Consolidated Water Reports Second Quarter 2023 Revenue up 110% to $44.2 Million and Net Income of $7.3 Million or $0.46 per Diluted Share

Consolidated Water Co. Ltd.

GEORGE TOWN, Cayman Islands, Aug. 10, 2023 (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 second quarter ended June 30, 2023. All comparisons are to the same prior year 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).

Second Quarter 2023 Financial Highlights

• Total revenue increased 110% to $44.2 million.

• Retail revenue increased 16% to $7.6 million.

• Services revenue increased 377% to $24.1 million, with recurring services revenue generated from operation and maintenance contracts up 11% to $3.9 million.

• Manufacturing revenue increased to $4.1 million.

• Net income from continuing operations attributable to company stockholders was $7.5 million or $0.47 per diluted share, up 178% from $2.7 million or $0.18 per diluted share in the same year-ago period.

• Paid quarterly cash dividend of $0.085 per share ($0.34 on an annualized basis).

• Cash and cash equivalents totaled $47.7 million as of June 30, 2023.
  

Second Quarter 2023 Operational Highlights

• Signed $204 million contract to design, build, operate and maintain a seawater desalination plant in Hawaii.

• Volume of water sold in Grand Cayman retail segment increased 14% primarily due to increased tourist activity on Grand Cayman, with tourism in 2022 was lower than historical levels due to the lingering impact of the COVID-19 pandemic.

• Recognized $17.6 million in revenue from PERC Water’s progress on the construction of a $82 million advanced water treatment plant in Goodyear, Arizona. The construction is on track for completion next year.
  

Management Commentary

“I‘m truly gratified and excited to mark the company’s 50^th anniversary this month by reporting record quarterly and six-month financial results,” commented Consolidated Water CEO, Rick McTaggart. “In Q2, our revenue increased by 110% to $44.2 million, reflecting another strong period of growth across all four of our business segments. Our retail water segment benefited from a 14% increase in the volume of water sold in Grand Cayman, which we attribute to improved tourist activity over last year when tourism was lower than historical levels due to the lingering impact of the pandemic.

“Our services revenue grew by $19 million, mostly due to the progress our PERC Water subsidiary has made on the construction of an $82 million advanced water treatment plant in Goodyear, Arizona that we announced in May of last year. Construction is progressing as planned, and we anticipate generating significant additional revenue from this project until the plant’s anticipated commissioning and startup in mid-2024.

“PERC’s continued strong operating performance, revenue growth and synergies with other areas of our business have significantly improved our overall top and bottom line. Its strong operational presence in the Southwestern U.S. — a region that urgently needs new fresh water sources due to unprecedented drought conditions — has positioned us for further growth and development in this important segment of our business.

“In our Caribbean seawater desalination business, the revenue we recognized from the design and construction of the 2.6 million gallon per day Red Gate desalination plant for the Water Authority of the Cayman Islands also contributed to the year-over-year increase in services revenue. Construction remains on track and is expected to be completed in early 2024.

“Our new Cayman Water 1 million gallon per day West Bay desalination plant is replacing a 30-year-old plant and supplements production capacity for our retail water business in Grand Cayman. The plant is expected to go online next month in time to meet the higher retail water demand we typically experience from mid-December through April in Grand Cayman.

“In July, we entered the U.S. desalination market for the first time with a $204 million contract to design, build, operate and maintain a seawater desalination plant in Hawaii. We believe winning this contract was due to our proven ability in designing, building and operating some of the world’s most energy-efficient seawater desalination plants, as well as the exceptional project track record that our team was able to demonstrate to our new client, the Board of Water Supply of Honolulu. We also believe this entrance into the U.S. desalination plant market positions us well for the additional opportunities we are pursuing in the Western U.S.

“We will be commemorating our 50^th year of operating with the ringing of the Nasdaq opening bell on Monday. From our humble beginnings, Consolidated Water has pursued a mission to provide state-of-the-art water services to areas of the world where the supply of potable water is scarce. Our dedicated team of engineers, builders and operators have long recognized that fresh water is the most precious resource in the world. Today, we produce more than 25 million gallons of potable water daily from our 11 seawater desalination plants in the Caribbean, and operate 27 water and wastewater treatment facilities in the Western U.S.

“We remain very optimistic about our further growth for numerous reasons. This includes the recovery of tourism in Grand Cayman and our ongoing construction projects underway there and in the U.S., as well as the increased project bidding activity we are seeing in the U.S. We also anticipate that the more than $350 million in major multi-year projects that we secured over the last 18 months will have an increasing positive impact on our earnings in future quarters.

“We believe these activities and achievements, combined with the current positive trends in our markets, represent strong drivers for continued growth, increased profitability, and further strengthening of shareholder value.”

Second Quarter 2023 Financial Summary

Revenue for the second quarter of 2023 totaled $44.2 million, up 110% compared to $21.1 million in the same year-ago period. The increase was driven by increases of $1.0 million in the retail segment, $59,000 in the bulk segment, $19.0 million in the services segment and $3.0 million in the manufacturing segment.

Retail revenue increased primarily due to a 14% increase in the volume of water sold, as well as the result of higher energy costs that increased the energy pass-through component of the company’s water rates and a more favorable rate mix.

The increase in services segment revenue was due to an increase in plant design and construction revenue. The company recognized approximately $17.6 million in revenue in the second quarter of 2023 for the construction of a water treatment plant in Goodyear, Arizona. Revenue generated under operations and maintenance contracts totaled $3.9 million in the second quarter of 2023, up 11% as compared to $3.5 million in the same year-ago period.

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

Gross profit for the second quarter of 2023 was $15.5 million or 35.0% of total revenue, up 107% from $7.5 million or 35.5% of total revenue for the same year-ago period.

Net income from continuing operations attributable to stockholders for the second quarter of 2023 was $7.5 million or $0.47 per diluted share, compared to net income of $2.7 million or $0.18 per diluted share for the same year-ago period.

Net income attributable to Consolidated Water stockholders for the second quarter of 2023, which includes the results of discontinued operations, was $7.3 million or $0.46 per fully diluted share, up from a net income of $2.3 million or $0.15 per basic and fully diluted share for the same year-ago period.

Cash and cash equivalents totaled $47.7 million as of June 30, 2023, as compared to $51.1 million as of March 31, 2023, with working capital at $75.5 million, debt of $0.3 million, and stockholders’ equity totaling $170.3 million.

First Half 2023 Financial Summary

Revenue for the first half of 2023 was $77.1 million, up 90% compared to $40.6 million in the same year-ago period. The increase was primarily driven by increases of $2.5 million in the retail segment, $1.7 million in the bulk segment, $27.0 million in the services segment and $5.2 million in the manufacturing segment.

Retail revenue increased primarily due to a 17% increase in the volume of water sold. The volume of water sold in the Cayman Water license area increased by 15% and the remaining 2% increase in the volume of water sold was due to water sales made by Cayman Water directly to the WAC in January and February of 2023.

The retail revenue increased also as a result of higher energy costs that increased the energy pass-through component of the company’s retail water rates, as well as a more favorable rate mix.

The increase in bulk segment revenue was due 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 9% in the volume of water sold by CW-Bahamas.

The increase in services segment revenue was due to an increase in plant design and construction revenue. The company recognized approximately $24.1 million in revenue for the construction of a water treatment plant in Goodyear, Arizona in the first half of 2023. Revenue generated under operations and maintenance contracts totaled $7.5 million in the first half of 2023, up 5% as compared to $7.1 million in the same year-ago period.

The increase in manufacturing segment revenue was due to higher project activity.

Gross profit for the first half of 2023 was $26.0 million or 33.7% of total revenue, up 78% from $14.6 million or 36.0% of total revenue in the same year-ago period.

Net income from continuing operations attributable to stockholders for the first half of 2023 was $11.6 million or $0.73 per diluted share, compared to net income of $5.0 million or $0.33 per diluted share in the same year-ago period.

Net income attributable to Consolidated Water stockholders for the half of 2023, which includes the results of discontinued operations, was $11.1 million or $0.70 per fully diluted share, up from net income of $4.0 million or $0.26 per fully diluted share in the same year-ago period.

Second Quarter Segment Results

		Three Months Ended June 30, 2023
		Retail				Bulk			Services			Manufacturing			Total
Revenue		$	7,573,329			$	8,482,495		$	24,093,963		$	4,087,476		$	44,237,263
Cost of revenue			3,433,132				5,931,735			16,248,141			3,160,706			28,773,714
Gross profit			4,140,197				2,550,760			7,845,822			926,770			15,463,549
General and administrative expenses			4,265,535				379,900			904,560			434,920			5,984,915
Gain on asset dispositions and impairments, net			—				1,000			—			—			1,000
Income (loss) from operations		$	(125,338	)		$	2,171,860		$	6,941,262		$	491,850			9,479,634
Other income, net																129,131
Income before income taxes																9,608,765
Provision for income taxes																1,940,067
Net income from continuing operations																7,668,698
Income from continuing operations attributable to non-controlling interests																137,226
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																7,531,472
Net loss from discontinued operations																(207,701	)
Net income attributable to Consolidated Water Co. Ltd. stockholders															$	7,323,771

		Three Months Ended June 30, 2022
		Retail			Bulk			Services			Manufacturing				Total
Revenue		$	6,526,803		$	8,423,749		$	5,055,483		$	1,061,092			$	21,067,127
Cost of revenue			3,118,411			5,647,583			3,865,867			959,769				13,591,630
Gross profit			3,408,392			2,776,166			1,189,616			101,323				7,475,497
General and administrative expenses			3,345,109			404,072			838,040			339,470				4,926,691
Gain on asset dispositions and impairments, net			1,200			—			4,080			—				5,280
Income (loss) from operations		$	64,483		$	2,372,094		$	355,656		$	(238,147	)			2,554,086
Other income, net																397,982
Income before income taxes																2,952,068
Provision for income taxes																10,152
Net income from continuing operations																2,941,916
Income attributable to non-controlling interests																232,197
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																2,709,719
Net loss from discontinued operations																(419,833	)
Net income attributable to Consolidated Water Co. Ltd. stockholders															$	2,289,886

First Half Segment Results

		Six Months Ended June 30, 2023
		Retail				Bulk			Services			Manufacturing			Total
Revenue		$	15,344,424			$	17,486,868		$	36,815,664		$	7,459,297		$	77,106,253
Cost of revenue			6,983,926				12,174,881			26,292,219			5,632,596			51,083,622
Gross profit			8,360,498				5,311,987			10,523,445			1,826,701			26,022,631
General and administrative expenses			8,442,642				732,875			1,993,232			852,828			12,021,577
Gain (loss) on asset dispositions and impairments, net			(7,287	)			12,270			—			1,933			6,916
Income (loss) from operations		$	(89,431	)		$	4,591,382		$	8,530,213		$	975,806			14,007,970
Other income, net																286,190
Income before income taxes																14,294,160
Provision for income taxes																2,389,552
Net income from continuing operations																11,904,608
Income from continuing operations attributable to non-controlling interests																300,347
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																11,604,261
Net loss from discontinued operations																(466,864	)
Net income attributable to Consolidated Water Co. Ltd. stockholders															$	11,137,397

		Six Months Ended June 30, 2022
		Retail				Bulk			Services			Manufacturing				Total
Revenue		$	12,840,003			$	15,774,393		$	9,799,303		$	2,211,333			$	40,625,032
Cost of revenue			6,172,151				10,334,702			7,515,047			1,981,871				26,003,771
Gross profit			6,667,852				5,439,691			2,284,256			229,462				14,621,261
General and administrative expenses			6,795,515				714,375			1,618,014			664,904				9,792,808
Gain on asset dispositions and impairments, net			1,200				—			16,538			—				17,738
Income (loss) from operations		$	(126,463	)		$	4,725,316		$	682,780		$	(435,442	)			4,846,191
Other income, net																	717,709
Income before income taxes																	5,563,900
Benefit from income taxes																	56,425
Net income from continuing operations																	5,507,475
Income from continuing operations attributable to non-controlling interests																	473,627
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders																	5,033,848
Net loss from discontinued operations																	(1,027,147	)
Net income attributable to Consolidated Water Co. Ltd. stockholders																$	4,006,701

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, August 11, 2023
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: 5868888

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 August 18, 2023, 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: 5868888

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, builds and operates seawater desalination facilities in the Cayman Islands, The Bahamas and the British Virgin Islands, and designs, builds 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, build, 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 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; 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 Contact

Investor Relations Contact
Ron Both or Grant Stude
CMA Investor Relations
Tel (949) 432-7566
Email Contact

Media Contact:
Tim Randall
CMA Media Relations
Tel (949) 432-7572
Email Contact

CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

			June 30,			December 31,
			2023			2022
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	47,691,699		$	50,711,751
Accounts receivable, net			30,302,638			27,046,182
Inventory			9,844,600			5,727,842
Prepaid expenses and other current assets			6,873,183			5,643,279
Contract assets			8,192,770			2,913,722
Current assets of discontinued operations			320,427			531,480
Total current assets			103,225,317			92,574,256
Property, plant and equipment, net			50,733,041			52,529,545
Construction in progress			5,890,363			3,705,681
Inventory, noncurrent			5,004,956			4,550,987
Investment in OC-BVI			1,339,585			1,545,430
Goodwill			10,425,013			10,425,013
Intangible assets, net			2,545,556			2,818,888
Operating lease right-of-use assets			1,785,865			2,058,384
Other assets			3,001,292			1,669,377
Long-term assets of discontinued operations			21,129,288			21,129,288
Total assets		$	205,080,276		$	193,006,849
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities		$	10,156,003		$	8,438,315
Accounts payable - related parties			—			403,839
Accrued compensation			1,869,351			2,267,583
Dividends payable			1,411,753			1,375,403
Current maturities of operating leases			547,297			546,851
Current portion of long-term debt			114,964			114,964
Contract liabilities			12,928,490			8,803,921
Deferred revenue			409,670			315,825
Current liabilities of discontinued operations			280,695			389,884
Total current liabilities			27,718,223			22,656,585
Long-term debt, noncurrent			161,409			216,117
Deferred tax liabilities			485,008			560,306
Noncurrent operating leases			1,552,708			1,590,542
Other liabilities			153,000			219,110
Total liabilities			30,070,348			25,242,660
Commitments and contingencies
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 48,088 and 34,383 shares, respectively			28,853			20,630
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,736,041 and 15,322,875 shares, respectively			9,441,625			9,193,725
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued			—			—
Additional paid-in capital			91,107,323			89,205,159
Retained earnings			69,702,109			61,247,699
Total Consolidated Water Co. Ltd. stockholders' equity			170,279,910			159,667,213
Non-controlling interests			4,730,018			8,096,976
Total equity			175,009,928			167,764,189
Total liabilities and equity		$	205,080,276		$	193,006,849

CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
Revenue		$	44,237,263			$	21,067,127			$	77,106,253			$	40,625,032
Cost of revenue(including related party expenses of $0 and $640,937 for the three months ended, and $0 and $1,480,369 for the six months ended, June 30, 2023 and 2022, respectively)			28,773,714				13,591,630				51,083,622				26,003,771
Gross profit			15,463,549				7,475,497				26,022,631				14,621,261
General and administrative expenses (including related party expenses of $0 and $24,231 for the three months ended, and $0 and $48,462 for the six months ended, June 30, 2023 and 2022, respectively)			5,984,915				4,926,691				12,021,577				9,792,808
Gain on asset dispositions and impairments, net			1,000				5,280				6,916				17,738
Income from operations			9,479,634				2,554,086				14,007,970				4,846,191
Other income (expense):
Interest income			86,137				110,916				199,781				291,603
Interest expense			(36,247	)			(2,724	)			(74,091	)			(6,805	)
Profit-sharing income from OC-BVI			12,150				8,100				26,325				18,225
Equity in the earnings of OC-BVI			35,272				19,551				70,830				51,317
Net gain on put/call options			—				201,000				—				276,000
Other			31,819				61,139				63,345				87,369
Other income, net			129,131				397,982				286,190				717,709
Income before income taxes			9,608,765				2,952,068				14,294,160				5,563,900
Provision for income taxes			1,940,067				10,152				2,389,552				56,425
Net income from continuing operations			7,668,698				2,941,916				11,904,608				5,507,475
Income from continuing operations attributable to non-controlling interests			137,226				232,197				300,347				473,627
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders			7,531,472				2,709,719				11,604,261				5,033,848
Total loss from discontinued operations			(207,701	)			(419,833	)			(466,864	)			(1,027,147	)
Net income attributable to Consolidated Water Co. Ltd. stockholders		$	7,323,771			$	2,289,886			$	11,137,397			$	4,006,701
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations		$	0.48			$	0.18			$	0.74			$	0.33
Discontinued operations			(0.01	)			(0.03	)			(0.03	)			(0.07	)
Basic earnings per share		$	0.47			$	0.15			$	0.71			$	0.26
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations		$	0.47			$	0.18			$	0.73			$	0.33
Discontinued operations			(0.01	)			(0.03	)			(0.03	)			(0.07	)
Diluted earnings per share		$	0.46			$	0.15			$	0.70			$	0.26
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			15,736,041				15,285,523				15,729,852				15,285,523
Diluted earnings per share			15,907,440				15,436,421				15,899,923				15,435,956