GlobeNewswire Inc | Mar 31, 2021 06:10PM EDT

March 31, 2021

GEORGE TOWN, Cayman Islands, March 31, 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 year ended December 31, 2020. All annual comparisons are to the previous year unless otherwise noted.

2020 Highlights

-- Revenue increased 6% to a record $72.6 million. -- Services segment revenue increased to $12.9 million, with $12.5 million of the revenue due to acquiring a 51% controlling interest in PERC Water in October 2019. -- Services segment gross profit was $3.2 million versus $0.5 million in 2019. -- Net income from continuing operations attributable to stockholders was $8.6 million or $0.56 per diluted share. -- Cash and cash equivalents totaled $43.8 million as of December 31, 2020. -- Paid $5.1 million in dividends. -- Acquired an additional 10% of PERC Water in October 2020, increasing the companys ownership to 61%. -- Acquired the remaining 49% interest in Aerex Industries, Consolidated Waters specialty manufacturer of water treatment-related systems and products, in January 2020.

Management Commentary

In 2020 we increased total revenue by 6% to a record $72.6 million, generated net income of $8.6 million and paid $5.1 million in dividends all despite the unprecedented challenges caused by the global pandemic, said Consolidated Waters CEO, Rick McTaggart. Our services segment, led by our PERC Water subsidiary, performed well during economic weakness in its marketplace. We expect PERCs strong performance, including the expansion of its recurring revenue stream from operating and maintenance contracts, to continue in 2021.

We are currently in discussions with existing and potential clients in California that are seeking cost-effective solutions to their wastewater treatment and potable water challenges. We believe that the pandemic has adversely effected the finances of many communities across our service areas and they are increasingly looking for innovative public-private partnership arrangements to address their water challenges. PERCs excellent reputation and strong track record of successfully delivering projects through a wide range of project delivery models, including public-private partnerships, is very attractive to resource-conscious municipalities and private operators.

We believe conditions in the design-build market are also improving and that project activity will increase significantly in 2021, which should prove quite positive for our PERC business.

PERCs potential clients include golf clubs in California that are seeking to replace expensive potable water with sustainable reclaimed wastewater for irrigating landscaping and courses. We believe that PERCs award-winning water reuse plant designs provide a competitive advantage in this niche market.

We have also been working to expand PERCs business into central Florida. PERC has natural synergies with Aerexs water infrastructure manufacturing capabilities and is leveraging Aerexs client base and excellent reputation in the region.

The operations of our manufacturing business have not been significantly affected by the pandemic. However, as previously mentioned, Aerexs largest customer informed us last October that it expects to suspend its purchases until the first quarter of 2022 due to inventory management related factors. While there can be no guarantee, we anticipate this customer will resume purchasing by the first quarter of 2022.

Meanwhile, we have been focused on diversifying Aerexs revenue by increasing sales of other products that it manufactures for existing and potential new customers. Since last fall, Aerex has been awarded two contracts to manufacture equipment for municipal water treatment projects in Florida. Production is scheduled to begin in April for the first and in the third quarter for the second, with both beginning to contribute revenue in the second quarter of this year. While we do not typically disclose the value of awarded contracts, we can state that each of these contracts are worth more than $1 million. We view these contracts as important milestones in our strategy to diversify Aerexs product offerings and customer base.

We expect our manufacturing segment revenue to be down in the first part of 2021 as compared to last year, as these new contracts will not begin to generate revenue until the second quarter. Aerex is presently also targeting three additional potential manufacturing projects in Florida.

We are finally seeing some new opportunities for bidding on seawater desalination projects in the Caribbean that we are currently evaluating. Through PERC, we are also actively pursuing potential acquisitions and have several irons in the fire. We are looking to complete at least one acquisition before the end of the year that will expand our U.S. footprint.

Overall, from an operational and financial perspective, our company remains in very good shape. We have substantially no debt and more than ample liquidity and capital resources to continue to be a great partner for the customers we have the privilege to serve.

Over the course of 2021, we plan to continue expanding our business through organic growth, acquisitions, and new projects, as we further develop and broaden our water solution offerings. Above all, we will continue to focus on business that will provide increasing value for our shareholders.

2020 Financial Summary

Total revenue for the full year 2020 increased 6% to a record $72.6 million from $68.8 million in 2019. The increase was driven by an increase of $11.2 million in services, which was due to the addition of PERC Water to the companys services segment in late October 2019. The increase in total revenue was partially offset by decreases of $3.5 million, $2.7 million, and $1.2 million in the revenue of the retail, bulk and manufacturing segments, respectively.

Retail revenue declined due to a 13% decrease in the volume of water sold by Cayman Water primarily as a result of the tourism restrictions which were in effect for the last nine months of 2020 on Grand Cayman Island. The company believes that its retail business will eventually return to normal, as the vaccine becomes more widely administered and tourism resumes in its Grand Cayman retail service area.

The decrease in bulk water revenue was due to two new water supply contracts that commenced in February and July of 2019 with the Water Authority-Cayman at lower per gallon rates than the contracts they replaced, as well as a decline in revenue of approximately $1.5 million from the companys Bahamas operations arising from lower energy prices which correspondingly reduced the energy pass-through component of CW-Bahamas rates.

The decrease in manufacturing revenue from 2019 to 2020 was due to a decrease in orders in the fourth quarter of 2020. Aerexs largest customer informed Aerex last October that it was suspending its purchases until the first quarter of 2022 due to inventory management related factors. The company anticipates that orders from this customer will resume in the first quarter of 2022; however, it can offer no assurances that orders from this major customer will resume.

Gross profit decreased 5.3% to $26.8 million in 2020 from $28.3 million in 2019, with gross margin as a percentage of revenue decreasing from 41% to 37% primarily as a result of the decline in revenue for the retail segment.

Net income from continuing operations attributable to stockholders decreased 20.9% to $8.6 million or $0.56 per diluted share, compared to $10.9 million or $0.72 per diluted share in 2019.

Cash and cash equivalents totaled $43.8 million as of December 31, 2020, as compared to $42.1 million as of December 31, 2019. The increase resulted primarily from net income generated from continuing operations and the sale of CW-Belize.

2020 Segment Results

Year Ended December31,2020 Retail Bulk Services Manufacturing TotalRevenue $ 22,952,370 $ 24,312,546 $ 12,937,859 $ 12,425,351 $ 72,628,126 Cost of revenue 11,080,814 16,959,563 9,698,214 8,121,080 45,859,671 Gross profit 11,871,556 7,352,983 3,239,645 4,304,271 26,768,455 General andadministrative 12,879,445 1,260,062 2,834,917 1,460,474 18,434,898 expensesGain on assetdispositionsand 2,965 7,213 3,801 18 13,997 impairments,netIncome (loss) $ (1,004,924 ) $ 6,100,134 $ 408,529 $ 2,843,815 8,347,554 from operationsOther income, 1,082,946 netIncome before 9,430,500 income taxesProvision for 86,724 income taxesNet income fromcontinuing 9,343,776 operationsIncome fromcontinuingoperations 730,005 attributable tonon-controllinginterestsNet income fromcontinuingoperationsattributable to 8,613,771 ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (4,902,243 )operationsNet incomeattributable toConsolidated $ 3,711,528 Water Co. Ltd.stockholders

Year Ended December31,2019 Retail Bulk Services Manufacturing TotalRevenue $ 26,456,022 $ 26,986,108 $ 1,759,446 $ 13,592,075 $ 68,793,651 Cost of revenue 11,611,165 18,606,805 1,215,193 9,086,140 40,519,303 Gross profit 14,844,857 8,379,303 544,253 4,505,935 28,274,348 General andadministrative 13,422,821 1,238,296 392,425 1,947,622 17,001,164 expensesGain on assetdispositionsand 398,041 47,000 ? ? 445,041 impairments,netIncome from $ 1,820,077 $ 7,188,007 $ 151,828 $ 2,558,313 11,718,225 operationsOther income, 786,552 netIncome before 12,504,777 income taxesProvision for 66,621 income taxesNet income fromcontinuing 12,438,156 operationsIncome fromcontinuingoperations 1,549,978 attributable tonon-controllinginterestsNet income fromcontinuingoperationsattributable to 10,888,178 ConsolidatedWater Co. Ltd.stockholdersNet income fromdiscontinued 1,287,915 operationsNet incomeattributable toConsolidated $ 12,176,093 Water Co. Ltd.stockholders

Revenue by Geographic Region

Year ended December31, 2020 2019Cayman Islands $ 25,640,169 $ 30,327,139Bahamas 21,654,153 23,114,860Indonesia ? 131United States 24,918,527 14,968,868Revenues earned from management services agreement 415,277 382,653with OC-BVI $ 72,628,126 $ 68,793,651

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 visitingwww.virtualshareholdermeeting.com/cwco2021or 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 companys stock as of March 25, 2021 will be entitled to vote at the meeting.

Conference Call

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

Date: Thursday, April 1, 2021Time: 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: 10153293

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 April 8, 2021, as well as available for replay via the Investors section of the Consolidated Water website at www.cwco.com.

Toll-free replay number: 1-877-344-7529International replay number: 1-412-317-0088Replay ID: 10153293

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, visitwww.cwco.com.

Cautionary Note Regarding Forward-Looking StatementsThis 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 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; (v) the collection of its delinquent accounts receivable in the Bahamas; (vi) its ability to integrate and profitably operate the companys recently acquired subsidiary PERC Water Corporation; (vii) the possible adverse impact of the COVID-19 virus on the companys business; and (viii) 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 companys business, please refer to the Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk Factors sections of the companys 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 companys Secretary at the companys executive offices or at the Investors SEC Filings page of the companys 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) 509-8200dsasnett@cwco.com

Investor Relations ContactRon Both, CMATel (949) 432-7566CWCO@cma.team

CONSOLIDATED WATER CO.LTD.

CONSOLIDATED BALANCE SHEETS

December31, 2020 2019ASSETS Current assets Cash and cash equivalents $ 43,794,150 $ 42,071,083 Accounts receivable, net 21,483,976 22,953,659 Inventory 3,214,178 3,287,555 Prepaid expenses and other current assets 2,412,282 1,559,448 Contract assets 516,521 1,677,041 Current assets of discontinued operations 1,511,099 1,619,056 Total current assets 72,932,206 73,167,842 Property, plant and equipment, net 57,687,984 61,238,752 Construction in progress 440,384 1,335,597 Inventory, noncurrent 4,506,842 4,404,378 Investment in OC-BVI 2,092,146 1,903,602 Goodwill 13,325,013 13,325,013 Intangible assets, net 4,148,333 5,040,000 Operating lease right-of-use assets 1,329,561 1,811,516 Other assets 1,926,594 2,120,708 Long-term assets of discontinued operations 21,166,489 27,669,966 Total assets $ 179,555,552 $ 192,017,374 LIABILITIES AND EQUITY Current liabilities Accounts payable, accrued expenses and other $ 2,856,127 $ 3,503,561 current liabilitiesAccounts payable - related parties 200,558 57,410 Accrued compensation 1,434,106 1,821,395 Dividends payable 1,300,022 1,292,187 Current maturities of operating leases 455,788 688,540 Current portion of long-term debt 42,211 17,753 Contract liabilities 461,870 339,616 Current liabilities of discontinued 188,434 178,382 operationsTotal current liabilities 6,939,116 7,898,844 Long-term debt, noncurrent 126,338 61,146 Deferred tax liabilities 1,440,809 1,529,035 Noncurrent operating leases 982,076 1,156,543 Net liability arising from put/call options 690,000 664,000 Other liabilities 362,165 75,000 Long-term liabilities of discontinued 2,499 2,679,932 operationsTotal liabilities 10,543,003 14,064,500 Commitments and contingencies Equity Consolidated Water Co. Ltd. stockholders' equityRedeemable preferred stock, $0.60 par value.Authorized 200,000 shares; issued and 18,641 20,251 outstanding 31,068and 33,751 shares, respectivelyClass A common stock, $0.60 par value.Authorized 24,655,000 shares; issued andoutstanding 9,086,210 9,029,765 15,143,683 and 15,049,608 shares,respectivelyClass B common stock, $0.60 par value. ? ? Authorized 145,000 shares; none issuedAdditional paid-in capital 86,893,486 88,356,509 Retained earnings 64,910,709 66,352,733 Total Consolidated Water Co. Ltd. 160,909,046 163,759,258 stockholders' equityNon-controlling interests 8,103,503 14,193,616 Total equity 169,012,549 177,952,874 Total liabilities and equity $ 179,555,552 $ 192,017,374

CONSOLIDATED WATER CO.LTD.

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December31, 2020 2019Total revenue $ 72,628,126 $ 68,793,651 Total cost of revenue (including purchasesfrom related parties of $1,349,331 in 2020 45,859,671 40,519,303 and $10,295 in 2019)Gross profit 26,768,455 28,274,348 General and administrative expenses 18,434,898 17,001,164 Gain on asset dispositions and impairments, 13,997 445,041 netIncome from operations 8,347,554 11,718,225 Other income (expense): Interest income 540,096 588,509 Interest expense (9,669 ) (1,332 )Profit-sharing income from OC-BVI 135,675 16,200 Equity in the earnings of OC-BVI 371,019 44,765 Net unrealized gain (loss) on put/call (26,000 ) 56,000 optionsOther 71,825 82,410 Other income, net 1,082,946 786,552 Income before income taxes 9,430,500 12,504,777 Provision for income taxes 86,724 66,621 Net income from continuing operations 9,343,776 12,438,156 Income from continuing operations 730,005 1,549,978 attributable to non-controlling interestsNet income from continuing operationsattributable to Consolidated Water Co. Ltd. 8,613,771 10,888,178 stockholdersGain on sale of discontinued operations ? 3,621,170 Net loss from discontinued operations (4,902,243 ) (2,333,255 )Total income (loss) from discontinued (4,902,243 ) 1,287,915 operationsNet income attributable to Consolidated Water $ 3,711,528 $ 12,176,093 Co. Ltd. stockholders Basic earnings (loss) per common shareattributable to Consolidated Water Co. Ltd. common stockholdersContinuing operations $ 0.56 $ 0.72 Discontinued operations (0.32 ) 0.09 Basic earnings per share $ 0.24 $ 0.81 Diluted earnings (loss) per common shareattributable to Consolidated Water Co. Ltd. common stockholdersContinuing operations $ 0.56 $ 0.72 Discontinued operations (0.32 ) 0.08 Diluted earnings per share $ 0.24 $ 0.80 Dividends declared per common and redeemable $ 0.34 $ 0.34 preferred shares Weighted average number of common shares used in the determination of:Basic earnings per share 15,119,305 15,025,639 Diluted earnings per share 15,223,955 15,137,076