Consolidated Water Reports Second Quarter 2024 Operating Results

About this update from Consolidated Water Co. Ltd.

GEORGE TOWN, Cayman Islands , Aug. 14, 2024 (GLOBE NEWSWIRE) -- Consolidated Water Co. Ltd . (NASDAQ Global Select Market: CWCO), a leading designer, builder and operator of advanced water supply and treatment plants, reported results for the second quarter ended June 30, 2024 . All comparisons are to the same prior year period unless otherwise noted. Consolidated Water will hold a conference call at 11:00 a.m. Eastern time tomorrow to discuss the results (see dial-in information below). Second Quarter 2024 Financial Key Points Total revenue declined 27% to $32.5 million . Retail revenue increased 8% to $8.2 million on higher sales volumes. Bulk revenue was relatively consistent at $8.4 million . Manufacturing revenue was relatively consistent at $3.9 million . Services revenue declined by 51% (or approximately $12.2 million ) to $11.9 million due to a $16.5 million decline in construction revenue that was partially offset by an approximately $3 million increase in recurring operations and maintenance revenue. Net income from continuing operations attributable to company stockholders totaled $4.2 million or $0.26 per diluted share, compared to $7.5 million or $0.47 per diluted share in the second quarter of 2023. Net income including discontinued operations attributable to company stockholders totaled $15.9 million or $0.99 per diluted share, compared to $7.3 million or $0.46 per diluted share in the second quarter of 2023. Cash and cash equivalents totaled $96.7 million and working capital was $131.2 million as of June 30, 2024 . Second Quarter 2024 Operational Key Points Volume of retail water sold in the company’s utility service area in Grand Cayman increased 10% compared with the same period in 2023. Completed the construction and commissioning of the new 2.6 million gallon per day Red Gate desalination plant for the Water Authority of the Cayman Islands . Began operating the facility under a 10-year operations and maintenance agreement. Continued piloting, design and permitting of a $147 million project to design, construct, operate and maintain a seawater desalination plant for the Board of Water Supply of Honolulu, Hawaii . Recognized $1.9 million in operations and maintenance revenue from REC which Consolidated Water acquired in October 2023 to provide a new channel for expansion in water-stressed regions of Colorado . Settled a dispute with Mexico involving the discontinued desalination project in Playas de Rosarito, Mexico and recognized a gain of $12.1 million from the sale of the project land and project documentation. Received Notice to Proceed under a new 15-year agreement with the Water and Sewerage Corporation of the Bahamas to design, build, own, operate and finance two seawater desalination plants on Cat Island in the Bahamas . Management Commentary “Our second quarter results were fairly positive, especially considering the inherent variability in our service segment revenue and earnings due to the timing of our large design-build projects in Grand Cayman , Arizona and Hawaii,” stated company CEO, Rick McTaggart . “Our services revenue was down by about half due to the anticipated reduction in construction-related revenue as the Grand Cayman and Arizona projects were completed earlier this year. “Meanwhile, development activities continue to ramp up on the $147 million project to design, construct, operate and maintain a seawater desalination plant for the Board of Water Supply of Honolulu in Hawaii that we announced in June of last year. We are currently in the piloting, design and permitting stage, which we expect will lead into the full construction stage late next year. “The completion of the Hawaii project plant encompasses the current two-year development phase followed by a two-year construction phase. After construction and commissioning, we will operate the plant under a 20-year operations and maintenance agreement which has two additional 5-year extensions exercisable at the client’s discretion. “The reduction in construction-related revenue in the second quarter was partially offset by an increase in the revenue generated from operations and maintenance contracts by both PERC and REC. We acquired REC last October to provide a new channel for growth in the water-stressed regions of Colorado , and we’ve been pleased with REC’s integration into our company and the new opportunities we see developing in Colorado . Similar to our acquisition of PERC, we anticipate that our greater financial and management resources will enable REC to pursue larger projects that will accelerate REC’s growth over time. “Looking ahead to the remainder of the year and beyond, we remain very excited about our prospects. Many positive factors—including the consistent strong water sales growth in Grand Cayman , the long-term recurring revenues from our Caribbean -based bulk water and U.S. -based O&M businesses, stabilized manufacturing revenue and earnings, and the anticipated revenue and earnings from our $147 million design-build-operate project in Hawaii—altogether provide a very solid base for the company in the coming years. “Supported by our exceptionally strong balance sheet, we will continue to invest in new long-term projects such as two desalination plants on Cat Island in the Bahamas , as well as new infrastructure to serve the growing water needs of our utility customer in the Cayman Islands . We see these projects ultimately enhancing revenue growth. “The market for design-build projects is also showing no sign of slowing. While we are currently in a period between two large projects, we believe our efficient and aesthetically pleasing plant designs, our cost-efficient project delivery models and our significant industry experience will help us secure new projects. “In fact, we recently signed master design-build service agreements with two major national clients for a number of projects they are contemplating. We anticipate this will positively impact revenue and earnings in future periods. Combined with strong industry tailwinds, we anticipate that all of these factors will drive our long-term growth, enhance profitability, and further strengthen shareholder value.” Second Quarter 2024 Financial Summary Revenue totaled $32.5 million , declining 27% from $44.2 million in the second quarter of 2023. The decrease was primarily due to decreases of $35,000 in the bulk segment, $12.2 million in the services segment and $161,000 in the manufacturing segment. The decreases were partially offset by an increase of $609,000 in the retail segment. Retail revenue increased primarily due to a 10% increase in the volume of water sold. The volume of water sold increased due to a 5.5% increase in the number of customer accounts in the company’s license area from June 30, 2023 to June 30, 2024 . The increase was also due to significantly less rainfall on Grand Cayman in April and May of 2024 as compared to the same months a year ago. The marginal decrease in bulk segment revenue was due to lower energy costs, which decreased the energy pass-through component of the company’s bulk water rates. The decrease in services segment revenue was primarily due to plant construction revenue decreasing from $19.8 million in 2023 to $3.3 million in 2024 as the result of two construction projects nearing completion during the quarter. Revenue generated under operations and maintenance contracts totaled $7.1 million in the second quarter of 2024, an increase of 75% from the second quarter of 2023. Newly acquired REC contributed $1.9 million of the increase, with the remainder related to PERC contracts. Manufacturing segment revenue was relatively consistent at $3.9 million as compared to $4.1 million in the second quarter of 2023. Gross profit for the second quarter of 2024 was $11.6 million (36% of total revenue), as compared to $15.5 million (35% of total revenue) in the second quarter of 2023. Net income from continuing operations attributable to Consolidated Water stockholders for the second quarter of 2024 was $4.2 million or $0.26 per diluted share, compared to net income of $7.5 million or $0.47 per diluted share in the second quarter of 2023. Including discontinued operations, net income attributable to Consolidated Water stockholders for the second quarter of 2024 was $15.9 million or $0.99 per diluted share, up from net income of $7.3 million or $0.46 per diluted share in the second quarter of 2023. The increase was primarily due to the gain on sale of the land and documentation related to a discontinued project in Mexico totaling $12.1 million in the second quarter of 2024. Cash and cash equivalents totaled $96.7 million as of June 30, 2024 , with working capital of $131.2 million , debt of $0.3 million , and stockholders’ equity of $206.7 million . First Half 2024 Financial Summary Revenue for the first half of 2024 was $72.2 million , down 6% compared to $77.1 million in the same year-ago period. The decrease was primarily driven by decreases of $0.7 million in the bulk segment and $7.5 million in the services segment. The decreases were partially offset by increases of $1.5 million in the retail segment and $1.8 million in the manufacturing segment. Retail revenue increased primarily due to an 8% increase in the volume of water sold. The volume of water sold increased due to a 5.5% increase in the number of customer accounts in the company’s license area from June 30, 2023 to June 30, 2024 . The retail revenue increased also as a result of significantly less rainfall on Grand Cayman in April and May of 2024 as compared to the same months a year ago. The decrease in bulk segment revenue was due to a decrease in energy costs for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas’ rates. The decrease in services segment revenue was due to a $16.5 million decrease in plant construction revenue. Revenue generated under operations and maintenance contracts totaled $14.2 million in the first half of 2024, up 83% as compared to $7.7 million in the same year-ago period. The increase in manufacturing segment revenue was due to increased production activity. Gross profit for the first half of 2024 was $25.5 million (35% of total revenue), down 2% from $26.0 million (34% of total revenue) in the same year-ago period. Net income from continuing operations attributable to stockholders for the first half of 2024 was $11.2 million or $0.70 per diluted share, compared to net income of $11.6 million or $0.73 per diluted share for the first half of 2023. Including discontinued operations, net income attributable to Consolidated Water stockholders for the first half of 2024 was $22.3 million or $1.40 per fully diluted share, up from net income of $11.1 million or $0.70 per fully diluted share in the same period of 2023. The increase was primarily due to a gain on sale of land and project documentation of $12.1 million in the second quarter of 2024. Second Quarter Segment Results Three Months Ended June 30, 2024 Retail Bulk Services Manufacturing Total Revenue $ 8,181,884 $ 8,447,958 $ 11,922,469 $ 3,926,847 $ 32,479,158 Cost of revenue 3,670,133 6,097,460 8,458,537 2,632,814 20,858,944 Gross profit 4,511,751 2,350,498 3,463,932 1,294,033 11,620,214 General and administrative expenses 4,378,816 363,268 1,196,624 667,586 6,606,294 Gain (loss) on asset dispositions and impairments, net (6,130 ) — 3,000 — (3,130 ) Income from operations $ 126,805 $ 1,987,230 $ 2,270,308 $ 626,447 5,010,790 Other income, net 418,426 Income before income taxes 5,429,216 Provision for income taxes 1,063,933 Net income from continuing operations 4,365,283 Income from continuing operations attributable to non-controlling interests 122,872 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 4,242,411 Net income from discontinued operations 11,607,846 Net income attributable to Consolidated Water Co. Ltd. stockholders $ 15,850,257 Three Months Ended June 30, 2023 Retail Bulk Services Manufacturing Total Revenue $ 7,573,329 $ 8,482,495 $ 24,093,963 $ 4,087,476 $ 44,237,263 Cost of revenue 3,433,132 5,931,735 16,248,141 3,160,706 28,773,714 Gross profit 4,140,197 2,550,760 7,845,822 926,770 15,463,549 General and administrative expenses 4,265,535 379,900 904,560 434,920 5,984,915 Gain on asset dispositions and impairments, net — 1,000 — — 1,000 Income from operations $ (125,338 ) $ 2,171,860 $ 6,941,262 $ 491,850 9,479,634 Other income, net 129,131 Income before income taxes 9,608,765 Provision for income taxes 1,940,067 Net income from continuing operations 7,668,698 Income attributable to non-controlling interests 137,226 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 7,531,472 Net loss from discontinued operations (207,701 ) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 7,323,771 First Half Segment Results Six Months Ended June 30, 2024 Retail Bulk Services Manufacturing Total Revenue $ 16,806,822 $ 16,790,052 $ 29,340,080 $ 9,231,594 $ 72,168,548 Cost of revenue 7,221,477 11,662,718 21,127,476 6,658,640 46,670,311 Gross profit 9,585,345 5,127,334 8,212,604 2,572,954 25,498,237 General and administrative expenses 8,483,148 707,409 2,794,478 1,185,288 13,170,323 Gain (loss) on asset dispositions and impairments, net (6,130 ) — 3,000 — (3,130 ) Income from operations $ 1,096,067 $ 4,419,925 $ 5,421,126 $ 1,387,666 12,324,784 Other income, net 836,610 Income before income taxes 13,161,394 Provision for income taxes 1,685,629 Net income from continuing operations 11,475,765 Income from continuing operations attributable to non-controlling interests 291,940 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 11,183,825 Net income from discontinued operations 11,140,780 Net income attributable to Consolidated Water Co. Ltd. stockholders $ 22,324,605 Six Months Ended June 30, 2023 Retail Bulk Services Manufacturing Total Revenue $ 15,344,424 $ 17,486,868 $ 36,815,664 $ 7,459,297 $ 77,106,253 Cost of revenue 6,983,926 12,174,881 26,292,219 5,632,596 51,083,622 Gross profit 8,360,498 5,311,987 10,523,445 1,826,701 26,022,631 General and administrative expenses 8,442,642 732,875 1,993,232 852,828 12,021,577 Gain (loss) on asset dispositions and impairments, net (7,287 ) 12,270 — 1,933 6,916 Income (loss) from operations $ (89,431 ) $ 4,591,382 $ 8,530,213 $ 975,806 14,007,970 Other income, net 286,190 Income before income taxes 14,294,160 Provision for income taxes 2,389,552 Net income from continuing operations 11,904,608 Income from continuing operations attributable to non-controlling interests 300,347 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 11,604,261 Net loss from discontinued operations (466,864 ) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 11,137,397 Conference Call Consolidated Water management will host a conference call tomorrow to discuss these results, which will include a question-and-answer period. Date: Thursday, August 15, 2024 Time: 11:00 a.m. Eastern time ( 8:00 a.m. Pacific time )Toll-free dial-in number: 1-844-875-6913International dial-in number: 1-412-317-6709Conference ID: 3791392 Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you require any assistance connecting with the 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 22, 2024 , as well as available for replay via the Investors section of the Consolidated Water website at www.cwco.com . Toll-free replay number: 1-877-344-7529International replay number: 1-412-317-0088Replay ID: 3791392 About Consolidated Water Co. Ltd. Consolidated Water Co. Ltd. develops and operates advanced water supply and treatment plants and water distribution systems. The company designs, constructs and operates seawater desalination facilities in the Cayman Islands , The Bahamas and the British Virgin Islands , and designs, constructs and operates water treatment and reuse facilities in the United States . The company recently entered the U.S. desalination market with a contract to design, construct, operate and maintain a seawater desalination plant in Hawaii . 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 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 ; and (v) 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 CFOTel (954) 509-8200 Email Contact Investor & Media Relations Contact: Ron Both or Grant Stude CMA Investor & Media RelationsTel (949) 432-7566 Email Contact CONSOLIDATED WATER CO. LTD. CONDENSED CONSOLIDATED BALANCE SHEETS June 30 , December 31 , 2024 2023 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 96,670,206 $ 42,621,898 Accounts receivable, net 39,664,848 38,226,891 Inventory 4,561,374 6,044,642 Prepaid expenses and other current assets 2,945,174 4,056,370 Contract assets 5,413,780 21,553,057 Current assets of discontinued operations 1,503,473 211,517 Total current assets 150,758,855 112,714,375 Property, plant and equipment, net 54,368,951 55,882,521 Construction in progress 1,245,998 495,471 Inventory, noncurrent 4,999,102 5,045,771 Investment in OC-BVI 1,311,271 1,412,158 Goodwill 12,861,404 12,861,404 Intangible assets, net 3,025,000 3,353,185 Operating lease right-of-use assets 3,532,430 2,135,446 Other assets 3,058,949 3,407,973 Long-term assets of discontinued operations — 21,129,288 Total assets $ 235,161,960 $ 218,437,592 LIABILITIES AND EQUITY Current liabilities Accounts payable, accrued expenses and other current liabilities $ 8,100,744 $ 11,604,369 Accrued compensation 2,759,353 3,160,030 Dividends payable 1,559,669 1,572,655 Current maturities of operating leases 618,705 456,865 Current portion of long-term debt 170,867 192,034 Contract liabilities 5,710,398 6,237,011 Deferred revenue 217,618 317,017 Current liabilities of discontinued operations 393,237 364,665 Total current liabilities 19,530,591 23,904,646 Long-term debt, noncurrent 115,033 191,190 Deferred tax liabilities 383,075 530,780 Noncurrent operating leases 2,949,303 1,827,302 Other liabilities 153,000 153,000 Deferred revenue 29,459 — Total liabilities 23,160,461 26,606,918 Commitments and contingencies Equity Consolidated Water Co. Ltd. stockholders' equity Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 49,057 and 44,297 shares, respectively 29,434 26,578 Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,829,572 and 15,771,545 shares, respectively 9,497,743 9,462,927 Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued — — Additional paid-in capital 92,723,287 92,188,887 Retained earnings 104,455,633 85,148,820 Total Consolidated Water Co. Ltd. stockholders' equity 206,706,097 186,827,212 Non-controlling interests 5,295,402 5,003,462 Total equity 212,001,499 191,830,674 Total liabilities and equity $ 235,161,960 $ 218,437,592 CONSOLIDATED WATER CO. LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended June 30 , Six Months Ended June 30 , 2024 2023 2024 2023 Revenue $ 32,479,158 $ 44,237,263 $ 72,168,548 $ 77,106,253 Cost of revenue 20,858,944 28,773,714 46,670,311 51,083,622 Gross profit 11,620,214 15,463,549 25,498,237 26,022,631 General and administrative expenses 6,606,294 5,984,915 13,170,323 12,021,577 Gain (loss) on asset dispositions and impairments, net (3,130 ) 1,000 (3,130 ) 6,916 Income from operations 5,010,790 9,479,634 12,324,784 14,007,970 Other income (expense): Interest income 380,854 86,137 714,996 199,781 Interest expense (33,438 ) (36,247 ) (66,939 ) (74,091 ) Profit-sharing income from OC-BVI 12,150 12,150 32,400 26,325 Equity in the earnings of OC-BVI 36,647 35,272 93,963 70,830 Other 22,213 31,819 62,190 63,345 Other income, net 418,426 129,131 836,610 286,190 Income before income taxes 5,429,216 9,608,765 13,161,394 14,294,160 Provision for income taxes 1,063,933 1,940,067 1,685,629 2,389,552 Net income from continuing operations 4,365,283 7,668,698 11,475,765 11,904,608 Income from continuing operations attributable to non-controlling interests 122,872 137,226 291,940 300,347 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 4,242,411 7,531,472 11,183,825 11,604,261 Net income (loss) from discontinued operations 11,607,846 (207,701 ) 11,140,780 (466,864 ) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 15,850,257 $ 7,323,771 $ 22,324,605 $ 11,137,397 Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders Continuing operations $ 0.27 $ 0.48 $ 0.71 $ 0.74 Discontinued operations 0.73 (0.01 ) 0.70 (0.03 ) Basic earnings per share $ 1.00 $ 0.47 $ 1.41 $ 0.71 Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders Continuing operations $ 0.26 $ 0.47 $ 0.70 $ 0.73 Discontinued operations 0.73 (0.01 ) 0.70 (0.03 ) Diluted earnings per share $ 0.99 $ 0.46 $ 1.40 $ 0.70 Dividends declared per common and redeemable preferred shares $ 0.095 $ 0.085 $ 0.19 $ 0.17 Weighted average number of common shares used in the determination of: Basic earnings per share 15,829,120 15,736,041 15,829,024 15,729,852 Diluted earnings per share 15,983,671 15,907,440 15,984,154 15,899,923 Source: Consolidated Water Co. Ltd.

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