Global Water Resources, Inc.

Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources, Inc. 2024 second 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. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded on August 8, 2024, 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 2024 second 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 Krieger, Chief Operating Officer. Ron will summarize the key operational events of the quarter, Mike will review the financial results for the second quarter, and Chris will review strategic initiatives and Arizona Corporation Commission activity for the quarter. Ron, Mike and Chris will be available to answer 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 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 day hereof and are not guarantees of future performance. For additional information regarding factors that may affect future results, please read the sections regarding risk factors and management's discussion and analysis of financial conditions and results of operations included within our latest Form 10-Q 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 also 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 second quarter of 2024. I will start with some operational highlights. Total active service connections increased 4.9% to 63,256 as of June 30, 2024, from the 12 months prior. The 2024 annualized growth rate is 4.7%. While our organic growth rate remains strong in the face of higher interest rates, it's also important to highlight that our year-over-year regulated revenue growth rate continues to trend even higher, which is up 5.3%. Mike will provide the details on regulated revenue growth drivers. Year-to-date, we've invested $12.2 million into our infrastructure, improving our existing utilities to provide safe and reliable service. And finally, with public health and safety being our top mandate, we are very proud of our compliance record. For the quarter, we had zero significant compliance events, continuing our streak from 2023 in progress. And in fact, this means it has been nearly seven years without a significant compliance event. Now I want to discuss organic customer growth and what is going on in our core utilities. The single family dwelling unit market ended 2023 with approximately 22,582 building permits issued in the Phoenix greater metro area. For the first half of this year, this market realized 14,433 building permits, representing a 43% increase from Q2 of 2023. In 2023, the city of Maricopa issued 888 single family dwelling building permits. For the first half of the year, this market realized 559 building permits representing a 43% increase from the first half of 2023. As you can see, the year to date Q2 2024 permit data was strong in both Metro Phoenix and the city of Maricopa. However, with interest rates inching back up because of the continued inflation fight, it is hard to anticipate the potential significance this will have on the housing market in the near term. However, there is strong consensus that there remains a housing shortage in Metro Phoenix. And thus, over time, Metro Phoenix will retain an annual run rate approaching 30,000 housing units per year to keep pace with net immigration and the job growth. This demand must be met by a combination of single-family dwelling units and multifamily. On this note, as previously reported, there is a significant shift occurring in the City of Maricopa to large-scale, high-density, multifamily dwelling complexes, along with more commercial and retail businesses. We believe this shift will be notable and at some level supplant the reduction in single-family home growth. In fact, the year-to-date 2024 multifamily housing unit data was also strong in the City of Maricopa, with 1,176 units permitted compared to 315 units permitted in the first half of 2023. This represents an increase of 861 units permitted, or 273%. Looking ahead, this is a record number of additional multifamily projects in some stage of development. The fact is, the booming economy and net emigration 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 continue to accelerate at an extremely high pace in Metro Phoenix and in our service areas. 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 with $40.7 billion invested in the state just last year. There has been significant further announcements made in 2024, including additional planned expansions at TSMC and Intel as the chip industry continues to explode here. Frankly, what continues to occur here in Arizona is unprecedented. Because of these things, we remain bullish on the future potential of our Inland Port Arizona service area for a Nikola Motocorp facility and Procter Gamble recently acquired land. Additionally, the City of Maricopa recently announced and gave a public presentation on a very large industrial complex they are preparing to bring to market right in the center of the City of Maricopa. Initial plans include over 1,200 acres of an industrial corridor with a smart rail park as it is adjacent to a double railroad. Recently, the city ran a request for interest process on the land, and they had more interest than land available. Respondents included a half dozen large, reputable existing businesses that are looking for large property in Arizona to relocate to. If you're interested in learning more, I recommend you visit the City of Maricopa's YouTube page and watch the video recording of Rick Horst's presentation to the City Council on July 16th. More information to come on this exciting project in the future. Based on all of these trends, we believe that in the years to come, we will continue to see considerable large-scale commercial, multifamily, and industrial growth, in addition to the return of even stronger organic housing growth. As I mentioned in our earnings release, yes, high inflation and other cost drivers have caught up with us and impacted our earnings growth a bit so far this year. However, it's important to recognize that 2024 is a test year for our largest utilities, whose last test year was five years ago in 2019. We need new rates to address all the cost increases over that time period and the significant investments we have made. So while 2024 will be another solid year for Global Water, Putting all of these things together, and that means the four ways we grow, organic, new service areas, acquisitions, and the subsequent rate cases on all of that, you can see how global water is going to be able to grow earnings considerably in the years to come. 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 stewardship in the face of this rapid growth, water scarcity, challenging regulations, and aging infrastructure. I will now turn the call over to Mike for financial highlights.