EPS Forecast
Revenue Forecast
Exhibit 99.1
Consolidated
Water Reports 2019 Record Results; Total Revenue up 5% to $68.8 million, Net Income up 8% to $12.2 million
Company Sets Dates for Annual Shareholders’ Meeting and Holders of Record
GEORGE TOWN, Cayman Islands, March 16, 2020 -- 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, 2019. All annual comparisons are to the previous year unless otherwise noted.
2019 Financial Highlights
| · | Revenue increased 5% to a record $68.8 million, driving gross profit up 6% to $28.3 million. |
| · | Net income attributable to stockholders increased 8% to a record $12.2 million or $0.80 per diluted share. |
| · | Cash and cash equivalents totaled $42.9 million at December 31, 2019. |
| · | Paid $5.1 million in dividends in 2019. |
2019 Operational Highlights
| · | Expanded the company’s product offerings and presence in the U.S. by acquiring a controlling interest in PERC Water Corporation, an innovative water infrastructure company, in October. |
| · | Completed the sale of CW-Belize to the company’s government-controlled Belize customer for $7.0 million in February. |
| · | Generated a gain on asset dispositions of approximately $445,000 primarily from the sale of CW-Bali in June. |
| · | Continued to advance the development project in Rosarito, Baja California, Mexico involving the construction and operation of a major seawater desalination plant and distribution pipeline. Designed to produce 100 million gallons per day of potable water, the plant is expected to be the largest of its kind in the Western Hemisphere and a major, much-needed new source of drinking water for the coastal region of Baja California for at least 37 years. |
Management Commentary
“2019 was a banner year for Consolidated Water, with strong progress made in many areas of our business driving record revenue and net income,” commented Chief Executive Officer Rick McTaggart. “Our retail segment increased its revenue and gross profit, while our bulk segment won two competitive tender processes for Grand Cayman that replaced expiring contracts. Our manufacturing segment increased sales by $6.3 million, and we dramatically expanded the offerings of our services segment through the acquisition of PERC Water.
“We also increased our cash balances by $11.6 million
and our working capital by $10.8 million. From a financial condition perspective, the company has never been stronger, and we
have more than ample liquidity and capital resources to pursue our strategic initiatives.
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“While naturally we are concerned about the impact of the COVID-19 virus on the world economy and our business, we remain optimistic about our long-term prospects. Travel interruptions or a temporary decline in tourism would likely adversely affect our desalination business in the Caribbean. Because the vast majority of our retail customers are residents and businesses on Grand Cayman who depend on tourism, we may be asked to do our part to help support customers who become economically challenged. Our bulk water supply contracts with government entities provide for guaranteed minimum monthly payments. To be sure, this remains a fluid situation and we are monitoring it closely.
“We are taking the necessary precautions to help protect our customers and employees, but at this point we do not anticipate a significant impact of COVID-19 on our North American-based business. Our current manufacturing segment order backlog already exceeds the level we had at this time last year, and PERC is pursuing several promising project and management contract opportunities. We are proceeding with the development of our project in Mexico, which we anticipate will be transformative for our company once we complete the financing stage and commence construction.”
2019 Financial Summary
Revenue increased 5% to a record $68.8 million from $65.7 million in 2018, which was driven primarily by increases of $6.3 million in manufacturing and $835,000 in retail. The increase was partially offset by decreases of $4.0 million in bulk water sales and $52,000 in services.
The increase in manufacturing revenue was due to an increase in the number of orders that resulted in expanded project production activity. Retail segment revenue was higher due to a slight increase in the volume of water sold by Cayman Water and higher energy prices.
The decrease in bulk water revenue was due to the lower rates that came into effect in February for water supplied by the Red Gate and North Sound plants, as well as lower rates that came into effect in July for the North Side Water Works plant under the new contracts for those plants.
The slight decrease in services reflects $710,000 in 2018 from an OC-BVI plant refurbishment project and $518,000 for pipeline installations made on Grand Cayman in 2018. The services segment did not complete any such projects in 2019. However, the services segment benefited from $1.4 million in revenue contributed by PERC Water.
Gross profit increased 6% to $28.3 million in 2019 from $26.7 million in 2018, with gross margin as a percentage of revenue improving from 40.7% to 41.1%.
Net income attributable to stockholders increased 8% to a record $12.2 million or $0.80 per diluted share, compared to $11.3 million or $0.75 per diluted share in 2018.
Cash and cash equivalents totaled $42.9 million as of December 31, 2019, as compared to $31.3 million as of December 31, 2018. The increase resulted primarily from net income generated from continuing operations and the sale of CW-Belize.
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2019 Segment Results
| 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 | 2,740,219 | 1,947,622 | 19,348,958 | |||||||||||||||
| Gain on asset dispositions and impairments, net | 398,041 | 47,000 | - | - | 445,041 | |||||||||||||||
| Income (loss) from operations | $ | 1,820,077 | $ | 7,188,007 | $ | (2,195,966 | ) | $ | 2,558,313 | 9,370,431 | ||||||||||
| Other income, net | 801,091 | |||||||||||||||||||
| Income before income taxes | 10,171,522 | |||||||||||||||||||
| Provision for income taxes | 66,621 | |||||||||||||||||||
| Net income from continuing operations | 10,104,901 | |||||||||||||||||||
| Income from continuing operations attributable to non-controlling interests | 1,549,978 | |||||||||||||||||||
| Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 8,554,923 | |||||||||||||||||||
| Net income from discontinued operations | 3,621,170 | |||||||||||||||||||
| Net income attributable to Consolidated Water Co. Ltd. stockholders | $ | 12,176,093 | ||||||||||||||||||
| Year Ended December 31, 2018 | ||||||||||||||||||||
| Retail | Bulk | Services | Manufacturing | Total | ||||||||||||||||
| Revenue | $ | 25,621,048 | $ | 31,031,287 | $ | 1,811,372 | $ | 7,256,150 | $ | 65,719,857 | ||||||||||
| Cost of revenue | 11,011,456 | 21,551,383 | 1,503,034 | 4,911,697 | 38,977,570 | |||||||||||||||
| Gross profit | 14,609,592 | 9,479,904 | 308,338 | 2,344,453 | 26,742,287 | |||||||||||||||
| General and administrative expenses | 12,029,646 | 1,301,042 | 2,889,703 | 2,489,028 | 18,709,419 | |||||||||||||||
| (Loss) on asset dispositions and impairments, net | (12,263 | ) | - | (41,180 | ) | (3,331 | ) | (56,774 | ) | |||||||||||
| Income (loss) from operations | $ | 2,567,683 | $ | 8,178,862 | $ | (2,622,545 | ) | $ | (147,906 | ) | 7,976,094 | |||||||||
| Other income, net | 2,740,064 | |||||||||||||||||||
| Income before income taxes | 10,716,158 | |||||||||||||||||||
| Benefit from income taxes | (157,291 | ) | ||||||||||||||||||
| Net income from continuing operations | 10,873,449 | |||||||||||||||||||
| Income from continuing operations attributable to non-controlling interests | 695,787 | |||||||||||||||||||
| Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 10,177,662 | |||||||||||||||||||
| Net income from discontinued operations | 1,115,825 | |||||||||||||||||||
| Net income attributable to Consolidated Water Co. Ltd. stockholders | $ | 11,293,487 | ||||||||||||||||||
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Revenues by Geographic Region
| Year ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Cayman Islands | $ | 30,327,139 | $ | 34,623,925 | ||||
| Bahamas | 23,114,860 | 23,241,361 | ||||||
| Indonesia | 131 | 153,233 | ||||||
| United States | 14,968,868 | 7,256,150 | ||||||
| Revenues earned from management services agreement with OC-BVI | 382,653 | 445,188 | ||||||
| $ | 68,793,651 | $ | 65,719,857 | |||||
Annual General Meeting of Shareholders
The company has set May 19, 2020 as the date of its annual meeting of shareholders to be held at 3:00 p.m. local time at The Westin Grand Cayman Seven Mile Beach Resort & Spa in Grand Cayman. Holders of record of the company’s stock as of March 17, 2020 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: Monday, March 16, 2020
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: 10140082
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 March 23, 2020, 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: 10140082
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.
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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) its ability to complete the project under development in Baja California, Mexico; (v) 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; (vi) the collection of its delinquent accounts receivable in the Bahamas; (vii) its ability to integrate and profitably operate recently acquired subsidiary PERC Water Corporation; (viii) the possible adverse impact of the COVID-19 virus on the company’s business; and (ix) 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
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CONSOLIDATED WATER CO. LTD.
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 42,902,669 | $ | 31,337,477 | ||||
| Accounts receivable, net | 23,229,689 | 22,462,217 | ||||||
| Inventory | 3,287,555 | 2,232,721 | ||||||
| Prepaid expenses and other current assets | 2,346,918 | 2,801,674 | ||||||
| Current portion of loans receivable | - | 734,980 | ||||||
| Costs and estimated earnings in excess of billings | 1,675,781 | 835,669 | ||||||
| Current assets of discontinued operations | - | 1,959,494 | ||||||
| Total current assets | 73,442,612 | 62,364,232 | ||||||
| Property, plant and equipment, net | 61,248,979 | 58,880,818 | ||||||
| Construction in progress | 1,335,597 | 6,015,043 | ||||||
| Inventory, non-current | 4,404,378 | 4,545,198 | ||||||
| Investment in OC-BVI | 1,903,602 | 2,584,987 | ||||||
| Goodwill | 13,325,013 | 8,004,597 | ||||||
| Land and rights of way held for development | 24,162,523 | 24,161,024 | ||||||
| Intangible assets, net | 5,040,000 | 1,891,667 | ||||||
| Operating lease right-of-use assets | 4,439,212 | - | ||||||
| Other assets | 2,990,228 | 2,123,999 | ||||||
| Long-term assets of discontinued operations | - | 1,944,033 | ||||||
| Total assets | $ | 192,292,144 | $ | 172,515,598 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 3,672,142 | $ | 4,570,641 | ||||
| Accrued compensation | 1,821,395 | 1,286,468 | ||||||
| Dividends payable | 1,292,187 | 1,286,493 | ||||||
| Current maturities of operating leases | 755,751 | - | ||||||
| Current portion of long-term debt | 17,753 | - | ||||||
| Billings in excess of costs and estimated earnings | 614,386 | 109,940 | ||||||
| Current liabilities of discontinued operations | - | 646,452 | ||||||
| Total current liabilities | 8,173,614 | 7,899,994 | ||||||
| Long term debt | 61,146 | - | ||||||
| Deferred tax liabilities | 1,529,035 | 659,874 | ||||||
| Noncurrent operating leases | 3,836,475 | - | ||||||
| Net liability arising from put/call options | 664,000 | - | ||||||
| Other liabilities | 75,000 | 199,827 | ||||||
| Total liabilities | 14,339,270 | 8,759,695 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Consolidated Water Co. Ltd. stockholders' equity | ||||||||
| Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 33,751 and 34,796 shares, respectively | 20,251 | 20,878 | ||||||
| Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,049,608 and 14,982,906 shares, respectively | 9,029,765 | 8,989,744 | ||||||
| Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued | - | - | ||||||
| Additional paid-in capital | 88,356,509 | 87,211,953 | ||||||
| Retained earnings | 66,352,733 | 59,298,161 | ||||||
| Cumulative translation adjustment | - | (549,555 | ) | |||||
| Total Consolidated Water Co. Ltd. stockholders' equity | 163,759,258 | 154,971,181 | ||||||
| Non-controlling interests | 14,193,616 | 8,784,722 | ||||||
| Total equity | 177,952,874 | 163,755,903 | ||||||
| Total liabilities and equity | $ | 192,292,144 | $ | 172,515,598 | ||||
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CONSOLIDATED WATER CO. LTD.
CONSOLIDATED STATEMENTS OF INCOME
| Year Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Total revenue | $ | 68,793,651 | $ | 65,719,857 | ||||
| Total cost of revenue | 40,519,303 | 38,977,570 | ||||||
| Gross profit | 28,274,348 | 26,742,287 | ||||||
| General and administrative expenses | 19,348,958 | 18,709,419 | ||||||
| Gain (loss) on asset dispositions and impairments, net | 445,041 | (56,774 | ) | |||||
| Income from operations | 9,370,431 | 7,976,094 | ||||||
| Other income (expense): | ||||||||
| Interest income | 588,509 | 663,197 | ||||||
| Interest expense | (2,814 | ) | (8,427 | ) | ||||
| Profit-sharing income from OC-BVI | 16,200 | 654,075 | ||||||
| Equity in the earnings of OC-BVI | 44,765 | 1,798,280 | ||||||
| Net unrealized gain (loss) on put/call options | 56,000 | (256,000 | ) | |||||
| Other | 98,431 | (111,061 | ) | |||||
| Other income, net | 801,091 | 2,740,064 | ||||||
| Income before income taxes | 10,171,522 | 10,716,158 | ||||||
| Provision for (benefit from) income taxes | 66,621 | (157,291 | ) | |||||
| Net income from continuing operations | 10,104,901 | 10,873,449 | ||||||
| Income from continuing operations attributable to non-controlling interests | 1,549,978 | 695,787 | ||||||
| Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 8,554,923 | 10,177,662 | ||||||
| Gain on sale of discontinued operations | 3,621,170 | - | ||||||
| Net income from discontinued operations | - | 1,115,825 | ||||||
| Total income from discontinued operations | 3,621,170 | 1,115,825 | ||||||
| Net income attributable to Consolidated Water Co. Ltd. stockholders | $ | 12,176,093 | $ | 11,293,487 | ||||
| Basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||||||
| Continuing operations | $ | 0.57 | $ | 0.68 | ||||
| Discontinued operations | 0.24 | 0.07 | ||||||
| Basic earnings per share | $ | 0.81 | $ | 0.75 | ||||
| Diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||||||
| Continuing operations | $ | 0.56 | $ | 0.68 | ||||
| Discontinued operations | 0.24 | 0.07 | ||||||
| Diluted earnings per share | $ | 0.80 | $ | 0.75 | ||||
| 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 | 15,025,639 | 14,962,760 | ||||||
| Diluted earnings per share | 15,137,076 | 15,074,147 | ||||||
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