Consolidated Water Co. Ltd. Reports Second Quarter Operating Results

Consolidated Water Co. Ltd. Reports Second Quarter Operating Results

COMPANY WINS TENDER FOR MEXICO PROJECT

PR Newswire

GEORGE TOWN, Cayman Islands, Aug. 9, 2016 /PRNewswire/ -- Consolidated Water Co. Ltd. (NASDAQ Global Select Market: "CWCO") ("Consolidated Water" or "the Company"), which develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent, today reported its operating results for the second quarter of 2016. The Company will host an investor conference call on Wednesday, August 10, 2016 at 11:00 a.m. EDT (see details below) to discuss its operating results and other topics of interest.

Second Quarter Operating Results

Net income attributable to Consolidated Water Co. Ltd. stockholders for the quarter ended June 30, 2016 was $2,204,333 ($0.15 per share on a fully-diluted basis), as compared to $2,228,100 ($0.15 per share on a fully-diluted basis) for the quarter ended June 30, 2015.

Revenues generated by retail water operations were $6,292,833 in 2016 as compared to $6,152,185 in 2015. Although the volume of water sold by the retail segment increased by approximately 10% from 2015 to 2016, retail revenues increased by only approximately 2% in 2016 due to (i) lower energy costs, which reduced the energy component of the rates charged to the Cayman retail customers by $172,437 from 2015; and (ii) the annual first quarter adjustment of base rates under the Company's retail license, which were lowered in 2016 by 4.4% due to downward movement in the price indices used as the basis for such rate adjustments.

Bulk segment revenues were $7,441,061 and $8,187,273 for 2016 and 2015, respectively. The decrease in bulk revenues from 2015 to 2016 is attributable to the Company's Bahamas and Cayman operations, which generated approximately $587,000 and $210,000 less in revenues, respectively, in 2016 than in 2015 due to a significant decrease in the prices of diesel fuel and electricity from 2015 to 2016, which reduced the energy component of bulk water rates.

Services segment revenues were $1,664,741 and $146,211 for 2016 and 2015, respectively. Services revenues increased in 2016 primarily as a result of the addition of the revenues of Aerex Industries, Inc. ("Aerex") after the acquisition of 51% of this company on February 11, 2016.

Consolidated gross profit increased to $6,592,379 (43% of total revenues) in 2016, versus $5,965,294 (41% of total revenues) in 2015.  Gross profit for retail revenues was $3,607,517 (57% of retail revenues) and $3,494,487 (57% of retail revenues) in 2016 and 2015, respectively. Gross profit on bulk revenues was $2,627,800 (35% of bulk revenues), compared with $2,537,344 (31% of bulk revenues) for the prior year period. The services segment generated gross profit of $357,062 in 2016, while incurring a negative gross profit of ($66,537) in 2015.

Consolidated general and administrative expenses ("G&A") increased to approximately $4.9 million in 2016 from approximately $3.7 million in 2015 due to the addition of the G&A expenses of Aerex and an increase in the project development expenses incurred by the Company's Mexican subsidiary, N.S.C. Agua S.A. de C.V. ("NSC").

Other income (expense), net for 2016 was $418,837 as compared to $28,195 for 2015. The fluctuation in this net component of results of operations reflects (i) the impairment charge recorded for the Company's equity investment in Ocean Conversion (BVI) Ltd. ("OC-BVI") in 2015 of $275,000, as no impairment charge was recorded for this investment in 2016; and (ii) foreign currency gains recorded for PT Consolidated Water Bali ("CW-Bali") in 2016 as compared to foreign currency losses recorded for this subsidiary in 2015.

Management Comments

"Our gross profit, both in dollars and as a percentage of revenues increased for all three of our business segments this past quarter compared to the second quarter of 2015, resulting in a total gross profit increase this past quarter of approximately $627,000, or 11%, compared to the same period of 2015," stated CEO Rick McTaggart

"Our newly-acquired Aerex subsidiary contributed approximately $1.3 million in revenues to our services segment this past quarter.  Aerex is an original equipment manufacturer of a wide range of products and services applicable to the water industry, and consequently its revenues and earnings are dependent on the timing and size of purchase orders for these products and services.  While Aerex's financial performance during the four months following its acquisition has not been consistent on average with its 2015 financial performance, we remain extremely positive about the contribution that Aerex will make to our Company.

We were very pleased to announce in mid-June that our consortium was declared the winner of the bidding process for the 100 million gallon per day seawater desalination plant in Rosarito, Mexico.  We are currently in the process of finalizing a public-private partnership agreement with the State of Baja California, Mexico which we expect to execute in the coming weeks. 

We believe that our negotiations with the Cayman Islands Water Authority for a new water utility license in Grand Cayman are nearing an end, and although a few important differences have yet to be resolved, we remain hopeful that these negotiations will be concluded before the end of this year," concluded Mr. McTaggart.

Six Months Operating Results

Net income attributable to Consolidated Water Co. Ltd. stockholders for 2016 was $4,258,974 ($0.29 per share on a fully-diluted basis), as compared to $4,149,361 ($0.28 per share on a fully-diluted basis) for 2015.

Total revenues for 2016 and 2015 were $29,433,407 and $29,151,781, respectively. Higher revenues for the services segment in 2016 served to offset a decline in bulk segment revenues as retail revenue remained relatively consistent in 2016 from 2015. Gross profit for 2016 was $12,769,410 or 43% of total revenues, as compared to $12,113,596 or 42% of total revenues, for 2015. Gross profit for the retail and services segments increased while the bulk segment gross profit declined in 2016 from 2015.

G&A expenses on a consolidated basis were $9,396,760 and $7,554,540 for 2016 and 2015, respectively. The increase in consolidated G&A expenses from 2015 to 2016 is primarily attributable to the addition of approximately $1,022,000 in expenses for Aerex after the Company's acquisition of a 51% ownership interest in this company in February 2016 and an increase of approximately $629,000 in the project development expenses incurred by the Company's Mexican subsidiary, NSC.

Other income (expense), net for 2016 was $808,394 as compared to ($191,362) for 2015. The fluctuation in this net component of results of operations reflects (i) a decrease in the impairment charge recorded for the Company's equity investment in OC-BVI in 2016 as compared to 2015 of $535,000; and (ii) foreign currency gains recorded for CW-Bali in 2016 of approximately $174,000 as compared to foreign currency losses recorded for this subsidiary in 2015 of approximately ($233,000).

Cash Dividends

On July 31, 2016, the Company paid a quarterly cash dividend of $0.075 per share to shareholders of record at the close of business on July 1, 2016. The Company has paid cash dividends to shareholders since 1985.

Investor Conference Call

The Company will host a conference call at 11:00 a.m. Eastern Time (EDT) on Wednesday, August 10, 2016 to discuss its second quarter operating results and other topics of interest. Shareholders and other interested parties may participate in the conference call by dialing 844-875-6913 (international/local participants dial 412-317-6709) and requesting participation in the "Consolidated Water Company Call" a few minutes before 11:00 a.m. EDT on Wednesday, August 10, 2016.

A replay of the conference call will be available one hour after the call through August 17, 2016 by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the conference ID # 10091314, and on the Company's website at www.cwco.com.

CWCO-E

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 or nonexistent. The Company operates water production and distribution facilities and provides water-related products and services to customers in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas, Indonesia and 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 water projects, including the projects under development in Baja California, Mexico and Bali, Indonesia, its ability to develop and operate such projects profitably, and its ability to manage growth and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission ("SEC").

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:

Frederick W. McTaggart, President and CEO, at (345) 945-4277 or David W. Sasnett, Executive Vice President and CFO, at (954) 509-8200 or via e-mail at [email protected]

 

(Financial Highlights Follow)

 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS




June 30,



December 31,




2016



2015




(Unaudited)












ASSETS









Current assets









Cash and cash equivalents


$

37,081,272



$

44,792,734


Certificate of deposit



-




5,637,538


Restricted cash



-




428,203


Accounts receivable, net



13,717,123




9,529,016


Inventory



1,988,249




1,918,728


Prepaid expenses and other current assets



837,947




1,282,660


Current portion of loans receivable



1,902,490




1,841,851


Costs and estimated earnings in excess of billings



1,066,367




-


Total current assets



56,593,448




65,430,730


Property, plant and equipment, net



54,251,554




53,743,170


Construction in progress



2,163,548




1,928,610


Inventory, non-current



4,508,940




4,558,374


Loans receivable



2,802,365




3,769,016


Investment in OC-BVI



4,678,093




4,548,271


Intangible assets, net



5,993,644




771,811


Goodwill



11,534,248




3,499,037


Land held for development



20,558,424




20,558,424


Other assets



2,717,744




2,767,583


Total assets


$

165,802,008



$

161,575,026











LIABILITIES AND EQUITY









Current liabilities









Accounts payable and other current liabilities


$

4,060,956



$

4,829,535


Dividends payable



1,183,134




1,177,246


Note payable to related party



490,000




-


Demand loan payable



-




6,958,328


Billings in excess of costs and estimated earnings



1,469




189,985


Total current liabilities



5,735,559




13,155,094


Deferred tax liability



2,207,636




-


Other liabilities



557,827




224,827


Total liabilities



8,501,022




13,379,921


Commitments and contingencies









Equity









Consolidated Water Co. Ltd. stockholders' equity









Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares;  issued and outstanding 45,206 and 38,804 shares, respectively



27,124




23,282


Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 14,806,040 and 14,781,201 shares, respectively



8,883,624




8,868,721


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



-




-


Additional paid-in capital



84,960,531




84,597,349


Retained earnings



54,118,710




52,084,175


Cumulative translation adjustment



(538,907)




(533,365)


Total Consolidated Water Co. Ltd. stockholders' equity



147,451,082




145,040,162


Non-controlling interests



9,849,904




3,154,943


Total equity



157,300,986




148,195,105


Total liabilities and equity


$

165,802,008



$

161,575,026


 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




Three Months Ended June 30,



Six Months Ended June 30,




2016



2015



2016



2015


Retail revenues


$

6,292,833



$

6,152,185



$

12,263,071



$

12,287,823


Bulk revenues



7,441,061




8,187,273




14,706,354




16,569,589


Services revenues



1,664,741




146,211




2,463,982




294,369


Total revenues



15,398,635




14,485,669




29,433,407




29,151,781



















Cost of retail revenues



2,685,316




2,657,698




5,314,990




5,424,561


Cost of bulk revenues



4,813,261




5,649,929




9,423,585




11,115,989


Cost of services revenues



1,307,679




212,748




1,925,422




497,635


Total cost of revenues



8,806,256




8,520,375




16,663,997




17,038,185


Gross profit



6,592,379




5,965,294




12,769,410




12,113,596


General and administrative expenses



4,935,774




3,661,574




9,396,760




7,554,540


Income from operations



1,656,605




2,303,720




3,372,650




4,559,056



















Other income (expense):

















Interest income



159,891




258,201




376,726




491,783


Interest expense



(30,323)




(67,929)




(94,369)




(137,461)


Profit sharing income from OC-BVI



14,175




22,275




48,600




48,600


Equity in earnings of OC-BVI



85,858




62,668




131,222




137,823


Impairment of investment in OC-BVI



-




(275,000)




(50,000)




(585,000)


Other



189,236




27,980




396,215




(147,107)


Other income (expense), net



418,837




28,195




808,394




(191,362)


Income before income taxes



2,075,442




2,331,915




4,181,044




4,367,694


Provision for (benefit from) income taxes



(170,393)




-




(243,662)




-


Net income



2,245,835




2,331,915




4,424,706




4,367,694


Income attributable to non-controlling interests



41,502




103,815




165,732




218,333


Net income attributable to Consolidated Water Co. Ltd. stockholders


$

2,204,333



$

2,228,100



$

4,258,974



$

4,149,361



















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


$

0.15



$

0.15



$

0.29



$

0.28


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


$

0.15



$

0.15



$

0.29



$

0.28


Dividends declared per common share


$

0.075



$

0.075



$

0.15



$

0.15



















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

















Basic earnings per share



14,792,053




14,736,057




14,787,716




14,727,455


Diluted earnings per share



14,871,119




14,793,298




14,863,791




14,780,269


 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)




Three Months Ended June 30,



Six Months Ended June 30,




2016



2015



2016



2015


Net income


$

2,245,835



$

2,331,915



$

4,424,706



$

4,367,694


Other comprehensive income (loss)

















Foreign currency translation adjustment



(2,659)




(7,202)




(5,834)




(42,751)


Total other comprehensive income (loss)



(2,659)




(7,202)




(5,834)




(42,751)


Comprehensive income



2,243,176




2,324,713




4,418,872




4,324,943


Comprehensive income attributable to non-controlling interests



41,369




103,454




165,440




216,195


Comprehensive income attributable to Consolidated Water Co. Ltd. stockholders


$

2,201,807



$

2,221,259



$

4,253,432



$

4,108,748


 

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SOURCE Consolidated Water Co. Ltd.

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