Consolidated Water (CWCO) 15 Aug 242024 Q2 Earnings call transcript

Good morning, everyone. Thank you for joining us today to discuss the results for Consolidated Water's Second Quarter of 2024. Hosting the call today is the Chief Executive Officer of Consolidated Water Company, Rick McTaggart; and the company's Chief Financial Officer, David Sasnett.

Following their remarks, we will open the call to questions. [Operator Instructions] Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call.

which everyone made call per the available in press remind and being the company's to the yesterday's be in will for release, website. like that section is today's recorded instructions Investor I'd Relations available of is telecom replay

CEO, Now like Company's the Sir, please to Consolidated floor I'd McTaggart. over go turn Water to Rick ahead.

XXXX. morning, financial joining us second discuss our and Thank results for quarter you, today you of Jamie, everyone. Thank and the operating good for to

in issued release reported of saw we you quarter. As the $XX.X our revenue yesterday, million for

revenue during quarter. in continued area from segment customers quarter. retail our the the on water X% retail in benefited volume to amounts resulting Cayman resident Our This $X.X from increased population a increase sold million by service for Grand revenue the growth XX% our and to utility exclusive rainfall of lower

both and last manufacturing bulk compared revenues Our with segments relatively year. had consistent

by construction-related completed segment year. the services projects were to earlier was the down Arizona build about and as Cayman revenue half due design Our in this reduction anticipated Grand

in Our plant million the Arizona, was the $XX quarter. water treatment completed construction first substantially of in Goodyear,

desalination plant which project construct, revenues last on Honolulu, the to year. that Board new was water build of development will Islands. million expect the finishing We list Hawaii, Authority in facility of the bulk by activities up desalination which under a continue and works in for this of in -- X.X a day we operate will we Cayman minor completed $XXX segment. Cayman operations final from plant our quarter, Gate announced second XX-year the the maintenance Grand commissioning this million seawater maintain June In design, began May, agreement, end contract design the completion gallon and and up items Meanwhile, and the of third quarter. of supply and to during for operating punch fall the site are currently Also Red ramp within construction Water the per fall

in expect desalination will lead now design investigations, Such final currently permitting have seawater next systems, the are public construction full-scale now and outreach on schedule piloting stage, The plant project. and year. that and the of completed and of efforts post-treatment and design initiatives. the procurement, of operation the permitting We design, commissioning piloting, gathering site ongoing activities permitting and installation into the included data full late stage in inform essential was the is systems the which for development will and operational installation pilot we

The completion a last under commissioning exercisable is at of construction the and followed X-year which operations a project the by two started completed, the extensions, operate discretion. which X-year development encompasses X-year client's the then after year, construction which And contract, also XX-year will maintenance Hawaii phase. has plant and current we phase, are

the and For by quarter in REC Colorado. last generated REC the increase revenue an for integration channel market. Colorado in of we've with Colorado, company pleased been water-stressed into growth new provide contracts partially in We by offset in October developing the REC's O&M from construction-related new in reduction revenue the a both to was in the see we and regions acquired PERC second opportunities our and

million. of a documentation XX pursue our We time. growth the to land resources settlement larger of management the anticipate dispute settled canceled during to as of their the Mexico USD with the MXN enable as of we also for over desalination that financial we cancellation and will in Similar arose government was result project of and our Mexico, Mexican accelerate XXXX. proceeds project acquisition net XX our greater sold that project our approximately But for will that Playas the -- the part agreement PERC, Rosarito, that quarter, de projects the million in to plus REC

developments and our the quarter. into CFO, details through who for will financial turn David more Sasnett, the rest to like getting before our take Now of outlook recent us I'd over the for the call year, the to

Rick, Thanks, everyone. morning, good and

In XX% the for Arizona of to same Red overall Gate million the a second the primarily quarter reported decrease a completion increased year, totaled and almost to of has million $XX.X of decrease $XX.X year. million, is in in Liberty attributable mentioned $XX.X was project construction earlier. for which project this Grand This in revenue entirely the in decrease due we revenue revenue The revenues due in area as Retail of as compared the quarter sold. volume retail from water volume revenue our Rick a was PERC's on the this of Utilities X.X% last quarter of in May the in to of second in the significantly in compared increase the year. Grand to rainfall retail up was the for a and of customer also number And year of license to due April last water sold less increase revenue to accounts up same of segment to months Cayman due XX% last year. Cayman, as

a our year, quarter the increase decrease in XX% generated the marginal remainder second Revenue under year. the in important And million the to to earlier, mentioned services the Bahamas new to of operations in of of revenue. in decrease revenue, which operations contracts. XXXX, that $X.X acquired pass-through with million we REC, decreased $X.X the to related and from of Our lower we increase energy contracts It's in segment costs, component bulk PERC the energy quarter attributable decrease maintenance increase bulk second was revenue from construction totaled attributable our of note of which was as last of rates. revenue an last constituted October

$X.X consistent 'XX. last the with $X.X compared was quarter as segment second with year, in at manufacturing to million Our revenue million of

quarter of Net or million income to profit per total total for operations $X.XX share or revenue, $X.X last XX% year this in revenue. million the which decrease was of share of gross due to revenue quarter in quarter of $XX.X continuing the this second of the XX% or from $XX.X of Our was the million net for overall year of the down million diluted year or second second in $X.XX shareholders to compared diluted per quarter the 'XX. from $X.X income attributable second our was

we income from Including Mexico on discontinued the connection land reported the for year documentation which this or $XX.X We this with project $X.XX from the operations, of or million, recorded attributable project per $XX.X that the of we our settlement $XX.X in last this second was million sale diluted and net in government. with discontinued million operations gain share of of quarter the of our $X.X income share, the second stockholders the diluted to Consolidated million per quarter arbitration year. up the for from the was resulted quarter income reported that $X.XX Water net

Now turning sheet. to the balance

equivalents cash and $XX.X Our as million of cash totaled June XXXX. XX,

working our and $XXX.X capital Our equity million stockholders' $XXX.X was million. was

increase working reflects and MXN capital in XX, the settlement. XXXX, received and that the cash Our since XX Mexico USD from we December substantial million XX million

continued healthy extremely solid and maintain and an capacity enhanced condition. very liquidity have financial levels and of We to credit

other approximately million, We in additional Bay plant of new -- this Our declared of approximately approximately million for year requirements in million be incurred and July $X.X our be the there of approximately include million $X.X liquidity may XX, operations capacity projects. paid incurred such for our $X.X board. included also for dividends by are quarterly include and to if addition for which West the requirements balance and to projected $X.X capital existing expenditures liquidity our dividends future dividends

our quarter. financial completes for This summary the

like over I'd to the to Now call turn back Rick.

Thank David. you,

segment caused timing of in were by believe our Arizona second despite positive Hawaii. the revenues earnings We and large our design-build the quarter fairly and in variability results Service projects

year the As mentioned ahead next of Liberty to the project and of quarter expected late in is schedule was start Arizona our construction project Hawaii completed year. first earlier, this in

retail from this to and past the helped and reduced business design-build Revenues meaningfully have services our quarter revenues. offset segment O&M increased

Caribbean, of operation maintenance which of apart visually a to such our and States expertise Our most superefficient delivery in offering continues from set be cost-effective plants, and regions world-class suite diversified wastewater growth opportunities models, we strategy as believe of water-stressed project us United and efficient products solutions, to and treatment the pursue desalination competitors. all and the appealing our the services,

this As exclusive water for David capital to expand mentioned, plant expenditures new we area year Grand our demand our in Cayman. to West in Bay desalination plan customers to $X.X incur in utility service growing million the by meet our

this completed the this we demand, of plan are phase months capacity ago most first designed new already built. production and is have was retail plant due plant, doubling water ever to than less which increasing and desalination the The we also energy-efficient of XX

in plants desalination Storage served project the and be design, on Bahamas. letter historically our first binding notice XX-year a under our Bahamas of Corporation will seawater of received In to the which been for competitors. WSC commence finance by the islands with the and the X Bahamas, Bahamas, and new operate agreement own, family the Island we Cat This acceptance to have the of a Water build,

to very are Bahamas currently use We a business grow to Nassau. hope beyond about excited this our this project as opportunity steppingstone and

recurring Our as $X.X performing in quarter Colorado, newest revenue business million last in REC, is contributed anticipated. and

to and Colorado business with technical team in greater that to the pursue is Water the market brings important closely REC the table. development the team working very financial projects Consolidated resources Our with

As experts or minerals specialized we customers business, joint contaminated previous significantly extract water last to other seeing pursue in could we the industry further require and this develop reduce opportunities of to and quarters, mentioned source that with a whether services significantly offer successfully reverse nonmunicipal with earnings mining to this the markets. in osmosis revenues we If industrial the venture high-pressure coming water interesting water. business. volume formed and treatment potential concentrate of are years equipment sourced diversify June lithium products that X source to and Consequently, in we water equipment the increase year it in

beyond, operate and together earnings million design, the provide very looking our remainder manufacturing and revenues we're and saw Water's all long-term quarter base expected coming So Hawaii, stabilized and earnings company bulk years. solid Consistent we this excited water U.S.-based O&M and Consolidated business, in the Caribbean-based a strong in that project our business from for for of revenues build, in from future. very water Grand growth Cayman, about ahead the revenues recurring year sales $XXX

by exceptionally Cat growing in on we as Supported customers such the future balance to projects infrastructure the the new continue desalination long-term as Bahamas that ultimately needs utility drive serve strong water sheet, new as our of invest Island growth. Cayman Islands to in will the and plant revenue our will well

the also quickly targets may any to us ability Our sheet gives we capitalize acquisition on that strong identify. balance potential

slowing. help of our projects, efficient signs addition, design-build industry market no project delivery In we although that our currently believe the for we plant period between designs, us significant are pleasing experience and a will aesthetically models large new And X obtain projects. shows project in cost-efficient our and

We which we with number industry, and the in recently we that Along major design-build X drive national enhance master factors anticipate positive these future further tailwinds believe earnings and will revenue service agreements our with our conditions of strong periods. and they in clients from shareholder to projects for profitability impact the contemplating value. market long-term continue strengthen a growth, will are signed positively

And now, questions. open call to up for the Jamie, like I'd

comes [Operator ROTH from Instructions] today Our Gerry first Capital. Sweeney from question

water pipeline could out wondering on bit the Rick, you there's give little a projects, a I us lot Obviously, percolating there. on if detail more the projects. was maybe

stimulus had coming through. You dollars

a Our money starting XX to end projects just suggests channel of with lot money XX front behind coming hit to months. that companies the that is check engineering

you're pipeline. seeing there I'm out what little of bit description the So a of maybe as just and qualitative curious to

Well, I well obviously, I is the project, Obviously, mean, this interested know that the hard project the Cat and Hawaii these in pipeline you're aware of, U.S. are market. stuff. -- Island you're non-U.S.,

with what but recognized at one a desalination there the islands Island what in game mean time. just water the issues wouldn't island impressed they're really, project do of it's for help our business I number very And now they've I us a a other expand for Cat some Bahamas. obviously Nassau. we the we've done and think, definitely there's of to say can Bahamas are present I is, beyond the that islands to in changer, quite catalyst having

in If in Bahamas. the much the you press it's pretty daily press, check the

run go to we're and a about So operating I year through the going that. that's excited XX-year that's mean agreement probably on of next year into And them. a this project with then construction. part we

clients, mean, I can -- projects, these that discussing there's this one detail least we're service So about mean, our I that in the mentioned agreements, we other things impact these it's will speak of this treatment treatment master some at smaller but with seeing, water at there's that that possible I nothing we're wastewater year. that revenues point, projects projects these

We're in because I sources, certain pricing seeing natural new drinking lack to seeing -- the of of less identifiable sources. sensitivity, I markets, there's think, mean and freshwater new we're water

markets, I that. to market, see So think Gerry, that's I you're mean very in starting specific the Texas in

you So that's that desalination cheap alternative, anything don't mean good on. starting fall are to that's to a because back got not else, you but the is I recognize way when have people

So ... we A are price sensitivity seeing in less some markets.

ahead. Yes, go sorry,

right now, got I you all That's for Gerry.

with formal dispatches to proposal that the to bunches haven't to a for all We're actually in point us. when There understand we we gone the needs. a would their client in where things are do lot come we're preliminary those seem submit yet. And projects the that of pursuing

lot there's the conversations projects they and Customer decided of but when want we have a it. marketplace, So in exactly want underway firm yet. they hasn't don't what

So...

fair projects than time potential it this this year? to -- year that there's say your more on Is conversations last

design-build design traditional customized traction able model, been get of there's design with sort our delivery similar. seed on and not pricing it's -- abating of reports, are that, talking these think down at take need a road we've projects. that a help. a we're definitely example, lot of clients and going to all, of And the not build but lot for I to we're It's project people CDRs,

some we lot and of I try cases, model disrupt what these projects to traditional to of project have we alternative interest. So there is the client. do an delivery in mean offer a some And

talked as anything to to have we're going -- mean earlier. don't David So I other we're disclose mentioned, I people. to than mean, talking about we not And specific I what

Gerry, But lot to will do I this, days. say have department, a remains very these sales our active. They

process was it lot we I it's of a what and of essentially and to say the processor there's the That's of do through they like to I little lot a Yes. know take feels see a out sort big there, a mean of getting there. bit lot but longer bid per get activity the out activity to there's projects at. do get we to taking longer se, to suffice

should to plants? On of look steppingstone the they side, a what's are -- that we more the we And as outline. a plant of than Cat think steppingstone size are for you're as Island larger, desal those should bunch of going a we smaller do -- the or at that so

Well, have, populated now, much I XX, XX on is day lot of like most is doing in Nassau, the mean smaller. a Nassau. which we're what plants smaller per we capacity production gallons it, than what island. are right These they're just million

than You're X,XXX more typically talking less populations remote. that about of people. they're because challenging they're islands have But

charge Nassau. we higher what of than in price typically the So is water

meaningful think Cat some time, Island over project. certainly from the projects from these I you're see going revenues to

relationship we good think a government. We have the with Yes. Bahamian really

hopeful that Bahamas, elsewhere we be meet what's going country. in water not we're a for in to them growing in So but help Nassau need the just can the

So...

you. And X wanted I quick Got then more follow-ups.

AC of quarter. Our in recurring million said revenue the $X.X

if And you up import that think -- you your you. do I catch Could with -- mentioned not, number? you have didn't follow I can basis. PERC, but it I

mentioned... So the increase was a

right? year-over-year, XX%

Yes.

to just said in look for just So -- you -- quarter, last look year's that million was think just that's I you REC totaled the have what $X.X And we to then O&M was the... at segment, million increase. at of under second $X.X the revenue generated have

of year. we for compared in year, me, of much was the first and exactly from million quarter if year. was Gerry, $XX.X XX-Q, front revenue both increase and half to this in the Well, the million Well, it for of look $X.X last half the first O&M don't for of the our and the matter last have first have... detail quarter O&M And you how I second fact, I revenue

Yes, per... subtractive that that $X.X and million was be should record

Yes.

revenue of the year. didn't quarter that, $X.X REC $X.X is last of million for have quarter increase same our mentioned, related So as XX% for REC. the second just is of year total of second we quarter was the XX% million, which we last for in the out up O&M so And to

I So here, could -- on do quick but calculator... real we could do math the you real could quick your

It history was major. a

that? What's

just that of lots I shouldn't sheet. history And conference that But this get a the math. but you're discussions back I my but call. on is dividends, of don't looking been curious settlement, the say at Mexico that a decision, major, sort last balance -- probably any capital shares. curious... Obviously, a don't I actually cash Obviously, probably I I was can buybacks, you just know allocation. But question. very on buy on if with there's Board if trust acquisitions,

Yes. -- tell of not mean, and the I articles pretty -- back with next the I just would be mean, I and because to you shares that And our meeting challenges looking again thing. rate considered the that of buying could dividend much at sort really it's Board. our week. we're up obviously,

be will I'm sure So it discussed.

you appreciate guess. I

Sir, [Operator the I'd session. please over ahead. conclude like our turn gentlemen, time, go Instructions] question-and-answer floor this and to to And at we'll back Mr. ladies McTaggart.

Thanks, Jamie.

talking the Thanks. results. a in wanted of has third thank again to hope everybody for November you forward look everybody our call. when Just to I summer. quarter again rest release great joining with on we I the

Thank you.

Act we that future statements have this the not the I revenue, conclude call forward-looking events, today's Before within estimates. The today's company's like to and that includes safe expectations statement objectives, Securities includes provided made XXXX of and Private regarding statements limited cautions of harbor future information conference would provide call, regarding call. we including, during the the company's meaning plans, but forward-looking Litigation Reform statements assumptions to, in

the phrases of Statements are company's or historical facts markets expect, estimates, not are usually current containing project, the words projections should, that the or the will to for and business estimate, its be business. can Forward-looking industry beliefs, on and intend, statements expressions. related words and similar its based identified use by assumptions, forecasts believe, expectations,

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annual XX-K analysis Factors about Form uncertainties results company's sections company's and and quarterly the conditions or not business, the filings limited to information SEC discussion reports management's and and report we refer more operations with on of Form Risk of risks XX-Q. but on to, including, the of For the financial associated

today's the as required forward-looking expectations any call or any update conference any during with except or events, its changes in call speaks conditions Any regard circumstances, to statements made any its in undertaking any is revise date. thereto changes law. by made during The reflect statement based, as expressly forward-looking or disclaims statements conference company which of of forward-looking or the to obligations

that Please for remind to like call available www.cwco.com. would release yesterday's this refer will available instructions evening. company's to the starting later earnings dial-in replay website I replay be everyone at via this for

concludes conference This attending call. for presentation. you the Thank today's

your disconnect may You lines. now