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Press release from CNW Group

GWR Global Water Resources Corp. reports first quarter 2012 results

Thursday, May 10, 2012

GWR Global Water Resources Corp. reports first quarter 2012 results15:15 EDT Thursday, May 10, 2012PHOENIX, 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, 2011Awarded FATHOM™contract for the City of South Pasadena, California, to service approximately 6,200 service connectionsCity of El Cajon, California signed a contract for FATHOM™ as the Customer Information System to service approximately 16,000 wastewater service connectionsGoleta Water District in California approved FATHOM™ as the Customer Information System to service approximately 16,600 service connections, subsequent to the end of the quarterEntered 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 quarterReceived 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 developersInitiated monthly invoicing for the final phase of $2 million regulated revenues rate increaseAnnounced FATHOM™ channel partnerships with Ontario Clean Water Agency and Isle Utilities GroupSecured 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 HighlightsGlobal 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 OutlookGlobal 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 informationEffective 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 CallGlobal 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 StatementsThis 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 MeasuresThis 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 SHEETSAs of March 31, 2012 and December 31, 2011(Unaudited)                     March 31,2012  December 31,2011       (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         54,063TOTAL  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         53,774TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 53,041  $54,063                            GWR GLOBAL WATER RESOURCES CORP.STATEMENTS OF OPERATIONSFor the Three Months Ended March 31, 2012 and 2011(Unaudited)                          Three Months Ended March31,          2012  2011         (in thousands of US$, except share andper share data)          LOSS FROM EQUITY INVESTMENT         $(1,051)  $(488)OPERATING EXPENSE                124         112OPERATING 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)  $(0.07)                           GLOBAL WATER RESOURCES, INC.CONSOLIDATED BALANCE SHEETSAs of March 31, 2012 and December 31, 2011(Unaudited)               March 31, 2012  December31, 2011    (in thousands of US$, 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         55,536TOTAL 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         12,362TOTAL    $ 331,419  $330,622                     GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFor the Three Months Ended March 31, 2012 and 2011(Unaudited)                    Three MonthsEnded March 31,             2012     2011       (in thousands of US$)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         8,579OPERATING 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         650NET 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):                                     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)   $9.46                               GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTSOFOPERATIONSFor the Eight Quarters Ended March 31, 2012(Unaudited)                               2012     2011       2010    Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2    (in thousands of US$, 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  5,639OPERATING 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  843NET 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  2,288EBITDA     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 $2,123Active service connections at period end     40,100  39,731  39,644  39,342  39,011  38,459  38,923  38,665                           Certain previously reported amounts have been reclassified to conform to the current presentation GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Three Months Ended March 31, 2012 and 2011(Unaudited)          Three Months Ended March 31,        2011  2010    (in thousands of US$)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         10,163CASH AND CASH EQUIVALENTS - End of period     $2,561  $815For further information: Ross Marshall Investor Relations Tel:  416.815.00700 ext. 238 Email:  rmarshall@equicomgroup.comwww.gwresources.comwww.gwfathom.com