Consolidated Water Reports Q1 2021 Results

Grand Cayman, CAYMAN ISLANDS


GEORGE TOWN, Cayman Islands, May 17, 2021 (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 first quarter ended March 31, 2021. Quarterly comparisons are to the year-ago quarter 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.)

Q1 2021 Highlights

  • Total revenue of $17.1 million.
  • Services revenue increased 13.7% to $3.5 million.
  • Bulk segment gross profit up 11.5% to $2.1 million.
  • Net income from continuing operations attributable to Consolidated Water stockholders was $1.3 million or $0.08 per basic and fully diluted share.
  • As of March 31, 2021, cash and cash equivalents totaled $42.8 million, working capital was $67.4 million, debt was $0.2 million, with stockholders’ equity at $160.8 million.
  • Paid $1.3 million in dividends.

Management Commentary

“Our first quarter 2021 results reflect the company’s continued focus on expanding our services segment to mitigate the negative effects of the pandemic,” said Consolidated Water CEO, Rick McTaggart. “Our services revenue increased 14% to $3.5 million, which accounted for 21% of our consolidated revenue compared to 15% of consolidated revenue in the first quarter of 2020.

“PERC Water is the reason for the growth in our services segment, and generated about 70% of its revenue through contracts with government entities in California this past quarter. We operate and maintain water treatment and reuse facilities under contracted engagements that range from one to five years with varying renewal options. The majority of these contracts have renewal dates beyond 2021.

“Our retail business segment continued to be adversely affected by the pandemic due to continuing travel restrictions to the Cayman Islands. The Cayman Islands government recently relaxed quarantine requirements for fully vaccinated people arriving to the Islands and we hope that a gradual reopening to tourism will continue over the coming months.

“We continue to be excited and encouraged about the possibilities for PERC, which has been the best-performing area of our business throughout the pandemic. Bidding activity for potential design-build projects and operating contracts is at the busiest level we have seen since we acquired our majority ownership interest in PERC in late 2019. Potential clients in California and Arizona are seeking cost-effective solutions to their wastewater treatment and potable water challenges caused by unprecedented drought in the region. Arizona has also experienced population growth caused by the pandemic that is creating new water treatment opportunities.

“Over the remainder of the year, we expect to use our strong balance sheet to expand our business through organic growth, acquisitions, and new projects, whereby further broadening our water solution offerings and market area. Above all, we will continue to focus on business that will provide increasing value for our shareholders. We remain confident that Consolidated Water will emerge from the pandemic stronger and better than ever.”

Q1 2021 Financial Summary

Total revenue for the first quarter of 2021 declined by 17.5% to $17.1 million from $20.7 million in the first quarter of 2020. The decline reflects decreases of $1.5 million in retail segment revenue, $194,000 in bulk segment revenue and $2.3 million in manufacturing segment revenue. The decrease in revenue for these segments was partially offset by an increase of $426,000 in services segment revenue.

Retail revenue declined due to a 20% decrease in the volume of water sold by Cayman Water that resulted from the temporary cessation of tourism on Grand Cayman, as all Cayman Islands airports and seaports have been closed since March 2020 in response to the COVID-19 pandemic.

The decrease in bulk water revenue was due to a decrease in CW-Bahamas’ revenue of approximately $166,000 for 2021 due to lower energy costs, which correspondingly decreased the energy pass-through component of CW-Bahamas’ rates.

The decrease in manufacturing revenue in the first quarter of 2021 was due to a decrease in orders from Aerex’s former largest customer, which informed Aerex last October that it was suspending its purchases of certain products until the first quarter of 2022 due to inventory management related factors. The company anticipates, although cannot assure, that orders from this customer will resume in the first quarter of 2022.

The increase in services revenue was due to an increase of $1.3 million in revenue from new operating and maintenance contracts which offset a decline in plant construction revenue of $913,000.

Gross profit decreased 27.4% to $6.1 million in the first quarter of 2021 from $8.4 million in the same year-ago quarter, with gross profit as a percentage of revenue decreasing from 40.7% to 35.8% primarily as a result of the decline in revenue for the retail and manufacturing segments.

Net income from continuing operations attributable to stockholders decreased 59.4% to $1.3 million or $0.08 per basic and diluted share, compared to $3.2 million or $0.21 per basic and diluted share in the first quarter of 2020.

Net income attributable to Consolidated Water stockholders in the first quarter of 2021 decreased 65.8% to $989,000 or $0.06 per basic and fully diluted share, as compared to $2.9 million or $0.19 per basic and fully diluted share in the first quarter of 2020.

Cash and cash equivalents totaled $42.8 million as of March 31, 2021, as compared to $43.8 million as of December 31, 2020.

First Quarter Segment Results

  Three Months Ended March 31, 2021
  Retail Bulk Services Manufacturing Total
Revenue $5,711,305  $6,245,970  $3,540,846  $1,605,196  $17,103,317 
Cost of revenue  2,707,994   4,155,153   2,721,928   1,391,732   10,976,807 
Gross profit  3,003,311   2,090,817   818,918   213,464   6,126,510 
General and administrative expenses  3,371,010   377,503   722,020   293,953   4,764,486 
Gain (loss) on asset dispositions and impairments, net  (250,000)  1,500   (433)     (248,933)
Income (loss) from operations $(617,699) $1,714,814  $96,465  $(80,489)  1,113,091 
Other income, net               314,608 
Income before income taxes               1,427,699 
Benefit from income taxes               (2,660)
Net income from continuing operations               1,430,359 
Income from continuing operations attributable to non-controlling interests               128,793 
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders               1,301,566 
Net loss from discontinued operations               (312,794)
Net income attributable to Consolidated Water Co. Ltd. stockholders              $988,772 


  Three Months Ended March 31, 2020
  Retail Bulk Services Manufacturing Total
Revenue $7,257,432  $6,440,284  $3,114,813  $3,913,192  $20,725,721 
Cost of revenue  2,986,620   4,564,580   2,273,520   2,460,680   12,285,400 
Gross profit  4,270,812   1,875,704   841,293   1,452,512   8,440,321 
General and administrative expenses  3,373,839   292,046   672,690   356,734   4,695,309 
Gain (loss) on asset dispositions and impairments, net     200   (420)     (220)
Income from operations $896,973  $1,583,858  $168,183  $1,095,778   3,744,792 
Other income, net                 27,261 
Income before income taxes                 3,772,053 
Provision for income taxes                 206,083 
Net income from continuing operations                 3,565,970 
Income attributable to non-controlling interests                 360,998 
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders                 3,204,972 
Net loss from discontinued operations                 (316,365)
Net income attributable to Consolidated Water Co. Ltd. stockholders                $2,888,607 

Annual General Meeting of Shareholders

The company has set May 24, 2021 as the date of its Annual General Meeting of Shareholders to be held at 4:00 p.m. Eastern Daylight Time. The Annual General Meeting will be a “hybrid” meeting of shareholders, meaning shareholders will be able to attend the Annual General Meeting as well as vote during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/cwco2021 or attend the meeting in person at the offices of Aquilex, Inc., 5810 Coral Ridge Drive, Suite 220, Coral Springs, FL 33076. Holders of record of the company’s stock as of March 25, 2021 will be entitled to vote at the meeting.

Conference Call

Consolidated Water management will host a conference call tomorrow to discuss these results, followed by a question-and-answer period.

Date: Tuesday, May 18, 2021
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: 10155785

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 May 25, 2021, 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: 10155785

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 collection of its delinquent accounts receivable in the Bahamas; (v) the possible adverse impact of the COVID-19 virus on the company’s business; and (vi) 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, CMA
Tel (949) 432-7566
CWCO@cma.team

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

   March 31,    December 31,  
   2021   2020 
  (Unaudited)    
ASSETS        
Current assets        
Cash and cash equivalents $42,782,527  $43,794,150 
Accounts receivable, net  24,688,432   21,483,976 
Inventory  2,320,089   3,214,178 
Prepaid expenses and other current assets  1,935,180   2,412,282 
Contract assets  669,419   516,521 
Current assets of discontinued operations  1,412,379   1,511,099 
Total current assets  73,808,026   72,932,206 
Property, plant and equipment, net  56,084,332   57,687,984 
Construction in progress  600,021   440,384 
Inventory, noncurrent  4,440,670   4,506,842 
Investment in OC-BVI  1,659,501   2,092,146 
Goodwill  13,325,013   13,325,013 
Intangible assets, net  3,949,166   4,148,333 
Operating lease right-of-use assets  2,889,508   1,329,561 
Other assets  1,886,754   1,926,594 
Long-term assets of discontinued operations  21,131,444   21,166,489 
Total assets $179,774,435  $179,555,552 
         
LIABILITIES AND EQUITY        
Current liabilities        
Accounts payable, accrued expenses and other current liabilities $2,970,756  $2,856,127 
Accounts payable - related parties  247,008   200,558 
Accrued compensation  1,218,729   1,434,106 
Dividends payable  1,304,852   1,300,022 
Current maturities of operating leases  462,464   455,788 
Current portion of long-term debt  54,698   42,211 
Contract liabilities  45,553   461,870 
Current liabilities of discontinued operations  102,892   188,434 
Total current liabilities  6,406,952   6,939,116 
Long-term debt, noncurrent  161,439   126,338 
Deferred tax liabilities  1,386,086   1,440,809 
Noncurrent operating leases  2,520,367   982,076 
Net liability arising from put/call options  559,000   690,000 
Other liabilities  387,857   362,165 
Long-term liabilities of discontinued operations     2,499 
Total liabilities  11,421,701   10,543,003 
Commitments and contingencies        
Equity        
Consolidated Water Co. Ltd. stockholders' equity        
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 30,106 and 31,068 shares, respectively  18,064   18,641 
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,201,475 and 15,143,683 shares, respectively  9,120,885   9,086,210 
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued      
Additional paid-in capital  87,028,085   86,893,486 
Retained earnings  64,603,284   64,910,709 
Total Consolidated Water Co. Ltd. stockholders' equity  160,770,318   160,909,046 
Non-controlling interests  7,582,416   8,103,503 
Total equity  168,352,734   169,012,549 
Total liabilities and equity $179,774,435  $179,555,552 


CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

  Three Months Ended March 31, 
  2021 2020
Total revenue $17,103,317  $20,725,721 
Total cost of revenue (including purchases from related parties of $155,982 in 2021 and $493,463 in 2020)  10,976,807   12,285,400 
Gross profit  6,126,510   8,440,321 
General and administrative expenses (including purchases from related parties of $4,429 in 2021)  4,764,486   4,695,309 
Loss on asset dispositions and impairments, net  (248,933)  (220)
Income from operations  1,113,091   3,744,792 
       
Other income (expense):      
Interest income  160,364   136,440 
Interest expense  (2,860)  (2,526)
Profit-sharing income from OC-BVI  6,075   10,125 
Equity in the earnings of OC-BVI  15,780   25,883 
Net unrealized gain (loss) on put/call options  131,000   (161,000)
Other  4,249   18,339 
Other income, net  314,608   27,261 
Income before income taxes  1,427,699   3,772,053 
Provision (benefit) for income taxes  (2,660)  206,083 
Net income from continuing operations  1,430,359   3,565,970 
Income from continuing operations attributable to non-controlling interests  128,793   360,998 
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders  1,301,566   3,204,972 
Total loss from discontinued operations  (312,794)  (316,365)
Net income attributable to Consolidated Water Co. Ltd. stockholders $988,772  $2,888,607 
       
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders      
Continuing operations $0.08  $0.21 
Discontinued operations  (0.02)  (0.02)
Basic earnings per share $0.06  $0.19 
       
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders      
Continuing operations $0.08  $0.21 
Discontinued operations  (0.02)  (0.02)
Diluted earnings per share $0.06  $0.19 
       
Dividends declared per common and redeemable preferred shares $0.085  $0.085 
       
Weighted average number of common shares used in the determination of:      
Basic earnings per share  15,201,458   15,114,506 
Diluted earnings per share  15,356,842   15,268,884