GlobeNewswire Inc | Aug 16, 2021 08:30PM EDT

August 17, 2021

GEORGE TOWN, Cayman Islands, Aug. 16, 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 three and six months ended June 30, 2021. Quarterly and first-half comparisons are to the same year-ago 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).

Financial and Operational Highlights

-- Revenue in the second quarter totaled $16.7 million, declining 13%. -- Services revenue in the second quarter up 8.3% to $3.8 million and bulk revenue up 14.4% to $6.7 million, while retail revenue declined by 5% to $5.7 million and manufacturing down by 85% to $552,000. -- In the first half of 2021, revenue totaled $33.8 million, which included bulk revenue up 5.3% to $13.0 million and services revenue up 10.8% to $7.3 million. -- Continued diversification of manufacturing segment products and customer base to offset reduced orders from a major customer. All manufacturing revenue in the first half of the year was generated by new customers and/or products. -- As of June 30, 2021, cash and cash equivalents totaled $41.2 million, working capital was $68.8 million, debt was $0.2 million, with stockholders equity at $165.8 million. -- Paid $1.3 million in dividends in Q2 2021.

Management Commentary

Our lower revenue for the second quarter reflects the impact of the global pandemic on our retail segment and reduced orders from a major customer in our manufacturing segment, commented Consolidated Water CEO, Rick McTaggart. This was partially offset by improved performance of our bulk water and services segments.

Our services revenue increased 8% to $3.8 million, which accounted for 23% of our overall revenue compared to 18% in the same year-ago quarter. This was driven by growth in our PERC Water subsidiary.

Based in southern California, PERC designs, constructs, operates and maintains municipal water treatment and reuse facilities. PERC has been seeing an increase in bidding requests for new design/build projects as well as operating contracts. Its prospective customers in California and Arizona are seeking cost-effective solutions to their wastewater treatment and potable water challenges, particularly those being caused by the unprecedented drought in the region.

PERC is currently awaiting decisions on recent bids for design/build projects and operating contracts valued at more than $55 million. These projects could also represent recurring annual revenue of more than $2 million in ongoing operating and maintenance agreements.

In the first quarter of 2020, we increased resources in our manufacturing sales team at our Aerex subsidiary to focus on other market sectors in order to diversify our product, customer and revenue base. This turned out to be especially timely, given the unexpected suspension of orders by Aerexs largest customer in October. As the result of this investment in diversification, we were able to offset its impact considerably. In fact, we generated manufacturing revenue of $2.2 million from new customers and/or products in the first half of this year, which was equal to the revenue generated for all of last year from customers other than Aerexs former major customer.

Manufacturing bidding activity has also increased significantly over the last few months. We presently have a contracted project backlog in our manufacturing segment of about $9 million from new customers and/or products. This has begun to increase our revenues in the second half of this year, and we see it carrying into 2022.

So, while weve had many unexpected challenges over the past year, in all, we believe weve taken the right steps to overcome them, and our prospects for growth are very encouraging. We expect improved financial results in the second half of this year as compared to the first six months due to these successful efforts. We also anticipate that the eventual reopening of tourism to our operating area in Grand Cayman will help with the recovery of our retail water segment.

Given the strong industry tailwinds, which appear strengthened by major increases in federal infrastructure spending recently passed in the U.S., we will continue to focus on those opportunities that will provide increasing value for our shareholders.

Our strong balance sheet and liquidity position us to ride out the adverse economic impacts of the pandemic, while enabling us to fund our growth initiatives. We believe we are well on track to emerge from these challenging times stronger than ever.

Q2 2021 Financial Summary

Revenue for the second quarter of 2021 declined by 12.5% to $16.7 million from $19.1 million in the second quarter of 2020. The decline reflects decreases of $292,000 in retail segment revenue and $3.2 million in manufacturing segment revenue. The decrease in revenue for these segments was partially offset by an increase of $846,000 in bulk segment revenue and $287,000 in services segment revenue.

Retail revenue declined due to a 2% decrease in the volume of water sold by Cayman Water. The sales volumes for both 2021 and 2020 are significantly below the historical volumes for the retail segment prior to 2020 due to the continuing cessation of tourism on Grand Cayman resulting from border restrictions initiated in March 2020 in response to the COVID-19 pandemic.

The decrease in manufacturing revenue in the second quarter of 2021 was due to a decrease in orders from Aerexs largest customer, which informed Aerex in October 2020 that it was suspending its purchases of a specialized product until 2022 due to inventory management related factors. The company anticipates that orders from this customer will resume in 2022 at much lower volumes than in the past, although the resumption in such orders cannot be assured.

The increase in bulk segment revenue was due to higher energy costs, which correspondingly increased the energy pass-through component of CW-Bahamas rates. The increase in bulk segment revenue was also due to a 9% increase in CW-Bahamas volume of water sold.

The increase in services revenue was due to an increase of approximately $926,000 in revenue from operating and maintenance contracts attributable to new contracts, which more than offset a decline in plant construction revenue of approximately $672,000.

Gross profit decreased 17.0% to $6.1 million in the second quarter of 2021 from $7.3 million in the same year-ago quarter, with gross profit as a percentage of revenue decreasing from 38% to 36% primarily as a result of the decline in revenue for the retail segment.

Net loss from continuing operations attributable to stockholders was $1.5 million or $(0.10) per basic and diluted share, compared to net income of $2.6 million or $0.17 per basic and diluted share in the second quarter of 2020.

Net loss attributable to Consolidated Water stockholders in the second quarter of 2021, which includes the results of discontinued operations, was $1.7 million or $(0.11) per basic and fully diluted share, as compared to $1.1 million or $(0.07) per basic and fully diluted share in the second quarter of 2020. Excluding the impairment loss recorded for the companys manufacturing segment of $2.9 million, the companys net income attributable to Consolidated Water was $1.2 million or $0.08 per basic and fully diluted share.

Cash and cash equivalents totaled $41.2 million as of June 30, 2021, as compared to $42.8 million as of March 31, 2021.

First Half 2021 Financial Summary

Revenue for the first half of 2021 was $33.8 million, down 15.1% compared to $39.8 million in the same year-ago period. The decrease was primarily driven by decreases of $1.8 million in the retail segment and $5.5 million in the manufacturing segment. The decrease in total revenue was partially offset by increases of $651,000 in the bulk segment and $713,000 in the services segment.

Retail revenue decreased due to the volume of water sold, which decreased by 12%. This sales volume decrease is due to the continuing cessation of tourism on Grand Cayman resulting from border restrictions initiated in March 2020 in response to the COVID-19 pandemic.

The decrease in manufacturing segment revenue was due to the loss of orders from Aerexs largest customer.

The increase in servicessegment revenue was due to an increase of approximately $2.3 million in revenue from operating and maintenance contracts attributable to new contracts, which more than offset a decline in plant construction revenue of approximately $1.6 million.

The increase in bulk segment revenue was due to higher energy costs, which correspondingly increased the energy pass-through component of CW-Bahamas rates. The increase in bulk segment revenue was also due to an increase of 7% in the volume of water sold by CW-Bahamas.

Gross profit for the first half of 2021 was $12.2 million or 36% of total revenue, down 23% from $15.7 million or 40% of total revenue in the same year-ago period.

Net loss from continuing operations attributable to stockholders for the first half of 2021 was $212,000 or $(0.01) per basic and diluted share, compared to net income of $5.8 million or $0.38 per diluted share in the same year-ago period.

Net loss attributable to Consolidated Water stockholders for the half of 2021, which includes the results of discontinued operations, was $676,000 or $(0.04) per fully diluted share, down from net income of $1.8 million or $0.12 per fully diluted share in the same year-ago period. Excluding the impairment loss recorded for the companys manufacturing segment of $2.9 million, the companys net income attributable to Consolidated Water was $2.2 million or $0.15 per basic and fully diluted share.

Second Quarter Segment Results

Three Months Ended June30,2021 Retail Bulk Services Manufacturing TotalRevenue $ 5,674,790 $ 6,711,971 $ 3,763,239 $ 551,524 $ 16,701,524 Cost of revenue 2,781,909 4,386,794 2,878,409 589,559 10,636,671 Gross profit 2,892,881 2,325,177 884,830 (38,035 ) 6,064,853 (loss)General andadministrative 3,318,473 303,856 671,585 430,390 4,724,304 expensesGain (loss) onassetdispositions 3,360 ? ? (2,900,000 ) (2,896,640 )andimpairments,netIncome (loss) $ (422,232 ) $ 2,021,321 $ 213,245 $ (3,368,425 ) (1,556,091 )from operationsOther income, 233,114 netLoss before (1,322,977 )income taxesBenefit from (6,845 )income taxesNet loss fromcontinuing (1,316,132 )operationsIncome fromcontinuingoperations 197,138 attributable tonon-controllinginterestsNet loss fromcontinuingoperationsattributable to (1,513,270 )ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (151,379 )operationsNet lossattributable toConsolidated $ (1,664,649 )Water Co. Ltd.stockholders

Three Months Ended June30,2020 Retail Bulk Services Manufacturing TotalRevenue $ 5,966,296 $ 5,866,397 $ 3,476,000 $ 3,778,554 $ 19,087,247 Cost of revenue 2,769,497 3,941,309 2,631,513 2,441,785 11,784,104 Gross profit 3,196,799 1,925,088 844,487 1,336,769 7,303,143 General andadministrative 3,266,782 261,100 711,350 318,381 4,557,613 expensesGain on assetdispositionsand ? ? 5,205 ? 5,205 impairments,netIncome (loss) $ (69,983 ) $ 1,663,988 $ 138,342 $ 1,018,388 2,750,735 from operationsOther income, 260,957 netIncome before 3,011,692 income taxesProvision for 204,268 income taxesNet income fromcontinuing 2,807,424 operationsIncomeattributable to 180,154 non-controllinginterestsNet income fromcontinuingoperationsattributable to 2,627,270 ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (3,755,112 )operationsNet lossattributable toConsolidated $ (1,127,842 )Water Co. Ltd.stockholders

First Half 2021 Segment Results

Six Months Ended June30,2021 Retail Bulk Services Manufacturing TotalRevenue $ 11,386,095 $ 12,957,941 $ 7,304,085 $ 2,156,720 $ 33,804,841 Cost of revenue 5,489,903 8,541,947 5,600,337 1,981,291 21,613,478 Gross profit 5,896,192 4,415,994 1,703,748 175,429 12,191,363 General andadministrative 6,689,483 681,359 1,393,605 724,343 9,488,790 expensesGain (loss) onassetdispositions (246,640 ) 1,500 (433 ) (2,900,000 ) (3,145,573 )andimpairments,netIncome (loss) $ (1,039,931 ) $ 3,736,135 $ 309,710 $ (3,448,914 ) (443,000 )from operationsOther income, 547,722 netIncome before 104,722 income taxesBenefit from (9,505 )income taxesNet income fromcontinuing 114,227 operationsIncome fromcontinuingoperations 325,931 attributable tonon-controllinginterestsNet loss fromcontinuingoperationsattributable to (211,704 )ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (464,173 )operationsNet lossattributable toConsolidated $ (675,877 )Water Co. Ltd.stockholders

Six Months Ended June30,2020 Retail Bulk Services Manufacturing TotalRevenue $ 13,223,728 $ 12,306,681 $ 6,590,813 $ 7,691,746 $ 39,812,968 Cost of revenue 5,756,117 8,505,889 4,905,033 4,902,465 24,069,504 Gross profit 7,467,611 3,800,792 1,685,780 2,789,281 15,743,464 General andadministrative 6,640,621 553,146 1,384,040 675,115 9,252,922 expensesGain on assetdispositionsand ? 200 4,785 ? 4,985 impairments,netIncome from $ 826,990 $ 3,247,846 $ 306,525 $ 2,114,166 6,495,527 operationsOther income, 288,218 netIncome before 6,783,745 income taxesProvision for 410,351 income taxesNet income fromcontinuing 6,373,394 operationsIncome fromcontinuingoperations 541,152 attributable tonon-controllinginterestsNet income fromcontinuingoperationsattributable to 5,832,242 ConsolidatedWater Co. Ltd.stockholdersNet loss fromdiscontinued (4,071,477 )operationsNet incomeattributable toConsolidated $ 1,760,765 Water Co. Ltd.stockholders

Conference Call

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

Date: Tuesday, August 17, 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: 10159283

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 August 24, 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: 10159283

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

June30, December31, 2021 2020 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 41,210,143 $ 43,794,150 Accounts receivable, net 26,119,130 21,483,976 Inventory 2,500,070 3,214,178 Prepaid expenses and other current assets 3,375,644 2,412,282 Contract assets 415,633 516,521 Current assets of discontinued operations 1,480,101 1,511,099 Total current assets 75,100,721 72,932,206 Property, plant and equipment, net 54,704,193 57,687,984 Construction in progress 681,317 440,384 Inventory, noncurrent 4,432,645 4,506,842 Investment in OC-BVI 1,674,277 2,092,146 Goodwill 10,425,013 13,325,013 Intangible assets, net 3,756,666 4,148,333 Operating lease right-of-use assets 2,963,075 1,329,561 Other assets 1,842,420 1,926,594 Long-term assets of discontinued operations 21,130,307 21,166,489 Total assets $ 176,710,634 $ 179,555,552 LIABILITIES AND EQUITY Current liabilities Accounts payable, accrued expenses and $ 2,654,942 $ 2,856,127 other current liabilitiesAccounts payable - related parties 278,739 200,558 Accrued compensation 1,402,148 1,434,106 Dividends payable 1,301,025 1,300,022 Current maturities of operating leases 555,591 455,788 Current portion of long-term debt 54,698 42,211 Contract liabilities 14,581 461,870 Current liabilities of discontinued 69,602 188,434 operationsTotal current liabilities 6,331,326 6,939,116 Long-term debt, noncurrent 148,876 126,338 Deferred tax liabilities 1,332,998 1,440,809 Noncurrent operating leases 2,464,960 982,076 Net liability arising from put/call options 528,000 690,000 Other liabilities 141,000 362,165 Long-term liabilities of discontinued ? 2,499 operationsTotal liabilities 10,947,160 10,543,003 Commitments and contingencies Equity Consolidated Water Co. Ltd. stockholders' equityRedeemable preferred stock, $0.60 parvalue. Authorized 200,000 shares; issued 22,409 18,641 and outstanding 37,349 and 31,068 shares,respectivelyClass A common stock, $0.60 par value.Authorized 24,655,000 shares; issued and 9,121,423 9,086,210 outstanding 15,202,371 and 15,143,683shares, respectivelyClass B common stock, $0.60 par value. ? ? Authorized 145,000 shares; none issuedAdditional paid-in capital 87,196,150 86,893,486 Retained earnings 61,643,938 64,910,709 Total Consolidated Water Co. Ltd. 157,983,920 160,909,046 stockholders' equityNon-controlling interests 7,779,554 8,103,503 Total equity 165,763,474 169,012,549 Total liabilities and equity $ 176,710,634 $ 179,555,552

CONSOLIDATED WATER CO.LTD.CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)(UNAUDITED)

Three Months Ended June30, Six Months Ended June30, 2021 2020 2021 2020Revenue $ 16,701,524 $ 19,087,247 $ 33,804,841 $ 39,812,968 Cost of revenue(includingpurchases fromrelated partiesof $129,401 and$371,201 forthe threemonths ended, 10,636,671 11,784,104 21,613,478 24,069,504 and $285,383and $864,664for the sixmonths ended,June 30, 2021and 2020,respectively)Gross profit 6,064,853 7,303,143 12,191,363 15,743,464 General andadministrativeexpenses(includingpurchases fromrelated partiesof $24,299 and$0 for the 4,724,304 4,557,613 9,488,790 9,252,922 three monthsended, and$28,728 and $0for the sixmonths ended,June 30, 2021and 2020,respectively)Gain (loss) onassetdispositions (2,896,640 ) 5,205 (3,145,573 ) 4,985 andimpairments,netIncome (loss) (1,556,091 ) 2,750,735 (443,000 ) 6,495,527 from operations Other income (expense):Interest income 174,645 109,818 335,009 246,259 Interest (2,638 ) (2,818 ) (5,498 ) (5,344 )expenseProfit-sharingincome from 4,050 14,175 10,125 24,300 OC-BVIEquity in theearnings of 10,726 34,095 26,506 59,976 OC-BVINet unrealizedgain (loss) on 31,000 80,000 162,000 (81,000 )put/calloptionsOther 15,331 25,687 19,580 44,027 Other income, 233,114 260,957 547,722 288,218 netIncome (loss)before income (1,322,977 ) 3,011,692 104,722 6,783,745 taxesProvision(benefit) for (6,845 ) 204,268 (9,505 ) 410,351 income taxesNet income(loss) from (1,316,132 ) 2,807,424 114,227 6,373,394 continuingoperationsIncome fromcontinuingoperations 197,138 180,154 325,931 541,152 attributable tonon-controllinginterestsNet income(loss) fromcontinuingoperations (1,513,270 ) 2,627,270 (211,704 ) 5,832,242 attributable toConsolidatedWater Co. Ltd.stockholdersTotal loss fromdiscontinued (151,379 ) (3,755,112 ) (464,173 ) (4,071,477 )operationsNet income(loss)attributable to $ (1,664,649 ) $ (1,127,842 ) $ (675,877 ) $ 1,760,765 ConsolidatedWater Co. Ltd.stockholders Basic earnings(loss) percommon shareattributable to ConsolidatedWater Co. Ltd.commonstockholdersContinuing $ (0.10 ) $ 0.17 $ (0.01 ) $ 0.39 operationsDiscontinued (0.01 ) (0.24 ) (0.03 ) (0.27 )operationsBasic earnings(loss) per $ (0.11 ) $ (0.07 ) $ (0.04 ) $ 0.12 share Dilutedearnings (loss)per commonshareattributable to ConsolidatedWater Co. Ltd.commonstockholdersContinuing $ (0.10 ) $ 0.17 $ (0.01 ) $ 0.38 operationsDiscontinued (0.01 ) (0.24 ) (0.03 ) (0.26 )operationsDilutedearnings (loss) $ (0.11 ) $ (0.07 ) $ (0.04 ) $ 0.12 per share Dividendsdeclared percommon and $ 0.085 $ 0.085 $ 0.17 $ 0.17 redeemablepreferredshares Weightedaverage numberof commonshares used in thedeterminationof:Basic earnings 15,201,682 15,114,506 15,201,571 15,114,506 per shareDilutedearnings per 15,201,682 15,269,334 15,201,571 15,269,175 share