Consolidated Water Reports First Quarter 2022 Results
Published
GEORGE TOWN, Cayman Islands, May 12, 2022 (GLOBE NEWSWIRE) -- 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*
*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, 4^th 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, 2022
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-844-875-6913
International dial-in number: 1-412-317-6709
Conference 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: 1-877-344-7529
International replay number: 1-412-317-0088
Replay 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 Statements*
This 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. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
dsasnett@cwco.com
*Investor Relations Contact*
Ron Both or Justin Lumley
CMA
Tel (949) 432-7566
Email Contact
*Media Contact:*
Tim Randall
CMA
Tel (949) 432-7572
Email Contact
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*CONSOLIDATED WATER CO. LTD.*
*CONDENSED CONSOLIDATED BALANCE SHEETS*
*March 31, * *December 31, * *2022* *2021* *(Unaudited)*
*ASSETS*
*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
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*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