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Press release from CNW Group

GWR Global Water Resources Corp. Reports First Quarter 2013 Results

Thursday, May 09, 2013

GWR Global Water Resources Corp. Reports First Quarter 2013 Results

17:00 EDT Thursday, May 09, 2013

PHOENIX, May 9, 2013 /CNW/ - GWR Global Water Resources Corp. (the "Company") (TSX: GWR) today reported its financial results for the first quarter ended March 31, 2013.

The Company was established to acquire an equity interest in Global Water Resources, Inc. ("Global Water" or "GWRI"). 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.

First Quarter 2013 Highlights :

  • Grew active service connections for the first quarter to 41,607 compared with 41,008 at December 31, 2012, representing an annualized growth rate of 5.8% for 2013.
  • Commenced performing the implementation of a fully integrated, end-to-end Customer Information System ("CIS"), including utility billing, customer care and Advanced Metering Infrastructure ("AMI") for 2,600 connections for the City of Kennedale, Texas.
  • Received a separate purchase order to develop billing and web presentment for Thames Water.

Summary of Financial Results

Consolidated revenues for the three months ended March 31, 2013 increased $264,000, or 3.6%, to $7.6 million compared to $7.3 million for the three months ended March 31, 2012.

Consolidated revenues include revenue generated by our utility companies, which is subject to regulation from the Arizona Corporation Commission ("ACC"). Such regulated utility revenue increased $126,000, or 1.9%, to approximately $6.9 million for the three months ended March 31, 2013, compared with $6.8 million for the three months ended March 31, 2012. The increase in regulated utility revenue was due primarily to growth in the number of active service connections.

Consolidated revenues also include revenues not subject to regulation of the ACC. Such unregulated revenues primarily relate to the Company's FATHOM™ business which is comprised of recurring operations and nonrecurring activities associated with FATHOM™ implementations. Recurring FATHOM™ revenues increased $97,000, or 18.5%, to approximately $622,000 for the three months ended March 31, 2013.  The increase is attributed to the increased number of FATHOM™ clients.

EBITDA for the three months ended March 31, 2013 totalled $1.6 million compared to $1.7 million for the same period last year. Consolidated net loss was $3.3 million for the three months ended March 31, 2013, compared to $1.9 million for the same period last year.

"The marked improvement in the Arizona economy is clearly reflected in the doubling of our organic growth in the first quarter of 2013 over 2012. Based on the development activity we have seen in our service areas so far this year, we believe this trend seems likely to continue," said Trevor Hill, President and CEO of Global Water. "Our rate proceedings with the Arizona Corporation Commission continue to progress and we feel confident that it will be completed by the end of 2013."

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, the Arizona Corporation Commission (ACC). As previously discussed, population and community growth in the metropolitan Phoenix area served by Global Water's utilities have a direct impact on the Company's earnings.

During the economic downturn beginning in 2008, GWRI's utilities experienced an increase in the number of vacant homes, reaching 4,647 vacant connections as of February 28, 2009, its peak high of 11.2%; the Company is now at its lowest level of vacant connections at 2,264.  Of the 599 active connections added this quarter, 248 were new connections and 351 were move-ins to previously foreclosed properties.  Based on economic metrics and published analyses of industry experts, the metropolitan Phoenix area is expected to experience strong population and employment growth for the foreseeable future, which will ultimately result in real estate development and further decreasing vacancy rates in Global Water's utility service areas.

As discussed previously, during 2012 Global Water filed rate applications with the ACC for seven of the Company's utilities.  The rate applications request an adjustment to the revenue requirements for six of the seven utilities representing a collective rate increase of approximately 28%, or approximately $8.4 million, of annualized revenues over 2012.  It is expected that any rate increase granted will be phased-in over a two to three year period.

Recurring revenues of the FATHOM™ business increased for the three months ended March 31, 2013, compared with the three months ended March 31, 2012.  Although implementation revenue has been lower than expected and the FATHOM™ sales cycle remains challenging, the primary driver of FATHOM™'s value is recurring revenue.  The FATHOM™ product continues to develop interest in the market place, and with continued investment in IT, the strength of the product continues to increase.  Sales remain steady and the pipeline of opportunities remains robust and growing.

The full financial statements and management's discussion and analysis for the Company and Global Water will be available May 9, 2013 on the Company's SEDAR profile at www.sedar.com or on the Company's website at www.gwresources.com.  The Company will announce conference call details at a later date.

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 March 31, 2013" 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, 2013 and December 31, 2012
(Unaudited)
                   
        March 31, 2013     December 31, 2012
        (in thousands of US$, except share data)
ASSETS                  
                   
CURRENT ASSETS:                  
  Cash and cash equivalents        $ -     $ -
  Other current assets          29             1
    Total current assets          29             1
  Equity method investment          33,160             34,852
TOTAL  ASSETS        $ 33,189     $ 34,853
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
                   
LIABILITIES:                  
  Accounts payable and accrued expenses        $ 68     $ 32
  Other noncurrent liabilities          66             41
    Total liabilities          134             73
                   
SHAREHOLDERS' EQUITY:                  
  Common stock, unlimited shares authorized, 8,754,612
  shares issued and outstanding at March 31, 2013 and
  December 31, 2012 
        55,786             55,767
  Accumulated deficit           (22,731)             (20,987)
    Total shareholders' equity          33,055             34,780
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $ 33,189     $ 34,853
       

   

GWR GLOBAL WATER RESOURCES CORP.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
                 
         Three Months Ended March 31,
          2013      2012
          (in thousands of US$, except share and
per share data)
                           
LOSS FROM EQUITY INVESTMENT          $ (1,613)       $ (1,051)
OPERATING EXPENSES             131               124
OPERATING LOSS             (1,744)        (1,175)
LOSS BEFORE INCOME TAXES            (1,744)        (1,175)
INCOME TAX BENEFIT                 -               -
NET LOSS          $ (1,744)       $ (1,175)
                        
WEIGHTED AVERAGE SHARES:                        
  Basic             8,754,612        8,754,612
  Diluted            8,754,612        8,754,612
                          
LOSS PER SHARE:                         
  Basic         $ (0.20)      $ (0.13)
  Diluted         $ (0.20)      $ (0.13)
                            
                            
 
GLOBAL WATER RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
As of March 31, 2013 and 2012
(Unaudited)
                     
          March 31, 2013     December 31, 2012
          (in thousands of US$, except share data)
ASSETS                    
PROPERTY, PLANT AND EQUIPMENT:                    
  Property, plant and equipment          $ 323,761     $ 321,697
  Less accumulated depreciation            (64,624)             (61,461)
    Net property, plant and equipment            259,137             260,236
CURRENT ASSETS:                    
  Cash and cash equivalents            4,018             3,816
  Accounts receivable - net            1,941             1,926
  Other receivables            460             215
  Accrued revenue            1,430             1,599
  Prepaid expenses and other current assets            1,892             1,194
    Total current assets            9,741             8,750
OTHER ASSETS:                    
  Goodwill            13,082             13,082
  Intangible assets - net            1,545             1,545
  Regulatory assets            752             715
  Deposits            38             43
  Bond service fund and other restricted cash            11,383             11,383
  Debt issuance costs - net            3,622             3,643
    Total other assets            30,422             30,411
TOTAL ASSETS          $ 299,300     $ 299,397
LIABILITIES AND EQUITY (DEFICIT)                    
CURRENT LIABILITIES:                    
  Accounts payable          $ 3,358     $ 3,676
  Accrued expenses            7,911             4,263
  Deferred revenue            1,111             1,000
  Customer and meter deposits            2,588             2,565
  Long-term debt - current portion            3,232             3,203
    Total current liabilities            18,200             14,707
NONCURRENT LIABILITIES:                    
  Long-term debt            132,830             132,770
  Advances in aid of construction            100,322             100,192
  Contributions in aid of construction - net            71,375             71,879
  Deferred income tax liability            589             589
  Acquisition liability            4,688             4,688
  Other non-current liabilities            1,225             1,136
    Total noncurrent liabilities            311,029             311,254
    Total liabilities            329,229             325,961
SHAREHOLDERS' EQUITY (DEFICIT):                    
  Common stock, $0.01 par value, 1,000,000 shares authorized,
  182,050 shares issued and outstanding at March 31, 2013
  and December 31, 2012 
          2       2
  Paid in capital            55,215             55,286
  Accumulated deficit            (85,146)             (81,852)
    Total equity (deficit)            (29,929)             (26,564)
TOTAL          $ 299,300     $ 299,397
                     
                     
GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
                     
          Three Months Ended March 31,
                2013        2012
          (in thousands of US$)
REVENUES:                             
  Water services             $ 3,599        $ 3,554
  Wastewater and recycled water services                        3,313                   3,232
  Unregulated revenues                         677                    539
    Total revenues                        7,589                   7,325
                              
OPERATING EXPENSES:                             
  Operations and maintenance                        3,154                   2,937
  General and administrative                        2,809                   2,660
  Depreciation                        2,697                   2,665
    Total operating expenses                        8,660                   8,262
OPERATING LOSS                        (1,071)                   (937)
                              
OTHER INCOME (EXPENSE):                             
  Interest income                        1                   -
  Interest expense                        (2,239)                   (2,230)
  Other                        17                   (6)
    Total other income (expense)                        (2,221)                   (2,236)
                                    
LOSS BEFORE INCOME TAXES                        (3,292)                   (3,173)
INCOME TAX (EXPENSE) BENEFIT                        (2)                   1,224
NET LOSS             $ (3,294)        $ (1,949)
                     
Net Loss and EBITDA per Share Information for the Three Months Ended March 31, 2013
(amounts in thousands of US dollars, except share data):
                     
                Three Months Ended
March 31, 2013
                Net Loss     EBITDA
Amount for the period ended March 31, 2013            $ (3,294)     $ 1,643
Weighted average number of Global Water shares outstanding
  during the period ended March 31, 2013 
            182,050       182,050
Global Water per share amount            $ (18.09)     $ 9.02
                                
                       

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Eight Quarters Ended March 31, 2013
(Unaudited)
                                                                 
      2013     2012     2011
      Q1     Q4     Q3     Q2     Q1     Q4     Q3     Q2
      (in thousands of US$, except service connections)
REVENUES:                                                                
  Water services      $ 3,599     $ 4,156     $ 4,863     $ 4,844     $ 3,554     $ 3,815     $ 5,394     $ 4,497
  Wastewater and recycled water services        3,313       3,331       3,328       3,353       3,232       2,903       2,872       2,866
  Unregulated revenues        677       937       829       572       539       1,016       1,885       1,991
    Total revenues        7,589       8,424             9,020       8,769       7,325       7,734       10,151       9,354
OPERATING EXPENSES:                                                                
  Operations and maintenance        3,154       2,862       3,276       2,919       2,937       2,767       3,164       3,151
  General and administrative         2,809       2,362       2,178       2,457       2,660       2,238       2,384       2,678
  Depreciation        2,697       2,866       2,662       2,706       2,665       2,738       2,557       2,580
    Total operating expenses        8,660       8,090       8,116       8,082       8,262       7,743       8,105       8,409
  OPERATING INCOME (LOSS)        (1,071)       334             904       687       (937)       (9)       2,046       945
OPERATING INCOME (EXPENSE):                                                                      
  Interest income              1       5             1       -             -       -       -       -
  Interest expense        (2,239)       (2,085)       (2,245)       (3,005)       (2,230)       (2,194)       (2,196)       (2,202)
  Other        17       (14)             723       54             (6)       2       (8)       23
    Total other income (expense)        (2,221)       (2,094)       (1,521)       (2,951)       (2,236)       (2,192)       (2,204)       (2,179)
LOSS BEFORE INCOME TAXES        (3,292)       (1,760)       (617)       (2,264)       (3,173)       (2,201)       (158)       (1,234)
INCOME TAX (EXPENSE) BENEFIT        (2)       (6)             -       (31,885)       1,224       795       56       471
NET LOSS      $ (3,294)     $ (1,766)     $ (617)     $ (34,149)     $ (1,949)     $ (1,406)     $ (102)     $ (763)
  Income tax expense (benefit)      $ 2     $ 6     $ -     $ 31,885     $ (1,224)       (795)       (56)       (471)
  Interest income        (1)       (5)             (1)       -             -       -       -       -
  Interest expense        2,239       2,085       2,245       3,005       2,230       2,194       2,196       2,202
  Depreciation        2,697       2,866       2,662       2,706       2,665       2,738       2,557       2,580
EBITDA      $ 1,643     $ 3,186     $ 4,289     $ 3,447     $ 1,722     $ 2,731     $ 4,595     $ 3,548
Active service connections at period end        41,607       41,008       40,833       40,503       40,100       39,731       39,644       39,342

   

GLOBAL WATER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
                       
            Three Months Ended March 31,
                  2013     2012
            (in thousands of US$)
CASH FLOWS FROM OPERATING ACTIVITIES:                         
  Net loss               $ (3,294)     $ (1,949)
  Adjustments to reconcile net loss to net cash provided by operating activities:                                             
    Deferred compensation                    134            119  
    Depreciation                          2,697                2,665
    Amortization of deferred debt issuance costs and discounts                          80                57
    Loss on disposal of fixed and intangible assets                          2                -
    Imputed interest expense on deferred payments for acquisitions - net of cash paid                          -                (463)
    Provision for doubtful accounts receivable                          26                41
    Deferred income tax expense (benefit)                          2                (1,224)
    Changes in assets and liabilities - excluding effects of acquisitions:                                             
      Accounts receivable                          (40)                240
      Other current assets                          (832)                (570)
      Accounts payable and other current liabilities                          3,691                1,869
      Other noncurrent assets                          45                (59)
      Other noncurrent liabilities                          (27)                (15)
         Net cash provided by operating activities                          2,484                711
                                
CASH FLOWS FROM INVESTING ACTIVITIES:                               
  Capital expenditures                          (2,380)                (856)
  Deposits (withdraws) of restricted cash                          -                (144)
  Deposits received                          4                -
         Net cash used in investing activities                          (2,376)                (1,000)
                                      
CASH FLOWS FROM FINANCING ACTIVITIES:                                     
  Loan borrowings                       -                7,000
  Loan repayments                       (1)                   (4,073)
  Principal payments under capital leases                       (34)                   -
  Related-party loan proceeds                       -                8,910
  Debt issuance costs paid                       -                (142)
  Acquisition of utilities - deferred acquisition payments                       -              (11,163)
  Advances in aid of construction                       129                55
  Contributions in aid of construction under ICFA and other agreements                       -                30
         Net cash provided by financing activities                       94                617
                                   
INCREASE IN CASH AND CASH EQUIVALENTS                       202                328
CASH AND CASH EQUIVALENTS - Beginning of period                       3,816                2,233
CASH AND CASH EQUIVALENTS - End of period               $ 4,018     $ 2,561

 

SOURCE: GWR Global Water Resources Corp.

For further information:

Ross Marshall
Investor Relations
Tel:  416.815.00700 ext. 238
Email:  rmarshall@tmxequicom.com
www.gwresources.com
www.gwfathom.com

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