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PHOENIX - Global Water Resources, Inc. (NASDAQ: GWRS), a water resource management company with a market capitalization of $280 million, has announced a settlement agreement that could lead to increased annual revenue by $1.1 million. According to InvestingPro data, the company maintains impressive gross profit margins of 74% and is currently trading near its 52-week low of $11.05. The agreement, which pertains to the company’s subsidiary GW-Farmers, is pending approval by the Arizona Corporation Commission ( ACC (NSE:ACC)).
The settlement was reached following Global Water’s rate case application submitted on June 27, 2024, and filed with the ACC on January 10, 2025. A hearing on the agreement is scheduled for February 10, 2025. If the ACC approves the settlement, the new rates would be implemented in stages, with the first increase of 50% set for May 1, 2025, followed by two additional 25% increases on November 1, 2025, and May 1, 2026.
The rate case, the first since Global Water acquired GW-Farmers in 2023, is based on service connections from the 2023 test year. The proposed rate adjustments are part of Global Water’s strategy to enhance utility services for customers and support infrastructure investment in the Sahuarita community. While InvestingPro analysis indicates net income is expected to decrease this year, the company maintains strong liquidity with a current ratio of 1.63, suggesting adequate resources for its infrastructure investments. InvestingPro subscribers have access to 8 additional key insights about GWRS’s financial health and growth prospects.
In addition to the rate increase, the agreement includes a provision for deferring the recovery of a $3 million acquisition premium, which would be recognized as a regulatory asset in a future rate case. It also introduces a system improvement benefits (SIB) mechanism for the timely recovery of capital costs from distribution system upgrades.
Global Water operates 32 systems primarily around metropolitan Phoenix, focusing on water, wastewater, and recycled water services. The company is known for recycling over 1 billion gallons of water annually and has been acknowledged for its Total (EPA:TTEF) Water Management (TWM) practices, which aim to maximize the use of recycled water. Notable for investors, the company has maintained a consistent dividend growth track record, having raised its dividend for 9 consecutive years, with a current yield of 2.6%. For detailed analysis and valuation metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.
The company’s chief operating officer, Chris Krygier, expressed gratitude for the collaborative effort in reaching the settlement and emphasized the importance of the rate case for community and customer benefits.
This news is based on a press release statement and the final decision on the rate increase rests with the ACC following the upcoming hearing.
In other recent news, Global Water Resources, Inc. reported a mixed financial performance for the third quarter of 2024, with a slight decrease in total revenue to $14.3 million, but an increase in net income to $2.9 million and regulated revenue. Despite these challenges, the company saw a robust increase in housing permits in the Phoenix area and strategic growth through acquisitions and rate adjustments. The company also entered into new employment agreements with its top executives, including President and CEO Ron Fleming, CFO Michael J. Liebman, and COO Christopher D. Krygier, effective from January 1, 2025. The terms of these agreements extend to January 1, 2028, and include annual base salary adjustments and potential cash bonuses or restricted stock units based on performance. These are among the recent developments for Global Water Resources, Inc.
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