Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources 2021 Second Quarter Conference Call. At this time, all participants are in 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. [Operator Instructions] I would like to remind everyone that this call is being recorded on August 6, 2021 at 1:00 pm Eastern Time. I would now like to turn the conference over to Heather Krupa, Vice President and Controller. Please go ahead.

Welcome, everyone, and thank you for joining us on today's call. Yesterday, we issued our 2021 second quarter 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 Chris Krygier, Chief Strategy Officer. Mr. Fleming will summarize the key operational events of the quarter. Mr. Liebman will review the financial results for the quarter and Mr. Krygier will review strategic initiatives and business development for the quarter. 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. Such 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 available on our website. I will now turn the call over to Mr. Ron Fleming.

Thank you, Heather. Good morning, everyone, and thank you for joining us today. We are very pleased to report the results for the second quarter of 2021. Before handing the call over to Mike to review financial highlights, I will review a few operational highlights for the quarter. In accordance with our top priority, we continue to perform at an extremely high level on employee safety and regulatory compliance non-recordable incidents. Within the quarter, we experienced no recordable events, injuries or expenses related to employee safety. And as of today, our staff has only experienced 2 minor OSHA recordable incidents in 1436 days. We have incurred only $2500 in nearly 5 years on OSHA recordable related incidents. This results in an extremely low loss ratio and experience modifier or EMOD, which is 0.62 today. As a reminder, an EMOD of 1 is considered to be an industry average. So said another way, we are performing 38% better than the industry average, which results in lower actual costs and worker's insurance costs, and most importantly, a safer work environment. Also having incurred no significant compliance violations in the quarter, it has now been 1951 days since our last significant compliance violation for over 5 years. These impressive track records clearly demonstrate our performance on our top mandate, customer and employee safety. I now want to highlight customer growth. On the organic growth front, total active service connections increased 10.2% as compared to the end of Q2 2020, bringing total connections to 51,314. Development and housing activity remained very strong in Metro Phoenix and our service areas. As a reminder, single-family dwelling permits for Metro Phoenix totaled 28,704 in 2020, and that was up 18% over 2019. According to local real estate consensus, single-family permits increased by another 40% in 2021 through…

Thanks, Ron. Hello, everyone. Total revenue for the second quarter of 2021 was $10.9 million, which was up $1.1 million or 10.7% compared to Q2 of 2020. This increase is primarily driven by the organic connection growth, increased consumption and our approved rate increase. Operating expenses for Q2 of 2021 were $8.6 million compared to $8.2 million in Q2 of 2020. This is an increase of $440,000 or 5.4%. Notable changes in operating expenses include: increased operating and maintenance costs by $140,000, which was primarily driven by those costs that increased as revenue increases; second, increased depreciation and amortization expense by $211,000, primarily due to the increases in our fixed assets associated with our capital expenditures plan as well as increased amortization of intangibles; lastly, we had increased G&A expense by $92,000. Now to discuss other income and expense. Other income for Q2 of 2021 was $284,000 compared to $1.8 million of expense in Q1 of 2020. This improvement of $2.1 million was primarily due to a onetime other income of $1.5 million for cell tower leases we sold. Additionally, we incurred $532,000 of expense in Q2 of 2020 for a loss on disposal of assets versus only $16,000 in Q2 of 2021. Turning to net income. Global Water had net income of $2 million or $0.09 per diluted share in Q2 of 2021. Now to talk about adjusted EBITDA, which adjusts for non-recurring and non-cash items. Adjusted EBITDA was $5.3 million in Q2 of 2021, which was up $550,000 or 11.5% compared to Q2 of 2020. Before turning the call over to Chris, I'd like to touch on our liquidity position. When combining our unused $10 million line of credit with our existing cash on hand of $19.3 million, we have over $29 million of liquidity to support our ongoing operations and our growth strategy. It's also worth reminding folks that we have $100 million shelf registration in the event we need to access the capital markets to execute our growth strategy. This concludes our update on the second quarter 2021 financial results. I'll now pass the call to Chris to review our rate case and strategic initiatives for the quarter.

Thanks, Mike. Hello, everyone. I will briefly highlight 3 items for you before passing the call back to Ron. First, our pending rate case before the Arizona Corporation Commission continues as expected. In the quarter, all written pre-file testimony was completed and the hearing starts next week. The latest rounds of testimony reflect our current position requesting approximately $3 million revenue increase with staff and RUCO [ph] 0:10:54 both recommending an approximately $1 million revenue increase. As I mentioned earlier, the hearing before the Administrative Law Judge Starts next week and is expected to conclude on or around August 20. From that point, the party file sets of legal briefs summarizing the case and the Administrative Law Judge drafts what is called a Recommended Opinion and Order or ROO as it is sometimes abbreviated. The commissioners will then review the Judge's recommendation and issue a final order. We estimate the commissioners to review the ROO in Q4 with new rates to be implemented on or around January 1, 2022. Finally, as we previously stated, it is important to note that there can be no assurance, however, on the outcome of the rate case, the requested rate increase or the timing of any increase. Next, turning to expansion of current service areas and establishment of new service areas. As you read in our press release and heard Ron referenced, we began providing potable water service to Nikola Motor Corp.'s new manufacturing facility in the City of Coolidge. This is an impressive achievement as it reflects the ability of our team to execute key projects with short turnarounds. We originally signed a master utility agreement with Nikola in December 2020 and provided potable water service less than 7 months later. A reflection of hard work by our engineering and operations team. Now…

Thank you, Chris. It is clear we are well positioned with a strong balance sheet and disciplined strategy that continues to accelerate. In fact, from an operational and financial perspective, we have never been stronger, and we have more than ample liquidity and access to capital to be great utility partners for the communities we've the privilege to serve; and to 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 your questions.

We will now begin the question-and-answer session. [Operator Instructions] There are no questioners from the telephone lines. This concludes the question-and-answer session. I would like to turn the conference back over to the presenters for any closing remarks. : :

Great. Thank you, operator. We'd just like to thank everyone for participating on the call today and for your ongoing interest in Global Water Resources. Thanks, and we look forward to speaking with you again soon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.