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 earlier in the year.

• Net income attributable to stockholders for Q3 2024 was $4.5 million ($0.28 per diluted share), compared to $8.6 million ($0.54 per share) in Q3 2023.

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

• Gross profit margin improved to 34.8% from 33% in Q3 2023, driven by higher-margin products and new O&M contracts.

• 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), with a $20.6 million drop in construction revenue.

• Retail revenue increased 5% to $7.6 million, driven by a 4.2% rise 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 REC contributing $2.1 million.

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

• Net income from continuing operations was $5.0 million ($0.31 per diluted share), down from $8.8 million ($0.55 per share) last year.

• Net income including discontinued operations was $4.5 million ($0.28 per share), compared to $8.6 million ($0.54 per share) last year.

• For the nine months ended September 30, 2024, net income including discontinued operations was $26.8 million ($1.68 per share), up from $19.7 million ($1.24) due to a $12.1 million gain on the Mexico asset sale.

• Cash and cash equivalents increased to $104.9 million as of September 30, 2024, mainly from the Mexico settlement.

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 Hawaii desalination project is planned to start in Q4 2025, representing about 80% of the $147 million project value.

• Anticipates continued growth in recurring O&M revenue and stable profitability in manufacturing.

• Ongoing investment in new long-term projects, including Bahamas and Grand Cayman infrastructure.

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