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Press release from CNW Group

GWR Global Water Resources Corp. reports third quarter 2012 results

Thursday, November 08, 2012

GWR Global Water Resources Corp. reports third quarter 2012 results15:00 EST Thursday, November 08, 2012PHOENIX, AZ, Nov. 8, 2012 /CNW/ - GWR Global Water Resources Corp. (the "Company") (TSX: GWR) today reported its financial results for the third quarter ended September 30, 2012. 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 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.Third Quarter Highlights:Grew active service connections through September 30, 2012 at a 3.7% annualized year-to-date growth rate with a total of 40,833 active connections, as compared with 39,731 at December 31, 2011.Received application sufficiency for an approximate 28% increase in utility rates for regulated division.Awarded agreement by the City of Glendale, Arizona to provide wastewater and recycled water services to approximately 7,000 acres.Extended our agreement with the City of Torrance, California to provide additional FATHOM™ services to 10,000 accounts.Contracted with the City of South Pasadena, California, to provide FATHOM™ solutions for their water, wastewater and refuse operations to approximately 6,200 service connections.Collected $2.0 million from an arbitration award.Financial HighlightsConsolidated revenues for the three months ended September 30, 2012, totalled $9.0 million compared to $10.2 million for the same period last year. Consolidated revenues for the nine months ended September 30, 2012, totalled $25.1 million compared to $28.7 million for the same period in 2011.Consolidated revenues include regulated revenue which remained relatively flat at approximately $8.2 million for the three months ended September 30, 2012, compared with the same period last year. For the nine months ended September 30, 2012, regulated revenues increased $1.4 million, or 6.2%, to $23.2 million compared with the same period last year. The increase in regulated revenue was due primarily to the rate increase phase-in pursuant to the 2010 Regulatory Rate Decision effective January 1, 2012, as well as to growth in the number of active service connections.Consolidated revenues also include recurring revenue from the Company's FATHOM™ business which increased 16.0% to $579,000 for the three months ended September 30, 2012 compared with the same period last year. For the nine months ended September 30, 2012, recurring FATHOM™ revenues increased 34.8% to approximately $1.6 million compared with the same period last year. While recurring revenue increased substantially, implementation revenue, which is generally lumpy in nature, decreased compared to last year as Global Water recorded no Automatic Meter Infrastructure ("AMI") implementations during the 2012 period. Consolidated revenues also decreased in 2012 compared to 2011 due to no sale of contractual rights to date this year.EBITDA for the three months ended September 30, 2012, totalled $4.3 million compared to $4.6 million for the same period last year. EBITDA for the nine months ended September 30, 2012, totalled $9.5 million compared to $11.4 million for the same period last year. The change in EBITDA is primarily due to the decrease in implementation revenue and revenue from the sale of contractual rights mentioned above.Consolidated net loss was $0.6 million for the three months ended September 30, 2012, compared to $0.1 million for the same period last year. Consolidated net loss was $36.7 million for the nine months ended September 30, 2012, compared to $1.9 million for the same period last year. The change is predominantly due to a $32.8 million noncash charge attributed to a valuation allowance recorded against the Company's net deferred tax assets during the second quarter of 2012. Excluding this charge, consolidated net loss totalled $4.0 million for nine months ended September 30, 2012, compared with $1.9 million for the same period last year.Business OutlookGlobal 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.  In July 2012, Global Water filed rate applications with the regulator for each of its operating utilities.  The preliminary evaluation process is expected to conclude in November of 2013. The current revenue requirement was set in a rate case that concluded in 2010 and was based on a 2008 historic test year. Since that time, certain costs related to utility operations have increased. Global Water has also continued to make the necessary capital improvements to maintain industry‐leading performance for compliant operations, reliability, customer service, and critical water resource management.  The applications request a rate increase of approximately 28% or $8.4 million of additional annualized revenue over 2012.Expansion of FATHOM™ is driven by both market adoption and expanding the channels to market.  The primary channels remain the direct sales and partner channels in both the national and the international markets. With the benefits offered by Global Water's FATHOM™ OS platform, coupled with the brand visibility associated with its international expansion, there has been an increased activity within both the national and international markets - particularly with larger municipalities using systems in need of updating or upgrading. This momentum has also opened up an emerging channel to market for large cities based on our ability to implement FATHOM™ incrementally."We continue to grow the fundamentals of our business across both the regulated and the FATHOM™ divisions.  The utility rate increase application process has gone smoothly to date and organic growth from the regulated division is picking up as a function of new activity in the national and state housing markets," said Trevor Hill, President and CEO of Global Water.  "FATHOM™ continues to build momentum within the United States and abroad. The completion of FATHOM™ OS and the momentum we have gained with the 16 utilities now on the platform positions us well for continued growth in 2013."The full financial statements and management's discussion and analysis for the Company and Global Water will be available November 8, 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 November 8, 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 35212185.  The replay will expire at midnight (ET) on November 22, 2012.  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.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 "Consolidated Statements of Operations for the eight quarters end September 30, 2012" 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 September 30, 2012 and December 31, 2011(Unaudited)   September 30, 2012  December 31,    2011  (in thousands of US$, except share data)ASSETS           CURRENT ASSETS:      Cash and cash equivalents $ - $ - Other current assets        10     -  Total current assets        10        - Equity method investment        36,287    54,063TOTAL  ASSETS $ 36,297 $ 54,063      LIABILITIES AND SHAREHOLDERS' EQUITY           LIABILITIES:      Accounts payable and accrued expenses $ 7 $ 8 Due to related party        531    256 Other noncurrent liabilities        47     25  Total liabilities        585   289      SHAREHOLDERS' EQUITY:      Common stock, unlimited shares authorized, 8,754,612shares issued and outstanding at September 30, 2012and December 31, 2011        55,761       55,670 Accumulated deficit         (20,049)  (1,896)  Total shareholders' equity        35,712  53,774TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,297 $ 54,063GWR GLOBAL WATER RESOURCES CORP.STATEMENTS OF OPERATIONSFor the Three and Nine Months Ended September 30, 2012 and 2011(Unaudited)        Three Months Ended September 30,    Nine Months Ended September 30,         2012    2011        2012        2011                                             LOSS FROM EQUITY INVESTMENT     $ (321) $ (49)    $ (17,820)    $ (904)OPERATING EXPENSES           53         37           333           220OPERATING INCOME (LOSS)           (374)       (86)        (18,153)          (1,124)LOSS BEFORE INCOME TAXES           (374)       (86)          (18,153)          (1,124)INCOME TAX BENEFIT            -        -           -           -NET LOSS     $ (374) $ (86)    $ (18,153)    $ (1,124)                               WEIGHTED AVERAGE SHARES:                               Basic      8,754,612  8,754,612       8,754,612     8,698,277 Diluted      8,754,612  8,754,612      8,754,612     8,698,277                               LOSS PER SHARE:                               Basic     $ (0.04) $ (0.01)    $ (2.07)    $ (0.13) Diluted     $ (0.04) $ (0.01)    $ (2.07)    $ (0.13)                                                              NET LOSS EXCLUDING EFFECT OF GWRIVALUATION ALLOWANCE     $ (374) $ (86)    $ (2,401)    $ (1,124)LOSS PER SHARE EXCLUDING EFFECTOF GWRI VALUATION ALLOWANCE     $ (0.04) $ (0.01)    $ (0.27)    $ (0.13)GLOBAL WATER RESOURCES, INC.CONSOLIDATED BALANCE SHEETSAs of September 30, 2012 and December 31, 2011(Unaudited)    September 30, 2012  December 31, 2011  (in thousands of US$, except share data)ASSETS      PROPERTY, PLANT AND EQUIPMENT:       Property, plant and equipment  $ 322,606 $  317,804 Less accumulated depreciation   (60,776)  (51,856)  Net property, plant and equipment    261,830  265,948CURRENT ASSETS:       Cash and cash equivalents       6,154  2,233 Accounts receivable - net     2,380  2,779 Other receivables      748  444 Accrued revenue      1,721  1,254 Prepaid expenses and other current assets      963  425 Deferred tax asset - current         -  2,003  Total current assets       11,966  9,138OTHER ASSETS:       Goodwill    13,082  13,082 Intangible assets - net     1,545  1,545 Regulatory assets         676  486 Deposits         38  63 Bond service fund and other restricted cash      11,380  9,287 Debt issuance costs - net     3,637  3,005 Deferred tax assets         -  28,068  Total other assets    30,358  55,536TOTAL ASSETS  $ 304,154 $  330,622LIABILITIES AND EQUITY (DEFICIT)      CURRENT LIABILITIES:       Accounts payable  $ 2,095 $  3,637 Accrued expenses        7,577  3,884 Deferred revenue        154  2 Accrued acquisition payments    -  5,919 Customer and meter deposits   2,517  2,371 Long-term debt - current portion   2,316  5,757  Total current liabilities   14,659  21,570NONCURRENT LIABILITIES:       Long-term debt    135,872  115,476 Advances in aid of construction   104,804  105,331 Contributions in aid of construction - net   66,787  64,775 Deferred income tax liability   589  - Acquisition liability   4,688  10,395 Other non-current liabilities   997  713  Total noncurrent liabilities   313,737  296,690  Total liabilities   328,396   318,260SHAREHOLDERS' EQUITY (DEFICIT):       Common stock, $0.01 par value, 1,000,000 shares authorized, 182,050 shares issued andoutstanding at September 30, 2012 and December 31, 2011    2  2 Paid in capital   55,842  55,731 Accumulated deficit   (80,086)  (43,371)  Total equity (deficit)   (24,242)  12,362TOTAL  $ 304,154 $  330,622GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFor the Three and Nine Months Ended September 30, 2012 and 2011(Unaudited)         Three Months Ended September 30,    Nine Months Ended September 30,         2012     2011        2012   2011     REVENUES:                            Water services       $ 4,863 $ 5,394    $ 13,261 $ 13,315 Wastewater and recycled water services      3,328   2,872           9,913  8,509 Unregulated revenues      829    1,885           1,940  6,847  Total revenues      9,020  10,151     25,114  28,671                    OPERATING EXPENSES:                    Operations and maintenance      3,276   3,164       9,132  9,390 General and administrative      2,178   2,384     7,295   7,954 Depreciation      2,662    2,557     8,033  7,749  Total operating expenses      8,116    8,105     24,460  25,093OPERATING INCOME (LOSS)      904  2,046         654  3,578                    OTHER INCOME (EXPENSE):                    Interest income      1        -     1       2 Interest expense      (2,245)   (2,196)     (7,480)  (6,714) Other      723      (8)        771      55  Total other income (expense)      (1,521)  (2,204)      (6,708)   (6,657)                       LOSS BEFORE INCOME TAXES      (617)  (158)     (6,054)  (3,079)INCOME TAX (EXPENSE) BENEFIT       -        56     (30,661)  1,177NET LOSS     $ (617) $ (102)    $   (36,715) $ (1,902)Net Loss and EBITDA per Share Information for the Three and Nine Months Ended September 30, 2012   (amounts in thousands of US dollars, except share data):                    Three Months Ended September 30, 2012       Nine Months Ended   September 30, 2012         Net Loss  EBITDA  Net Loss  EBITDAAmount for the period ended September 30, 2012     $ (617)    $ 4,289    $ (36,715)    $ 9,458Weighted average number of Global Water sharesoutstanding during the period ended September30, 2012        182,050       182,050  182,050  182,050Global Water  per share amount     $ (3.39) $ 23.56 $ (201.68) $ 51.95                                     Global Water  per share amount, excludingvaluation allowance     $ (3.39) $ 23.56 $ (21.75) $ 51.95GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFor the Eight Quarters Ended September 30, 2012(Unaudited)   2012 2011 2010     Q3 Q2 Q1  Q4 Q3 Q2 Q1  Q4       REVENUES:                    Water services  $ 4,863$ 4,844$ 3,554 $ 3,815$ 5,394$ 4,497$ 3,424 $  3,836 Wastewater and recycled water services    3,328   3,353   3,232  2,903 2,872 2,866 2,771  2,219 Unregulated revenues         829 572 539  1,016 1,885 1,991 2,971  3,160  Total revenues       9,020  8,769  7,325  7,734 10,151 9,354 9,166   9,215OPERATING EXPENSES:                    Operations and maintenance      3,276 2,919 2,937  2,758 3,583 3,547 3,357  3,681 General and administrative     2,178 2,457 2,660  2,247 1,965 2,282 2,610   1,778 Depreciation   2,662 2,706 2,665  2,738 2,557 2,580 2,612  2,619  Total operating expenses    8,116 8,082 8,262  7,743 8,105 8,409 8,579  8,078 OPERATING INCOME (LOSS)    904 687 (937)  (9) 2,046 945 587  1,137OPERATING INCOME (EXPENSE):                       Interest income   1  -  -  - - - 2  - Interest expense   (2,245)  (3,005)  (2,230)  (2,194) (2,196) (2,202) (2,316)  (3,428) Other   723 54 (6)  2 (8) 23 40  51  Total other income (expense)   (1,521) (2,951)  (2,236)  (2,192) (2,204) (2,179) (2,274)   (3,377)LOSS BEFORE INCOME TAXES   (617) (2,264) (3,173)  (2,201) (158) (1,234) (1,687)  (2,240)INCOME TAX (EXPENSE) BENEFIT         - (31,885) 1,224  795 56 471 650  2,607NET INCOME (LOSS)  $ (617)$ (34,149)$ (1,949) $  (1,406)$  (102)$  (763)$  (1,037) $  367 Income tax expense (benefit)    -  31,885  (1,224)  (795) (56) (471) (650)  (2,607) Interest income   (1)  -  -  - - - (2)  - Interest expense   2,245  3,005 2,230  2,194 2,196 2,202 2,316  3,428 Depreciation   2,662 2,706 2,665  2,738 2,557 2,580 2,612  2,619EBITDA  $4,289$3,447$1,722 $ 2,731$ 4,595$ 3,548$ 3,239 $  3,807                       Other, net   - - -  - - - -   (51)ADJUSTED EBITDA   4,289 3,447 1,722 $  2,731$  4,595$  3,548$  3,239 $  3,756Active service connections at period end   40,833 40,503 40,100  39,731 39,644 39,342 39,011  38,459GLOBAL WATER RESOURCES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Three and Nine Months Ended September 30, 2012 and 2011(Unaudited)     Three Months Ended September 30, Nine Months Ended September 30,         2012  2011  2012  2011     (in thousands of US$)CASH FLOWS FROM OPERATING ACTIVITIES:                Net loss     $ (617) $ (102) $ (36,715) $ (1,902) Adjustments to reconcile net loss to net cash provided by operating activities:                             Deferred compensation          97        110  362  406  Depreciation       2,662     2,557  8,033  7,749  Amortization of deferred debt issuance costs and discounts         81     55   311      188  Write-off of debt issuance costs            16   -      618        -  Loss on disposal of fixed and intangible assets        -  12  -  45  Gain on advance in aid of construction purchase          -    -   -    (22)  Gain on settlement of acquisition liability            -    -   -  (80)  Imputed interest expense on deferred payments for acquisitions - netof cash paid          -  155  (463)  (348)  Provision for doubtful accounts receivable         41    49  123   140  Deferred income tax expense (benefit)       -   (56)  30,661  (1,177)  Changes in assets and liabilities - excluding effects of acquisitions:                              Accounts receivable       (89)  1,555  242  (1,207)   Other current assets        409   (255)  (756)   (1,670)   Accounts payable and other current liabilities      1,948  1,587  2,291  1,905   Other noncurrent assets       (105)  (19)  (231)    (76)   Other noncurrent liabilities       5  (12)  618  370    Net cash provided by operating activities      4,448  5,636  5,094  4,321                                CASH FLOWS FROM INVESTING ACTIVITIES:                            Capital expenditures        (1,962)  (2,081)  (4,247)  (5,162) Proceeds from disposal of fixed and intangible assets       -     -  -  34 Deposits (withdraws) of restricted cash       8  (10)  (2,645)  (54) Deposits received      -    3  3  8    Net cash used in investing activities       (1,954)  (2,088)  (6,889)  (5,174)                             CASH FLOWS FROM FINANCING ACTIVITIES:                          Proceeds from bonds         -  -   14,000   - Loan borrowings        -  3,742  18,000     13,010 Loan repayments      (4,289)  (6,765)    (15,425)      (21,841) Principal payments under capital lease      (22)     -     (22)     - Deposit into escrow for debt service       -     -     (3,923)     - Redemption from escrow for debt service       3,923       -     3,923       - Related-party loan proceeds      -     -  8,910   - Related-party loan repayments       -    -   (8,910)      - Debt issuance costs paid        -     -   (1,465)  (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       224   154  379  637 Contributions in aid of construction under ICFA and other agreements      1,473    150  1,921  249 Refunds of advances for construction       (509)     (503)     (509)     (503)    Net cash provided by (used in) financing activities      800  (3,222)   5,716  (8,852)                              INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      3,294   326  3,921  (9,705)CASH AND CASH EQUIVALENTS - Beginning of period      2,860  132  2,233  10,163CASH AND CASH EQUIVALENTS - End of period     $ 6,154 $ 458 $ 6,154 $ 458   SOURCE: GWR Global Water Resources Corp.For further information: Ross Marshall Investor Relations Tel:  416.815.00700 ext. 238 Email:  rmarshall@equicomgroup.com www.gwresources.com www.gwfathom.com