Consolidated Water Co. Ltd. Reports 2013 Operating Results
GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Mar
17, 2014) - Consolidated Water Co. Ltd. (NASDAQ: CWCO), which
develops and operates seawater desalination plants and water
distribution systems in areas of the world where naturally
occurring supplies of potable water are scarce or nonexistent,
today reported its operating results for the year ended December
31, 2013. The Company will host an investor conference call on
Tuesday, March 18 2014, at 11:00 a.m. EDT (see details below) to
discuss its operating results and other topics of interest.
2013 Operating Results
Net income attributable to the Company's stockholders was
$8,594,519, or $0.58 per diluted share, for the year ended December
31, 2013, compared with net income attributable to CWCO
stockholders of $9,315,514, or $0.64 per diluted share, for the
year ended December 31, 2012. The decrease in net income from
2012 to 2013 was attributable to the earnings and profit sharing
derived from the Company's equity investment in its affiliate,
OC-BVI, which totaled $1,337,352 in 2013, compared with $2,464,773
in the previous year. OC-BVI's 2012 earnings included the
receipt of approximately $4.7 million of the amount awarded by the
Court in the Baughers Bay litigation, whereas its 2013 earnings
included the receipt of only $2.0 million on this award.
Total revenues for the year ended December 31, 2013 decreased
2.5% to approximately $63.8 million, compared with approximately
$65.5 million for 2012.
Retail water revenues declined 5% to approximately $23.0 million
(36% of total revenues) in the most recent year, versus
approximately $24.2 million (37% of total revenues) in
2012. The reduction in retail revenues was due to an
approximate 8% decrease in the number of gallons of water sold by
the Company's Cayman retail operation. Management is not
certain of the cause of this decrease in volume of retail water
sold, but believes the decrease could partially reflect the
adoption of water conservation measures by certain larger
customers. The impact of the reduction in the number of
gallons sold was exacerbated by a decrease in the Company's base
rates of approximately 0.22% due to movements in the consumer price
indices used to determine annual base rate adjustments that become
effective in the first quarter of each year.
Bulk water revenues decreased 2% to approximately $40.0 million
(63% of total revenues) in 2013, compared with approximately $40.8
million (62% of total revenues) in the previous year. The
January 2013 expiration of the Company's operating agreement with
the Water Authority - Cayman for the Lower Valley plant on Grand
Cayman Island resulted in a reduction in bulk water revenues for
the year ended December 31, 2013 when compared with the year ended
December 31, 2012. This decrease was partially offset by
increased sales from the other plants that the Company operates for
the Water Authority - Cayman. The total gallons of water sold
by the bulk segment in 2013 decreased by 2% relative to the number
of gallons sold in 2012.
Services revenues increased 80% to $843,413 in 2013, compared
with $469,625 in 2012, primarily due to an increase in the
management fees earned under the management services agreement with
OC-BVI.
Consolidated gross profit improved 7% to approximately $23.5
million (37% of total revenues) for the year ended December 31,
2013, versus approximately $22.0 million (34% of total revenues)
for the year ended December 31, 2012. Gross profit on retail
revenues declined 5% to approximately $12.0 million in 2013 (52% of
retail revenues), compared with approximately $12.7 million (52% of
retail revenues) in the previous year. Gross profit on bulk
revenues increased 29% to approximately $11.7 million (29% of bulk
revenues), compared with approximately $9.1 million (22% of bulk
revenues) in 2012. The increase in gross profit dollars for
the bulk segment reflected improved margins for bulk operations and
a reduction of approximately $2.2 million in depreciation expense,
as certain assets we continue to use reached the end of their
depreciable lives during the fourth quarter of 2012 and in early
2013. The services segment recorded a negative gross profit of
($236,847) in 2013, compared with a gross profit of $239,507 in
2012. The lower gross profit for 2013 reflects $307,000 in
incremental employee costs primarily due to the transfer of four
engineering employees from the retail segment to the services
segment, and a $173,000 increase in engineering-related consulting
expenses. The services segment's losses from operations of
approximately ($3.6 million) and ($1.7 million) for 2013 and 2012,
respectively, include the costs incurred by N.S.C. Agua, S.A. de
C.V. ("NSC"), the Company's Mexico subsidiary, to develop a 100
million gallon per day desalination plant in Rosarito,
Mexico.
Consolidated general and administrative expenses ("G&A")
increased 9% to approximately $15.8 million in 2013, compared with
approximately $14.5 million in the previous year. Project
development expenses incurred by NSC increased by approximately
$1.5 million, employee costs rose approximately $206,000 due to
base salary increases, directors' fees and expenses increased
approximately $218,000, and fees and license expenses increased
approximately $146,000. These cost increases were partially
offset by a reduction of approximately $584,000 in business
development expenses not related to NSC, a decrease of
approximately $186,000 in research and development costs, a decline
of approximately $178,000 in professional fees, and a reduction in
depreciation expense of approximately $131,000.
Interest income decreased slightly to $826,570 in 2013, versus
$835,941 in 2012 as a result of the declining principal balances on
our loans receivable. Interest expense decreased 45% to
$484,057 for the year ended December 31, 2013, versus $876,971 in
the previous year, as a result of the repayment in March 2012 of
the remaining $8.5 million of CW-Bahamas' Series A bonds payable
and the declining principal balances on the Company's remaining
bonds payable.
Management Comments
"I am pleased that we were able to increase the Company's
consolidated gross profit dollars by 7% during 2013, in spite of a
2.5% decline in consolidated revenues," commented Chief Executive
Officer Rick McTaggart. "This demonstrates our expertise in
operating and maintaining seawater desalination plants and our
ability to maximize the production of our facilities while
controlling costs, which ultimately benefits our customers and
shareholders."
"The erosion over the past three years of our retail sales
volumes in Grand Cayman is somewhat confounding, given that
economic conditions and tourist numbers continue to
improve. We are currently speaking with some of our larger
customers to determine what factors may be contributing to this
phenomenon."
"Development activities involving our Rosarito desalination
plant and conveyance pipeline project in northern Baja California,
Mexico continue to progress," continued Mr. McTaggart. "Over
the last three months, we have held technical and financial
meetings with officials from the Government of Baja California and
the public water utility in Tijuana, Mexico, Comisión Estatal de
Servicios Públicos de Tijuana ("CESPT"), and we expect to reach
certain important project milestones shortly. In addition, we
continue to work closely with the Otay Water District in San Diego
County, California, and expect to soon deploy additional water
sampling and piloting programs in support of Otay's efforts to
obtain necessary regulatory approvals in California."
"We continue to believe that the northern Baja California and
southern California region desperately needs new drinking water
sources and that the Rosarito project provides an economical and
practical solution to meet this need. Recent press coverage of
the extreme drought conditions affecting the region supports our
views," concluded Mr. McTaggart.
Cash Dividends
On January 31, 2014, the Company paid a quarterly cash dividend
of $0.075 per share for the 19th consecutive quarter. The
Company has paid cash dividends to shareholders since 1985.
Investor Conference Call
The Company will host a conference call at 11:00 a.m. Eastern
Time (EDT) on Tuesday, March 18, 2014. Shareholders and other
interested parties may participate in the conference call by
dialing 877-374-8416 (international/local participants dial
412-317-6716) and requesting participation in the "Consolidated
Water Conference Call" a few minutes before 11:00 a.m. EDT on March
18, 2014.
A replay of the conference call will be available one hour after
the call through Tuesday, March 25, 2014 by dialing 877-344-7529
(international/local participants dial 412-317-0088) and entering
the conference ID # 10042472, and on the Company's website at
www.cwco.com.
CWCO-E
About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates seawater
desalination plants and water distribution systems in areas of the
world where naturally occurring supplies of potable water are
scarce or nonexistent. The Company operates water production and/or
distribution facilities in the Cayman Islands, Belize, the British
Virgin Islands, The Commonwealth of The Bahamas, and Bali,
Indonesia.
Consolidated Water Co. Ltd. is headquartered in George Town,
Grand Cayman, in the Cayman Islands. The Company's ordinary
(common) stock is traded on the NASDAQ Global Select Market under
the symbol "CWCO". Additional information on the Company is
available on its website at http://www.cwco.com.
This press release includes statements that may constitute
"forward-looking" statements, usually containing the words
"believe", "estimate", "project", "intend", "expect", "should" 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, continued acceptance of the Company's products and
services in the marketplace, changes in its relationships with the
governments of the jurisdictions in which it operates, the outcome
of its negotiations with the Cayman government regarding a new
retail license agreement, its ability to successfully secure
contracts for water projects, including the projects under
development in Baja California, Mexico and Bali, Indonesia, its
ability to develop and operate such projects profitably, and its
ability to manage growth and other risks detailed in the Company's
periodic report filings with the Securities and Exchange Commission
("SEC").
By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revisions
or changes after the date of this release.
(Financial Highlights Follow)
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CONSOLIDATED WATER CO. LTD. |
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CONSOLIDATED BALANCE SHEETS |
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December 31, |
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2013 |
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2012 |
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ASSETS |
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Current assets |
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Cash
and cash equivalents |
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$ |
33,626,516 |
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$ |
33,892,655 |
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Marketable securities |
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|
8,587,475 |
|
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|
8,570,338 |
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|
Accounts receivable, net |
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|
18,859,560 |
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|
|
12,516,466 |
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Inventory |
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|
1,383,135 |
|
|
|
1,757,601 |
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|
Prepaid expenses and other current assets |
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|
3,435,127 |
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|
|
2,709,185 |
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Current portion of loans receivable |
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|
1,691,102 |
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|
1,812,532 |
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Total current assets |
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67,582,915 |
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61,258,777 |
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Property, plant and equipment, net |
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|
58,602,886 |
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|
58,993,406 |
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Construction in progress |
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1,450,417 |
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|
2,612,800 |
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Inventory, non-current |
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|
4,204,089 |
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|
3,970,241 |
|
Loans receivable |
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|
7,337,177 |
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|
9,028,279 |
|
Investment in OC-BVI |
|
|
6,623,448 |
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6,925,346 |
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Intangible assets, net |
|
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1,096,488 |
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1,455,015 |
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Goodwill |
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|
3,499,037 |
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|
3,499,037 |
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Investment in land |
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12,175,566 |
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|
- |
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Other assets |
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|
2,792,831 |
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|
2,706,185 |
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Total assets |
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$ |
165,364,854 |
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$ |
150,449,086 |
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LIABILITIES AND EQUITY |
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Current liabilities |
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Accounts payable and other current liabilities |
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$ |
7,157,896 |
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$ |
5,883,666 |
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Dividends payable |
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1,164,026 |
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1,158,967 |
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Current portion of long term debt |
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5,205,167 |
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|
1,647,493 |
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Land
purchase obligation |
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10,050,000 |
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- |
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Total current liabilities |
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23,577,089 |
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8,690,126 |
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Long term debt |
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- |
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5,205,167 |
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Other liabilities |
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289,392 |
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|
435,413 |
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Total liabilities |
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23,866,481 |
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14,330,706 |
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Commitments and contingencies |
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Equity |
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Consolidated Water Co. Ltd. stockholders' equity |
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Redeemable preferred stock, $0.60 par value. Authorized 200,000
shares; issued and outstanding 37,408 and 30,265 shares,
respectively |
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22,445 |
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18,159 |
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Class
A common stock, $0.60 par value. Authorized 24,655,000 shares;
issued and outstanding 14,686,197 and 14,593,011 shares,
respectively |
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|
8,811,718 |
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|
8,755,807 |
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Class
B common stock, $0.60 par value. Authorized 145,000 shares; none
issued or outstanding |
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- |
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- |
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Additional paid-in capital |
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83,381,387 |
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82,467,421 |
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Retained earnings |
|
|
47,155,548 |
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42,965,179 |
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Cumulative translation adjustment |
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(471,983 |
) |
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(15,400 |
) |
Total Consolidated Water Co. Ltd. stockholders'
equity |
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138,899,115 |
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134,191,166 |
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Non-controlling interests |
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2,599,258 |
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1,927,214 |
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Total equity |
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141,498,373 |
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|
136,118,380 |
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Total liabilities and equity |
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$ |
165,364,854 |
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$ |
150,449,086 |
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CONSOLIDATED WATER CO. LTD. |
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CONSOLIDATED STATEMENTS OF INCOME |
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Year Ended December 31, |
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2013 |
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2012 |
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2011 |
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Retail water revenues |
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$ |
23,018,498 |
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$ |
24,222,895 |
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$ |
23,356,338 |
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Bulk water revenues |
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39,960,220 |
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40,758,182 |
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30,757,874 |
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Services revenues |
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|
843,413 |
|
|
|
469,625 |
|
|
|
1,040,280 |
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|
Total
revenues |
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|
63,822,131 |
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|
65,450,702 |
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55,154,492 |
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Cost of retail revenues |
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|
11,023,096 |
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11,548,255 |
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|
11,496,598 |
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Cost of bulk revenues |
|
|
28,212,896 |
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|
31,679,887 |
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|
24,127,488 |
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Cost of services revenues |
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|
1,080,260 |
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|
|
230,118 |
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|
|
508,339 |
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Total
cost of revenues |
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40,316,252 |
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|
43,458,260 |
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36,132,425 |
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Gross profit |
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|
23,505,879 |
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|
21,992,442 |
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19,022,067 |
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General and administrative expenses |
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|
15,844,303 |
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|
|
14,542,817 |
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13,651,650 |
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Impairment losses |
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|
- |
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|
521,444 |
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|
|
- |
|
Income from operations |
|
|
7,661,576 |
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|
6,928,181 |
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|
5,370,417 |
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Other income (expense) |
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Interest income |
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|
826,570 |
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|
835,941 |
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|
1,200,999 |
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Interest expense |
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|
(484,057 |
) |
|
|
(876,971 |
) |
|
|
(1,141,744 |
) |
|
Profit sharing income from OC-BVI |
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|
357,636 |
|
|
|
343,454 |
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|
|
- |
|
|
Equity in earnings of OC-BVI |
|
|
979,716 |
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|
|
2,121,319 |
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|
|
838,652 |
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Impairment of investment in OC-BVI |
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|
(200,000 |
) |
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|
- |
|
|
|
- |
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Other |
|
|
7,048 |
|
|
|
272,085 |
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|
|
283,656 |
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|
Other
income (expense), net |
|
|
1,486,913 |
|
|
|
2,695,828 |
|
|
|
1,181,563 |
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Net income |
|
|
9,148,489 |
|
|
|
9,624,009 |
|
|
|
6,551,980 |
|
Income attributable to non-controlling interests |
|
|
553,970 |
|
|
|
308,495 |
|
|
|
438,762 |
|
Net income attributable to Consolidated Water Co. Ltd.
stockholders |
|
$ |
8,594,519 |
|
|
$ |
9,315,514 |
|
|
$ |
6,113,218 |
|
|
|
|
|
|
|
|
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Basic earnings per common share attributable to
Consolidated Water Co. Ltd. common stockholders |
|
$ |
0.59 |
|
|
$ |
0.64 |
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|
$ |
0.42 |
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Diluted earnings per common share attributable to
Consolidated Water Co. Ltd. common stockholders |
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$ |
0.58 |
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|
$ |
0.64 |
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|
$ |
0.42 |
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Dividends declared per common share |
|
$ |
0.30 |
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$ |
0.30 |
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$ |
0.30 |
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Weighted average number of common shares used in the
determination of: |
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|
Basic
earnings per share |
|
|
14,633,884 |
|
|
|
14,578,518 |
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|
|
14,560,259 |
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|
Diluted earnings per share |
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|
14,703,880 |
|
|
|
14,606,148 |
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|
|
14,596,013 |
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CONSOLIDATED WATER CO. LTD. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) |
|
|
|
Year Ended December 31, |
|
|
2013 |
|
|
2012 |
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|
2011 |
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Net Income |
|
$ |
9,148,489 |
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|
$ |
9,624,009 |
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|
$ |
6,551,980 |
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(480,614 |
) |
|
|
(16,210 |
) |
|
|
- |
|
Total other comprehensive income (loss) |
|
|
(480,614 |
) |
|
|
(16,210 |
) |
|
|
- |
Comprehensive income |
|
|
8,667,875 |
|
|
|
9,607,799 |
|
|
|
6,551,980 |
Comprehensive income attributable to the
non-controlling interest |
|
|
529,939 |
|
|
|
307,685 |
|
|
|
438,762 |
Comprehensive income attributable to Consolidated Water
Co. Ltd. stockholders |
|
$ |
8,137,936 |
|
|
$ |
9,300,114 |
|
|
$ |
6,113,218 |
|
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For further information, please contact: Frederick W. McTaggart
President and CEO (345) 945-4277 David W. Sasnett Executive Vice
President and CFO (954) 509-8200 info@cwco.com or RJ Falkner &
Company, Inc. Investor Relations Counsel (800) 377-9893
info@rjfalkner.com
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