Global Water Resources ((GWRS)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Global Water Resources painted a picture of both growth and challenges. The company reported strong growth in service connections, compliance, and multifamily housing permits, alongside significant industrial investments and successful regulatory developments. However, these positive aspects were tempered by a decline in total revenue due to non-repeating ICFA revenue, increased operating expenses, and a drop in net income.
Increase in Active Service Connections
Global Water Resources reported a 4.4% increase in total active service connections, reaching 64,520 by the end of 2024. This growth highlights the company’s ability to expand its customer base and enhance its service reach.
Strong Compliance Record
The company maintained a strong compliance record in 2024, with zero significant compliance events. This continues nearly eight years of flawless compliance, underscoring Global Water’s commitment to regulatory standards and operational excellence.
Increase in Building Permits
The market saw a significant rise in building permits, with a 20.3% increase in the Phoenix area and an 11.5% increase in Maricopa. This growth reflects a robust demand for new housing developments and a thriving real estate market.
Growth in Multifamily Housing
The city of Maricopa experienced an 88.7% increase in multifamily housing units, with 1,200 units permitted in 2024. This surge indicates a growing trend towards multifamily living spaces and increased urbanization.
Significant Industrial Investment
Arizona attracted $50 billion in industrial investments in 2024, following $40.7 billion in 2023. This includes a record $168 billion investment from TSMC, highlighting the state’s appeal as a hub for industrial growth and development.
Revenue Growth from Regulated Services
Regulated revenue for 2024 was $52.7 million, marking a 4.9% increase compared to 2023. This growth demonstrates the company’s ability to generate stable income from its regulated services.
Approval for Acquisition of City of Tucson Assets
The Arizona Corporation Commission approved Global Water’s acquisition of City of Tucson assets, increasing the customer base from 5,000 to 7,000 connections. This strategic move is expected to enhance the company’s market presence in the region.
Settlement in Global Water Farmers Rate Case
A settlement in the Global Water Farmers rate case authorized an approximate $1.1 million revenue increase, to be phased in 2025 and 2026. This settlement represents a significant step towards achieving the company’s financial objectives.
Decrease in Total Revenue
Despite the positive developments, total revenue for 2024 was $52.7 million, down 0.6% compared to 2023. This decline was primarily due to non-repeating ICFA revenue, highlighting a challenge in maintaining consistent revenue streams.
Increase in Operating Expenses
Operating expenses for 2024 rose to $43.3 million, an increase of approximately 6.3% compared to 2023. This rise in expenses poses a challenge to the company’s profitability.
Decline in Net Income
Net income for 2024 was $5.8 million or $0.24 per diluted share, down from $8 million or $0.33 per diluted share in 2023. This decline reflects the impact of increased expenses and decreased revenue on the company’s bottom line.
Forward-Looking Guidance
Looking ahead, Global Water Resources is optimistic about future growth, driven by organic connections, new utilities, acquisitions, and rate cases. The company has proposed over $7.5 million in rate increases and is pursuing further regulatory initiatives to enhance financial performance. With active connections rising 40.8%, revenue increasing 48.4%, and EPS growing 119% from 2019 to 2024, the company is poised for continued expansion.
In conclusion, Global Water Resources’ earnings call highlighted a mix of growth and challenges. While the company achieved significant milestones in service connections, compliance, and industrial investments, it faced hurdles in revenue and net income. Looking forward, the company remains optimistic about its growth prospects, driven by strategic initiatives and regulatory advancements.