Consolidated Water Reports Q2 2020 Results
GEORGE TOWN, Cayman Islands, Aug. 14, 2020 /PRNewswire/ -- 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 three and six months ended June 30, 2020. Quarterly and first-half comparisons are to the year-ago period unless otherwise noted.
Financial Highlights
-- Revenue in the second quarter increased 4% to $19.1 million, first half
up 13% to $39.8 million.
-- Gross profit in the first half increased 8% to $15.7 million.
-- Net loss attributable to Consolidated Water stockholders for the second
quarter of 2020 was $1.1 million or $(0.07) per basic and fully diluted
share, as compared to net income of $2.5 million or $0.16 per basic and
fully diluted share in the year-ago quarter. For the first half of 2020,
net income attributable to Consolidated Water stockholders was $1.8
million or $0.12 per fully diluted share, down from $8.7 million or
$0.57 per fully diluted share in the same year-ago period.
-- Cash and cash equivalents totaled $35.0 million as of June 30, 2020.
-- Paid $1.3 million in dividends in Q2 2020.
Management Commentary
"In Q2, our core water production and distribution and manufacturing operations remained stable and profitable, although at reduced production levels due to the impact of the COVID-19 pandemic," commented Consolidated Water CEO, Rick McTaggart. "This allowed our financial condition and liquidity to remain strong, with cash balances totaling $35.0 million at quarter end.
"Our services segment revenue was up by more than $3.3 million due to the contribution from PERC Water, our new majority-owned subsidiary that we acquired in the fourth quarter of last year. PERC has been performing better than we anticipated given the current market conditions created by the pandemic. During the quarter, PERC was awarded two new contracts and secured four contract renewals for operating and maintaining advanced water treatment plants in California. We expect PERC's two new O&M contracts to add incremental revenue of $1.7 million in the second half of this year.
"We continue to see attractive opportunities for PERC in a very active market. Its strong growth potential is largely due to its excellent product and service offerings, and strong presence in the Southwestern United States where water supplies are increasingly under stress.
"PERC has been highly complementary to our existing business and overall mission, supporting our pursuit of water reuse projects and other emerging opportunities with a comprehensive suite of solutions for improving water infrastructure. PERC also provides us a solid platform upon which to expand to North America our core business of designing, constructing and operating desalination plants. Given these compelling growth factors, earlier this week we acquired an additional 10% of PERC from another shareholder for $900,000, thereby raising our ownership interest from 51% to 61%.
"Overall, Consolidated Water continues to be well positioned to successfully navigate these uncertain and turbulent times, thanks to a strong balance sheet and well-established growth strategy that brought us PERC and, we anticipate, other successful future acquisitions.
"Although COVID-19 has impacted each of our operating segments to varying degrees, our products and services remain public health and economic imperatives for the communities we serve. Customers still need turn-key and affordable sources of drinking water from our desalination plants, and wastewater still must be treated to the highest standards for environmentally responsible disposal or reuse. We expect the growth drivers inherent in our markets to persist over the long term, which bodes well for Consolidated Water and our efforts to enhance shareholder value over the years to come."
Q2 2020 Financial Summary
Revenue increased 4% to $19.1 million from $18.3 million in the second quarter of 2019, which was driven by an increase of $3.4 million in the services segment. The increase was partially offset by decreases of $1.0 million in the retail segment, $1.1 million in the bulk segment, and $511,000 in the manufacturing segment.
The increase in services revenue was due to the addition of $3.4 million in revenue from PERC as a result of acquiring 51% of this company in late October 2019.
The decrease in retail revenue was due to a 16% decrease in the volume of water sold due to the temporary cessation of tourism on Grand Cayman resulting from the closing of all Cayman Islands airports and seaports in March 2020 in response to the COVID-19 pandemic.
The decrease in bulk water revenue was primarily due to lower energy costs in the Bahamas, which correspondingly decreased the energy pass-through component of the company's rates. The decrease was also due to a lower rate that came into effect in July 2019 for the North Side Water Works plant under the new contract with the Water-Authority Cayman.
The decrease in manufacturing revenue was due to a decrease in the number of active projects.
Gross profit for the second quarter of 2020 was $7.3 million or 38.3% of total revenue, down 3% from $7.6 million or 41.3% of total revenue in the same year-ago quarter.
Net loss attributable to Consolidated Water stockholders for the second quarter of 2020 was $1.1 million or $(0.07) per basic and fully diluted share, as compared to net income of $2.5 million or $0.16 per basic and fully diluted share in the second quarter of 2019. The decrease was due to a $3.0 million loss on asset dispositions and impairments.
First Half 2020 Financial Summary
Total revenue for the first half of 2020 was $39.8 million, up 13% compared to $35.3 million in the same year-ago period. The increase was primarily driven by an increase of $6.4 million in the services segment, and an increase of $312,000 in the manufacturing segment. The increase in total revenue was partially offset by decreases of $1.7 million in the bulk segment and $446,000 in the retail segment.
The increase in services revenue was due to the addition of $6.4 million in revenue from PERC as a result of acquiring 51% of this company in late October 2019.
Retail revenue decreased due to the volume of water sold, which decreased by 3%. This sales volume decrease is due to the temporary cessation of tourism on Grand Cayman resulting from the closing of Cayman Islands airports and seaports in March 2020 in response to the COVID-19 pandemic.
The decrease in bulk revenue was due to the lower rates that came into effect in February of this year under the new contract with the Water-Authority Cayman for water supplied by the Red Gate and North Sound plants. The decrease was also due to the lower rate that came into effect in July 2019 under the new contract with the Water-Authority Cayman for water supplied by the North Side Water Works plant, as well as due to decreased energy prices that decreased the energy pass-through component of the company's bulk revenue by $448,000.
The increase in manufacturing revenue was due to an increase in project production activity.
Gross profit for the first half of 2020 was $15.7 million or 39.5% of total revenue, up 8% from $14.5 million or 41.1% of total revenue in the same year-ago period.
Net income attributable to Consolidated Water stockholders for the half of 2020 was $1.8 million or $0.12 per fully diluted share, down from $8.7 million or $0.57 per fully diluted share in the same year-ago period.
Second Quarter Segment Results
Three Months Ended June 30, 2020
Retail Bulk Services Manufacturing Total
Revenue $
5,966,296 $
5,866,397 $
3,476,000 $
3,778,554 $
19,087,247
Cost of revenue 2,769,497 3,941,309 2,631,513 2,441,785 11,784,104
Gross profit 3,196,799 1,925,088 844,487 1,336,769 7,303,143
General and
administrative
expenses 3,266,782 261,100 1,014,765 318,381 4,861,028
Loss on asset
dispositions and
impairments, net (3,030,420) (3,030,420)
Income (loss) from
operations $
(69,983) $
1,663,988 $
(3,200,698) $
1,018,388 (588,305)
Other expense, net (155,115)
Loss before income
taxes (743,420)
Provision for income
taxes 204,268
Net loss (947,688)
Income attributable
to non-controlling
interests 180,154
Net loss
attributable to
Consolidated Water
Co. Ltd.
stockholders $
(1,127,842)
Three Months Ended June 30, 2019
---
Retail Bulk Services Manufacturing Total
Revenue $
6,983,515 $
6,941,051 $
90,792 $
4,289,902 $
18,305,260
Cost of revenue 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 2,941,158
Income attributable
to non-controlling
interests 464,896
Net income
attributable to
Consolidated Water
Co. Ltd.
stockholders $
2,476,262
First Half Segment Results
Six Months Ended June 30, 2020
Retail Bulk Services Manufacturing Total
Revenue $
13,223,728 $
12,306,681 $
6,590,813 $
7,691,746 $
39,812,968
Cost of revenue 5,756,117 8,505,889 4,905,033 4,902,465 24,069,504
Gross profit 7,467,611 3,800,792 1,685,780 2,789,281 15,743,464
General and administrative
expenses 6,640,621 553,146 2,145,903 675,115 10,014,785
Gain (loss) on asset
dispositions and
impairments, net 200 (3,030,840) (3,030,640)
Income (loss) from
operations $
826,990 $
3,247,846 $
(3,490,963) $
2,114,166 2,698,039
Other income, net 14,229
Income before income taxes 2,712,268
Provision for income taxes 410,351
Net income 2,301,917
Income attributable to non-
controlling interests 541,152
Net income attributable to
Consolidated Water Co.
Ltd. stockholders $
1,760,765
Six Months Ended June 30, 2019
---
Retail Bulk Services Manufacturing Total
Revenue $
13,670,175 $
14,052,364 $
191,369 $
7,379,876 $
35,293,784
Cost of revenue 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
Annual General Meeting of Shareholders
The company has rescheduled its 2020 annual meeting of shareholders for November 18, 2020 to be held at a time and location yet to be determined. Shareholders of record as of September 15, 2020 will be entitled to vote at the meeting.
Conference Call
Consolidated Water management will host a conference call to discuss these results, followed by a question and answer period.
Date: Monday, August 17, 2020
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: 10147145
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 24, 2020, 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: 10147145
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 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; (v) the collection of its delinquent accounts receivable in the Bahamas; (vi) its ability to integrate and profitably operate recently acquired subsidiary PERC Water Corporation; (vii) the possible adverse impact of the COVID-19 virus on the company's business; and (viii) 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 Grant Stude
CMA Investor Relations
Tel (949) 432-7566
CWCO@cma.team
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
June 30,
2019
2020
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $
34,956,328 $
42,902,669
Accounts receivable, net 26,858,584 23,229,689
Inventory 5,067,873 3,287,555
Prepaid expenses and other
current assets 1,738,472 2,346,918
Costs and estimated earnings
in excess of billings 2,202,524 1,675,781
Total current assets 70,823,781 73,442,612
Property, plant and equipment,
net 59,808,325 61,248,979
Construction in progress 399,463 1,335,597
Inventory, noncurrent 4,738,617 4,404,378
Investment in OC-BVI 1,987,878 1,903,602
Goodwill 13,325,013 13,325,013
Land and rights of way 21,126,898 24,162,523
Intangible assets, net 4,573,333 5,040,000
Operating lease right-of-use
assets 1,250,157 4,439,212
Other assets 2,791,458 2,990,228
Total assets $
180,824,923 $
192,292,144
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued
expenses and other current
liabilities $
3,613,387 $
3,672,142
Accrued compensation 1,519,911 1,821,395
Dividends payable 1,298,321 1,292,187
Current maturities of
operating leases 628,161 755,751
Current portion of long-term
debt 42,211 17,753
Billings in excess of costs
and estimated earnings 899,942 614,386
Total current liabilities 8,001,933 8,173,614
Long-term debt, noncurrent 145,822 61,146
Deferred tax liabilities 1,384,268 1,529,035
Noncurrent operating leases 930,072 3,836,475
Net liability arising from
put/call options 745,000 664,000
Other liabilities 75,000 75,000
Total liabilities 11,282,095 14,339,270
Commitments and contingencies
Equity
Consolidated Water Co. Ltd.
stockholders' equity
Redeemable preferred stock,
$0.60 par value. Authorized
200,000 shares; issued and
outstanding 40,237 and 33,751
shares, respectively 24,142 20,251
Class A common stock, $0.60
par value. Authorized
24,655,000 shares; issued and
outstanding 15,114,506 and
15,049,608 shares,
respectively 9,068,704 9,029,765
Class B common stock, $0.60
par value. Authorized 145,000
shares; none issued
Additional paid-in capital 86,234,521 88,356,509
Retained earnings 65,536,646 66,352,733
Total Consolidated Water Co.
Ltd. stockholders' equity 160,864,013 163,759,258
Non-controlling interests 8,678,815 14,193,616
Total equity 169,542,828 177,952,874
Total liabilities and equity $
180,824,923 $
192,292,144
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Total revenue $
19,087,247 $
18,305,260 $
39,812,968 $
35,293,784
Total cost of revenue 11,784,104 10,752,511 24,069,504 20,778,732
Gross profit 7,303,143 7,552,749 15,743,464 14,515,052
General and administrative
expenses 4,861,028 4,994,992 10,014,785 9,373,026
Gain (loss) on asset
dispositions and impairments,
net (3,030,420) 397,301 (3,030,640) 441,070
Income (loss) from operations (588,305) 2,955,058 2,698,039 5,583,096
Other income (expense):
Interest income 109,819 140,467 246,259 290,652
Interest expense (2,818) (1,482) (5,344) (1,482)
Profit-sharing income from
OC-BVI 14,175 2,025 24,300 8,100
Equity in the earnings
(losses) of OC-BVI 34,093 (24,949) 59,976 (11,488)
Net unrealized gain (loss) on
put/call options 80,000 (81,000) (24,000)
Other (390,384) (65,728) (229,962) 48,641
Other income (expense), net (155,115) 50,333 14,229 310,423
Income (loss) before income
taxes (743,420) 3,005,391 2,712,268 5,893,519
Provision for income taxes 204,268 64,233 410,351 113,192
Net income (loss) from
continuing operations (947,688) 2,941,158 2,301,917 5,780,327
Income from continuing
operations attributable to
non-controlling interests 180,154 464,896 541,152 738,804
Net income (loss) from
continuing operations
attributable to Consolidated
Water Co. Ltd. stockholders (1,127,842) 2,476,262 1,760,765 5,041,523
Gain on sale of discontinued
operations 3,621,170
Total income from discontinued
operations 3,621,170
Net income (loss) attributable
to Consolidated Water Co.
Ltd. stockholders $
(1,127,842) $
2,476,262 $
1,760,765 $
8,662,693
Basic earnings (loss) per
common share attributable to
Consolidated Water Co. Ltd.
common stockholders
Continuing operations $
(0.07) $
0.16 $
0.12 $
0.34
Discontinued operations 0.24
Basic earnings (loss) per
share $
(0.07) $
0.16 $
0.12 $
0.58
Diluted earnings (loss) per
common share attributable to
Consolidated Water Co. Ltd.
common stockholders
Continuing operations $
(0.07) $
0.16 $
0.12 $
0.33
Discontinued operations 0.24
Diluted earnings (loss) per
share $
(0.07) $
0.16 $
0.12 $
0.57
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 15,114,506 15,020,344 15,114,506 15,020,344
Diluted earnings per share 15,114,506 15,185,812 15,269,175 15,185,463
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SOURCE Consolidated Water Co. Ltd.
