Consolidated Water’s second quarter revenues declined by 12.5% to $16.7 million compared to the same period in 2020 as the retail and manufacturing segments saw lower revenues by $292,000 and $3.2 million, respectively.
This decrease was partially offset by higher revenues in the bulk ($846,000) and services ($287,000) segments.
CEO Rick McTaggart said the drop reflected both the impact of the global pandemic on the company’s retail business and fewer orders from a major customer in the manufacturing segment.
This affected purchases of a specialised product from Consolidated Water subsidiary Aerex until 2022, when the company anticipates orders from the customer will resume but at a lower volume.
Retail revenue declined due to a 2% decrease in the volume of water sold by Cayman Water.
In the Cayman Islands retail sales volumes for both 2021 and 2020 are significantly below the historical volumes due to the continuing border restrictions and halt to tourism.
“While we’ve had many unexpected challenges over the past year, in all, we believe we’ve taken the right steps to overcome them, and our prospects for growth are very encouraging,” McTaggart said. He expects improved financial results in the second half of this year. “We also anticipate that the eventual reopening of tourism to our operating area in Grand Cayman will help with the recovery of our retail water segment.”
The water company has grown services revenues in the quarter by 8.3% to $3.8 million. This was mainly driven by the growth of its California-based PERC subsidiary, which builds and operates municipal water treatment and reuse facilities.
McTaggart said PERC had seen an increase in bidding requests for new design/build projects as well as operating contracts. The company’s prospective customers in California and Arizona are seeking cost-effective solutions to their wastewater treatment and potable water challenges, McTaggarts said, particularly those caused by the unprecedented drought in the region.
PERC is currently awaiting decisions on recent bids for design/build projects and operating contracts valued at more than $55 million, he noted. These projects could also represent recurring annual revenue of more than $2 million in ongoing operating and maintenance agreements.
Consolidated Water’s manufacturing bidding activity has also increased significantly over the last few months.
“We presently have a contracted project backlog in our manufacturing segment of about $9 million from new customers and/or products. This has begun to increase our revenues in the second half of this year, and we see it carrying into 2022,” McTaggart said.
He said the strong balance sheet and liquidity position of the company had allowed it to ride out the adverse economic impacts of the pandemic and to fund growth initiatives.
McTaggart highlighted also that the industry was experiencing strong tailwinds, in part from increased federal infrastructure spending in the US.
Consolidated Water’s gross profit dropped by 17% to $6.1 million in the second quarter year on year.
The company reported a net loss from continuing operations attributable to stockholders of $1.5 million compared to net income of $2.6 million in the second quarter of 2020. The net loss attributable to stockholders in the second quarter of 2021, which includes the results of discontinued operations, was $1.7 million.
For the first six months of 2021 revenue was $33.8 million, down 15.8% year on year. The half-year gross profit at $12.2 million was 23% lower. The net loss from operations attributable to shareholders for the six months was $212,000, and $676,000 when discontinued operations are included.