Good afternoon, everyone. Thanks for joining us for JANI's fifth annual Virtual Water Utility Conference. We have here with us this hour, Michael Liebman, Senior Vice President and Chief Financial Officer, and Christopher Krygier, Chief Operating Officer of Global Water Resources. Gentlemen, good afternoon. Good afternoon. Thanks for having us. Our pleasure, sir. You know what? Let's start off, discussion on the third quarter weather. I know it was really, really hot last year, insanely hot out there. How did this third quarter compare to 3Q 2024? Yeah, good question. I think last year it was hot and dry. I think we had a little over 1.5 inches over the whole quarter of rain. This year so far, we're a little bit over 3 inches. It's a little bit more rain, but you know, our largest utilities, primarily in the City of Maricopa, all of our wastewater fees are fixed and our water fees, half of them are fixed. You don't see a whole lot of variation in the revenue due to weather. I mean, there slightly is some, but you don't really see a lot of that. I just mentioned to you that, you know, with all the organic connection growth, the increased rates from our rate cases, the Tucson acquisition, which closed in July, that's going to enhance revenues in Q3 quite a bit. You didn't have, what was it last year, 31 days in a row in excess of 100 degrees? Yeah, I think it was, maybe it was even 110 or 115. Like it was the hottest. Oh, okay. I remember it was some insane amount of days over 100 degrees. Fortunately for us, we didn't have that this summer. It's actually, you know, already the nights and the mornings are pretty cool outside. Good. You recently concluded the water system acquisition in Tucson. Congrats. How's that integration coming along? Any surprises, positive or negative? Yeah, thanks, Mike. This is Chris. I'll grab that. Yes, we just took it over and closed the deal in early July, and I'd say overall the transition has gone well. Not actually no major surprises, kind of on the positive or the negative. I would say one item just worth highlighting a little bit is we're projecting about $1.5 million of revenue on an annualized basis for that utility, and there's another rate increase for 5% scheduled next year. That was part of the rate phase-in plan that we adopted from Tucson. I feel good about that. We're already starting to look towards what our rate case cycle looks like for this utility and potential consolidation with other utilities. Already thinking about the CapEx plan that feeds into the rate case cycle, which you know is very important. Do you think you get all of the utilities on the same rate case cycle at some point? Yeah, it's a great question. I don't know if we'll have all of them on the same rate case cycle. Part of that is just due to the number of utilities we have, but also in our current rate case, we actually have a formula rates proposal pending. If the commission were to adopt that proposal, those utilities would be on an every year formula rates plan, which might deviate from what the others do. I would say overall, we will continue to be in for rate cases frequently just because we're investing a lot of capital and keeping it up with costs, just trying to find the right balance of all of it from a customer perspective. You're looking at every two years or every three years? Is there a kind of a defined cycle you're looking at? I would say without assuming no formula rates were approved, every two to three years is probably right how we're thinking about it. Obviously, that'll be a little bit driven by the CapEx needs of the system and also thinking about affordability from a customer perspective. Since we were talking about the Tucson acquisitions, I guess that just leads into what's the pipeline of new opportunities look like, let's say over the next 12 to 18 months? Yeah, great, great question. I would say right now we're kind of heads down on that rate case and finishing the Tucson integration. I'd say once we get a little bit past those, you've heard us talk about the number of investor-owned utilities in Arizona is about 300. We see a pretty strong opportunity set there, just looking for the right ones for us. We'll always continue to stay disciplined though, because as you know, we've got a good organic growth profile. We'll always be thoughtful about doing the right deals for us and our customer set and where we're located. Yeah, I saw the slide in your slide deck with customer growth. I don't think I have a utility in my coverage universe that's got that kind of growth. Even half of that is considered very, very strong. Congrats on that. Thank you. That's something we're proud of. That's kind of an anchoring point for us. We've got so much there. Let's make sure that goes right and then evaluate opportunities against that. I'll flip over next to new construction permits for single-family and multifamily. It looks like they've slowed a bit versus last year. Have you shifted any capital deployment based on the trend? Yeah, good question, Mike. Yeah, you're right. Permits have slowed both on the single-family and multifamily side. I will point out we were just talking about that organic growth. It's still coming in strong year to date, just under 4%. It's still, still robust for us. We have mentioned in some of our recent filings the CapEx profile for 2025 has been set. You know, we kind of do this in prior years and do the planning. It's set and it's actually expected to be higher than prior years, but it wouldn't be surprising to me if 2026 reverted back more in line with some of our previous years. Okay. What we're seeing in the permit activity, what do you attribute that to? Is it shifts in developer demand, or I mean, just what are you seeing, because I know you've got a lot, I mean, we're going to talk about it later in terms of the macro for the Metro Phoenix area, but it seems almost impossible that it could survive given the number of businesses moving in. Right. Yeah, I mean, we have seen actually in 2023, multifamily actually took a hold. We had only had a handful of projects that we were servicing. Since then, about 20 projects have come online that have been put in service or are expected to come online in the near future. There has been a decent shift. I think that macroeconomic factor, interest rates, affordability obviously comes into the equation there. I also say, I think Maricopa has been predominantly single-family homes. I almost want to say the multifamily makes up less than 1% of our actual mix. I think as it matures and it grows, I think the population just recently surpassed 75,000. We would expect maybe that multifamily piece to kind of draw more in line with some of the other cities around Metro Phoenix, which I think is in that 70% to 80%. I mean, that will take some time, but I think it's a combination of that macro environment and then that multifamily, you know, typical mix in cities around Phoenix. Are you seeing any shifts in developer demand between the single-family and multifamily, or are they just the same as it always was? Yeah, I mean, I think it's still the same as it always was with the tilt to the multifamily side. I think we're still pretty robust on the single-family side, and the fact that the City of Maricopa, I think a single-family home is about a 23% discount to that of the other Metro Phoenix cities on the outskirts. I think there's good drivers on both sides of that for both of them to continue. We do think that the multifamily even had some permits this year, even though last year was a very robust year. We still see some permits come through in 2025. It sounds like from your previous comments on the CapEx for next year, kind of maybe pulling back to more historical norms, you're not expecting a big rebound in permits, let's say, over the next year or so. I wouldn't necessarily say that. I actually think there's a lot of tailwinds on that front, Mike, with the potential Fed rate reduction. I think 30-year mortgages have now slipped below 6.5% on their way down to 6%. I do think in all the business growth that you mentioned, there is a good catalyst there. We've also, there's a State Route 347, which actually connects I-10 down into the City of Maricopa directly. It is a two-lane, in both directions, but it has a few lights in the process, so not a real freeway, and it creates some traffic jams during rush hour. The Arizona Department of Transportation recently announced that they approved in their five-year plan to actually expand that, make it more like a real freeway, make it three lanes both ways, and get rid of those traffic lights. We do think that's going to be a big catalyst for folks who would have to commute to actually view Maricopa as a real option for making a home acquisition. It's a pretty good tailwind for us. State Route 347, is that fairly developed? Or if you go, like, let's call it a couple of blocks off the highway, there's nothing in it. It can just be developed. Yeah, it's actually interesting. It wraps down. It actually runs through the Gila River Indian Community there. There won't really be homes and stuff there, but the roads, the roads there, I think they're in development right now of the plans. I think they're supposed to break ground next year, in 2026. It's actually something that's coming here in the next couple of years. Let's see. I think the next question, we focus on the Metro Phoenix economy. Softness in some areas, strength in others. I took a look at some of the data when I was preparing questions for today, and it looked like construction and manufacturing, trade, transportation utilities, information, professional and business services, employment down year over year, but education, healthcare, government, mining, and logging are up. What are your thoughts directionally over the next 12 months? Yeah, you know, look, again, we don't have the crystal ball. With the pullback in permits, it does feel to us like we're kind of at or near that bottom on the permit side of things. We expect, especially with interest rates, 30 years coming down or expected to decline, that that'll start to pick back up later in this year or in the first half of 2026. I'd say, Mike, regardless of that, over the long run, with all the business boom that's come to Arizona and then that in-migration trend that we've experienced and expect to continue, there could be some things accelerating here on our organic side just from all that business boom and the reduction in rates and the affordability factor that we have. We’ll probably get an answer on rates here right ahead if it isn’t out already. I hadn't seen it, but I haven't looked at it. I'm looking forward to checking that out. Yeah, it just seems kind of counterintuitive. Certainly, you know, when I looked at the data, you know, education, healthcare, government, I get all that, you know, being up. Construction and manufacturing kind of surprised me. It leads into my next question, which was on the stuff we've spoken on in the past. I know you've got a slide in your deck, and I'm actually going to look for it here real quick. Let me go back. Yeah, on Maricopa, Pinal County, the business boom, and you just look at all of the companies that are in there. It just strikes me as odd that anything would slow down given how much is moving into that particular region. It's almost, it's sort of hard to make sense of it. I know in the past we talked about the Procter & Gamble plant that was going to be a big, big water user, and I guess now Lucid Motors, their facilities. How are those projects coming along? Yeah, so Lucid Motors is there. I mean, we're serving them today. They're not overly material from a financial perspective. We did sign towards the end of 2024 that contract with Procter & Gamble to provide, you know, service to their manufacturing plant. We haven't moved forward material on that, and obviously you got to go through the design and the actual construction. That project's probably more, you know, two plus years out until we start to see that run through the numbers, not necessarily in the near term. As far as this map goes, look, there's just so many companies there. It's hard to peck through them. Are any of these new relative to, let's call it last year? Yeah, I mean, I did a little bit of trying to recall back. I know earlier this year, Taiwan Semiconductor Manufacturing Company, they had already invested $65 billion, and they announced another $100 billion that they were committing to Arizona. That's obviously a big win. I've heard that's going to bring tens of thousands of jobs, and it's also expected to create $200 billion of indirect economic output in Arizona over the next decade. I did hear Mayo Clinic announced a $1.9 billion campus expansion and thousands of jobs, and so did Banner Health. They broke ground on a new medical campus in Scottsdale. It's supposed to be 2,500 jobs. Things like Dutch Bros relocated their headquarters to Phoenix, and I think, Adrian, who's in the defense and aerospace sector, announced a $200 million factory in Mesa that's supposed to be a few hundred jobs. You're hearing things like this that are coming across to lead you to believe that this boom is real, and we're kind of just at the front end of it. All right. We also spent some time last year. We discussed the Southwest service area below Maricopa, where investments were made years ago. Maybe you could provide us an update on development plans there and what's happening. Yeah, I'll grab that one. My team has been busy focused on that one. Maybe taking a step back, those assets are part of the pending rate case that you see in our slide deck. That rate case is going through its process at the commission, and we expect to get the initial staff and consumer advocate testimony here in a couple of weeks. From a regulatory front, that's moving over. To the heart of the question on development, it's been going really well down there. There are three communities that have broken ground and are in some stage of the construction process: Amarillo Creek, which was the first community, Palomino Ranch, and a community called Vinita. In those three communities, at full build-out, that's about 4,500 customers just in those three communities right there, just due to the size and scale of them. Right now, we have, if you recall, we kind of started serving our first customer back in August of 2023. We now have between water and wastewater 800 active connections down there as of the end of Q2. It's grown fast, even in light of the higher interest rates and those economic challenges. We've been excited about that. We've also actually signed what are called capacity assurance letters, basically reserving wastewater capacity for homes for another couple thousand homes. There's been a lot of activity. There continues to be a lot of activity. That's something we're excited about. Okay, so you're at 800 now. It sounds like the existing infrastructure will handle at 4,500. Is that right? We may need to add some additional wells from a water quantity standpoint, maybe some additional treatment, but from a backbone, pipelines and wastewater plant and the water treatment, the water tank, all of that should be able to help us go very far. What do you think the build-out timeline is on that? Five years? Ten? It's a good question. It's interesting because we've also actually had some industrial interest in that area too, which could totally add another dynamic to it from a usage standpoint. I would say it's definitely not tomorrow. I don't know if it's 10 years, but we're happy with the progress it's making down there. It's been a good challenge to have. All right. I'll probably throw this one back to Mike. You recently completed an equity raise. Will that provide the necessary financing you need over the next 12 months, or do you see additional needs over that timeframe? That includes either debt or equity. Yeah, thanks, Mike. Happy to take that one. We have nothing to report on at this time, but as a high-growth utility, we've accessed the capital markets both on the debt and equity side as needed. We expect to continue to do that as the need arises with all that great organic growth we've got. Okay. I was hoping you guys could maybe go over the Ag to Urban situation that's going on with water supply. That was something that was, I mean, you'd spoken about it before, but the level of detail you put in the slides for the presentation, I just think that's something worth spending a couple of minutes on. Pass that one back to Chris. Yeah, absolutely. Mike, as a little bit of background for folks that aren't as familiar with Arizona, Arizona actually is a, it was and still is a heavy agriculture and farming community. We often think of Arizona as just the cities, Phoenix, Tucson, Flagstaff, but actually there's a lot of farming that has been going on for a long time and still occurs today. The county that we're in, Pinal County, which is where the City of Maricopa is located, is a very, very heavily farmed area. What's happened for a long time, there's just been discussions amongst all the water stakeholders about what's the right way as those farms decide to stop farming and sell to home builders. What's the way to convert all of that water usage to residential homes? This is an idea that's been percolating for a while, a lot of consensus building, but the governor just signed the legislation a few months ago. It really creates a pathway for all of those that are farming to convert that farming to homes over time and essentially pledge those water resources to the utility provider. As kind of a rule of thumb, we generally say farming uses about three times as much water as homes. There's a great benefit to, we as a utility have additional customers to serve, but it also benefits the aquifer over time by using less water. It's a win-win for all. That will enhance our ability to increase our DAWs that we have today, our designation of assured water supply. We think it's another potential catalyst for us from a growth perspective over time. Seventy-four% of the available water supply goes to agriculture. Yeah, folks don't think about Arizona that way, but there is that much farming that goes on in the state of different crops, and it's unbelievable. You got to go to a little bit more of the outskirts than you used to. It used to be closer to town, but it's still far out there, but it absolutely is. That would certainly seem to indicate that there's a lot of water supply to be had for growth. Given it, it's hard to imagine the economics of growing, you know, certainly the cattle makes sense to me, but growing crops in Arizona, from an economic perspective, I could certainly see where a lot of that, what that water right, those water rights could transfer over to the municipal sector over time. I just can't believe the economics are there. Maybe you can tell us what are the big crops? Yeah, so there's been a lot of cotton over time. If you think, some folks take it even a step further, more statewide, Yuma is often considered one of the bread baskets for lettuce and vegetables, and folks don't realize that comes from Yuma, Arizona. Cotton's a big one. You see some alfalfa, you'll see other things like that that have just historically been here. It's interesting. Right now in our primary service area, especially in the City of Maricopa, it's all homes today in the core city. Going back 10, 15, 20 years ago, most of that was farming. Those family farmers decided, hey, the next generation doesn't want to farm, so that's why we'll sell it to developers and home builders. We have relationships with all of them because they're all connected to the community nearby. Eventually they all decide to sell at some point when they decide farming is not something they want to pursue anymore. It sounds like exactly what happened in Florida, call it 30 or 40 years ago. They started selling off the orange groves and just continued to build housing. That's what this reminds me of today. The way that housing is spreading and the investments coming into Arizona, it looks like Florida 30 or 40 years ago. Yeah, I'll give you an even more specific example. The farmers' acquisition we closed in 2023, while that customer base is only about 3,500 customers today, the rest of that service area is all pecan trees. What the family had done as part of their long-term thinking is they know they aren't going to farm, so they got all of the approvals in place today to have that convert to residential homes as they decide to stop farming each section of land. A lot of developers follow the same model. They say we're going to farm to a point, but then we'll eventually gradually sell it off, and it'll follow the exact model of what you're talking about from Florida. Interesting stuff. Really interesting. Like I said, something we haven't delved into in the past on this conference, but I just would not have guessed that you had farming territory around you. When you look at the slides and you see all the companies moving in, that's the last thing you think of is pecan farms. Gentlemen, I'm through my prepared remarks, but I'll wrap up by asking, is there any topic I missed you think we ought to chat about here? No, I think you covered it well, Mike. I guess I would say, you know, we do have a slide in our deck that talks about obviously the macro-economic impacts and how, you know, the water utilities have been beat up since interest rates have started to increase. With the potential reduction coming in, you know, maybe that reversion back, you'll see a quite nice pop in the water sector stock prices. We're looking forward to seeing that. I think too, Mike, on that point, also, we've got a risk-on environment right now where, you know, the market just continues to make new highs. As our technical analysis person, Dan Wontropski, our strategist, has said, you know, the melt-up in the market. We all know what happens when that happens long-term. I don't disagree with you. I think there's going to be an opportunity here where the utilities will, the valuations will once again begin expanding. I don't know what the trigger will be for that, but in my lifetime, there's always been one. We seem to have gone a long time without one of those triggers. It could be here. Gentlemen, I'll say it. Want to ask this afternoon, as always, fun and informative. Yeah, very good. Thanks for having us, Mike. We really appreciate it. All right, let's do it again next year. Sounds good. Thank you, gentlemen.