U.S. Markets close in 1 hr 16 mins

Consolidated Water Reports Q2 2019 Results; Revenues up 22% to $18.3 million, Net Income up 13% to $2.5 million or $0.16 per Share

GEORGE TOWN, Cayman Islands, Aug. 12, 2019 /PRNewswire/ -- Consolidated Water Co. Ltd. (Nasdaq Global Select Market: CWCO), a leading developer and operator of seawater desalination plants, reported results for the quarter ended June 30, 2019. Quarterly and first-half comparisons are to the same year-ago period unless otherwise noted.

(PRNewsfoto/Consolidated Water Co. Ltd.)

Q2 2019 Financial Highlights

  • Total revenues increased 22% to $18.3 million.
  • Manufacturing revenue increased 332% to $4.3 million.
  • Gross profit up 22% to $7.6 million.
  • Net income attributable to stockholders increased 13% to $2.5 million or $0.16 per diluted share.
  • $1.3 million in dividends paid.

Q2 2019 Operational Highlights

  • Appointed Jamie Bryan to the new position of Vice President of Manufacturing. Bryan brings to Consolidated Water more than 22 years of experience in engineering, manufacturing, plant integration and development, and product development and distribution.
  • Continued to advance the development project in Rosarito, Baja California, Mexico involving the construction and operation of a major seawater desalination plant and distribution pipeline. Designed to produce 100 million gallons per day of potable water, the plant is expected to be the largest of its kind in the Western Hemisphere and a major, much-needed new source of drinking water for the coastal region of Baja California for at least 37 years.
  • Completed the disposition of CW-Bali for total consideration of $390,000.

Management Commentary
"In Q2, we realized double-digit revenue and gross profit growth that was driven primarily by increased production activity in our manufacturing business," commented Consolidated Water CEO, Rick McTaggart. "The growth in manufacturing was due to a renewed focus on industrial sales, strong execution by our sales team and increasing customer demand for our specialized products.

"Our retail revenue growth was in part attributed to the fact that it has been a very dry year so far, with rainfall in the second quarter down 76% compared to last year. For the first half of 2019, rainfall in our Cayman Islands service area was down 55% compared with rainfall in the first half of 2018 and was also 55% lower than the 30-year average.

"The prospects for the manufacturing segment continue to look favorable, given that we have specialized manufacturing capabilities and experience relating to markets with relatively high barriers to entry. In these markets, we qualify for projects that require unique quality controls and certification. We also fabricate water treatment equipment for a diverse number of industries involved in wastewater treatment infrastructure, and we believe the numerous municipal utilities in need of improvements in this area can also drive growth in our business.

"In anticipation of further manufacturing growth, we are expanding our production facility, with this expected to be completed within the next year. This project is being led by our new VP of Manufacturing, whose knowledge and experience will play an important role as we grow this business.

"With respect to our Rosarito project, we had two major positive developments earlier this year regarding legislative approval and funding that has allowed us to proceed to the next several important steps before we begin the construction phase. These steps include securing the major portions of the project's required debt financing and aqueduct rights of way.

"There remain many water-scarce countries in the Caribbean and other markets where we believe we can have a positive impact on their development by providing essential fresh water supplies. So, we are continuing to explore development opportunities where we can support the growth of regional economies and improve the quality of life in local communities.

"We plan to take advantage of the ample liquidity on our balance sheet to expand into new markets and complementary product lines, diversify revenue streams and widen our geographic footprint. Our strong performance in Q2 reflects the tremendous opportunities ahead."

Second Quarter 2019 Financial Summary
Total revenues for the second quarter of 2019 were $18.3 million, up 22% compared to $15.1 million in the same year-ago quarter. The increase was primarily driven by an increase of $3.3 million in the manufacturing segment, as well as an increase of $0.7 million in the retail segment.

Manufacturing revenues increased due to an increase in the number of orders and expanded project production activity. The increase in manufacturing and retail revenues was partially offset by a decrease in bulk and services revenues. The decrease in bulk revenues was due to the lower rates that came into effect in February for water supplied by the company's Red Gate and North Sound plants.

Gross profit for the second quarter of 2019 was $7.6 million or 41.3% of revenues, up 22% from $6.2 million or 40.1% of revenues in the same year-ago quarter.

Net income attributable to Consolidated Water stockholders for the second quarter of 2019 was $2.5 million or $0.16 per fully diluted share, up 13% from $2.2 million or $0.14 per fully diluted share the year-ago quarter.

The rise in net income for the second quarter of 2019 as compared to the same year-ago quarter reflects an improvement in income from operations of $1.2 million.

Cash and cash equivalents totaled $41.9 million as of June 30, 2019, as compared to $31.3 million as of December 31, 2018. The increase resulted primarily from net income generated from continuing operations.

First Half 2019 Financial Summary
Total revenues for the first half of 2019 were $35.3 million, up 19% compared to $29.6 million in the same year-ago period. The increase was primarily driven by an increase of $5.8 million in the manufacturing segment, as well as an increase of $1.0 million in the retail segment.

Manufacturing revenues increased due to an increase in the number of orders and expanded project production activity. Retail revenues increased due to the volume of water sold by Cayman Water, which increased by nearly 3%, as well as due to increased energy prices that increased the energy pass-through component of the company's Cayman Water retail revenues by $356,000.

The increase in manufacturing and retail revenues was partially offset by a decrease in bulk and slight decrease in services revenues. The decrease in bulk revenues was due to the lower rates that came into effect in February of this year under the new contract for water supplied by the Red Gate and North Sound plants.

Gross profit for the first half of 2019 was $14.5 million or 41.1% of revenues, up 17% from $12.4 million or 41.7% of revenues in the same year-ago period.

Net income attributable to Consolidated Water stockholders for the half of 2019 was $8.7 million or $0.57 per fully diluted share, up 102% from $4.3 million or $0.28 per fully diluted share in the same year-ago period.

Second Quarter Segment Results



Three Months Ended June 30, 2019




Retail



Bulk



Services



Manufacturing



Total


Revenues


$

6,983,515



$

6,941,051



$

90,792



$

4,289,902



$

18,305,260


Cost of revenues



2,982,758




4,768,122




45,094




2,956,537




10,752,511


Gross profit



4,000,757




2,172,929




45,698




1,333,365




7,552,749


General and administrative expenses



3,405,421




344,971




779,882




464,718




4,994,992


Gain on asset dispositions and impairments, net



397,301




-




-




-




397,301


Income (loss) from operations


$

992,637



$

1,827,958



$

(734,184)



$

868,647




2,955,058


Other income, net



















50,333


Income before income taxes



















3,005,391


Provision for income taxes



















64,233


Net income from continuing operations



















2,941,158


Income from continuing operations attributable to non-controlling interests









464,896


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









2,476,262


Total income from discontinued operations



















-


Net income attributable to Consolidated Water Co. Ltd. stockholders













$

2,476,262


Depreciation and amortization expenses for the three months ended June 30, 2019 for the retail, bulk, services and manufacturing segments were $615,363, $976,437, $1,137 and $215,713, respectively.



Three Months Ended June 30, 2018




Retail



Bulk



Services



Manufacturing



Total


Revenues


$

6,268,023



$

7,680,701



$

122,912



$

992,430



$

15,064,066


Cost of revenues



2,722,650




5,397,449




104,069




655,679




8,879,847


Gross profit



3,545,373




2,283,252




18,843




336,751




6,184,219


General and administrative expenses



2,874,517




297,863




665,738




608,851




4,446,969


(Loss) on asset dispositions and impairments, net



(650)




-




-




-




(650)


Income (loss) from operations


$

670,206



$

1,985,389



$

(646,895)



$

(272,100)




1,736,600


Other income, net



















312,032


Income before income taxes



















2,048,632


Benefit from income taxes



















(48,878)


Net income from continuing operations



















2,097,510


Income from continuing operations attributable to non-controlling interests









208,692


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









1,888,818


Total income from discontinued operations



















299,375


Net income attributable to Consolidated Water Co. Ltd. stockholders








$

2,188,193


Depreciation and amortization expenses for the three months ended June 30, 2018 for the retail, bulk, services and manufacturing segments were $504,616, $763,490, $7,639 and $399,426, respectively.

First Half Segment Results



Six Months Ended June 30, 2019




Retail



Bulk



Services



Manufacturing



Total


Revenues


$

13,670,175



$

14,052,364



$

191,369



$

7,379,876



$

35,293,784


Cost of revenues



5,808,362




9,722,713




167,013




5,080,644




20,778,732


Gross profit



7,861,813




4,329,651




24,356




2,299,232




14,515,052


General and administrative expenses



6,522,699




606,383




1,265,767




978,177




9,373,026


Gain on asset dispositions and impairments, net



394,570




46,500




-




-




441,070


Income (loss) from operations


$

1,733,684



$

3,769,768



$

(1,241,411)



$

1,321,055




5,583,096


Other income, net



















310,423


Income before income taxes



















5,893,519


Provision for income taxes



















113,192


Net income from continuing operations



















5,780,327


Income from continuing operations attributable to non-controlling interests














738,804


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









5,041,523


Net income from discontinued operations



















3,621,170


Net income attributable to Consolidated Water Co. Ltd. stockholders













$

8,662,693


Depreciation and amortization expenses for the six months ended June 30, 2019 for the retail, bulk, services and manufacturing segments were $1,133,377, $1,924,126, $2,273 and $492,766, respectively.



Six Months Ended June 30, 2018




Retail



Bulk



Services



Manufacturing



Total


Revenues


$

12,699,371



$

15,127,484



$

246,676



$

1,545,198



$

29,618,729


Cost of revenues



5,484,204




10,447,785




238,940




1,094,540




17,265,469


Gross profit



7,215,167




4,679,699




7,736




450,658




12,353,260


General and administrative expenses



5,959,363




594,734




1,316,374




1,238,209




9,108,680


(Loss) on asset dispositions and impairments, net



(1,990)




-




-




-




(1,990)


Income (loss) from operations


$

1,253,814



$

4,084,965



$

(1,308,638)



$

(787,551)




3,242,590


Other income, net



















459,629


Income before income taxes



















3,702,219


Benefit from income taxes



















(126,266)


Net income from continuing operations



















3,828,485


Income from continuing operations attributable to non-controlling interests












174,199


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








3,654,286


Net income from discontinued operations



















626,432


Net income attributable to Consolidated Water Co. Ltd. stockholders















$

4,280,718


Depreciation and amortization expenses for the six months ended June 30, 2018 for the retail, bulk, services and manufacturing segments were $1,007,629, $1,527,037, $15,277 and $798,720, respectively.

Outlook
Based on committed purchase orders, Consolidated Water continues to expect that the performance of its manufacturing segment for the 2019 fiscal year to exceed its performance for 2018.

The company traditionally sells more water on Grand Cayman during the first half of the calendar year when the number of visitors is typically greater and local rainfall is less as compared to the back half of the year.

Conference Call
Consolidated Water management plans to host a conference call to discuss these results, followed by a question and answer period.

Date: Monday, August 12, 2019
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: 10133824

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 August 19, 2019, 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: 10133824

About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where there are scarce amounts of naturally occurring potable water. The company operates water production facilities in the Cayman Islands, The Bahamas and the British Virgin Islands. The company's operations in the United States manufacture and service a wide range of products and provide 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.

Company Contact:
David W. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
dsasnett@cwco.com 

Investor Relations Contact
Ron Both, CMA
Tel (949) 432-7566
CWCO@cma.team

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, continued acceptance of the company's products and services in the marketplace, changes in its relationships with the governments of the jurisdictions in which it operates, the outcome of its negotiations with the Cayman government regarding a new retail license agreement, its ability to successfully secure contracts for new water projects, its ability to complete the project under development in Baja California, Mexico, the future financial performance of its subsidiary that manufactures water treatment-related systems and products and provides design, engineering, management, operating and other services applicable to commercial, municipal and industrial water production, its ability to develop its projects and operate its water production facilities profitably, its ability to collect its delinquent accounts receivable in the Bahamas, and its ability to manage growth and other risks 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.

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS




June 30,



December 31,




2019



2018




(Unaudited)





ASSETS









Current assets









Cash and cash equivalents


$

41,878,723



$

31,337,477


Restricted cash



1,505,679




-


Accounts receivable, net



20,190,787




24,228,095


Inventory



3,764,169




2,232,721


Prepaid expenses and other current assets



675,931




1,035,796


Current portion of loans receivable



-




734,980


Costs and estimated earnings in excess of billings



3,451,517




835,669


Current assets of discontinued operations



-




1,959,494


Total current assets



71,466,806




62,364,232


Property, plant and equipment, net



62,951,715




58,880,818


Construction in progress



661,062




6,015,043


Inventory, non-current



4,417,302




4,545,198


Investment in OC-BVI



2,127,099




2,584,987


Goodwill



8,004,597




8,004,597


Land and rights of way held for development



24,161,024




24,161,024


Intangible assets, net



1,499,444




1,891,667


Operating lease right-of-use assets



4,590,492




-


Other assets



2,079,668




2,123,999


Long-term assets of discontinued operations



-




1,944,033


Total assets


$

181,959,209



$

172,515,598











LIABILITIES AND EQUITY









Current liabilities









Accounts payable, accrued expenses and other current liabilities


$

2,779,028



$

4,570,641


Accrued compensation



853,782




1,286,468


Dividends payable



1,290,174




1,286,493


Current maturities of operating leases



647,782




-


Billings in excess of costs and estimated earnings



-




109,940


Current liabilities of discontinued operations



-




646,452


Total current liabilities



5,570,766




7,899,994


Deferred tax liability



540,966




659,874


Noncurrent operating leases



4,036,684




-


Other liabilities



75,000




199,827


Total liabilities



10,223,416




8,759,695


Commitments and contingencies









Equity









Consolidated Water Co. Ltd. stockholders' equity









Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 40,120 and 34,796 shares, respectively



24,072




20,878


Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,020,344 and 14,982,906 shares, respectively



9,012,206




8,989,744


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



-




-


Additional paid-in capital



87,534,435




87,211,953


Retained earnings



65,400,272




59,298,161


Cumulative translation adjustment



-




(549,555)


Total Consolidated Water Co. Ltd. stockholders' equity



161,970,985




154,971,181


Non-controlling interests



9,764,808




8,784,722


Total equity



171,735,793




163,755,903


Total liabilities and equity


$

181,959,209



$

172,515,598


 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




Three Months Ended June 30,



Six Months Ended June 30,




2019



2018



2019



2018


Total revenues


$

18,305,260



$

15,064,066



$

35,293,784



$

29,618,729


Total cost of revenues



10,752,511




8,879,847




20,778,732




17,265,469


Gross profit



7,552,749




6,184,219




14,515,052




12,353,260


General and administrative expenses



4,994,992




4,446,969




9,373,026




9,108,680


Gain (loss) on asset dispositions and impairments, net



397,301




(650)




441,070




(1,990)


Income from operations



2,955,058




1,736,600




5,583,096




3,242,590



















Other income (expense):

















Interest income



140,467




170,102




290,652




331,223


Interest expense



(1,482)




(2,876)




(1,482)




(4,630)


Profit-sharing income from OC-BVI



2,025




56,700




8,100




85,050


Equity in the earnings (losses) of OC-BVI



(24,949)




157,483




(11,488)




238,076


Net unrealized gain (loss) on put/call options



-




84,000




(24,000)




(122,000)


Other



(65,728)




(153,377)




48,641




(68,090)


Other income, net



50,333




312,032




310,423




459,629


Income before income taxes



3,005,391




2,048,632




5,893,519




3,702,219


Provision for (benefit from) income taxes



64,233




(48,878)




113,192




(126,266)


Net income from continuing operations



2,941,158




2,097,510




5,780,327




3,828,485


Income from continuing operations attributable to non-controlling interests



464,896




208,692




738,804




174,199


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



2,476,262




1,888,818




5,041,523




3,654,286


Gain on sale of discontinued operations



-




-




3,621,170




-


Net income from discontinued operations



-




299,375




-




626,432


Total income from discontinued operations



-




299,375




3,621,170




626,432


Net income attributable to Consolidated Water Co. Ltd. stockholders


$

2,476,262



$

2,188,193



$

8,662,693



$

4,280,718



















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

















Continuing operations


$

0.16



$

0.13



$

0.34



$

0.25


Discontinued operations



-




0.02




0.24




0.04


Basic earnings per share


$

0.16



$

0.15



$

0.58



$

0.29



















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

















Continuing operations


$

0.16



$

0.12



$

0.33



$

0.24


Discontinued operations



-




0.02




0.24




0.04


Diluted earnings per share


$

0.16



$

0.14



$

0.57



$

0.28



















Dividends declared per common and redeemable preferred shares


$

0.085



$

0.085



$

0.17



$

0.17



















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

















Basic earnings per share



15,020,344




14,959,309




15,020,344




14,959,284


Diluted earnings per share



15,130,778




15,117,726




15,130,071




15,116,712


 

Cision

View original content to download multimedia:http://www.prnewswire.com/news-releases/consolidated-water-reports-q2-2019-results-revenues-up-22-to-18-3-million-net-income-up-13-to-2-5-million-or-0-16-per-share-300899643.html