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FINAL TRANSCRIPT
August 13, 2014 — 4:00 p.m. E.T.
GWR Global Water Resources Corp. Second Quarter Results
CORPORATE PARTICIPANTS
Brett Higginbotham
GWR Global Water Resources Corp. — Vice President of Accounting
Trevor Hill
GWR Global Water Resources Corp. — Chairman
Ron Fleming
GWR Global Water Resources Corp. — Interim Chief Executive Officer
Mike Liebman
GWR Global Water Resources Corp. — Chief Financial Officer
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PRESENTATION
Operator
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the GWR
Global Water Resources Corp. 2014 Second Quarter Conference Call. At this time 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 you for questions. If anyone has any
difficulties hearing the conference, please press *, 0 for Operator assistance at any time.
I would like to remind everyone that this call is being recorded on Wednesday, August 13,
2014 at 4:00 p.m. Eastern Time.
I would now like to turn the conference over to Brett Higginbotham, VP of Accounting.
Please, go ahead.
Brett Higginbotham — Vice President of Accounting, GWR Global Water Resources Corp.
Good afternoon, everyone, and thank you, for joining us on today's call.
Today we issued our 2014 second quarter financial results by press release and a copy of
those results is available on our website at www.gwresources.com.
Speaking today are Trevor Hill, Chairman; Ron Fleming, President and Chief Executive
Officer; and Mike Liebman, Chief Financial Officer.
Mr. Hill and Mr. Fleming will summarize the key events of the second quarter and provide
their insights for the remainder of 2014, followed by Mr. Liebman, who will review our financial
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results for the second quarter of 2014. Then Mr. Hill and Mr. Fleming and Mr. Liebman will be
available for questions.
Before we begin, I'd 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.
These forward-looking statements are not guarantees of future performance, and they are
subject to certain risks which could cause actual performance and financial results to vary materially
from those contemplated in the forward-looking statements. For additional information on these
risks, please read the March 25, 2014 GWR Annual Information Form, under the heading Risk
Factors.
Unless otherwise stated, all amounts discussed are in US dollars. GWR Global Water
Resources Corp. was formed in 2010 as a Canadian company to hold an equity investment interest
in the US-based company Global Water Resources, Inc. We'll refer to the US company today as
Global Water or the Company.
I’ll now turn the call over to Trevor Hill.
Trevor Hill — Chairman, GWR Global Water Resources Corp.
Thank you, Brett. Good afternoon, everyone, and thank you for joining us today.
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Last quarter, I announced changes within the senior executive management team whereby
Ron Fleming was elevated to Interim CEO of the Company from his prior role as President and COO;
and Mike Liebman assumed the role of CFO.
Both of these changes had been contemplated for some time as part of the Company's
succession plan and were part of Cindy's and my transition from the day-to-day management of the
Company to active members of the Board of Directors.
As discussed previously, Ron and Mike bring a wealth of experience and business
knowledge, and I am impressed with both of them as they have embraced their new responsibilities
with care and enthusiasm.
Cindy and I will remain, and continue to remain, active as members of the Board, and work
closely with Mike and Ron, and the rest of the Board and management team, each day to ensure an
efficient, measured, and successful transition over the coming years.
It is also worth noting that the transition plan reduces a material—or results in a material
reduction to overhead costs. As I mentioned several times before, in that I'm a founder and original
shareholder with considerable stake in this Company, my interests are completely aligned with our
shareholders and investors. I will remain personally engaged until such time as we have surfaced
the full value of this Company.
When we spoke to you in late March, we discussed several significant milestones the
Company was able to achieve during the first quarter of 2014. These included the resolution of our
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only remaining litigation matter, and the question of related funds owed; the completion of our rate
case in a manner that allowed us to fully restore our balance sheet and rate base; and the initiation
of our recurring monthly dividend. These achievements were several years in the making, and we
recognize and appreciate the patience of our many shareholders.
That being said, it is clear that these accomplishments have begun to, and we believe will
continue to, generate value for the Company and to our shareholders.
The Company continues to have significant tailwinds, and we believe the stock price will
continue to improve until such time that the inherent value of Global is realized and appropriately
reflected in the market. And due to the many compelling drivers that you will hear today unique to
Global, such as strong revenue growth as a function of organic growth, and the new rates which
started January 2015, and our low capital requirements due to the new and modern infrastructure
we have with significant available capacity, our dividend has attractive growth potential in the
future.
I will now turn it over to Ron Fleming, for our operational results.
Ron Fleming — Interim Chief Executive Officer, GWR Global Water Resources Corp.
Thank you, Trevor. Good afternoon, everyone. In our utilities, we are experiencing the
lowest vacancy rate since the market downturn in 2008, now at 3.7 percent. As vacancy rates
decline, organic growth will continue to turn towards new home construction. Remember, new
home growth in the United States is a function of affordability.
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Arizona is near the top of the affordability index nationally and this driver is even greater
in our largest utilities within the City of Maricopa and the City of Buckeye, where the absolute home
values are among the most affordable in the nation. Combined with significant loss and
infrastructure availability, there are numerous compelling factors that indicate strong growth will
occur in our service areas.
Our utilities have seen steady, organic growth now for some time. In fact, continuous since
January of 2009. As of June 30, 2014, Global's total service connections increased to 44,868, and the
total active service connections increased to 43,202. This represented a 2.2 percent annualized
growth rate in 2014 and a 2.6 percent growth rate over the last 12 months.
While we continue to experience a slowing in the housing market, one that started in Q4
2013, the following key points remain true and provide some evidence that we will see escalating
growth over the next several years.
Expert consensus data still points to considerable and growing demand for single-family
dwelling permits in the Phoenix Metro area, growing from approximately 13,000 starts in 2013 to
nearly 20,000 just next year in 2015.
Global’s service areas possess a significant market share of available lot inventory,
approximately 20 percent. Thus, if this growth occurs, a large portion of it will be in our service
areas.
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Because of these factors, substantial developer activity is occurring in our regions with
dozens of large-scale residential master planned communities moving forward and in some stage of
the development process, either up from contracting or actively selling homes.
In fact, Global is processing its first service area expansion application since 2008, inclusive
of five properties and roughly 1,400 acres as numerous developers seek to prepare their land for
development outside our existing service area in the City of Maricopa. Combining these strong
indicators with seven years of rate increases suggests Global will experience many years of robust
revenue growth.
As we communicated previously, in February of 2014, the rate case proceedings were
completed and the ACC issued its rate decision. The rulings of the decision have been disclosed, but
I wanted to highlight, again, the following: For all Global utilities, a collective revenue requirement
increases 4.3 million based on 2011 test year connections phased in over time, with the first
increase coming in January of 2015. New rates equating to roughly 60 percent of the overall rate
phase-in will be in place by January 2016, less than 17 months from today.
We also achieved a full reversal of the imputation of contributions and aid of construction
associated with funds previously received under infrastructure coordination and financing
agreements, as required in the Company's last rate case.
The reversal restored over 60 million in rate base and future rate base, and restored
approximately 66 million of shareholders' equity on our balance sheet. The settlement agreement
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and the rate decision are public documents and are posted on the Company's website and at the
ACC’s eDocket website.
As Trevor discussed, our strategy is focused on servicing the value of our core regulated
utility business. Driven by increased service connections and new rates, and the consideration of our
relatively low capital requirements to allow for such growth, the combined effect of these factors
allows for a sustainable free cash flow from which a healthy, reliable dividend can be paid, one with
growth potential.
And now I will ask Mike to review our second quarter 2014 results.
Mike Liebman — Chief Financial Officer, GWR Global Water Resources Corp.
Thank you, Ron. Good afternoon, everyone. Our discussion today refers to the
consolidated financial information of the US company, Global Water, since the financial information
of the US company is not consolidated with the public Canadian company. As a reminder, unless
otherwise stated, all amounts discussed are in US dollars.
Consolidated revenues for the three months ended June 30, 2014, totalled 8.9 million
compared with 9.1 million for the same quarter in 2013, representing a decline of 234,000. It is
important to note, water and wastewater revenue increased 284,000, while unregulated revenue,
which was primarily attributable to the FATHOM business in 2013, declined 518,000. As we divested
of most of FATHOM in Q2 2013, we will not see its impact in the comparative financial analysis
again.
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Consolidated revenues for the six months ended June 30, 2014, totalled 15.9 million
compared with 16.7 million for the same period in 2013, representing a year-over-year decline of
827,000. This includes a 354,000 increase in water and wastewater revenue, combined with a 1.2
million decline in unregulated revenue, which again was primarily attributable to the FATHOM
business in 2013.
EBITDA increased to 3.7 million for the three months ended June 30, 2014, compared to
1.3 million for the same quarter in 2013. This 2.4 million improvement was primarily a result of the
1.9 million loss on the sale of FATHOM we recorded in 2013, as well as the increased revenue from
connection growth and improved margins in 2014 post-FATHOM sale.
For the six months ended June 30, 2014, EBITDA increased to 58.3 million compared to 2.9
million for the year-to-date period in 2013. Excluding the impact of the rate case and litigation
proceeds, EBITDA totalled 5.7 million for the year-to-date period in 2014. This reflects a 2.7 million
increase year over year after removing the impact of the rate case and litigation proceeds.
Again, this improvement was primarily attributable to the 1.9 million loss on the sale of
FATHOM recorded in 2013, in addition to the 2014 increased revenue as a result of connection
growth and improved margins post-FATHOM sale.
With respect to net income, for the three months ended June 30, 2014, net income
improved 3.1 million, going from a net loss of 3.5 million in 2013 to a net loss of 489,000 in 2014.
This improvement is primarily related to the 1.9 million loss on the FATHOM sale in Q2 2013, in
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addition to the 2014 increased revenue as a result of connection growth and improved margins
post-FATHOM sale.
For the six months ended June 30, 2014, net income improved 72.6 million, moving from a
6.8 million loss in 2013 to a 65.8 million net income in 2014.
The improvement was attributable to the following events that took place in 2014: the
50.7 million gain on the rate case decision; two, the 16.1 million income tax benefit recognized in
connection with the rate case decision, and the associated release of the deferred income tax
valuation allowance; the 2 million in litigation proceeds; and the increase in revenues as a result of
connection growth and improvements in margins as a result of the FATHOM sale, which were
approximately 1.75 million.
That concludes the financial results and I'll now pass the call back to Trevor.
Trevor Hill
Thank you, Mike. So it remains evident the strategic plan we set out on nearly two years
ago to surface near-term shareholder value is working.
Today, Global is a growing, pure-play water utility that generates predictable and
sustainable cash flows. Driven by organic growth and new rates, the investment offers a growth
trajectory well above the industry average without the need for material capital expenditures
typically associated with water utilities. These achievements ensure a sustainable and growing
dividend in coming years.
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Once again, thank you all for you continued support and interest.
That concludes our prepared remarks. Thank you. Ron, Mike, and I are now available to
answer your questions.
I'll now turn the call back over to the Operator for the Q&A session.
Q&A
Operator
And at this time, I'd like to advise everyone, if you wish to ask a question, simply press *, 1
on your telephone keypad. And we’ll pause for just a moment to compile the Q&A roster.
And your first question comes from the line of Michael Mills with Beacon Securities. Your
line is open.
Michael Mills — Beacon Securities
Hi. Good afternoon, guys.
Trevor Hill
Good afternoon.
Ron Fleming
Hi, Mike.
Michael Mills
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I'd like to start off maybe just asking about the service area expansion. I believe you said
that's the first time since 2009. Is that a developer-led initiative? And does it require any capital
outlay on the part of GWR?
Trevor Hill
Ron, please take that one.
Ron Fleming
Yeah. Absolutely. Hi, Mike. Yeah. So with respect to the CC&N expansion, there's several
aspects of your question, but it represents five different properties around our Maricopa service
area. Some of these properties are located within the areas you can refer to as infill, and so they're
going to be located right within the confines of our existing CC&N and our existing infrastructure.
And due to the growth pressures overall that the region is feeling that for over the next three to five
years there's going to be additional development property needed, those developers are moving
forward pretty rapidly to get inside of our CC&N and start developing their properties. For those
ones, really no capital work is needed to ultimately provide services in fuller.
There is one property that's a little bit further out from the existing CC&N area, that's
more of a longer-term type of project. Ultimately, most of the infrastructure leading towards that
area is in place. There might be minor capital requirements needed to extend to the area, but they
are under—we do have developer contributions or developer funds that come in with that
development that ultimately offsets some of the capital requirements.
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I believe that answered most parts of your question, Mike. Is there anything I can add to
that?
Michael Mills
Yeah. No. The fact that its infill, so it's essentially developers looking for additional land
which is within kind of the confines of your already in-place in-ground infrastructure and, I guess,
plant facilities. So they basically pick up when they do go to develop the actual lots, they're
essentially picking up the, I guess, the minor connection charges. Is that a fair assess?
Ron Fleming
Well put. Yep.
Michael Mills
Okay. I guess moving on here, just in terms of general connection activity, I'm wondering if
you can give me any kind of sense in terms of how far out or what kind of visibility you have in terms
of the pace of connection growth. And if you do have decent visibility, maybe what that looks like
for the back half of this year.
Trevor Hill
All right, Mike. It's Trevor. This is something we watch closely and I know our investors do
as well. And what's interesting right now is the whole US housing market seems to be acting a little
bit contrary to the heat of, or the recent heat of the stock market. What I can tell you is that the
development community is bullish. We see about three times as much activity in our service area in
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terms of those precursors that run before home building as we did in 2010. So there's a lot of
activity, including some of the CC&N work. We have three times as many subdivisions open as we
did in 2010. So it seems to us that this continued growth and the acceleration of growth is inbound
and it had slowed a bit in the last quarter of last year. But has been—the activity levels have been
sort of steadily picking up since then. So we certainly expect it to stay as it is for the balance of this
year at least, and quite possibly, start to accelerate into the third and fourth quarter. Ron, can you
add anything to that?
Ron Fleming
Yeah. No. I think, yes. I agree with you, Trevor, and the only thing I could point is the
expert consensus data as a whole, and if you look at any of the other local industry experts' data, it
seems to have slowed a little bit. All of them project and all of the trend lines have the need for new
single-family dwelling units increasing considerably over the next few years. So yeah, you’ve
somewhat got to predict or pick your slope of the curve. But ultimately, it is steadily improving;
every belief that will continue. The activity is strong. We have about 20 percent of the market share
of those available lots today. So as that growth occurs, it just seems to suggest that our growth rate
will be picking up in the next few years.
Michael Mills
Okay. Maybe one for Mike, just around operating costs. I'm just trying to figure out kind of
a normalized quarterly run rate. It looks like O&M and G&A came in at about 5 million. But I believe
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about 600,000 of that refers to deferred comp. So is around 4.5 million a quarter for those two line
items appropriate? And where do you see that going maybe over the next 6 or 12 months?
Mike Liebman
Yeah. I would say, Mike, that's spot on, I mean with the exception of deferred comp. I will
remind you that Q2 and Q3 tend to be our seasonally higher quarters, and as a result we will have
increased costs related to utilities and chemicals and as well as property taxes. So Q2 and Q3, you
would expect to be slightly higher than Q1 and Q4. But from a run rate perspective, not—outside of
deferred comp which is not within our control, I would agree with you—agree with your
assessment.
Michael Mills
Okay. Final question, and I think this is three times in a row that I've bugged Trevor on this,
but on the question with regards to the debt and being able to potentially recapitalize that debt and
get a lower interest rate, where do you stand if there's any update? And what's the level of belief
that maybe something can be accomplished in the next three to six months?
Trevor Hill
Yeah. It's a great question. I don't mind you asking me repetitively. I do the same thing to
myself. The truth is, as you know, on our strategic plan we unveiled almost two years ago there
were seven things on the list. Five of them were done at the time we instituted the dividend, and
there's two left. One of which is to look at this debt, and the other is to, in some way, simplify our
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corporate structure. And so over the last quarter, we've been looking again closely at this. And now
we're—from a metrics perspective, we're about one-to-one equity-to-debt as opposed to where we
were a year ago this time. And the issue, just for everyone else listening, is that we've got long-term
bonds. There's no pending issues, but we're amortizing quite rapidly now, nearly $5 million a year,
and there's not really a good argument to amortize infrastructure that's 90 percent of which is
under 10 years old, in a utility like ours to amortize it so aggressively. And so the thinking here is
that if we could, in some form or fashion, refinance this debt, we could reduce our amortization and
quite possibly increase the dividend, or at least increase free cash flow.
So that's why Mike's asking the question, and it is a very, very significant factor for the
business. So I can tell you that the Board is supportive of this initiative as well, Mike, we are. We
have begun the process in Q2 of looking at it closely, and I do believe that there—put it this way, it's
on the top of our list, and I believe that there is a possibility that we could make some inroads on
this in the time frame that you spoke of. So nothing announceable yet, but its front and centre for
me.
Michael Mills
Very good. That's it for me. Thanks.
Operator
Your next question comes from the line of Warrick Jervis with GVC Capital. Your line is
open. Warrick Jervis, your line is open.
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Warrick Jervis — GVC Capital
Hi. I look forward to seeing you guys next month in San Francisco. But I had a question on
this refinancing to sort of dovetail with the prior question. So you have these bonds outstanding and
they have—some of them have a pretty long maturity. Are they callable? Are you looking at
refinancing? In other words, defeasing those bonds? Or what kind of options do you have?
Trevor Hill
Yeah. It's Trevor speaking. So these bonds, these bonds are long-term, tax-exempt bonds
issued under the IDA. And we built into them an extraordinary redemption feature that allowed us
to call the bonds at a premium in the event that we had listed Global Water Resources, Inc. Now
when we went public in Canada, we listed—we formed a new entity, Global Water Resources Corp.,
and listed the public that—the Company in a public fashion that way. So there is a methodology and
a mechanism to call the bonds, yes, at a premium, 3 percent premium. This is all facts that you can
read about in our disclosure. And right now, we are investigating all options that would get us to the
point where we could, in fact, call these bonds and reissue them.
Warrick Jervis
Okay. So it's a matter of you do have a call option and you don't have to go through the
expense of defeasing them and re-collateralizing with treasuries?
Trevor Hill
Correct.
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Warrick Jervis
Okay. That's great. And what kind of time line is realistic for some kind of structural change
with the—you're listed in Canada. You're based down here. And I know that's probably number
seven on your list of seven, but realistically is that an event that may happen over the next year? Or
is that more of a two to three-year process? I mean, what do you think?
Trevor Hill
Well look, that's a pretty pointed question. I'm going to give you a high-level view on this.
But when we talk to investors, there are often questions about our structure. It is a little bit
cumbersome. I think it does preclude certain classes of investors to invest. So it is number seven on
our list. So when you think about the other utilities in the sector that are like us, there's only about
10 regulated water and wastewater utilities that trade in the sector. And as many of you know, our
metrics of growth and rate base per connection and margins are all significantly better than the
sector. And this sector trades at an average cap rate of 2.8 percent today. So we're trading at about
a 5 percent cap rate.
So obviously, we believe that that kind of a transaction, among a range of options that we
have, could be quite good in conjunction with a refinancing of our bonds. So you can imagine the
combined effect of refinancing the bonds and pushing out the amortization, which is appropriate
and I think prudent to improving cash flow, and the potential of an increase in dividend then, at a
lower cap rate, you can imagine could be quite accretive to shareholders. So we are investigating all
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options right now in that regard. And I think that structurally, I’m not telling you—this is not
guidance or any direction, but structurally that kind of transaction could be completed in a relatively
short time frame.
Warrick Jervis
Okay. So it's not a we take care of number six and then number seven? You're moving
both of those along currently? Is that correct?
Trevor Hill
Yeah. Every conceivable option to surface near-term shareholder value is front and centre,
as we speak.
Warrick Jervis
Okay. Great. And then one, just more general question for you. Obviously there's a lot of
talk about the drought and whatnot. Can you just reiterate, and, Trevor, I know you've gone through
this with me in the past, but just update me on your supply of water and how secure that is? And if
you have any, what you believe to be, excess water rights?
Trevor Hill
Yeah. It's a great question, and it's good to talk about water rights in a company like
Global. And certainly in California the issue is become acute, primarily because California has a
stronger dependence on surface water flows like Colorado River and a relatively smaller
proportionate share of the Colorado River than Arizona does. So fundamentally, Arizona as
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compared to California, even the context of their proportional right to the Colorado River, Arizona's
in slightly better shape. So as a state, we're not feeling the squeeze quite like California is, and it
shouldn't be painted in the same brush exactly. But with specific reference to Global, we're in
actually better shape than that. As you probably remember, our utilities are located in the outlying
regions around Phoenix. And as we built the utilities, we very carefully and methodically built the
water right portfolio under these utilities as we built out and secured the service territories that we
have, which are very large. You may recall, we have about 500 square miles of service territory.
So what underpins our service territories today is about 80,000 acre feet of water rights.
And in our model, that's about 400,000 future homes. Right now, we have 25,000 or 30,000 homes
reflected in the connections that Mike laid out for you a few moments ago. So from a water rights
perspective, we're less than 10 percent built out. Those kinds of water rights inure to a service
territory, so they are specific to our territories. They're perpetual in nature. They're not going
anywhere. Now we can't sell them, or list them, or hold them in any sort of way—commercial way.
But from an asset on the balance sheet that isn't reflected in value, we have very significant and
very secure groundwater rights that are proved up to a very comprehensive groundwater analysis
process, which is why they have that 100-year life associated with them. So we're in great shape for
water in Global.
Warrick Jervis
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Okay. Great. Good to hear, and keep up the good work. And again, hope to see you next
month in San Francisco. Thank you.
Trevor Hill
Thank you.
Operator
And again, if you wish to ask a question, simply press *, 1 on your telephone keypad.
Your next question comes from the line of Jon Jung with Trailhead Asset Management.
Your line is open.
Jon Jung — Trailhead Asset Management
Trevor, I think you've answered most of the questions that we have in the last calls here.
But could you give us a little bit more information about how many wells you've currently got to
provide water for your district there and how deep are you pumping today in terms of water levels?
Trevor Hill
Yeah. Sure. Let me—I’ll get Ron to field that one, Jon.
Ron Fleming
Yeah. Hi, Jon. So we got service territory spread out over the large regions that Trevor
alluded to. So it is somewhat dependent upon where, but in general we’ve probably got 30-plus
wells. Most of the time they're 1,200 to 1,500 foot deep. But the water table, and again depending
upon where you're at, is anywhere from 200 to 500 foot deep. And so, you're basically pumping
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from a zone just below that water level, but they're reliable sources. We developed most of them in
the last 10 years, and we're doing good from a pumping capacity perspective, which is a bit different
than the water rights piece that Trevor was talking about. But yeah, good on that front as well.
Jon Jung
Okay. Well, terrific. Thanks. Just reiterating the question that I think has been asked a
couple times, but have you considered relisting in the US instead of maintaining the Canadian
listing? I think that's created some—some investors just simply don't go across the border to invest
in a US company.
Trevor Hill
Yeah. Jon, it's Trevor again. Absolutely. We're looking at all those options from dual listing
to holding two listings to consolidating the listing, and the arguments can be made. We have a loyal
base of great shareholders in Canada that we're hugely respectful of and appreciate. We also have a
lot of investors in the US that would love to have a little taste of Global as well. And so there are
compelling reasons to rationalize the structure, and we're looking at all options.
Jon Jung
Okay. Well, terrific. And again, thanks, for the work you've done. We've been shareholders
quite a while and hope to maintain that holding. So good work.
Trevor Hill
Thanks, Jon. Appreciate it. Thank you.
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Jon Jung
Thank you.
Operator
And once again, if you wish to ask a question, simply press *, 1 on your telephone keypad.
And we have a question on the line from Zach Liggett from Financial & Investment Group.
Your line is open.
Zach Liggett — Financial & Investment Group
Great. Thanks, guys. Thanks for the call. Just a question on FATHOM. I know you don’t
have—you just have the minority stake at this point. Any updates there on how they're doing and
just how you guys are—how the technology is working for you in the services contract that you have
with them?
Trevor Hill
Hi. It's Trevor speaking again. Yeah. Obviously FATHOM is a private entity and we don't
disclose its operating results here in Global. But all indications suggest that, that company is doing
well and that our minority interest in FATHOM is appreciating in the context of the investment
that's been made in that company. And I'll get Ron to comment on the second part of the question,
which is how the technology is serving Global today.
Ron Fleming
23
FINAL TRANSCRIPT
August 13, 2014 — 4:00 p.m. E.T.
Yeah. So you may be aware of the history, but just to revisit it briefly, we engineered and
built the FATHOM platform primarily to aggregate water utilities in Global. And so the platform
covers everything from customer service to billing to AMI to asset management, and a lot of other
bells and whistles there. And we did it so we could surface efficiencies and automation benefits for
our customers and for the utilities. And so we still 100 percent today rely and utilize the FATHOM
platform the way we built it for ourselves to achieve those benefits. We sold the majority interest in
FATHOM, and now as I like to tell them confidently, I’m their number one and most important
client. And so they deliver those services back to me as a client instead of another department, but
other than that it's the same. And it's an industry leading platform, and we continue to utilize and
benefit in every way that we can.
Zach Liggett
Great. And I know you don’t—you can't provide much colour, but have you earned
anything additional to that? There was an initial cash payment, right? And then like an earnout? Has
there been any money earned on the earnout portion?
Trevor Hill
Yeah. I'll take that one. Yeah. So the Company, part of the consideration was a royalty.
That royalty's been paid since the beginning, for a year now, and is tracking along nicely. It’ll
probably generate 400,000 or 500,000 grand in the next 12 months.
Zach Liggett
24
FINAL TRANSCRIPT
August 13, 2014 — 4:00 p.m. E.T.
Okay. Great. Thank you.
Operator
And we have no further questions at this time. I would like to turn the call back over to Mr.
Hill.
Trevor Hill
Great. Well, that concludes our formal comments and questions. I'd like to thank everyone
for participating and continuing with Global. And as you can hear in the tenor of the questions,
there's a few things left on our strategic plan and we continue to be focused on them.
So thanks again, everyone, and we'll talk to you next quarter. Thank you.
Operator
And this concludes today's conference call. You may now disconnect.
*****
25

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