Consolidated Water Misses on Earnings & Revs - Analyst Blog
May 13 2014 - 10:00AM
Zacks
Consolidated Water Co.
Ltd. (CWCO) reported first-quarter 2014 earnings per share
of 4 cents, lagging the Zacks Consensus Estimate of 9 cents by
55.6%. On a year-over-year basis, the company’s earnings fell a
substantial 84.6%.
A decline in earnings and profit due to Consolidated Water’s equity
investment in its affiliate, Ocean Conversion (BVI) Ltd.
(“OC-BVI”), a rise in project development expenses by the company's
Mexican unit N.S.C. Agua, S.A. de C.V. (“NSC”) and lower operating
income from retail business segment collectively led to the
unfavorable earnings result.
Total Revenue
In the first quarter of 2014, Consolidated Water’s total revenue
was $16.3 million, missing the Zacks Consensus Estimate of $17
million by 4.1%.
Quarterly total revenue fell 1.6% from $16.56 million a year ago,
primarily due to lower revenues from the company’s Retail Water
(down 4.4% year over year) and Services (down 9.1% year over year)
segments. This was partially offset by higher contribution from the
company’s Bulk water (up 1% year over year) businesses.
Operational Update
In the quarter under review, Consolidated Water’s total cost of
revenues was $10.38 million, up 0.5% year over year due to higher
costs of revenues at its Retail and Services segments.
The company’s general and administrative expenses during the
quarter were $5.3 million compared with $3.6 million a year ago. A
47.2% year-over-year rise in general and administrative expenses
was mainly due to a surge in project development costs at NSC.
Income from operations at Consolidated Water was $0.63 million,
down 76.2% from $2.65 million a year ago.
In the reported quarter, interest expenses increased 123.3% year
over year to around $0.3 million primarily due to prepayment
premium paid for the early redemption of the remaining outstanding
balance on the company's bonds payable.
Financial Update
As of Mar 31, 2014, Consolidated Water’s cash and cash equivalents
were $24.7 million versus $33.6 million as of Dec 31, 2013.
The company had no outstanding long-term debt as of Mar 31, 2014
compared with $5.2 million at the end of 2013.
In the first three months of 2014, Consolidated Water’s net cash
used in operating activities was $2.1 million versus $3.2 million
in the year-ago comparable period.
At the Peers
Connecticut Water Service Inc. (CTWS) reported
first-quarter 2014 earnings of 27 cents per share, in line with the
Zacks Consensus Estimate.
Aqua America Inc. (WTR) reported first-quarter
2014 earnings per share of 24 cents, edging past the Zacks
Consensus Estimate of 23 cents by a penny.
Zacks Rank
Consolidated Water currently has a Zacks Rank #4 (Sell). However,
another better-ranked stock in the water utility industry is
American Water Works Company, Inc. (AWK), carrying
a Zacks Rank #2 (Buy).
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