10.08.2017 01:02:00

Consolidated Water Reports Second Quarter Results

GEORGE TOWN, Cayman Islands, Aug. 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 second quarter ended June 30, 2017.

Management Commentary

"Our second quarter results reflect the stability of existing desalination operations and our continued investment in the development of our large Rosarito, Mexico project," said Rick McTaggart, Chief Executive Officer. "Our desalination operations, which reflect the positive outcome of negotiations over the past 12 months to extend four bulk water contracts, continue to meet expectations and provide a solid foundation for our other initiatives. Manufacturing segment results reflected lower sales this past quarter, but we are encouraged by an increase in orders that we expect will positively impact sales for this segment in the second half of 2017.

Net income from continuing operations continues to reflect our ongoing Rosarito project development costs. The decline compared to last year's second quarter was primarily due to lower revenues from our retail and services segments resulting in a modest decline in gross profit and lower other (non-operating) income due to reduced earnings from our investment in OC-BVI and the absence of the one-time gain on sale of assets that occurred in the 2016 second quarter. Our results from continuing operations exclude the impairment loss resulting from our recent decision to discontinue our operations in Bali.

During the second quarter, we made considerable progress on our Rosarito project and expect to be in a position to break ground by year end. Our total investment in the Rosarito project to date has been $42.9 million, of which $21.0 million has been spent on land, right of ways and equipment and approximately $21.9 million on development expenses. We were pleased to see that in May, the Otay Water District received a permit to build and operate a nearly four-mile cross border pipeline that could ultimately be used to transport potable water from our Rosarito desalination plant. The Otay Water District currently serves a population of over 223,000 within the San Diego metropolitan area," Mr. McTaggart noted.

Second Quarter 2017 Financial Results

Total revenues for the 2017 second quarter were $15.3 million, slightly below the $15.4 million reported in last year's second quarter due primarily to modest declines in retail, services and manufacturing segments revenues that were partially offset by higher revenues in the bulk segment. Gross profit decreased 3.2% to $6.5 million from $6.7 million. Net income from continuing operations attributable to Consolidated Water stockholders was $1.7 million, or $0.11 per fully diluted share, a decrease of 27.7% from the $2.3 million, or $0.16 per fully diluted share, earned in the similar year-ago period. Net income from continuing operations for the 2017 second quarter included operating expenses of $885,000 related to costs for the Rosarito desalination plant. The Company incurred a $1.0 million impairment loss in the second quarter related to its Bali operation, which is now classified as a discontinued operation. After accounting for that loss, net income attributable to Consolidated Water stockholders was $624,548, or $0.04 per diluted share.

First Half 2017 Financial Results

Total revenues for the first six months of 2017 were $31.0 million, an increase of $1.5 million from the $29.4 million reported in last year's comparable period. Gross profit was up 3.0% to $13.4 million from $13.0 million.  Net income from continuing operations attributable to Consolidated Water stockholders was $4.4 million, or $0.29 per fully diluted share, an increase of 0.4% from the $4.4 million, or $0.29 per fully diluted share, earned in the similar year-ago period. Net income and diluted EPS for the first half of 2017 and 2016 included operating expenses of $1.6 million and $1.6 million, respectively, related to development costs for the Rosarito desalination plant. After accounting for the impairment loss related to the Company's Bali operations, net income attributable to Consolidated Water stockholders was $3.3 million, or $0.21 per diluted share.

Net cash provided by operating activities for the six months ended June 30, 2017 was $9.6 million and capital expenditures totaled $2.6 million.

Segment Results

 

Three Months Ended June 30, 2017 (Unaudited)


Retail

Bulk

Services

Manufacturing

Revenues

$     6,029,449

$     8,043,921

$     119,204

$     1,056,047

Cost of revenues

2,659,066

5,152,212

103,753

847,760

Gross profit

3,370,383

2,891,709

15,451

208,287











Three Months Ended June 30, 2016 (Unaudited)


Retail

Bulk

Services

Manufacturing

Revenues

$     6,273,400

$     7,441,061

$     403,935

$     1,260,806

Cost of revenues

2,555,545

4,813,261

272,537

1,035,142

Gross profit

3,717,855

2,627,800

131,398

225,664

 

Summary and Outlook

"In summary, we are pleased with the consistent performance of our core desalination operations and the improving prospects for our manufacturing segment. Renewal negotiations for our Cayman retail license began in July 2017 with the newly formed OfReg, and we have been informed that our retail license has been extended through January 31, 2018, while negotiations continue.

We continue to make progress on the Rosarito project, which should be a transformational event for the Company once it is completed. This is a very complex project and is the largest infrastructure project ever undertaken by the State of Baja California, Mexico.  Over the past six months we have been working together with Mexican State and Federal government agencies to achieve the various conditions precedent in the public-private partnership agreement. In the third quarter, we look forward to finalizing financing negotiations for the project, and we continue to work closely with the client, our partners, advisors and financing institutions with the goal of commencing construction on this landmark project by year end.

Importantly, we maintained a strong balance sheet and continued to generate significant operating cash flows over the first six months of 2017, which provides us with the credit standing and liquidity to invest in the Rosarito project while maintaining dividends to our shareholders," Mr. McTaggart concluded.

For further information, please contact our investor relations firm, MBS Value Partners:

Lynn Morgen: (212) 223 4147 lynn.morgen@mbsvalue.com
Eric Prouty: (978) 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



June 30,


December 31,


2017


2016


(Unaudited)



ASSETS




Current assets




Cash and cash equivalents

$          45,950,954


$          39,126,214

Accounts receivable, net

14,091,119


16,480,639

Inventory

3,057,218


1,985,006

Prepaid expenses and other current assets

1,330,580


1,084,155

Current portion of loans receivable

1,355,824


1,633,588

Costs and estimated earnings in excess of billings

543,893


85,211

Current assets of discontinued operations

154,331


480,979

Total current assets

66,483,919


60,875,792

Property, plant and equipment, net

50,463,135


52,471,537

Construction in progress

2,804,958


885,494

Inventory, non-current

4,497,027


4,558,816

Loans receivable

1,446,541


2,135,428

Investment in OC-BVI

2,949,547


4,086,630

Intangible assets, net

4,468,530


5,195,476

Goodwill

9,784,248


9,784,248

Land held for development

20,558,424


20,558,424

Other assets

2,183,317


2,280,519

Long-term assets of discontinued operations

154,501


772,164

Total assets

$        165,794,147


$        163,604,528





LIABILITIES AND EQUITY




Current liabilities




Accounts payable and other current liabilities

$ 4,878,489


$ 4,840,387

Dividends payable

1,189,786


1,187,214

Notes payable to related party

392,000


490,000

Billings in excess of costs and estimated earnings

1,396,426


102,966

Current liabilities of discontinued operations

55,329


58,521

Total current liabilities

7,912,030


6,679,088

Deferred tax liability

1,639,096


1,915,241

Other liabilities

752,828


904,827

Total liabilities

10,303,954


9,499,156

Commitments and contingencies




Equity




Consolidated Water Co. Ltd. stockholders' equity




Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding
 
45,087 and 35,225 shares, respectively 27,052 21,135




Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding
  14,889,865 and 14,871,664 shares, respectively

8,933,919


8,922,998

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

-


-

Additional paid-in capital

85,926,072


85,621,033

Retained earnings

52,606,237


51,589,337

Cumulative translation adjustment

(549,555)


(549,555)

Total Consolidated Water Co. Ltd. stockholders' equity

146,943,725


145,604,948

Non-controlling interests

8,546,468


8,500,424

Total equity

155,490,193


154,105,372

Total liabilities and equity

$        165,794,147


$         163,604,528

 

 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




Three Months Ended June 30,



Six Months Ended June 30,




2017



2016



2017



2016


Retail revenues


$

6,029,449



$

6,273,400



$

12,478,399



$

12,216,660


Bulk revenues



8,043,921




7,441,061




15,734,323




14,706,354


Services revenues



119,204




403,935




249,456




584,647


Manufacturing revenues



1,056,047




1,260,806




2,435,895




1,879,335


Total revenues



15,248,621




15,379,202




30,898,073




29,386,996



















Cost of retail revenues



2,659,066




2,555,545




5,278,713




5,065,540


Cost of bulk revenues



5,152,212




4,813,261




10,168,001




9,423,585


Cost of services revenues



103,753




272,537




205,919




469,813


Cost of manufacturing revenues



847,760




1,035,142




1,889,057




1,455,609


Total cost of revenues



8,762,791




8,676,485




17,541,690




16,414,547


Gross profit



6,485,830




6,702,717




13,356,383




12,972,449


General and administrative expenses



4,960,170




4,888,794




9,714,680




9,295,856


Income from operations



1,525,660




1,813,923




3,641,703




3,676,593



















Other income (expense):

















Interest income



108,821




158,085




230,893




374,843


Interest expense



(7,939)




(30,323)




(10,162)




(94,369)


Profit sharing income from OC-BVI



-




14,175




10,125




48,600


Equity in the earnings (losses) of OC-BVI



(37,824)




85,858




(10,958)




131,222


Impairment loss on investment in OC-BVI



-




-




-




(50,000)


Unrealized gain (loss) on put/call options



(13,000)




-




152,000




-


Other



(28,530)




176,383




53,191




222,129


      Other income, net



21,528




404,178




425,089




632,425


Income before income taxes



1,547,188




2,218,101




4,066,792




4,309,018


Benefit from income taxes



(136,448)




(170,393)




(276,145)




(243,662)


Net income from continuing operations
before non-controlling interests



1,683,636




2,388,494




4,342,937




4,552,680


Income (loss) from continuing
operations attributable to non-
controlling interests



(8,354)




48,544




(56,146)




172,040


Net income from continuing operations



1,691,990




2,339,950




4,399,083




4,380,640


Loss from discontinued operations



(1,071,001)




(142,659)




(1,150,850)




(127,974)


Loss from discontinued operations
attributable to non-controlling interests



(3,559)




(7,042)




(7,543)




(6,308)


Net loss from discontinued operations



(1,067,442)




(135,617)




(1,143,307)




(121,666)


Net income attributable to
Consolidated Water Co. Ltd.
stockholders


$

624,548



$

2,204,333



$

3,255,776



$

4,258,974




































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

















Continuing operations


$

0.11



$

0.16



$

0.30



$

0.30


Discontinued operations


$

(0.07)



$

(0.01)



$

(0.08)



$

(0.01)


Basic earnings per share


$

0.04



$

0.15



$

0.22



$

0.29



















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

















Continuing operations


$

0.11



$

0.16



$

0.29



$

0.29


Discontinued operations


$

(0.07)



$

(0.01)



$

(0.08)



$

-


Diluted earnings per share


$

0.04



$

0.15



$

0.21



$

0.29



















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



14,889,816




14,792,053




14,880,889




14,787,716


Diluted earnings per share



15,055,554




14,871,119




15,045,204




14,863,791


 

View original content:http://www.prnewswire.com/news-releases/consolidated-water-reports-second-quarter-results-300502400.html

SOURCE Consolidated Water Co. Ltd.

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