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| 8-K - FORM 8-K - Consolidated Water Co. Ltd. | tv500676_8k.htm |
Exhibit 99.1
CONSOLIDATED WATER CO. LTD.
REPORTS SECOND QUARTER 2018 RESULTS
Core Desalination Business Drives Steady Revenues and Earnings
Further Progress Achieved on Rosarito Project
Second Quarter 2018 Total Revenues Increased 3.9% to $15.9 million; Gross Profit Was $6.6 Million, Up 2.2% Year-Over-Year
Net Income Attributable to Consolidated Water Stockholders Increased to $2.2 Million, or $0.14 per Fully Diluted Share
GEORGE TOWN, Cayman Islands, August 9, 2018 — Consolidated Water Co. Ltd. (NASDAQ: CWCO), a leading developer and operator of seawater desalination plants, reported financial and operating results for its second quarter ended June 30, 2018.
Management Commentary
President and CEO Rick McTaggart commented: “Our core desalination business continued to perform well in the second quarter, and revenues in our manufacturing segment nearly doubled on an unconsolidated basis. However, similar to the first quarter, a portion of our manufacturing segment’s production, equivalent to $1.1 million in the second quarter and $1.8 million year-to-date, was allocated for our internal use in the refurbishment of our Windsor plant in the Bahamas and our Governor’s Harbor plant in the Cayman Islands, and was not recognized as revenue. These internal projects have obscured the year-over-year improvement in our manufacturing segment. Looking forward, we expect manufacturing sales to continue to improve based on orders in hand for the remainder of this year.”
“We made significant progress on our Rosarito project during the second quarter by achieving several important milestones. Specifically, (i) we signed an amended public private partnership agreement, which addressed foreign currency exchange and interest rate adjustment concerns related to the project; (ii) we obtained additional rights of way for the project’s aqueduct and now have the majority of such rights of way required for the project; and (iii) we signed the turn-key engineering, procurement and construction contract with Suez for the desalination plant and aqueduct. These accomplishments have moved us forward in line with our expectations for completion of the conditions of the project,” Mr. McTaggart noted.
Second Quarter 2018 Financial Results
Total revenues for the second quarter 2018 were $15.9 million, representing a 3.9% increase from $15.3 million in the second quarter of 2017. Gross profit amounted to $6.6 million, compared to $6.5 million in the year ago quarter. Inclusive of $0.7 million in Rosarito-related expenses, net income attributable to Consolidated Water stockholders was $2.2 million, or $0.14 per fully diluted share, compared to $0.6 million, or $0.04 per fully diluted share, reported in last year’s comparable quarter. In the second quarter of 2017, the Company recorded an impairment loss of $1.0 million relating to its Bali operations, however this subsidiary did not have a material adverse impact on the Company’s results of operations for the second quarter of 2018.
First Half 2018 Financial Results
Total revenues for the first six months of 2018 were $31.2 million, compared to the $31.0 million reported in last year's comparable period. Gross profit was $13.2 million, compared to $13.3 million for the first half of 2017. Net income attributable to Consolidated Water stockholders was $4.3 million ($0.28 per fully diluted share), an increase of 31.5% from the $3.3 million ($0.22 per fully diluted share), earned in the first six months of 2017. Net income and diluted EPS for the first half of 2018 and 2017 included operating expenses of $1.3 million and $1.6 million, respectively, related to development costs for the Rosarito desalination plant.
Segment Results
| Three Months Ended June 30, 2018 (Unaudited) | ||||||||||||||||||||
| Retail | Bulk | Services | Manufacturing | Total | ||||||||||||||||
| Revenues | $ | 6,268,023 | $ | 8,488,850 | $ | 122,912 | $ | 992,430 | $ | 15,872,215 | ||||||||||
| Cost of revenues | 2,722,650 | 5,793,704 | 104,069 | 655,679 | 9,276,102 | |||||||||||||||
| Gross profit | $ | 3,545,373 | $ | 2,695,146 | $ | 18,843 | $ | 336,751 | $ | 6,596,113 | ||||||||||
| Three Months Ended June 30, 2017 (Unaudited) | ||||||||||||||||||||
| Retail | Bulk | Services | Manufacturing | Total | ||||||||||||||||
| Revenues | $ | 6,064,016 | $ | 8,043,921 | $ | 119,204 | $ | 1,056,047 | $ | 15,283,188 | ||||||||||
| Cost of revenues | 2,722,890 | 5,152,212 | 103,753 | 847,760 | 8,826,615 | |||||||||||||||
| Gross profit | $ | 3,341,126 | $ | 2,891,709 | $ | 15,451 | $ | 208,287 | $ | 6,456,573 | ||||||||||
Summary and Outlook
“Our core desalination business continued its steady performance year-to-date, and the outlook for this business is favorable for volume increases in the Caribbean, particularly in the Cayman Islands, which is experiencing positive tourism industry trends. Additionally, we continue to expect improved year-over-year results from our manufacturing operations for the full 2018 fiscal year.”
“We continue to maintain solid forward momentum with respect to our transformational Rosarito project, which is envisioned as the largest desalination plant in the Western Hemisphere. We remain focused on the negotiation and execution of the debt financing agreements necessary to provide the funding for the first phase of the project. As a reminder, the first phase of the project will supply 50 million gallons of water a day to Mexico, with an opportunity to expand the plant capacity in the project’s second phase by an additional 50 million gallons per day.“
“Our company continues to be very well capitalized, providing us with the ability to execute on our growth strategy while simultaneously returning capital to our shareholders in the form of dividends,” Mr. McTaggart concluded.
Investor Conference Call
The Company will host a conference call at 8:30 a.m. Eastern Time (EDT) on Monday, August 13, 2018 to review the Company's operating results for the second quarter of 2018, along with other relevant topics of interest. Shareholders and other interested parties may participate in the conference call by dialing 844-875-6913 (international participants dial 412-317-6709) and requesting participation in the "Consolidated Water Company Call" a few minutes before 8:30 a.m. EDT on Monday, August 13, 2018.
A replay of the conference call will be available one hour after the call through Monday, August 20, 2018 at 8:30 a.m. EDT by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID # 10122958.
About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce. The Company operates water production and/or distribution facilities in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas, and Bali, Indonesia. 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 in the United States.
Consolidated Water Co. Ltd. is headquartered in George Town, Grand Cayman, in the Cayman Islands. The Company’s ordinary (common) stock is traded on the NASDAQ Global Select Market under the symbol “CWCO”. Additional information on the Company is available on its website at http://www.cwco.com.
This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe”, “estimate”, “project”, “intend”, “expect”, “should” 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, continued acceptance of the Company’s products and services in the marketplace, changes in its relationships with the governments of the jurisdictions in which it operates, the outcome of its negotiations with the Cayman government regarding a new retail license agreement, its ability to successfully secure contracts for new water projects including the project under development in Baja California, Mexico, its ability to develop and operate such projects profitably, its ability to renew existing bulk water supply contracts, its ability to collect its delinquent accounts receivable in the Bahamas, and its ability to manage growth and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission.
By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
For further information, please contact our investor relations firm, AdvisIRy Partners:
Lynn Morgen: (212) 223-4147 lynn.morgen@advisiry.com
Eric Prouty: (212) 750-5800 eric.prouty@advisiry.com
Viktoriia Nakhla: (646) 625-4800 vicky.nakhla@advisiry.com
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 34,092,347 | $ | 47,182,966 | ||||
| Accounts receivable, net | 22,161,267 | 15,047,846 | ||||||
| Inventory | 2,703,806 | 1,744,445 | ||||||
| Prepaid expenses and other current assets | 1,880,849 | 1,077,257 | ||||||
| Current portion of loans receivable | 1,446,540 | 1,400,448 | ||||||
| Costs and estimated earnings in excess of billings | 844,693 | 238,435 | ||||||
| Total current assets | 63,129,502 | 66,691,397 | ||||||
| Property, plant and equipment, net | 48,476,540 | 50,525,064 | ||||||
| Construction in progress | 11,397,699 | 1,823,284 | ||||||
| Inventory, non-current | 4,706,727 | 4,758,973 | ||||||
| Loans receivable | - | 734,980 | ||||||
| Investment in OC-BVI | 2,501,008 | 2,783,882 | ||||||
| Goodwill | 8,384,248 | 8,384,248 | ||||||
| Land held for development | 20,642,660 | 20,558,424 | ||||||
| Intangible assets, net | 3,062,337 | 3,765,434 | ||||||
| Other assets | 5,000,103 | 5,455,209 | ||||||
| Total assets | $ | 167,300,824 | $ | 165,480,895 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other current liabilities | $ | 5,841,427 | $ | 5,662,448 | ||||
| Dividends payable | 1,285,270 | 1,281,612 | ||||||
| Note payable to related party | 294,000 | 686,000 | ||||||
| Billings in excess of costs and estimated earnings | 1,971 | 1,258 | ||||||
| Total current liabilities | 7,422,668 | 7,631,318 | ||||||
| Deferred tax liability | 832,917 | 1,024,893 | ||||||
| Other liabilities | 778,307 | 803,307 | ||||||
| Total liabilities | 9,033,892 | 9,459,518 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Consolidated Water Co. Ltd. stockholders' equity | ||||||||
| Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 41,033 and 33,488 shares, respectively | 24,620 | 20,093 | ||||||
| Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 14,959,309 and 14,918,869 shares, respectively | 8,975,585 | 8,951,321 | ||||||
| Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued | - | - | ||||||
| Additional paid-in capital | 86,717,545 | 86,405,387 | ||||||
| Retained earnings | 54,835,603 | 53,105,196 | ||||||
| Cumulative translation adjustment | (549,555 | ) | (549,555 | ) | ||||
| Total Consolidated Water Co. Ltd. stockholders' equity | 150,003,798 | 147,932,442 | ||||||
| Non-controlling interests | 8,263,134 | 8,088,935 | ||||||
| Total equity | 158,266,932 | 156,021,377 | ||||||
| Total liabilities and equity | $ | 167,300,824 | $ | 165,480,895 | ||||
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Retail revenues | $ | 6,268,023 | $ | 6,064,016 | $ | 12,699,371 | $ | 12,540,620 | ||||||||
| Bulk revenues | 8,488,850 | 8,043,921 | 16,717,365 | 15,734,323 | ||||||||||||
| Services revenues | 122,912 | 119,204 | 246,676 | 249,456 | ||||||||||||
| Manufacturing revenues | 992,430 | 1,056,047 | 1,545,198 | 2,435,895 | ||||||||||||
| Total revenues | 15,872,215 | 15,283,188 | 31,208,610 | 30,960,294 | ||||||||||||
| Cost of retail revenues | 2,722,650 | 2,722,890 | 5,484,204 | 5,407,176 | ||||||||||||
| Cost of bulk revenues | 5,793,704 | 5,152,212 | 11,190,295 | 10,168,001 | ||||||||||||
| Cost of services revenues | 104,069 | 103,753 | 238,940 | 205,919 | ||||||||||||
| Cost of manufacturing revenues | 655,679 | 847,760 | 1,094,540 | 1,889,057 | ||||||||||||
| Total cost of revenues | 9,276,102 | 8,826,615 | 18,007,979 | 17,670,153 | ||||||||||||
| Gross profit | 6,596,113 | 6,456,573 | 13,200,631 | 13,290,141 | ||||||||||||
| General and administrative expenses | 4,554,754 | 5,001,669 | 9,322,198 | 9,798,861 | ||||||||||||
| Loss on asset dispositions and impairments, net | 650 | 997,006 | 1,990 | 987,406 | ||||||||||||
| Income from operations | 2,040,709 | 457,898 | 3,876,443 | 2,503,874 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 170,102 | 108,881 | 331,223 | 231,072 | ||||||||||||
| Interest expense | (2,876 | ) | (7,939 | ) | (4,630 | ) | (10,162 | ) | ||||||||
| Profit sharing income from OC-BVI | 56,700 | - | 85,050 | 10,125 | ||||||||||||
| Equity in the earnings (losses) of OC-BVI | 157,483 | (37,824 | ) | 238,076 | (10,958 | ) | ||||||||||
| Net unrealized gain (loss) on put/call options | 84,000 | (13,000 | ) | (122,000 | ) | 152,000 | ||||||||||
| Other | (158,111 | ) | (31,829 | ) | (75,511 | ) | 39,991 | |||||||||
| Other income, net | 307,298 | 18,289 | 452,208 | 412,068 | ||||||||||||
| Income before income taxes | 2,348,007 | 476,187 | 4,328,651 | 2,915,942 | ||||||||||||
| Benefit from income taxes | (48,878 | ) | (136,448 | ) | (126,266 | ) | (276,145 | ) | ||||||||
| Net income | 2,396,885 | 612,635 | 4,454,917 | 3,192,087 | ||||||||||||
| Income (loss) attributable to non-controlling interests | 208,692 | (11,913 | ) | 174,199 | (63,689 | ) | ||||||||||
| Net income attributable to Consolidated Water Co. Ltd. stockholders | $ | 2,188,193 | $ | 624,548 | $ | 4,280,718 | $ | 3,255,776 | ||||||||
| Basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | $ | 0.15 | $ | 0.04 | $ | 0.29 | $ | 0.22 | ||||||||
| Diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | $ | 0.14 | $ | 0.04 | $ | 0.28 | $ | 0.22 | ||||||||
| Dividends declared per common share | $ | 0.085 | $ | 0.075 | $ | 0.17 | $ | 0.15 | ||||||||
| Weighted average number of common shares used in the determination of: | ||||||||||||||||
| Basic earnings per share | 14,959,309 | 14,889,816 | 14,959,284 | 14,880,889 | ||||||||||||
| Diluted earnings per share | 15,117,726 | 15,055,554 | 15,116,712 | 15,045,204 | ||||||||||||