GlobeNewswire Inc | May 17, 2021 04:30PM EDT

May 17, 2021

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 companys 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 Aerexs 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 March31,2021 Retail Bulk Services Manufacturing TotalRevenue $ 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 andadministrative 3,371,010 377,503 722,020 293,953 4,764,486 expensesGain (loss) onassetdispositions (250,000 ) 1,500 (433 ) ? (248,933 )andimpairments,netIncome (loss) $ (617,699 ) $ 1,714,814 $ 96,465 $ (80,489 ) 1,113,091 from operationsOther income, 314,608 netIncome before 1,427,699 income taxesBenefit from (2,660 )income taxesNet income fromcontinuing 1,430,359 operationsIncome fromcontinuingoperations 128,793 attributable tonon-controllinginterestsNet income fromcontinuingoperationsattributable to 1,301,566 ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (312,794 )operationsNet incomeattributable toConsolidated $ 988,772 Water Co. Ltd.stockholders

Three Months Ended March31,2020 Retail Bulk Services Manufacturing TotalRevenue $ 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 andadministrative 3,373,839 292,046 672,690 356,734 4,695,309 expensesGain (loss) onassetdispositions ? 200 (420 ) ? (220 )andimpairments,netIncome from $ 896,973 $ 1,583,858 $ 168,183 $ 1,095,778 3,744,792 operationsOther income, 27,261 netIncome before 3,772,053 income taxesProvision for 206,083 income taxesNet income fromcontinuing 3,565,970 operationsIncomeattributable to 360,998 non-controllinginterestsNet income fromcontinuingoperationsattributable to 3,204,972 ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (316,365 )operationsNet incomeattributable toConsolidated $ 2,888,607 Water Co. Ltd.stockholders

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 tomorrow to discuss these results, followed by a question-and-answer period.

Date: Tuesday, May 18, 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: 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: 1-877-344-7529International replay number: 1-412-317-0088Replay 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, 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 collection of its delinquent accounts receivable in the Bahamas; (v) the possible adverse impact of the COVID-19 virus on the companys 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 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

March31, December31, 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 21,131,444 21,166,489 operationsTotal assets $ 179,774,435 $ 179,555,552 LIABILITIES AND EQUITY Current liabilities Accounts payable, accrued expenses and $ 2,970,756 $ 2,856,127 other current liabilitiesAccounts 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 102,892 188,434 operationsTotal 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 559,000 690,000 optionsOther liabilities 387,857 362,165 Long-term liabilities of discontinued ? 2,499 operationsTotal liabilities 11,421,701 10,543,003 Commitments and contingencies Equity Consolidated Water Co. Ltd. stockholders' equityRedeemable preferred stock, $0.60 parvalue. Authorized 200,000 shares; issued 18,064 18,641 and outstanding 30,106 and 31,068 shares,respectivelyClass A common stock, $0.60 par value.Authorized 24,655,000 shares; issued and 9,120,885 9,086,210 outstanding 15,201,475 and 15,143,683shares, respectivelyClass B common stock, $0.60 par value. ? ? Authorized 145,000 shares; none issuedAdditional paid-in capital 87,028,085 86,893,486 Retained earnings 64,603,284 64,910,709 Total Consolidated Water Co. Ltd. 160,770,318 160,909,046 stockholders' equityNon-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 March31, 2021 2020Total revenue $ 17,103,317 $ 20,725,721 Total cost of revenue (includingpurchases from related parties of 10,976,807 12,285,400 $155,982 in 2021 and $493,463 in 2020)Gross profit 6,126,510 8,440,321 General and administrative expenses(including purchases from related 4,764,486 4,695,309 parties of $4,429 in 2021)Loss on asset dispositions and (248,933 ) (220 )impairments, netIncome 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 131,000 (161,000 )optionsOther 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 operationsattributable to non-controlling 128,793 360,998 interestsNet income from continuing operationsattributable to Consolidated Water Co. 1,301,566 3,204,972 Ltd. stockholdersTotal loss from discontinued operations (312,794 ) (316,365 )Net income attributable to Consolidated $ 988,772 $ 2,888,607 Water Co. Ltd. stockholders Basic earnings (loss) per common shareattributable to Consolidated Water Co. Ltd. common stockholdersContinuing operations $ 0.08 $ 0.21 Discontinued operations (0.02 ) (0.02 )Basic earnings per share $ 0.06 $ 0.19 Diluted earnings (loss) per commonshare attributable to Consolidated Water Co. Ltd. common stockholdersContinuing operations $ 0.08 $ 0.21 Discontinued operations (0.02 ) (0.02 )Diluted earnings per share $ 0.06 $ 0.19 Dividends declared per common and $ 0.085 $ 0.085 redeemable preferred shares 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