GEORGE TOWN, Cayman Islands,
Aug. 9, 2017 /PRNewswire/ --
Consolidated Water Co. Ltd. (NASDAQ: CWCO), a leading developer and
operator of seawater desalination plants, reported financial and
operating results for the second quarter ended June 30, 2017.
Management Commentary
"Our second quarter results reflect the stability of existing
desalination operations and our continued investment in the
development of our large Rosarito,
Mexico project," said Rick
McTaggart, Chief Executive Officer. "Our desalination
operations, which reflect the positive outcome of negotiations over
the past 12 months to extend four bulk water contracts, continue to
meet expectations and provide a solid foundation for our other
initiatives. Manufacturing segment results reflected lower sales
this past quarter, but we are encouraged by an increase in orders
that we expect will positively impact sales for this segment in the
second half of 2017.
Net income from continuing operations continues to reflect our
ongoing Rosarito project
development costs. The decline compared to last year's second
quarter was primarily due to lower revenues from our retail and
services segments resulting in a modest decline in gross profit and
lower other (non-operating) income due to reduced earnings from our
investment in OC-BVI and the absence of the one-time gain on sale
of assets that occurred in the 2016 second quarter. Our results
from continuing operations exclude the impairment loss resulting
from our recent decision to discontinue our operations in
Bali.
During the second quarter, we made considerable progress on our
Rosarito project and expect to be
in a position to break ground by year end. Our total investment in
the Rosarito project to date has
been $42.9 million, of which
$21.0 million has been spent on land,
right of ways and equipment and approximately $21.9 million on development expenses. We were
pleased to see that in May, the Otay Water District received a
permit to build and operate a nearly four-mile cross border
pipeline that could ultimately be used to transport potable water
from our Rosarito desalination
plant. The Otay Water District currently serves a population of
over 223,000 within the San Diego
metropolitan area," Mr. McTaggart noted.
Second Quarter 2017 Financial Results
Total revenues for the 2017 second quarter were $15.3 million, slightly below the $15.4 million reported in last year's second
quarter due primarily to modest declines in retail, services and
manufacturing segments revenues that were partially offset by
higher revenues in the bulk segment. Gross profit decreased 3.2% to
$6.5 million from $6.7 million. Net income from continuing
operations attributable to Consolidated Water stockholders was
$1.7 million, or $0.11 per fully diluted share, a decrease of
27.7% from the $2.3 million, or
$0.16 per fully diluted share, earned
in the similar year-ago period. Net income from continuing
operations for the 2017 second quarter included operating expenses
of $885,000 related to costs for the
Rosarito desalination plant. The
Company incurred a $1.0 million
impairment loss in the second quarter related to its Bali operation, which is now classified as a
discontinued operation. After accounting for that loss, net income
attributable to Consolidated Water stockholders was $624,548, or $0.04
per diluted share.
First Half 2017 Financial Results
Total revenues for the first six months of 2017 were
$31.0 million, an increase of
$1.5 million from the $29.4 million reported in last year's comparable
period. Gross profit was up 3.0% to $13.4
million from $13.0 million.
Net income from continuing operations attributable to
Consolidated Water stockholders was $4.4
million, or $0.29 per fully
diluted share, an increase of 0.4% from the $4.4 million, or $0.29 per fully diluted share, earned in the
similar year-ago period. Net income and diluted EPS for the first
half of 2017 and 2016 included operating expenses of $1.6 million and $1.6
million, respectively, related to development costs for the
Rosarito desalination plant. After
accounting for the impairment loss related to the Company's
Bali operations, net income
attributable to Consolidated Water stockholders was $3.3 million, or $0.21 per diluted share.
Net cash provided by operating activities for the six months
ended June 30, 2017 was $9.6
million and capital expenditures totaled $2.6 million.
Segment Results
Three Months Ended
June 30, 2017 (Unaudited)
|
|
Retail
|
Bulk
|
Services
|
Manufacturing
|
Revenues
|
$
6,029,449
|
$
8,043,921
|
$
119,204
|
$
1,056,047
|
Cost of
revenues
|
2,659,066
|
5,152,212
|
103,753
|
847,760
|
Gross
profit
|
3,370,383
|
2,891,709
|
15,451
|
208,287
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2016 (Unaudited)
|
|
Retail
|
Bulk
|
Services
|
Manufacturing
|
Revenues
|
$
6,273,400
|
$
7,441,061
|
$
403,935
|
$
1,260,806
|
Cost of
revenues
|
2,555,545
|
4,813,261
|
272,537
|
1,035,142
|
Gross
profit
|
3,717,855
|
2,627,800
|
131,398
|
225,664
|
Summary and Outlook
"In summary, we are pleased with the consistent performance of
our core desalination operations and the improving prospects for
our manufacturing segment. Renewal negotiations for our Cayman
retail license began in July 2017
with the newly formed OfReg, and we have been informed that our
retail license has been extended through January 31, 2018, while negotiations
continue.
We continue to make progress on the Rosarito project, which should be a
transformational event for the Company once it is completed. This
is a very complex project and is the largest infrastructure project
ever undertaken by the State of Baja
California, Mexico. Over the past six months we have
been working together with Mexican State and Federal government
agencies to achieve the various conditions precedent in the
public-private partnership agreement. In the third quarter, we look
forward to finalizing financing negotiations for the project, and
we continue to work closely with the client, our partners, advisors
and financing institutions with the goal of commencing construction
on this landmark project by year end.
Importantly, we maintained a strong balance sheet and continued
to generate significant operating cash flows over the first six
months of 2017, which provides us with the credit standing and
liquidity to invest in the Rosarito project while maintaining dividends
to our shareholders," Mr. McTaggart concluded.
For further information, please contact our investor
relations firm, MBS Value Partners:
Lynn Morgen: (212) 223 4147
lynn.morgen@mbsvalue.com
Eric Prouty: (978) 456 9539
eric.prouty@mbsvalue.com
Viktoriia Nakhla: (646) 625-4800
viktoriia.nakhla@mbsvalue.com
(Financial Highlights Follow)
CONSOLIDATED WATER
CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
45,950,954
|
|
$
39,126,214
|
Accounts receivable,
net
|
14,091,119
|
|
16,480,639
|
Inventory
|
3,057,218
|
|
1,985,006
|
Prepaid expenses and
other current assets
|
1,330,580
|
|
1,084,155
|
Current portion of
loans receivable
|
1,355,824
|
|
1,633,588
|
Costs and estimated
earnings in excess of billings
|
543,893
|
|
85,211
|
Current assets of
discontinued operations
|
154,331
|
|
480,979
|
Total current
assets
|
66,483,919
|
|
60,875,792
|
Property, plant and
equipment, net
|
50,463,135
|
|
52,471,537
|
Construction in
progress
|
2,804,958
|
|
885,494
|
Inventory,
non-current
|
4,497,027
|
|
4,558,816
|
Loans
receivable
|
1,446,541
|
|
2,135,428
|
Investment in
OC-BVI
|
2,949,547
|
|
4,086,630
|
Intangible assets,
net
|
4,468,530
|
|
5,195,476
|
Goodwill
|
9,784,248
|
|
9,784,248
|
Land held for
development
|
20,558,424
|
|
20,558,424
|
Other
assets
|
2,183,317
|
|
2,280,519
|
Long-term assets of
discontinued operations
|
154,501
|
|
772,164
|
Total
assets
|
$
165,794,147
|
|
$
163,604,528
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
other current liabilities
|
$
4,878,489
|
|
$
4,840,387
|
Dividends
payable
|
1,189,786
|
|
1,187,214
|
Notes payable to
related party
|
392,000
|
|
490,000
|
Billings in excess of
costs and estimated earnings
|
1,396,426
|
|
102,966
|
Current liabilities of
discontinued operations
|
55,329
|
|
58,521
|
Total current
liabilities
|
7,912,030
|
|
6,679,088
|
Deferred tax
liability
|
1,639,096
|
|
1,915,241
|
Other
liabilities
|
752,828
|
|
904,827
|
Total
liabilities
|
10,303,954
|
|
9,499,156
|
Commitments and
contingencies
|
|
|
|
Equity
|
|
|
|
Consolidated Water
Co. Ltd. stockholders' equity
|
|
|
|
Redeemable preferred
stock, $0.60 par value. Authorized 200,000 shares; issued and
outstanding
45,087 and 35,225 shares,
respectively 27,052 21,135
|
|
|
|
Class A common
stock, $0.60 par value. Authorized 24,655,000 shares; issued and
outstanding
14,889,865 and 14,871,664 shares, respectively
|
8,933,919
|
|
8,922,998
|
Class B common stock,
$0.60 par value. Authorized 145,000 shares; none issued
|
-
|
|
-
|
Additional paid-in
capital
|
85,926,072
|
|
85,621,033
|
Retained
earnings
|
52,606,237
|
|
51,589,337
|
Cumulative translation
adjustment
|
(549,555)
|
|
(549,555)
|
Total Consolidated
Water Co. Ltd. stockholders' equity
|
146,943,725
|
|
145,604,948
|
Non-controlling
interests
|
8,546,468
|
|
8,500,424
|
Total
equity
|
155,490,193
|
|
154,105,372
|
Total liabilities
and equity
|
$
165,794,147
|
|
$
163,604,528
|
CONSOLIDATED WATER
CO. LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Retail
revenues
|
|
$
|
6,029,449
|
|
|
$
|
6,273,400
|
|
|
$
|
12,478,399
|
|
|
$
|
12,216,660
|
|
Bulk
revenues
|
|
|
8,043,921
|
|
|
|
7,441,061
|
|
|
|
15,734,323
|
|
|
|
14,706,354
|
|
Services
revenues
|
|
|
119,204
|
|
|
|
403,935
|
|
|
|
249,456
|
|
|
|
584,647
|
|
Manufacturing
revenues
|
|
|
1,056,047
|
|
|
|
1,260,806
|
|
|
|
2,435,895
|
|
|
|
1,879,335
|
|
Total
revenues
|
|
|
15,248,621
|
|
|
|
15,379,202
|
|
|
|
30,898,073
|
|
|
|
29,386,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of retail
revenues
|
|
|
2,659,066
|
|
|
|
2,555,545
|
|
|
|
5,278,713
|
|
|
|
5,065,540
|
|
Cost of bulk
revenues
|
|
|
5,152,212
|
|
|
|
4,813,261
|
|
|
|
10,168,001
|
|
|
|
9,423,585
|
|
Cost of services
revenues
|
|
|
103,753
|
|
|
|
272,537
|
|
|
|
205,919
|
|
|
|
469,813
|
|
Cost of manufacturing
revenues
|
|
|
847,760
|
|
|
|
1,035,142
|
|
|
|
1,889,057
|
|
|
|
1,455,609
|
|
Total
cost of revenues
|
|
|
8,762,791
|
|
|
|
8,676,485
|
|
|
|
17,541,690
|
|
|
|
16,414,547
|
|
Gross
profit
|
|
|
6,485,830
|
|
|
|
6,702,717
|
|
|
|
13,356,383
|
|
|
|
12,972,449
|
|
General and
administrative expenses
|
|
|
4,960,170
|
|
|
|
4,888,794
|
|
|
|
9,714,680
|
|
|
|
9,295,856
|
|
Income from
operations
|
|
|
1,525,660
|
|
|
|
1,813,923
|
|
|
|
3,641,703
|
|
|
|
3,676,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
108,821
|
|
|
|
158,085
|
|
|
|
230,893
|
|
|
|
374,843
|
|
Interest
expense
|
|
|
(7,939)
|
|
|
|
(30,323)
|
|
|
|
(10,162)
|
|
|
|
(94,369)
|
|
Profit sharing income
from OC-BVI
|
|
|
-
|
|
|
|
14,175
|
|
|
|
10,125
|
|
|
|
48,600
|
|
Equity in the
earnings (losses) of OC-BVI
|
|
|
(37,824)
|
|
|
|
85,858
|
|
|
|
(10,958)
|
|
|
|
131,222
|
|
Impairment loss on
investment in OC-BVI
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,000)
|
|
Unrealized gain
(loss) on put/call options
|
|
|
(13,000)
|
|
|
|
-
|
|
|
|
152,000
|
|
|
|
-
|
|
Other
|
|
|
(28,530)
|
|
|
|
176,383
|
|
|
|
53,191
|
|
|
|
222,129
|
|
Other income,
net
|
|
|
21,528
|
|
|
|
404,178
|
|
|
|
425,089
|
|
|
|
632,425
|
|
Income before
income taxes
|
|
|
1,547,188
|
|
|
|
2,218,101
|
|
|
|
4,066,792
|
|
|
|
4,309,018
|
|
Benefit from
income taxes
|
|
|
(136,448)
|
|
|
|
(170,393)
|
|
|
|
(276,145)
|
|
|
|
(243,662)
|
|
Net income from
continuing operations
before non-controlling interests
|
|
|
1,683,636
|
|
|
|
2,388,494
|
|
|
|
4,342,937
|
|
|
|
4,552,680
|
|
Income (loss) from
continuing
operations attributable to non-
controlling interests
|
|
|
(8,354)
|
|
|
|
48,544
|
|
|
|
(56,146)
|
|
|
|
172,040
|
|
Net income from
continuing operations
|
|
|
1,691,990
|
|
|
|
2,339,950
|
|
|
|
4,399,083
|
|
|
|
4,380,640
|
|
Loss from
discontinued operations
|
|
|
(1,071,001)
|
|
|
|
(142,659)
|
|
|
|
(1,150,850)
|
|
|
|
(127,974)
|
|
Loss from
discontinued operations
attributable to non-controlling interests
|
|
|
(3,559)
|
|
|
|
(7,042)
|
|
|
|
(7,543)
|
|
|
|
(6,308)
|
|
Net loss from
discontinued operations
|
|
|
(1,067,442)
|
|
|
|
(135,617)
|
|
|
|
(1,143,307)
|
|
|
|
(121,666)
|
|
Net income
attributable to
Consolidated Water Co. Ltd.
stockholders
|
|
$
|
624,548
|
|
|
$
|
2,204,333
|
|
|
$
|
3,255,776
|
|
|
$
|
4,258,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
attributable to Consolidated Water Co.
Ltd. common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
Discontinued
operations
|
|
$
|
(0.07)
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.01)
|
|
Basic earnings per
share
|
|
$
|
0.04
|
|
|
$
|
0.15
|
|
|
$
|
0.22
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per common share
attributable to Consolidated Water Co. Ltd.
common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
$
|
0.29
|
|
|
$
|
0.29
|
|
Discontinued
operations
|
|
$
|
(0.07)
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.08)
|
|
|
$
|
-
|
|
Diluted earnings
per share
|
|
$
|
0.04
|
|
|
$
|
0.15
|
|
|
$
|
0.21
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.075
|
|
|
$
|
0.075
|
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common
shares used in the determination of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
14,889,816
|
|
|
|
14,792,053
|
|
|
|
14,880,889
|
|
|
|
14,787,716
|
|
Diluted earnings per
share
|
|
|
15,055,554
|
|
|
|
14,871,119
|
|
|
|
15,045,204
|
|
|
|
14,863,791
|
|
View original
content:http://www.prnewswire.com/news-releases/consolidated-water-reports-second-quarter-results-300502400.html
SOURCE Consolidated Water Co. Ltd.