CONSOLIDATED WATER CO. LTD. GEORGE TOWN, Cayman Islands, Nov. 9, 2017 /PRNewswire/ -- Consolidated Water Co. Ltd. (NASDAQ: CWCO), a leading developer and operator of seawater desalination plants, reported financial and operating results for the third quarter ended September 30, 2017.
Management Commentary
President and CEO Rick McTaggart commented, "Third quarter results reflected positive year-over-year comparisons across all key financial metrics. Such results were led by an increase in manufacturing revenues due to an increase in the average value of manufacturing orders and were supported by the continued steady performance of our core desalination operations."
"Although our affiliate company OC-BVI sustained some hurricane-related damage to its facilities in the British Virgin Islands, the impact of OC-BVI on our financial results for the quarter was not material. We are proud of the tremendous response from our BVI employees, who have worked tirelessly to minimize disruptions in the water supply and assist in the recovery efforts."
"Our third quarter results continued to reflect our investment in the large Rosarito project. This project represents a major milestone for the company, on which construction is now expected to commence in 2018 instead of this year as previously predicted. It is important to recognize that this is a complex project that is inherently subject to some unanticipated delays, as it encompasses various governmental, regulatory and financial initiatives that involve not only us but other stakeholders in the project. We remain confident about the completion of these initiatives as well as the merits of the project and its future positive impacts on our shareholder value."
Third Quarter 2017 Financial Results
Total revenues for the 2017 third quarter were $16.6 million, $2.2 million higher than the $14.4 million reported in last year's third quarter due to increases in retail, bulk, and manufacturing segment revenues, which more than offset a slight decline in services revenues. Gross profit increased 6.6% to $6.3 million from $5.9 million. Net income attributable to Consolidated Water stockholders was $1.2 million, or $0.08 per fully diluted share, inclusive of $864,000 in operating expenses related to the Rosarito desalination plant. This represents a substantial improvement from the $1.9 million net loss that was reported in the comparable 2016 quarter, inclusive of $606,000 of Rosarito project-related expenses. During the quarter the Company incurred a net loss of $569,000 or $0.04 per share related to Bali, a market which the Company has announced it will exit.
Nine Months 2017 Financial Results
Total revenues for the first nine months of 2017 were $47.5 million, an increase of $3.7 million from the $43.8 million reported in last year's comparable period. Gross profit was up 4.9% to $19.6 million from $18.7 million. Net income attributable to Consolidated Water stockholders was $4.4 million, or $0.29 per fully diluted share, an increase of 84.5% from the $2.4 million, or $0.16 per fully diluted share, earned in the similar year-ago period.
Net cash provided by operating activities for the nine months ended September 30, 2017 was $11.7 million, well ahead of last year's $4.5 million. Year-to-date capital expenditures were $3.0 million. Cash and cash equivalents increased to $46.8 million as of September 30, 2017.
Segment Results
Three Months Ended September 30, 2017 (Unaudited)
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Retail Bulk Services Manufacturing
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Revenues $5,570,654 $7,881,464 $111,302 $3,008,783
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Cost of revenues 2,488,441 5,582,401 114,667 2,078,888
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Gross profit 3,082,213 2,299,063 (3,365) 929,895
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Three Months Ended September 30, 2016 (Unaudited)
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Retail Bulk Services Manufacturing
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Revenues $5,447,200 $7,429,732 125,929 $1,382,492
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Cost of revenues 2,464,841 4,922,162 168,577 910,450
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Gross profit 2,982,359 2,507,570 (42,648) 472,042
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Summary and Outlook
"Our core desalination business continues to provide stable, positive results, and we see incremental growth opportunities in this business as commercial development continues in the Cayman Islands and the Bahamas. This quarter's improvement in our manufacturing business was significant, and we anticipate an increasing backlog for this business," noted Mr. McTaggart.
"We continue to work diligently to achieve financing for the Rosarito project in anticipation of receiving final governmental and financing approvals. To date we have invested over $22.8 million in assets for the project and a cumulative $22.6 million in development expenses. Our balance sheet remains very strong with a healthy cash position at the end of the third quarter, and we have returned $3.3 million to shareholders year-to-date in the form of cash dividends," concluded Mr. McTaggart.
Investor Conference Call
The Company will host a conference call at 11:00 a.m. Eastern Time (EST) on Friday, November 10, 2017 to review the Company's operating results for the third quarter of 2017, 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 11:00 a.m. EST on Friday, November 10, 2017.
A replay of the conference call will be available one hour after the call through Friday, November 17, 2017 at 9:00 a.m. EST by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID # 10114039.
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 water projects, including the project under development in Baja California, Mexico, 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 our investor relations firm, MBS Value Partners:
Lynn Morgen: (212) 223 4147 lynn.morgen@mbsvalue.com
Eric Prouty: (646) 456 9539 eric.prouty@mbsvalue.com
Viktoriia Nakhla: (646) 625-4800 viktoriia.nakhla@mbsvalue.com
(Financial Highlights Follow)
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $46,976,764 $39,254,116
Accounts receivable, net 13,007,883 16,500,798
Inventory 2,291,082 2,305,879
Prepaid expenses and other current assets 2,430,570 1,096,200
Current portion of loans receivable 1,377,956 1,633,588
Costs and estimated earnings in excess of billings 1,673,460 85,211
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Total current assets 67,757,715 60,875,792
Property, plant and equipment, net 50,759,258 53,084,105
Construction in progress 1,433,341 885,494
Inventory, non-current 4,408,321 4,606,088
Loans receivable 1,093,641 2,135,428
Investment in OC-BVI 3,124,910 4,086,630
Intangible assets, net 4,116,982 5,195,476
Goodwill 9,784,248 9,784,248
Land held for development 20,558,424 20,558,424
Other assets 2,803,617 2,392,843
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Total assets $165,840,457 $163,604,528
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LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other current liabilities $5,332,446 $4,898,908
Dividends payable 1,189,924 1,187,214
Note payable to related party 392,000 490,000
Billings in excess of costs and estimated earnings 294,156 102,966
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Total current liabilities 7,208,526 6,679,088
Deferred tax liability 1,502,649 1,915,241
Other liabilities 1,160,307 904,827
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Total liabilities 9,871,482 9,499,156
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Commitments and contingencies
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 20,384 21,135
33,974 and 35,225 shares, respectively
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 8,941,027 8,922,998
14,901,711 and 14,871,664 shares, respectively
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued - -
Additional paid-in capital 86,106,647 85,621,033
Retained earnings 52,648,399 51,589,337
Cumulative translation adjustment (549,555) (549,555)
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Total Consolidated Water Co. Ltd. stockholders' equity 147,166,902 145,604,948
Non-controlling interests 8,802,073 8,500,424
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Total equity 155,968,975 154,105,372
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Total liabilities and equity $165,840,457 $163,604,528
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CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2017 2016 2017 2016
---- ---- ---- ----
Retail revenues $5,570,654 $5,447,200 $18,111,274 $17,710,271
Bulk revenues 7,881,464 7,429,732 23,615,787 22,136,086
Services revenues 111,302 125,929 360,758 710,576
Manufacturing revenues 3,008,783 1,382,492 5,444,678 3,261,827
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Total revenues 16,572,203 14,385,353 47,532,497 43,818,760
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Cost of retail revenues 2,488,441 2,464,841 7,895,617 7,779,831
Cost of bulk revenues 5,582,401 4,922,162 15,750,402 14,345,747
Cost of services revenues 114,667 168,577 320,586 638,389
Cost of manufacturing revenues 2,078,888 910,450 3,967,945 2,366,060
--------- ------- --------- ---------
Total cost of revenues 10,264,397 8,466,030 27,934,550 25,130,027
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Gross profit 6,307,806 5,919,323 19,597,947 18,688,733
General and administrative expenses 4,896,323 4,528,679 14,695,184 13,925,439
Impairment loss on long-lived assets 578,480 2,000,000 1,578,480 2,000,000
Impairment of goodwill - 1,750,000 - 1,750,000
--- --------- --- ---------
Income (loss) from operations 833,003 (2,359,356) 3,324,283 1,013,294
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Other income (expense):
Interest income 70,741 137,806 301,813 514,532
Interest expense (1,016) (1,246) (11,178) (95,615)
Profit sharing income from OC-BVI 36,450 38,475 46,575 87,075
Equity in the earnings of OC-BVI 138,913 101,301 127,955 232,523
Impairment loss on investment in OC-BVI - (875,000) - (925,000)
Net unrealized gain (loss) on put/call options 171,000 (275,000) 323,000 (275,000)
Other 31,206 110,968 83,791 507,183
------ ------- ------ -------
Other income (expense), net 447,294 (762,696) 871,956 45,698
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Income (loss) before income taxes 1,280,297 (3,122,052) 4,196,239 1,058,992
Provision for (benefit from) income taxes (136,447) (146,198) (412,592) (389,860)
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Net income (loss) 1,416,744 (2,975,854) 4,608,831 1,448,852
Income (loss) attributable to non-controlling 255,605 (1,110,522) 191,916 (944,790)
interests
Net income (loss) attributable to Consolidated $1,161,139 $(1,865,332) $4,416,915 $2,393,642
Water Co. Ltd. stockholders
Basic earnings per common share attributable to $0.08 $(0.13) $0.30 $0.16
Consolidated Water Co. Ltd. common stockholders
Diluted earnings per common share attributable to $0.08 $(0.13) $0.29 $0.16
Consolidated Water Co. Ltd. common stockholders
Dividends declared per common share $0.075 $0.075 $0.225 $0.225
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Weighted average number of common shares used
in the determination of:
Basic earnings per share 14,898,246 14,815,248 14,886,738 14,803,216
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Diluted earnings per share 15,072,142 14,852,967 15,054,343 14,940,635
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SOURCE Consolidated Water Co. Ltd.
