Net income attributable to shareholders for the Caribbean’s largest water provider has fallen 82 percent, according to Consolidated Water’s first quarter report.
The company reported a net income of $655,000, down from $3.7 million in the first quarter of 2013.
Net income per share fell from $0.26 to $0.04, which the company attributed to lower earnings and profit sharing from its investments in Mexico and the British Virgin Islands.
Total revenues for the quarter fell 1 percent to $16.3 million.
Consolidated Water CEO Rick McTaggart said two factors significantly impact the results.
“In February 2014, we paid $1 million to a previous NSC shareholder to exercise an option and avoid dilution of our existing ownership in our Mexican subsidiary, NSC, which increased our general and administrative costs for the quarter. This was a one-time expense that kept our ownership in the Mexican desalination project at 99.95 percent,” Mr. McTaggart said.
“Meanwhile, last year’s first quarter results benefited from the receipt by our OC-BVI affiliate of a $2 million payment from the British Virgin Islands government that was related to the resolution of the Baughers Bay litigation.
“These factors, combined with lower operating income for our retail segment and higher project development expenses at our Mexican subsidiary, were responsible for the decrease in profitability in the first quarter of 2014, relative to the prior-year period,” he said.
The Consolidated Water report stated that retail water revenues decreased 4 percent due to a drop in the number of gallons sold by the company’s retail operations. Management attributed the decline to the amount of rainfall – which was 12 times higher than for the same period in 2013 – and to water conservation measures by large retail customers.
Bulk water revenue rose 1 percent to $10 million, while services revenues declined by 9 percent, which the report stated was due to a “non-recurring sale of chemicals and materials to an unrelated company.”
Consolidated gross profit declined 4 percent to around $6 million, while consolidated general and administrative expenses jumped 50 percent to $5.3 million, showing a $1.5 million increase in the Mexico project’s development costs.
Consolidated Water has been awarded three contracts this year by the Water Authority-Cayman, including work on refurbishment of the Lower Valley desalination plant, a one-year extension of the operating and maintenance contract for the North Sound plant, and providing a 60,000 gallon-per-day desalination plant in Cayman Brac.
“The Lower Valley and Cayman Brac contracts were awarded to us through a competitive tendering process that included a number of overseas suppliers,” Mr. McTaggart noted. “This firmly underscored our competitiveness in our home market. The Lower Valley project will be completed during the first quarter of 2015, and completion of the Cayman Brac project is scheduled later this year.”