Consolidated Water Reports Record 2022 Revenue up 41% to $94.1 Million, Driving Net Income of $8.2 Million or $0.54 per Share

Rhea-AI Summary

Consolidated Water Co. Ltd. (CWCO) reported its 2022 financial results, achieving a record revenue of $94.1 million, up 41% year-over-year. Key drivers include a 206% surge in services revenue and a 71% increase in fourth-quarter total revenue. Net income from continuing operations rose 138% to $8.2 million, reflecting robust performance across segments and a cash dividend of $0.085 per share. Major contracts secured include an $82 million project in Arizona and a $20 million seawater desalination plant in the Cayman Islands. The company is optimistic about future growth trends in tourism and substantial multi-year projects valued over $150 million.

Positive

• Total revenue for 2022 reached $94.1 million, a 41% increase year-over-year.
• Net income from continuing operations rose 138% to $8.2 million.
• Services revenue jumped 206% to $10.3 million in Q4.
• Major contracts awarded in 2022 total over $150 million, expected to enhance earnings.
• Dividends paid totaled $6.3 million for 2022, maintaining a steady dividend of $0.085 per share.

Negative

• Cash and cash equivalents decreased slightly from $51.1 million to $50.7 million.
• Gross profit margin declined from 35.2% to 32.3%.

GEORGE TOWN, Cayman Islands, March 30, 2023 (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 year ended December 31, 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).

Fourth Quarter 2022 Financial Highlights

• Total revenue increased 71% to $28.4 million.
• Retail revenue increased 25% to $6.8 million.
• Bulk revenue increased 23% to $8.5 million.
• Services revenue increased 206% to $10.3 million.
• Paid quarterly cash dividend of $0.085 per share ($0.34 on an annualized basis).
• As of December 31, 2022, cash and cash equivalents totaled $50.7 million, down slightly from $51.1 million as of September 30, 2022, with working capital at $69.9 million, debt of $0.3 million, and stockholders’ equity totaling $159.7 million.

Full Year 2022 Financial Highlights

• Total revenue increased 41% to a record $94.1 million.
• Retail revenue increased 17% to $26.0 million.
• Bulk revenue increased 23% to $33.0 million.
• Services revenue increased 108% to $28.8 million.
• Net income from continuing operations attributable to company stockholders was $8.2 million or $0.54 per basic and diluted share, up 138% from $3.4 million or $0.23 per basic and diluted share in 2021.
• Paid quarterly cash dividends of $0.085 per share ($0.34 on an annualized basis), totaling $6.3 million in dividends for the full year of 2022.

2022 Operational Highlights

• PERC Water, Consolidated Water’s subsidiary that develops, designs, builds, operates and manages water infrastructure facilities in the Southwestern U.S., was awarded a $82 million contract to design an advanced water reuse facility in the city of Goodyear, Arizona for Liberty Utilities. The project, now underway, addresses the increasing demand in Liberty’s service territory in Goodyear and Litchfield Park, with both cities experiencing significant residential and commercial growth over the past decade.
• PERC Water won a 10-year, $49.2 million contract from the Water Replenishment District of Southern California to operate and maintain two advanced water treatment facilities.
• Consolidated Water was awarded a $20 million contract for the designing, building and operating of a new 2.64 million gallon per day seawater desalination plant in the Cayman Islands. The company anticipates the majority of revenue to be generated by the construction and sale of the plant during the first 18 months of the project, with the rest from the operation of the plant over the following 10 years. The design and preliminary construction permitting is complete, and the company broke ground on the project in the fourth quarter of 2022 with construction now well underway.
• In August, all COVID-related travel restrictions to enter the Cayman Islands were eliminated by the government, with the associated return of tourism resulting in a 12.5% increase in water sold.
• Consolidated Water exercised its option to purchase the remaining 39% minority interest in PERC Water in October 2022. In January 2023, the transaction was completed and Consolidated Water became the 100% owner of PERC Water.
• Consolidated Water’s specialty manufacturing subsidiary was awarded a contract by the City of Port St. Lucie, Florida to replace membrane elements and upgrade equipment at the city’s 20 million gallons-per-day J.E. Anderson Reverse Osmosis Water Treatment Plant.
• In all, Consolidated Water secured more than $150 million in major multi-year projects in 2022, which will contribute significantly to earnings during 2023.
  

Management Commentary

“Our record revenue was driven by stronger than expected performance across all four of our business segments,” commented Consolidated Water CEO, Rick McTaggart. “This generated a 41% increase in revenue for the year, reaching a record $94.1 million, and drove net income up 138% to $8.2 million.

“In 2022, our retail water segment benefited from the large increase in the volume of water sold in Grand Cayman. This was primarily due to the lifting of travel restrictions and the return of tourism to the Cayman Islands beginning in August. Indications are now that visits to the Islands will return to historical levels in 2023.

“The $15.0 million in revenue growth in our services segment was largely the result of our PERC Water subsidiary beginning the construction on the $82 million advanced water treatment plant for Liberty Utilities in Arizona, as well as Consolidated Water starting the construction of the new seawater desalination plant on Grand Cayman under a $20 million, 11.5-year contract with the Water Authority of the Cayman Islands.

“In October, we announced another milestone win with the award of the longest-term operation and maintenance contract PERC has ever signed. The 10-year, $49.2 million contract affirms the world-class services that PERC provides. It also supports our plans for further growing this business in the Western U.S., a region that has experienced unprecedented drought conditions for many years.

“We were pleased to see continued quarterly and year-over-year growth in our manufacturing segment. During the fourth quarter, we began to see relief from supply chain constraints and challenging economic conditions. This allowed us to advance more of our previously delayed order backlog through the manufacturing process.

“Our strengthened performance in 2022 also reflected how we have continued to leverage our sales teams across our four business segments. For example, our manufacturing segment has been providing the stainless-steel piping for PERC’s water recycling plant project in Arizona. It has also been providing all of the equipment for the two seawater desalination plants we are building on Grand Cayman.

“We believe our ability to manufacture key components of our projects provides us with a significant competitive advantage. We plan for our manufacturing operations to provide piping and equipment for all future projects we might sign in the U.S. Such intercompany sales, while providing economic benefit to our consolidated operations, are eliminated in consolidation for purposes of reporting our manufacturing segment results.

“Our 2022 results reflected our successful acquisition and integration of PERC Water, and particularly how we applied our financial and management expertise to grow it exponentially. Given PERC’s strong operating performance and profitability, at the beginning of this year we acquired the remaining 39% interest in PERC. Our success with PERC inspires us to explore other acquisition opportunities, and we are presently evaluating two potential complementary transactions where we could utilize our ample cash on hand and leverage our strong balance sheet.

“Looking ahead, we see many positive factors driving continued growth for Consolidated Water. These include the continued recovery of tourism in Grand Cayman and the ongoing construction projects there and in the U.S., as well as the increased project bidding activity underway in the U.S. and the Caribbean.

“We expect that the more than $150 million in major multi-year projects that we secured in 2022 will have a greater positive impact to our earnings in future quarters. It also supports our positive outlook for continued growth in our services segment and the other segments that benefit from it. We believe all of these activities and trends represent strong catalysts for continued growth and positive returns ahead, and the further strengthening of shareholder value.”

Full Year 2022 Financial Summary

Revenue for the full year of 2022 was $94.1 million, up 41% compared to $66.9 million in 2021. The increase was driven by increases of $3.8 million in the retail segment, $6.2 million in the bulk segment, $15.0 million in the services segment and $2.3 million in the manufacturing segment.

Retail revenue increased primarily due to a 12.5% increase in the volume of water sold. 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.

The increase in services segment revenue was due to increases in both plant design and construction revenue and operating and maintenance revenue, with most of the revenue increase resulting from PERC’s progress on its contract with Liberty Utilities for the construction of a water treatment plant in Goodyear, Arizona.

The increase in manufacturing segment revenue was due to increased production activity.

Gross profit for the full year of 2022 was $30.4 million or 32.3% of total revenue, up 29% from $23.5 million or 35.2% of total revenue in 2021.

Net income from continuing operations attributable to stockholders for the full year of 2022 was $8.2 million or $0.54 per basic and diluted share, compared to net income of $3.4 million or $0.23 per basic and diluted share in 2021.

Net income attributable to Consolidated Water stockholders for the full year of 2022, which includes the results of discontinued operations, was $5.9 million or $0.38 per basic and fully diluted share, up from a net income of $876,000 or $0.06 per basic and fully diluted share in 2021.

Cash and cash equivalents totaled $50.7 million as of December 31, 2022, as compared to $51.1 million as of September 30, 2022.

Full Year 2022 Segment Results

		Year Ended December 31, 2022
		Retail				Bulk			Services			Manufacturing				Total
Revenue		$	25,954,013			$	32,991,066		$	28,835,428		$	6,324,465			$	94,104,972
Cost of revenue			12,548,763				23,032,212			22,973,634			5,195,240				63,749,849
Gross profit			13,405,250				9,958,854			5,861,794			1,129,225				30,355,123
General and administrative expenses			14,552,866				1,570,732			3,461,294			1,485,342				21,070,234
Gain (loss) on asset dispositions and impairments, net			(39,397	)			5,607			23,717			(2,631	)			(12,704	)
Income (loss) from operations		$	(1,187,013	)		$	8,393,729		$	2,424,217		$	(358,748	)			9,272,185
Other income, net																	464,810
Income before income taxes																	9,736,995
Provision for income taxes																	396,739
Net income from continuing operations																	9,340,256
Income from continuing operations attributable to non-controlling interests																	1,112,913
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																	8,227,343
Net loss from discontinued operations																	(2,371,049	)
Net income attributable to Consolidated Water Co. Ltd. stockholders																$	5,856,294

		Year Ended December 31, 2021
		Retail				Bulk			Services				Manufacturing				Total
Revenue		$	22,104,953			$	26,800,869		$	13,884,857			$	4,072,823			$	66,863,502
Cost of revenue			11,060,937				17,759,272			10,707,243				3,828,859				43,356,311
Gross profit			11,044,016				9,041,597			3,177,614				243,964				23,507,191
General and administrative expenses			12,841,259				1,365,735			2,762,735				1,380,630				18,350,359
Gain (loss) on asset dispositions and impairments, net			(246,851	)			1,500			(485	)			(2,900,000	)			(3,145,836	)
Income (loss) from operations		$	(2,044,094	)		$	7,677,362		$	414,394			$	(4,036,666	)			2,010,996
Other income, net																		1,623,595
Income before income taxes																		3,634,591
Benefit from income taxes																		(447,982	)
Net income from continuing operations																		4,082,573
Income from continuing operations attributable to non-controlling interests																		632,915
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																		3,449,658
Net loss from discontinued operations																		(2,574,079	)
Net income attributable to Consolidated Water Co. Ltd. stockholders																	$	875,579

Revenue earned by major geographic region were:

		Year ended December 31,
		2022			2021
Cayman Islands		$	30,375,985		$	24,935,746
Bahamas			29,943,615			24,031,547
United States			33,338,466			17,489,851
Revenue earned from management services agreement with OC-BVI			446,906			406,358
		$	94,104,972		$	66,863,502

Annual General Meeting of Shareholders

The company has set May 23, 2023 as the date of its Annual General Meeting of Shareholders to be held at 3:00 p.m. Cayman Islands time (4:00 p.m. EDT) at The Westin Grand Cayman Seven Mile Beach Resort & Spa, Seven Mile Beach, Grand Cayman, Cayman Islands. Holders of record of the company’s stock as of March 24, 2023 will be entitled to vote at the meeting.

Conference Call

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

Date: Friday, March 31, 2023
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: 9603846

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 April 7, 2023, 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: 9603846

About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates advanced water treatment plants and water distribution systems. The company designs, builds and operates seawater desalination facilities in the Cayman Islands, The Bahamas and the British Virgin Islands, and designs, builds and operates water treatment and reuse 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 global health concerns, such as 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 Contact

Investor Relations Contact
Ron Both or Grant Stude
CMA Investor Relations
Tel (949) 432-7566
Email Contact

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

CONSOLIDATED WATER CO. LTD.

CONSOLIDATED BALANCE SHEETS

		December 31,
		2022			2021
ASSETS
Current assets
Cash and cash equivalents		$	50,711,751		$	40,358,059
Certificate of deposit			—			2,500,000
Accounts receivable, net			27,046,182			27,349,307
Inventory			5,727,842			2,504,832
Prepaid expenses and other current assets			5,643,279			2,558,822
Contract assets			2,913,722			489,961
Net asset arising from put/call options			—			128,000
Current assets of discontinued operations			531,480			1,173,741
Total current assets			92,574,256			77,062,722
Property, plant and equipment, net			52,529,545			52,946,539
Construction in progress			3,705,681			710,863
Inventory, noncurrent			4,550,987			4,733,010
Investment in OC-BVI			1,545,430			1,715,905
Goodwill			10,425,013			10,425,013
Intangible assets, net			2,818,888			3,401,666
Operating lease right-of-use assets			2,058,384			2,681,137
Other assets			1,669,377			1,531,816
Long-term assets of discontinued operations			21,129,288			21,146,186
Total assets		$	193,006,849		$	176,354,857
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities		$	8,438,315		$	2,831,925
Accounts payable - related parties			403,839			163,947
Accrued compensation			2,267,583			1,435,542
Dividends payable			1,375,403			1,320,572
Current maturities of operating leases			546,851			592,336
Current portion of long-term debt			114,964			62,489
Contract liabilities			8,803,921			513,878
Deferred revenue			315,825			583,646
Current liabilities of discontinued operations			389,884			182,322
Total current liabilities			22,656,585			7,686,657
Long-term debt, noncurrent			216,117			152,038
Deferred tax liabilities			560,306			564,526
Noncurrent operating leases			1,590,542			2,137,394
Other liabilities			219,110			141,000
Long-term liabilities of discontinued operations			—			7,819
Total liabilities			25,242,660			10,689,434
Commitments and contingencies
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 34,383 and 28,635 shares, respectively			20,630			17,181
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,322,875 and 15,243,693 shares, respectively			9,193,725			9,146,216
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued			—			—
Additional paid-in capital			89,205,159			87,812,432
Retained earnings			61,247,699			60,603,056
Total Consolidated Water Co. Ltd. stockholders' equity			159,667,213			157,578,885
Non-controlling interests			8,096,976			8,086,538
Total equity			167,764,189			165,665,423
Total liabilities and equity		$	193,006,849		$	176,354,857

CONSOLIDATED WATER CO. LTD.

CONSOLIDATED STATEMENTS OF INCOME

		Year Ended December 31,
		2022				2021
Revenue		$	94,104,972			$	66,863,502
Cost of revenue (including purchases from related parties of $2,694,810 in 2022 and $437,857 in 2021)			63,749,849				43,356,311
Gross profit			30,355,123				23,507,191
General and administrative expenses (including purchases from related parties of $96,924 in 2022 and $77,190 in 2021)			21,070,234				18,350,359
Loss on asset dispositions and impairments, net			(12,704	)			(3,145,836	)
Income from operations			9,272,185				2,010,996
Other income (expense):
Interest income			447,186				684,809
Interest expense			(46,545	)			(10,248	)
Profit-sharing income from OC-BVI			26,325				22,275
Equity in the earnings of OC-BVI			75,900				55,984
Net gain (loss) on put/call options			(128,000	)			818,000
Other			89,944				52,775
Other income, net			464,810				1,623,595
Income before income taxes			9,736,995				3,634,591
Provision (benefit) for income taxes			396,739				(447,982	)
Net income from continuing operations			9,340,256				4,082,573
Income from continuing operations attributable to non-controlling interests			1,112,913				632,915
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders			8,227,343				3,449,658
Total loss from discontinued operations			(2,371,049	)			(2,574,079	)
Net income attributable to Consolidated Water Co. Ltd. stockholders		$	5,856,294			$	875,579
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations		$	0.54			$	0.23
Discontinued operations			(0.16	)			(0.17	)
Basic earnings per share		$	0.38			$	0.06
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations		$	0.54			$	0.23
Discontinued operations			(0.16	)			(0.17	)
Diluted earnings per share		$	0.38			$	0.06
Dividends declared per common and redeemable preferred shares		$	0.34			$	0.34
Weighted average number of common shares used in the determination of:
Basic earnings per share			15,290,509				15,213,816
Diluted earnings per share			15,401,653				15,310,145

 

FAQ

What were Consolidated Water's financial highlights for 2022?

Consolidated Water reported a record revenue of $94.1 million for 2022, a 41% increase year-over-year.

How much did Consolidated Water's net income increase in 2022?

Net income from continuing operations rose 138% to $8.2 million in 2022.

What key contracts did Consolidated Water secure in 2022?

The company secured over $150 million in major contracts, including an $82 million project in Arizona and a $20 million seawater desalination plant.

What was the cash dividend paid by Consolidated Water in 2022?

Consolidated Water paid a quarterly cash dividend of $0.085 per share, totaling $6.3 million for the full year.

What is the outlook for Consolidated Water following the 2022 results?

The company expects continued growth driven by recovered tourism and ongoing construction projects, projecting positive impacts from major secured projects.