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Consolidated Water Reports 2020 Revenue up 6% to $72.6 Million

GEORGE TOWN, Cayman Islands, March 31, 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 year ended December 31, 2020. All annual comparisons are to the previous year unless otherwise noted.

2020 Highlights

  • Revenue increased 6% to a record $72.6 million.
  • Services segment revenue increased to $12.9 million, with $12.5 million of the revenue due to acquiring a 51% controlling interest in PERC Water in October 2019.
  • Services segment gross profit was $3.2 million versus $0.5 million in 2019.
  • Net income from continuing operations attributable to stockholders was $8.6 million or $0.56 per diluted share.
  • Cash and cash equivalents totaled $43.8 million as of December 31, 2020.
  • Paid $5.1 million in dividends.
  • Acquired an additional 10% of PERC Water in October 2020, increasing the company’s ownership to 61%.
  • Acquired the remaining 49% interest in Aerex Industries, Consolidated Water’s specialty manufacturer of water treatment-related systems and products, in January 2020.

Management Commentary

“In 2020 we increased total revenue by 6% to a record $72.6 million, generated net income of $8.6 million and paid $5.1 million in dividends – all despite the unprecedented challenges caused by the global pandemic,” said Consolidated Water’s CEO, Rick McTaggart. “Our services segment, led by our PERC Water subsidiary, performed well during economic weakness in its marketplace. We expect PERC’s strong performance, including the expansion of its recurring revenue stream from operating and maintenance contracts, to continue in 2021.

“We are currently in discussions with existing and potential clients in California that are seeking cost-effective solutions to their wastewater treatment and potable water challenges. We believe that the pandemic has adversely effected the finances of many communities across our service areas and they are increasingly looking for innovative public-private partnership arrangements to address their water challenges. PERC’s excellent reputation and strong track record of successfully delivering projects through a wide range of project delivery models, including public-private partnerships, is very attractive to resource-conscious municipalities and private operators.

“We believe conditions in the design-build market are also improving and that project activity will increase significantly in 2021, which should prove quite positive for our PERC business.

“PERC’s potential clients include golf clubs in California that are seeking to replace expensive potable water with sustainable reclaimed wastewater for irrigating landscaping and courses. We believe that PERC’s award-winning water reuse plant designs provide a competitive advantage in this niche market.

“We have also been working to expand PERC’s business into central Florida. PERC has natural synergies with Aerex’s water infrastructure manufacturing capabilities and is leveraging Aerex’s client base and excellent reputation in the region.

“The operations of our manufacturing business have not been significantly affected by the pandemic. However, as previously mentioned, Aerex’s largest customer informed us last October that it expects to suspend its purchases until the first quarter of 2022 due to inventory management related factors. While there can be no guarantee, we anticipate this customer will resume purchasing by the first quarter of 2022.

“Meanwhile, we have been focused on diversifying Aerex’s revenue by increasing sales of other products that it manufactures for existing and potential new customers. Since last fall, Aerex has been awarded two contracts to manufacture equipment for municipal water treatment projects in Florida. Production is scheduled to begin in April for the first and in the third quarter for the second, with both beginning to contribute revenue in the second quarter of this year. While we do not typically disclose the value of awarded contracts, we can state that each of these contracts are worth more than $1 million. We view these contracts as important milestones in our strategy to diversify Aerex’s product offerings and customer base.

“We expect our manufacturing segment revenue to be down in the first part of 2021 as compared to last year, as these new contracts will not begin to generate revenue until the second quarter. Aerex is presently also targeting three additional potential manufacturing projects in Florida.

“We are finally seeing some new opportunities for bidding on seawater desalination projects in the Caribbean that we are currently evaluating. Through PERC, we are also actively pursuing potential acquisitions and have several irons in the fire. We are looking to complete at least one acquisition before the end of the year that will expand our U.S. footprint.

“Overall, from an operational and financial perspective, our company remains in very good shape. We have substantially no debt and more than ample liquidity and capital resources to continue to be a great partner for the customers we have the privilege to serve.

“Over the course of 2021, we plan to continue expanding our business through organic growth, acquisitions, and new projects, as we further develop and broaden our water solution offerings. Above all, we will continue to focus on business that will provide increasing value for our shareholders.”

2020 Financial Summary

Total revenue for the full year 2020 increased 6% to a record $72.6 million from $68.8 million in 2019. The increase was driven by an increase of $11.2 million in services, which was due to the addition of PERC Water to the company’s services segment in late October 2019. The increase in total revenue was partially offset by decreases of $3.5 million, $2.7 million, and $1.2 million in the revenue of the retail, bulk and manufacturing segments, respectively.

Retail revenue declined due to a 13% decrease in the volume of water sold by Cayman Water primarily as a result of the tourism restrictions which were in effect for the last nine months of 2020 on Grand Cayman Island. The company believes that its retail business will eventually return to normal, as the vaccine becomes more widely administered and tourism resumes in its Grand Cayman retail service area.

The decrease in bulk water revenue was due to two new water supply contracts that commenced in February and July of 2019 with the Water Authority-Cayman at lower per gallon rates than the contracts they replaced, as well as a decline in revenue of approximately $1.5 million from the company’s Bahamas operations arising from lower energy prices which correspondingly reduced the energy pass-through component of CW-Bahamas’ rates.

The decrease in manufacturing revenue from 2019 to 2020 was due to a decrease in orders in the fourth quarter of 2020. Aerex’s largest customer informed Aerex last October that it was suspending its purchases until the first quarter of 2022 due to inventory management related factors. The company anticipates that orders from this customer will resume in the first quarter of 2022; however, it can offer no assurances that orders from this major customer will resume.

Gross profit decreased 5.3% to $26.8 million in 2020 from $28.3 million in 2019, with gross margin as a percentage of revenue decreasing from 41% to 37% primarily as a result of the decline in revenue for the retail segment.

Net income from continuing operations attributable to stockholders decreased 20.9% to $8.6 million or $0.56 per diluted share, compared to $10.9 million or $0.72 per diluted share in 2019.

Cash and cash equivalents totaled $43.8 million as of December 31, 2020, as compared to $42.1 million as of December 31, 2019. The increase resulted primarily from net income generated from continuing operations and the sale of CW-Belize.

2020 Segment Results

                
  Year Ended December 31, 2020
  Retail Bulk Services Manufacturing Total
Revenue $22,952,370  $24,312,546 $12,937,859 $12,425,351 $72,628,126 
Cost of revenue  11,080,814   16,959,563  9,698,214  8,121,080  45,859,671 
Gross profit  11,871,556   7,352,983  3,239,645  4,304,271  26,768,455 
General and administrative expenses  12,879,445   1,260,062  2,834,917  1,460,474  18,434,898 
Gain on asset dispositions and impairments, net  2,965   7,213  3,801  18  13,997 
Income (loss) from operations $(1,004,924) $6,100,134 $408,529 $2,843,815  8,347,554 
Other income, net              1,082,946 
Income before income taxes              9,430,500 
Provision for income taxes              86,724 
Net income from continuing operations              9,343,776 
Income from continuing operations attributable to non-controlling interests              730,005 
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders              8,613,771 
Net loss from discontinued operations              (4,902,243)
Net income attributable to Consolidated Water Co. Ltd. stockholders             $3,711,528 



                  
  Year Ended December 31, 2019
  Retail Bulk Services Manufacturing Total
Revenue $26,456,022  $26,986,108 $1,759,446 $13,592,075 $68,793,651 
Cost of revenue  11,611,165   18,606,805  1,215,193  9,086,140  40,519,303 
Gross profit  14,844,857   8,379,303  544,253  4,505,935  28,274,348 
General and administrative expenses  13,422,821   1,238,296  392,425  1,947,622  17,001,164 
Gain on asset dispositions and impairments, net  398,041   47,000      445,041 
Income from operations $1,820,077  $7,188,007 $151,828 $2,558,313  11,718,225 
Other income, net               786,552 
Income before income taxes               12,504,777 
Provision for income taxes               66,621 
Net income from continuing operations               12,438,156 
Income from continuing operations attributable to non-controlling interests               1,549,978 
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders               10,888,178 
Net income from discontinued operations               1,287,915 
Net income attributable to Consolidated Water Co. Ltd. stockholders              $12,176,093 



Revenue by Geographic Region

       
  Year ended December 31, 
  2020 2019
Cayman Islands $25,640,169 $30,327,139
Bahamas  21,654,153  23,114,860
Indonesia    131
United States  24,918,527  14,968,868
Revenues earned from management services agreement with OC-BVI  415,277  382,653
  $72,628,126 $68,793,651


Annual General Meeting of Shareholders

The company has set May 24, 2021 as the date of its Annual General Meeting of Shareholders to be held at 4:00 p.m. Eastern Daylight Time. The Annual General Meeting will be a “hybrid” meeting of shareholders, meaning shareholders will be able to attend the Annual General Meeting as well as vote during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/cwco2021 or attend the meeting in person at the offices of Aquilex, Inc., 5810 Coral Ridge Drive, Suite 220, Coral Springs, FL 33076. Holders of record of the company’s stock as of March 25, 2021 will be entitled to vote at the meeting.

Conference Call

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

Date: Thursday, April 1, 2021
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-844-875-6913
International dial-in number: 1-412-317-6709
Conference ID: 10153293

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 April 8, 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: 10153293

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.

Cautionary Note 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 the company’s 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.

Company Contact:
David W. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
dsasnett@cwco.com

Investor Relations Contact
Ron Both, CMA
Tel (949) 432-7566
CWCO@cma.team


CONSOLIDATED WATER CO. LTD.

CONSOLIDATED BALANCE SHEETS

        
 December 31, 
 2020 2019
ASSETS       
Current assets       
Cash and cash equivalents$43,794,150  $42,071,083 
Accounts receivable, net 21,483,976   22,953,659 
Inventory 3,214,178   3,287,555 
Prepaid expenses and other current assets 2,412,282   1,559,448 
Contract assets 516,521   1,677,041 
Current assets of discontinued operations 1,511,099   1,619,056 
Total current assets 72,932,206   73,167,842 
Property, plant and equipment, net 57,687,984   61,238,752 
Construction in progress 440,384   1,335,597 
Inventory, noncurrent 4,506,842   4,404,378 
Investment in OC-BVI 2,092,146   1,903,602 
Goodwill 13,325,013   13,325,013 
Intangible assets, net 4,148,333   5,040,000 
Operating lease right-of-use assets 1,329,561   1,811,516 
Other assets 1,926,594   2,120,708 
Long-term assets of discontinued operations 21,166,489   27,669,966 
Total assets$179,555,552  $192,017,374 
        
LIABILITIES AND EQUITY       
Current liabilities       
Accounts payable, accrued expenses and other current liabilities$2,856,127  $3,503,561 
Accounts payable - related parties 200,558   57,410 
Accrued compensation 1,434,106   1,821,395 
Dividends payable 1,300,022   1,292,187 
Current maturities of operating leases 455,788   688,540 
Current portion of long-term debt 42,211   17,753 
Contract liabilities 461,870   339,616 
Current liabilities of discontinued operations 188,434   178,382 
Total current liabilities 6,939,116   7,898,844 
Long-term debt, noncurrent 126,338   61,146 
Deferred tax liabilities 1,440,809   1,529,035 
Noncurrent operating leases 982,076   1,156,543 
Net liability arising from put/call options 690,000   664,000 
Other liabilities 362,165   75,000 
Long-term liabilities of discontinued operations 2,499   2,679,932 
Total liabilities 10,543,003   14,064,500 
Commitments and contingencies       
Equity       
Consolidated Water Co. Ltd. stockholders' equity       
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 31,068
and 33,751 shares, respectively
 18,641   20,251 
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding
15,143,683 and 15,049,608 shares, respectively
 9,086,210   9,029,765 
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued     
Additional paid-in capital 86,893,486   88,356,509 
Retained earnings 64,910,709   66,352,733 
Total Consolidated Water Co. Ltd. stockholders' equity 160,909,046   163,759,258 
Non-controlling interests 8,103,503   14,193,616 
Total equity 169,012,549   177,952,874 
Total liabilities and equity$179,555,552  $192,017,374 


CONSOLIDATED WATER CO. LTD.

CONSOLIDATED STATEMENTS OF INCOME

       
  Year Ended December 31, 
  2020 2019
Total revenue $72,628,126  $68,793,651 
Total cost of revenue (including purchases from related parties of $1,349,331 in 2020 and $10,295 in 2019)  45,859,671   40,519,303 
Gross profit  26,768,455   28,274,348 
General and administrative expenses  18,434,898   17,001,164 
Gain on asset dispositions and impairments, net  13,997   445,041 
Income from operations  8,347,554   11,718,225 
       
Other income (expense):      
Interest income  540,096   588,509 
Interest expense  (9,669)  (1,332)
Profit-sharing income from OC-BVI  135,675   16,200 
Equity in the earnings of OC-BVI  371,019   44,765 
Net unrealized gain (loss) on put/call options  (26,000)  56,000 
Other  71,825   82,410 
Other income, net  1,082,946   786,552 
Income before income taxes  9,430,500   12,504,777 
Provision for income taxes  86,724   66,621 
Net income from continuing operations  9,343,776   12,438,156 
Income from continuing operations attributable to non-controlling interests  730,005   1,549,978 
Net income from continuing operations attributable to Consolidated Water Co. Ltd.
stockholders
  8,613,771   10,888,178 
Gain on sale of discontinued operations     3,621,170 
Net loss from discontinued operations  (4,902,243)  (2,333,255)
Total income (loss) from discontinued operations  (4,902,243)  1,287,915 
Net income attributable to Consolidated Water Co. Ltd. stockholders $3,711,528  $12,176,093 
       
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd.
common stockholders
      
Continuing operations $0.56  $0.72 
Discontinued operations  (0.32)  0.09 
Basic earnings per share $0.24  $0.81 
       
Diluted earnings (loss) per common share attributable to Consolidated Water Co.
Ltd. common stockholders
      
Continuing operations $0.56  $0.72 
Discontinued operations  (0.32)  0.08 
Diluted earnings per share $0.24  $0.80 
       
Dividends declared per common and redeemable preferred shares $0.34  $0.34 
       
Weighted average number of common shares used in the determination of:      
Basic earnings per share  15,119,305   15,025,639 
Diluted earnings per share  15,223,955   15,137,076 

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