PR Newswire | Aug 14, 2020 05:30PM EDT

08/14 16:30 CDT

Consolidated Water Reports Q2 2020 ResultsRevenue up 4% to $19.1 Million, First Half 2020 Revenue up 13% to $39.8 Million GEORGE TOWN, Cayman Islands, Aug. 14, 2020

GEORGE TOWN, Cayman Islands, Aug. 14, 2020 /PRNewswire/ -- 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, 2020. Quarterly and first-half comparisons are to the year-ago period unless otherwise noted.

Financial Highlights

* Revenue in the second quarter increased 4% to $19.1 million, first half up 13% to $39.8 million. * Gross profit in the first half increased 8% to $15.7 million. * Net loss attributable to Consolidated Water stockholders for the second quarter of 2020 was $1.1 million or $(0.07) per basic and fully diluted share, as compared to net income of $2.5 million or $0.16 per basic and fully diluted share in the year-ago quarter. For the first half of 2020, net income attributable to Consolidated Water stockholders was $1.8 million or $0.12 per fully diluted share, down from $8.7 million or $0.57 per fully diluted share in the same year-ago period. * Cash and cash equivalents totaled $35.0 million as of June 30, 2020. * Paid $1.3 million in dividends in Q2 2020.

Management Commentary

"In Q2, our core water production and distribution and manufacturing operations remained stable and profitable, although at reduced production levels due to the impact of the COVID-19 pandemic," commented Consolidated Water CEO, Rick McTaggart. "This allowed our financial condition and liquidity to remain strong, with cash balances totaling $35.0 million at quarter end.

"Our services segment revenue was up by more than $3.3 million due to the contribution from PERC Water, our new majority-owned subsidiary that we acquired in the fourth quarter of last year. PERC has been performing better than we anticipated given the current market conditions created by the pandemic. During the quarter, PERC was awarded two new contracts and secured four contract renewals for operating and maintaining advanced water treatment plants in California. We expect PERC's two new O&M contracts to add incremental revenue of $1.7 million in the second half of this year.

"We continue to see attractive opportunities for PERC in a very active market. Its strong growth potential is largely due to its excellent product and service offerings, and strong presence in the Southwestern United States where water supplies are increasingly under stress.

"PERC has been highly complementary to our existing business and overall mission, supporting our pursuit of water reuse projects and other emerging opportunities with a comprehensive suite of solutions for improving water infrastructure. PERC also provides us a solid platform upon which to expand to North America our core business of designing, constructing and operating desalination plants. Given these compelling growth factors, earlier this week we acquired an additional 10% of PERC from another shareholder for $900,000, thereby raising our ownership interest from 51% to 61%.

"Overall, Consolidated Water continues to be well positioned to successfully navigate these uncertain and turbulent times, thanks to a strong balance sheet and well-established growth strategy that brought us PERC and, we anticipate, other successful future acquisitions.

"Although COVID-19 has impacted each of our operating segments to varying degrees, our products and services remain public health and economic imperatives for the communities we serve. Customers still need turn-key and affordable sources of drinking water from our desalination plants, and wastewater still must be treated to the highest standards for environmentally responsible disposal or reuse. We expect the growth drivers inherent in our markets to persist over the long term, which bodes well for Consolidated Water and our efforts to enhance shareholder value over the years to come."

Q2 2020 Financial Summary

Revenue increased 4% to $19.1 million from $18.3 million in the second quarter of 2019, which was driven by an increase of $3.4 million in the services segment. The increase was partially offset by decreases of $1.0 million in the retail segment, $1.1 million in the bulk segment, and $511,000 in the manufacturing segment.

The increase in services revenue was due to the addition of $3.4 million in revenue from PERC as a result of acquiring 51% of this company in late October 2019.

The decrease in retail revenue was due to a 16% decrease in the volume of water sold due to the temporary cessation of tourism on Grand Cayman resulting from the closing of all Cayman Islands airports and seaports in March 2020 in response to the COVID-19 pandemic.

The decrease in bulk water revenue was primarily due to lower energy costs in the Bahamas, which correspondingly decreased the energy pass-through component of the company's rates. The decrease was also due to a lower rate that came into effect in July 2019 for the North Side Water Works plant under the new contract with the Water-Authority Cayman.

The decrease in manufacturing revenue was due to a decrease in the number of active projects.

Gross profit for the second quarter of 2020 was $7.3 million or 38.3% of total revenue, down 3% from $7.6 million or 41.3% of total revenue in the same year-ago quarter.

Net loss attributable to Consolidated Water stockholders for the second quarter of 2020 was $1.1 million or $(0.07) per basic and fully diluted share, as compared to net income of $2.5 million or $0.16 per basic and fully diluted share in the second quarter of 2019. The decrease was due to a $3.0 million loss on asset dispositions and impairments.

First Half 2020 Financial Summary

Total revenue for the first half of 2020 was $39.8 million, up 13% compared to $35.3 million in the same year-ago period. The increase was primarily driven by an increase of $6.4 million in the services segment, and an increase of $312,000 in the manufacturing segment. The increase in total revenue was partially offset by decreases of $1.7 million in the bulk segment and $446,000 in the retail segment.

The increase in services revenue was due to the addition of $6.4 million in revenue from PERC as a result of acquiring 51% of this company in late October 2019.

Retail revenue decreased due to the volume of water sold, which decreased by 3%. This sales volume decrease is due to the temporary cessation of tourism on Grand Cayman resulting from the closing of Cayman Islands airports and seaports in March 2020 in response to the COVID-19 pandemic.

The decrease in bulk revenue was due to the lower rates that came into effect in February of this year under the new contract with the Water-Authority Cayman for water supplied by the Red Gate and North Sound plants. The decrease was also due to the lower rate that came into effect in July 2019 under the new contract with the Water-Authority Cayman for water supplied by the North Side Water Works plant, as well as due to decreased energy prices that decreased the energy pass-through component of the company's bulk revenue by $448,000.

The increase in manufacturing revenue was due to an increase in project production activity.

Gross profit for the first half of 2020 was $15.7 million or 39.5% of total revenue, up 8% from $14.5 million or 41.1% of total revenue in the same year-ago period.

Net income attributable to Consolidated Water stockholders for the half of 2020 was $1.8 million or $0.12 per fully diluted share, down from $8.7 million or $0.57 per fully diluted share in the same year-ago period.

Second Quarter Segment Results

Three Months Ended June 30, 2020

Retail Bulk Services ManufacturingTotal

Revenue $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 and administrative 3,266,782 261,100 1,014,765 318,381 4,861,028 expenses

Loss on asset dispositions and - - (3,030,420) - (3,030,420)impairments, net

Income (loss) $(69,983) $1,663,988$(3,200,698)$1,018,388 (588,305) from operations

Other expense, (155,115) net

Loss before (743,420) income taxes

Provision for 204,268 income taxes

Net loss (947,688)

Income attributable to 180,154 non-controlling interests

Net loss attributable to Consolidated $(1,127,842)Water Co. Ltd. stockholders





Three Months Ended June 30, 2019

Retail Bulk Services ManufacturingTotal

Revenue $6,983,515$6,941,051$90,792 $4,289,902 $18,305,260

Cost of revenue 2,982,758 4,768,122 45,094 2,956,537 10,752,511

Gross profit 4,000,757 2,172,929 45,698 1,333,365 7,552,749

General and administrative 3,405,421 344,971 779,882 464,718 4,994,992 expenses

Gain on asset dispositions and 397,301 - - - 397,301 impairments, net

Income (loss) $992,637 $1,827,958$(734,184) $868,647 2,955,058 from operations

Other income, 50,333 net

Income before 3,005,391 income taxes

Provision for 64,233 income taxes

Net income 2,941,158

Income attributable to 464,896 non-controlling interests

Net income attributable to Consolidated $2,476,262 Water Co. Ltd. stockholders

First Half Segment Results

Six Months Ended June 30, 2020

Retail Bulk Services ManufacturingTotal

Revenue $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 and administrative 6,640,621 553,146 2,145,903 675,115 10,014,785 expenses

Gain (loss) on asset dispositions - 200 (3,030,840) - (3,030,640)and impairments, net

Income (loss) $826,990 $3,247,846 $(3,490,963)$2,114,166 2,698,039 from operations

Other income, 14,229 net

Income before 2,712,268 income taxes

Provision for 410,351 income taxes

Net income 2,301,917

Income attributable to 541,152 non-controlling interests

Net income attributable to Consolidated $1,760,765 Water Co. Ltd. stockholders





Six Months Ended June 30, 2019

Retail Bulk Services ManufacturingTotal

Revenue $13,670,175$14,052,364$191,369 $7,379,876 $35,293,784

Cost of revenue 5,808,362 9,722,713 167,013 5,080,644 20,778,732

Gross profit 7,861,813 4,329,651 24,356 2,299,232 14,515,052

General and administrative 6,522,699 606,383 1,265,767 978,177 9,373,026 expenses

Gain on asset dispositions and 394,570 46,500 - - 441,070 impairments, net

Income (loss) $1,733,684 $3,769,768 $(1,241,411)$1,321,055 5,583,096 from operations

Other income, 310,423 net

Income before 5,893,519 income taxes

Provision for 113,192 income taxes

Net income from continuing 5,780,327 operations

Income from continuing operations 738,804 attributable to non-controlling interests

Net income from continuing operations attributable to 5,041,523 Consolidated Water Co. Ltd. stockholders

Net income from discontinued 3,621,170 operations

Net income attributable to Consolidated $8,662,693 Water Co. Ltd. stockholders

Annual General Meeting of Shareholders

The company has rescheduled its 2020 annual meeting of shareholders for November 18, 2020 to be held at a time and location yet to be determined. Shareholders of record as of September 15, 2020 will be entitled to vote at the meeting.

ConferenceCall

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

Date: Monday, August 17, 2020Time: 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: 10147145

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, 2020, 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: 10147145

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, visit www.cwco.com.

CautionaryNote 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 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 recently acquired subsidiary PERC Water Corporation; (vii) the possible adverse impact of the COVID-19 virus on the company's 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 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.

CompanyContact:

David W. SasnettExecutive Vice President and CFOTel (954) 509-8200dsasnett@cwco.com

Investor Relations Contact:

Ron Both or Grant StudeCMA Investor RelationsTel (949) 432-7566CWCO@cma.team

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS



June 30, December 31,

2020 2019

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents $34,956,328 $42,902,669

Accounts receivable, net 26,858,584 23,229,689

Inventory 5,067,873 3,287,555

Prepaid expenses and other current assets 1,738,472 2,346,918

Costs and estimated earnings in excess of 2,202,524 1,675,781 billings

Total current assets 70,823,781 73,442,612

Property, plant and equipment, net 59,808,325 61,248,979

Construction in progress 399,463 1,335,597

Inventory, noncurrent 4,738,617 4,404,378

Investment in OC-BVI 1,987,878 1,903,602

Goodwill 13,325,013 13,325,013

Land and rights of way 21,126,898 24,162,523

Intangible assets, net 4,573,333 5,040,000

Operating lease right-of-use assets 1,250,157 4,439,212

Other assets 2,791,458 2,990,228

Total assets $180,824,923$192,292,144



LIABILITIES AND EQUITY

Current liabilities

Accounts payable, accrued expenses and other $3,613,387 $3,672,142 current liabilities

Accrued compensation 1,519,911 1,821,395

Dividends payable 1,298,321 1,292,187

Current maturities of operating leases 628,161 755,751

Current portion of long-term debt 42,211 17,753

Billings in excess of costs and estimated 899,942 614,386 earnings

Total current liabilities 8,001,933 8,173,614

Long-term debt, noncurrent 145,822 61,146

Deferred tax liabilities 1,384,268 1,529,035

Noncurrent operating leases 930,072 3,836,475

Net liability arising from put/call options 745,000 664,000

Other liabilities 75,000 75,000

Total liabilities 11,282,095 14,339,270

Commitments and contingencies

Equity

Consolidated Water Co. Ltd. stockholders' equity

Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and 24,142 20,251 outstanding 40,237 and 33,751 shares, respectively

Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and 9,068,704 9,029,765 outstanding 15,114,506 and 15,049,608 shares, respectively

Class B common stock, $0.60 par value. - - Authorized 145,000 shares; none issued

Additional paid-in capital 86,234,521 88,356,509

Retained earnings 65,536,646 66,352,733

Total Consolidated Water Co. Ltd. 160,864,013 163,759,258 stockholders' equity

Non-controlling interests 8,678,815 14,193,616

Total equity 169,542,828 177,952,874

Total liabilities and equity $180,824,923$192,292,144

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)



Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Total revenue $19,087,247 $18,305,260 $39,812,968 $35,293,784

Total cost of 11,784,104 10,752,511 24,069,504 20,778,732revenue

Gross profit 7,303,143 7,552,749 15,743,464 14,515,052

General and administrative 4,861,028 4,994,992 10,014,785 9,373,026 expenses

Gain (loss) on asset dispositions (3,030,420) 397,301 (3,030,640) 441,070 and impairments, net

Income (loss) from (588,305) 2,955,058 2,698,039 5,583,096 operations



Other income (expense):

Interest income 109,819 140,467 246,259 290,652

Interest expense (2,818) (1,482) (5,344) (1,482)

Profit-sharing 14,175 2,025 24,300 8,100 income from OC-BVI

Equity in the earnings (losses) 34,093 (24,949) 59,976 (11,488) of OC-BVI

Net unrealized gain (loss) on put 80,000 - (81,000) (24,000) /call options

Other (390,384) (65,728) (229,962) 48,641

Other income (155,115) 50,333 14,229 310,423 (expense), net

Income (loss) before income (743,420) 3,005,391 2,712,268 5,893,519 taxes

Provision for 204,268 64,233 410,351 113,192 income taxes

Net income (loss) from continuing (947,688) 2,941,158 2,301,917 5,780,327 operations

Income from continuing operations 180,154 464,896 541,152 738,804 attributable to non-controlling interests

Net income (loss) from continuing operations attributable to (1,127,842) 2,476,262 1,760,765 5,041,523 Consolidated Water Co. Ltd. stockholders

Gain on sale of discontinued - - - 3,621,170 operations

Total income from discontinued - - - 3,621,170 operations

Net income (loss) attributable to Consolidated Water$(1,127,842)$2,476,262 $1,760,765 $8,662,693 Co. Ltd. stockholders



Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders

Continuing $(0.07) $0.16 $0.12 $0.34 operations

Discontinued - - - 0.24 operations

Basic earnings $(0.07) $0.16 $0.12 $0.58 (loss) per share



Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders

Continuing $(0.07) $0.16 $0.12 $0.33 operations

Discontinued - - - 0.24 operations

Diluted earnings $(0.07) $0.16 $0.12 $0.57 (loss) per share



Dividends declared per common and $0.085 $0.085 $0.17 $0.17 redeemable preferred shares



Weighted average number of common shares used in the determination of:

Basic earnings per 15,114,506 15,020,344 15,114,506 15,020,344share

Diluted earnings 15,114,506 15,185,812 15,269,175 15,185,463per share

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SOURCE Consolidated Water Co. Ltd.