,405


Wastewater and recycled water services


3,793


3,602


3,551


3,584


3,612


3,365


3,498


3,536


Unregulated revenues


175


127


117


124


116


14


45


49



Total revenues


9,082


7,622


7,913


8,795


8,855


6,996


7,766


8,990


















OPERATING EXPENSES:


















Operations and maintenance


2,675


2,471


2,563


2,677


2,695


2,483


2,460


3,043


General and administrative


1,807


2,064


2,199


1,841


2,280


2,489


1,671


2,608


Gain on regulatory order







(50,664)




Depreciation


2,320


2,312


2,279


2,255


2,427


2,244


2,134


2,306



Total operating expenses


6,802


6,847


7,041


6,773


7,402


(43,448)


6,265


7,957

OPERATING INCOME (LOSS)


2,280


775


872


2,022


1,453


50,444


1,501


1,033


















OTHER INCOME (EXPENSE):


















Interest income


2


2


15


23


22


19


20


20


Interest expense


(2,050)


(2,079)


(3,025)


(2,111)


(2,152)


(2,224)


(2,351)


(2,209)


Other


363


(141)


781


23


(147)


1,921


978


1,818



Total other income (expense)


(1,685)


(2,218)


(2,229)


(2,065)


(2,277)


(284)


(1,353)


(371)

INCOME (LOSS) BEFORE INCOME TAXES


595


(1,443)


(1,357)


(43)


(824)


50,160


148


662

INCOME TAX  BENEFIT (EXPENSE)


(192)


528


518


17


335


16,125


(11)


(2)

NET INCOME (LOSS)


$        403


$      (915)


$      (839)


$        (26)


$      (489)


$   66,285


$        137


$        660


















Adjusted EBITDA (1)


4,723


3,166


3,314


4,367


3,966


2,098


3,767


3,346


















(1) Adjustments exclude the loss on assets held for sale, gain on sale of Loop 303 Contracts, loss on equity investment, gain on regulatory order, gain on SNR litigation proceeds and loss on sale of GWM.


 

GLOBAL WATER RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three and Six Months Ended June 30, 2015 and 2014

(Unaudited)













Three Months Ended June 30,


Six Months Ended June 30,



2015


2014


2015


2014



(in thousands of US$)

CASH FLOWS FROM OPERATING ACTIVITIES:










Net income (loss)


$            403


$          (489)


$          (512)


$       65,796



Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:











Deferred compensation


256


564


443


864



Depreciation


2,320


2,427


4,632


4,671



Amortization of deferred debt issuance costs and discounts


56


89


112


176



Loss on disposal of fixed assets



3



3



Gain on sale of 303 contracts


(296)



(296)




Loss on equity method investment


56


232


100


406



Gain on regulatory order





(50,664)



Other gains and losses




176




Provision for doubtful accounts receivable


12


28


28


43



Deferred income tax expense (benefit)


192


(335)


(336)


(16,460)



Changes in assets and liabilities:












Accounts receivable


(451)


(326)


(290)


(254)




Other current assets


(625)


(528)


(957)


(302)




Accounts payable and other current liabilities


(1,960)


(2,845)


(2,423)


(260)




Other noncurrent assets


35


22


85


31




Other noncurrent liabilities



51



2,853





Net cash provided by (used in) operating activities


(2)


(1,107)


762


6,903

CASH FLOWS FROM INVESTING ACTIVITIES:










Capital expenditures


(590)


(560)


(1,009)


(666)


(Deposits) withdrawals of restricted cash


(76)



(80)


197


Cash received from the sale of Loop 303 Contracts


296



296



Cash advance to related party




(1,107)



Repayment of related party cash advance


651



833



Deposits received


1


1


7


2





Net cash used in investing activities


282


(559)


(1,060)


(467)

CASH FLOWS FROM FINANCING ACTIVITIES:










Loan repayments


(197)


(1)


(393)


(1,002)


Principal payments under capital leases


(26)


(20)


(48)


(65)


Advances in aid of construction


94


133


144


194


Dividends paid


(1,181)


(1,150)


(2,293)


(1,150)


Share repurchase


(96)



(96)



Refunds of advances for construction


(17)



(29)






Net cash used in financing activities


(1,423)


(1,038)


(2,715)


(2,023)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(1,143)


(2,704)


(3,013)


4,413

CASH AND CASH EQUIVALENTS – Beginning of period


4,707


9,077


6,577


1,960

CASH AND CASH EQUIVALENTS – End of period


$         3,564


$         6,373


$         3,564


$         6,373

 

SOURCE GWR Global Water Resources Corp.

For further information: Marina Proskurovsky, Investor Relations | NATIONAL Equicom, Tel: 416.815.0700 ext. 288, Email: mproskurovsky@equicomgroup.com, www.gwresources.com

Organization Profile

GWR Global Water Resources Corp.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890