Consolidated Water (CWCO) 15 Nov 242024 Q3 Earnings call transcript

Good morning. Thank you for joining us today to discuss the results for Consolidated Water's Third 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'll open the call to your 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. I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay per the instructions in yesterday's press release, which is available in the Investor Relations section of the company's website.

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

and our David. you today financial for you, joining results Thank Good us to morning, discuss XXXX. quarter of third everybody. Thank operating for our

given of the increasing this exclusive to our sales X income quarter. and Grand projects with As We net year. business growth diluted yesterday, earlier our we to on population million continuing large design continuing share completion build $X.XX These on Cayman, were pleased per due operations island. consistent which of utility in the for release retail reported you press see service area expectations issued of past was of results trend revenue were water our the saw $XX.X or this in from and $X million

relatively to Bulk revenue Our year. consistent had segment compared last

to the the margins certainty when guarantee of to gives plants clients of this particularly the contract for just plant However, equipment, consumption margin effective gross we we and due the which I'll new. type Cayman, early of which contract, costs, are Water Gate our May in our in better are of II cycle operations because typically an Red our became X contract the this increase saw energy for in Grand new year. the note client maintenance Authority the in the life membranes, RO

balance third in of the revenue, $X.X was projects. but offset the reduction construction this and provides of us by of million included REC revenues, with start REC which expansion Colorado, on Utilities year. increased channel for These impact water revenue, O&M in revenue with construction increase Services from build acquired of completed October our The increase by Looking resulted and businesses the of were at of construction this Colorado. major decline Water to new revenue, contracts Gate our half last from of we O&M they design declined recurring conclusion XXXX into projects II $X.X our subsidiary. prior PERC Red a in O&M million to recurring our partially a year. in about and subsidiary revenue revenue The related a to our due quarter stress regions anticipated incremental the Liberty had

advancing in activities We the portion on project. this plan we expect next for and and of represents revenue the in Since project development the design, year, million Supply project Hawaii. Water the we continue Board to advance which to the construction construct, a $XXX stage. design our of been Honolulu, through seawater June permitting desalination piloting We to of generate maintain operate we late have the last to largest begin announced year, phase plant from

all operate exercisable that to O&M of additional we phase, XX-year at the design for essential data are to will and O&M and X-year the a the desalination option. gather the the to plant the comprised a design and and X project the followed close seawater are agreement, the final of phase clients' pilot of to extensions development are completion operational full-scale a commissioning, from final the X-year construction inform of And the construction is are and pilot agreement of XX% present, continue expect we and post-treatment project. At after X-year phase under nearing testing We Hawaii there systems by first completing that project. that permitting

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

Good everyone. morning, Rick. Thanks,

II Red of last this a this revenue our year. in Grand was for Arizona construction the in due $XX.X both same decrease quarter the almost totaled to quarter PERC's as Utilities a and quarter is Liberty XX% million project construction from Our Cayman, year. project, $XX.X third This of decrease And third before million. revenue were start the Gate for the entirely decrease completed

Our Retail volume year. in X.X% this in area the to and a of and reflects water of revenue sold, due increase our a license increased over X.X% number connections increase the the last customer

third company, want typically would that to I Retail Revenue solid very for the quarter our quarter just people, typically bit who in drop revenues business point of seasonality. a that for us. out the fourth is little follow because

Both quarter, XXXX. due million than fourth contract of year Authority quarter XX% Gate Sound do under a May increase the Retail and in bit of Cayman. to Retail-wise. The is increase the maintenance contract generated totaled third became revenue on contributed quarter same increase for the remainder Water for Revenue contract fourth REC the revenue. to perhaps our and North maintenance little and amendment of contract which Red But year. new PERC the Authority effective Bulk quarters of operations and last this segment of of keep our the Water contracts commencement contracts X one Cayman So represents amendment to $X.X the and in a new Red operating million was in contracts. our related to in Sound we that an the the North for $X.X quarter better our expect incremental mind weaker of with Gate

grew segment gross decreased reaching the $XXX,XXX decreased excuse me, in segment part our our Our focus to quarter. our higher-margin this by this $X.X in million due our $X.X on But third Manufacturing $XXX,XXX of XX%, decline revenue by to products. despite slight million, Manufacturing manufacturing by profit -- revenue,

as XXXX. dissolution reported million net or the $XXX,XXX Mexico next operations, income losses of total our formal in and loss per discontinued overall $X.XX of anticipate attributable by for eliminating the quarter share quarter total the was from compared shareholders income subsidiaries our to of third operations profit of operations revenue the from of We of of Including of our share. million these $X.X XX.X% attributable of year. last quarter discontinued continuing net third as million loss or thus million to $X.XX third completing $XX.X Net or to for the our $X.XX compares of million a quarter operations income third Our in $X.X $X compared $XX.X consolidated to QX XXXX. of end $XXX,XXX last This net or And revenue quarter to for share. was or for compares $X.XX gross the per Water year. operations, the quarter per to diluted diluted discontinued per million shareholders for for diluted income Consolidated share or a of year. We diluted the for XX% net was the quarter $X.X this

At balance the quarter, end of $XXX.X our to XX, and we September had the XXXX, million in Turning sheet. equivalents. cash cash

Our $XXX.X working million. was capital

was $XXX,XXX and million. all, $XXX.X equity stockholders' maintain only In credit approximately an financial of we to condition. extremely our level Our a totaled and very healthy solid capacity and debt continue liquidity

by liquidity approximately $X.X and project include quarterly the also in requirements for Board. as our million plant This projected capital requirements future for include of liquidity for such We million incurred includes approximately in obviously, West our project. Bahamas, and a in $X.X dividends, year new to dividends of the the be Bay approximately million. are may $XXX,XXX Island remainder our for $X.X Our expenditure paid approximately operations Cat declared October existing dividends

completes the now turn Rick. this over So to like summary things financial our to for I'd back quarter.

Thanks, David.

details Now across segments. operational for more our business

activity increased mentioned, We've business has Cayman. as segment, been and with utility additional on Grand our in David revenue pleased resulted which system growth the from connections our service Retail in

any not from earlier lasting did Cayman Fortunately, that impacted significant damage the the hurricanes Grand see this or island year.

second of same rainfall revenue impact margin sales rainfall was few maintenance last commenced gross Gate year, resulted start additional than which the days Bahamas This year. concentrated this cost charges from water and storms total this in contract in did with ultimately, Red our plant adversely to the and energy reduced fees a costs, only new Sound Cayman energy quarter Also because those the island. Bulk a was over just turn client. quarter, II quarter extension the North Grand during maintenance in to declines and the secured during on the lower of higher and pass-through Although customer. operating operating revenue we of it reduction which offset past our minor and the not business the of revenue that in contract quarter the a O&M our the contract, profit XX-month second the increased

synergies and continue will and profit design manufacturing a to and This improving ahead, created smaller progress that -- opportunities We growth. operations we supply by is see tanks, homes and and we market. Colorado our this our PERC, generators. and a to Bahamas. business the changes in seawater is state. In will recent between be achieved Corporation agreement to despite design, upgrades. revenue decline Based for our gross they accelerated REC of change of made positions $X will Each Sewer regulatory are in the will first to on XXX,XXX on XX% gallons build, our island. This as water management X by in expected, and experience teams. see XX,XXX the segment and PERC, past X,XXX on business. more that of pursuit the pursue expected to Cat quarter, us desalinated on we Family this natural success supply the the need treated backup the PERC potable plants million, REC Construction with focused a us the believe As efficiency integrated greater has has to optimistic segment. on our thanks results to David reliable REC We're PERC storage facility and of maximizing opened, the progressing build opportunities years wells new are opportunities on the the disposal our segment produce products in has provide remain REC. and requirements of islands trend production daily, finance Similar with call support Bahamas, desalination Imperial REC Manufacturing capabilities higher-margin with project capitalize $X.X our than will new to in PERC subsidiary, water growth grew Colorado. become including projects in this replicate in relentless about REC what steady million larger and to enabling and newest they in wastewater the statutory it municipalities installation discharge own, especially and several new that achieve extension or with for mentioned, important segment project to designed over number of of stable is sales profitable. Services anticipated to bolstered solid WSC and two well as gallons X with revenue enable Bahamas. operate we to in operating Water Island financial opportunities XX-year small that along

except Providence. our that's much historically In So that competitors. Family pretty area, by everywhere, served Islands been the have

a our Bahamas expanding So see we're and step operations beyond this excited it to key about opportunity forward as Nassau.

future solutions for impaired macro Looking remain excited At interest forward, to growing continues scarcity treatment we build the water for sources. level, the many desalination in advanced water reasons. about and

in supply recurring water Caribbean-based we sales U.S.-based and businesses strong rising challenges long-term water Bulk for O&M business. that growth the our a from the revenue our positive specialized Grand factors increase, Specific include provide. As demand the and capabilities there's water Cayman

Island And the of Hawaii things our for expect new and infrastructure Our to as plants will new we will balance our new drive coming needs include long-term Bulk earnings projects, Manufacturing future on positive years. exceptionally customers in revenue water business Retail invest both its desalination by in well strong significantly an desalination plant enhance of these the and Enabled the continue Grand revenue continues Cat Cayman. utility we sheet, the to growth. in and these Bahamas and project ultimately over in growing as trend,

plant our project strong sheet in will construction opportunistic between delivery designs believe unmatched move award-winning or a new quickly continued growth prove ahead. product we charted secure we and the lays The strong company our that We and currently But large experience Our beyond for balance and also Caribbean, us the for several industry acquisitions. period desalination we are years marked potential cost-efficient in are the has to projects areas projects. path ago, enables on successful any involved help us diversifying models our to pursuing. offerings seawater course which

strength complete new XXXX in prepare continue value. factors shareholder we we year, their and to our and its future all anticipate long-term that As these for will for support of growth the profitability positive

call the moving that, for So like I'd with up questions. to

[Operator Instructions] First with question comes from ROTH Capital. Gerry Sweeney

said little planned couple Obviously, or cost project. and This the pilot have questions. an a construction I start the bit about could I -- us the construction had desal is you a of And Hawaii think is construction how phase is a tender you when what the remind Do to you phase. going to more I'm -- permit details. with of design, to much idea is at least base? allocated to allocated there's start?

Yes.

to in plan the to expect mean, it year. it the we I -- of So, fourth is quarter start next

I balance is the -- of $XX think phase construction about the million, development the about costs. the million is $XXX and

it... is And Okay.

And clarify something, me let Gerry.

after These based of design a incur. but we the to time, so So design phase of flow typically the we're recognize not funded million. into will of cost draw recalculated price $XX and be the actual And that phase, will labor amount date will signed we in $XX had projects we be the cash ahead allowed start in contract the in construction the contract to get that are the in don't million from date based upon then revenue we It it of changes starts. increases we price construction, clauses the upon costs a for signed challenge. when construction we that -- actual in the that the construction materials because allow be

clarifies... that hope I So

inflation there's And adjustments available.

Okay.

correct. That's Yes.

hit quarter Got construction seeing side, start we it. fourth phase the we part and the is chunkier But of speaking, -- roughly the should that revenue start 'XX, should in...

about That's the revenue. XX% the that's -- correct. majority of That's

range. that in somewhere it's think, I

time, Yes. construction be And would years sort allocated? it of equally X

Yes.

No, be sort mean... I to curve. it's the going of

The you. got ramp-up... I

time [indiscernible] incurred. works X is do that we we can if construction that moving build about everybody. But project And plan. of have to obviously, years maximum on, it faster, for amount the the

or like? REC of does curious infrastructure look United in what pipeline, to in it. Got seeing Obviously, water backlog RFP talk the I'm what a just about States gears long-term as cetera. lot project the U.S., to project civil Switching there. et the PERC, heavy you're opportunity

quite and and mind into I there's current there California. busy are bidding market pursuing getting without or mean, specific, come that in X X we probably to mean in Arizona area mean, I job. our I jobs

year -- are teams We pretty I our together some last think aware that have lost jobs the no I universe proposals. in -- getting stronger. overall mean all probably you're the putting there's is over but press, the opportunity much just there's the busy, of bid time there quite

when a meaningful X have So hits, of we'll everybody ones the I But one in certainly that hit, of jobs big the months. over ones to range these are sub-$XX we mean, gotten know. couple of let last X million smaller one the

gotten that has Got it. is message year here is the stronger key market the over But and it per se? strong past

I lot honesty, competitors. attracting a all in mean, I from mean, Yes. of it's attention

client project that for and the well. as types So do client best things of to we're the models be adapting to best competitive and we that more sell work and delivery the

question Got opportunity that big maybe Cat background? potential The the can or it. Islands, How And How a of me. then an projects for many just Family Islands. be? one just last

day our islands Nassau there's day another Island Yes. in not us I immediate islands XXX,XXX projects. a it's told whatever. And And total million mean, Imperial plants a require Nassau-sized mean, the they that that informally or capacity. with they're XX Cat probably -- gallons XXX,XXX Bahamas I or gallons smaller produce people is attention. They're X something.

for So that's water. and requires the scale just we size And -- charge way the it but is. that the more the

easily year generate in on. could $X the revenues contract million XX-year a whatever turns So period, fairly over period, in these XX-year incremental a projects

So...

close fair you some Is Got I and to it. mean be there that there. demand mean, opportunity may well? Nassau capacity that is additive. as Island I Cat have But

last to at clients. from We're for increase a them expand we're running ask XX% there. We'd more some there, amounts obviously Yes. guaranteed we We're hoping our quite bit high them that equipment. is this give range I providing plant really point, capacity -- give to online well amazing mean those room breathing and they there us to to that were in breathing above of is it the type the which like little that us room. year,

it. Got

grow. Island, Nassau to are Caymans Cat continuing So the and obviously, then

So trajectory business. legacy little desal their a you business historical have nice growth or or core on desal

Yes.

no our At we to concludes This back this [Operator McTaggart. Instructions] question-and-answer ahead. over time, go are I'd questions. further please now to like showing the Mr. call session. turn Sir,

everybody when we today thank XXXX joining results. happy wish And Thank of to I you like year full just next next say holidays. our and year in discuss will for to earnings you. be our call March everybody

care. So and take thank you,

you. Thank

provide conclude statement cautions during we that to today's today's call, made forward-looking harbor Before includes statements like safe regarding company's I would the call.

we statements in future conference Securities of Act expectations revenues, statements not Litigation plans, company's The provided meaning and and of Reform future regarding XXXX call information have assumptions includes including, estimates. this Private the that but events, the within forward-looking objectives, to, the limited

difficult the use other political to the country conduct and we differences business. Any is forward-looking differ and performance should, which to cause the materially phrases the Forward-looking detailed of as entities serve, its including guarantees conference certain and projections of industry serve, regulatory the to and report facts or the customers company's the based successfully on and business, statements. project, and outcomes periodic that not and call to risks, and of from social forward-looking predict. relationships our markets, will such area Grand Actual in with government be involve and during plan historical new such Commission, Statements on conditions license in tourism forecasts related not resolution Securities words for other the future results SEC. in are matters, statement to conditions identified this to, beliefs, estimates, conduct include, negotiations our economic, believe, by are expressions. expect, would we not weather business Exchange made statements assumptions, but expressed markets in contribute what of words various or enter and its each are of which uncertainties usually our retail assumptions, limited may are or Factors similar Cayman, the the are renewal and that for current estimate, ability with company's containing we the intend, filings can expectations, or risks

with analysis reflect change its expectations remind would to as in any call its required by in like forward-looking circumstances, regard for that this available call. annual as conditions section other company's at its For speaks made attending XX-K associated or undertaking financial to, results statements the is events, or starting discussion everyone filings, conditions Form law. I the and concludes for during statement thereto the call and the available to about www.cwco.com. Thank except of operations but this today's and refer report or based, of conference website the risk and refer on limited Form uncertainties information yesterday's management's any statements risks any of not This The this update or to please to instructions changes company's SEC reports or company the company's during quarterly of presentation. business, factors any which XX-Q. Any any forward-looking for evening. today's with date. for Please to replay made disclaims call dial-in made later expressly revise the be will via conference replay including, conference obligation release earnings forward-looking you of

now You disconnect. may