Total revenue generated by Consolidated Water Co. increased 3 percent to approximately $65.6 million in 2014, but net income attributable to shareholders dropped to $6.26 million last year from $8.59 million in 2013, or $0.42 per diluted share down from $0.58.
The water utility ascribed higher revenues to the performance of its retail and services business segments. Retail water revenues increased 5 percent to approximately $24.1 million for the year, predominantly based on a 3 percent increase in the number of gallons of water sold to retail customers in the Cayman Islands and $328,000 higher revenues in Bali, Indonesia.
The company’s services segment grew revenues to $2,253,135 in 2014 from $843,413 in 2013, mainly as a result of construction contracts with the Water Authority Cayman to refurbish its Lower Valley plant and to build a plant on Cayman Brac.
Bulk water revenues, in turn, fell 2 percent to approximately $39.2 million in 2014, following a decrease in the volume of water sold in the Bahamas. Water conservation and a reduction of the amount of water lost by the distribution system of the Water and Sewerage Corporation of The Bahamas have reduced the demand for water in this market.
This was partially offset by 23 percent higher bulk water sales in Cayman due to the temporary closing for refurbishment of the one plant owned by the Water Authority Cayman that Consolidated Water no longer operates.
The company’s services business segment incurred operating losses of $4.2 million in 2014 and $3.6 million in 2013. Losses in the services segment are expected to continue as the company funds project development activities by its Mexican subsidiary N.S.C. Agua until significant new management services or plant construction contracts are obtained.
Consolidated gross profit declined slightly to $23.1 million, 35 percent of total revenues in 2014, compared to $23.5 million, 37 percent of total revenues, in 2013.
Gross profit on retail revenues remained relatively unchanged at $12.1 million, but the gross profit margin declined from 52 percent to 50 percent due to higher plant and pipeline maintenance costs in Cayman.
Rick McTaggart, CEO of Consolidated Water, said, “Our operating activities generated $19.3 million in cash during 2014, which allowed us to continue funding development activities related to our 100 million gallon-per-day seawater desalination project in northern Baja California, Mexico, including the final payment of $17.4 million for the land upon which the plant will be constructed, while at the same time reducing total liabilities on our balance sheet by 31 percent to $16.4 million.”
The company’s cash and cash equivalent assets of $41 million exceeded liabilities by more than $24.3 million, and stockholders’ equity totaled $141.1 million, he added. “We are proud of our balance sheet, which remains one of the strongest in our industry.”
Mexico project moving ahead
The company’s development project for a desalination plant in Mexico has achieved “several significant milestones” since the end of 2014, according to Mr. McTaggart. “In January 2015, the government of Baja California, Mexico, officially accepted our initial expression of interest under the new Public-Private Associations Law to build a desalination plant and conveyance pipeline at Playas de Rosarito, Baja California, Mexico and has asked us to develop and submit a detailed proposal.”
In February, Consolidated Water partnered with a group of companies with substantial resources and a history of successful capital project investments in Mexico, he said. In addition, the Mexican environmental regulatory authority approved the environmental permit for the desalination plant and a rezoning application was also approved.
“We look forward to further progress on the largest development project in our Company’s history during the remainder of 2015,” Mr. McTaggart added.