Global Water Resources Completes Acquisition of Red Rock Utilities
[NEWS RELEASE] Global Water Resources, Inc. (NASDAQ: GWRS), (TSX: GWR), a pure-play water resource management company, has completed the previously announced acquisition of Red Rock Utilities, an operator of water and wastewater utilities that service the Pinal and Pima counties of Arizona. The acquisition was approved by the Arizona Corporation Commission.
The acquisition adds 1,654 connections and approximately nine square miles of service area that generates more than $1 million in revenue annually. Red Rock Utilities is also in a revenue phase-in period stemming from its last rate case, which is projected to increase revenue by more than $300,000 once the increased rates are fully phased in.
“Including Red Rock Utilities, the four utilities we’ve recently acquired add more than 2,600 connections and over 22 square miles of service area,” said Global Water Resources’ president and CEO, Ron Fleming. “These accretive ‘tuck-ins’ complement our core regional assets’ strong position for growth, and we plan to continue pursuing similar opportunities both big and small.”
The sellers of Red Rock are affiliates of Diamond Ventures, a highly reputable real estate development and investment company in Arizona. Mark Weinberg, SVP for Diamond Ventures, commented, “Global Water’s ability to consolidate water and wastewater utilities into their professional, integrated platform can greatly benefit these communities.”
These utilities represent an expansion of Global Water’s service area in Pinal County and a new entry into Pima County near Tucson, Arizona. Both service areas have growth potential. Pinal County’s active service area is located directly along I-10 between Phoenix and Tucson, a high growth area known as “Arizona’s Sun Corridor.”
The company’s acquisition efforts complement its annualized organic connection growth rate, with year-to-date active connections up 5.4%. The addition of these two utilities, plus Turner Ranches Water and Sanitation Company that the company acquired earlier this year, keeps the company on track for an overall double-digit connection growth rate in 2018.
Global Water Resources acquisition strategy is supported by the Arizona Corporation Commission’s desire for consolidation of Arizona’s highly-fragmented water utility industry, as demonstrated in the commission’s new policy guidelines that support and incentivize consolidation.
