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Consolidated Water Co. Ltd. Reports Third Quarter 2018 Results

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GEORGE TOWN, Cayman Islands, Nov. 8, 2018 /PRNewswire/ -- Consolidated Water Co. Ltd. (NASDAQ:CWCO), a leading developer and operator of seawater desalination plants, reported financial and operating results for its third quarter ended September 30, 2018.

(PRNewsfoto/Consolidated Water Co. Ltd.)

Management Commentary

President and CEO Rick McTaggart commented: "We are pleased to report double-digit increases in gross profit across each of our business segments in the third quarter. Our retail desalination operations benefitted from higher volumes and fuel pass-through charges, and our manufacturing operations achieved operating improvements thanks to increased order flows and higher utilization. Income from operations for the third quarter more than doubled year-over-year to $2.6 million, and net earnings for the period were up over 3.5 times from 2017 levels, thanks to a one-time gain of approximately $1.9 million, reflecting the favorable resolution of outstanding litigation in the British Virgin Islands."

"As we previously disclosed, we are in discussions to possibly sell our operations in Belize to our customer there. As part of this dialogue, we were able to repatriate $2.75 million from our Belize operations in the third quarter, as well as an additional $1.0 million after the quarter end, following many years of difficulties in transferring funds due to the economic conditions in the region."

"Subsequent to the quarter end, we re-commissioned our Windsor plant in the Bahamas, which is our second largest facility in our plant portfolio. This facility, which provides 2.6 million US gallons per day to the government-owned Water and Sewerage Corporation, was refurbished with equipment manufactured by us and designed with embedded operating efficiencies," Mr. McTaggart noted.

Financial Results for the Three Months Ended September 30, 2018

Total revenues for the third quarter 2018 were $18.8 million, representing a 13.6% increase from $16.6 million in the third quarter of 2017. Gross profit amounted to $7.5 million, reflecting a 19.3% increase from $6.3 million in the year ago quarter. Inclusive of $846,000 in Rosarito-related expenses, net income attributable to Consolidated Water stockholders was $4.6 million, or $0.30 per fully diluted share, ahead of $1.2 million, or $0.08 per fully diluted share, reported in last year's comparable quarter.

Financial Results for the Nine Months Ended September 30, 2018

Total revenues for the first nine months of 2018 were $50.0 million, up 5.3% compared to the $47.5 million reported in last year's comparable period. Gross profit was $20.7 million, up 5.8% from $19.6 million for the first nine months of 2017. Net income attributable to Consolidated Water stockholders year-to-date was $8.8 million ($0.58 per fully diluted share), an increase of 99.9% from the $4.4 million ($0.29 per fully diluted share) in the comparable period of 2017. Net income and diluted EPS for the first nine months of 2018 and 2017 included operating expenses of $2.2 million and $2.5 million, respectively, related to development costs for the Rosarito desalination plant.

Segment Results


















Three Months Ended September 30, 2018 (Unaudited)



Retail


Bulk


Services


Manufacturing


Total

Revenues


$

6,185,558


$

8,577,456


$

807,424


$

3,253,750


$

18,824,188

Cost of revenues



2,750,599



5,658,373



682,713



2,205,830



11,297,515

Gross profit


$

3,434,959


$

2,919,083


$

124,711


$

1,047,920


$

7,526,673



































Three Months Ended September 30, 2017 (Unaudited)



Retail


Bulk


Services


Manufacturing


Total

Revenues


$

5,570,654


$

7,881,464


$

111,302


$

3,008,783


$

16,572,203

Cost of revenues



2,488,441



5,582,401



114,667



2,078,888



10,264,397

Gross profit (loss)


$

3,082,213


$

2,299,063


$

(3,365)


$

929,895


$

6,307,806

Summary and Outlook

"Our year-to-date consolidated financial results demonstrate the positive performance of our core desalination operations, and in the third quarter we saw a recovery in manufacturing, reflecting our ability to take on third party orders now that our Windsor plant is completed."

"We continue to execute on the next steps with respect to the Rosarito project, which represents the most important initiative we have undertaken. Faced with water shortages, Mexico is turning to alternative solutions, such as desalination, and the Rosarito plant will secure drinking water supplies in the coastal region of Baja California for the next 40 years."

"Our capital allocation priorities remain the same: investing in the business and returning the capital to our shareholders in the form of dividends. Our capital expenditures will decrease now that the Windsor plant is completed but will remain above last year's levels as we also continue to work on the expansion of the Abel Castillo Water Works plant in Grand Cayman. The improvements to this plant will continue through the first quarter of 2019," Mr. McTaggart concluded.

Investor Conference Call

The Company will host a conference call at 8:30 a.m. Eastern Time (EST) on Friday, November 9, 2018 to review the Company's operating results for the third quarter of 2018, along with other relevant topics of interest. Shareholders and other interested parties may participate in the conference call by dialing 844-875-6913 (international participants dial 412-317-6709) and requesting participation in the "Consolidated Water Company Call" a few minutes before 8:30 a.m. EST on Friday, November 9, 2018.

A replay of the conference call will be available one hour after the call through Friday, November 16, 2018 at 9:00 a.m. EST by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID # 10126036.

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 naturally occurring supplies of potable water are scarce. The Company operates water production and/or distribution facilities in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas, and Bali, Indonesia. 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 in the United States.

Consolidated Water Co. Ltd. is headquartered in George Town, Grand Cayman, in the Cayman Islands. The Company's ordinary (common) stock is traded on the NASDAQ Global Select Market under the symbol "CWCO". Additional information on the Company is available on its website at http://www.cwco.com.

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, including the project under development in Baja California, Mexico, its ability to develop and operate such projects profitably, its ability to renew existing bulk water supply contracts, 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").

By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

For further information, please contact our investor relations firm, AdvisIRy Partners:
Lynn Morgen: (212) 223-4147 lynn.morgen@advisiry.com 
Eric Prouty: (212) 750-5800 eric.prouty@advisiry.com 
Viktoriia Nakhla: (646) 625-4800 vicky.nakhla@advisiry.com

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS




September 30,



December 31,




2018



2017





(Unaudited)






ASSETS









Current assets









Cash and cash equivalents


$

34,367,483



$

47,182,966


Accounts receivable, net



22,996,276




15,047,846


Inventory



2,538,052




1,744,445


Prepaid expenses and other current assets



1,598,061




1,077,257


Current portion of loans receivable



1,093,641




1,400,448


Costs and estimated earnings in excess of billings



1,396,166




238,435


Total current assets



63,989,679




66,691,397


Property, plant and equipment, net



47,342,177




50,525,064


Construction in progress



16,742,806




1,823,284


Inventory, non-current



4,825,253




4,758,973


Loans receivable



-




734,980


Investment in OC-BVI



2,464,537




2,783,882


Goodwill



8,384,248




8,384,248


Land and rights of way held for development



23,673,855




21,505,675


Intangible assets, net



2,710,790




3,765,434


Other assets



2,369,214




4,507,958


Total assets


$

172,502,559



$

165,480,895











LIABILITIES AND EQUITY









Current liabilities









Accounts payable and other current liabilities


$

6,539,508



$

5,662,448


Dividends payable



1,284,964




1,281,612


Note payable to related party



1,078,000




686,000


Billings in excess of costs and estimated earnings



21,578




1,258


Total current liabilities



8,924,050




7,631,318


Deferred tax liability



757,447




1,024,893


Other liabilities



778,307




803,307


Total liabilities



10,459,804




9,459,518


Commitments and contingencies









Equity









Consolidated Water Co. Ltd. stockholders' equity









Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and
outstanding 36,498 and 33,488 shares, respectively



21,899




20,093


Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and
outstanding 14,964,281 and 14,918,869 shares, respectively



8,978,569




8,951,321


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



-




-


Additional paid-in capital



86,904,523




86,405,387


Retained earnings



58,113,606




53,105,196


Cumulative translation adjustment



(549,555)




(549,555)


Total Consolidated Water Co. Ltd. stockholders' equity



153,469,042




147,932,442


Non-controlling interests



8,573,713




8,088,935


Total equity



162,042,755




156,021,377


Total liabilities and equity


$

172,502,559



$

165,480,895


 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




Three Months Ended September 30,



Nine Months Ended September 30,




2018



2017



2018



2017


Retail revenues


$

6,185,558



$

5,570,654



$

18,884,929



$

18,111,274


Bulk revenues



8,577,456




7,881,464




25,294,821




23,615,787


Services revenues



807,424




111,302




1,054,100




360,758


Manufacturing revenues



3,253,750




3,008,783




4,798,948




5,444,678


Total revenues



18,824,188




16,572,203




50,032,798




47,532,497



















Cost of retail revenues



2,750,599




2,488,441




8,234,803




7,895,617


Cost of bulk revenues



5,658,373




5,582,401




16,848,668




15,750,402


Cost of services revenues



682,713




114,667




921,653




320,586


Cost of manufacturing revenues



2,205,830




2,078,888




3,300,370




3,967,945


Total cost of revenues



11,297,515




10,264,397




29,305,494




27,934,550


Gross profit



7,526,673




6,307,806




20,727,304




19,597,947


General and administrative expenses



4,941,564




4,896,323




14,263,762




14,695,184


Loss on asset dispositions and impairments, net



12,415




578,480




14,405




1,578,480


Income from operations



2,572,694




833,003




6,449,137




3,324,283



















Other income (expense):

















Interest income



172,805




70,741




504,028




301,813


Interest expense



(2,492)




(1,016)




(7,122)




(11,178)


Profit-sharing income from OC-BVI



536,625




36,450




621,675




46,575


Equity in the earnings of OC-BVI



1,472,154




138,913




1,710,230




127,955


Net unrealized gain (loss) on put/call options



75,000




171,000




(47,000)




323,000


Other



48,841




31,206




(26,670)




83,791


Other income, net



2,302,933




447,294




2,755,141




871,956


Income before income taxes



4,875,627




1,280,297




9,204,278




4,196,239


Provision for (benefit from) income taxes



12,659




(136,447)




(113,607)




(412,592)


Net income



4,862,968




1,416,744




9,317,885




4,608,831


Income attributable to non-controlling interests



310,579




255,605




484,778




191,916


Net income attributable to Consolidated Water
Co. Ltd. stockholders


$

4,552,389



$

1,161,139



$

8,833,107



$

4,416,915



















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


$

0.30



$

0.08



$

0.59



$

0.30



















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


$

0.30



$

0.08



$

0.58



$

0.29



















Dividends declared per common share


$

0.085



$

0.075



$

0.255



$

0.225



















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

















Basic earnings per share



14,963,195




14,898,246




14,960,602




14,886,738


Diluted earnings per share



15,124,720




15,072,142




15,119,415




15,054,343


 

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SOURCE Consolidated Water Co. Ltd.

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