PHOENIX, 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 Highlights

Consolidated 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 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.  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 Call

Global 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 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 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 SHEETS
As 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			54,063
TOTAL  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, 8,754,612 shares issued and outstanding at September 30, 2012 and December 31, 2011			55,761			55,670
	Accumulated deficit			(20,049)			(1,896)
		Total shareholders' equity		35,712			53,774
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	36,297		$	54,063

GWR GLOBAL WATER RESOURCES CORP.
STATEMENTS OF OPERATIONS
For 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			220
OPERATING 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 GWRI VALUATION ALLOWANCE			$	(374)		$	(86)		$	(2,401)		$	(1,124)
LOSS PER SHARE EXCLUDING EFFECT OF GWRI VALUATION ALLOWANCE			$	(0.04)		$	(0.01)		$	(0.27)		$	(0.13)

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
As 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			265,948
CURRENT 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			9,138
OTHER 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			55,536
TOTAL ASSETS				$	304,154		$	330,622
LIABILITIES 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			21,570
NONCURRENT 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			318,260
SHAREHOLDERS' EQUITY (DEFICIT):
	Common stock, $0.01 par value, 1,000,000 shares authorized, 182,050 shares issued and outstanding 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)			12,362
TOTAL				$	304,154		$	330,622

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For 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			25,093
OPERATING 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)			1,177
NET 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			EBITDA
Amount for the period ended September 30, 2012		$	(617)		$			4,289		$	(36,715)		$	9,458
Weighted average number of Global Water shares outstanding during the period ended September 30, 2012			182,050					182,050			182,050			182,050
Global Water  per share amount		$	(3.39)		$			23.56		$	(201.68)		$	51.95
Global Water  per share amount, excluding valuation allowance		$	(3.39)		$			23.56		$	(21.75)		$	51.95

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For 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			9,215
OPERATING 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			1,137
OPERATING 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			2,607
NET 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			2,619
EBITDA				$	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		$	3,756
Active service connections at period end					40,833		40,503		40,100			39,731		39,644		39,342		39,011			38,459

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For 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 - net of 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			10,163
CASH 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