Greetings, ladies and gentlemen, and thank you for standing by. Welcome to the Global Water Resources, Inc. 2023 Third Quarter Conference Call. 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. [Operator Instructions] I would now like to remind everyone that this call is being recorded on November 9, 2023 at 1 p.m. Eastern Time. I would now like to turn the conference over to Joanne Ellsworth, Executive Vice President, Corporate Affairs. Please go ahead.

Welcome, everyone, and thank you for joining us on today’s call. Yesterday, we issued our 2023 third 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 Operating Officer. Ron will summarize the key operational events of the quarter, Mike will review the financial results for the third quarter 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. 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 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 additional information regarding factors that may affect future results, please see the sections Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included within our latest Forms 10-K and 10-Q, filed with the SEC. The 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 will now turn the call over to Ron.

Thank you, Joanne. Good morning, everyone, and thank you for joining us today. We are very pleased to report the results for the third quarter of 2023. First, I wanted to recognize a significant milestone that recently occurred, as in October, Global Water Resources celebrated our 20-year anniversary. As part of the celebration, we are honored to be holding these earnings call from the NASDAQ market site here in Times Square, where later today we will ring the closing bell. It’s been an incredible journey over at least 20 years, including from the time we first listed on NASDAQ and rang the opening bell in 2016. As I believe is evidenced by the information provided here today and in our earnings release, 2023 has shaped up to be our best year yet. It is clear by the momentum we continue to experience that we are only getting started on our mission to aggregate water, waste water and recycled water utilities in a manner that allows our community to realize the benefits of consolidation, regionalization and environmental stewardship in the face of water scarcity. As I mentioned on our last earnings call, before discussing our normal highlights, I wanted to briefly discuss the outcome of several records that occurred locally in and around Phoenix throughout the summer. Phoenix experienced a record number of consecutive days over 110 degrees and shattered prior records for total daytime highs over 110 degrees. Because of this prolonged high temperature period, it is not just weather records that were broken. As Global Water set records for the highest average volume pump for numerous calendar months and repeatedly broke high single-day pump volume records throughout. For Q3, this ultimately resulted in Global Water shattering our own all-time record for gallons pumped as water consumption increased 31.2% year-over-year,…

Thanks, Ron. Hello, everyone. Total revenue for the third quarter of 2023 was $14.5 million, which was up $2.6 million or 22.2% compared to Q3 2022. The increase in revenue was primarily attributable to higher than average temperatures coupled with significantly lower precipitation, causing an escalation of consumption as compared to the same period in 2022. The increase was also due to the recognition of $518,000 of revenue under Infrastructure Coordination and Financing Agreements, also known as ICFAs. A more fulsome 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 home builders, 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 home builder. Other contributing factors to the increase in total revenue included increased rates related to our most recent rate decision, new connections associated with the acquisition of Farmers in February of 2023 and year-over-year organic connection growth. Regulated revenue, which excludes ICFA revenue for Q3 of 2023, increased $2.1 million or 17.8% compared to Q3 2022. This increase was driven by an increase in consumption, the acquisition of Farmers Water Company, increased rates approved in our last rate case and organic connection growth. Operating expenses for Q3 of 2023 were $10.7 million, compared to $9.1 million in Q3 2022. This is an increase of $1.6 million or 17.2%. Notable changes in operating expenses included approximately $756,000 increase in depreciation and amortization expense tied to our capital expenditure program, a portion of which is related to the activation of the Southwest Plan. In addition, ICFA-related amortization of intangible assets also contributed to the increase, which occurs when payments are received related to…

Thank you, Mike. Hello, everyone. On the acquisition and growth front, we don’t have any specifics to announce at this time. However, we continue exploring a number of different opportunities that may be good strategic fits for our company. Now onto activity at the Arizona Corporation Commission. As you will recall, we filed the Saguaro Region rate case in June 2023. This rate cases comprises -- this rate case comprises approximately 1,600 customers in and around Pima County. It excludes the Farmers’ water utility we acquired earlier this year. The rate case requests a revenue increase of approximately $420,000 phased in over two steps. It also requests regional consolidation of the utilities, including their rates and legal entities. In the quarter, we received the procedural order in the case, which outlines that commission staff testimony will be filed in January next year and a hearing on the case is scheduled for March 2024. The case is proceeding as expected, with commission staff issuing discovery requests for the case. Finally, I will note there can be no assurance that the ACC will approve the requested rate increase or any increase or the consolidation of water rates described above and the ACC could take other actions as a result of the rate case. Further, it is possible that the ACC may determine to decrease future rates. There can also be no assurance as to the timing of when the rate increase, if any, would go into effect. This concludes the update on strategic initiatives and regulatory activity for the quarter. I’ll now pass the call back to Ron.

Thank you, Chris. I want to conclude today with a few thank yous. None of this amazing 20-year journey would have been possible or would be able to continue without the hard work and dedication of our entire Global Water family. We thank you for your commitment and believing in the mission and each other. Our success would also have not been possible without the ongoing support and contributions of our many stakeholders, from our customers and shareholders to our municipal partners, developers, regulators, contractors, consultants and many others, including our partnership here with NASDAQ. We value these important relationships and appreciate your trust in us. We look forward to working together over the next 20 years and beyond as we continue to pursue our shared success. We are truly just getting started. That highlight concludes our prepared remarks. Thank you. We are now available to answer any questions.

[Operator Instructions] Our first question will come from Gerry Sweeney with ROTH Capital. You may now go ahead.

Good morning, guys. Thanks for taking my call or good afternoon, since we’re on the East Coast.

Hey, Gerry.

Hey, Gerry.

Ron went over a lot of my -- I had some questions on the potential growth, but Ron really went in-depth on that front. Maybe taking a step back. In the headlines, there’s always some concerns about water availability to Colorado Compact. I know that you’re not necessarily part of that, but maybe you can discuss your water availability sources and how they’re well-positioned to support growth.

Yeah. Thanks, Gerry. I’m very happy to do that. I know those headlines continue to be in the news and it’s worth always talking about, because fundamentally, that issue is the reason we created this company. It’s the reason we created the concept of total water management and the reason we do what we do with recycled water, technology, rates, incentives and everything. The idea was, these emerging communities around Metro Phoenix are going to continue to grow for decades and decades, and it’s our job as the utility to push out that kind of impending issue of water supply as far as possible. So, what we have done over the 20 years that’s allowed that to be true in the communities we serve is implemented all of those solutions, and more specifically, we secured large water portfolios and the permits that go along with it. So, in Arizona, if you want to build homes and businesses and subdivide land, you have to get what’s called 100-year assured water supply. So, I’ll speak just specifically to our largest service area in the city of Maricopa to use it as an example, but we’ve gone out and built a 24,000 roughly acre-feet per year designation of assured water supply and we’re currently pumping around 8,000 acre-feet per year, a little bit less than that. So, even though Maricopa continues to grow, it’s one of the fastest growing cities in the country, we continue to kind of perfect all those water conservation solutions that I just mentioned and we’re continuously driving down the per capita demand. So, frankly, we can fit more homes in that 24,000 acre-feet number today than we could have even five years ago or 10 years ago. So, lots of runway there. We’re always continually active on it. Point being, we are not reliant on the Colorado River. Yes, that’s a long-term challenge for the state and the Southwest, but we’ve kind of positioned our communities and our utilities, that’s just not an issue in the immediate term and we have lots of opportunity for growth to continue at the current scale or even faster. So, I hope that answers the question.

It does. Just a quick fact check. Did you say 24,800 or just 24,000?

I rounded it to 24,000. Is it -- I’m looking at Mike.

A little less, it’s like 23,000 and change, but close to…

Yeah.

… 24,000. Yeah.

I will go with Ron.

I rounded up, Gerry, but I think it’s in the higher end, so I’m allowed to do that.

Yeah. Yeah.

One other question. Buckeye, it’s in the other income. That -- it slowed down, but I believe there was some infrastructure investments made in the region, but that seems to be picking up. Can you maybe touch upon exactly how much the Buckeye payment was this quarter and what you’re seeing on that front, just want to go [ph]?

Yeah. Hey, Gerry. This is Mike. Happy to answer that question. So, similar to the City of Maricopa and the permit side where Q3 picked up, we actually saw a similar pickup in Buckeye. So last year we had about 606,000 tied to Buckeye in Q3 and this year we had 732,000 come in. So it’s about 126,000 increase or 21% over prior year quarter. So, it feels like there’s a nice stabilization there and continued runway, and looking forward to how it’s going to shape up for the year, but it’s looking really good.

I know. Do you think its position is sort of on a steady state runway? I know as much as you can tell about Buckeye.

Yeah. Yeah. It definitely feels like it’s stabilized and it’s kind of increased, so we do feel like it’s pretty good from a sort of run through -- runway perspective. I mean, exactly what the future holds, who knows? Interest rates may impact that positively or negatively, but we feel pretty good about it.

Got it. Okay. That’s it for me. I appreciate it, guys.

Thank you.

You guys have done a great job and Ron ringing the bell.

Yeah. Appreciate it. Thank you.

[Operator Instructions] All right. At this time, this concludes our question-and-answer session. I’d like to turn the call back over to Mr. Fleming. Sir, please go ahead.

Thank you, Operator. I’d like to thank everyone for participating on the call today and your ongoing interest in Global Water. Thanks and we look forward to speaking with you again.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a great rest of your day.