Consolidated Water (CWCO) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $33.4 million, down 33% year-over-year, mainly due to the completion of major construction projects.

• Net income from continuing operations was $5.0 million ($0.31 per diluted share), down from $8.8 million ($0.55) in Q3 2023; net income including discontinued operations was $4.5 million ($0.28 per share).

• Retail and bulk segments saw modest revenue growth, while services revenue dropped 57% due to lower construction activity.

• Gross margin improved to 34.8%–35% from 33%–33.3% year-over-year, driven by higher-margin O&M contracts and product mix.

• Cash and cash equivalents stood at $104.9 million, with working capital of $133.9 million and minimal debt.

Financial highlights

• Q3 2024 revenue: $33.4 million (down 33% year-over-year); gross profit: $11.6 million (34.8% margin).

• Retail revenue rose on a 4.2% increase in water volume sold and a 4.8% increase in customer connections.

• O&M contract revenue grew 49% year-over-year to $7.5 million, with $2.1 million contributed by the REC subsidiary.

• Manufacturing segment revenue was $4.4 million, with gross profit up 84% to $1.6 million due to higher-margin products.

• Net income for the first nine months of 2024 was $26.8 million ($1.68 per share), up from $19.7 million ($1.24), boosted by a $12.1 million gain from the Mexico asset sale.

Outlook and guidance

• Fourth quarter retail revenue is expected to be slightly better than last year, though Q4 is typically weaker due to seasonality.

• Construction phase of the $147 million Hawaii desalination project is planned to start in Q4 2025, representing about 80% of the project’s revenue.

• Anticipated capital expenditures for the remainder of 2024 are $3.8 million, including $3.1 million for a Bahamas project.

• Long-term recurring revenue growth is expected from Caribbean bulk water and U.S. O&M businesses, with further expansion in the Bahamas and Grand Cayman.

• Management is not aware of any liquidity issues except for potential risks related to CW-Bahamas' receivables.