GEORGE TOWN, Cayman Islands, March 27, 2024 (GLOBE NEWSWIRE) -- 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
| 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 | |||||||||||||||
| 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 | ||||||||||||||||
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, 2024
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: 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: 1-877-344-7529
International replay number: 1-412-317-0088
Replay 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. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
Email Contact
Investor Relations Contact:
Ron Both or Grant Stude
CMA Investor Relations
Tel (949) 432-7566
Email Contact
Media Contact:
Tim Randall
CMA Media Relations
Tel (949) 432-7572
Email Contact
CONSOLIDATED WATER CO. LTD.
CONSOLIDATED BALANCE SHEETS
| 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 | ||||||
