Q4 2023 Global Water Resources Inc Earnings Call

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Operator: Ladies and gentlemen, thank you for joining today's Global Water Resources Inc. conference call. The call will begin momentarily. We do thank you for joining. Once again, the call will begin momentarily. If anyone should need assistance while waiting, please press star and zero to signal an...

Ladies and gentlemen, thank you for joining today's global water Resources, Inc. Conference call. The call will begin momentarily we do thank you for joining.

Once again the call will begin momentarily if any once you needed assistance, while waiting please press star zero to say no one operator, thank you.

Operator: Thank you, www.globalwaterresources.org, The Ultimate Parody Site! www.globalwaterresources.org Transcription by ESO, translation by — www.larryweaver.com www.globalonenessproject.org www.globalwaterresources.org www.larryweaver.com www.globalwaterresources.org www.globalwaterresources Thank you for standing by.

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Good day, ladies and gentlemen, thank you for standing by and welcome to the Global Water Resources, Inc, 2023, fourth quarter and year end conference call.

Operator: Welcome to the Global Water Resources 2023 fourth quarter and year end. At this time, all participants are in a listen-only mode; presentation; we will conduct a question, and instructions will be provided at that time for you to queue up. If anyone has any difficulties hearing the conference, star and zero for operator assistance. I'd now like to remind everyone that this was recorded on March, or at. And I'd like to turn the floor over to Joanne Ellsworth, Executive Vice President, and please go ahead. Thank you.

At this time all 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.

If anyone has any difficulties hearing the conference. Please press star zero for operator assistance at any time.

I'd now like to remind everyone that this call is being recorded on March seven 2024 at one P M Eastern time.

And I'd like to turn the floor over to Joanne elsewhere Executive Vice President Corporate Affairs. Please go ahead.

Thank you welcome everyone and thank you for joining us on today's call yesterday, we issued our 2023 fourth quarter and year end financial results by press release, a copy of which is available on our website at www Dot GW resources Dot com.

Joanne Ellsworth: Welcome, everyone, and thank you for joining us on today's call. Yesterday, we issued our 2023 fourth quarter and year-end financial results by press release, a copy of which is available on our website at www.gwresources.com. Speaking today are Ron Fleming, President and Chief Executive Officer, Mike Liebman, Chief Financial Officer, and Chris Krygier, Chief Operating Officer. Ron will summarize the key operational events of the quarter, Mike will review the financial results for the fourth quarter and year-end, and Chris will review strategic initiatives and the Arizona Corporation Commission activity for the quarter. Ron, Mike, and Chris will be available for questions at the end of the call.

Speaking today is Ron Fleming, President and Chief Executive Officer, Mike Liebman, Chief Financial Officer, and Chris Kreger, Chief operating Officer.

Ron will summarize the key operational events of the quarter, Mike will review the financial results for the fourth quarter and year end and Chris will review the strategic initiatives and the Arizona Corporation Commission activity for the quarter.

Ron Mike and Chris will be available for questions at the end of the call.

Joanne Ellsworth: Before we begin, I would like to remind you that certain information presented today may include forward-looking statements. Such statements reflect the company's current expectations, estimates, projections, and assumptions regarding future events. These forward-looking statements involve a number of assumptions, risks, uncertainties, estimates, and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management's views as of the date hereof and are not guarantees of future performance.

Before we begin I would like to remind you that certain information presented today may include forward looking statements such statements reflect the company's current expectations estimates projections and assumptions regarding future events.

These forward looking statements involve a number of assumptions risks uncertainties estimates and other factors that could cause actual results to differ materially from those contained in the forward looking statements.

Accordingly investors are cautioned not to place undue reliance on any forward looking statements, which reflect management's views as of the date hereof and are not guarantees of future performance for.

Joanne Ellsworth: For additional information regarding factors that may affect future results, please read the sections Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations, which is included within our latest Form 10-K filed with the SEC. Such filings are available at www.sec.gov. Certain non-GAAP measures may be included within today's call. For a reconciliation of these measures to the comparable GAAP financial measures, please see the tables included in yesterday's earnings release, which is available on our website. I'll now turn the call over to Ron. Thank you, Joanne. Good morning, everyone, and thank you for joining us today.

For additional information regarding factors that may affect future results. Please read the sections risk factors and management's discussion and analysis of financial condition and results of operations, which is included within our latest Form 10-K filed with the SEC.

Such filings are available at Www Dot FCC Dot Gov.

Certain non-GAAP measures may be included within today's call for a reconciliation of these measures to the comparable GAAP financial measures. Please see the tables included in yesterday's earnings release, which is available on our website.

I'll now turn the call over to Ron.

Thank you Joanne.

Good morning, everyone and thank you for joining us today.

Ron L. Fleming: We are very pleased to report the results for the fourth quarter and year-end 2020. As you can see from our earnings release, 2023 was an exceptional year for Global Water. Before discussing our normal operational highlights, I wanted to briefly summarize a few of our accomplishments from last year. We managed a record-setting heatwave in Arizona during the summer, and when combined with growth, we broke all records for water pumped and delivered to customers. Importantly, this was done without any reliability or safety issues.

We are very pleased to report the results for the fourth quarter and year end 2023.

As you can see by our earnings release 2023 was an exceptional year for global water.

Before discussing our normal operational highlights I wanted to briefly summarize a few of our accomplishments from last year.

We managed a record setting heat wave in Arizona during the summer and.

And when combined with growth we broke all records for water pump.

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Accordingly, this was done without any reliability or safety issues.

Ron L. Fleming: We recommissioned and commenced operations of our southwest plant water infrastructure and portions of our wastewater infrastructure to serve new development southwest of the City of Maricopa. This recommissioning amounts to a significant portion of the water and wastewater infrastructure in this area that had been mothballed since being constructed prior to the Great Recession, and the remaining plant will be put into service once sufficient flows are established. The total value of this investment is approximately $38.4 million. We completed the purchase and full integration of our largest utility acquisition since before the Great Recession. By all accounts, this was done seamlessly for our customers who are already benefiting from our ownership and additional investment. We filed our Saguaro District rate case with the proposal to consolidate all previously acquired utilities in Pima County.

We recommissioned and commenced operations of our southwest plant water infrastructure and portions of our wastewater infrastructure to serve new development southwest of the city of Maricopa.

This re commissioning amounts to a significant portion of the water and wastewater infrastructure in this area that had been mothballed since being constructed prior to the great recession.

And the remaining plant will be put into service one sufficient flows are established.

The total value of this investment is approximately $38 4 million.

We completed the purchase and full integration of our largest utility acquisition since before the great recession.

By all accounts. This was done seamlessly for our customers who are already benefiting from our ownership in additional investment.

We filed our swirl district rate case.

With the proposal to consolidate all previously acquired utilities in Pima County.

Ron L. Fleming: Subsequent to year end, and after a collaborative process, we entered into a positive settlement agreement with the ACC Utilities Division staff; we released our first ever environmental, social, and governance report. Shifting now to our normal operational highlights, those include that total active service connections increased 9.8% to 61,791 as of the end of the year, up from 56,270 12 months prior. Excluding the acquisition of Farmer's Water Company in February 23, the annualized growth rate was 3.7%. Year-to-date, we've invested $22.3 million into infrastructure improvements and existing utilities to provide safe and reliable service. And finally, with safety and compliance being our top mandate, we are very proud of our ongoing safety and compliance records. For the quarter, we had zero significant compliance events and no preventable OSHA reportable events, continuing our streaks from 2022 and prior.

Subsequent to year end and after a collaborative process, we entered into a positive settlement agreement with the E. C C Utilities Division staff.

We released our first ever environmental social and governance report.

Shifting now to our normal operational highlights those include that total active service connections increased nine 8% to 61791 as of end of year up from 56270, the 12 months prior.

Excluding the acquisition of farmers water company in February of 23, the annualized growth rate was three 7%.

Year to date, we've invested 22.3 million into infrastructure improvements and existing utilities to provide safe and reliable service.

And finally with safety and compliance being our top mandate, we are very proud of our ongoing safety and compliance record.

For the quarter, we had zero significant compliance events and no preventable Osha recordable events, continuing our shrieks from 2022 and prior.

Ron L. Fleming: In fact, this means we have now surpassed six years and seven months without a significant compliance event, and we've now gone over three years and two months since our last preventable OSHA event for a portable event. So with that, I want to pause, highlight, and thank the team here at Global Water for their continued exceptional performance throughout 2023, that allows me to provide such wonderful... Full updates. Now I'm going to discuss organic customer growth further and what's going on in our core utilities. Despite the local and national slowdown, development and housing activity do continue in Metro Phoenix and our service areas. In 2022, Metro Phoenix did experience a 23% reduction in single-family home building permits over 2021, but this was still nearly 25,000 single-family building permits. In 2023, single-family permits stayed strong when we realized 22,582 permits. However...

In fact this means we have now surpassed six years and seven months without a significant compliance event and we've now gone over three years and two months since our last preventable Osha.

Reportable event.

So with that I want to pause.

Highlight and thank the team here at global water for their continued exceptional performance throughout 2023.

That allows me to provide such one.

Hello.

Okay.

Now I'm going to discuss organic customer growth further and what's going on in our core utility.

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Despite the local and national slow down development and housing activity does continue in Metro Phoenix and our service areas.

In 2022 Metro Phoenix did experienced a 23% reduction in single family home building permits over 2020 one.

But this was still nearly 25000 single family building permits.

In 2023 single family permits stayed strong when we realized 22582 permits.

However.

Ron L. Fleming: The 12,462 permits issued in the second half of 2023 were 4,677 more permits than in the second half of 2022. This is an increase of 60% as the market continues to recover. In the city of Maricopa, the location of our largest utilities, it's a similar story. Maricopa issued 888 permits in 2023. This was compared to 1,149 permits for 2022. However, there were only 243 new permits issued during the second half of 2022, but there were 497 permits issued in the second half of 2023.

12462 permits issued in the second half of 2023 was 4677 permit is higher than the second half of 2022. This is an increase of 60% as the market continues to recover.

And the city of Maricopa co location of our largest utilities. It's a similar story America issued 888 permits in 2023. This was compared to 1149 permits for 2022.

However, there were only 243, new permits issued during the second half of 2022, but there are 497 permits issued in the second half of 2023.

Ron L. Fleming: There's an improvement of 105% as that local market accelerates and recovers as well. With that said about housing, the booming economy and net immigration that Arizona continues to attract require more and more places for people to live, work, and play. That is why large-scale multifamily housing, commercial, and recreational projects continue to accelerate at an extremely high pace in Metro Phoenix and in our service areas, with a record number of multifamily units being constructed in the City of Maricopa. Additionally, the industrial manufacturing boom also continues.

This is an improvement of 105% as that local market accelerates and recoveries as well.

With that said on housing the booming economy and net in migration that Arizona continues to realize requires more and more places for people to live work and play.

That is why large scale multifamily housing commercial and recreational projects continued to accelerate and extremely high pace in metro Phoenix and in our service areas with a record number of multifamily units being constructed in the city of Maricopa.

Additionally, the industrial manufacturing boom also continues previously 2022 was the single best year for Arizona, All time from an industrial economic development investment perspective, and that was eclipsed in 2023.

Ron L. Fleming: Previously, 2022 was the single best year for Arizona all time from an industrial economic development investment perspective, and that was eclipsed in 2023. Because of this, we continue to make excellent progress on the engineering, permitting, and construction of new service areas for industrial projects, including the Inland Port in Arizona, where the Nikola Motor Corp. facility is located and where Procter & Gamble acquired land. Based on all of these trends, we believe that in the years to come, we will continue to see considerable, large-scale, commercial, multifamily housing, and industrial growth, in addition to the return of strong organic housing growth. Putting all these elements together, we believe 2024 will be another good year for global water as we continue to advance our mission of growing and aggregating water and wastewater utilities so that our customers can realize the benefits of consolidation, regionalization, and environmental I will now turn the call over to Mike for a financial highlight. Thanks, Ron. Hello everyone.

Because of this we continue to make excellent progress on the engineering permitting and construction of new service areas for industrial projects, including the inland Port, Arizona, where Nikola Motor Corp facility is located and where Procter and Gamble acquired land.

Based on all of these trends, we believe that in the years to come we will continue to see considerable large scale commercial multifamily housing and industrial growth. In addition to the return of strong organic housing growth.

Putting all these elements together, we believe 2024 will be another credible year for global water as we continue to advance our mission of growing and aggregating water and wastewater utilities.

That our customers can realize the benefits of consolidation regionalization and environmental stewardship.

In the face of water scarcity challenging regulations and aging infrastructure.

I will now turn the call over to Mike for our financial highlights.

Thanks, Ron and Hello, everyone.

Michael J. Liebman: Total revenue for the fourth quarter of 2023 was $12.4 million, which was up $1.3 million or 11.4% compared to Q4 2022. The increase in revenue was primarily attributable to increased rates related to our 2022 rate decision, new connections associated with the acquisition of farmers in February of 2023, and year-over-year organic connection growth of 3.7%. Total revenue for the full year 2023 was $53 million, which was up $8.3 million or 18.6% over 2022. The increase in revenue is primarily attributable to the increased rates, the farmers' acquisition, organic connection growth, and the recognition of $2.8 million of revenue under Infrastructure Coordination and Financing Agreements, also known as ICFAs. A more complete explanation of ICFAs can be found in our quarterly and annual filings. However, just for some background, ICFAs are agreements we entered into with developers and homebuilders whereby Global Water provides services to plan, coordinate, and finance the water and wastewater infrastructure that would otherwise be required to be performed or subcontracted by the developer or homebuilder.

Total revenue for the fourth quarter of 2023 was $12 4 million, which was up $1 3 million or 11, 4% compared to Q4 2022.

The increase in revenue was primarily attributable to increased rates related to our 2022 rate decision new connections associated with the acquisition of farmers in February of 2000.

And year over year organic connection growth of three 7%.

Total revenue for the full year 2023 was $53 million, which was up $8 3 million or 18, 6% over 2020 to the.

The increase in revenue was primarily attributable to the increased rates the farmers acquisition organic connection growth in the recognition of $2 8 million of revenue under infrastructure coordination and financing agreements also known as Ics as.

A more fulsome explanation of ICF as can be found in our quarterly and annual filings. However, just for some background ICF as our agreements we entered into with developers and homebuilders whereby global water provides services to plan coordinate and financed the water and wastewater infrastructure that would otherwise be require.

<unk> to be performed or sub contracted by the developer or a homebuilder.

Michael J. Liebman: Water and wastewater revenue, which excludes ICFA revenue for the year 2023, increased 5.5 million, or 12.3 percent, compared to 2022. Operating expenses for Q4 2023 were $10.7 million compared to $9.9 million in Q4 2022. This is an increase of 0.8 million, or 8.5%. Notable changes in operating expenses included a 201,000 increase in depreciation and amortization expense tied to our capital expenditure program, a portion of which is related to the activation of the Southwest plant Ron mentioned. In addition, ICFA-related amortization also contributed to the increase, which occurs when payments are received related to certain ICFAs.

Water and wastewater revenue, which excludes ICF a revenue for the year 2023 increased $5 5 million or 12, 3% compared to 2022.

Operating expenses for Q4, 2023 were $10 7 million compared to $9 9 million in Q4 2022.

This is an increase of <unk> 8 million or eight 5%.

Notable changes in operating expenses included.

201000 increase in depreciation and amortization expense tied to our capital expenditure program a portion of which is related to the activation of the southwest plant Ron mentioned in.

In addition, I see a favorite related amortization also contributed to the increase which occurs when payments are received related to certain ICF phase.

Yeah.

Michael J. Liebman: We also had an increase in operating and maintenance costs by about $483,000, which was primarily attributable to the farmer's acquisition, additional costs for purchase power as a direct result of increased consumption, increased personnel costs, and higher property tax expense. Operating expenses for the full year 2023 were $40.7 million compared to $36.9 million, an increase of $3.8 million or 10.4 percent. Notable changes include a $1.5 million increase in depreciation and amortization expense tied to our capital expenditure program, the activation of the Southwest plant, and amortization expense related to ICFA. A $1.8 million increase in operations and maintenance expense related to farmers' acquisition, higher costs due to growth for items like power and chemical costs, as well as personnel cost increases tied to the cost of living adjustments and increased headcount to support growth, and a $500,000 increase in G&A.

We also had an increase in operating and maintenance cost by about 483000, which was primarily attributable to the farmers acquisition additional costs for purchase power as a direct result of increased consumption increased personnel costs and higher property tax expense.

Okay.

Operating expenses for the full year 2023 were $40 7 million compared to $36 9 million, an increase of $3 8 million or 10, 4%.

Notable changes include.

The $1 5 million increase in depreciation and amortization amortization expense tied to our capital expenditure program. The activation of the southwest plant in amortization expense related to ICF face.

A $1 8 million increase in operations and maintenance expense related to farmers acquisition higher costs either growth for items like power and chemical costs as well as personnel costs increase tied to the cost of living adjustments and increased headcount to support growth.

And a $500000 increase in G&A.

Now to discuss other income and expense.

Michael J. Liebman: Now to discuss other income and expenses. Other expense for Q4 2023 was $131,000, which was lower compared to the $279,000 of expenses in Q4 2022. For the full year 2023, other expense was $1.43 million, which was slightly higher than the $1.38 million in 2022. Turning to net income, Global Water had net income of $1.1 million or $0.05 per diluted share in Q4 2023, an increase of 318,000 or 38.5% compared to Q4 2022. For the full year 2023, net income was $8 million, or $0.33 per diluted share, compared to $5.5 million, or $0.24 per diluted share.

Other expense for Q4 2023, it was 131000, which was lower compared to the 279000 of expense in Q4 2022.

For the full year 2023, other expense was $1 four 3 million, which was slightly higher than the 138 million in 2022.

Turning to net income global water had net income of $1 1 million or five cents per diluted share in Q4, 2023, an increase of 318000 or 38, 5% compared to Q4 2022.

For the full year 2023, net income was 8 million or <unk> 33 per diluted share compared to $5 5 million or <unk> 24 cents per diluted share. This was an increase of $2 5 million or 45%.

Michael J. Liebman: This was an increase of $2.5 million, or 45%. Now, to talk about adjusted EBITDA, which adjusts for non-returnee items such as ICFA revenue as well as non-cash items such as restricted stock expenses. Adjusted EBITDA was $5.8 million in Q4 2023, an increase of $322,000 or 5.9% compared to Q4 2022. For the full year 2023, Adjusted Evita was $25.3 million compared to $22.9 million in 2022.

Now to talk about adjusted EBITDA, which adjusts for nonrecurring items, such as ICF, a revenue as well as noncash items such as restricted stock expense.

Adjusted EBITDA was $5 8 million in Q4, 2023, an increase of 322000 or five 9% compared to Q4 2022.

For the full year 2023, adjusted EBITDA was $25 3 million compared to $22 9 million in 2022.

Michael J. Liebman: This is an increase of $2.5 million, or 10.8%. Before turning the call over to Chris, I'd like to mention a couple of other developments. In January 2024, we received $20 million related to the note purchase agreement we executed in October of 2023. This is an interest-only 10-year loan at a fixed rate of 6.91%.

This is an increase of $2 5 million or 10, 8%.

Before turning the call over to Chris I'd like to mention a couple of other developments.

In January 2024, we received $20 million related to the note purchase agreement we executed in October of 2023. This is an interest only 10 year loan at a fixed rate of 691%.

Michael J. Liebman: Our weighted average cost of debt is now approximately 4.9%, and all of our outstanding debt is fixed rate debt with the exception of our revolvers. Lastly, as part of our efforts in the current Southwest plant depreciation deferral docket, we recently discovered that in 2007, $7.8 million of our Southwest plant infrastructure was prematurely included as plant in service for rate-making purposes. As a result, these costs were inadvertently included in rates as part of our 2010 rate order as well as our 2014 and 2022 rate orders.

Our weighted average cost of debt is now approximately four 9% and all of our outstanding debt is fixed rate debt with the exception of our revolver.

Lastly, as part of our efforts in the current southwest plant depreciation deferral docket. We recently discovered that in 2000 and 778 million of our southwest plant infrastructure was prematurely included as plant in service for ratemaking purposes.

As a result these costs were inadvertently included in rates as part of our 2010 rate order as well as our 2014 and 2022 rate orders.

Michael J. Liebman: We met with the Arizona Corporation Commission staff on March 1st to bring this to their attention, and we plan to continue meeting with ACC staff in the coming months as we intend to work toward resolving the matter in a way that we believe is fair to all of our stakeholders, including customers and shareholders. The final outcome and resolution of this matter cannot be predicted, and the results, while not reasonably estimable at this time, could be material. This concludes our update on the fourth quarter and year-end 2023 financial results. I'll now pass the call to Chris to review our rate case and strategic initiatives for the quarter. Thank you, Mike. Hello everyone.

We met with the Arizona Corporation Commission staff on March 1st to bring this to their attention and we plan to continue meeting with ACC staff in the coming months as we intend to work towards resolving the matter in a way that we believe is fair to all of our stakeholders, including customers and shareholders. The final outcome in resolution of this matter.

Be predicted and the results will not reasonably estimable at this time could be material.

This concludes our update on our fourth quarter and year end 2023 financial results I'll now pass the call to Chris to review, our rate case and strategic initiatives for the quarter.

Thank you Mike Hello, everyone on the Arizona Corporation Commission front, we made progress on a number of different filings.

Christopher D. Krygier: On the Arizona Corporation Commission front, we made progress on a number of different filings. First, our Saguaro District rate case continues moving down the field. On February 29th, 2024, the company entered into a settlement agreement with the ACC Utilities Division staff. The agreement includes, among other things, a recommended annual revenue increase of approximately $351,000.

First our <unk> district rate case continues moving down the field on February 29, 2024, the company entered into a settlement agreement with the Arizona Corporation Commission Utilities Division staff.

The agreement includes among other things our recommended annual revenue increase of approximately $351000.

Acquisition premiums for six of the utilities.

Christopher D. Krygier: Acquisition premiums for six of the utilities, a capital structure with an equity layer of 55%, a return on equity of 9.6%, consolidation of the utilities in the case, and an accounting deferral for a large capital project related to the former Rincon utility. We appreciate the Commission staff's efforts on the case as it continues through the process. Settlement testimony is due to be filed today, with the hearing scheduled to begin on March 25th, 2024. And then after that hearing, the administrative law judge will issue a recommended opinion for the commission to consider.

Our capital structure with an equity layer of 55%.

A return on equity of nine 6%.

Consolidation of the utilities in the case.

And an accounting deferral for a large capital project related to the former RIN Con utility.

We appreciate.

<unk> The commission staff's efforts on the case as it continues through the process.

Settlement testimony is due to be filed today with the hearings scheduled to begin on March 25th 2024.

And then after that hearing the administrative law judge will issue a recommended opinion and order for the commission to consider.

Christopher D. Krygier: Finally, as you saw in our press release..., there can be no assurance of the final outcome of the case. Also ACC related, in the quarter, we met with the utility division staff and the commissioners to inform them that we plan to file a rate case for our recently acquired farmer's utility in the summer of 2024 and a rate case for our Santa Cruz and Palo Verde utilities, the largest in our fleet, in 2025. We have begun outreach with our municipal partners and will provide more updates in future quarters. On the acquisition and growth front, as you saw in our press release, we continue to look for acquisitions and hope to make an announcement in the next quarter. This concludes the update on strategic initiatives and Arizona Corporation Commission activity. I'll now pass the call back to Ron. Thank you, Chris.

Finally, as you saw in our press release.

There can be no assurance that the final outcome of the case.

Also ACC related in the quarter, we met with the utility Division staff and the commissioners to inform them that we plan to file a rate case for our recently acquired farmers utility in the summer of 2024, and a rate case for our Santa Cruz and Palo Verde Utilities' the largest in <unk>.

Our fleet in 2025.

We have begun outreach with our municipal partners and we'll provide more updates in future quarters.

On the acquisition and growth front as you saw in our press release, we continue to look for acquisitions and hope to make an announcement in the next quarter.

This concludes the update on strategic initiatives, and Arizona Corporation Commission activity I will now pass the call back to Rob.

Thank you Chris.

Ron L. Fleming: So it's clear we are still experiencing rapid growth while also successfully handling challenging times on the macroeconomic front. As we execute our growth plan, 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 and to new utilities will be beneficial to all the stakeholders involved. We appreciate your investment and support of us as we grow global water to address important utility, water resource, and economic development matters along the Arizona Sun Corridor, allowing our communities to thrive. That highlight concludes our prepared remarks. Thank you.

So it's clear we are still experiencing rapid growth, while also successfully handling challenging times on the macroeconomic front.

As we execute our growth plan, 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 and to new utilities will be beneficial to all the stakeholders involved.

We appreciate your investment in support of US as we grow global water to address important utility water resource and economic development matters, along the Arizona Sun corridor, allowing our communities to thrive.

That highlight concludes our prepared remarks. Thank you.

Operator: We are now available to answer questions. Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your question, you may press star and..., if you are using. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

We're now available to answer questions.

Ladies and gentlemen at this time, we'll begin the question and answer session.

Ask a question you May press Star and then one using your Touchtone telephone.

Your all your questions you May press star and two.

If you are using a speaker phone please.

Please pick up the handset prior depressing the keys to ensure the best sound quality.

Once again that is star and then one to join the question queue.

Our first question today comes from Gerry Sweeney from Roth Capital. Please go ahead with your question.

Good morning, Ron Mike and Chris Thanks for taking my call.

Gerard J. Sweeney: Again, that is a star and then one to join the question. Our first question today comes from Jerry Sweeney from Rothfield. Please go ahead with your question. Good morning, and, Yeah, absolutely, Jerry.

Hey, Jeremy.

I was wondering.

Inland ports opportunity I know, it's probably a little bit further out on the curve.

Curious if you can just give us maybe a little bit of an update on maybe some of the major milestones that you're looking at.

You know timelines.

That were available please.

Yeah, absolutely Gerry.

Ron L. Fleming: I guess the most recent public announcement that we're able to talk about was when Procter & Gamble purchased 300 acres or so of the inland port. You know, there's so much industrial growth going on in the Metro Phoenix area right now that we get inquiries, if you want to call them that, on a fairly routine basis, not just in the inland port there but also in some of our other service areas. So I do think it's just a matter of time until there are more announcements on that. But for Procter & Gamble themselves, I guess I can't pretend to understand how a company that large makes its decisions on when they're going to pull the trigger on a new factory. I guess that all relates to supply and demand and what their own goals are.

So the I guess, there's still most recent public announcement that we're able to talk about was when Procter and Gamble purchased 300 acres or so of the inland port.

Theres, so much industrial growth going on in the Metro Phoenix area right now that we get we get inquiries. If you want to call them not on a fairly routine basis not just in the inland port there, but also in some of our other service areas. So.

I do think it's just a matter of time until there's there's more announcements on that but for procter and gamble themselves. So I guess I I can't pretend to understand how a company that large makes their decisions.

When they're going to pull trigger on a new factory I guess, that's all relates to supply and demand and what they what their own goals are but but we do continue to work with them. We do continue to plan and lay out the regional.

Ron L. Fleming: But we do continue to work with them. We do continue to plan and lay out the regional infrastructure solution that they will connect to. And so that progress continues; can't put a date on when we'll actually get to us building alongside them building, and then Maricopa, while you're overall at www.globalwaterresources.org, Yeah, absolutely. Yeah, it's really remarkable what continues to happen there in Maricopa. Sure, housing slowed to, like you said, 3.7%, but again, considering the highest interest rates in 50 years, that just speaks to the strength of that location from a residential growth perspective.

Infrastructure solution that they will connect into.

And so that progress continues.

Can't put a date on when we'll actually get to.

US building alongside them building.

Got it.

I appreciate it.

Then mericopa, obviously I'm pretty solid I think what well your overall organic growth of three 7%, which I thought was pretty solid considering everything.

It sounds like.

Multifamily is coming.

Strong maybe single families returning or.

Rebounding.

Maricopa is getting quite big is there any larger developments going on around within Maricopa that you can discuss that.

Sort of.

Projects that are.

Moves it up the the size changed I know at one point the big box stores came in I'm, just curious if there's anything like that on the horizon as well.

Yeah, absolutely yeah, it's really remarkable what continues to happen there in maricopa.

Sure housing slowed to like you said three 7% but.

Again considering.

The highest interest rates of 50 years that just speaks to the strength of that.

Location from a from a residential growth perspective.

Ron L. Fleming: We are going to start looking at how to talk more about the other data that we get coming out of the community, which is housing units. It hasn't been a big deal for us in the past because there weren't a lot of them, but now there are a lot. So housing units are when you combine residential homes with apartments and condos and build-to-rent type complexes. And so I'll just tell you that that growth rate, the population growth rate, is significantly higher than 3.7%.

But.

We are going to start looking at how to talk more about the other data that we get coming out of the community, which is housing units and hasn't been a big deal for us in the past because there wasn't a lot of it but now there's a lot. So housing units is when you combine residential homes with no apartments, and condos and build to rent type for <unk>.

Complexes and so I'll just tell you that.

That growth rate the population growth rate is significantly higher than the three 7% and thats because of the amount of housing units that are going on there. So I think I think even today in the last number I saw on Maricopa as they are now saying there was 73000 people that live there.

Ron L. Fleming: And that's because of the amount of housing units that are going on there. So I think even today, the last number I saw on Maricopa, they're now saying there are 73,000 people that live there. So we're tracking over a dozen apartment, condo, slash multifamily projects that are going into Maricopa right now. Maybe next quarter we'll pre-think this through and bring you a number for you.

So we're tracking on over a dozen apartment.

Apartment condo slash multifamily projects that are going into Maricopa right now.

Maybe next quarter are all pre think this through and bring a number for you but.

Ron L. Fleming: But beyond that, yes, lots of big projects. If you want to, you know, Google Maricopa's news articles, you'll see these, but in short, there are a couple of large commercial projects where recently the landowners, they've been talking about it for a while, but actually acquired the land and moved through the city's zoning process. So, we're working with them. So, there are what's called multi-generational facilities, large medical facilities, and some large big box facilities, like you mentioned. I think it's public now that both Lowe's and Home Depot are, right now, together, at the same time building in the city of Maricopa, which shows you where it's gotten, to your point.

But beyond that yes lots of big projects. So.

If you want to Google Maricopa as news articles, you'll see these but in short there is a.

There's a couple of large commercial projects were recently the landowners are they've been talking about it for a while but actually acquired the land and move through the city's zoning process. So we're working with them. So there's there's what's called multi generational facilities large medical facilities.

And some large big box facilities like you mentioned I think it's public now that bulk Lowe's and home depot are right now together at the same time building in the city of Maricopa, which shows you where it's gone to your point, but beyond that I think the biggest project and I don't think we've talked about it yet much.

Ron L. Fleming: But beyond that, I think the biggest project, and I don't think we've talked about it yet much, it's early, but they are out publicly talking about it, so we can, is the University of Arizona has over 2,000 acres in the city of Maricopa. It was an old, what they called Maricopa Agricultural Center, or MAC, where they did a lot of studying for agricultural purposes. Well, today, with what's going on in the city of Maricopa, I think the university has realized the value of that land, maybe beyond that use, and they can do that on a smaller scale or elsewhere. So they've recently announced, and we're working with them on what they might do with that land, and it's pretty significant, again, over 2,000 acres with probably a new city center, a new university branch, student housing to go along with that, an innovation hub. If you look that up, the University of Arizona in the city of Maricopa, there are a few impressive articles out there.

It's early but they are out publicly talking about it. So we can is the university of Arizona has over 2000 acres in the city of Maricopa. It was an old one.

They called Miracle.

Mericopa agricultural center on Mac.

They did a lot of <unk>.

Studying for agriculture agricultural purposes, while today with what's gone on in the city of Maricopa I think the university's realized the value of that land, maybe beyond that use and they can do that on a smaller scale or elsewhere.

So they've recently announced and were working with them on a on what they might do with that land and it's pretty significant again over 2000 acres with <unk>.

Probably a new city center.

A new University branch.

Student housing to go along with that an innovation hub.

If you looked at up University of Arizona in the city of Maricopa, a few impressive articles out there so.

Ron L. Fleming: So we're looking forward to that. Thank you. Thank you. Jerry, lots going on there. It's keeping us busy, and that's all in just one area we have going on.

Jerry what's going on there, it's keeping us busy and that's following just one area, we got going on.

That's actually Super helpful.

It's everybody.

Excuse me I'm, a better visuals.

You know activity.

That's correct.

It continues to go up so that's it for me, but thanks, a lot and.

Operator: ...

Operator: That's it for me, but thanks a lot. Thanks, Jerry. And once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star and 1, which will pause momentarily to assemble any additional... And ladies and gentlemen, since there are no additional questions, I'd like to conclude today's question and answer session and turn the floor back over to Ron Fleming for a. Thank you, operator. Just want to, again, thank everybody for participating in the call and your ongoing interest in global water. Look forward to speaking with you again. And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending. That's all for now.

Look forward to seeing you guys in a couple of weeks.

Sounds good thanks, Jerry Thanks Terry.

And once again, if you would like to ask a question. Please press star and then one to withdraw your question you May Press Star and two we will pause momentarily to assemble any additional questions.

And ladies and gentlemen, im showing no additional questions.

To conclude today's question and answer session and turn the floor back over to Ron Fleming for any closing remarks.

Thank you operator.

Just want to again, thank everybody for participating on the call and your ongoing interest in global water look forward to speaking with you again.

Okay.

And ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending you may now disconnect your lines.

Okay.