Consolidated Water Reports Second Quarter 2022 Results

Rhea-AI Summary

Consolidated Water Co. Ltd. (CWCO) reported strong second-quarter results for 2022, with total revenue up 26% year-over-year to $21.1 million. Key segments saw revenue growth: retail revenue increased 15%, bulk revenue rose 26%, and services revenue grew 34%. Net income attributed to stockholders was $2.7 million, or $0.18 per share. The company announced a significant $82 million wastewater project in Arizona and a $20 million desalination plant project in the Cayman Islands, enhancing revenue prospects. Cash equivalents stood at $49.1 million, reflecting strong operational cash flow.

Positive

• Total revenue increased by 26% to $21.1 million.
• Net income from continuing operations was $2.7 million or $0.18 per share.
• Retail revenue grew by 15% and services revenue by 34%.
• Secured $82 million contract for wastewater treatment in Arizona.
• Won a $20 million desalination project in the Cayman Islands.
• Cash and cash equivalents reached $49.1 million, up from $43.1 million.

Negative

• None.

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
dsasnett@cwco.com

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

FAQ

What were Consolidated Water Co.'s second quarter 2022 earnings?

Consolidated Water Co. reported net income of $2.7 million, or $0.18 per share, for the second quarter of 2022.

How much did Consolidated Water Co. earn in total revenue in Q2 2022?

The company earned $21.1 million in total revenue for the second quarter of 2022, a 26% increase from the previous year.

What new projects did Consolidated Water Co. announce in August 2022?

The company announced an $82 million wastewater treatment facility project in Arizona and a $20 million desalination project in the Cayman Islands.

What is Consolidated Water Co.'s cash position as of June 30, 2022?

As of June 30, 2022, Consolidated Water Co. reported cash and cash equivalents of $49.1 million.

How did the retail revenue change for Consolidated Water Co. in Q2 2022?

Retail revenue increased by 15% in the second quarter of 2022.