UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 11, 2015
(Date of earliest event reported)
CONSOLIDATED WATER CO. LTD.
(Exact Name of Registrant as Specified in Charter)
Cayman Islands, B.W.I. |
0-25248 |
98-0619652 |
(State or Other Jurisdiction of |
(Commission File No.) |
(IRS Employer Identification No.) |
Incorporation) |
|
|
Regatta Office Park
Windward Three, 4th
Floor
West Bay Road, P.O. Box 1114
Grand Cayman, KY1-1102
Cayman Islands
(Address of Principal Executive Offices)
(345) 945-4277
(Registrant’s telephone number, including
area code)
Not Applicable
(Former Name or Former Address, if Changed Since
Last Report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see
General Instructions A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On May 11, 2015, Consolidated Water Co. Ltd.
(the “Company”) issued a press release announcing its results of operations for the first quarter ended March 31, 2015.
A copy of the press release is attached as Exhibit 99.1 to this report. This information is not deemed to be “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities
Act registration statements.
| Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. |
|
Title |
|
|
|
99.1 |
|
Press release issued by the Company on May 11, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
CONSOLIDATED WATER CO. LTD. |
|
|
|
|
By: |
/s/ David W. Sasnett |
|
Name: |
David W. Sasnett |
|
Title: |
Executive Vice President & Chief Financial Officer |
|
|
|
Date: May 12, 2015 |
|
|
EXHIBIT INDEX
Exhibit |
|
Description |
|
|
|
99.1 |
|
Press release issued by the Company on May 11, 2015. |
Exhibit 99.1
CONSOLIDATED WATER CO. LTD.
REPORTS FIRST QUARTER OPERATING RESULTS
NET INCOME ATTRIBUTABLE TO STOCKHOLDERS UP
$1.3 MILLION AS MEXICO PROJECT DEVELOPMENT EXPENDITURES DECREASE FROM PRIOR-YEAR PERIOD
GEORGE TOWN, Grand Cayman, Cayman Islands
(May 11, 2015) — Consolidated Water Co. Ltd. (NASDAQ Global Select Market: “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 2015. The Company will host an investor conference call on Tuesday, May 12, 2015 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 increased to $1,921,261, or $0.13 per diluted share, for the quarter ended March 31, 2015, compared to $654,909, or
$0.04 per diluted share, for the quarter ended March 31, 2014.
Total revenues declined 10% to approximately
$14.7 million in the most recent quarter, compared with approximately $16.3 million in the prior-year period. The decrease in revenues
was attributable to lower revenues for the Company’s bulk water and services business segments, partially offset by a modest
increase in retail water revenues.
While retail water revenues increased slightly,
such revenues approximated $6.1 million in the first quarters of both 2015 and 2014. An increase of 2% in the number of gallons
of water sold by our Cayman Water retail operations was more than offset by a decrease in electricity costs that reduced the energy
component of the Company’s retail water rates for 2015 when compared with the first quarter of the previous year.
Bulk water revenues declined 16% to approximately
$8.4 million in the first quarter of 2015, compared with approximately $10.0 million in the year-earlier period. The decrease in
bulk revenues was primarily attributable to the Company’s Bahamas operations, which generated approximately $1.4 million
less in revenues in the first quarter of 2015 than in the three months ended March 31, 2014. The decrease at the Bahamas operations
resulted from a significant decline in the prices of diesel fuel and electricity, which reduced the energy component of the Company’s
bulk water rates in the Bahamas. Revenues for bulk operations in the Cayman Islands and Belize declined slightly from the prior-year
period, again the result of lower energy prices.
Services segment revenues declined to $148,158
in the most recent quarter, compared with $275,913 a year earlier, due to a decrease in the purchasing fees charged to the Company’s
affiliate, Ocean Conversion (BVI) Ltd. (“OC-BVI”).
Consolidated gross profit increased 1% to approximately
$6.1 million (41% of total revenues) in the first quarter of 2015, versus approximately $6.0 million (37% of total revenues) in
the 2014 quarter. Gross profit on retail revenues rose 2% to approximately $3.3 million (53% of retail revenues) in the three months
ended March 31, 2015, compared with approximately $3.2 million (52% of retail revenues) in the year-earlier period. The slight
improvement in retail gross profit margin was due to lower electricity prices and energy reduction efforts that reduced energy
costs in 2015 by approximately $95,000. Gross profit on bulk revenues increased 3% to approximately $2.9 million (35% of bulk revenues),
compared with approximately $2.8 million (29% of bulk revenues) a year earlier. Both total gross profit dollars and gross profit
as a percentage of revenues in 2015 benefited from the reduction in energy prices, as energy expense for the Company’s bulk
operations was approximately $1,575,000 less than in the first quarter of 2014. The services segment generated a negative gross
profit of ($136,729) in the first quarter of 2015, compared with a negative gross profit of ($59,351) in the prior-year quarter.
The services business segment incurred an operating
loss of approximately ($0.7 million) in the most recent quarter, versus an operating loss of approximately ($2.1 million) in the
first quarter of 2014, primarily due to a decrease of approximately $1.4 million in the project development expenses incurred by
N.S.C. Agua, S.A. de C.V. (“NSC”), the Company’s Mexico subsidiary. The services segment is expected to continue
to incur losses from operations while the Company funds the project development activities of NSC and/or until such time as significant
new management services or plant construction contracts are obtained.
Consolidated general and administrative expenses
(“G&A”) declined 29% to approximately $3.8 million in the 2015 quarter, compared with approximately $5.3 million
a year earlier. The decrease in consolidated G&A expenses in 2015 resulted from a reduction of approximately $1.4 million in
project development expenses incurred by NSC.
Interest income increased 35% to $233,582 in
the three months ended March 31, 2015, compared with $172,932 in the 2014 quarter. Interest expense declined 76% to $69,532 in
the most recent quarter, versus $295,737 a year earlier, reflecting the prepayment premium paid for the early redemption on February
17, 2014 of the remaining outstanding balance on bonds payable and the amortization of the related bond discount and deferred issuance
costs at the time of prepayment.
The Company recognized earnings and profit
sharing on its equity investment in OC-BVI of $101,480 in the first quarter of 2015, compared with $74,739 in the first quarter
of 2014. The Company also recognized an impairment loss of $310,000 on its equity investment in OC-BVI during the first quarter
of 2015 due to the continuing maturation of OC-BVI’s current contract for its Bar Bay plant.
The Company reported “other” expense
of ($175,087) in the three months ended March 31, 2015, compared with “other” income of $198,296 in the prior-year
period. The fluctuation in these amounts is primarily the result of foreign currency gains and/or losses recorded for the Company’s
subsidiary in Bali, Indonesia, PT Consolidated Water Bali (“CW-Bali”).
Management Comments
“Although revenues declined in the first
quarter of 2015 due to lower fuel and electricity costs that were passed on to our customers, gross profit in terms of dollars
increased slightly due to a reduction in operating costs,” stated Mr. Rick McTaggart, Chief Executive Officer of Consolidated
Water Co. Ltd.. “Our net income rose from the prior-year quarter primarily due to a $1.4 million reduction in development
costs incurred by our NSC subsidiary, which is pursuing a 100 million gallon per day desalination plant project in Rosarito Beach,
Mexico. NSC’s expenses are beginning to slow as we move closer to the end of the initial development process for this very
important project, which is designed to supply potable water to the drought-plagued northern Baja California, Mexico and San Diego,
California regions.”
“In accordance with the requirements
of the new public-private partnership legislation that was enacted last year, in late March 2015 we submitted our initial proposal
to the State of Baja California, Mexico to provide desalinated water from the proposed Rosarito plant and are awaiting the State’s
response. If the State elects to proceed with the Project it will conduct a public tender process, in response to which NSC will
submit a more detailed proposal consistent with the terms of the tender. During the first quarter of 2015, NSC entered into a Letter
of Intent with a potential equity partner with substantial financial resources and a history of successful capital project investments
in Mexico to enhance the quality of its proposal(s) to the State.”
“In the Cayman Islands, the Water Authority
– Cayman (“WAC”) has accepted our proposal to operate its North Sound Desalination Plant on the island of Grand
Cayman for an additional two years, subject to receiving approval from the Cayman Islands Government Central Tenders Committee.
Although the current operating agreement expired on April 1, 2015, we continue to operate the plant on the same terms and conditions
until advised otherwise by the WAC,” concluded Mr. McTaggart.
Cash Dividends
On April 30, 2015, the Company paid a quarterly
cash dividend of $0.075 per share to shareholders of record at the close of business on April 1, 2015. 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 12, 2015 to discuss its first quarter operating results and other topics of interest.
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 Co. Ltd.
Conference Call” a few minutes before 11:00 a.m. EDT on Tuesday, May 12, 2015.
A replay of
the conference call will be available one hour after the call through 9:00 a.m. EDT on Tuesday, May 19, 2015 by dialing 877-344-7529
(international/local participants dial 412-317-0088) and entering the conference ID # 10065412, 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.
For further information, please contact:
Frederick W. McTaggart,
President and CEO, at (345) 945-4277 or David W. Sasnett, Executive Vice President and CFO, at (954) 509-8200 or via e-mail at
info@cwco.com
or
RJ Falkner & Company, Inc., Investor Relations
Counsel at (800) 377-9893 or
via e-mail at info@rjfalkner.com
(Financial Highlights Follow)
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
| |
March 31, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 36,754,928 | | |
$ | 35,713,689 | |
Certificate of deposit | |
| 5,000,000 | | |
| 5,000,000 | |
Restricted cash | |
| 442,955 | | |
| 456,083 | |
Accounts receivable, net | |
| 12,535,264 | | |
| 11,773,744 | |
Inventory | |
| 1,790,103 | | |
| 1,738,382 | |
Prepaid expenses and other current assets | |
| 1,530,915 | | |
| 1,961,385 | |
Current portion of loans receivable | |
| 1,754,498 | | |
| 1,726,310 | |
Costs and estimated earnings in excess of billings - construction project | |
| 869,539 | | |
| 1,090,489 | |
Total current assets | |
| 60,678,202 | | |
| 59,460,082 | |
Property, plant and equipment, net | |
| 55,064,046 | | |
| 56,396,988 | |
Construction in progress | |
| 2,195,456 | | |
| 1,900,016 | |
Inventory, non-current | |
| 4,433,571 | | |
| 4,240,977 | |
Loans receivable | |
| 5,161,530 | | |
| 5,610,867 | |
Investment in OC-BVI | |
| 5,000,083 | | |
| 5,208,603 | |
Intangible assets, net | |
| 888,877 | | |
| 927,900 | |
Goodwill | |
| 3,499,037 | | |
| 3,499,037 | |
Investment in land | |
| 20,558,424 | | |
| 20,558,424 | |
Other assets | |
| 2,554,454 | | |
| 2,656,937 | |
Total assets | |
$ | 160,033,680 | | |
$ | 160,459,831 | |
| |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and other current liabilities | |
$ | 4,914,993 | | |
$ | 5,962,015 | |
Dividends payable | |
| 1,191,703 | | |
| 1,190,325 | |
Demand loan payable | |
| 8,500,000 | | |
| 9,000,000 | |
Total current liabilities | |
| 14,606,696 | | |
| 16,152,340 | |
Other liabilities | |
| 224,827 | | |
| 224,827 | |
Total liabilities | |
| 14,831,523 | | |
| 16,377,167 | |
Commitments and contingencies | |
| | | |
| | |
Equity | |
| | | |
| | |
Consolidated Water Co. Ltd. stockholders' equity | |
| | | |
| | |
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; | |
| | | |
| | |
issued and outstanding 36,840 and 36,840 shares, respectively | |
| 22,104 | | |
| 22,104 | |
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; | |
| | | |
| | |
issued and outstanding 14,734,272 and 14,715,899 shares, respectively | |
| 8,840,563 | | |
| 8,829,539 | |
Class B common stock, $0.60 par value. Authorized 145,000 shares; | |
| | | |
| | |
none issued | |
| - | | |
| - | |
Additional paid-in capital | |
| 83,994,765 | | |
| 83,779,292 | |
Retained earnings | |
| 49,814,648 | | |
| 49,000,621 | |
Cumulative translation adjustment | |
| (516,160 | ) | |
| (482,388 | ) |
Total Consolidated Water Co. Ltd. stockholders' equity | |
| 142,155,920 | | |
| 141,149,168 | |
Non-controlling interests | |
| 3,046,237 | | |
| 2,933,496 | |
Total equity | |
| 145,202,157 | | |
| 144,082,664 | |
Total liabilities and equity | |
$ | 160,033,680 | | |
$ | 160,459,831 | |
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(UNAUDITED)
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
Retail water revenues | |
$ | 6,135,638 | | |
$ | 6,112,961 | |
Bulk water revenues | |
| 8,382,316 | | |
| 9,959,736 | |
Services revenues | |
| 148,158 | | |
| 275,913 | |
Total revenues | |
| 14,666,112 | | |
| 16,348,610 | |
| |
| | | |
| | |
Cost of retail revenues | |
| 2,876,788 | | |
| 2,931,376 | |
Cost of bulk revenues | |
| 5,449,512 | | |
| 7,111,545 | |
Cost of services revenues | |
| 284,887 | | |
| 335,264 | |
Total cost of revenues | |
| 8,611,187 | | |
| 10,378,185 | |
Gross profit | |
| 6,054,925 | | |
| 5,970,425 | |
General and administrative expenses | |
| 3,799,589 | | |
| 5,342,633 | |
Income from operations | |
| 2,255,336 | | |
| 627,792 | |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Interest income | |
| 233,582 | | |
| 172,932 | |
Interest expense | |
| (69,532 | ) | |
| (295,737 | ) |
Profit sharing income from OC-BVI | |
| 26,325 | | |
| 20,250 | |
Equity in earnings of OC-BVI | |
| 75,155 | | |
| 54,489 | |
Impairment of investment in OC-BVI | |
| (310,000 | ) | |
| - | |
Other | |
| (175,087 | ) | |
| 198,296 | |
Other income, net | |
| (219,557 | ) | |
| 150,230 | |
Net income | |
| 2,035,779 | | |
| 778,022 | |
Income attributable to non-controlling interests | |
| 114,518 | | |
| 123,113 | |
Net income attributable to Consolidated Water Co. Ltd. stockholders | |
$ | 1,921,261 | | |
$ | 654,909 | |
| |
| | | |
| | |
Basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | |
$ | 0.13 | | |
$ | 0.04 | |
Diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | |
$ | 0.13 | | |
$ | 0.04 | |
Dividends declared per common share | |
$ | 0.075 | | |
$ | 0.075 | |
| |
| | | |
| | |
Weighted average number of common shares used in the determination of: | |
| | | |
| | |
Basic earnings per share | |
| 14,718,757 | | |
| 14,686,744 | |
Diluted earnings per share | |
| 14,764,169 | | |
| 14,766,985 | |
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| |
Three Months Ended March 31, | |
| |
2015 | | |
2014 | |
Net Income | |
$ | 2,035,779 | | |
$ | 778,022 | |
Other comprehensive income (loss) | |
| | | |
| | |
Foreign currency translation adjustment | |
| (35,549 | ) | |
| 100,456 | |
Total other comprehensive income (loss) | |
| (35,549 | ) | |
| 100,456 | |
Comprehensive income | |
| 2,000,230 | | |
| 878,478 | |
Comprehensive income attributable to non-controlling interests | |
| 112,741 | | |
| 128,136 | |
Comprehensive income attributable to Consolidated Water Co. Ltd. stockholders | |
$ | 1,887,489 | | |
$ | 750,342 | |
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