Consolidated Water Co. Ltd. (NASDAQ Global Select Market: CWCO), a
leading developer and operator of advanced water supply and
treatment plants, reported results for the first quarter ended
March 31, 2022. All comparisons are to the same year-ago period
unless otherwise noted.
The company will hold a conference call at 11:00 a.m. Eastern
time tomorrow to discuss the results (see dial-in information
below).
First Quarter 2022 Financial Highlights
- Total revenue increased 14% to $19.6
million.
- Retail revenue increased 11% to $6.3
million.
- Bulk revenue increased 18% to $7.4
million.
- Services revenue increased 34% to
$4.7 million.
- Net income from continuing
operations attributable to company stockholders was $2.3 million or
$0.15 per share.
- Paid quarterly cash dividend of
$0.085 per share ($0.34 on an annualized basis), totaling $1.3
million in dividends in the first quarter of 2022.
- As of March 31, 2022, cash and cash
equivalents totaled $43.1 million, up $2.7 million from $40.4
million as of December 31, 2021, with working capital at $70.9
million, debt of $0.2 million, and stockholders’ equity totaling
$158.2 million.
First Quarter 2022 Operational Highlights
- Reported an increase in water demand
in the Cayman Islands, as major airlines resumed flights to the
Islands in February and cruise ship tourism returned in March under
the government’s COVID-19 reopening planreopening plans.
- PERC Water, Consolidated Water’s
subsidiary that develops, designs, builds, operates and manages
water infrastructure facilities in the Southwestern U.S., was
awarded a major contract to design an advanced water reuse facility
in the city of Goodyear, Arizona for Liberty Utilities. The
facility will address the increasing demand in Liberty’s service
territory in Goodyear and Litchfield Park, with both cities
experiencing significant residential and commercial growth over the
past decade.
- Consolidated Water’s specialty
manufacturing subsidiary was awarded a contract by the City of Port
St. Lucie, Florida to replace membrane elements and upgrade
equipment at the city’s 20 million gallons-per-day J.E. Anderson
Reverse Osmosis Water Treatment Plant.
Recent Operational Highlight
Consolidated Water was awarded a $20 million seawater
desalination plant design, build and operate contract in the Cayman
Islands earlier this week.
Management Commentary
“Our first quarter of 2022 showed significant improvements
across our retail, bulk, and services segments,” stated
Consolidated Water CEO, Rick McTaggart. “As a result, our total
revenue for the first quarter increased 14% to $19.6 million,
generating net income from continuing operations of $2.3 million or
$0.15 per share.
“The results from our manufacturing segment came in below last
year’s levels, largely due to adverse global economic conditions
that caused raw material and equipment delivery delays and
increased our costs. We believe these adverse conditions also
resulted in order delays from our existing and prospective
customers. However, we believe that the strong advancements we made
in other areas of our business resulted in an improved first
quarter and set the stage for future earnings growth.
“We are very encouraged by the return of tourism to the Cayman
Islands as the country’s COVID-19 reopening plan continues. In
February, the Cayman Islands government dropped all post-arrival
COVID-19 tests for fully vaccinated travelers, citing a decline in
local infection cases. Several major airlines resumed their flights
to the islands and cruise ships were welcomed back to the islands
in March.
“As a result, we experienced an 8% year-over-year increase in
water sales in our Grand Cayman retail service area during the
first quarter of 2022. We expect the resurgence of tourism to help
our retail water sales return to normal levels over time, as hotels
and businesses begin to serve the thousands of tourists and
vacationers returning to the islands.
“Our bulk segment results in the quarter improved on higher
revenues and continued to operate efficiently and stably, while our
services segment benefited from revenues generated from our
contract to design an advanced wastewater reuse facility in
Arizona. This project is progressing as planned and positively
impacted our first quarter financial results. Revenues in this
operating segment also benefited from the new operating contracts
that we secured over the past year.
“Earlier this week, we announced that we were awarded a contract
to design, build and operate a new 2.64 million gallon per day
seawater desalination plant in George Town, Grand Cayman for the
Water Authority of the Cayman Islands. We believe that winning this
contract was the result of our many years of experience designing,
building and operating some of the most energy-efficient seawater
desalination plants in the world.
“Desalination appears to be the key to alleviating global water
scarcity, and especially in the arid southwestern U.S., where they
need to take immediate steps to diversify their shrinking water
sources by implementing drought-proof resources like
desalination.
“Given the overall strong progress in our first quarter, we
remain very optimistic about the future of Consolidated Water. Our
plans to expand our services revenue in the wastewater reuse market
is supported by our strong balance sheet and growing pipeline of
potential projects. Combined with our strong financial position,
low-cost operating structure, and the inherent synergies between
the four segments of our business, we believe we enjoy competitive
advantages as we pursue new opportunities in growing markets.”
First Quarter 2022 Financial Summary
Revenue for the first quarter of 2022 was $19.6 million, up 14%
compared to $17.1 million in the same year-ago period. The increase
was primarily driven by increases of $602,000 in the retail
segment, $1.1 million in the bulk segment and $1.2 million in the
services segment. The increase in total revenue was partially
offset by a decrease of $455,000 in the manufacturing segment.
The increase in retail revenue reflects an 8% increase in the
volume of water sold.
The increase in bulk segment revenue is attributable to an
increase in energy costs for CW-Bahamas, which increased the energy
pass-through component of CW-Bahamas’ rates and, to a lesser
extent, an increase of 6% in the volume of water sold by
CW-Bahamas.
The increase in services segment revenue was due to increases in
both plant design revenue and operating and maintenance
revenue.
The decrease in manufacturing segment revenue was due to
significant product delivery delays requested by customers as well
as continuing delayed shipments of raw materials and supplies to
Aerex.
Gross profit for the first quarter of 2022 was $7.1 million or
36.5% of total revenue, up 17% from $6.1 million or 35.8% of total
revenue for the same year-ago period.
Net income from continuing operations attributable to
Consolidated Water stockholders for the first quarter of 2022 was
$2.3 million or $0.15 per basic and diluted share, compared to net
income of $1.3 million or $0.08 per basic and diluted share for the
same year-ago period.
Net income attributable to Consolidated Water stockholders for
the first quarter of 2022, which includes the results of
discontinued operations, was $1.7 million or $0.11 per basic and
fully diluted share, up from net income of $989,000 or $0.06 per
basic and fully diluted share for the same year-ago period.Cash and
cash equivalents totaled $43.1 million as of March 31, 2022, as
compared to $40.4 million as of December 31, 2021. The increase was
due to cash generated from operating activities.
First Quarter 2022 Segment Results
|
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|
Three Months Ended March 31, 2022 |
|
|
Retail |
|
Bulk |
|
Services |
|
Manufacturing |
|
Total |
Revenue |
|
$ |
6,313,200 |
|
|
$ |
7,350,644 |
|
$ |
4,743,820 |
|
$ |
1,150,241 |
|
|
$ |
19,557,905 |
|
Cost of
revenue |
|
|
3,053,740 |
|
|
|
4,687,119 |
|
|
3,649,180 |
|
|
1,022,102 |
|
|
|
12,412,141 |
|
Gross
profit |
|
|
3,259,460 |
|
|
|
2,663,525 |
|
|
1,094,640 |
|
|
128,139 |
|
|
|
7,145,764 |
|
General
and administrative expenses |
|
|
3,450,406 |
|
|
|
310,303 |
|
|
779,974 |
|
|
325,434 |
|
|
|
4,866,117 |
|
Gain on
asset dispositions and impairments, net |
|
|
— |
|
|
|
— |
|
|
12,458 |
|
|
— |
|
|
|
12,458 |
|
Income
(loss) from operations |
|
$ |
(190,946 |
) |
|
$ |
2,353,222 |
|
$ |
327,124 |
|
$ |
(197,295 |
) |
|
|
2,292,105 |
|
Other
income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
319,727 |
|
Income
before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,611,832 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,273 |
|
Net income from continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,565,559 |
|
Income from continuing
operations attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
241,430 |
|
Net
income from continuing operations attributable to Consolidated
Water Co. Ltd. stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,324,129 |
|
Loss
from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(607,314 |
) |
Net income attributable to
Consolidated Water Co. Ltd. stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,716,815 |
|
|
|
Three Months Ended March 31, 2021 |
|
|
Retail |
|
Bulk |
|
Services |
|
Manufacturing |
|
Total |
Revenue |
|
$ |
5,711,305 |
|
|
$ |
6,245,970 |
|
$ |
3,540,846 |
|
|
$ |
1,605,196 |
|
|
$ |
17,103,317 |
|
Cost of
revenue |
|
|
2,707,994 |
|
|
|
4,155,153 |
|
|
2,721,928 |
|
|
|
1,391,732 |
|
|
|
10,976,807 |
|
Gross
profit |
|
|
3,003,311 |
|
|
|
2,090,817 |
|
|
818,918 |
|
|
|
213,464 |
|
|
|
6,126,510 |
|
General
and administrative expenses |
|
|
3,371,010 |
|
|
|
377,503 |
|
|
722,020 |
|
|
|
293,953 |
|
|
|
4,764,486 |
|
Gain
(loss) on asset dispositions and impairments, net |
|
|
(250,000 |
) |
|
|
1,500 |
|
|
(433 |
) |
|
|
— |
|
|
|
(248,933 |
) |
Income
(loss) from operations |
|
$ |
(617,699 |
) |
|
$ |
1,714,814 |
|
$ |
96,465 |
|
|
$ |
(80,489 |
) |
|
|
1,113,091 |
|
Other
income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
314,608 |
|
Income
before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,427,699 |
|
Income
tax (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,660 |
) |
Net
income from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,430,359 |
|
Income
attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,793 |
|
Net
income from continuing operations attributable to Consolidated
Water Co. Ltd. stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,301,566 |
|
Loss
from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312,794 |
) |
Net
income attributable to Consolidated Water Co. Ltd.
stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
988,772 |
|
Annual General Meeting of Shareholders
The company has set May 23, 2022 as the date of its Annual
General Meeting of Shareholders to be held at 3:00 p.m. Cayman
Islands time (4:00 p.m. EDT). The Annual General Meeting will be a
“hybrid” meeting of shareholders, meaning shareholders will be able
to attend the Annual General Meeting as well as vote during the
live webcast of the meeting by
visiting www.virtualshareholdermeeting.com/cwco2022 or
attend the meeting in person at the offices of Consolidated Water
Co. Ltd., Regatta Office Park, Windward Three, 4th Floor, West Bay
Road, Grand Cayman, KY1-1102, Cayman Islands. Holders of record of
the company’s stock as of March 24, 2022 will be entitled to vote
at the meeting.
Conference Call
Consolidated Water management will host a conference call
tomorrow to discuss these results, followed by a
question-and-answer period.
Date: Friday, May 13, 2022Time: 11:00 a.m. Eastern time (8:00
a.m. Pacific time)Toll-free dial-in number:
1-844-875-6913International dial-in number:
1-412-317-6709Conference ID: 3803259
Please call the conference telephone number five minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact CMA at 1-949-432-7566.
A replay of the call will be available after 1:00 p.m. Eastern
time on the same day through May 20, 2022, as well as available for
replay via the Investors section of the Consolidated Water website
at www.cwco.com.
Toll-free replay number: 1-877-344-7529International replay
number: 1-412-317-0088Replay ID: 3803259
About Consolidated Water Co. Ltd.Consolidated
Water Co. Ltd. develops and operates advanced water supply and
treatment plants and water distribution systems. The company
operates water production facilities in the Cayman Islands, The
Bahamas and the British Virgin Islands and operates water treatment
facilities in the United States. The company also manufactures and
services a wide range of products and provides design, engineering,
management, operating and other services applicable to commercial
and municipal water production, supply and treatment, and
industrial water and wastewater treatment. For more information,
visit www.cwco.com.
Cautionary Note Regarding Forward-Looking
StatementsThis press release includes statements that may
constitute "forward-looking" statements, usually containing the
words "believe", "estimate", "project", "intend", "expect",
"should", "will" 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 (i) continued acceptance of the company's
products and services in the marketplace; (ii) changes in its
relationships with the governments of the jurisdictions in which it
operates; (iii) the outcome of its negotiations with the Cayman
government regarding a new retail license agreement; (iv) the
collection of its delinquent accounts receivable in the Bahamas;
(v) the possible adverse impact of the COVID-19 virus on the
company’s business; and (vi) various other risks, as detailed in
the company's periodic report filings with the Securities and
Exchange Commission (“SEC”). For more information about risks and
uncertainties associated with the company’s business, please refer
to the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Risk Factors” sections of the
company’s SEC filings, including, but not limited to, its annual
report on Form 10-K and quarterly reports on Form 10-Q, copies of
which may be obtained by contacting the company’s Secretary at the
company’s executive offices or at the “Investors – SEC Filings”
page of the company’s website at http://ir.cwco.com/docs. Except as
otherwise required by law, the company undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or
otherwise.Company Contact:David W.
SasnettExecutive Vice President and CFOTel (954)
509-8200dsasnett@cwco.comInvestor Relations
ContactRon Both or Justin LumleyCMATel (949) 432-7566Email
ContactMedia Contact:Tim RandallCMATel (949)
432-7572Email Contact
CONSOLIDATED WATER
CO. LTD.CONDENSED CONSOLIDATED BALANCE
SHEETS
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March 31, |
|
December 31, |
|
|
|
2022 |
|
2021 |
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|
(Unaudited) |
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ASSETS |
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Current
assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
43,144,541 |
|
$ |
40,358,059 |
|
Certificate of deposit |
|
|
2,518,493 |
|
|
2,500,000 |
|
Accounts receivable, net |
|
|
27,000,827 |
|
|
27,349,307 |
|
Inventory |
|
|
3,101,630 |
|
|
2,504,832 |
|
Prepaid expenses and other current assets |
|
|
2,049,841 |
|
|
2,558,822 |
|
Contract assets |
|
|
828,962 |
|
|
489,961 |
|
Current assets of discontinued operations |
|
|
620,535 |
|
|
1,173,741 |
|
Total current
assets |
|
|
79,264,829 |
|
|
76,934,722 |
|
Property, plant and equipment,
net |
|
|
51,790,999 |
|
|
52,946,539 |
|
Construction in progress |
|
|
1,325,856 |
|
|
710,863 |
|
Inventory, noncurrent |
|
|
4,831,093 |
|
|
4,733,010 |
|
Investment in OC-BVI |
|
|
1,485,096 |
|
|
1,715,905 |
|
Goodwill |
|
|
10,425,013 |
|
|
10,425,013 |
|
Intangible assets, net |
|
|
3,254,166 |
|
|
3,401,666 |
|
Operating lease right-of-use
assets |
|
|
2,502,069 |
|
|
2,681,137 |
|
Net asset arising from
put/call options |
|
|
203,000 |
|
|
128,000 |
|
Other assets |
|
|
2,166,409 |
|
|
2,204,013 |
|
Long-term assets of
discontinued operations |
|
|
21,144,009 |
|
|
21,146,186 |
|
Total
assets |
|
$ |
178,392,539 |
|
$ |
177,027,054 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other current
liabilities |
|
$ |
3,418,981 |
|
$ |
2,831,925 |
|
Accounts payable - related parties |
|
|
715,549 |
|
|
163,947 |
|
Accrued compensation |
|
|
1,138,577 |
|
|
1,435,542 |
|
Dividends payable |
|
|
1,324,195 |
|
|
1,320,572 |
|
Current maturities of operating leases |
|
|
553,613 |
|
|
592,336 |
|
Current portion of long-term debt |
|
|
62,489 |
|
|
62,489 |
|
Contract liabilities |
|
|
579,852 |
|
|
513,878 |
|
Deferred revenue |
|
|
418,315 |
|
|
583,646 |
|
Current liabilities of discontinued operations |
|
|
195,679 |
|
|
182,322 |
|
Total current
liabilities |
|
|
8,407,250 |
|
|
7,686,657 |
|
Long-term debt,
noncurrent |
|
|
137,433 |
|
|
152,038 |
|
Deferred tax liabilities |
|
|
1,196,042 |
|
|
1,236,723 |
|
Noncurrent operating
leases |
|
|
1,995,747 |
|
|
2,137,394 |
|
Other liabilities |
|
|
141,000 |
|
|
141,000 |
|
Long-term liabilities of
discontinued operations |
|
|
5,428 |
|
|
7,819 |
|
Total
liabilities |
|
|
11,882,900 |
|
|
11,361,631 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Consolidated Water Co. Ltd.
stockholders' equity |
|
|
|
|
|
|
|
Redeemable preferred stock, $0.60 par value. Authorized 200,000
shares; issued and outstanding 28,635 and 28,635 shares,
respectively |
|
|
17,181 |
|
|
17,181 |
|
Class A common stock, $0.60 par value. Authorized 24,655,000
shares; issued and outstanding 15,285,523 and 15,243,693 shares,
respectively |
|
|
9,171,314 |
|
|
9,146,216 |
|
Class B common stock, $0.60 par value. Authorized 145,000 shares;
none issued |
|
|
— |
|
|
— |
|
Additional paid-in capital |
|
|
87,976,319 |
|
|
87,812,432 |
|
Retained earnings |
|
|
61,016,857 |
|
|
60,603,056 |
|
Total Consolidated Water Co.
Ltd. stockholders' equity |
|
|
158,181,671 |
|
|
157,578,885 |
|
Non-controlling interests |
|
|
8,327,968 |
|
|
8,086,538 |
|
Total
equity |
|
|
166,509,639 |
|
|
165,665,423 |
|
Total liabilities and
equity |
|
$ |
178,392,539 |
|
$ |
177,027,054 |
|
CONSOLIDATED WATER
CO. LTD.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
Revenue |
|
$ |
19,557,905 |
|
|
$ |
17,103,317 |
|
|
Cost of
revenue (including purchases from related parties of
$839,432 in 2022 and $155,982 in 2021) |
|
|
12,412,141 |
|
|
|
10,976,807 |
|
|
Gross
profit |
|
|
7,145,764 |
|
|
|
6,126,510 |
|
|
General and administrative
expenses (including purchases from related parties of $24,231 in
2022 and $4,429 in 2021) |
|
|
4,866,117 |
|
|
|
4,764,486 |
|
|
Gain (loss) on asset
dispositions and impairments, net |
|
|
12,458 |
|
|
|
(248,933 |
) |
|
Income from
operations |
|
|
2,292,105 |
|
|
|
1,113,091 |
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest income |
|
|
180,687 |
|
|
|
160,364 |
|
|
Interest expense |
|
|
(4,081 |
) |
|
|
(2,860 |
) |
|
Profit-sharing income from OC-BVI |
|
|
10,125 |
|
|
|
6,075 |
|
|
Equity in the earnings of OC-BVI |
|
|
31,766 |
|
|
|
15,780 |
|
|
Net unrealized gain on put/call options |
|
|
75,000 |
|
|
|
131,000 |
|
|
Other |
|
|
26,230 |
|
|
|
4,249 |
|
|
Other income,
net |
|
|
319,727 |
|
|
|
314,608 |
|
|
Income before income
taxes |
|
|
2,611,832 |
|
|
|
1,427,699 |
|
|
Income tax provision
(benefit) |
|
|
46,273 |
|
|
|
(2,660 |
) |
|
Net income from
continuing operations |
|
|
2,565,559 |
|
|
|
1,430,359 |
|
|
Income from continuing
operations attributable to non-controlling interests |
|
|
241,430 |
|
|
|
128,793 |
|
|
Net income from
continuing operations attributable to Consolidated Water Co. Ltd.
stockholders |
|
|
2,324,129 |
|
|
|
1,301,566 |
|
|
Loss from discontinued
operations |
|
|
(607,314 |
) |
|
|
(312,794 |
) |
|
Net income
attributable to Consolidated Water Co. Ltd.
stockholders |
|
$ |
1,716,815 |
|
|
$ |
988,772 |
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share attributable to Consolidated Water Co. Ltd. common
stockholders |
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
0.15 |
|
|
$ |
0.08 |
|
|
Discontinued
operations |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
Basic earnings per
share |
|
$ |
0.11 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per common share attributable to Consolidated Water Co. Ltd.
common stockholders |
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
0.15 |
|
|
$ |
0.08 |
|
|
Discontinued
operations |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
Diluted earnings per
share |
|
$ |
0.11 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per common and redeemable preferred
shares |
|
$ |
0.085 |
|
|
$ |
0.085 |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares used in the determination of: |
|
|
|
|
|
|
|
Basic earnings per share |
|
|
15,285,523 |
|
|
|
15,201,458 |
|
|
Diluted earnings per share |
|
|
15,435,691 |
|
|
|
15,356,842 |
|
|
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