Consolidated Water : Reports Third Quarter 2024 Operating Results Form 8 K

CWCO

​Consolidated Water Reports Third Quarter 2024 Operating Results

GEORGE TOWN, Grand Cayman, Cayman Islands, November 14, 2024 -- Consolidated Water Co. Ltd. (NASDAQ Global Select Market: CWCO), a leading designer, builder and operator of advanced water supply and treatment plants, reported results for the third quarter ended September 30, 2024. All comparisons are to the same prior year period unless otherwise noted.

Consolidated Water will hold a conference call at 11:00 a.m. Eastern time tomorrow to discuss the results (see dial-in information below).

Third Quarter 2024 Financial Key Points

Third Quarter 2024 Operational Key Points

‌​

Management Commentary

"In the third quarter, our revenue and profitability were consistent with our expectations, given the completion of two large design-build projects earlier this year," stated company CEO, Rick McTaggart. "We were pleased to see the continuing trend of increasing retail water sales in our exclusive utility service area on Grand Cayman due to the continued business and population growth on the island.

"While our Bulk segment had relatively consistent revenue compared to last year, we saw an increase in gross margin from our new operations and maintenance (O&M) contract for the new Red Gate II plant that we completed earlier this year for the Water Authority-Cayman.

"Services revenue declined by about half due to our anticipated reduction in construction revenue related to the conclusion of our Liberty Utilities and Red Gate II projects. These projects had a major impact on 2023 revenue but were completed prior to the start of the current quarter.

"The decline in construction revenue was partially offset by a $2.5 million increase in recurring O&M revenue. The increase included $2.1 million from our REC subsidiary in Colorado which we acquired in October of last year. REC provides us a new channel for expansion of our design-build and O&M businesses into water-stressed regions of Colorado. The balance of the increase in recurring revenue from O&M contracts was generated by our PERC Water subsidiary.

"Despite the small decline in manufacturing revenue this quarter, manufacturing gross profit grew 84% to $1.6 million-thanks to our relentless pursuit of higher-margin products and maximizing production efficiency. Based on the opportunities we see ahead of us, we believe that this improving trend in our manufacturing segment will continue and its operating results will remain stable and profitable.

"We continue to advance our development activities on the $147 million project to design, construct, operate and maintain a seawater desalination plant for the Board of Water Supply of Honolulu in Hawaii. Since we announced the project in June of last year, we have been advancing through the piloting, design and permitting stage. We plan to begin the construction phase late next year, which represents the largest portion of the revenue we expect to generate from the project.

"Looking ahead, we remain excited about the future and for many reasons. At the macro level, growing water scarcity continues to build interest in advanced treatment and desalination solutions for impaired resources. As water supply challenges increase, there is a rising demand for the specialized capabilities we provide.

"Specific positive factors include the strong water sales growth in Grand Cayman and long-term recurring revenue from our Caribbean-based bulk water business and U.S.-based O&M business. Our manufacturing business continues its positive trend, and we expect our desalination plant project in Hawaii to significantly enhance revenue and earnings over the coming years.

2

‌​

"Enabled by an exceptionally strong balance sheet, we will continue to invest in new long-term projects. This includes the new desalination plants in the Bahamas on Cat Island, as well as new infrastructure for serving the growing water needs of our utility customers in the Cayman Islands which will ultimately drive future bulk and retail revenue growth.

"Our strong balance sheet also enables us to move quickly on any potential acquisitions. While we are currently in a period between large construction projects, we believe that our award-winning plant designs, our cost-efficient project delivery models, and our unmatched industry experience will help us secure new projects we are pursuing.

"The course we charted for our company several years ago, which involved diversifying our product offerings and market areas beyond seawater desalination in the Caribbean, has continued to prove successful and lays the path for strong growth ahead.

"As we complete 2024 and prepare for the new year, we anticipate that all of these positive factors will continue to support our long-term growth, enhance future profitability, and further strengthen shareholder value."

Third Quarter 2024 Financial Summary

Revenue totaled $33.4 million, declining 33% from $49.9 million in the third quarter of 2023. The decrease was due to decreases of $16.7 million in the services segment and $362,000 in the manufacturing segment. The decreases were partially offset by increases of $369,000 in the retail segment and $279,000 in the bulk segment.

Retail revenue increased due to a 4.2% increase in the volume of water sold. The volume of water sold increased due to a 4.8% increase in the number of customer accounts in the company's license area from September 30, 2023 to September 30, 2024.

The increase in bulk segment revenue was due to the commencement on May 1, 2024 of the operating and maintenance contract for the new Red Gate desalination plant for the Water Authority of the Cayman Island. The increase was also due to an amendment of the company's North Sound contract, which became effective May 1, 2024.

The decrease in services segment revenue was due to plant construction revenue decreasing from $24.2 million in 2023 to $3.6 million in 2024 as the result of two construction projects being completed earlier this year. Revenue generated under operations and maintenance contracts totaled $7.5 million in the third quarter of 2024, an increase of 49% from the third quarter of 2023. Newly acquired REC contributed $2.1 million to the increase, with the remainder related to incremental PERC contracts.

Manufacturing segment revenue decreased by $362,000 to $4.4 million as compared to $4.7 million in the third quarter of 2023.

Gross profit for the third quarter of 2024 was $11.6 million (34.8% of total revenue), as compared to $16.6 million (33.3% of total revenue) in the third quarter of 2023.

3

‌​

Net income from continuing operations attributable to Consolidated Water stockholders for the third quarter of 2024 was $5.0 million or $0.31 per diluted share, compared to net income of $8.8 million or $0.55 per diluted share in the third quarter of 2023.

Including discontinued operations, net income attributable to Consolidated Water stockholders for the third quarter of 2024 was $4.5 million or $0.28 per diluted share, compared to net income of $8.6 million or $0.54 per diluted share in the third quarter of 2023.

Cash and cash equivalents totaled $104.9 million as of September 30, 2024, with working capital of $133.9 million, debt of $0.2 million, and stockholders' equity of $209.8 million.

First Nine Months 2024 Financial Summary

Revenue for the first nine months of 2024 was $105.6 million, down 17% compared to $127.0 million in the same year-ago period. The decrease was attributable to decreases of $0.4 million in the bulk segment and $24.2 million in the services segment. The decreases were partially offset by increases of $1.8 million in the retail segment and $1.4 million in the manufacturing segment.

Retail revenue increased primarily due to a 6.9% increase in the volume of water sold. The volume of water sold increased due to a 4.8% increase in the number of customer accounts in the company's license area from September 30, 2023 to September 30, 2024.

The decrease in bulk segment revenue was due to a decrease in energy costs for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas' rates.

The decrease in services segment revenue was due to a $36.4 million decrease in plant construction revenue. Revenue generated under operations and maintenance contracts totaled $21.7 million in the first nine months of 2024, up 70% as compared to $12.8 million in the same year-ago period. Newly acquired REC contributed $5.9 million of the increase, with the remainder related to incremental PERC contracts.

The increase in manufacturing segment revenue was due to increased production activity.

Gross profit for the first nine months of 2024 was $37.1 million (35.2% of total revenue), down 13% from $42.6 million (33.6% of total revenue) in the same year-ago period.

Net income from continuing operations attributable to stockholders for the first nine months of 2024 was $16.1 million or $1.01 per diluted share, compared to net income of $20.4 million or $1.28 per diluted share for the first nine months of 2023.

Including discontinued operations, net income attributable to Consolidated Water stockholders for the first nine months of 2024 was $26.8 million or $1.68 per fully diluted share, up from net income of $19.7 million or $1.24 per fully diluted share in the same period of 2023. The increase was primarily due to a $12.1 million gain on sale of land and project documentation in Mexico during the second quarter of 2024.

4

‌​

Third Quarter Segment Results

Three Months Ended September 30, 2024

Retail

Bulk

Services

Manufacturing

Total

Revenue

$

7,585,992

$

8,767,168

$

12,677,837

$

4,359,560

$

33,390,557

Cost of revenue

3,606,944

5,969,292

9,409,325

2,770,338

21,755,899

Gross profit

3,979,048

2,797,876

3,268,512

1,589,222

11,634,658

General and administrative expenses

4,359,476

381,230

1,469,845

745,418

6,955,969

Gain on asset dispositions and impairments, net

201,582

-

-

-

201,582

Income (loss) from operations

$

(178,846)

$

2,416,646

$

1,798,667

$

843,804

4,880,271

Other income, net

724,040

Income before income taxes

5,604,311

Provision for income taxes

490,209

Net income from continuing operations

5,114,102

Income from continuing operations attributable to non-controlling interests

156,784

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders

4,957,318

Net loss from discontinued operations

(502,854)

Net income attributable to Consolidated Water Co. Ltd. stockholders

$

4,454,464

Three Months Ended September 30, 2023

Retail

Bulk

Services

Manufacturing

Total

Revenue

$

7,216,574

$

8,488,615

$

29,427,664

$

4,721,222

$

49,854,075

Cost of revenue

3,371,891

5,835,837

20,174,645

3,857,274

33,239,647

Gross profit

3,844,683

2,652,778

9,253,019

863,948

16,614,428

General and administrative expenses

4,225,825

347,668

861,835

437,162

5,872,490

Income (loss) from operations

$

(381,142)

$

2,305,110

$

8,391,184

$

426,786

10,741,938

Other income, net

236,066

Income before income taxes

10,978,004

Provision for income taxes

1,976,453

Net income from continuing operations

9,001,551

Income attributable to non-controlling interests

163,428

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders

8,838,123

Net loss from discontinued operations

(232,994)

Net income attributable to Consolidated Water Co. Ltd. stockholders

$

8,605,129

5

‌​

First Nine Months Segment Results

Nine Months Ended September 30, 2024

Retail

Bulk

Services

Manufacturing

Total

Revenue

$

24,392,814

$

25,557,220

$

42,017,917

$

13,591,154

$

105,559,105

Cost of revenue

10,828,421

17,632,010

30,536,801

9,428,978

68,426,210

Gross profit

13,564,393

7,925,210

11,481,116

4,162,176

37,132,895

General and administrative expenses

12,842,624

1,088,639

4,264,323

1,930,706

20,126,292

Gain on asset dispositions and impairments, net

195,452

-

3,000

-

198,452

Income from operations

$

917,221

$

6,836,571

$

7,219,793

$

2,231,470

17,205,055

Other income, net

1,560,650

Income before income taxes

18,765,705

Provision for income taxes

2,175,838

Net income from continuing operations

16,589,867

Income from continuing operations attributable to non-controlling interests

448,724

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders

16,141,143

Net income from discontinued operations

10,637,926

Net income attributable to Consolidated Water Co. Ltd. stockholders

$

26,779,069

Nine Months Ended September 30, 2023

Retail

Bulk

Services

Manufacturing

Total

Revenue

$

22,560,998

$

25,975,483

$

66,243,328

$

12,180,519

$

126,960,328

Cost of revenue

10,355,817

18,010,718

46,466,864

9,489,870

84,323,269

Gross profit

12,205,181

7,964,765

19,776,464

2,690,649

42,637,059

General and administrative expenses

12,668,467

1,080,543

2,855,067

1,289,990

17,894,067

Gain (loss) on asset dispositions and impairments, net

(7,287)

12,270

-

1,933

6,916

Income (loss) from operations

$

(470,573)

$

6,896,492

$

16,921,397

$

1,402,592

24,749,908

Other income, net

522,256

Income before income taxes

25,272,164

Provision for income taxes

4,366,005

Net income from continuing operations

20,906,159

Income from continuing operations attributable to non-controlling interests

463,775

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders

20,442,384

Net loss from discontinued operations

(699,858)

Net income attributable to Consolidated Water Co. Ltd. stockholders

$

19,742,526

6

‌​

Conference Call

Consolidated Water management will host a conference call tomorrow to discuss these results, which will include a question-and-answer period.

Date: Friday, November 15, 2024

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: 5709326

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you require any assistance connecting with the 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 November 22, 2024, 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: 5709326

About Consolidated Water Co. Ltd.

Consolidated Water Co. Ltd. develops and operates advanced water supply and treatment plants and water distribution systems. The company designs, constructs and operates seawater desalination facilities in the Cayman Islands, The Bahamas and the British Virgin Islands, and designs, constructs and operates water treatment and reuse facilities in the United States. The company recently entered the U.S. desalination market with a contract to design, construct, operate and maintain a seawater desalination plant in Hawaii. 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 cwco.com.

7

‌​

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; and (v) 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 Email ContactInvestor & Media Relations Contact: Ron Both or Grant Stude CMA Investor & Media Relations Tel (949) 432-7566 Email Contact ​

8

‌​

​ CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2024

2023

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

104,869,627

$

42,621,898

Accounts receivable, net

37,199,621

38,226,891

Inventory

3,928,851

6,044,642

Prepaid expenses and other current assets

5,675,517

4,056,370

Contract assets

1,958,361

21,553,057

Current assets of discontinued operations

314,847

211,517

Total current assets

153,946,824

112,714,375

Property, plant and equipment, net

53,203,218

55,882,521

Construction in progress

2,799,135

495,471

Inventory, noncurrent

5,180,540

5,045,771

Investment in OC-BVI

1,384,891

1,412,158

Goodwill

12,861,404

12,861,404

Intangible assets, net

2,860,907

3,353,185

Operating lease right-of-use assets

3,328,936

2,135,446

Other assets

2,801,873

3,407,973

Long-term assets of discontinued operations

-

21,129,288

Total assets

$

238,367,728

$

218,437,592

LIABILITIES AND EQUITY

Current liabilities

Accounts payable, accrued expenses and other current liabilities

$

7,108,726

$

11,604,369

Accrued compensation

3,747,516

3,160,030

Dividends payable

1,803,926

1,572,655

Current maturities of operating leases

633,971

456,865

Current portion of long-term debt

151,276

192,034

Contract liabilities

6,018,720

6,237,011

Deferred revenue

170,551

317,017

Current liabilities of discontinued operations

451,839

364,665

Total current liabilities

20,086,525

23,904,646

Long-term debt, noncurrent

91,561

191,190

Deferred tax liabilities

227,253

530,780

Noncurrent operating leases

2,784,742

1,827,302

Other liabilities

153,000

153,000

Deferred revenue

38,424

-

Total liabilities

23,381,505

26,606,918

Commitments and contingencies

Equity

Consolidated Water Co. Ltd. stockholders' equity

Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 44,650 and 44,297 shares, respectively

26,790

26,578

Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,834,459 and 15,771,545 shares, respectively

9,500,675

9,462,927

Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued

-

-

Additional paid-in capital

93,074,517

92,188,887

Retained earnings

107,164,155

85,148,820

Total Consolidated Water Co. Ltd. stockholders' equity

209,766,137

186,827,212

Non-controlling interests

5,220,086

5,003,462

Total equity

214,986,223

191,830,674

Total liabilities and equity

$

238,367,728

$

218,437,592

9

‌​

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Revenue

$

33,390,557

$

49,854,075

$

105,559,105

$

126,960,328

Cost of revenue

21,755,899

33,239,647

68,426,210

84,323,269

Gross profit

11,634,658

16,614,428

37,132,895

42,637,059

General and administrative expenses

6,955,969

5,872,490

20,126,292

17,894,067

Gain on asset dispositions and impairments, net

201,582

-

198,452

6,916

Income from operations

4,880,271

10,741,938

17,205,055

24,749,908

Other income (expense):

Interest income

626,801

196,567

1,341,797

396,348

Interest expense

(32,801)

(34,020)

(99,740)

(108,111)

Profit-sharing income from OC-BVI

20,250

12,150

52,650

38,475

Equity in the earnings of OC-BVI

53,370

37,182

147,333

108,012

Other

56,420

24,187

118,610

87,532

Other income, net

724,040

236,066

1,560,650

522,256

Income before income taxes

5,604,311

10,978,004

18,765,705

25,272,164

Provision for income taxes

490,209

1,976,453

2,175,838

4,366,005

Net income from continuing operations

5,114,102

9,001,551

16,589,867

20,906,159

Income from continuing operations attributable to non-controlling interests

156,784

163,428

448,724

463,775

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders

4,957,318

8,838,123

16,141,143

20,442,384

Net income (loss) from discontinued operations

(502,854)

(232,994)

10,637,926

(699,858)

Net income attributable to Consolidated Water Co. Ltd. stockholders

$

4,454,464

$

8,605,129

$

26,779,069

$

19,742,526

Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders

Continuing operations

$

0.31

$

0.56

$

1.02

$

1.30

Discontinued operations

(0.03)

(0.01)

0.67

(0.05)

Basic earnings per share

$

0.28

$

0.55

$

1.69

$

1.25

Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders

Continuing operations

$

0.31

$

0.55

$

1.01

$

1.28

Discontinued operations

(0.03)

(0.01)

0.67

(0.04)

Diluted earnings per share

$

0.28

$

0.54

$

1.68

$

1.24

Dividends declared per common and redeemable preferred shares

$

0.11

$

0.095

$

0.30

$

0.265

Weighted average number of common shares used in the determination of:

Basic earnings per share

15,833,715

15,742,854

15,830,599

15,734,234

Diluted earnings per share

15,989,601

15,928,604

15,986,019

15,909,725

10

Disclaimer

Consolidated Water Co. Ltd. published this content on November 15, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 15, 2024 at 15:33:03.758.