Consolidated Water’s net income attributable to shareholders increased 107 percent year-on-year in the third quarter to $1,882,692, or $0.13 per diluted share.
“We are very pleased to report that our net income attributable to Consolidated Water stockholders more than doubled in the most recent quarter, when compared with the third quarter of 2013,” said Rick McTaggart, chief executive officer of Consolidated Water Co. Ltd.
Total revenues grew by 10 percent to $17 million during the period compared to the previous year, driven by retail water revenue increases of 18 percent to $5.9 million.
Most of the growth came from 17 percent higher retail water sales in the Cayman Islands.
“We are encouraged that retail water volume sales have increased during the past two quarters relative to prior-year periods, reversing a three-year downtrend that began in 2010. We believe that drier weather conditions and an increase in tourist arrivals in the Cayman Islands have contributed to a greater demand for potable water in this key market,” Mr. McTaggart said.
Bulk water revenues, in contrast, declined 3 percent to approximately $9.9 million in the third quarter due to lower sales in the Bahamas. The decrease in the volume of water sold to the Water and Sewerage Corporation of the The Bahamas was partially offset by an increase in bulk water revenues in Cayman.
The volume of bulk water sold in the Bahamas decreased mainly because of the Water and Sewerage Corporation’s successful loss mitigation efforts in its distribution system. However, the Water and Sewage Corporation continued to purchase more than the minimum amount stipulated in its contract with Consolidated Water.
The services segment of Consolidated Water grew revenues to $1.78 million compared to $175,438 last year due to construction revenues generated from contracts with the Water Authority in the Cayman Islands to refurbish its Lower Valley plant and to build a plant on the island of Cayman Brac.
The company’s planned 100 million-gallon-per-day desalination plant and conveyance pipeline project in northern Baja California, Mexico, is making significant progress, said Mr. McTaggart.
“We recently received initial comments from the Mexican regulator on our environmental impact studies for the project and are pleased that no major issues were identified in this first round of comments,” said Mr. McTaggart. “We will work diligently to address the regulator’s comments and hope to obtain the necessary permits in due course.”
There is still no development concerning Consolidated Water’s retail license renewal in Cayman.
Consolidated Water’s subsidiary Cayman Water has been in negotiations first with the government and subsequently with the Water Authority over the renewal of the license in its service area since July 2010.
The Cayman Islands government aims to change the current price cap system to a model that would limit the rate of return that Consolidated Water is allowed to earn. The company has objected to such a change, saying that it believes the proposed model would not promote the efficient operation of its water utility and could ultimately increase water rates to its customers.
In June, the company made submissions on the proposed return on invested capital model, known as RCAM, and alternative pricing models to the Water Authority, but these were fully rejected in a letter dated Sept. 11, the company said. According to a U.S. Securities and Exchange Commission filing, the Water Authority informed Consolidated Water that it intends to provide the company with a draft RCAM license in due course.
“The terms of any new license agreement may not be as favorable to the company as the terms under which it is presently operating and could materially reduce the operating income and cash flows that the company has historically generated from its retail license,” Consolidated Water said in the filing.
License changes could also require the company to record an impairment charge to reduce goodwill, which could impact operating results.