Consolidated Water Co. Ltd. (NASDAQ Global Select Market: CWCO), a
leading designer, builder and operator of advanced water supply and
treatment plants, reported results for the full year ended December
31, 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).
2023 Financial Highlights
- Total revenue up 92% to $180.2
million.
- Retail revenue up 16% to $30.2
million.
- Bulk revenue increased 5% to $34.6
million.
- Services revenue increased 240% to
$98.0 million, with recurring services revenue generated from
operations and maintenance contracts up 37% to $19.4 million.
- Manufacturing revenue increased 177%
to $17.5 million.
- Net income from continuing
operations attributable to company stockholders was $30.7 million
or $1.93 per diluted share, as compared to $8.2 million or $0.54
per diluted share in 2022.
- Cash and cash equivalents totaled
$42.6 million and working capital was $88.8 million as of December
31, 2023.
2023 Operational Highlights
- Recognized $64.0 million in revenue
on the construction of a $81 million water treatment plant in
Goodyear, Arizona, being completed by our subsidiary, PERC Water
Corporation (PERC). The project was certified substantially
complete in January 2024 and the remaining work on the plant will
be completed by June 2024.
- Volume of retail water sold
increased 15%, primarily due to the greater return of tourist
activity in Grand Cayman.
- Began construction of a new 2.6
million gallon per day Red Gate desalination plant in Grand Cayman,
and recognized total design and construction revenue of $8.2
million in 2023.
- Began piloting, design and
permitting for a $204 million project to design, construct, operate
and maintain a seawater desalination plant in Hawaii announced in
June 2023.
- Acquired remaining 39% interest of
PERC to become the 100% owner of the company’s subsidiary that
designs, constructs, operates and manages water infrastructure
facilities in the Southwestern U.S.
- Acquired Ramey Environmental
Compliance (REC) in the fourth quarter, creating a new channel for
PERC to expand its presence in water-stressed regions in
Colorado.
Dividend Increase
In August 2023, the company increased its quarterly dividend by
11.8% to $0.095 per share beginning in the fourth quarter of
2023.
Management Commentary
“In 2023, our strong revenue and earnings growth made it the
best-performing year ever for Consolidated Water,” stated company
CEO, Rick McTaggart. “This is a fitting achievement in the year
that we celebrated our 50th year in business.
“In fact, revenue was up across all four of our business
segments, with total gross profit doubling to $61.9 million and
gross margin up 211 basis points to 34.4%. We believe this margin
expansion was primarily the result of our focus on quality projects
and cost control.
“Over the past year, we have seen tourism recover and water use
increase for our Cayman Islands retail and bulk water segments. We
also recognized revenue from the design and construction of the 2.6
million gallon per day Red Gate seawater desalination plant we are
building for the Water Authority of the Cayman Islands. This
contributed significantly to the year-over-year increase in our
services segment.
“Our operating results in 2023 benefited from an extraordinary
level of design and construction revenue from the Arizona and
Cayman projects, both of which are winding down this quarter. Other
segments in our business, however, also generated increased
revenues, which we expect to continue through 2024. Based on our
schedule for the Hawaii project, we expect to complete piloting,
design and permitting, and commence construction of that plant in
the third quarter of 2025, at which time we will begin to recognize
the majority of the $150 million in design-build revenue from that
important project over the two-year construction period.
“The sustained robust operational performance and revenue
expansion of our PERC subsidiary has continued to bolster our top
and bottom lines. Given its strong operational footprint in the
Southwestern U.S., a region grappling with critical water scarcity
exacerbated by unprecedented drought conditions, PERC is poised for
further expansion and advancement in this fundamental segment of
our business.
“In our U.S. desalination business, we commenced work in the
fourth quarter on site investigations, engineering, permitting and
public outreach for our contract to design, construct, operate and
maintain a 1.7 MGD seawater desalination plant in Oahu, Hawaii.
This project includes a two-year development phase, two-year
construction phase and 20-year operating phase, with two potential
5-year operating phase extensions at the client’s option.
“We see opportunities to grow our US-based O&M business as
well as our design-build business by building upon our successes
this past year. Bidding activity for O&M contracts and
design-build projects— particularly in California where PERC’s
presence is strong—has been robust and we hope to obtain some of
this new work.
“Our strong 2023 results certainly set the bar higher in terms
of our future growth outlook. However, we remain optimistic about
our growth prospects. Our exceptional operational performance over
the past several years has reaffirmed our belief that our highly
efficient and aesthetically pleasing treatment plant designs,
world-class operating and maintenance capabilities, and our
innovative project delivery models are superior to our
competitors.”
2023 Financial Summary
Revenue totaled $180.2 million, up 92% compared to $94.1 million
in 2022. The increase was primarily driven by increases of $4.2
million in the retail segment, $1.6 million in the bulk segment,
$69.1 million in the services segment and $11.2 million in the
manufacturing segment.
Retail revenue increased primarily due to a 15% increase in the
volume of water sold. The volume of water sold in the Cayman Water
license area increased by 14% and the remaining 1% increase in the
volume of water sold was due to sales by Cayman Water directly to
the Water Authority Cayman in the first quarter of 2023. Retail
revenue also increased as the result of higher energy costs that
increased the energy pass-through component of the company’s retail
water rates.
The increase in bulk segment revenue was due to an increase of
6% in the volume of water sold by CW-Bahamas and higher energy
costs, which increased the energy pass-through component of the
company’s bulk water rates.
The increase in services segment revenue was primarily due to
plant construction revenue increasing 566% to $77.3 million. The
company recognized approximately $64.0 million in revenue for the
construction of the water treatment plant in Goodyear, Arizona, and
recognized $8.2 million in revenue for the design and construction
of the Red Gate plant in Grand Cayman, Cayman Islands.
Revenue generated under operations and maintenance contracts
totaled $19.4 million in the full year of 2023, up 37% from $14.2
million in 2022.
The increase in manufacturing segment revenue was due to higher
project activity.
Gross profit for the full year of 2023 was $61.9 million or
34.4% of total revenue, up 104% from $30.4 million or 32.3% of
total revenue in 2022.
Net income from continuing operations attributable to
stockholders for the full year of 2023 was $30.7 million or $1.93
per diluted share, compared to net income of $8.2 million or $0.54
per diluted share in 2022.
Net income attributable to Consolidated Water stockholders for
the full year of 2023, which includes the results of discontinued
operations, was $29.6 million or $1.86 per diluted share, up from
net income of $5.9 million or $0.38 per diluted share in 2022.
Cash and cash equivalents totaled $42.6 million as of December
31, 2023, with working capital of $88.8 million, debt of $0.4
million, and stockholders’ equity totaling $186.8 million.
Full Year Segment Results
|
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|
|
|
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|
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|
|
|
Year Ended December 31, 2023 |
|
|
Retail |
|
Bulk |
|
Services |
|
Manufacturing |
|
Total |
Revenue |
|
$ |
30,158,051 |
|
|
$ |
34,595,058 |
|
$ |
97,966,650 |
|
$ |
17,491,474 |
|
$ |
180,211,233 |
|
Cost of revenue |
|
|
13,891,229 |
|
|
|
24,128,132 |
|
|
66,797,762 |
|
|
13,467,005 |
|
|
118,284,128 |
|
Gross profit |
|
|
16,266,822 |
|
|
|
10,466,926 |
|
|
31,168,888 |
|
|
4,024,469 |
|
|
61,927,105 |
|
General and administrative
expenses |
|
|
16,905,010 |
|
|
|
1,737,264 |
|
|
4,271,808 |
|
|
1,838,284 |
|
|
24,752,366 |
|
Gain (loss) on asset
dispositions and impairments, net |
|
|
(22,065 |
) |
|
|
12,720 |
|
|
— |
|
|
2,233 |
|
|
(7,112 |
) |
Income (loss) from
operations |
|
$ |
(660,253 |
) |
|
$ |
8,742,382 |
|
$ |
26,897,080 |
|
$ |
2,188,418 |
|
|
37,167,627 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
828,313 |
|
Income before income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,995,940 |
|
Provision for income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,750,014 |
|
Net income from continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,245,926 |
|
Income from continuing
operations attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
573,791 |
|
Net income from continuing
operations attributable to Consolidated Water Co. Ltd.
stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,672,135 |
|
Loss from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,086,744 |
) |
Net income attributable to
Consolidated Water Co. Ltd. stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
29,585,391 |
|
|
|
|
|
|
|
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Year Ended December 31, 2022 |
|
|
Retail |
|
Bulk |
|
Services |
|
Manufacturing |
|
Total |
Revenue |
|
$ |
25,954,013 |
|
|
$ |
32,991,066 |
|
$ |
28,835,428 |
|
$ |
6,324,465 |
|
|
$ |
94,104,972 |
|
Cost of revenue |
|
|
12,548,763 |
|
|
|
23,032,212 |
|
|
22,973,634 |
|
|
5,195,240 |
|
|
|
63,749,849 |
|
Gross profit |
|
|
13,405,250 |
|
|
|
9,958,854 |
|
|
5,861,794 |
|
|
1,129,225 |
|
|
|
30,355,123 |
|
General and administrative
expenses |
|
|
14,552,866 |
|
|
|
1,570,732 |
|
|
3,461,294 |
|
|
1,485,342 |
|
|
|
21,070,234 |
|
Gain (loss) on asset dispositions
and impairments, net |
|
|
(39,397 |
) |
|
|
5,607 |
|
|
23,717 |
|
|
(2,631 |
) |
|
|
(12,704 |
) |
Income (loss) from
operations |
|
$ |
(1,187,013 |
) |
|
$ |
8,393,729 |
|
$ |
2,424,217 |
|
$ |
(358,748 |
) |
|
|
9,272,185 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
464,810 |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,736,995 |
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396,739 |
|
Net income from continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,340,256 |
|
Income from continuing operations
attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,112,913 |
|
Net income from continuing
operations attributable to Consolidated Water Co. Ltd.
stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,227,343 |
|
Loss from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,371,049 |
) |
Net income attributable to
Consolidated Water Co. Ltd. stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,856,294 |
|
|
|
|
|
|
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|
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|
|
|
Revenue earned by major geographic region was:
|
|
Year ended December 31, |
|
|
2023 |
|
2022 |
Cayman Islands |
|
$ |
41,728,340 |
|
$ |
30,375,985 |
The Bahamas |
|
|
31,221,633 |
|
|
29,943,615 |
United States |
|
|
106,768,621 |
|
|
33,338,466 |
Revenue earned from management
services agreement with OC-BVI |
|
|
492,639 |
|
|
446,906 |
|
|
$ |
180,211,233 |
|
$ |
94,104,972 |
|
|
|
|
|
|
|
Annual General Meeting of Shareholders
The company has set May 28, 2024 as the date of its Annual
General Meeting of Shareholders to be held at 3:00 p.m. Cayman
Islands time (4:00 p.m. EDT) at the Grand Cayman Marriott Resort,
Seven Mile Beach, Grand Cayman, Cayman Islands. Holders of record
of the company’s stock as of March 28, 2024 will be entitled to
vote at the meeting.Conference Call
Consolidated Water management will host a conference call
tomorrow to discuss these results, which will include a
question-and-answer period.
Date: Thursday, March 28, 2024Time: 11:00 a.m. Eastern time
(8:00 a.m. Pacific time)Toll-free dial-in number:
1-844-875-6913International dial-in number:
1-412-317-6709Conference ID: 6785971
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 April 4, 2024, as well as available
for replay via the Investors section of the Consolidated Water
website at www.cwco.com.
Toll-free replay number: 1-877-344-7529International replay
number: 1-412-317-0088Replay ID: 6785971
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, constructs and operates seawater desalination
facilities in the Cayman Islands, The Bahamas and the British
Virgin Islands, and designs, constructs 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, constructs, 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 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. SasnettExecutive Vice President and CFOTel (954) 509-8200Email
ContactInvestor Relations Contact:Ron Both or
Grant StudeCMA Investor RelationsTel (949) 432-7566Email
ContactMedia Contact:Tim RandallCMA Media
RelationsTel (949) 432-7572Email Contact
CONSOLIDATED WATER
CO. LTD.CONSOLIDATED BALANCE
SHEETS
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December 31, |
|
|
2023 |
|
2022 |
ASSETS |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
42,621,898 |
|
$ |
50,711,751 |
Accounts receivable, net |
|
|
38,226,891 |
|
|
27,046,182 |
Inventory |
|
|
6,044,642 |
|
|
5,727,842 |
Prepaid expenses and other current assets |
|
|
4,056,370 |
|
|
5,643,279 |
Contract assets |
|
|
21,553,057 |
|
|
2,913,722 |
Current assets of discontinued operations |
|
|
211,517 |
|
|
531,480 |
Total current
assets |
|
|
112,714,375 |
|
|
92,574,256 |
Property, plant and equipment,
net |
|
|
55,882,521 |
|
|
52,529,545 |
Construction in progress |
|
|
495,471 |
|
|
3,705,681 |
Inventory, noncurrent |
|
|
5,045,771 |
|
|
4,550,987 |
Investment in OC-BVI |
|
|
1,412,158 |
|
|
1,545,430 |
Goodwill |
|
|
12,861,404 |
|
|
10,425,013 |
Intangible assets, net |
|
|
3,353,185 |
|
|
2,818,888 |
Operating lease right-of-use
assets |
|
|
2,135,446 |
|
|
2,058,384 |
Other assets |
|
|
3,407,973 |
|
|
1,669,377 |
Long-term assets of
discontinued operations |
|
|
21,129,288 |
|
|
21,129,288 |
Total
assets |
|
$ |
218,437,592 |
|
$ |
193,006,849 |
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
Accounts payable, accrued expenses and other current
liabilities |
|
$ |
11,604,369 |
|
$ |
8,438,315 |
Accounts payable - related parties |
|
|
— |
|
|
403,839 |
Accrued compensation |
|
|
3,160,030 |
|
|
2,267,583 |
Dividends payable |
|
|
1,572,655 |
|
|
1,375,403 |
Current maturities of operating leases |
|
|
456,865 |
|
|
546,851 |
Current portion of long-term debt |
|
|
192,034 |
|
|
114,964 |
Contract liabilities |
|
|
6,237,011 |
|
|
8,803,921 |
Deferred revenue |
|
|
317,017 |
|
|
315,825 |
Current liabilities of discontinued operations |
|
|
364,665 |
|
|
389,884 |
Total current
liabilities |
|
|
23,904,646 |
|
|
22,656,585 |
Long-term debt,
noncurrent |
|
|
191,190 |
|
|
216,117 |
Deferred tax liabilities |
|
|
530,780 |
|
|
560,306 |
Noncurrent operating
leases |
|
|
1,827,302 |
|
|
1,590,542 |
Other liabilities |
|
|
153,000 |
|
|
219,110 |
Long-term liabilities of
discontinued operations |
|
|
— |
|
|
— |
Total
liabilities |
|
|
26,606,918 |
|
|
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 44,297 and 34,383 shares,
respectively |
|
|
26,578 |
|
|
20,630 |
Class A common stock, $0.60 par value. Authorized 24,655,000
shares; issued and outstanding 15,771,545 and 15,322,875 shares,
respectively |
|
|
9,462,927 |
|
|
9,193,725 |
Class B common stock, $0.60 par value. Authorized 145,000 shares;
none issued |
|
|
— |
|
|
— |
Additional paid-in capital |
|
|
92,188,887 |
|
|
89,205,159 |
Retained earnings |
|
|
85,148,820 |
|
|
61,247,699 |
Total Consolidated Water Co.
Ltd. stockholders' equity |
|
|
186,827,212 |
|
|
159,667,213 |
Non-controlling interests |
|
|
5,003,462 |
|
|
8,096,976 |
Total
equity |
|
|
191,830,674 |
|
|
167,764,189 |
Total liabilities and
equity |
|
$ |
218,437,592 |
|
$ |
193,006,849 |
|
|
|
|
|
|
|
CONSOLIDATED WATER
CO. LTD.CONSOLIDATED STATEMENTS OF
INCOME
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
180,211,233 |
|
|
$ |
94,104,972 |
|
Cost of
revenue (including related party expense of $0 and
$2,694,810 in 2023 and 2022) |
|
|
118,284,128 |
|
|
|
63,749,849 |
|
Gross
profit |
|
|
61,927,105 |
|
|
|
30,355,123 |
|
General and administrative
expenses (including related party expense of $0 and $96,924 in 2023
and 2022) |
|
|
24,752,366 |
|
|
|
21,070,234 |
|
Loss on asset dispositions and
impairments, net |
|
|
(7,112 |
) |
|
|
(12,704 |
) |
Income from
operations |
|
|
37,167,627 |
|
|
|
9,272,185 |
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
Interest income |
|
|
696,408 |
|
|
|
447,186 |
|
Interest expense |
|
|
(145,284 |
) |
|
|
(46,545 |
) |
Profit-sharing income from OC-BVI |
|
|
46,575 |
|
|
|
26,325 |
|
Equity in the earnings of OC-BVI |
|
|
123,153 |
|
|
|
75,900 |
|
Loss on put/call options |
|
|
— |
|
|
|
(128,000 |
) |
Other |
|
|
107,461 |
|
|
|
89,944 |
|
Other income,
net |
|
|
828,313 |
|
|
|
464,810 |
|
Income before income
taxes |
|
|
37,995,940 |
|
|
|
9,736,995 |
|
Provision for income
taxes |
|
|
6,750,014 |
|
|
|
396,739 |
|
Net income from
continuing operations |
|
|
31,245,926 |
|
|
|
9,340,256 |
|
Income from continuing
operations attributable to non-controlling interests |
|
|
573,791 |
|
|
|
1,112,913 |
|
Net income from
continuing operations attributable to Consolidated Water Co. Ltd.
stockholders |
|
|
30,672,135 |
|
|
|
8,227,343 |
|
Loss from discontinued
operations |
|
|
(1,086,744 |
) |
|
|
(2,371,049 |
) |
Net income
attributable to Consolidated Water Co. Ltd.
stockholders |
|
$ |
29,585,391 |
|
|
$ |
5,856,294 |
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share attributable to Consolidated Water Co. Ltd. common
stockholders |
|
|
|
|
|
|
Continuing
operations |
|
$ |
1.95 |
|
|
$ |
0.54 |
|
Discontinued
operations |
|
|
(0.07 |
) |
|
|
(0.16 |
) |
Basic earnings per
share |
|
$ |
1.88 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per common share attributable to Consolidated Water Co. Ltd.
common stockholders |
|
|
|
|
|
|
Continuing
operations |
|
$ |
1.93 |
|
|
$ |
0.54 |
|
Discontinued
operations |
|
|
(0.07 |
) |
|
|
(0.16 |
) |
Diluted earnings per
share |
|
$ |
1.86 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
Dividends declared per
common and redeemable preferred shares |
|
$ |
0.36 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
Weighted average
number of common shares used in the determination of: |
|
|
|
|
|
|
Basic earnings per share |
|
|
15,739,056 |
|
|
|
15,290,509 |
|
Diluted earnings per share |
|
|
15,865,897 |
|
|
|
15,401,653 |
|
Consolidated Water (NASDAQ:CWCO)
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Consolidated Water (NASDAQ:CWCO)
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