Consolidated Water reported rising revenues, especially in its retail, bulk and services segments, in the second of quarter of 2022, with total revenue of $21.1 million, up 26% year on year.
The jump comprised increases of $852,000 in the retail, $1.7 million in bulk, $1.3 million in services and $510,000 in manufacturing.
Consolidated Water CEO Rick McTaggart said in a press release, “Our retail segment’s results so far this year have been encouraging and based on recent government data we believe tourism arrivals to Grand Cayman could eventually double from current levels to reach pre-pandemic levels.”
The increase in retail revenue reflects an 8% rise in the volume of water sold, as well as higher energy costs that increased the energy pass-through component of the company’s water rates.
Gross profit for the second quarter of 2022 was $7.5 million, or 35.5% of total revenue, up 23% from $6.1 million, or 36.3% of total revenue, for the same period last year.
Net income from continuing operations for the second quarter of 2022 was $2.7 million, compared to net loss of $1.5 million in the same three months of 2021.
When discontinued operations are included, net income was $2.3 million in the quarter, up from a net loss of $1.7 million in the second quarter of last year.
Consolidated Water’s cash and cash equivalents totalled $49.1 million at the end of June up from $43.1 million 12 months earlier.
New projects in Cayman and US
During the quarter, the water utility won two major contracts.
In Cayman, the company has been engaged to design, build, sell and subsequently operate a 10-year, 2.64 million gallon-per-day seawater desalination plant in George Town under a contract with the Water Authority.
“We commenced the permitting and design phase for this plant during this past quarter, and we expect to complete the construction of the plant and begin operations by the fourth quarter of 2023,” McTaggart said.
In a second project announced during the quarter, the company’s subsidiary, PERC Water Corporation, has been selected to construct and commission a 4 million gallon-per-day advanced wastewater-treatment facility for Liberty Utilities in Goodyear, Arizona.
“Our fees for the project are expected to total approximately $82 million, with the facility planned to be operational in December 2023 and fully completed by the end of the second quarter of 2024. Construction of this important project has already commenced and will begin to generate significant revenue beginning next quarter,” McTaggart said.
Cancelled Rosarito project unresolved
The company is still in discussions how to resolve a project in Rosarito, Baja California, that was cancelled by the Mexican government in 2020. McTaggart said it was difficult to predict the outcome of ongoing talks, but Consolidated Water continues to seek relief through an international arbitration process.
Earlier this year, the water provider filed a request for arbitration with the International Centre for Settlement of Investment Disputes seeking to recover more than US$51 million from the Mexican government in relation to its investment in a 100 million gallon-per-day seawater desalination plant and accompanying pipelines.
The project was cancelled on grounds disputed by the company.
Consolidated Water believes it is, at a minimum, entitled to have its expenses and investments reimbursed, but two years later no money has been paid.
Positive outlook
The Consolidated Water CEO’s outlook for the year is favourable.
“We see many positive factors driving continued growth in 2022. In addition to the further diminishing effects of the pandemic and the continuing return of tourism in Grand Cayman, we are also seeing increased project bidding activity in the United States and the Caribbean,” he said.
“It has been widely reported that the situation in the Colorado River basin is dire and this is driving water utilities and agricultural users in PERC’s service area to implement extraordinary measures to meet their water demands. All of these factors and trends will continue to drive growth across all of our business segments in the remainder of this year and beyond.”
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