Symbol supply: The Motley Idiot.
DATE
Thursday, Would possibly 14, 2026 at 1 p.m. ET
CALL PARTICIPANTS
- President and Leader Govt Officer — Ron L. Fleming
- Leader Monetary Officer — Michael J. Liebman
- Leader Running Officer — Christopher D. Krygier
TAKEAWAYS
- General Income — $13.3 million, up $800 thousand or 6.7% yr over yr, pushed by way of the Tucson gadget acquisition, natural connection enlargement, and better Farmers application charges.
- Energetic Provider Connections — 68,900 as of March 31, 2026, reflecting 5.7% annual enlargement; with the exception of the Tucson techniques, natural enlargement estimated at 1.9%.
- Running Bills — $12.9 million, greater by way of $1.7 million or 15.1% yr over yr, with $900 thousand attributed to better depreciation, amortization, and accretion from new depreciable property.
- Internet Loss — $400 thousand, or $0.01 consistent with diluted proportion, in comparison to web source of revenue of $600 thousand, or $0.02 consistent with proportion the prior yr.
- EBITDA — $5.6 million, in step with the prior yr regardless of upper running and financing bills.
- Infrastructure Funding — $6.3 million allotted in 2026 for enhancements and upgrades to current utilities.
- Price Case Agreement — The Santa Cruz agreement contemplates a $2.3 million building up in water income with a $400 thousand aid for Palo Verde wastewater, efficient November 1, 2026.
- Development Allows — Phoenix MSA lets in in Q1 2026 totaled 5,200, down 18.8%; Maricopa lets in had been 157, down 16.5%, indicating marketplace softness nonetheless offset by way of 2.6% natural connection enlargement.
- Different Expense — $900 thousand, up from $500 thousand yr over yr, pushed by way of upper hobby expense, decrease hobby source of revenue, and decreased source of revenue from Buckeye enlargement premiums.
- Pending Regulatory Task — New charges for Palo Verde wastewater expected in 2028, with additional fee evaluate filings deliberate for Farmers, Saguaro, Ocotillo, and Santa Cruz divisions.
Want a quote from a Motley Idiot analyst? Electronic mail [email protected]
RISKS
- Ron L. Fleming stated, “those investments greater positive running bills and maximum significantly, depreciation expense. Such bills proceed to adversely have an effect on web source of revenue and income consistent with proportion in 2026.”
- The corporate reported a shift from web source of revenue to web loss, with Michael J. Liebman mentioning greater depreciation, clinical prices, and better operational prices because of plant commissioning.
- Slower new allow job, with Phoenix and Maricopa down 18.8% and 16.5% respectively, might obstruct long term natural enlargement if this development persists.
SUMMARY
International Water Sources (GWRS +4.80%) reported greater overall income supported by way of acquisitions and connection enlargement, however income grew to become adverse because of upper running and financing prices connected to fresh capital investments. The corporate finalized a fee case agreement for its Santa Cruz and Palo Verde utilities, organising a transparent trail to better income for water however a brief aid for wastewater. Decrease new house allow job signaled softer regional call for, although natural connection enlargement remained certain. Close to-term center of attention will middle on securing further fee will increase and intensifying capital self-discipline, with regulatory milestones deliberate throughout a number of divisions.
- Christopher D. Krygier defined, “Unanimous agreement contemplates a water income of roughly $2.3 million for Santa Cruz, and a wastewater income lower of $400 thousand for Palo Verde.”
- The efficient date for brand spanking new Santa Cruz and Palo Verde charges is estimated to be November 1, 2026, with additional regulatory lawsuits starting in August 2026 and new Palo Verde charges expected for 2028.
- Control said intentions to sluggish capital funding tempo for the rest of the yr whilst getting ready a couple of further fee case filings.
INDUSTRY GLOSSARY
- EBITDA: Profits sooner than hobby, taxes, depreciation, and amortization; a non-GAAP measure used to evaluate running efficiency with the exception of non-cash and financing pieces.
- Price Case: A proper regulatory continuing through which a application seeks approval to extend or exchange charges charged to consumers, in response to investments and bills.
- Accretion Expense: Non-cash accounting expense associated with adjustments in asset retirement legal responsibility liabilities, normally tied to infrastructure upgrades or environmental remediation duties.
Complete Convention Name Transcript
Kyle Upchurch: Thanks, operator. And welcome, everyone. Thanks for becoming a member of us on nowadays’s name. The day past, we issued our 2026 first quarter monetary effects by way of press unlock a replica of which is to be had on our website online at gwresources.com. Talking nowadays is Ron L. Fleming, President and Leader Govt Officer; Michael J. Liebman, Leader Monetary Officer; and Christopher D. Krygier, Leader Running Officer. Ron will summarize the important thing operational occasions of the quarter, Mike will evaluate the monetary effects for the primary quarter, and Christopher will evaluate Arizona Company Fee job. Ron, Michael, and Christopher will probably be to be had for questions on the finish of the decision.
Earlier than we start, I want to remind you that positive knowledge introduced nowadays might come with ahead having a look statements. Such statements mirror the corporate’s present expectancies, estimates, projections, and assumptions referring to long term occasions. Those ahead having a look statements contain plenty of assumptions, dangers, uncertainties, estimates and different elements that would purpose exact effects to vary materially from the ones contained within the ahead having a look statements. Accordingly, buyers are cautioned to not position undue reliance on any ahead having a look statements, which mirror control’s perspectives as of the date hereof and aren’t promises of long term efficiency. For more information referring to elements that can impact long term effects, please learn the danger elements and MD&A sections of our periodic SEC filings.
Moreover, positive non-GAAP measures could also be integrated inside of nowadays’s name. For a reconciliation of the ones measures to the similar GAAP measures, please see the tables integrated in the day past’s income unlock, which is to be had on our website online. I will be able to now flip the decision over to Ron.
Ron L. Fleming: Thanks, Kyle. Excellent morning, everybody. Thanks for becoming a member of us nowadays. First, sooner than leaping to customary running highlights, I want to emphasize our center of attention on income enlargement. Whilst maximum components of our industry have skilled enlargement, our function is to succeed in longer term income enlargement and we’re dedicated to this purpose. Which we consider will let us improve shareholder price. As we reported remaining quarter, as a part of our yr finish reporting for 2025, we had a close to document yr for capital investments that had been essential to finish. This integrated the funding essential to recommission our Southwest plant water reclamation facility. Which used to be at first built twenty years in the past and used to be mothballed throughout the Nice Recession.
Even supposing those investments develop fee base significantly, and thus turn into drivers of long term income enlargement, those investments greater positive running bills and maximum significantly, depreciation expense. Such bills proceed to adversely have an effect on web source of revenue and income consistent with proportion in 2026. That is an unlucky but essential a part of the ancient take a look at yr surroundings right here in Arizona. As you should make the investments incur the bills, after which pursue fee restoration. As I’ve been pronouncing for plenty of quarters now, we’d like new charges to stay alongside of all of the funding and inflation that we’ve got skilled in our utilities.
To this finish, whilst it represents a diversion from our unique fee utility, the lately introduced fee case agreement supplies a clearer trail to a notable fee building up for our biggest water application Santa Cruz, later this yr For Palo Verde, whilst behind schedule, the lengthen offers with the main distinction of opinion at the timing of fee restoration because it pertains to our ancient Southwest plant water reclamation facility factor. Thus, the brand new agenda supplies a clearer trail to atmosphere suitable charges for our biggest wastewater application alongside this new timeline. In combination, this may occasionally permit us to raised understand restoration of inflationary bills and go back on and a go back of our plant investments.
Together with the Southwest plant leading to years of significant income enlargement forward. Christopher will talk about the speed case additional later at the name, however I will be able to upload that we plan to announce further fee job for our different utilities within the coming quarters. Within the intervening time, 2026 is ready running exhausting to keep watch over bills and now we have decreased the tempo of our capital investments. Within the years yet to come, we consider we will be able to handle forged income and income enlargement as we search to acquire suitable fee will increase mixed with our expected sturdy natural enlargement. Now I will be able to supply a couple of operational highlights. General energetic carrier connections greater 5.7% to 68.9 thousand as of 03/31/2026, from the one year prior.
In 2026, we accomplished an annualized 1.9% overall energetic carrier connection enlargement fee with the exception of the purchase of the 7 Tucson Water Methods. Particularly, now we have invested $6.3 million into infrastructure enhancements and current utilities in 2026 to supply protected and dependable carrier. Now I wish to talk about natural buyer enlargement and what’s going on in our core utilities additional. The only circle of relatives residing unit marketplace ended 2025 with roughly 21.8 thousand development lets in. Issued within the Phoenix Better Metro Statistical House. In 2026, this marketplace learned 5.2 thousand development lets in. Representing an 18.8% lower in comparison to the similar length in 2025. In the meantime, the Maricopa marketplace learned 157 development lets in representing a 16.5% lower from the similar length. In 2025.
Whilst new allow job has slowed in 2026, persevered enlargement within the Phoenix MSA in particular within the town of Maricopa, is mirrored within the corporate’s 2.6% year-over-year natural building up in energetic connections. We consider the decline in lets in is transient and we stay neatly located to take pleasure in the expected longer term enlargement of the Phoenix MSA and our explicit house drivers together with task enlargement, affordability, bettering transportation, together with State Course 347 widening, and our massive confident water provide. I will be able to now flip the decision over to Mike for monetary highlights.
Michael J. Liebman: Thank you, Ron. Hi, everybody. General income for 2026 used to be $13.3 million, which used to be up $800 thousand or 6.7% in comparison to Q1 25. The rise in income used to be essentially because of the purchase of seven Water Methods from town of Tucson in July 2025, natural connection enlargement and better charges in our Farmers application. Running bills for Q1 26 greater roughly $1.7 million or 15.1% to $12.9 million in comparison to $11.2 million in Q1 25. Notable adjustments in running bills integrated depreciation, amortization, and accretion expense, greater $900 thousand for Q1.
The rise used to be considerably because of the extra depreciable property positioned in carrier remaining yr on account of our 2025 capital growth plan and the commissioning of comparable initiatives. Running and upkeep prices greater roughly $500 thousand The rise used to be essentially pushed by way of emerging clinical expense, upper acquire energy related to newly operational plant, and wastewater disposal bills associated with the beginning up of two new wastewater reclamation amenities. G&A prices greater by way of roughly $300 thousand essentially pushed by way of emerging clinical prices. Now to speak about different expense. Different expense for Q1 26 used to be $900 thousand in comparison to $500 thousand in Q1 25.
The rise in expense is essentially because of upper hobby expense, decrease hobby source of revenue, and a lower in source of revenue related to our Buckeye enlargement premiums. Internet loss for Q1 26 used to be $400 thousand or $0.01 consistent with diluted proportion as in comparison to web source of revenue of $600 thousand or $0.02 consistent with diluted proportion in Q1 25. Finally, I will be able to talk about EBITDA which adjusts for positive noncash pieces comparable to limited inventory expense, EBITDA remained constant at $5.6 million in 2026 and 2025. This concludes our replace at the first quarter 26 monetary effects. I will be able to now move the decision to Christopher to check our regulatory job for the quarter.
Christopher D. Krygier: Thanks, Mike, and hi, everybody. As you heard Ron point out previous, and noticed in our 04/29/2026 press unlock, and 10 Q we reached a agreement in our pending fee evaluations. Unanimous agreement contemplates a water income of roughly $2.3 million for Santa Cruz, and a wastewater income lower of $400 thousand for Palo Verde. As an extension of the present transient invoice credit score. The estimated efficient date of those new charges is November 1, 2026. The agreement lets in us to near many of the historical past associated with GW Santa Cruz’s Southwest House water property and switch our consideration to the wastewater property.
The following steps within the procedure come with submitting testimony in beef up of the agreement by way of the tip of this month with the listening to starting off in August 2026. After that, the executive legislation pass judgement on writes a advice for the fee’s attention. Making plans forward, we can proceed our center of attention on securing suitable charges for our neatly investments made. As a part of the agreement settlement, we agreed to withdraw the Palo Verde fee evaluate. We await submitting a brand new fee evaluate request for GW Palo Verde’s wastewater property in 2027, with new charges estimated to be carried out in 2028.
This upcoming fee evaluate request is expected to incorporate the Southwest Plant Water Reclamation Facility that you just heard about previous, incremental capital funding made since 2025, and mirror running bills of a 2026 take a look at yr. As Ron discussed previous, we’re laser thinking about improving in charges the capital investments made throughout our utilities. We’re within the making plans phases for a couple of fee evaluate submitting for our utilities, and be expecting to supply you updates at our subsequent quarterly replace in August 2026. The ones updates are anticipated to incorporate the timing of our subsequent fee evaluate filings for our farmers department, Saguaro department, Ocotillo Department, and Santa Cruz department among others. This concludes the replace on regulatory job for the quarter.
I will be able to now move the decision again to Ron.
Ron L. Fleming: Thanks, Christopher. Regardless of the headwinds, our paintings continues. What we do and the way we do what we do issues to our communities. We in reality consider that increasing our overall water control platform and making use of our experience all the way through our regional carrier spaces and to new utilities will probably be really helpful to all stakeholders concerned. That stated, I keep in mind that shareholders are an important stakeholder and our function is to succeed in longer term income enlargement which we consider will let us improve shareholder price. That is our center of attention.
We recognize your funding in and beef up people as we develop International Water, to proceed to handle essential application, water useful resource, and financial building issues alongside the Arizona Solar Hall permitting our communities to thrive. So those highlights conclude our ready remarks. Thanks. We are actually to be had to respond to any questions.
Operator: Thanks. We will be able to now start the question-and-answer consultation. To invite a query, you might press * then 1, for your phone keypad. If you’re the use of a speakerphone, please pick out up your handset sooner than urgent the keys. If at any time your query has been addressed and also you want to withdraw your query, please press * then 2. Once more, it’s * then 1 to invite a query. To gather our roster, a reminder once more, it’s * then 1 to invite a query. This concludes our question-and-answer consultation. I want to flip the convention again over to Ron L. Fleming for any final remarks.
Ron L. Fleming: All proper. Thanks, operator. We might simply once more love to thank everybody for taking part at the name and your hobby in International Water. Thank you, and we look ahead to talking with you once more.
Operator: The convention has now concluded. Thanks for attending nowadays’s presentation. Chances are you’ll now disconnect.
