GWR Global Water Resources Corp. reports first quarter 2012 results
PHOENIX, May 10, 2012 /CNW/ - GWR Global Water Resources Corp. (the "Company") (TSX: GWR) today reported its financial results for the first quarter ended March 31, 2012. See information below regarding today's conference call and dial in information.
First Quarter Highlights:
- Active service connections of 40,100 as of March 31, 2012, a 3.7 percent annualized increase compared with 39,731 as of December 31, 2011
- Awarded FATHOM™ contract for the City of South Pasadena, California, to service approximately 6,200 service connections
- City of El Cajon, California signed a contract for FATHOM™ as the Customer Information System to service approximately 16,000 wastewater service connections
- Goleta Water District in California approved FATHOM™ as the Customer Information System to service approximately 16,600 service connections, subsequent to the end of the quarter
- Entered into an agreement with Thames Water Utilities Ltd. in the United Kingdom to develop and implement a data hosting, analytics, billing and consumer presentment interface for high value commercial consumers, subsequent to the end of the quarter
- Received a favorable arbitration award, subsequent to end of the period, entitling Global Water to proceeds in excess of $6.3 million including over $2 million of interest and recovered legal fees arising out of a contractual dispute with two land developers
- Initiated monthly invoicing for the final phase of $2 million regulated revenues rate increase
- Announced FATHOM™ channel partnerships with Ontario Clean Water Agency and Isle Utilities Group
- Secured credit line at reduced rate and financing for short term liabilities
"We continue to build momentum with a series of customer wins for our FATHOM™ platform and sustained growth within our regulated business. The balance of 2012 continues to look promising as utilities and municipalities recognize the benefit of providing water consumption data to consumers to modify their usage. We are now beginning to bridge into international expansion in regions that are facing water scarcity challenges which demonstrates the value of our technology beyond our traditional strongholds in the southwest United States," stated Trevor Hill, President & CEO.
Financial Highlights
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 US dollars.
Consolidated revenues for the three months ended March 31, 2012 totalled $7.3 million compared to $9.2 million for the same period last year.
Consolidated revenues included regulated revenue of $6.8 million for the 2012 period, an increase of $0.6 million compared with the same period last year. Generally, the first quarter is the lowest period for water sales in the Arizona area. Despite that fact, Global Water increased regulated revenue due primarily to the last phase in of the rate increase from the 2010 rate case award.
Consolidated revenues also included recurring revenue from the Company's FATHOM™ business of $539,000, an increase of 57% compared with $344,000 for the same period last year. While recurring revenue increased substantially, implementation revenue for the period decreased compared to last year as this segment of revenue is generally lumpy in nature and Global Water recorded no AMI implementations during the period.
Consolidated net loss for the three months ended March 31, 2012 totalled $1.9 million compared with $1.0 million for the same period last year. EBITDA for the three months ended March 31, 2012 totalled $1.7 million compared to $3.2 million for the same period last year. The change in net loss and EBITDA is primarily due to the change in implementation revenue mentioned above and no monetization of contractual rights, a business activity that Global Water is continuing to pursue and expects to contribute in subsequent quarters this year.
Business Outlook
Global Water's growth strategy for FATHOM™ is driven by domestic market adoption, expanding channels to market and international expansion. At this time last year, FATHOM™ had only one channel to market - direct sales. Global Water has expanded its direct selling effort by recruiting additional internal resources to focus on key geographic regions. Direct selling into U.S. municipalities requires a longer selling cycle and the direct sales team will continue to pursue these deals through that process. FATHOM™ meets the needs of these municipalities and the interest remains strong. Global Water has also significantly expanded its partner channels by engaging strategic partnerships to accelerate the adoption of FATHOM™ and advance it geographically. Developing the partner channel provides additional opportunities for FATHOM™ through Global Water's existing relationships domestically with Aclara and the Ontario Clean Water Agency and internationally through Isle Utilities' Technology Approval Group (iTAG).
"Global Water has been at the forefront of technological innovation and adoption since our inception," said Trevor Hill, President and CEO of Global Water. "From our very early days we have integrated technologies to drive efficiencies into our organization. It is from this position of strength that we can bring our services to the market. Utilities derive great comfort from knowing that our products and services have been evaluated and certified through Global Water's U2U (Utility-to-Utility) certification program. Partnership's like iTAG then allow a large number of national and international utilities to gain exposure to FATHOMTM."
Other information
Effective January 1, 2011, IFRS replaced Canadian GAAP for publicly accountable enterprises, except those with rate regulated activities, for whom the mandatory date of adoption of IFRS was expected to be January 1, 2012. We had previously indicated that we planned to adopt IFRS effective January 1, 2012. Based on new guidance from the Canadian Accounting Standards Board, the deferral of IFRS adoption for rate regulated entities applies to the Company and, accordingly, the Company now expects to adopt IFRS effective January 1, 2015 and will continue preparing financial statements in accordance with U.S. GAAP for financial years beginning January 1, 2102 through January 1, 2015.
The full financial statements and management's discussion and analysis for the Company and Global Water will be available May 10, 2012 on the Company's SEDAR profile at www.sedar.com or on the Company's website at www.gwresources.com.
Conference Call
Global Water will conduct a conference call on May 10, 2012 at 4:00 p.m. ET. You 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 1 (855) 859-2056. The passcode is 78272802. The passcode will expire at midnight (ET) on May 15, 2012. A copy of the transcript and an audio recording of the call, once available, will be archived at www.gwresources.com.
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 "EBITDA" 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, 2012 and December 31, 2011 (Unaudited) |
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March 31, 2012 |
December 31, 2011 |
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(in thousands of US$, except share data) | ||||||||||||||
ASSETS | ||||||||||||||
CURRENT ASSETS: | ||||||||||||||
Cash and cash equivalents | $ | - | $ | - | ||||||||||
Other current assets | 29 | - | ||||||||||||
Total current assets | - | - | ||||||||||||
Equity method investment | 53,012 | 54,063 | ||||||||||||
TOTAL ASSETS | $ | 53,041 | $ | 54,063 | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
LIABILITIES: | ||||||||||||||
Accounts payable and accrued expenses | $ | 92 | $ | 8 | ||||||||||
Due to related party | 311 | 256 | ||||||||||||
Other noncurrent liabilities | 39 | 25 | ||||||||||||
Total liabilities | 442 | 289 | ||||||||||||
SHAREHOLDERS' EQUITY: | ||||||||||||||
Common stock, unlimited shares authorized, 8,754,612 shares issued and outstanding at March 31, 2012 and December 31, 2011 |
55,670 | 55,670 | ||||||||||||
Accumulated deficit | (3,071) | (1,896) | ||||||||||||
Total shareholders' equity | 52,599 | 53,774 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 53,041 | $ | 54,063 | ||||||||||
GWR GLOBAL WATER RESOURCES CORP. STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2012 and 2011 (Unaudited) |
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Three Months Ended March 31, |
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2012 | 2011 | |||||||||||||
(in thousands of US$, except share and per share data) |
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LOSS FROM EQUITY INVESTMENT | $ | (1,051) | $ | (488) | ||||||||||
OPERATING EXPENSE | 124 | 112 | ||||||||||||
OPERATING LOSS | (1,175) | (600) | ||||||||||||
LOSS BEFORE INCOME TAXES | (1,175) | (600) | ||||||||||||
INCOME TAX EXPENSE (BENEFIT) | - | - | ||||||||||||
NET LOSS | $ | (1,175) | $ | (600) | ||||||||||
WEIGHTED AVERAGE SHARES: | ||||||||||||||
Basic | 8,754,612 | 8,583,729 | ||||||||||||
Diluted | 8,754,612 | 8,583,729 | ||||||||||||
LOSS PER SHARE: | ||||||||||||||
Basic | $ | (0.13) | $ | (0.07) | ||||||||||
Diluted | $ | (0.13) | $ | (0.07) | ||||||||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED BALANCE SHEETS As of March 31, 2012 and December 31, 2011 (Unaudited) |
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March 31, 2012 | December 31, 2011 | ||||||||||
(in thousands of US$, except share data) | |||||||||||
ASSETS | |||||||||||
PROPERTY, PLANT AND EQUIPMENT: | |||||||||||
Property, plant and equipment | $ | 318,878 | $ | 317,804 | |||||||
Less accumulated depreciation | (54,807) | (51,856) | |||||||||
Net property, plant and equipment | 264,071 | 265,948 | |||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | 2,561 | 2,233 | |||||||||
Accounts receivable - net | 2,498 | 2,779 | |||||||||
Other receivables | 492 | 444 | |||||||||
Accrued revenue | 1,412 | 1,254 | |||||||||
Prepaid expenses and other current assets | 929 | 425 | |||||||||
Deferred tax asset - current | 2,170 | 2,003 | |||||||||
Total current assets | 10,062 | 9,138 | |||||||||
OTHER ASSETS: | |||||||||||
Goodwill | 13,082 | 13,082 | |||||||||
Intangible assets - net | 1,545 | 1,545 | |||||||||
Regulatory assets | 546 | 486 | |||||||||
Deposits | 60 | 63 | |||||||||
Bond service fund and other restricted cash | 9,294 | 9,287 | |||||||||
Debt issuance costs - net | 3,634 | 3,005 | |||||||||
Deferred tax assets | 29,125 | 28,068 | |||||||||
Total other assets | 57,286 | 55,536 | |||||||||
TOTAL ASSETS | $ | 331,419 | $ | 330,622 | |||||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts payable | $ | 3,053 | $ | 3,637 | |||||||
Accrued expenses | 6,517 | 3,884 | |||||||||
Deferred revenue | 22 | 2 | |||||||||
Accrued acquisition payments | - | 5,919 | |||||||||
Customer and meter deposits | 2,427 | 2,371 | |||||||||
Long-term debt - current portion | 12,806 | 5,757 | |||||||||
Total current liabilities | 24,825 | 21,570 | |||||||||
NONCURRENT LIABILITIES: | |||||||||||
Long-term debt | 120,769 | 115,476 | |||||||||
Advances in aid of construction | 105,386 | 105,331 | |||||||||
Contributions in aid of construction - net | 64,521 | 64,775 | |||||||||
Acquisition liability | 4,688 | 10,395 | |||||||||
Other non-current liabilities | 807 | 713 | |||||||||
Total noncurrent liabilities | 296,171 | 296,690 | |||||||||
Total liabilities | 320,996 | 318,260 | |||||||||
SHAREHOLDERS' EQUITY: | |||||||||||
Common stock, $0.01 par value, 1,000,000 shares authorized, 182,050 shares issued and outstanding at March 31, 2012 and December 31, 2011 |
2 | 2 | |||||||||
Paid in capital | 55,741 | 55,731 | |||||||||
Accumulated deficit | (45,320) | (43,371) | |||||||||
Total equity | 10,423 | 12,362 | |||||||||
TOTAL | $ | 331,419 | $ | 330,622 | |||||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2012 and 2011 (Unaudited) |
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Three Months Ended March 31, | |||||||||||||
2012 | 2011 | ||||||||||||
(in thousands of US$) | |||||||||||||
REVENUES: | |||||||||||||
Water services | $ | 3,554 | $ | 3,424 | |||||||||
Wastewater and recycled water services | 3,232 | 2,771 | |||||||||||
Unregulated revenues | 539 | 2,971 | |||||||||||
Total revenues | 7,325 | 9,166 | |||||||||||
OPERATING EXPENSES: | |||||||||||||
Operations and maintenance | 2,937 | 3,357 | |||||||||||
General and administrative | 2,660 | 2,610 | |||||||||||
Depreciation | 2,665 | 2,612 | |||||||||||
Total operating expenses | 8,262 | 8,579 | |||||||||||
OPERATING INCOME (LOSS) | (937) | 587 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||
Interest income | - | 2 | |||||||||||
Interest expense | (2,230) | (2,316) | |||||||||||
Other | (6) | 40 | |||||||||||
Total other income (expense) | (2,236) | (2,274) | |||||||||||
LOSS BEFORE INCOME TAXES | (3,173) | (1,687) | |||||||||||
INCOME TAX BENEFIT | 1,224 | 650 | |||||||||||
NET LOSS | $ | (1,949) | $ | (1,037) | |||||||||
Net Loss and EBITDA per Share Information for the Three Months Ended March 31, 2012 (amounts in thousands of US dollars, except share data): |
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Net Loss | EBITDA | |||||||||||||
Amount for the period ended March 31, 2012 | $ | (1,949) | $ | 1,722 | ||||||||||
Weighted average number of Global Water shares outstanding during the period ended March 31, 2012 |
182,050 | 182,050 | ||||||||||||
Global Water per share amount | $ | (10.71) | $ | 9.46 | ||||||||||
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Eight Quarters Ended March 31, 2012 (Unaudited) |
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2012 | 2011 | 2010 | |||||||||||||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | ||||||||||||||||||||
(in thousands of US$, except service connections) | |||||||||||||||||||||||||||
REVENUES: | |||||||||||||||||||||||||||
Water services | $ | 3,554 | $ | 3,815 | $ | 5,394 | $ | 4,497 | $ | 3,424 | $ | 3,836 | $ | 4,810 | $ | 3,550 | |||||||||||
Wastewater and recycled water services | 3,232 | 2,903 | 2,872 | 2,866 | 2,771 | 2,219 | 2,076 | 1,708 | |||||||||||||||||||
Unregulated revenues | 539 | 1,016 | 1,885 | 1,991 | 2,971 | 3,160 | 259 | 125 | |||||||||||||||||||
Total revenues | 7,325 | 7,734 | 10,151 | 9,354 | 9,166 | 9,215 | 7,145 | 5,383 | |||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||||||
Operations and maintenance | 2,937 | 2,758 | 3,583 | 3,547 | 3,357 | 3,681 | 1,980 | 1,683 | |||||||||||||||||||
General and administrative | 2,660 | 2,247 | 1,965 | 2,282 | 2,610 | 1,778 | 1,817 | 1,668 | |||||||||||||||||||
Goodwill impairment | - | - | - | - | - | - | 23,985 | - | |||||||||||||||||||
Depreciation | 2,665 | 2,738 | 2,557 | 2,580 | 2,612 | 2,619 | 2,640 | 2,288 | |||||||||||||||||||
Total operating expenses | 8,262 | 7,743 | 8,105 | 8,409 | 8,579 | 8,078 | 30,422 | 5,639 | |||||||||||||||||||
OPERATING INCOME (LOSS) | (937) | (9) | 2,046 | 945 | 587 | 1,137 | (23,277) | (256) | |||||||||||||||||||
OPERATING INCOME (EXPENSE): | |||||||||||||||||||||||||||
Interest income | - | - | - | - | 2 | - | - | - | |||||||||||||||||||
Interest expense | (2,230) | (2,194) | (2,196) | (2,202) | (2,316) | (3,428) | (3,293) | (3,200) | |||||||||||||||||||
Other | (6) | 2 | (8) | 23 | 40 | 51 | 8 | 34 | |||||||||||||||||||
Total other income (expense) | (2,236) | (2,192) | (2,204) | (2,179) | (2,274) | (3,377) | (3,285) | (3,166) | |||||||||||||||||||
LOSS BEFORE INCOME TAXES | (3,173) | (2,201) | (158) | (1,234) | (1,687) | (2,240) | (26,562) | (3,422) | |||||||||||||||||||
INCOME TAX BENEFIT | 1,224 | 795 | 56 | 471 | 650 | 2,607 | 323 | 843 | |||||||||||||||||||
NET INCOME (LOSS) | $ | (1,949) | $ | (1,406) | $ | (102) | $ | (763) | $ | (1,037) | $ | 367 | $ | (26,239) | $ | (2,579) | |||||||||||
Income tax benefit | $ | (1,224) | (795) | (56) | (471) | (650) | (2,607) | (323) | (843) | ||||||||||||||||||
Interest income | - | - | - | - | (2) | - | - | - | |||||||||||||||||||
Interest expense | 2,230 | 2,194 | 2,196 | 2,202 | 2,316 | 3,428 | 3,293 | 3,200 | |||||||||||||||||||
Depreciation | 2,665 | 2,738 | 2,557 | 2,580 | 2,612 | 2,619 | 2,640 | 2,288 | |||||||||||||||||||
EBITDA | 1,722 | $ | 2,731 | $ | 4,595 | $ | 3,548 | $ | 3,239 | $ | 3,807 | $ | (20,629) | $ | 2,066 | ||||||||||||
Goodwill impairment | - | - | - | - | - | - | 23,985 | - | |||||||||||||||||||
Other regulatory and governmental fees | - | - | - | - | - | - | 133 | 91 | |||||||||||||||||||
Other, net | - | - | - | - | - | (51) | (8) | (34) | |||||||||||||||||||
ADJUSTED EBITDA | 1,722 | $ | 2,731 | $ | 4,595 | $ | 3,548 | $ | 3,239 | $ | 3,756 | $ | 3,481 | $ | 2,123 | ||||||||||||
Active service connections at period end | 40,100 | 39,731 | 39,644 | 39,342 | 39,011 | 38,459 | 38,923 | 38,665 | |||||||||||||||||||
Certain previously reported amounts have been reclassified to conform to the current presentation
GLOBAL WATER RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2012 and 2011 (Unaudited) |
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Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
(in thousands of US$) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | (1,949) | $ | (1,037) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Deferred compensation | 119 | 162 | ||||||
Depreciation | 2,665 | 2,612 | ||||||
Amortization of deferred debt issuance costs and discounts | 57 | 78 | ||||||
Loss on disposal of fixed and intangible assets | - | 24 | ||||||
Gain on advance in aid of construction purchase | - | (22) | ||||||
Gain on settlement of acquisition liability | - | (80) | ||||||
Imputed interest expense on deferred payments for acquisitions - net of cash paid | (463) | (654) | ||||||
Provision for doubtful accounts receivable | 41 | 32 | ||||||
Deferred income tax benefit | (1,224) | (650) | ||||||
Changes in assets and liabilities - excluding effects of acquisitions: | ||||||||
Accounts receivable | 240 | 109 | ||||||
Other current assets | (570) | (1,293) | ||||||
Accounts payable and other current liabilities | 1,869 | 402 | ||||||
Other noncurrent assets | (59) | (6) | ||||||
Other noncurrent liabilities | (15) | 440 | ||||||
Net cash provided by operating activities | 711 | 117 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (856) | (1,606) | ||||||
Proceeds from disposal of fixed and intangible assets | - | 26 | ||||||
Deposits of restricted cash | (144) | (22) | ||||||
Deposits received | - | 5 | ||||||
Net cash used in investing activities | (1,000) | (1,597) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Loan borrowings | 7,000 | 2,364 | ||||||
Loan repayments | (4,073) | (10,267) | ||||||
Related-party loan proceeds | 8,910 | - | ||||||
Debt issuance costs paid | (142) | (34) | ||||||
Acquisition of utilities - deferred acquisition payments | (11,163) | (4,381) | ||||||
Net proceeds from the sale of stock | - | 4,011 | ||||||
Advances in aid of construction, net of refunds paid | 55 | 439 | ||||||
Contributions in aid of construction under ICFA and other agreements | 30 | - | ||||||
Net cash provided by (used in) financing activities | 617 | (7,868) | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 328 | (9,348) | ||||||
CASH AND CASH EQUIVALENTS - Beginning of period | 2,233 | 10,163 | ||||||
CASH AND CASH EQUIVALENTS - End of period | $ | 2,561 | $ | 815 |
For further information:
Ross Marshall
Investor Relations
Tel: 416.815.00700 ext. 238
Email: [email protected]
www.gwresources.com
www.gwfathom.com
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