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

SOURCE Consolidated Water Co. Ltd.

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