Bulk Segment:
The bulk segment contributed $1,663,988 and $1,827,958 to our income from operations for 2020 and 2019, respectively.
Bulk segment revenue was $5,866,397 and $6,941,051 for 2020 and 2019, respectively. OC-Cayman experienced a decline in revenue of approximately $505,000 for 2020 as a result of the new contract (at a lower rate) with the Water Authority-Cayman (the “WAC”) for water supplied from the North Side Water Works plant, which commenced in July 2019. CW-Bahamas’ revenue dropped approximately $570,000 for 2020 due to lower energy costs, which correspondingly decreased the energy pass-through component of CW-Bahamas’ rates.
Gross profit for our bulk segment was $1,925,088 (33% of bulk revenue) and $2,172,929 (31% of bulk revenue) for 2020 and 2019, respectively. Gross profit in dollars decreased in 2020 as compared to 2019 principally due to the lower margins earned on OC-Cayman’s new contracts (as compared to its previous contracts) with the WAC.
Bulk segment G&A expenses remained relatively consistent at $261,100 for 2020 as compared to $344,971 for 2019.
Services Segment:
The services segment incurred losses from operations of $(3,200,698) and $(734,184) for 2020 and 2019, respectively.
Services segment revenue increased to $3,476,000 for 2020 from $90,792 for 2019 due to the addition of $3,373,429 in revenue from PERC as a result of our acquisition of 51% of this company in late October 2019.
Gross profit for the services segment improved to $844,487 (24% of services revenue) in 2020 as a result of the addition of PERC. The services segment generated a gross profit of $45,698 (50% of services revenue) for 2019.
G&A expenses for the services segment increased to $1,014,765 for 2020 as compared to $779,882 for 2019 due to the addition in 2020 of PERC’s G&A expenses of approximately $729,000. A decrease in the development expenses incurred for our Mexico project of $475,491 in 2020 served to partially offset the incremental G&A expenses from PERC.
As previously discussed, on June 29, 2020 our Mexico subsidiary, AdR, received a letter from the State terminating AdR’s contract with the State involving the construction and operation of a desalination plant in Rosarito California and accompanying aqueduct to deliver the water produced by this plant to the Mexican public water system. As a result of the cancellation of this contract, we recorded an impairment loss of $(3.0 million) for our services segment in 2020 for rights of way acquired for the contract’s proposed aqueduct.
Manufacturing Segment:
The manufacturing segment contributed $1,018,388 to our income from operations in 2020 as compared to $868,647 in 2019.
Manufacturing revenue was $3,778,554 and $4,289,902 for 2020 and 2019, respectively. Manufacturing revenue declined from 2019 to 2020 due to a decrease in the number of active projects.
Manufacturing gross profit was $1,336,769 (35% of manufacturing revenue) and $1,333,365 (31% of manufacturing revenue) for 2020 and 2019, respectively. The increase in manufacturing gross profit as a percentage of revenue stems from a mix of higher margin projects.
G&A expenses for the manufacturing segment dropped to $318,381 for 2020 as compared to $464,718 for 2019 as a result of a decrease of $125,000 in amortization expenses due to the completion of the amortization of certain intangible assets recorded in connection with the Aerex acquisition.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
In late December 2018, our Board of Directors formally approved the sale of our subsidiary, CW-Belize, which was part of our bulk water operations, to BWSL and on February 14, 2019, we completed the sale (which was effective as of