Consolidated Water Reports First Quarter 2022 Results
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, 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, 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
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 | |||
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 | |||||||
