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 |
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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 |
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| June 30, |
| December 31, |
| 2017 |
| 2016 |
| (Unaudited) |
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ASSETS |
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Current assets |
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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 |
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LIABILITIES AND EQUITY |
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Current liabilities |
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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 |
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Equity |
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Consolidated Water Co. Ltd. stockholders' equity |
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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 |
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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) |
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| Three Months Ended June 30, |
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| Six Months Ended June 30, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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Retail revenues |
| $ | 6,029,449 |
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| $ | 6,273,400 |
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| $ | 12,478,399 |
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| $ | 12,216,660 |
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Bulk revenues |
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| 8,043,921 |
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| 7,441,061 |
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| 15,734,323 |
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| 14,706,354 |
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Services revenues |
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| 119,204 |
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| 403,935 |
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| 249,456 |
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| 584,647 |
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Manufacturing revenues |
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| 1,056,047 |
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| 1,260,806 |
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| 2,435,895 |
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| 1,879,335 |
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Total revenues |
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| 15,248,621 |
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| 15,379,202 |
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| 30,898,073 |
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| 29,386,996 |
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Cost of retail revenues |
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| 2,659,066 |
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| 2,555,545 |
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| 5,278,713 |
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| 5,065,540 |
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Cost of bulk revenues |
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| 5,152,212 |
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| 4,813,261 |
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| 10,168,001 |
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| 9,423,585 |
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Cost of services revenues |
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| 103,753 |
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| 272,537 |
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| 205,919 |
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| 469,813 |
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Cost of manufacturing revenues |
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| 847,760 |
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| 1,035,142 |
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| 1,889,057 |
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| 1,455,609 |
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Total cost of revenues |
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| 8,762,791 |
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| 8,676,485 |
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| 17,541,690 |
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| 16,414,547 |
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Gross profit |
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| 6,485,830 |
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| 6,702,717 |
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| 13,356,383 |
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| 12,972,449 |
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General and administrative expenses |
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| 4,960,170 |
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| 4,888,794 |
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| 9,714,680 |
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| 9,295,856 |
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Income from operations |
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| 1,525,660 |
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| 1,813,923 |
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| 3,641,703 |
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| 3,676,593 |
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Other income (expense): |
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Interest income |
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| 108,821 |
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| 158,085 |
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| 230,893 |
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| 374,843 |
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Interest expense |
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| (7,939) |
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| (30,323) |
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| (10,162) |
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| (94,369) |
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Profit sharing income from OC-BVI |
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| - |
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| 14,175 |
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| 10,125 |
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| 48,600 |
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Equity in the earnings (losses) of OC-BVI |
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| (37,824) |
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| 85,858 |
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| (10,958) |
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| 131,222 |
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Impairment loss on investment in OC-BVI |
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| - |
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| - |
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| - |
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| (50,000) |
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Unrealized gain (loss) on put/call options |
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| (13,000) |
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| - |
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| 152,000 |
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| - |
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Other |
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| (28,530) |
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| 176,383 |
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| 53,191 |
|
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| 222,129 |
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Other income, net |
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| 21,528 |
|
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| 404,178 |
|
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| 425,089 |
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| 632,425 |
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Income before income taxes |
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| 1,547,188 |
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| 2,218,101 |
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| 4,066,792 |
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| 4,309,018 |
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Benefit from income taxes |
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| (136,448) |
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| (170,393) |
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| (276,145) |
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| (243,662) |
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Net income from continuing operations
before non-controlling interests |
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| 1,683,636 |
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| 2,388,494 |
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| 4,342,937 |
|
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| 4,552,680 |
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Income (loss) from continuing
operations attributable to non-
controlling interests |
|
| (8,354) |
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| 48,544 |
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| (56,146) |
|
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| 172,040 |
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Net income from continuing operations |
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| 1,691,990 |
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| 2,339,950 |
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| 4,399,083 |
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| 4,380,640 |
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Loss from discontinued operations |
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| (1,071,001) |
|
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| (142,659) |
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| (1,150,850) |
|
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| (127,974) |
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Loss from discontinued operations
attributable to non-controlling interests |
|
| (3,559) |
|
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| (7,042) |
|
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| (7,543) |
|
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| (6,308) |
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Net loss from discontinued operations |
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| (1,067,442) |
|
|
| (135,617) |
|
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| (1,143,307) |
|
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| (121,666) |
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Net income attributable to
Consolidated Water Co. Ltd.
stockholders |
| $ | 624,548 |
|
| $ | 2,204,333 |
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| $ | 3,255,776 |
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| $ | 4,258,974 |
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Basic earnings per common share
attributable to Consolidated Water Co.
Ltd. common stockholders |
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Continuing operations |
| $ | 0.11 |
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| $ | 0.16 |
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| $ | 0.30 |
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| $ | 0.30 |
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Discontinued operations |
| $ | (0.07) |
|
| $ | (0.01) |
|
| $ | (0.08) |
|
| $ | (0.01) |
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Basic earnings per share |
| $ | 0.04 |
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| $ | 0.15 |
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| $ | 0.22 |
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| $ | 0.29 |
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Diluted earnings per common share
attributable to Consolidated Water Co. Ltd.
common stockholders |
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Continuing operations |
| $ | 0.11 |
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| $ | 0.16 |
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| $ | 0.29 |
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| $ | 0.29 |
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Discontinued operations |
| $ | (0.07) |
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| $ | (0.01) |
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| $ | (0.08) |
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| $ | - |
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Diluted earnings per share |
| $ | 0.04 |
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| $ | 0.15 |
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| $ | 0.21 |
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| $ | 0.29 |
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Dividends declared per common share |
| $ | 0.075 |
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| $ | 0.075 |
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| $ | 0.15 |
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| $ | 0.15 |
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Weighted average number of common
shares used in the determination of: |
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Basic earnings per share |
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| 14,889,816 |
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| 14,792,053 |
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| 14,880,889 |
|
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| 14,787,716 |
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Diluted earnings per share |
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| 15,055,554 |
|
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| 14,871,119 |
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| 15,045,204 |
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| 14,863,791 |
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View original content:http://www.prnewswire.com/news-releases/consolidated-water-reports-second-quarter-results-300502400.html
SOURCE Consolidated Water Co. Ltd.