Consolidated Water reported lower revenues in its retail water, bulk water and services business segments in 2015, but net income improved from US$6.27 million to $7.52 million.
The company, which builds and operates seawater desalination plants and water distribution systems, said the decline in turnover from $65.56 million to $57.12 million was in part due to lower electricity prices, which reduced the energy component in the calculation of retail and bulk water rates. In addition, bulk water sales were down 13 percent in the Bahamas and 3 percent in the Cayman Islands, as a result of continuing water conservation and loss mitigation efforts by the Water and Sewerage Corp. of the Bahamas and a decrease in purchases by the Water Authority – Cayman.
The company’s services segment revenues decreased to $2 million in 2015 from $2.25 million a year earlier due to a decline in procurement service fees.
“We are pleased to report an increase in net income for 2015 despite significantly lower revenues arising from declines in energy prices that decreased our rates, and a reduction in the volume of water sold by our bulk operations,” said Consolidated Water CEO Rick McTaggart.
He said the increase in net income reflects “operating efficiencies, water loss mitigation efforts and construction activities that enabled us to maintain our gross profit at an amount essentially equal to that for 2014 despite the drop in revenues.”
In addition, the company reduced its expenses in connection with the proposed construction of a desalination plant in Rosarito Beach, Mexico.
“With respect to the Rosarito project, our Mexico subsidiary and its partners are on track to submit their tender for the project by the March 23, 2016 submission deadline established under the tender process initiated by the State of Baja California, Mexico,” Mr. McTaggart said.
In an investor earnings call, Mr. McTaggart said the Mexican government had indicated it is going to make a decision on the project by May.
Meanwhile, Consolidated Water continues to be in protracted negotiations with the Water Authority – Cayman for a new retail license. The negotiations recommenced in the third quarter of 2015. Mr. McTaggart said that so far the negotiations have been “productive” but he could not say “with any certainty when they will be completed or what the final terms of the new license would be.”
In the interim, the company’s existing license has been extended to June 30, 2016.
In February, Consolidated Water acquired 51 percent of equipment manufacturer Aerex Industries, Inc. for $7.7 million.
“The Aerex acquisition represents a significant first step in our strategy to expand our products, service offerings and customer base and provides us with the capabilities of pursuing complementary water related business in the U.S. market,” Mr. McTaggart said.
During 2015, Consolidated Water’s operations generated $17.3 million in cash and the company increased its working capital by $9.3 million to $52.2 million. The stockholders’ equity totaled $145 million at the end of 2015.
“We are confident that our strong financial condition and liquidity position will enable us to aggressively pursue strategic opportunities as they arise in 2016 and thereafter,” Mr. McTaggart said.