Consolidated Water Co. Ltd. Reports 2019 Earnings: A Splash in the Right Direction

Ticker: CWCO | Date: March 16, 2020

In a year where many companies were treading water, Consolidated Water Co. Ltd. (NASDAQ: CWCO) made waves with its 2019 financial results. The company, a key player in water supply and treatment, reported a 5% increase in total revenue, reaching a record $68.8 million. This growth was buoyed by a gross profit surge of 6%, totaling $28.3 million. These numbers are not just a drop in the bucket; they showcase a robust performance that beats the EPS consensus expectations.

2019 Financial Highlights

Let?s dive deeper into the numbers:

Net Income: Increased 8% to $12.2 million or $0.80 per diluted share, marking a solid earnings surprise.
Cash Reserves: Cash and cash equivalents stood at a healthy $42.9 million by year-end.
Dividends: The company paid out $5.1 million in dividends in 2019, which should please shareholders looking for returns.

Operational Achievements

On the operational front, Consolidated Water made significant strides:

Acquisition of a controlling interest in PERC Water Corporation, expanding their product offerings and U.S. presence.
Sale of CW-Belize for $7 million, reflecting solid asset management.
Successful completion of a major desalination plant project in Rosarito, which is set to produce 100 million gallons of potable water daily.

Management's Perspective

Rick McTaggart, the CEO, didn?t hold back in his commentary on the results. He summarized the year as a ?banner year? driven by strong progress across various segments, including retail and bulk water supply. Notably, the retail segment's revenue and gross profit growth signals resilience in a sector often challenged by external factors like economic downturns or environmental issues.

As McTaggart pointed out, the company has bolstered its cash balances by $11.6 million and improved working capital by $10.8 million. This financial strength positions CWCO well for future strategic initiatives, potentially paving the way for more acquisitions or expansions in infrastructure.

Looking Ahead Amid Uncertainty

With the onset of COVID-19, the water sector, like many others, faces uncertainties. McTaggart acknowledged concerns about the pandemic's impact on the economy and tourism?a key driver for their Caribbean desalination business. While the company has contracts ensuring minimum monthly payments, the situation remains fluid.

The real question is: will CWCO manage to keep its earnings afloat amidst this turbulence? Given their demonstrated adaptability and solid management, it seems they might just weather the storm, potentially making them a benchmark for peers in the sector.