Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources, Inc. 2022 Q3 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 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 November 10th 2022 at 1:00 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 2022 Q3 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 Christopher Krygier, Chief Strategy Officer. Mr. Fleming will summarize the key operational events of the quarter. Mr. Liebman will review the financial results for the third quarter, and Mr. Krygier will review strategic initiatives and business development. Mr. Fleming, Mr. Liebman, and Mr. Krygier will be available for 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 date hereof and are not guarantees of future performance. For additional information regarding factors that may affect future results, please read the sections Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations included within our latest Form 10-Q filed with the SEC. Those 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 again 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 Q3 of 2022 as there are many highlights worth mentioning. At Global Water, 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 water scarcity, challenging regulations, and aging infrastructure. In the quarter, our company completed a public offering of common stock totaling net proceeds of $14.9 million and an increase to our unused revolving line of credit from $10 million to $15 million, ensuring we have the capital necessary to fund acquisitions, infrastructure investments, and for general corporate purposes.
We also announced the completion of our company-wide rate case, which includes new rates for 96% of our customers, including numerous notable policy decisions. On October 3rd, we filed an application at the ACC for approval to acquire Farmers Water Company and its roughly 3,300 customers in the town of Sahuarita. Chris will discuss the Farmers acquisition and the rate case further. Subsequent to quarter close, we completed the upgrade of Las Quintas Serenas customer connections from manually read meters to smart meters. The smart meters support greater operational efficiency as well as real-time automated notifications. As a reminder, Las Quintas Serenas is a utility we acquired in 2021, also in the town of Sahuarita. We intend to do the same meter upgrade project in Farmers Water Company once that acquisition closes. I now want to highlight customer growth.
Total active connections grew 8% as compared to the end of Q3 2021, bringing total connections to 56,134. Despite the national slowdown, development and housing activity continues in Metro Phoenix and our service areas. Thus far, Metro Phoenix has only experienced a 14% reduction in single-family home permits in 2022 over the same period in 2021. In Maricopa, our largest utilities, we're also seeing a slowdown, but the city has still issued over 1,000 single family housing permits year to date. However, large scale commercial and industrial growth continues to accelerate at a pace never seen before in Metro Phoenix, and this continues to push out to our areas either in our planned service territories or in communities immediately adjacent.
Because of this, we continue to make excellent progress on the engineering, permitting, and construction of new service areas, including for the Nikola Corporation manufacturing facility and the surrounding Inland Port Arizona. Amongst other areas within our large service territories. We believe that soon and in the years to come, we will continue to see large scale commercial and industrial growth in addition to our strong organic housing growth. Putting all these elements together, Global Water is well-positioned from an operational safety, compliance, and financial perspective with notable growth in the years to come. I'd now like to turn the call over to Mike for financial highlights.
Thanks, Ron. Hello, everyone. Total revenue for the third quarter of 2022 was $11.9 million, which is up $488,000 or 4.3% compared to Q3 of 2021. This increase is primarily driven by an 8% increase in active service connections, combined with the new rates that were implemented in August of 2022, as approved in our most recent rate case decision. These increases were offset by the $692,000 of revenue recognized in Q3 2021 related to our infrastructure, coordination, and financing agreements, also known as ICFAs, as we didn't recognize any ICFA revenue in Q3 of 2022. A more fulsome explanation of the ICFAs can be found in our quarterly and annual filings.
Water and wastewater revenue, which excludes ICFA revenue for Q3 of 2022, increased $1.2 million or 11% compared to Q3 of 2021. This increase was driven by the increase in active service connections combined with new rates. Operating expenses remained flat at $9.1 million in Q3 of 2022 compared to Q3 of 2021. Some notable changes in operating expenses included increased operating and maintenance costs by approximately $100,000, which was primarily associated with increased expenses as the company continues to grow, in addition to increases in costs related to inflation. These increases were offset by lower property taxes. G&A expense was reduced by $155,000, primarily driven by lower deferred compensation and board compensation tied to the reduction in stock price during the quarter.
These decreases were offset by higher professional fees and IT related costs. Lastly, we had approximately a $73,000 increase in depreciation and amortization tied to our capital expenditure program. Other expense for Q3 of 2022 remained flat at approximately $470,000 compared to Q3 of 2021. Turning to net income, Global Water had net income of $1.7 million in Q3 of 2022. This was a 12.6% increase compared to Q3 of 2021 and equated to a $0.07 per diluted share. Now to talk about adjusted EBITDA, which adjusts for non-recurring items such as ICFA revenue, as well as non-cash items such as restricted stock expense. Adjusted EBITDA was $6.1 million in Q3 of 2022, an increase of $1 million or 20.6% compared to Q3 of 2021.
I'd like to briefly touch on inflation. While we have not seen a material increase in our operating expenses as a result of inflation, we do expect to see some increases in future periods, primarily related to personnel costs. Additionally, as you would expect, we have experienced an increase in capital costs as a direct result of inflation. Lastly, before turning the call over to Chris, I'd like to touch on our liquidity position. When combining our unused $15 million line of credit with our September 30th cash on hand of over $15 million, we have over $30 million of liquidity to support ongoing operations and our growth strategy. This concludes our update on the Q3 of 2022 financial results. I'll now pass the call to Chris to review our Arizona Corporation Commission activity and strategic initiatives for the quarter.
Thank you, Mike. Hello, everyone. It was a busy quarter at the Arizona Corporation Commission. First, as you heard earlier and we mentioned on our last quarterly call, we received Rate Decision No. 78644 in July 2022. We implemented phase one of our rate increase on August 1st 2022, and we'll implement phase II of our rate increase on January 1st 2023. This process is proceeding as anticipated. Second, in the quarter, work began on the Arizona Corporation Commission's Water Task Force. Led by Chairwoman Lea Márquez Peterson, the task force is focused on reviewing and potentially providing more certainty around commission rules and procedures, in particular around acquisition policy and water supply policy. The intent of the task force is to see if the commission policy can provide more clarity for all utility stakeholders.
We see the task force and the associated workshops as important discussions to continue building constructive regulatory frameworks around continued acquisitions of small troubled utilities and the acquisition of future water supplies. Finally, at the ACC, as you may have seen, the initial election results for the two open seats occurred this week. Currently, the two Republican candidates, Kevin Thompson and Nick Myers, are leading the two Democratic candidates, incumbent Commissioner Kennedy and candidate Lauren Kuby. Candidate Thompson brings experience as a member of the Mesa City Council and worked for Southwest Gas, a natural gas utility, for a number of years. Candidate Myers has worked for the last four years as a policy advisor to a sitting commissioner. Candidate Kuby has experience working on the Tempe City Council.
While we await the election results, regardless of who wins, we look forward to engaging with the current commissioners and newly elected commissioners to advance important water policies in our state. Finally, turning to our acquisition of Farmers Water Company. As you may have seen in yesterday's press release, we filed our request for ACC approval to acquire Farmers on October 3rd 2022. Just a few weeks later, on October 24th, staff issued its recommendation to the commission recommending approval of our application, which we appreciate. Finally, yesterday at the ACC open meeting, the commissioners verbally approved the application on an expedited basis, and we appreciate their quick action. The transition planning process is going well, and we continue to estimate closing the Farmers acquisition in the Q1 of 2023. This concludes the update on the ACC activity and strategic initiatives for the quarter. I'll now pass the call back to Ron.
Thank you, Chris. It's clear we are well-positioned with a strong balance sheet and disciplined strategy. In fact, from an operational and financial perspective, we've never been stronger, and we have more than ample liquidity and access to capital to be great utility partners for the communities where we have the privilege to serve. We'll pursue expansion through organic growth, acquisitions, and new projects, both big and small. As we handle this high growth, we intend to remain at the forefront of the water management industry and advance our mission of achieving efficiency and consolidation. We truly believe that expanding our total water management platform and applying our expertise throughout our regional service areas and to new utilities will be beneficial to all stakeholders involved.
We appreciate your investment in and support of us as we grow Global Water to address important utility, water resource, and economic development issues in Arizona and potentially beyond. These highlights conclude our prepared remarks. Thank you. We are now available to answer any questions.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Gerry Sweeney with Roth Capital Partners. Please proceed with your question.
Hey, good morning, Ron, Chris. Thanks for taking my call.
Hey, Gerry.
Let's start with the Inland Port. Obviously, a lot of activity in that area. I'm curious if, as this builds out, will this be an entirely regulated opportunity for you, or is there also potential opportunity to do something that's unregulated? Or, I'm just curious as to how this is gonna function. Very familiar with connections on the homeowner side, but I think this is a little bit different for a lot of us.
Yeah, absolutely. This is Ron. I'll go ahead and take that, Gerry. First, you're right. There's lots of activity on that. Obviously, if you follow Arizona at all, we're in an industrial boom. Quite a bit of that has been moving south of Phoenix to Pinal County, which as you know, is where we got lots of large service territory, and that includes the Pinal Land Holdings Inland Port Arizona property in the city of Coolidge. I'll just say this, we've been very active working with lots of potential projects that wanna locate in our service areas there and in that inland port. You know, stay tuned. I believe we'll have some announcements pretty soon on that.
To your broader question, you know, I think part of the reason we were brought into Inland Port and really our large service areas throughout Pinal County and other places is the way we think about regional planning. Ultimately, you certainly could have some industrial users go out and individually try to do their own solutions on a case-by-case basis, but we certainly aren't a proponent for that. You know, obviously there's companies that focus on that aspect and become their utility partner internal to the property if they do a sole source solution.
We think from a efficiency standpoint, a water resource management standpoint, from a community standpoint, it's best if this is all part of an integrated, regulated plan, and that's our company's model and that's what we've positioned to these landowners and these communities and gotten that support. Mostly for, I would say, for any industrial project that's coming into our service areas, it's part of an integrated plan, and it will be the kind of fully regulated normal water and wastewater utility service. Now, I say normal because of the rate regulation component. Obviously, these are some of the pretty big projects and you know, it does have some different considerations as you you know, provide service to them. You know, nothing that we can't do. In fact, we're looking forward to those opportunities that are coming to us really quick on that.
I imagine one really big meter, that's all.
If it was only that simple.
If it was . Glad I could make you guys laugh. Second question. Permits obviously been really strong for an extended period of time, and also obviously they've slowed down a little bit, but just curious, roughly speaking, how long does it take from, we'll just say an issued permit to maybe metering a at that location? Granted, I understand that this was a little bit more broad brushed, but just curious as to how long that lasts or what that transition period is.
Yeah. No worries, Gerry. This is Mike. You know, obviously market has influence here, but then traditionally what we have seen, it's usually kind of a 12- to 18-month process. As you think about that Ron mentioned, that 1,000+ permits that were issued this year, you know, it'll take some time for that to funnel through. Yep.
Got it. Mike, while I have you, quick question on debt. Seen a lot of companies that have some type of structure, you know, SOFR plus a fixed amount, but SOFR's accelerated quite substantially over the last six, nine months. Could you just go through your debt structure and talk about is anything like that gonna impact you guys at all?
Yeah, yeah. Thanks, Gerry. A good question. Fortunate for us, the existing debt that we have outstanding over $110 million is all fixed rate debt at roughly 4.55%. We're in a really good position there. As it pertains to our revolver, there is a variable component that's SOFR related, that piece will move, but it's, you know, a pretty small piece considering the big tranche.
Got it. Last question. Farmers. Any idea expected CapEx required as you sort of transition that into the Global Water family?
Great question, Gerry. This is Chris. Good morning or good afternoon on your side of the country. We're still refining what that'll be internally, but I'll tell you, broadly speaking, we see that there's a significant opportunity to deploy capital down there, one, to catch up the utility, but then two, to implement our platform and everything we've done in all of our other utilities. For example, you heard Ron talk about the meter upgrades in AMI we did at LQS. We're gonna replicate that down at Farmers. I don't have the specific dollars that we're ready to share at this point, but we definitely see it as an opportunity to deploy more capital that's needed, and we'll provide all the fantastic benefits that the customers and our other service territories just love and speak so highly of.
Got it. One real short one since that's Chris. If the two Republicans win in the ACC election, what's the balance, Republican versus Democrat? Do you know?
Yeah. Great, great question, Gerry. If right now the current composition is three Republicans, two Democrats, and one Republican seat is up and one Democrat seat is up. If the two Republicans win, it will be four to one, Republicans to Democrats. If you were to flip it and say two Democrats win, it would then be three Democrats, two Republicans.
Got it. Thanks. I appreciate it. I'll talk to you guys.
Absolutely.
Thanks, Gerry.
Thanks, Gerry.
Thank you. Once again, ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. We'll pause a moment to allow for questions. Once again, it is star one to ask a question at this time. Ladies and gentlemen, there are no further questions at this time. I'll turn the floor back to Mr. Fleming for any final comments.
Okay. Thank you, operator. Thanks everyone for participating in our call today and your ongoing interest in Global Water Resources. We appreciate it and look forward to speaking with you again soon.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.