Consolidated Water sold 16% less water in its Cayman Islands retail segment following the border closures and a halt to tourism during the second quarter of 2020.
As a result, the water provider’s retail revenues declined by $1 million year-on-year, according to a press release. The company offset additional decreases of the bulk segment by $1.1 million and $511,000 in the manufacturing segment with $3.4 million higher services revenues stemming from its 51% acquisition of PERC Water in October 2019.
The decrease in bulk water revenue was partially caused by a lower rate that came into effect in July 2019 for the North Side Water Works plant under a new contract with the Water Authority Cayman.
Overall revenue increased 4% to $19.1 million from $18.3 million in the second quarter of 2019.
Gross profit for the second quarter of $7.3 million, or 38.3% of total revenue, was down 3% from $7.6 million, or 41.3% of total revenue, recorded in the same period last year.
However, Consolidated Water posted a net loss attributable to stockholders of $1.1 million in the quarter, compared to net income of $2.5 million in second-quarter 2019, due to a $3 million loss on asset dispositions and impairments.
Consolidated Water CEO Rick McTaggart said in the press release that the company’s core water production, and distribution and manufacturing operations, remained stable and profitable, albeit at reduced production levels due to the impact of the COVID-19 pandemic.
This allowed the company’s financial condition and liquidity to remain strong, with cash balances totalling $35 million at the end of the quarter.
Although the pandemic had impacted the various operating segments, the company said it expects the growth drivers inherent in its markets to persist over the long term.
McTaggart emphasised PERC Water’s positive contribution to services revenues and announced that Consolidated Water had increased its stake in the company by 10%.
“PERC has been performing better than we anticipated given the current market conditions created by the pandemic. During the quarter, PERC was awarded two new contracts and secured four contract renewals for operating and maintaining advanced water treatment plants in California,” he said.
The Consolidated Water CEO expects the two new contracts to add incremental revenue of $1.7 million in the second half of this year.
The company said it continues to see attractive opportunities for PERC, particularly in the southwestern US, where it has a strong presence and water supplies are increasingly under stress.
“PERC has been highly complementary to our existing business and overall mission, supporting our pursuit of water reuse projects and other emerging opportunities with a comprehensive suite of solutions for improving water infrastructure,” McTaggart said. “PERC also provides us a solid platform upon which to expand to North America our core business of designing, constructing and operating desalination plants.”
For these reasons, McTaggart said, Consolidated Water had acquired an additional 10% of PERC stock from another shareholder for $900,000 and raised its ownership interest from 51% to 61%.