Global Water Resources, Inc. (GWRS) on Q1 2021 Results - Earnings Call Transcript
Operator: Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources Incorporated 2021 First Quarter Conference Call. At this time, participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this call is being recorded on May 6, 2021 at 1:00 PM Eastern time. I would now like to turn the conference over to Joanne Ellsworth, Vice President, Corporate and Regulatory Affairs. Please go ahead.
Joanne Ellsworth: Welcome, everyone, and thank you for joining us on today’s call. Yesterday we issued our 2021 first quarter financial results by press release. A copy of which is available on our website at www.gwresources.com. Speaking today is Ron Fleming, President and Chief Executive Officer; Mike Liebman, Chief Financial Officer; and Chris Krygier, Chief Strategy Officer. Mr. Fleming will summarize the key operational events of the quarter, Mr. Liebman will review the financial results for the quarter and Mr. Krygier will review strategic initiatives and business development for the quarter. Mr. Fleming, Mr. Liebman, and Mr. Krygier will be available for questions at the end of the call.
Ron Fleming: Thank you, Joanne. Good morning everyone, and thank you for joining us today. We are very pleased to report the results for the first quarter of 2021. Before handing the call over to Mike to review financial highlights, I will review a few operational highlights. Operational highlights for the quarter include, in accordance with our top priority, we continue to perform at an extremely high level on employee safety and regulatory compliance non-reportable incidents. Within the quarter, we experienced no recordable events, injuries, or expenses related to employee safety. And as of today, our staff has only experienced two minor OSHA recordable incidents in 1,345 days. We have incurred only $2,500 in nearly five years on OSHA recordable related incidents, resulting in an extremely low loss ratio and experience modifier or EMOD of 0.62. As a reminder, an EMOD of 1 is considered to be industry average. So said in another way, we are performing 38% better than the industry average, which results in lower actual costs and workers’ comp insurance costs. Also have incurred no significant compliance violations in the quarter, it has now been 1,838 days since our last significant compliance violation or over five years. These impressive track records clearly demonstrate our performance on our top mandate customer and employee safety.
Mike Liebman: Thanks, Ron. Hello, everyone. Total revenue for the first quarter of 2021 was $9.3 million, which is up $1 million or 12.5% compared to Q1 of 2020. This increase is primarily driven by the organic connection growth, increased consumption and our approved rate increase. Operating expenses for Q1 of 2021 were $8.2 million compared to $6.4 million in Q1 of 2020. This is an increase of $1.8 million or 27.7%. Notable changes in operating expenses include increased operating and maintenance costs by $267,000, which was primarily driven by those costs that increase as revenue increases as well as increased medical expenses.
Chris Krygier: Thanks, Mike. Hello, everyone. I’ll briefly highlight three items for you before passing the call back to Ron. First, our rate case process at the Arizona Corporation Commission continues as expected. The next major milestone is receipt of the initial staff and intervene or testimony on or around May 19, 2021, with reply testimony to be filed in June and July this year. After the written testimony process is complete, the evidentiary hearing is scheduled for August. After the evidentiary hearing is concluded, the parties provide legal briefs summarizing the case and the administrative law judge draft a proposed order for the commission to consider for a final vote.
Ron Fleming: Thank you, Chris. It’s clear we are well positioned with a strong balance sheet and disciplined strategy that continues to accelerate. And back from an operational and financial perspective, we have never been stronger. And we have more than ample liquidity and access to capital to be great utility partners for the communities where we have the privilege to serve and to pursue expansion through organic growth, acquisitions and new projects, both big and small. If we handle this high growth, we intend to remain at the forefront of the water management industry and advance our mission of achieving efficiency and consolidation. We truly believe that expanding our total water management platform and applying our expertise throughout our regional service areas into new areas will be beneficial to all stakeholders involved. We appreciate your investment and support of us as we grow Global Water to address important utility, water resource and economic development issues in Arizona and potentially beyond.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Ron Fleming for closing remarks.
Ron Fleming: Great. Thank you, operator. I’d like to thank everyone for participating in the call today and your interest in Global Water Resources. Thank you and we look forward to speaking again with you soon.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a great rest of your day.
