Consolidated Water Co. Ltd. Reports First Quarter Operating Results
GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - May
12, 2014) - Consolidated Water Co. Ltd. (NASDAQ: CWCO)
("Consolidated Water" or "the Company"), 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 first quarter of 2014. The Company will
host an investor conference call on Tuesday, May 13, at 11:00 a.m.
EDT (see details below) to discuss its operating results and other
topics of interest.
First Quarter Operating Results
Net income attributable to the Company's stockholders totaled
$654,909, or $0.04 per diluted share, for the quarter ended March
31, 2014, compared with net income attributable to CWCO
stockholders of $3,742,003, or $0.26 per diluted share, for the
three months ended March 31, 2013. The decrease in net income from
the first quarter of 2013 to the first quarter of 2014 was
primarily attributable to lower earnings and profit sharing derived
from the Company's equity investment in its affiliate, OC-BVI,
higher project development expenses incurred by the Company's
Mexico subsidiary, N.S.C. Agua, S.A. de C.V. ("NSC"), and lower
operating income from the retail business segment.
Total revenues for the quarter ended March 31, 2014 decreased
slightly (1%) to approximately $16.3 million, compared with
approximately $16.6 million in the 2013 quarter.
Retail water revenues declined 4% to approximately $6.1 million
(37% of total revenues) in the most recent quarter, versus
approximately $6.4 million (39% of total revenues) in the first
quarter of 2013. The reduction in retail revenues was due to an
approximate 4% decrease in the number of gallons of water sold by
the Company's retail operations. Management believes this decrease
in volume of retail water sold reflects rainfall for the first
quarter of 2014 that was 12 times higher than that for the first
quarter of 2013 and, to a lesser extent, the adoption of water
conservation measures by certain large retail customers.
Bulk water revenues were relatively unchanged (up 1%) at
approximately $10.0 million (61% of total revenues) in the first
quarter of 2014, compared with approximately $9.9 million (60% of
total revenues) in the prior-year quarter. The Company's
subsidiary, Consolidated Water (Bahamas) Limited ("CW-Bahamas")
supplied the aggregate amount of water contracted by the Water
& Sewerage Corporation of The Bahamas ("WSC") under the water
supply agreement for the Windsor plant in July 2013, at which time
such agreement expired. However, at the request of the government
of The Bahamas, CW-Bahamas continues to supply water to the
government of The Bahamas from this plant. The government of The
Bahamas has not yet decided whether or not it will extend
CW-Bahamas' water supply agreement for the Windsor plant on a
long-term basis.
Services revenues declined 9% to $275,913 in the quarter ended
March 31, 2014, compared with $303,495 in the corresponding period
of 2013, primarily due to a non-recurring sale of chemicals and
materials to an unrelated company in the first quarter of 2013.
Consolidated gross profit declined 4% to approximately $6.0
million (37% of total revenues) in the three months ended March 31,
2014, versus approximately $6.2 million (38% of total revenues) in
the three months ended March 31, 2013. Gross profit on retail
revenues declined 11% to approximately $3.2 million in the most
recent quarter (52% of retail revenues), compared with
approximately $3.6 million (56% of retail revenues) in the
year-earlier period. Gross profit on bulk revenues increased 7% to
approximately $2.8 million (29% of bulk revenues), compared with
approximately $2.7 million (27% of bulk revenues) a year earlier.
The services segment recorded a negative gross profit of ($59,351)
in the 2014 quarter, compared with a negative gross profit of
($9,030) in the first quarter of 2013.
Consolidated general and administrative expenses ("G&A")
increased 50% to approximately $5.3 million in the first quarter of
2014, compared with approximately $3.6 million in the year-earlier
quarter, reflecting an approximate $1.5 million increase in NSC's
project development costs attributable primarily to a $1 million
payment on an option agreement and a $350,000 payment resulting
from a decision not to extend a letter of intent with an
engineering, procurement and construction contractor. G&A
expense increases also included $120,000 in additional professional
fees, $124,000 in higher base salaries, and an increase of $27,000
in information technology expenses.
Interest income remained relatively consistent at $172,932 for
the first quarter of 2014, versus $180,088 in the first quarter of
2013. Interest expense increased to $295,737 in the three months
ended March 31, 2014, up from $135,425 in the prior-year quarter,
reflecting the prepayment premium paid for the early redemption on
February 17, 2014 of the remaining outstanding balance on the
Company's bonds payable and the amortization of the related bond
discount and deferred issuance costs.
The Company recognized earnings and profit sharing on its
investment in OC-BVI of $74,739 in the first quarter of 2014,
compared with $1,075,320 in the first quarter of 2013. The
additional earnings and profit sharing recognized in the 2013
quarter from this equity investment resulted from the payment by
the British Virgin Islands government to OC-BVI in January 2013 of
the remaining $2.0 million of the amount awarded OC-BVI as a result
of the resolution of the Baughers Bay litigation.
Management Comments
"Two factors had a significant impact on the comparability of
our first quarter results for 2014 and 2013," noted Rick McTaggart,
Chief Executive Officer of Consolidated Water Co. Ltd. "In February
2014, we paid $1 million to a previous NSC shareholder to exercise
an option and avoid dilution of our existing ownership in our
Mexican subsidiary, NSC, which increased our general and
administrative costs for the quarter. This was a one-time expense
that kept our ownership in the Mexican desalination project at
99.95%. Meanwhile, last year's first quarter results benefited from
the receipt by our OC-BVI affiliate of a $2.0 million payment from
the British Virgin Islands government that was related to the
resolution of the Baughers Bay litigation. These factors, combined
with lower operating income for our retail segment and higher
project development expenses at our Mexican subsidiary, were
responsible for the decrease in profitability in the first quarter
of 2014, relative to the prior-year period."
"The profitability of our bulk water operations improved during
the most recent quarter, as gross profit increased in dollar terms
and as a percentage of revenues due to a very respectable increase
in our Cayman Islands bulk water gross margin from 24% to 30% due
to higher plant utilizations. Revenues and gross profit of our
retail water segment in the Cayman Islands was adversely impacted
by a 12-fold increase in rainfall during the first quarter of this
year when compared to the same period in 2013."
"We have been awarded three contracts this year by the Water
Authority-Cayman in the Cayman Islands. The first is a new contract
to refurbish the 800,000 gallon per day Lower Valley desalination
plant in Grand Cayman, Cayman Islands. The second is a one-year
extension through April 1, 2015 of the operating and maintenance
contract for the 1.6 million gallon per day North Sound plant in
Grand Cayman. Finally, we entered into a new contract to provide a
60,000 gallon per day desalination plant in Cayman Brac, Cayman
Islands. The Lower Valley and Cayman Brac contracts were awarded to
us through a competitive tendering process that included a number
of overseas suppliers. This firmly underscored our competitiveness
in our home market. The Lower Valley project will be completed
during the first quarter of 2015, and completion of the Cayman Brac
project is scheduled later this year," concluded Mr. McTaggart.
Cash Dividends
On April 30, 2014, the Company paid a quarterly cash dividend of
$0.075 per share for the 20th 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, May 13, 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 May
13, 2014.
A replay of the conference call will be available one hour after
the call through Tuesday, May 20, 2014 by dialing 877-344-7529
(international/local participants dial 412-317-0088) and entering
the conference ID # 10045961, 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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CONDENSED CONSOLIDATED BALANCE SHEETS |
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March 31, |
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December 31, |
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2014 |
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2013 |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash
and cash equivalents |
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$ |
24,693,011 |
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$ |
33,626,516 |
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Certificate of deposit |
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1,000,000 |
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- |
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Marketable securities |
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8,596,543 |
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8,587,475 |
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Accounts receivable, net |
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23,815,493 |
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18,859,560 |
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Inventory |
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1,370,036 |
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1,383,135 |
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Prepaid expenses and other current assets |
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2,490,098 |
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3,435,127 |
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Current portion of loans receivable |
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1,644,436 |
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1,691,102 |
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Total current assets |
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63,609,617 |
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67,582,915 |
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Property, plant and equipment, net |
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57,881,089 |
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58,602,886 |
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Construction in progress |
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1,729,638 |
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1,450,417 |
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Inventory, non-current |
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4,243,526 |
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4,204,089 |
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Loans receivable |
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6,916,027 |
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7,337,177 |
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Investment in OC-BVI |
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5,970,987 |
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6,623,448 |
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Intangible assets, net |
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1,044,966 |
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1,096,488 |
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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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12,175,566 |
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Other assets |
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2,683,742 |
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2,792,831 |
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Total assets |
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$ |
159,754,195 |
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$ |
165,364,854 |
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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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$ |
6,768,431 |
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$ |
7,157,896 |
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Dividends payable |
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1,165,032 |
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1,164,026 |
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Current portion of long term debt |
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- |
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5,205,167 |
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Land
purchase obligation |
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10,050,000 |
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10,050,000 |
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Total current liabilities |
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17,983,463 |
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23,577,089 |
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Other liabilities |
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264,827 |
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289,392 |
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Total liabilities |
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18,248,290 |
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23,866,481 |
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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 37,408 shares,
respectively |
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22,445 |
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22,445 |
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Class
A common stock, $0.60 par value. Authorized 24,655,000 shares;
issued and outstanding 14,698,499 and 14,686,197 shares,
respectively |
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8,819,099 |
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8,811,718 |
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Class
B common stock, $0.60 par value. Authorized 145,000 shares; none
issued or outstanding |
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- |
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- |
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Additional paid-in capital |
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83,607,653 |
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83,381,387 |
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Retained earnings |
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46,705,864 |
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47,155,548 |
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Cumulative translation adjustment |
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(376,550 |
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(471,983 |
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Total Consolidated Water Co. Ltd. stockholders'
equity |
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138,778,511 |
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138,899,115 |
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Non-controlling interests |
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2,727,394 |
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2,599,258 |
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Total equity |
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141,505,905 |
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141,498,373 |
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Total liabilities and equity |
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$ |
159,754,195 |
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$ |
165,364,854 |
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CONSOLIDATED WATER CO. LTD. |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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(UNAUDITED) |
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Three Months Ended March 31, |
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2014 |
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2013 |
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Retail water revenues |
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$ |
6,112,961 |
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$ |
6,395,012 |
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Bulk water revenues |
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9,959,736 |
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9,856,690 |
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Services revenues |
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275,913 |
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303,495 |
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Total revenues |
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16,348,610 |
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16,555,197 |
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Cost of retail revenues |
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2,931,376 |
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2,834,752 |
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Cost of bulk revenues |
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7,111,545 |
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7,187,413 |
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Cost of services revenues |
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335,264 |
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312,525 |
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Total cost of revenues |
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10,378,185 |
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10,334,690 |
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Gross profit |
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5,970,425 |
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6,220,507 |
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General and administrative expenses |
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5,342,633 |
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3,568,936 |
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Income from operations |
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627,792 |
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2,651,571 |
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Other income (expense): |
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Interest income |
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172,932 |
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180,088 |
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Interest expense |
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(295,737 |
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(132,425 |
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Profit sharing income from OC-BVI |
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20,250 |
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287,459 |
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Equity in earnings of OC-BVI |
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54,489 |
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787,861 |
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Other |
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198,296 |
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89,133 |
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Other
income (expense), net |
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150,230 |
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1,212,116 |
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Net income |
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778,022 |
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3,863,687 |
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Income attributable to non-controlling interests |
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123,113 |
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121,684 |
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Net income attributable to Consolidated Water Co. Ltd.
stockholders |
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$ |
654,909 |
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$ |
3,742,003 |
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Basic earnings per common share attributable to
Consolidated Water Co. Ltd. common stockholders |
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$ |
0.04 |
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$ |
0.26 |
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Diluted earnings per common share attributable to
Consolidated Water Co. Ltd. common stockholders |
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$ |
0.04 |
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$ |
0.26 |
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Dividends declared per common share |
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$ |
0.075 |
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$ |
0.075 |
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Weighted average number of common shares used in the
determination of: |
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Basic earnings per share |
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14,686,744 |
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14,598,096 |
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Diluted earnings per share |
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14,766,985 |
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14,635,334 |
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CONSOLIDATED WATER CO. LTD. |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) |
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(UNAUDITED) |
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Three Months Ended March 31, |
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2014 |
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2013 |
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Net Income |
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$ |
778,022 |
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$ |
3,863,687 |
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Other comprehensive income (loss) |
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Foreign currency translation adjustment |
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100,456 |
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(22,703 |
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Total other comprehensive income (loss) |
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100,456 |
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(22,703 |
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Comprehensive income |
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878,478 |
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3,840,984 |
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Comprehensive income attributable to the
non-controlling interest |
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128,136 |
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120,549 |
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Comprehensive income attributable to Consolidated Water
Co. Ltd. stockholders |
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$ |
750,342 |
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$ |
3,720,435 |
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For further information, please contact: Frederick W. McTaggart
President and CEO (345) 945-4277 or David W. Sasnett Executive Vice
President and CFO (954) 509-8200 or via e-mail at info@cwco.com or
RJ Falkner & Company, Inc. Investor Relations Counsel (800)
377-9893 or via e-mail at info@rjfalkner.com
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