Consolidated Water grew its revenue by 14% as demand for water in the Cayman Islands increased in the first quarter of this year.
“Our first quarter of 2022 showed significant improvements across our retail, bulk, and services segments,” said Consolidated Water CEO Rick McTaggart, in a press release announcing the results.
Total revenue for the first quarter has grown to US$19.6 million, generating net income from continuing operations of $2.3 million.
The company’s retail revenue increased 11% to $6.3 million, while bulk revenue was up 18% to $7.4 million and services revenue was 34% higher at $4.7 million, compared to the first quarter in 2021.
The increase in total revenue was partially offset by a decrease of $455,000 in the manufacturing segment.
McTaggart said the manufacturing segment results came in below last year’s levels, mainly due to adverse global economic conditions that caused raw material and equipment delivery delays and increased costs.
“We believe these adverse conditions also resulted in order delays from our existing and prospective customers. However, we believe that the strong advancements we made in other areas of our business resulted in an improved first quarter and set the stage for future earnings growth.”
The increase in the company’s retail revenue was based on an 8% increase in the volume of water sold.
McTaggart said the company is encouraged by the return of stayover and cruise tourism to the Cayman Islands and expects that the resurgence of the sector will help retail water sales return to normal levels over time.
The increase in the company’s bulk segment revenue reflects an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates, as well as, to a lesser extent, an increase of 6% in the volume of water sold by CW-Bahamas.
“Our bulk segment results in the quarter improved on higher revenues and continued to operate efficiently and stably, while our services segment benefited from revenues generated from our contract to design an advanced wastewater reuse facility in Arizona,” McTaggart said. “This project is progressing as planned and positively impacted our first quarter financial results.”
Consolidated Water’s subsidiary PERC Water was awarded a contract to design an advanced water reuse facility in the city of Goodyear, Arizona, for Liberty Utilities. The facility will address the increasing demand in Liberty’s service territory in Goodyear and Litchfield Park, with both cities experiencing significant residential and commercial growth over the past decade.
Revenues in the services segment also benefited from the new operating contracts that Consolidated Water secured over the past year.
Despite the decline in the company’s manufacturing revenue, Consolidated Water announced last week that it was awarded a contract to design, build and operate a new 2.64-million-gallon-per-day seawater desalination plant in George Town for the Water Authority.
“We believe that winning this contract was the result of our many years of experience designing, building and operating some of the most energy-efficient seawater desalination plants in the world,” McTaggart said.
“Desalination appears to be the key to alleviating global water scarcity, and especially in the arid southwestern U.S., where they need to take immediate steps to diversify their shrinking water sources by implementing drought-proof resources like desalination.”
Consolidated Water’s specialty manufacturing subsidiary was awarded a contract by the City of Port St. Lucie, Florida, to replace membrane elements and upgrade equipment at the city’s 20-million-gallons-per-day J.E. Anderson Reverse Osmosis Water Treatment Plant, the company said.
The company’s gross profit for the first quarter of 2022 was $7.1 million, or 36.5% of total revenue, up 17% from $6.1 million, or 35.8% of total revenue, for the first quarter in 2021.
Net income attributable to Consolidated Water stockholders for the first quarter of 2022, which includes the results of discontinued operations, was $1.7 million, or $0.11 per basic and fully diluted share. This was up from net income of $989,000, or $0.06 per basic and fully diluted share year on year.
In addition, the company increased its cash and cash equivalents to $43.1 million as of 31 March 2022, from $40.4 million 12 months earlier.
“Given the overall strong progress in our first quarter, we remain very optimistic about the future of Consolidated Water,” McTaggart said.
“Our plans to expand our services revenue in the wastewater reuse market is supported by our strong balance sheet and growing pipeline of potential projects. Combined with our strong financial position, low-cost operating structure, and the inherent synergies between the four segments of our business, we believe we enjoy competitive advantages as we pursue new opportunities in growing markets,” he added.
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