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GEORGE TOWN, Grand Cayman, Cayman Islands, Nov. 9 /PRNewswire-FirstCall/ -- Consolidated Water Co. Ltd. (Nasdaq: CWCO) today reported its operating results for the third quarter and first nine months of 2009. The Company will host an investor conference call on Tuesday, November 10, 2009 -- at 11:00 a.m. EST (see details below) to discuss its operating results and other topics of interest.
For the three months ended September 30, 2009, revenues approximated $13.5 million, compared with approximately $17.2 million in the third quarter of 2008. Retail water sales were relatively unchanged at approximately $5.7 million, versus approximately $5.8 million in the prior-year quarter. The volume of water sold was comparable in the third quarters of both 2008 and 2009. Bulk water revenues declined 16% to approximately $6.7 million in the most recent quarter, compared with approximately $8.0 million in the year-earlier period. Total gallons of water sold to bulk customers increased by 7% from the prior-year quarter, but revenues decreased due to a reduction in energy costs passed through to customers, as diesel and electricity prices were significantly lower in 2009 than in 2008. Services revenues declined from approximately $3.4 million in the third quarter of 2008 to approximately $1.2 million in the third quarter of 2009, reflecting lower project construction activity in 2009.
Net income attributable to controlling interests declined 63% to $657,900, or $0.05 per diluted share, in the three months ended September 30, 2009, compared with $1,780,017, or $0.12 per diluted share, in the quarter ended September 30, 2008. The decrease in net income during the most recent quarter was primarily due to increased losses recorded for the Company's equity investment in OC-BVI, reflecting recent rulings by the Eastern Caribbean Supreme Court with respect to the litigation between OC-BVI and the British Virgin Islands government.
In spite of lower revenues, consolidated gross profit increased 9% to approximately $5.0 million, versus $4.6 million in the prior-year quarter. Gross profit on retail revenues rose 9% to approximately $3.2 million (57% of revenues) in the quarter ended September 30, 2009, compared with approximately $3.0 million (51% of revenues) in the third quarter of 2008. The improvement in gross profit percentage from 2008 to 2009 resulted from the annual inflation-related increase in base rate water prices that went into effect in the first quarter of 2009, reduced operating and maintenance costs, and lower energy prices. Gross profit on bulk revenues increased 34% to approximately $1.4 million (21% of revenues), compared with approximately $1.0 million (13% of revenues) in the year-earlier period. Bulk gross profits in Cayman benefited from (i) the expiration of the original contract for the Red Gate plant and the elimination of approximately $125,000 in amortization expense for the intangible asset associated with this contract and (ii) annual inflation-related increases in base water rates. Gross profits were higher in the Company's Bahamas operations due to improved operating efficiencies at the Windsor and Blue Hills plants in Nassau, New Providence. Bulk segment gross profits also benefited from a reduction in diesel and electricity prices. Gross profit on Services revenues decreased by 33% to approximately $0.4 million in the three months ended September 30, 2009, versus approximately $0.6 million in the three months ended September 30, 2008. The decline reflects lower construction revenues, partially offset by fees earned on the Company's services contract for the Tynes Bay, Bermuda plant.
General and administrative expenses on a consolidated basis increased 25% to approximately $2.7 million (vs. approximately $2.1 million), primarily due to higher employee salaries, increased professional fees, bank charges related to currency conversion fees, and costs to bid new projects.
Interest income was relatively unchanged at $311,990 in the third quarter of 2009, compared with $326,880 in the year-earlier quarter. Interest expense declined slightly to $417,316 in the quarter ended September 30, 2009, versus $436,077 in the quarter ended September 30, 2008.
The Company recorded losses from its investment in its OC-BVI affiliate in the British Virgin Islands of approximately $1.6 million in the most recent quarter, compared with approximately $0.6 million in the prior-year period. The increase in the loss reflects impairment losses recorded by the Company and OC-BVI as a result of the recent rulings of the Eastern Caribbean Supreme Court with respect to the litigation between OC-BVI and the British Virgin Islands government.
For the nine months ended September 30, 2009, revenues approximated $44.8 million, compared with approximately $49.3 million in the first nine months of 2008. Retail water sales increased 3% to approximately $18.4 million, versus approximately $17.9 million in the corresponding period of the previous year. A 2% increase in volume of water sold, along with price increases related to inflation adjustments, more than offset a decrease of approximately $913,000 in revenues attributable to the pass-through of lower energy costs to customers. Bulk water revenues declined 14% to approximately $19.5 million in the first nine months of 2009, compared with approximately $22.6 million in the year-earlier period. Total gallons of water sold to bulk customers increased by 3%, but revenues decreased due to a reduction in energy costs passed through to customers. Services revenues declined 22% to approximately $6.9 million in the nine months ended September 30, 2009, compared with approximately $8.8 million in the nine months ended September 30, 2008, due to lower project construction activity, partially offset by fees from the Company's services contract for the Tynes Bay plant in Bermuda.
Net income attributable to controlling interests increased 30% to $7,075,657, or $0.49 per diluted share, in the nine months ended September 30, 2009, compared with $5,433,513, or $0.37 per diluted share, in the first nine months of 2008. The Company recorded a loss from its investment in OC-BVI of approximately $2.8 million in the nine months ended September 30, 2009, compared with prior-year losses of approximately $1.8 million. The increase in the loss from the investment in OC-BVI reflects the above-mentioned recent rulings of the Eastern Caribbean Supreme Court.
"Our gross profit margins continued to improve in both our retail and bulk water segments during the third quarter and first nine months of 2009, although a reduction in the amount of project construction activity hurt third quarter gross profits in the services business segment and caused operating income to decline slightly from prior-year levels for the quarter," stated Rick McTaggart, Chief Executive Officer of Consolidated Water Co. Ltd. "We are pleased with the improvements in operating efficiencies that we have been able to achieve in our Bahamas operations and with the operating performance of the Company, in general."
"While growth in water volumes sold has slowed due to the impact of the economic recession upon tourism throughout the Caribbean Basin, we are still running ahead of last year and remain optimistic regarding the long-term demand for water in our various markets. Bidding activity for new water projects remains active, as population growth increases demand and more governments confront the impact of pollution upon traditional non-desalination sources of drinking water."
"During the current quarter, we recorded an impairment loss for our investment in OC-BVI of $160,000," continued Mr. McTaggart. "OC-BVI also recorded an impairment loss for its Baughers Bay-related fixed assets of approximately $2.1 million that greatly increased the loss we recorded for the quarter from our investment in this affiliate. Both of these impairment losses resulted from the recent rulings by the Eastern Caribbean Supreme Court with respect to the litigation between OC-BVI and the British Virgin Islands government. However, our OC-BVI losses are non-cash in nature and do not adversely affect our cash position or our ability to fund projects. Although we lost our counterclaim for plant expansion costs in the most recent ruling, the Court ordered the BVI government to pay OC-BVI at the rate of $13.91 per thousand imperial gallons for water produced by OC-BVI from December 21, 2007 to present. This amounts to a total recovery for OC-BVI of $10.1 million as of September 30, 2009, excluding any interest that may be due. Because OC-BVI continues to account for revenues on a cash basis, it will not recognize as revenue the $10.1 million payment ordered by the Court until such amount is paid by the BVI government."
"Our financial position remains strong. As of September 30, 2009, cash and cash equivalents exceeded $41 million, working capital approximated $50 million, our current ratio stood at a healthy 7.0-to-1.0, and long-term debt of $21.4 million (including current portion) was equivalent to only 17% of our stockholders' equity of approximately $126 million," concluded Mr. McTaggart.
The Company will host a conference call at 11:00 a.m. EST on Tuesday, November 10, 2009. Stockholders and other interested parties may participate in the conference call by dialing 800-860-2442 (international/local participants dial 412-858-4600) and requesting participation in the "Consolidated Water Conference Call" a few minutes before 11:00 a.m. EST on November 10, 2009. A replay of the conference call will be available one hour after the call through November 17, 2009 by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the conference ID 435557.
CWCO-E
About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. The Company operates water production and/or distribution facilities in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas and Bermuda.
Consolidated Water Co. Ltd. is headquartered in George Town, Grand Cayman, in the Cayman Islands. The Company's ordinary (common) stock is traded on the NASDAQ Global Select Market under the symbol "CWCO". Additional information on the Company is available on its website at http://www.cwco.com.
This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "intend", "expect", "should" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, changes in its relationship with the Governments of the jurisdictions in which it operates, the manner in which the disputed issues between OC-BVI and the BVI Government are resolved, the ability to successfully secure contracts for water projects, the ability to develop and operate such projects profitably and the Company's ability to manage growth and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
For further information, please contact:
Frederick W. McTaggart, President and CEO, at (345) 945-4277
or David W. Sasnett, Executive Vice President and CFO, at
(954) 427-6283 or via e-mail at info@cwco.com
http://www.cwco.com
or
RJ Falkner & Company, Inc., Investor Relations Counsel at
(800) 377-9893 or via e-mail at info@rjfalkner.com
(Financial Highlights Follow)
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
------------- ------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $41,235,590 $36,261,345
Accounts receivable, net 11,574,653 13,911,312
Inventory 1,592,494 1,617,484
Prepaid expenses and other current assets 2,259,869 1,444,445
Current portion of loans receivable 1,241,174 768,803
--------- -------
Total current assets 57,903,780 54,003,389
Property, plant and equipment, net 56,313,495 58,937,980
Construction in progress 6,251,775 6,157,958
Costs and estimated earnings in excess of
billings - construction project 386,707 7,377,554
Inventory non-current 3,585,856 2,971,949
Loans receivable 11,216,982 1,560,420
Investment in and loan to affiliate 12,120,482 14,371,312
Intangible assets, net 1,956,742 2,144,162
Goodwill 3,587,754 3,587,754
Other assets 3,373,586 3,544,096
--------- ---------
Total assets $156,697,159 $154,656,574
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current
liabilities $5,751,299 $7,310,327
Dividends payable 1,152,412 1,006,414
Current portion of long term debt 1,298,484 1,229,071
--------- ---------
Total current liabilities 8,202,195 9,545,812
Long term debt 20,146,542 21,129,269
Other liabilities 508,280 430,717
------- -------
Total liabilities 28,857,017 31,105,798
---------- ----------
Stockholders' equity
Controlling interests:
Redeemable preferred stock, $0.60
par value. Authorized 200,000
shares; issued and outstanding
17,233 and 17,366 shares,
respectively 10,340 10,420
Class A common stock, $0.60
par value. Authorized 24,655,000
shares; issued and outstanding
14,537,950 and 14,529,360 shares,
respectively 8,722,770 8,717,616
Class B common stock, $0.60 par value.
Authorized 145,000 shares;
none issued or outstanding - -
Additional paid-in capital 80,874,934 80,461,942
Retained earnings 36,434,034 32,340,077
---------- ----------
126,042,078 121,530,055
Noncontrolling interests 1,798,064 2,020,721
--------- ---------
Total stockholders' equity 127,840,142 123,550,776
----------- -----------
Total liabilities and stockholders' equity $156,697,159 $154,656,574
============ ============
CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ------------------
2009 2008 2009 2008
---- ---- ---- ----
Retail water
revenues $5,659,390 $5,833,347 $18,418,103 $17,855,530
Bulk water
revenues 6,687,836 8,002,586 19,526,044 22,648,443
Services
revenues 1,178,833 3,368,660 6,900,965 8,834,766
--------- --------- --------- ---------
Total
revenues 13,526,059 17,204,593 44,845,112 49,338,739
---------- ---------- ---------- ----------
Cost of retail
revenues 2,421,740 2,862,070 7,390,251 8,209,513
Cost of bulk
revenues 5,302,535 6,968,547 15,239,258 19,620,430
Cost of
services
revenues 765,716 2,748,715 3,611,992 7,440,300
------- --------- --------- ---------
Total cost
of revenues 8,489,991 12,579,332 26,241,501 35,270,243
--------- ---------- ---------- ----------
Gross profit 5,036,068 4,625,261 18,603,611 14,068,496
General and
administrative
expenses 2,671,169 2,128,654 7,842,434 6,754,902
--------- --------- --------- ---------
Income from
operations 2,364,899 2,496,607 10,761,177 7,313,594
--------- --------- ---------- ---------
Other income
(expense):
Interest
income 311,990 326,880 620,663 1,097,120
Interest
expense (417,316) (436,077) (1,287,369) (1,325,184)
Other
income 50,337 32,767 143,600 77,534
Equity
in earnings
(loss) of
affiliate (1,582,248) (639,546) (2,780,270) (1,772,570)
---------- -------- ---------- ----------
Other
income
(expense),
net (1,637,237) (715,976) (3,303,376) (1,923,100)
---------- -------- ---------- ----------
Consolidated
net income 727,662 1,780,631 7,457,801 5,390,494
Income (loss)
attributable
to non-controlling
interests 69,762 614 382,144 (43,019)
------ --- ------- --------
Net income
attributable
to controlling
interests $657,900 $1,780,017 $7,075,657 $5,433,513
======== ========== ========== ==========
Basic earnings
per common
share $0.05 $0.12 $0.49 $0.37
===== ===== ===== =====
Diluted earnings
per common
share $0.05 $0.12 $0.49 $0.37
===== ===== ===== =====
Dividends declared
per common
share $0.075 $0.065 $0.205 $0.195
====== ====== ====== ======
Weighted average
number of
common shares
used in the
determination
of:
Basic
earnings
per share 14,537,041 14,523,016 14,533,097 14,516,869
========== ========== ========== ==========
Diluted
earnings
per share 14,611,601 14,543,485 14,583,250 14,538,785
========== ========== ========== ==========
SOURCE Consolidated Water Co. Ltd.
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