Consolidated Water Reports Second Quarter 2022 Results

GEORGE TOWN, Grand Cayman, Aug. 11, 2022 (GLOBE NEWSWIRE) — Consolidated Water Co. Ltd. (NASDAQ Global Select Market: CWCO), a leading developer and operator of advanced water supply and treatment plants, reported results for the second quarter ended June 30, 2022. All comparisons are to the same year-ago period unless otherwise noted.

The company will hold a conference call at 11:00 a.m. Eastern time tomorrow to discuss the results (see dial-in information below).

Second Quarter 2022 Financial Highlights

  • Total revenue increased 26% to $21.1 million.
  • Retail revenue increased 15% to $6.5 million.
  • Bulk revenue increased 26% to $8.4 million.
  • Services revenue increased 34% to $5.1 million.
  • Manufacturing revenue increased to $1.1 million.
  • Net income from continuing operations attributable to company stockholders was $2.7 million or $0.18 per share.
  • Paid quarterly cash dividend of $0.085 per share ($0.34 on an annualized basis), totaling $1.3 million in dividends in the second quarter of 2022.
  • As of June 30, 2022, cash and cash equivalents totaled $49.1 million, up $5.9 million from $43.1 million as of March 31, 2022, with working capital at $71.6 million, debt of only $0.3 million, and stockholders’ equity totaling $159.4 million.

Second Quarter 2022 Operational Highlights

  • Entered into an $82 million agreement (through PERC Water Corporation) to construct and commission a four million gallon per day advanced wastewater treatment facility for Liberty Utilities in Goodyear, Arizona.
  • Won desalination plant design, build and operate project in the Cayman Islands amounting to approximately $20 million in revenue backlog.

Management Commentary

“In Q2, we showed strong sales improvements across three of our business segments,” stated Consolidated Water CEO, Rick McTaggart. “As a result, our total revenue increased 26% to $21.1 million.

“Our retail segment’s results so far this year have been encouraging and based on recent government data we believe tourism arrivals to Grand Cayman could eventually double from current levels to reach pre-pandemic levels.

“During the quarter, we announced two major contract wins. The first project announced was a 10-year, 2.64 million gallon per day seawater desalination plant contract with the Water Authority of the Cayman Islands, where we have been engaged to design, build, sell and subsequently operate a desalination plant in George Town on Grand Cayman. We commenced the permitting and design phase for this plant during this past quarter, and we expect to complete the construction of the plant and begin operations by the fourth quarter of 2023.

“We believe our in-house manufacturing capabilities at Aerex provided us a competitive advantage in winning the seawater desalination plant design, build and operate project in the Cayman Islands. Since 1973, our cost-effective water supply solutions have supported the growth and development of Grand Cayman by supplying safe and affordable potable water to residents and visitors.

“The second project we announced was through our subsidiary, PERC Water Corporation, to construct and commission a four million gallon per day advanced wastewater treatment facility for Liberty Utilities in Goodyear, Arizona. Our fees for the project are expected to total approximately $82 million, with the facility planned to be operational in December 2023 and fully completed by the end of the second quarter of 2024. Construction of this important project has already commenced and will begin to generate significant revenue beginning next quarter.

“With respect to our canceled Rosarito project, the Baja California, Mexico government confirmed publicly that we recently began discussions with the State to potentially resolve the issues related to the cancellation by the government of the project as well as potentially addressing the State’s acute water shortage issues. We cannot presently determine the outcome of the discussions and we have not terminated our efforts to obtain relief through the international arbitration process as a result of these discussions.

“Looking ahead, we see many positive factors driving continued growth in 2022. In addition to the further diminishing effects of the pandemic and the continuing return of tourism in Grand Cayman, we are also seeing increased project bidding activity in the United States and the Caribbean. It has been widely reported that the situation in the Colorado River basin is dire and this is driving water utilities and agricultural users in PERC’s service area to implement extraordinary measures to meet their water demands. All of these factors and trends will continue to drive growth across all of our business segments in the remainder of this year and beyond.”

Second Quarter 2022 Financial Summary

Revenue for the second quarter of 2022 was $21.1 million, up 26% compared to $16.7 million in the same year-ago period. The increase was primarily driven by increases of $852,000 in the retail segment, $1.7 million in the bulk segment, $1.3 million in the services segment and $510,000 in the manufacturing segment.

The increase in retail revenue reflects an 8% increase in the volume of water sold. The retail revenue also increased as a result of higher energy costs that increased the energy pass-through component of the company’s water rates, as well as a more favorable rate mix.

The increase in bulk segment revenue was attributable to an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates.

The increase in services segment revenue was due to increases in both plant design and construction revenue and operating and maintenance revenue. The increase in manufacturing segment revenue was due to higher project activity.

Gross profit for the second quarter of 2022 was $7.5 million or 35.5% of total revenue, up 23% from $6.1 million or 36.3% of total revenue for the same year-ago period.

Net income from continuing operations attributable to Consolidated Water stockholders for the second quarter of 2022 was $2.7 million or $0.18 per basic and diluted share, compared to net loss of $1.5 million or $(0.10) per basic and diluted share for the same year-ago period.

Net income attributable to Consolidated Water stockholders for the second quarter of 2022, which includes the results of discontinued operations, was $2.3 million or $0.15 per basic and fully diluted share, up from net loss of $1.7 million or $(0.11) per basic and fully diluted share for the same year-ago period.

Cash and cash equivalents totaled $49.1 million as of June 30, 2022, as compared to $43.1 million as of March 31, 2022. The increase was due to cash generated from operating activities.

First Half 2022 Financial Summary

Revenue for the first half of 2022 was $40.6 million, up 20% compared to $33.8 million in the same year-ago period. The increase was primarily driven by increases of $1.5 million in the retail segment, $2.8 million in the bulk segment, $2.5 million in the services segment and $55,000 in the manufacturing segment.

Retail revenue increased primarily due to an 8% increase in the volume of water sold. The retail revenue also increased as a result of higher energy costs that increased the energy pass-through component of the company’s water rates, as well as a more favorable rate mix.

The increase in bulk segment revenue was due to an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates and, to a lesser extent, an increase of 4% in the volume of water sold by CW-Bahamas.

The increase in services segment revenue was due to increases in both plant design and construction revenue and operating and maintenance revenue.

The increase in manufacturing segment revenue was due to higher project activity.

Gross profit for the first half of 2022 was $14.6 million or 36.0% of total revenue, up 20% from $12.2 million or 36.1% of total revenue in the same year-ago period.

Net income from continuing operations attributable to stockholders for the first half of 2022 was $5.0 million or $0.33 per basic and diluted share, compared to net loss of $212,000 or $(0.01) per diluted share in the same year-ago period.

Net income attributable to Consolidated Water stockholders for the half of 2022, which includes the results of discontinued operations, was $4.0 million or $0.26 per fully diluted share, up from net loss of $676,000 or $(0.04) per fully diluted share in the same year-ago period.

Second Quarter Segment Results

                             
  Three Months Ended June 30, 2022
  Retail   Bulk   Services   Manufacturing   Total
Revenue $ 6,526,803   $ 8,423,749   $ 5,055,483   $ 1,061,092     $ 21,067,127  
Cost of revenue   3,118,411     5,647,583     3,865,867     959,769       13,591,630  
Gross profit   3,408,392     2,776,166     1,189,616     101,323       7,475,497  
General and administrative expenses   3,345,109     404,072     838,040     339,470       4,926,691  
Gain on asset dispositions and impairments, net   1,200         4,080           5,280  
Income (loss) from operations $ 64,483   $ 2,372,094   $ 355,656   $ (238,147 )     2,554,086  
Other income, net                           397,982  
Income before income taxes                           2,952,068  
Income tax provision                           10,152  
Net income from continuing operations                           2,941,916  
Income from continuing operations attributable to non-controlling interests                           232,197  
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders                           2,709,719  
Loss from discontinued operations                           (419,833 )
Net income attributable to Consolidated Water Co. Ltd. stockholders                         $ 2,289,886  
                               

                             
  Three Months Ended June 30, 2021
  Retail   Bulk   Services   Manufacturing   Total
Revenue $ 5,674,790     $ 6,711,971   $ 3,763,239   $ 551,524     $ 16,701,524  
Cost of revenue   2,781,909       4,386,794     2,878,409     589,559       10,636,671  
Gross profit   2,892,881       2,325,177     884,830     (38,035 )     6,064,853  
General and administrative expenses   3,318,473       303,856     671,585     430,390       4,724,304  
Gain (loss) on asset dispositions and impairments, net   3,360               (2,900,000 )     (2,896,640 )
Income (loss) from operations $ (422,232 )   $ 2,021,321   $ 213,245   $ (3,368,425 )     (1,556,091 )
Other income, net                           233,114  
Loss before income taxes                           (1,322,977 )
Income tax benefit                           (6,845 )
Net loss from continuing operations                           (1,316,132 )
Income attributable to non-controlling interests                           197,138  
Net loss from continuing operations attributable to Consolidated Water Co. Ltd. stockholders                           (1,513,270 )
Loss from discontinued operations                           (151,379 )
Net loss attributable to Consolidated Water Co. Ltd. stockholders                         $ (1,664,649 )
                               

First Half Segment Results

                             
  Six Months Ended June 30, 2022
  Retail   Bulk   Services   Manufacturing   Total
Revenue $ 12,840,003     $ 15,774,393   $ 9,799,303   $ 2,211,333     $ 40,625,032  
Cost of revenue   6,172,151       10,334,702     7,515,047     1,981,871       26,003,771  
Gross profit   6,667,852       5,439,691     2,284,256     229,462       14,621,261  
General and administrative expenses   6,795,515       714,375     1,618,014     664,904       9,792,808  
Gain on asset dispositions and impairments, net   1,200           16,538           17,738  
Income (loss) from operations $ (126,463 )   $ 4,725,316   $ 682,780   $ (435,442 )     4,846,191  
Other income, net                           717,709  
Income before income taxes                           5,563,900  
Income tax provision                           56,425  
Net income from continuing operations                           5,507,475  
Income from continuing operations attributable to non-controlling interests                           473,627  
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders                           5,033,848  
Loss from discontinued operations                           (1,027,147 )
Net income attributable to Consolidated Water Co. Ltd. stockholders                         $ 4,006,701  
                               

                             
  Six Months Ended June 30, 2021
  Retail   Bulk   Services   Manufacturing   Total
Revenue $ 11,386,095     $ 12,957,941   $ 7,304,085     $ 2,156,720     $ 33,804,841  
Cost of revenue   5,489,903       8,541,947     5,600,337       1,981,291       21,613,478  
Gross profit   5,896,192       4,415,994     1,703,748       175,429       12,191,363  
General and administrative expenses   6,689,483       681,359     1,393,605       724,343       9,488,790  
Gain (loss) on asset dispositions and impairments, net   (246,640 )     1,500     (433 )     (2,900,000 )     (3,145,573 )
Income (loss) from operations $ (1,039,931 )   $ 3,736,135   $ 309,710     $ (3,448,914 )     (443,000 )
Other income, net                           547,722  
Income before income taxes                           104,722  
Income tax benefit                           (9,505 )
Net income from continuing operations                           114,227  
Income from continuing operations attributable to non-controlling interests                           325,931  
Net loss from continuing operations attributable to Consolidated Water Co. Ltd. stockholders                           (211,704 )
Loss from discontinued operations                           (464,173 )
Net loss attributable to Consolidated Water Co. Ltd. stockholders                         $ (675,877 )
                               
                               

Conference Call

Consolidated Water management will host a conference call tomorrow to discuss these results, followed by a question-and-answer period.

Date: Friday, August 12, 2022
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-844-875-6913
International dial-in number: 1-412-317-6709
Conference ID: 1591128

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566.

A replay of the call will be available after 1:00 p.m. Eastern time on the same day through August 19, 2022, as well as available for replay via the Investors section of the Consolidated Water website at www.cwco.com.

Toll-free replay number: 1-877-344-7529
International replay number: 1-412-317-0088
Replay ID: 1591128

About Consolidated Water Co. Ltd.

Consolidated Water Co. Ltd. develops and operates advanced water supply and treatment plants and water distribution systems. The company operates water production facilities in the Cayman Islands, The Bahamas and the British Virgin Islands and operates water treatment facilities in the United States. The company also manufactures and services a wide range of products and provides design, engineering, management, operating and other services applicable to commercial and municipal water production, supply and treatment, and industrial water and wastewater treatment. For more information, visit www.cwco.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe”, “estimate”, “project”, “intend”, “expect”, “should”, “will” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to (i) continued acceptance of the company’s products and services in the marketplace; (ii) changes in its relationships with the governments of the jurisdictions in which it operates; (iii) the outcome of its negotiations with the Cayman government regarding a new retail license agreement; (iv) the collection of its delinquent accounts receivable in the Bahamas; (v) the possible adverse impact of the COVID-19 virus on the company’s business; and (vi) various other risks, as detailed in the company’s periodic report filings with the Securities and Exchange Commission (“SEC”). For more information about risks and uncertainties associated with the company’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the company’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting the company’s Secretary at the company’s executive offices or at the “Investors – SEC Filings” page of the company’s website at http://ir.cwco.com/docs. Except as otherwise required by law, the company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Company Contact:
David W. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
[email protected]

Investor Relations Contact
Ron Both or Justin Lumley
CMA
Tel (949) 432-7566
Email Contact

Media Contact:
Tim Randall
CMA
Tel (949) 432-7572
Email Contact



CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

           
  June 30,    December 31, 
  2022   2021
  (Unaudited)      
ASSETS          
Current assets          
Cash and cash equivalents $ 49,093,162   $ 40,358,059
Certificate of deposit   2,518,493     2,500,000
Accounts receivable, net   22,680,801     27,349,307
Inventory   3,565,223     2,504,832
Prepaid expenses and other current assets   3,988,445     2,558,822
Contract assets   1,098,240     489,961
Current assets of discontinued operations   413,187     1,173,741
Total current assets   83,357,551     76,934,722
Property, plant and equipment, net   50,938,339     52,946,539
Construction in progress   2,034,413     710,863
Inventory, noncurrent   4,933,103     4,733,010
Investment in OC-BVI   1,512,747     1,715,905
Goodwill   10,425,013     10,425,013
Intangible assets, net   3,106,667     3,401,666
Operating lease right-of-use assets   2,298,165     2,681,137
Net asset arising from put/call options   404,000     128,000
Other assets   2,430,208     2,204,013
Long-term assets of discontinued operations   21,141,805     21,146,186
Total assets $ 182,582,011   $ 177,027,054
           
LIABILITIES AND EQUITY          
Current liabilities          
Accounts payable, accrued expenses and other current liabilities $ 4,049,709   $ 2,831,925
Accounts payable – related parties   766,775     163,947
Accrued compensation   1,238,127     1,435,542
Dividends payable   1,325,011     1,320,572
Current maturities of operating leases   563,643     592,336
Current portion of long-term debt   85,533     62,489
Contract liabilities   3,225,682     513,878
Deferred revenue   344,539     583,646
Current liabilities of discontinued operations   193,062     182,322
Total current liabilities   11,792,081     7,686,657
Long-term debt, noncurrent   166,272     152,038
Deferred tax liabilities   1,155,362     1,236,723
Noncurrent operating leases   1,850,860     2,137,394
Other liabilities   141,000     141,000
Long-term liabilities of discontinued operations   2,921     7,819
Total liabilities   15,108,496     11,361,631
Commitments and contingencies          
Equity          
Consolidated Water Co. Ltd. stockholders’ equity          
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 38,239 and 28,635 shares, respectively   22,943     17,181
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,285,523 and 15,243,693 shares, respectively   9,171,314     9,146,216
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued      
Additional paid-in capital   88,178,390     87,812,432
Retained earnings   62,004,903     60,603,056
Total Consolidated Water Co. Ltd. stockholders’ equity   159,377,550     157,578,885
Non-controlling interests   8,095,965     8,086,538
Total equity   167,473,515     165,665,423
Total liabilities and equity $ 182,582,011   $ 177,027,054
           
           

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

                       
  Three Months Ended June 30,    Six Months Ended June 30, 
  2022     2021     2022     2021  
Revenue $ 21,067,127     $ 16,701,524     $ 40,625,032     $ 33,804,841  
Cost of revenue (including purchases from related parties of $640,937 and $129,401 for the three months ended, and $1,480,369 and $285,383 for the six months ended, June 30, 2022 and 2021, respectively)   13,591,630       10,636,671       26,003,771       21,613,478  
Gross profit   7,475,497       6,064,853       14,621,261       12,191,363  
General and administrative expenses (including purchases from related parties of $24,231 and $24,299 for the three months ended, and $48,462 and $28,728 for the six months ended, June 30, 2022 and 2021, respectively)   4,926,691       4,724,304       9,792,808       9,488,790  
Gain (loss) on asset dispositions and impairments, net   5,280       (2,896,640 )     17,738       (3,145,573 )
Income (loss) from operations   2,554,086       (1,556,091 )     4,846,191       (443,000 )
                       
Other income (expense):                      
Interest income   110,916       174,645       291,603       335,009  
Interest expense   (2,724 )     (2,638 )     (6,805 )     (5,498 )
Profit-sharing income from OC-BVI   8,100       4,050       18,225       10,125  
Equity in the earnings of OC-BVI   19,551       10,726       51,317       26,506  
Net unrealized gain on put/call options   201,000       31,000       276,000       162,000  
Other   61,139       15,331       87,369       19,580  
Other income, net   397,982       233,114       717,709       547,722  
Income (loss) before income taxes   2,952,068       (1,322,977 )     5,563,900       104,722  
Income tax provision (benefit)   10,152       (6,845 )     56,425       (9,505 )
Net income (loss) from continuing operations   2,941,916       (1,316,132 )     5,507,475       114,227  
Income from continuing operations attributable to non-controlling interests   232,197       197,138       473,627       325,931  
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders   2,709,719       (1,513,270 )     5,033,848       (211,704 )
Loss from discontinued operations   (419,833 )     (151,379 )     (1,027,147 )     (464,173 )
Net income (loss) attributable to Consolidated Water Co. Ltd. stockholders $ 2,289,886     $ (1,664,649 )   $ 4,006,701     $ (675,877 )
                       
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders                      
Continuing operations $ 0.18     $ (0.10 )   $ 0.33     $ (0.01 )
Discontinued operations   (0.03 )     (0.01 )     (0.07 )     (0.03 )
Basic earnings (loss) per share $ 0.15     $ (0.11 )   $ 0.26     $ (0.04 )
                       
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders                      
Continuing operations $ 0.18     $ (0.10 )   $ 0.33     $ (0.01 )
Discontinued operations   (0.03 )     (0.01 )     (0.07 )     (0.03 )
Diluted earnings (loss) per share $ 0.15     $ (0.11 )   $ 0.26     $ (0.04 )
                       
Dividends declared per common and redeemable preferred shares $ 0.085     $ 0.085     $ 0.26     $ 0.26  
                       
Weighted average number of common shares used in the determination of:                      
Basic earnings per share   15,285,523       15,201,682       15,285,523       15,201,571  
Diluted earnings per share   15,436,421       15,201,682       15,435,956       15,201,571