Consolidated Water has reported third-quarter revenues of US$17.7 million, 11.2% higher than in the same quarter one year ago.
Third-quarter net income from continuing operations attributable to stockholders was $1.8 million or $0.12 per basic and fully diluted share, down from $2.3 million or $0.15 per share in the same period in 2019.
Revenue increases were driven by a $3.3 million growth in services, which offset a $1.3 million decline in retail and a $400,000 decrease in the bulk-water segment.
The border closure and absence of tourism in Cayman led to an 18% lower volume of retail water sold, while the lower bulk-water revenue is mainly the result of lower energy costs in the Bahamas, which decreased the energy pass-through component of rates charged to customers.
“During the third quarter of 2020, Consolidated Water generated substantial revenue growth and returned to profitability from Q2,” said company president and CEO, Rick McTaggart, in a press release. “Over the first nine months of the year, we were also profitable, generating nearly $11 million in cash from operations.”
He said, “Fortunately, we have not been as impacted by the adverse conditions created by the COVID-19 pandemic as much as others.”
The company’s new services subsidiary PERC Water, which provides design, engineering, construction and management services for water treatment infrastructure in the US, was responsible for most of the third-quarter revenue growth.
“PERC’s performance has met our expectations so far this year in spite of the pandemic, and we’ve seen no material impact on its day-to-day operations,” McTaggart said. “The management team at PERC has been focused on increasing its recurring revenue through multi-year operating contracts and consequently, PERC was awarded four operating contract renewals and two new operating contracts during the first nine months of the year.”
The Consolidated Water CEO said the prospects in this area of business are promising as PERC pursues new contracts.
He said Cayman’s border closure and much wetter weather conditions in Cayman in the third quarter were responsible for the revenue decline in the retail segment.
However, he noted the limited opening for residents and property owners since October and the recently implemented Global Citizen Concierge programme, which allows individuals and families to reside and work remotely on the islands for up to two years.
“The Cayman Islands have actually been very successful in keeping the country COVID-free and mitigating pandemic-related damage to its economy, and this is one of their strong selling points for this new program,” McTaggart said.
“These developments can help bring much needed economic activity back to the islands. We are also encouraged by recent announcements regarding COVID-19 vaccines and believe the Cayman Islands are well positioned to quickly rebound from the economic downturn created by the pandemic once a vaccine is available and regular tourism resumes.”
Nevertheless, Consolidated Water still expects that its retail segment will continue to be negatively affected until the US recovers from the pandemic.
“Our bulk water operations in the Cayman Islands and the Bahamas have continued to operate without incident and have been much less affected by the pandemic than our retail business,” McTaggart added.
But bulk-water revenues generated in the Bahamas and the Cayman Islands declined slightly due to lower energy costs. In addition, the company’s bulk-water gross profit margin was lower due to higher scheduled maintenance costs for its Bahamas operations.
“The pandemic has caused unprecedented complications across all industries and companies, and does not appear to be getting any closer to ending. However, we have gone through two full quarters of lock downs with the various companies that we operate, and we think our business has stabilised in the current environment,” McTaggart said.
“While the sales in our retail business remain lower than normal, our other businesses are operating status quo or are improving. Our very strong balance sheet with $38 million in cash enables us to continue to execute on our growth strategies and further the key business development initiatives we’ve been working on.”