GWR Global Water Resources Corp. Reports First Quarter 2013 Results
PHOENIX, May 9, 2013 /CNW/ - GWR Global Water Resources Corp. (the "Company") (TSX: GWR) today reported its financial results for the first quarter ended March 31, 2013.
The Company was established to acquire an equity interest in Global Water Resources, Inc. ("Global Water" or "GWRI"). Global Water is a leading water resource management and technology company based in Phoenix, Arizona, that owns and operates water, wastewater and recycled water utilities, and provides data and water management services through its unique, award winning platform, FATHOM™ Utility-to-Utility (U2U™) Solutions. 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.
First Quarter 2013 Highlights:
- Grew active service connections for the first quarter to 41,607 compared with 41,008 at December 31, 2012, representing an annualized growth rate of 5.8% for 2013.
- Commenced performing the implementation of a fully integrated, end-to-end Customer Information System ("CIS"), including utility billing, customer care and Advanced Metering Infrastructure ("AMI") for 2,600 connections for the City of Kennedale, Texas.
- Received a separate purchase order to develop billing and web presentment for Thames Water.
Summary of Financial Results
Consolidated revenues for the three months ended March 31, 2013 increased $264,000, or 3.6%, to $7.6 million compared to $7.3 million for the three months ended March 31, 2012.
Consolidated revenues include revenue generated by our utility companies, which is subject to regulation from the Arizona Corporation Commission ("ACC"). Such regulated utility revenue increased $126,000, or 1.9%, to approximately $6.9 million for the three months ended March 31, 2013, compared with $6.8 million for the three months ended March 31, 2012. The increase in regulated utility revenue was due primarily to growth in the number of active service connections.
Consolidated revenues also include revenues not subject to regulation of the ACC. Such unregulated revenues primarily relate to the Company's FATHOM™ business which is comprised of recurring operations and nonrecurring activities associated with FATHOM™ implementations. Recurring FATHOM™ revenues increased $97,000, or 18.5%, to approximately $622,000 for the three months ended March 31, 2013. The increase is attributed to the increased number of FATHOM™ clients.
EBITDA for the three months ended March 31, 2013 totalled $1.6 million compared to $1.7 million for the same period last year. Consolidated net loss was $3.3 million for the three months ended March 31, 2013, compared to $1.9 million for the same period last year.
"The marked improvement in the Arizona economy is clearly reflected in the doubling of our organic growth in the first quarter of 2013 over 2012. Based on the development activity we have seen in our service areas so far this year, we believe this trend seems likely to continue," said Trevor Hill, President and CEO of Global Water. "Our rate proceedings with the Arizona Corporation Commission continue to progress and we feel confident that it will be completed by the end of 2013."
Business Outlook
Global Water's growth strategy for the regulated business is driven by increased service connections, continued operating efficiencies as well as utility rate increases approved by the economic regulator, the Arizona Corporation Commission (ACC). As previously discussed, population and community growth in the metropolitan Phoenix area served by Global Water's utilities have a direct impact on the Company's earnings.
During the economic downturn beginning in 2008, GWRI's utilities experienced an increase in the number of vacant homes, reaching 4,647 vacant connections as of February 28, 2009, its peak high of 11.2%; the Company is now at its lowest level of vacant connections at 2,264. Of the 599 active connections added this quarter, 248 were new connections and 351 were move-ins to previously foreclosed properties. Based on economic metrics and published analyses of industry experts, the metropolitan Phoenix area is expected to experience strong population and employment growth for the foreseeable future, which will ultimately result in real estate development and further decreasing vacancy rates in Global Water's utility service areas.
As discussed previously, during 2012 Global Water filed rate applications with the ACC for seven of the Company's utilities. The rate applications request an adjustment to the revenue requirements for six of the seven utilities representing a collective rate increase of approximately 28%, or approximately $8.4 million, of annualized revenues over 2012. It is expected that any rate increase granted will be phased-in over a two to three year period.
Recurring revenues of the FATHOM™ business increased for the three months ended March 31, 2013, compared with the three months ended March 31, 2012. Although implementation revenue has been lower than expected and the FATHOM™ sales cycle remains challenging, the primary driver of FATHOM™'s value is recurring revenue. The FATHOM™ product continues to develop interest in the market place, and with continued investment in IT, the strength of the product continues to increase. Sales remain steady and the pipeline of opportunities remains robust and growing.
The full financial statements and management's discussion and analysis for the Company and Global Water will be available May 9, 2013 on the Company's SEDAR profile at www.sedar.com or on the Company's website at www.gwresources.com. The Company will announce conference call details at a later date.
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 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 does 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 end March 31, 2013" 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 March 31, 2013 and December 31, 2012 (Unaudited) |
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March 31, 2013 | December 31, 2012 | ||||||||||
(in thousands of US$, except share data) | |||||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | - | $ | - | |||||||
Other current assets | 29 | 1 | |||||||||
Total current assets | 29 | 1 | |||||||||
Equity method investment | 33,160 | 34,852 | |||||||||
TOTAL ASSETS | $ | 33,189 | $ | 34,853 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
LIABILITIES: | |||||||||||
Accounts payable and accrued expenses | $ | 68 | $ | 32 | |||||||
Other noncurrent liabilities | 66 | 41 | |||||||||
Total liabilities | 134 | 73 | |||||||||
SHAREHOLDERS' EQUITY: | |||||||||||
Common stock, unlimited shares authorized, 8,754,612 shares issued and outstanding at March 31, 2013 and December 31, 2012 |
55,786 | 55,767 | |||||||||
Accumulated deficit | (22,731) | (20,987) | |||||||||
Total shareholders' equity | 33,055 | 34,780 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 33,189 | $ | 34,853 | |||||||
GWR GLOBAL WATER RESOURCES CORP. STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2013 and 2012 (Unaudited) |
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Three Months Ended March 31, | |||||||||
2013 | 2012 | ||||||||
(in thousands of US$, except share and per share data) |
|||||||||
LOSS FROM EQUITY INVESTMENT | $ | (1,613) | $ | (1,051) | |||||
OPERATING EXPENSES | 131 | 124 | |||||||
OPERATING LOSS | (1,744) | (1,175) | |||||||
LOSS BEFORE INCOME TAXES | (1,744) | (1,175) | |||||||
INCOME TAX BENEFIT | - | - | |||||||
NET LOSS | $ | (1,744) | $ | (1,175) | |||||
WEIGHTED AVERAGE SHARES: | |||||||||
Basic | 8,754,612 | 8,754,612 | |||||||
Diluted | 8,754,612 | 8,754,612 | |||||||
LOSS PER SHARE: | |||||||||
Basic | $ | (0.20) | $ | (0.13) | |||||
Diluted | $ | (0.20) | $ | (0.13) | |||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED BALANCE SHEETS As of March 31, 2013 and 2012 (Unaudited) |
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March 31, 2013 | December 31, 2012 | |||||||||||
(in thousands of US$, except share data) | ||||||||||||
ASSETS | ||||||||||||
PROPERTY, PLANT AND EQUIPMENT: | ||||||||||||
Property, plant and equipment | $ | 323,761 | $ | 321,697 | ||||||||
Less accumulated depreciation | (64,624) | (61,461) | ||||||||||
Net property, plant and equipment | 259,137 | 260,236 | ||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | 4,018 | 3,816 | ||||||||||
Accounts receivable - net | 1,941 | 1,926 | ||||||||||
Other receivables | 460 | 215 | ||||||||||
Accrued revenue | 1,430 | 1,599 | ||||||||||
Prepaid expenses and other current assets | 1,892 | 1,194 | ||||||||||
Total current assets | 9,741 | 8,750 | ||||||||||
OTHER ASSETS: | ||||||||||||
Goodwill | 13,082 | 13,082 | ||||||||||
Intangible assets - net | 1,545 | 1,545 | ||||||||||
Regulatory assets | 752 | 715 | ||||||||||
Deposits | 38 | 43 | ||||||||||
Bond service fund and other restricted cash | 11,383 | 11,383 | ||||||||||
Debt issuance costs - net | 3,622 | 3,643 | ||||||||||
Total other assets | 30,422 | 30,411 | ||||||||||
TOTAL ASSETS | $ | 299,300 | $ | 299,397 | ||||||||
LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Accounts payable | $ | 3,358 | $ | 3,676 | ||||||||
Accrued expenses | 7,911 | 4,263 | ||||||||||
Deferred revenue | 1,111 | 1,000 | ||||||||||
Customer and meter deposits | 2,588 | 2,565 | ||||||||||
Long-term debt - current portion | 3,232 | 3,203 | ||||||||||
Total current liabilities | 18,200 | 14,707 | ||||||||||
NONCURRENT LIABILITIES: | ||||||||||||
Long-term debt | 132,830 | 132,770 | ||||||||||
Advances in aid of construction | 100,322 | 100,192 | ||||||||||
Contributions in aid of construction - net | 71,375 | 71,879 | ||||||||||
Deferred income tax liability | 589 | 589 | ||||||||||
Acquisition liability | 4,688 | 4,688 | ||||||||||
Other non-current liabilities | 1,225 | 1,136 | ||||||||||
Total noncurrent liabilities | 311,029 | 311,254 | ||||||||||
Total liabilities | 329,229 | 325,961 | ||||||||||
SHAREHOLDERS' EQUITY (DEFICIT): | ||||||||||||
Common stock, $0.01 par value, 1,000,000 shares authorized, 182,050 shares issued and outstanding at March 31, 2013 and December 31, 2012 |
2 | 2 | ||||||||||
Paid in capital | 55,215 | 55,286 | ||||||||||
Accumulated deficit | (85,146) | (81,852) | ||||||||||
Total equity (deficit) | (29,929) | (26,564) | ||||||||||
TOTAL | $ | 299,300 | $ | 299,397 | ||||||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2013 and 2012 (Unaudited) |
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Three Months Ended March 31, | ||||||||||||
2013 | 2012 | |||||||||||
(in thousands of US$) | ||||||||||||
REVENUES: | ||||||||||||
Water services | $ | 3,599 | $ | 3,554 | ||||||||
Wastewater and recycled water services | 3,313 | 3,232 | ||||||||||
Unregulated revenues | 677 | 539 | ||||||||||
Total revenues | 7,589 | 7,325 | ||||||||||
OPERATING EXPENSES: | ||||||||||||
Operations and maintenance | 3,154 | 2,937 | ||||||||||
General and administrative | 2,809 | 2,660 | ||||||||||
Depreciation | 2,697 | 2,665 | ||||||||||
Total operating expenses | 8,660 | 8,262 | ||||||||||
OPERATING LOSS | (1,071) | (937) | ||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Interest income | 1 | - | ||||||||||
Interest expense | (2,239) | (2,230) | ||||||||||
Other | 17 | (6) | ||||||||||
Total other income (expense) | (2,221) | (2,236) | ||||||||||
LOSS BEFORE INCOME TAXES | (3,292) | (3,173) | ||||||||||
INCOME TAX (EXPENSE) BENEFIT | (2) | 1,224 | ||||||||||
NET LOSS | $ | (3,294) | $ | (1,949) | ||||||||
Net Loss and EBITDA per Share Information for the Three Months Ended March 31, 2013 (amounts in thousands of US dollars, except share data): |
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Three Months Ended March 31, 2013 |
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Net Loss | EBITDA | |||||||||||
Amount for the period ended March 31, 2013 | $ | (3,294) | $ | 1,643 | ||||||||
Weighted average number of Global Water shares outstanding during the period ended March 31, 2013 |
182,050 | 182,050 | ||||||||||
Global Water per share amount | $ | (18.09) | $ | 9.02 | ||||||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Eight Quarters Ended March 31, 2013 (Unaudited) |
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2013 | 2012 | 2011 | ||||||||||||||||||||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||||||||||||||||||||
(in thousands of US$, except service connections) | ||||||||||||||||||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||||||||||||
Water services | $ | 3,599 | $ | 4,156 | $ | 4,863 | $ | 4,844 | $ | 3,554 | $ | 3,815 | $ | 5,394 | $ | 4,497 | ||||||||||||||||||
Wastewater and recycled water services | 3,313 | 3,331 | 3,328 | 3,353 | 3,232 | 2,903 | 2,872 | 2,866 | ||||||||||||||||||||||||||
Unregulated revenues | 677 | 937 | 829 | 572 | 539 | 1,016 | 1,885 | 1,991 | ||||||||||||||||||||||||||
Total revenues | 7,589 | 8,424 | 9,020 | 8,769 | 7,325 | 7,734 | 10,151 | 9,354 | ||||||||||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||||||||||||||
Operations and maintenance | 3,154 | 2,862 | 3,276 | 2,919 | 2,937 | 2,767 | 3,164 | 3,151 | ||||||||||||||||||||||||||
General and administrative | 2,809 | 2,362 | 2,178 | 2,457 | 2,660 | 2,238 | 2,384 | 2,678 | ||||||||||||||||||||||||||
Depreciation | 2,697 | 2,866 | 2,662 | 2,706 | 2,665 | 2,738 | 2,557 | 2,580 | ||||||||||||||||||||||||||
Total operating expenses | 8,660 | 8,090 | 8,116 | 8,082 | 8,262 | 7,743 | 8,105 | 8,409 | ||||||||||||||||||||||||||
OPERATING INCOME (LOSS) | (1,071) | 334 | 904 | 687 | (937) | (9) | 2,046 | 945 | ||||||||||||||||||||||||||
OPERATING INCOME (EXPENSE): | ||||||||||||||||||||||||||||||||||
Interest income | 1 | 5 | 1 | - | - | - | - | - | ||||||||||||||||||||||||||
Interest expense | (2,239) | (2,085) | (2,245) | (3,005) | (2,230) | (2,194) | (2,196) | (2,202) | ||||||||||||||||||||||||||
Other | 17 | (14) | 723 | 54 | (6) | 2 | (8) | 23 | ||||||||||||||||||||||||||
Total other income (expense) | (2,221) | (2,094) | (1,521) | (2,951) | (2,236) | (2,192) | (2,204) | (2,179) | ||||||||||||||||||||||||||
LOSS BEFORE INCOME TAXES | (3,292) | (1,760) | (617) | (2,264) | (3,173) | (2,201) | (158) | (1,234) | ||||||||||||||||||||||||||
INCOME TAX (EXPENSE) BENEFIT | (2) | (6) | - | (31,885) | 1,224 | 795 | 56 | 471 | ||||||||||||||||||||||||||
NET LOSS | $ | (3,294) | $ | (1,766) | $ | (617) | $ | (34,149) | $ | (1,949) | $ | (1,406) | $ | (102) | $ | (763) | ||||||||||||||||||
Income tax expense (benefit) | $ | 2 | $ | 6 | $ | - | $ | 31,885 | $ | (1,224) | (795) | (56) | (471) | |||||||||||||||||||||
Interest income | (1) | (5) | (1) | - | - | - | - | - | ||||||||||||||||||||||||||
Interest expense | 2,239 | 2,085 | 2,245 | 3,005 | 2,230 | 2,194 | 2,196 | 2,202 | ||||||||||||||||||||||||||
Depreciation | 2,697 | 2,866 | 2,662 | 2,706 | 2,665 | 2,738 | 2,557 | 2,580 | ||||||||||||||||||||||||||
EBITDA | $ | 1,643 | $ | 3,186 | $ | 4,289 | $ | 3,447 | $ | 1,722 | $ | 2,731 | $ | 4,595 | $ | 3,548 | ||||||||||||||||||
Active service connections at period end | 41,607 | 41,008 | 40,833 | 40,503 | 40,100 | 39,731 | 39,644 | 39,342 |
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2013 and 2012 (Unaudited) |
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Three Months Ended March 31, | ||||||||||||
2013 | 2012 | |||||||||||
(in thousands of US$) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net loss | $ | (3,294) | $ | (1,949) | ||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Deferred compensation | 134 | 119 | ||||||||||
Depreciation | 2,697 | 2,665 | ||||||||||
Amortization of deferred debt issuance costs and discounts | 80 | 57 | ||||||||||
Loss on disposal of fixed and intangible assets | 2 | - | ||||||||||
Imputed interest expense on deferred payments for acquisitions - net of cash paid | - | (463) | ||||||||||
Provision for doubtful accounts receivable | 26 | 41 | ||||||||||
Deferred income tax expense (benefit) | 2 | (1,224) | ||||||||||
Changes in assets and liabilities - excluding effects of acquisitions: | ||||||||||||
Accounts receivable | (40) | 240 | ||||||||||
Other current assets | (832) | (570) | ||||||||||
Accounts payable and other current liabilities | 3,691 | 1,869 | ||||||||||
Other noncurrent assets | 45 | (59) | ||||||||||
Other noncurrent liabilities | (27) | (15) | ||||||||||
Net cash provided by operating activities | 2,484 | 711 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Capital expenditures | (2,380) | (856) | ||||||||||
Deposits (withdraws) of restricted cash | - | (144) | ||||||||||
Deposits received | 4 | - | ||||||||||
Net cash used in investing activities | (2,376) | (1,000) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Loan borrowings | - | 7,000 | ||||||||||
Loan repayments | (1) | (4,073) | ||||||||||
Principal payments under capital leases | (34) | - | ||||||||||
Related-party loan proceeds | - | 8,910 | ||||||||||
Debt issuance costs paid | - | (142) | ||||||||||
Acquisition of utilities - deferred acquisition payments | - | (11,163) | ||||||||||
Advances in aid of construction | 129 | 55 | ||||||||||
Contributions in aid of construction under ICFA and other agreements | - | 30 | ||||||||||
Net cash provided by financing activities | 94 | 617 | ||||||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 202 | 328 | ||||||||||
CASH AND CASH EQUIVALENTS - Beginning of period | 3,816 | 2,233 | ||||||||||
CASH AND CASH EQUIVALENTS - End of period | $ | 4,018 | $ | 2,561 |
SOURCE: GWR Global Water Resources Corp.
Ross Marshall
Investor Relations
Tel: 416.815.00700 ext. 238
Email: [email protected]
www.gwresources.com
www.gwfathom.com
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