Unusually dry weather in the Cayman Islands helped push Consolidated Water’s revenue growth in the second quarter of this year.
The water company, which supplies the West Bay and Seven Mile Beach areas through its Cayman Water subsidiary, reported 22% higher quarterly total revenues than one year ago.
“Our retail revenue growth was in part attributed to the fact that it has been a very dry year so far, with rainfall in the second quarter down 76% compared to last year,” Consolidated Water CEO Rick McTaggart said in an earnings press release. “For the first half of 2019, rainfall in our Cayman Islands service area was down 55% compared with rainfall in the first half of 2018, and was also 55% lower than the 30‑year average.”
The company traditionally sells more water on Grand Cayman during the first half of the calendar year when the number of visitors is greater and local rainfall is less than in the second half of the year.
In addition, both the double-digit revenue growth to $18.3 million and the equally large gross profit growth of 22% to $7.6 million were primarily driven by increased production activity in the company’s manufacturing business in response to more demand for specialised products.
Manufacturing revenue increased 332% to $4.3 million.
“The prospects for the manufacturing segment continue to look favourable, given that we have specialised manufacturing capabilities and experience relating to markets with relatively high barriers to entry,” McTaggart said. “In these markets, we qualify for projects that require unique quality controls and certification.
“We also fabricate water treatment equipment for a diverse number of industries involved in wastewater treatment infrastructure, and we believe the numerous municipal utilities in need of improvements in this area can also drive growth in our business.”
The prospect of further manufacturing growth has led the company to expand its production facility, which will be completed next year.
The developer and operator of seawater desalination plants continued to advance its project in Rosarito, Baja California, Mexico. Before construction of the planned seawater desalination plant and distribution pipeline can begin, the company still has to overcome administrative and financing hurdles.
“With respect to our Rosarito project, we had two major positive developments earlier this year regarding legislative approval and funding that has allowed us to proceed to the next several important steps before we begin the construction phase,” McTaggart said. “These steps include securing the major portions of the project’s required debt financing, and aqueduct rights of way.”
Once complete, the Rosarito project should produce 100 million gallons of potable water each day for the coastal region of Baja California.
But there are also many other water-scarce countries in the Caribbean and other markets where Consolidated Water could make an impact by providing fresh water supplies, McTaggart said.
“We plan to take advantage of the ample liquidity on our balance sheet to expand into new markets and complementary product lines, diversify revenue streams and widen our geographic footprint. Our strong performance in Q2 reflects the tremendous opportunities ahead,” he added.
The company’s second quarter net income attributable to stockholders increased 13% to $2.5 million or $0.16 per diluted share compared to the same period in 2018. This rise in net income reflected an improvement in income from operations of $1.2 million.
Higher net income from continuing operations also meant that the company’s cash and cash equivalents totalled $41.9 million as of 30 June 2019, compared with $31.3 million at the end of 2018.