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, 2011. The Company
will host an investor conference call tomorrow -- Friday, March 16,
2012 -- at 11:00 a.m. EDT (see details below).
Total revenues for the year ended December 31, 2011 increased 9%
to approximately $55.2 million, compared with approximately $50.7
million for the year ended December 31, 2010.
Retail water revenues rose 7% to approximately $23.4 million
(42% of total revenues) in 2011, versus approximately $21.9 million
(43% of total revenues) in the previous year, reflecting a 2%
increase in base rates due to an upward movement in the consumer
price indices used to determine such rate adjustments, and higher
energy price pass-through charges, partially offset by a 3% decline
in the number of gallons of water sold by the retail segment. The
decline in gallons sold during 2011 was due to the absence of water
sales made in the first quarter of 2010 at bulk water rates to the
Water Authority-Cayman ("WAC") to replace water previously supplied
by the Red Gate plant while such plant was under refurbishment.
Excluding this water sold to the WAC, the number of gallons of
water sold by the retail segment increased by approximately 3% from
2010 to 2011.
Bulk water revenues increased 22% to approximately $30.8 million
(56% of total revenues) in 2011, compared with $25.3 million (50%
of total revenues) in 2010, reflecting a 6% increase in the number
of gallons of water sold and energy pass-through charges due to
higher energy prices. Bulk revenues in 2011 benefited from $770,000
in revenues generated in the fourth quarter from the expansion of
CW-Bahamas' Blue Hills plant.
Services revenues declined 71% to approximately $1.0 million in
2011, compared with approximately $3.5 million in 2010, reflecting
substantially lower plant sales revenues due to a lack of plant
construction activity for third parties, the expiration of the
management services contract for the Bermuda plant on June 30,
2011, and lower fees earned on the Company's management agreement
with OC-BVI (the Company's equity investment affiliate) due to the
incremental fees earned on the higher earnings generated by this
affiliate in 2010.
Net income attributable to stockholders declined 3% to
$6,113,218, or $0.42 per diluted share, for the year ended December
31, 2011, compared with net income of $6,292,025, or $0.43 per
diluted share, for the year ended December 31, 2010. A modest
increase in operating income during 2011 was more than offset by a
reduction in OC-BVI's earnings. During the year ended December 31,
2011, the Company recognized earnings on its investment in OC-BVI
of $838,652, compared with $1,235,146 in 2010.
Consolidated gross profit rose 15% to approximately $19.0
million (34% of total revenues) in 2011, versus approximately $16.6
million (33% of total revenues) in 2010. Gross profit on retail
revenues improved 3% to approximately $11.9 million (51% of
revenues) in the most recent year, compared with approximately
$11.5 million (53% of revenues) for the year ended December 31,
2010. The slight decline in retail gross profit as a percentage of
retail revenues reflected the increase in energy pass-through
charges and higher non-revenue water volumes during 2011. Gross
profit on bulk revenues increased to approximately $6.6 million
(22% of revenues) in 2011, from approximately $4.4 million (17% of
revenues) in the prior year, primarily due to improved operating
efficiencies and the increase in bulk segment revenues. A
significant portion of the bulk segment's production costs are
relatively fixed in nature and do not increase proportionately with
an increase in the volume of water sold. The services segment
recorded a gross profit of approximately $0.5 million for the year
ended December 31, 2011, compared with a gross profit of
approximately $0.7 million in 2010. The lower gross profit for 2011
in the services segment stems primarily from the decrease in
revenues discussed above.
General and administrative expenses increased 21% to $13,651,650
in 2011, versus $11,329,648 in 2010, primarily due to (i)
approximately $1,286,000 of incremental expenses related to the
project development activities of the Company's consolidated Mexico
affiliate and (ii) approximately $1,045,000 in higher employee
costs due to additional management bonuses, higher stock-based
compensation, the hiring of additional personnel, and salary
increases.
Interest income decreased 13% to $1,200,999 for the year ended
December 31, 2011, versus $1,375,827 for the previous year.
Interest expense decreased 28.0% to $1,141,744 in 2011, from
$1,584,771 in 2010 as a result of $246,851 in interest capitalized
for the expansion of the Blue Hills plant and the prepayment on
September 30, 2010 of $1.5 million of our 7.5% bonds payable.
"We were pleased with our ability to achieve a level of net
income attributable to common stockholders comparable to that of
the prior year while incurring an incremental $1.3 million in
expenses for our Mexico joint venture and experiencing a 32%
decline in earnings from our OC-BVI affiliate," stated Rick
McTaggart, Chief Executive Officer of Consolidated Water Co. Ltd.
"The performance of our bulk water segment was particularly
gratifying given our recent efforts to improve these operations.
Margins in the Bahamas increased because of a strict cost-control
program, efficiency gains resulting from various operational
improvement programs that we have implemented over the past four
years and increased water production. In November, we commissioned
a 67% expansion in the capacity of our Blue Hills plant in Nassau.
This expansion contributed $770,000 to our revenue during the
fourth quarter of 2011, while allowing the island of New Providence
to eliminate its dependence upon the expensive barging of fresh
water from Andros Island. We expect the increased revenue resulting
from higher production at the Blue Hills plant to have a positive
impact upon the performance of our Bahamas subsidiary in 2012 and
future years."
"In our retail market on Grand Cayman Island, we continue to
produce and distribute water under the terms of our previous
license agreement, which, although it formally expired in July
2010, has been extended through June 30, 2012," noted Mr.
McTaggart. "While the government has not requested further retail
license negotiations since our last meeting in February 2011, we
believe the lack of recent license negotiations results from
government's focus on other matters, including the government's
publicly acknowledged intention to privatize certain
government-owned assets, including the Water Authority-Cayman.
Although we cannot state with any certainty when our retail license
negotiations will be completed, we are confident that our Company
and the Government can ultimately reach an agreement on terms
satisfactory to both parties."
"We strengthened our management team in September, in
anticipation of future growth opportunities, when John Tonner
joined our Company as Chief Operating Officer. John has acquired
extensive practical and engineering expertise involving all
commercially viable desalination processes during a career in the
industry that spans more than 25 years. His experience and
knowledge not only enhances our existing operations, but he
represents an extremely valuable addition to our new market
assessment capabilities."
"I am pleased to report that we have negotiated an agreement
with one of the other shareholders in our Mexican joint venture,
NSC Agua S.A. de C.V. ('NSC'), and we now control 75% of the shares
of NSC," continued Mr. McTaggart. "With the resolution of certain
internal NSC issues that delayed the project, we are again moving
forward with the development of a proposed 100 million US
gallon-per-day seawater desalination plant in Rosarito, Baja
California, Mexico. We are enthusiastic about this project and its
prospects for success given the growing need for water on both
sides of the US-Mexico border. Recent natural events, including the
earthquake in Mexicali in April 2010 and increasingly frequent
droughts on the Colorado River system, have highlighted the
fragility of existing water resources and heightened interest in
seawater desalination as a permanent solution to water problems in
the region."
"Looking forward, we have deployed full-time engineering and
management assets to Asia, where we are currently pursuing several
new projects in markets that have characteristics similar to our
traditional Caribbean market, including tourism-based economies,
stable political and economic environments and limited supplies of
potable water. We expect some of these projects to materialize soon
and hope to initiate business in Asia by the end of 2012,"
concluded Mr. McTaggart.
Investor Conference Call
The Company will host a conference call at
11:00 a.m. EDT tomorrow -- Friday, March 16, 2012. Shareholders and
other interested parties may participate in the conference call by
dialing 877-317-6789 (international/local
participants dial 412-317-6789) and requesting participation in the
"Consolidated Water Conference Call" a few minutes before 11:00
a.m. EDT on March 16, 2012. A replay of the conference call will be
available one hour after the call by dialing 877-344-7529
(international/local participants dial
412-317-0088) and entering the conference ID# 10011339, and on the
Company's website at www.cwco.com, through March 26, 2012.
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 and The Commonwealth of The Bahamas.
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 our products and services in the
marketplace, changes in our relationships with the Governments of
the jurisdictions in which it operates, the manner in which the
disputed issues between OC-BVI and the BVI Government are resolved,
the outcome of our negotiations with the Cayman Government
regarding a new retail license agreement, our ability to
successfully secure contracts for water projects, including the
project under development in Rosarito, Baja California, Mexico, our
ability to develop and operate such projects profitably, and our
ability to manage growth and other risks detailed in our periodic
report filings with the Securities and Exchange Commission("SEC").
The staff of the Division of Corporation Finance of the SEC (the
"Staff") has recently inquired through the comment letter process
as to what consideration we have given to recognizing an impairment
of our goodwill. We have responded to the Staff that we do not
believe our goodwill has been impaired and the Staff is considering
our position. For additional information regarding this matter, see
our Form 10-K filed with the SEC on March 15, 2012.
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.
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------
2011 2010
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 37,624,179 $ 46,130,237
Restricted cash 7,500,000 -
Marketable securities 8,496,372 -
Accounts receivable, net 8,537,232 12,132,730
Inventory 1,451,639 1,434,811
Prepaid expenses and other current assets 1,880,105 2,294,747
Current portion of loans receivable 1,843,600 1,733,799
------------ ------------
Total current assets 67,333,127 63,726,324
Property, plant and equipment, net 64,185,110 55,923,731
Construction in progress 141,204 249,300
Inventory, non-current 3,861,470 3,538,912
Loans receivable 10,758,873 12,602,419
Investment in OC-BVI 6,634,598 7,812,523
Intangible assets, net 1,501,824 1,710,737
Goodwill 3,587,754 3,587,754
Other assets 2,855,471 3,049,866
------------ ------------
Total assets $160,859,431 $152,201,566
============ ============
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other current liabilities $ 4,617,770 $ 4,316,125
Dividends payable 1,156,081 1,152,614
Current portion of long term debt 17,531,134 1,422,991
------------ ------------
Total current liabilities 23,304,985 6,891,730
Long term debt 6,852,660 16,883,794
Other liabilities 420,430 442,919
------------ ------------
Total liabilities 30,578,075 24,218,443
------------ ------------
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value.
Authorized 200,000 shares; issued and
outstanding 22,427 and 16,784 shares,
respectively 13,456 10,070
Class A common stock, $0.60 par value.
Authorized 24,655,000 shares; issued and
outstanding 14,568,696 and 14,555,393 shares,
respectively 8,741,217 8,733,236
Class B common stock, $0.60 par value.
Authorized 145,000 shares; none issued or
outstanding - -
Additional paid-in capital 81,939,211 81,349,944
Retained earnings 38,030,943 36,289,706
------------ ------------
Total Consolidated Water Co. Ltd. stockholders'
equity 128,724,827 126,382,956
Non-controlling interests 1,556,529 1,600,167
------------ ------------
Total equity 130,281,356 127,983,123
------------ ------------
Total liabilities and equity $160,859,431 $152,201,566
============ ============
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
----------------------------------------
2011 2010 2009
------------ ------------ ------------
Retail water revenues $ 23,356,338 $ 21,864,252 $ 23,239,756
Bulk water revenues 30,757,874 25,302,093 25,905,077
Services revenues 1,040,280 3,542,209 8,874,684
------------ ------------ ------------
Total revenues 55,154,492 50,708,554 58,019,517
------------ ------------ ------------
Cost of retail revenues 11,496,598 10,361,302 9,812,434
Cost of bulk revenues 24,127,488 20,907,981 20,149,969
Cost of services revenues 508,339 2,828,776 5,058,037
------------ ------------ ------------
Total cost of revenues 36,132,425 34,098,059 35,020,440
------------ ------------ ------------
Gross profit 19,022,067 16,610,495 22,999,077
General and administrative
expenses 13,651,650 11,329,648 10,101,257
------------ ------------ ------------
Income from operations 5,370,417 5,280,847 12,897,820
------------ ------------ ------------
Other income (expense):
Interest income 1,200,999 1,375,827 917,330
Interest expense (1,141,744) (1,584,771) (1,698,084)
Other income 283,656 136,113 168,584
Equity in earnings (loss) of
OC-BVI 838,652 1,235,146 (1,025,968)
Impairment of investment in
OC-BVI - - (4,660,000)
------------ ------------ ------------
Other income (expense), net 1,181,563 1,162,315 (6,298,138)
------------ ------------ ------------
Net income 6,551,980 6,443,162 6,599,682
Income attributable to non-
controlling interests 438,762 151,137 501,111
------------ ------------ ------------
Net income attributable to
Consolidated Water Co. Ltd.
stockholders $ 6,113,218 $ 6,292,025 $ 6,098,571
============ ============ ============
Basic earnings per common share
attributable to Consolidated
Water Co. Ltd. common
stockholders $ 0.42 $ 0.43 $ 0.42
============ ============ ============
Diluted earnings per common share
attributable to Consolidated
Water Co. Ltd. common
stockholders $ 0.42 $ 0.43 $ 0.42
============ ============ ============
Dividends declared per common
share $ 0.300 $ 0.300 $ 0.280
============ ============ ============
Weighted average number of common
shares used in the determination
of:
Basic earnings per share 14,560,259 14,547,065 14,535,192
============ ============ ============
Diluted earnings per share 14,596,013 14,597,894 14,588,144
============ ============ ============
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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