Consolidated Water Co Ltd
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
CWCO$27.22+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001558370-24-008284
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001558370-24-012242
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 163 current paragraphs.
79 unchanged; 36 reworded; 35 added; 13 removed; 2 previous and 13 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
On May 29, 2024, we, through CW-Cooperatief; NSC, and AdR entered into a settlement agreement (the “Settlement Agreement”) with the State and Banco Nacional de Obras y Servicios Públicos, S.N.C., as trustee under the trust agreement for the trust named Fondo Nacional de Infraestructura (the “Trust”). Under the Settlement Agreement, CW-Cooperatief requested that ICSID discontinue the arbitration and on May 31, 2024, ICSID issued an order discontinuing the arbitration. Pursuant to the Settlement Agreement, the Trust purchased the 20.1 hectares of land on which the Project’s plant was to be constructed, including related rights of way (the “Land”), on an “as-is” basis, from NSC for MXN$596,144,000. The sale of the Land to the Trust was closed on June 14, 2024 at which time the MXN$596,144,000 was paid to us and converted at the prevailing exchange rate on that date into US$31,959,685.
Current report
In connection with the Settlement Agreement on June 14, 2024, the State also paid NSC MXN$20,000,000 to purchase certain documentation owned by NSC relating to the Project.
Current report
As a result of the Settlement Agreement: (i) the parties have been released from all obligations owed to each other in connection with the APP Contract and the arbitration; and (ii) no party to the Settlement Agreement may institute any legal proceedings against another party thereto with respect to the matters which have been addressed by the Settlement Agreement.
Current report
We are presently in the process of legally terminating/dissolving CW-Cooperatief, NSC and AdR and will continue to incur expenses for these subsidiaries while such process is completed, but such expenses are not expected to be material to our consolidated results of operations.
Current report
Our net income from discontinued operations for the three months ended June 30, 2024 was $11,607,846 and the net loss from discontinued operations for the three months ended June 30, 2023 was ($207,701), respectively. The net income reported from discontinued operations for 2024 reflects the gain generated from the sale of the Project land and project documentation under the Settlement Agreement.
Current report
Revenue for 2024 decreased to $32,479,158 from $44,237,263 in 2023, as a result of a significant revenue decrease in the services segment, consistent revenue in the bulk and manufacturing segments and a slight revenue increase in the retail segment. Gross profit for 2024 was $11,620,214 (36% of total revenue) as compared to $15,463,549 (35% of total revenue) for 2023. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.
Current report
Other income, net, increased to $418,426 for 2024 as compared to $129,131 for 2023 primarily due to approximately $295,000 of additional interest income resulting from higher late payment charges to our CW-Bahamas customer on delinquent accounts receivable balances and additional interest earned on higher balances of interest earning assets.
Current report
The retail segment contributed $126,805 to our income from operations for 2024. The retail segment incurred a loss from operations of ($125,338) for 2023.
Current report
The bulk segment contributed $1,987,230 and $2,171,860 to our income from operations for 2024 and 2023, respectively.
Current report
The services segment contributed $2,270,308 and $6,941,262 to our income from operations for 2024 and 2023, respectively.
Current report
Gross profit for the services segment decreased to $3,463,932 (29% of services revenue) in 2024 from $7,845,822 (33% of services revenue) in 2023 due to the decreased revenue.
Current report
Manufacturing revenue was relatively consistent at $3,926,847 and $4,087,476 for 2024 and 2023, respectively.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Discontinued Operations – Mexico Project Development
Current report
As discussed previously, on June 30, 2020 the State of Baja California cancelled its APP Contract with AdR for the Project. As a result of the cancellation of the Project we discontinued all development activities associated with the Project, commenced marketing efforts to sell the land NSC purchased for the Project, and initiated international arbitration against the Government of Mexico to recover the costs we had incurred for the Project. In May 2024, we executed a Settlement Agreement with the State pursuant to which we discontinued the arbitration in exchange for the purchase by the State (i) of the land for the Project for MXN$596,144,000; and (ii) certain documentation for the Project for MXN$20,000,000. We received the proceeds from the sale of the land and documentation in June 2024 and the MXN$596,144,000 received for the land was converted into US$31,959,685.
Current report
Our net income from discontinued operations for the six months ended June 30, 2024 was $11,140,780 and the net loss from discontinued operations for the three months ended June 30, 2023 was ($466,864), respectively. The net income reported from discontinued operations for 2024 reflects the gain generated from the sale of the Project land and documentation under the Settlement Agreement.
Current report
Consolidated Results
Current report
Other income, net, increased to $836,610 for 2024 from $286,190 for 2023 primarily due to approximately $515,000 of additional interest income resulting from higher late payment charges to our CW-Bahamas customer on delinquent accounts receivable balances and additional interest earned on higher balances of interest earning assets.
Current report
Results by Segment
Current report
Retail Segment:
Current report
The retail segment contributed $1,096,067 to our income from operations for 2024 and recorded a loss from operations of ($89,431) for 2023, respectively.
Current report
Bulk Segment:
Current report
The bulk segment contributed $4,419,925 and $4,591,382 to our income from operations for 2024 and 2023, respectively.
Current report
Bulk segment G&A expenses remained relatively consistent at $707,409 for 2024 as compared to $732,875 for 2023.
Current report
Services Segment:
Current report
The services segment contributed $5,421,126 and $8,530,213 to our income from operations for 2024 and 2023, respectively.
Current report
Gross profit for the services segment decreased to $8,212,604 (28% of services revenue) in 2024 from $10,523,445 (29% of services revenue) in 2023 due to the decreased revenue.
Current report
G&A expenses for the services segment increased to $2,794,478 for 2024 as compared to $1,993,232 for 2023 primarily due to the addition of REC’s G&A expenses of approximately $687,000.
Current report
Manufacturing Segment:
Current report
The manufacturing segment contributed $1,387,666 and $975,806 to our income from operations in 2024 and 2023, respectively.
Current report
G&A expenses for the manufacturing segment remained relatively consistent at $1,185,288 for 2024 as compared to $852,828 for 2023.
Current report
Contract assets decreased by approximately $16.1 million primarily due to a $16.0 million decrease in the services segment contract assets.
Current report
Operating lease right-of-use assets increased by approximately $1.4 million due to the renewal of the corporate office lease in Cayman Islands.
Current report
Accounts payable, accrued expenses and other liabilities decreased by approximately $3.5 million primarily due to a $4.8 decrease in subcontractor costs in the services segment.
Current report
Noncurrent operating leases increased by approximately $1.1 million due to the renewal of the corporate office lease in Cayman Islands.
Removed paragraphs (13)
Previous report
district court in Tijuana. To date, AdR has not received a formal response from CEA or CESPT to its submission of non-recoverable expenses.
Previous report
CW-Cooperatief intends to pursue vigorously the relief sought in the arbitration, in addition to pursuing all other legal remedies and courses of action available under the operative contracts and applicable law with respect to its rights, damages, fees and expenses. We cannot provide any assurances that CW Cooperatief will be able to obtain the relief sought in the arbitration, and we have incurred and will continue to incur legal and other arbitration-related expenses that are material to our consolidated results of operations and cash flows.
Previous report
During July 2022, the State initiated discussions with us to potentially resolve the issues related to the cancellation by the government of the Rosarito desalination plant contract as well as potentially addressing the State’s acute water shortage issues. We cannot presently determine the outcome of the discussions and we have not terminated our efforts to obtain relief through the international arbitration process as a result of these discussions.
Previous report
We cannot provide any assurances that we will be able to obtain reimbursement for any expenses or investments made with respect to the Project.
Previous report
As a result of the cancellation of the APP Contract, in 2020 we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project. Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as the costs for our legal and administrative activities to pursue reimbursement from the State of Baja California following the cancellation of the APP Contract, are classified as discontinued operations in the accompanying condensed consolidated financial statements. Our net losses from discontinued operations for the three months ended March 31, 2024 and 2023 were ($467,066) and ($259,163), respectively.
Previous report
Other income (expense), net, increased to $418,184 for 2024 as compared to an expense of $157,059 for 2023 primarily due to interest income which increased by approximately $132,500 in 2024 primarily due to the increase in CW-Bahamas delinquent accounts receivable balances, on which we earn interest income. The balance of the increase is due to higher earning on interest earning assets.
Previous report
The retail segment contributed $969,262 and $35,907 to our income from operations for 2024 and 2023, respectively.
Previous report
The bulk segment contributed $2,432,695 and $2,419,522 to our income from operations for 2024 and 2023, respectively.
Previous report
The services segment contributed $3,150,818 and $1,588,951 to our income from operations for 2024 and 2023, respectively.
Previous report
Gross profit for the services segment increased to $4,748,672 (27% of services revenue) in 2024 from $2,677,623 (21% of services revenue) in 2023 due to the increased revenue. The increase in gross profit as a percentage of revenue from 2023 to 2024 reflects improved margins on both our construction and operations and maintenance activities.
Previous report
Contract assets increased by approximately $1.8 million primarily due to a $1.5 million increase in Aerex’s contract assets.
Previous report
Accrued compensation increased by approximately $1.2 million primarily due to accrued salaries and accrued staff and project bonuses for the three months ended March 31, 2024.
Previous report
Contract liabilities decreased by approximately $778,000 primarily due to a $724,000 decrease in billings made by the services segment in connection with Kalaeloa Desalco’s contract with the Board of Water Supply of the City and County of Honolulu, Hawaii.
Reworded paragraphs (36)
Previous wording
On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract. The Letter requested that AdR provide an inventory of the assets that comprised the “Project Works” (as defined in the APP Contract) for the purpose of acknowledging and paying the non-recoverable expenses made by AdR in connection with the Project, with such reimbursement to be calculated in accordance with the terms of the APP Contract. The applicable law required that this list of non-recoverable expenses made by AdR in connection with the Project be submitted to CEA and CESPT within 20 business days from the date of receipt of the Letter. AdR initiated an amparo claim before a federal district court in Tijuana, Baja California, to challenge the provision of the applicable law requiring submittal of the list of non-recoverable expenses within the 20 business days term, as AdR considered such term to be unreasonably short due to the magnitude of the Project and the scope of supporting documentation required to be provided with respect to the non-recoverable expenses. AdR obtained an initial provisional suspension of the lapsing of such 20-day term from the court, and on August 10, 2020 the court made such suspension definitive until the completion of the amparo trial. As such, the 20-day term for filing the list of non-recoverable expenses was suspended. Therefore, on August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which was comprised of 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos. In February 2021, AdR withdrew this amparo claim, and such withdrawal was accepted by the federal
Current wording
On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract. The Letter requested that AdR provide an inventory of the assets that comprised the “Project Works” (as defined in the APP Contract) for the purpose of acknowledging and paying the non-recoverable expenses made by AdR in connection with the Project, with such reimbursement to be calculated in accordance with the terms of the APP Contract. The applicable law required that this list of non-recoverable expenses made by AdR in connection with the Project be submitted to CEA and CESPT within 20 business days from the date of receipt of the Letter. AdR initiated an amparo claim before a federal district court in Tijuana, Baja California, to challenge the provision of the applicable law requiring submittal of the list of non-recoverable expenses within the 20 business days term, as AdR considered such term to be unreasonably short due to the magnitude of the Project and the scope of supporting documentation required to be provided with respect to the non-recoverable expenses. AdR obtained an initial provisional suspension of the lapsing of such 20-day term from the court, and on August 10, 2020 the court made such suspension definitive until the completion of the amparo trial. As such, the 20-day term for filing the list of non-recoverable expenses was suspended. Therefore, on August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which was comprised of 51,144,525 United States dollars and an additional 137,333,114
Previous wording
We believe CW-Cooperatief, as a Netherlands company, has certain rights relating to its investments in NSC and AdR under theAgreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican Statesentered into force as of October 1, 1999 (the “Treaty”). On April 16, 2021, CW-Cooperatief submitted a letter to the President of Mexico and other Mexican federal government officials alleging that the State’s termination of the APP Contract constituted a breach by Mexico of its international obligations under the Treaty, entitling CW-Cooperatief to full reparation, including monetary damages. This letter invited Mexico to seek a resolution of this investment dispute through consultation and negotiation, but stated that if the dispute could not be resolved in this manner, CW-Cooperatief would refer the dispute to the International Centre for the Settlement of International Disputes for arbitration, as provided for in the Treaty. On June 29, 2021, the Mexican Ministry of Economy responded to CW-Cooperatief’s letter and proposed to hold a consultation meeting. Two such meetings were held on July 9, 2021 and August 2, 2021 on a confidential basis, without a resolution of our investment dispute.
Current wording
We believed CW-Cooperatief, as a Netherlands company, had certain rights relating to its investments in NSC and AdR under theAgreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican Statesentered into force as of October 1, 1999 (the “Treaty”). On April 16, 2021, CW-Cooperatief submitted a letter to the President of Mexico and other Mexican federal government officials alleging that the State’s termination of the APP Contract constituted a breach by Mexico of its international obligations under the Treaty, entitling CW-Cooperatief to full reparation, including monetary damages. This letter invited Mexico to seek a resolution of this investment dispute through consultation and negotiation, but stated that if the dispute could not be resolved in this manner, CW-Cooperatief would refer the dispute to the International Centre for the Settlement of International Disputes for arbitration, as provided for in the Treaty. On June 29, 2021, the Mexican Ministry of Economy responded to CW-Cooperatief’s letter and proposed to hold a consultation meeting. Two such meetings were held on July 9, 2021 and August 2, 2021 on a confidential basis, without a resolution of our investment dispute.
Previous wording
On February 9, 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest.
Current wording
In February 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest.
Previous wording
Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $6,474,348 ($0.40 per share on a fully diluted basis), as compared to net income of $3,813,626 ($0.24 per share on a fully diluted basis) for 2023.
Current wording
Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $15,850,257 ($0.99 per share on a fully diluted basis), as compared to net income of $7,323,771 ($0.46 per share on a fully diluted basis) for 2023.
Previous wording
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $6,941,414 ($0.43 per share on a fully diluted basis), as compared to a net income from continuing operations of $4,072,789 ($0.26 per share on a fully diluted basis) for 2023.
Current wording
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $4,242,411 ($0.26 per share on a fully diluted basis), as compared to net income from continuing operations of $7,531,472 ($0.47 per share on a fully diluted basis) for 2023.
Previous wording
Consistent with prior periods, we record all non-direct G&A expenses in our retail segment and do not allocate any of these non-direct costs to our other three business segments. Retail G&A expenses remained relatively consistent at $4,104,332 for 2024 as compared to $4,177,107 for 2023.
Current wording
Consistent with prior periods, we record all non-direct G&A expenses in our retail segment and do not allocate any of these non-direct costs to our other three business segments. Retail G&A expenses remained relatively consistent at $4,378,816 for 2024 as compared to $4,265,535 for 2023.
Previous wording
Bulk segment G&A expenses remained relatively consistent at $344,141 for 2024 as compared to $352,975 for 2023.
Current wording
Bulk segment G&A expenses remained relatively consistent at $363,268 for 2024 as compared to $379,900 for 2023.
Previous wording
Services segment revenue increased to $17,417,611 for 2024 from $12,721,701 for 2023. Construction revenue was $9,203,662 in 2024 as compared to $8,693,516 in 2023. We recognized approximately $4.9 million and $6.4 million in construction revenue for the Liberty Utilities contract in 2024 and 2023, respectively. This contract is substantially completed and we expect final completion of this contract by the end of the second quarter of 2024. Revenue generated under operations and maintenance contracts increased to $7,099,354 in 2024 from $3,685,805 in 2023. The acquisition of REC effective October 2023 constituted $1,818,039 of this operations and maintenance contracts revenue increase and the remainder of the increase related to new PERC contracts.
Current wording
Services segment revenue decreased to $11,922,469 for 2024 from $24,093,963 for 2023. Construction revenue was $3,324,610 in 2024 as compared to $19,827,827 in 2023. We recognized approximately $1.4 million and $17.6 million in construction revenue for the Liberty Utilities contract in 2024 and 2023, respectively. This contract is substantially complete and we expect final completion of this contract by the end of the third quarter of 2024. Revenue generated under operations and maintenance contracts increased to $7,068,922 in 2024 from $4,044,015 in 2023. The acquisition of REC effective October 2023 constituted $1,921,819 of this operations and maintenance contracts revenue increase and the remainder of the increase related to new PERC contracts.
Previous wording
G&A expenses for the services segment increased to $1,597,854 for 2024 as compared to $1,088,672 for 2023 primarily due to the addition of G&A expenses of aproximately $388,000 for REC, which was acquired in the fourth quarter of 2023.
Current wording
G&A expenses for the services segment increased to $1,196,624 for 2024 as compared to $904,560 for 2023 primarily due to the addition of REC’s G&A expenses of approximately $299,000.
Previous wording
The manufacturing segment contributed $761,219 and $483,956 to our income from operations in 2024 and 2023, respectively.
Current wording
The manufacturing segment contributed $626,447 and $491,850 to our income from operations in 2024 and 2023, respectively.
Previous wording
G&A expenses for the manufacturing segment remained relatively consistent at $517,702 for 2024 as compared to $417,908 for 2023.
Current wording
G&A expenses for the manufacturing segment remained relatively consistent at $667,586 for 2024 as compared to $434,920 for 2023.
Previous wording
Revenue for 2024 increased to $39,689,390 from $32,868,990 in 2023, reflecting revenue increases in all segments except for the bulk segment which had a slight decrease. Gross profit for 2024 was $13,878,023 (35% of total revenue) as compared to $10,559,082 (32% of total revenue) for 2023. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.
Current wording
Revenue for 2024 decreased to $72,168,548 from $77,106,253 in 2023, reflecting a decrease in the services segment. Gross profit for 2024 was $25,498,237 (35% of total revenue) as compared to $26,022,631 (34% of total revenue) for 2023. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.
Previous wording
General and administrative (“G&A”) expenses on a consolidated basis increased to $6,564,029 for 2024 as compared to $6,036,662 for 2023. The increase in G&A expenses for 2024 relates primarily to additional G&A expenses of approximately $388,000 attributable to REC, which was acquired in the fourth quarter of 2023.
Current wording
General and administrative (“G&A”) expenses on a consolidated basis increased to $13,170,323 for 2024 as compared to $12,021,577 for 2023. The increase in G&A expenses for 2024 relates to additional G&A expenses of approximately $687,000 attributable to REC, which was acquired in the fourth quarter of 2023 and incremental audit, audit related and professional fees of approximately $348,000.
Previous wording
Revenue generated by our retail water operations increased to $8,624,938 in 2024 from $7,771,095 in 2023 due to an overall 6% increase in the volume of water sold. The volume of water sold to end consumers within our retail service area increased by 10%, but was partially offset by reduced volume sales to the WAC. We believe the increase in the volume of water sold in 2024 resulted in part from a 2.8% increase in the number of customer accounts in our license area from 2023 to 2024. In addition, significantly less rainfall on Grand Cayman in 2024 as compared to 2023 was also a likely contributor to the increase in water sold from 2023 to 2024.
Current wording
Revenue generated by our retail water operations increased to $16,806,822 in 2024 from $15,344,424 in 2023 due to an 8% increase in the volume of water sold. We believe the increase in the volume of water sold in 2024 resulted in part from a 5.5% increase in the number of customer accounts in our license area from June 30, 2023 to June 30, 2024. In addition, less rainfall on Grand Cayman in 2024 as compared to 2023 was also a contributor to the increase in water sold from 2023 to 2024.
Previous wording
Retail segment gross profit increased to $5,073,594 (59% of retail revenue) for 2024 from $4,220,301 (54% of retail revenue) for 2023 due to the revenue increase. Retail segment gross profit as a percentage of revenue increased in 2024 as compared to 2023 due to; (i) the overall increase in water volume sold and (ii) the higher average rate we charged for water in 2024 due to significantly lower sales to the WAC which pays a lower rate for water compared to customers within our retail service area.
Current wording
Retail segment gross profit increased to $9,585,345 (57% of retail revenue) for 2024 from $8,360,498 (54% of retail revenue) for 2023 due to the revenue increase. Retail segment gross profit as a percentage of revenue increased in 2024 as compared to 2023 due to; (i) the overall increase in water volume sold and (ii) the higher average rate we charged for water in 2024 due to significantly lower sales to the WAC which pays a lower rate for water compared to customers within our retail service area.
Previous wording
Bulk segment revenue was $8,342,094 and $9,004,373 for 2024 and 2023, respectively. The decrease in bulk revenue from 2023 to 2024 reflects a 2% decrease in the volume of water sold and a decrease in the price of energy for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas’ rates.
Current wording
Bulk segment revenue was $16,790,052 and $17,486,868 for 2024 and 2023, respectively. The decrease in bulk revenue from 2023 to 2024 reflects a decrease in the price of energy for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas’ rates.
Previous wording
Gross profit for our bulk segment was $2,776,836 (33% of bulk revenue) and $2,761,227 (31% of bulk revenue) for 2024 and 2023, respectively. Gross profit as a percentage of revenue increased in 2024 as compared to 2023 due to a reduction in the price of energy and reductions in various operating expenses, most notably chemicals.
Current wording
Gross profit for our bulk segment was $5,127,334 (31% of bulk revenue) and $5,311,987 (30% of bulk revenue) for 2024 and 2023, respectively. Gross profit as a percentage of revenue increased in 2024 as compared to 2023 due to reductions in various operating expenses, most notably chemicals.
Previous wording
Manufacturing revenue was $5,304,747 and $3,371,821 for 2024 and 2023, respectively. The growth in manufacturing revenue for 2024 reflects increased production activity.
Current wording
Manufacturing revenue was $9,231,594 and $7,459,297 for 2024 and 2023, respectively. The growth in manufacturing revenue for 2024 reflects increased production activity.
Previous wording
Manufacturing gross profit was $1,278,921 (24% of manufacturing revenue) for 2024 as compared to a gross profit of $899,931 (27% of manufacturing revenue) for 2023. The increase in manufacturing gross profit in dollars reflects the increase in revenue. Gross profit as a percentage of revenue decreased due to a lower margin product mix.
Current wording
Manufacturing gross profit was $2,572,954 (28% of manufacturing revenue) for 2024 as compared to a gross profit of $1,826,701 (24% of manufacturing revenue) for 2023. The increase in manufacturing gross profit in dollars reflects the increase in revenue. Gross profit as a percentage of revenue increased due to a higher margin product mix.
Previous wording
Accounts receivable increased by approximately $3.5 million primarily due to a $2.3 million increase in the services segment and a $2.2 million increase in Aerex accounts receivables offset by a $1.3 million decrease in CW-Bahamas’ accounts receivable.
Current wording
Accounts receivable increased by approximately $1.4 million primarily due to a $2.6 million increase in Aerex accounts receivables offset by a $1.4 million decrease in CW-Bahamas’ accounts receivable.
Previous wording
Current inventory decreased by approximately $1.9 million primarily due to a decrease in Aerex’s inventory due to the delivery of work orders that increased Aerex’s accounts receivable.
Current wording
Current inventory decreased by approximately $1.5 million primarily due to a decrease in Aerex’s inventory due to the delivery of work orders that increased Aerex’s accounts receivable.
Previous wording
Prepaid expenses and other current assets decreased by approximately $1.3 million primarily due to a reduction of approximately $900,000 in prepaid insurance and a reduction of approximately $163,000 in prepaid taxes.
Current wording
Prepaid expenses and other current assets decreased by approximately $1.1 million primarily due to a reduction of prepaid insurance and other expenses offset by an increase of approximately $436,000 in prepaid taxes.
Previous wording
Property, plant and equipment, net, decreased by approximately $1.0 million due to the scheduled depreciation of fixed assets.
Current wording
Property, plant and equipment, net, decreased by approximately $1.5 million primarily due to the scheduled depreciation of fixed assets offset by new additions.
Previous wording
Our projected liquidity requirements for the balance of 2024 include capital expenditures for our existing operations of approximately $9.0 million, which includes approximately $2.8 million to be incurred for our new West Bay plant. We paid approximately $1.6 million for dividends in April 2024. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.
Current wording
Our projected liquidity requirements for the balance of 2024 include capital expenditures for our existing operations of approximately $7.1 million, which includes approximately $2.5 million to be incurred for our new West Bay plant. In addition, we plan to spend approximately $3.9 million during the balance of 2024 for other projects. We paid approximately $1.6 million for dividends in July 2024. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $46.2 million and working capital of $95.0 million.
Current wording
As of June 30, 2024, we had cash and cash equivalents of $96.7 million and working capital of $131.2 million.
Previous wording
CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $25.6 million and $26.9 million as of March 31, 2024 and December 31, 2023, respectively. Approximately 79% and 80% of the accounts receivable balances were delinquent as of those dates, respectively. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. CW-Bahamas has been unable to pay a dividend to its shareholders since August 2022 due to liquidity constraints.
Current wording
CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $25.4 million and $26.9 million as of June 30, 2024 and December 31, 2023, respectively. Approximately 79% and 80% of the accounts receivable balances were delinquent as of those dates, respectively. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. CW-Bahamas has been unable to pay a dividend to its shareholders since August 2022 due to liquidity constraints.
Previous wording
cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable. Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.
Current wording
If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable. Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.
Previous wording
Discussion of Cash Flows for the Three Months Ended March 31, 2024
Current wording
Discussion of Cash Flows for the Six Months Ended June 30, 2024
Previous wording
Our cash and cash equivalents increased to $46,177,641 as of March 31, 2024 from $42,621,898 as of December 31, 2023.
Current wording
Our cash and cash equivalents increased to $96,670,206 as of June 30, 2024 from $42,621,898 as of December 31, 2023.
Previous wording
Net cash provided by our operating activities was $5,950,002. This net cash reflects the net income generated for the three months ended March 31, 2024 of $6,643,416 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital. The more significant of such items and changes in working capital components included depreciation and amortization of $1,674,699, an increase in accounts receivable of $3,715,214, an increase in contract assets of $1,787,438, an increase in accrued compensation of $1,177,819, offset by decreases in inventory of $1,746,438 and prepaid expenses and other assets of $1,275,345.
Current wording
Net cash provided by our operating activities was $26,905,891. This net cash reflects the net income generated for the six months ended June 30, 2024 of $22,616,545 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital. The more significant of such items and changes in working capital components included the gain from the sale of land and project documentation from discontinued operations of $12,134,766, depreciation and amortization of $3,342,337, an increase in accounts receivable of $1,672,589, a decrease in contract assets of $16,139,277, and a decrease in accounts payable, accrued expenses and other current liabilities of $3,503,625.
Previous wording
Net cash used by our investing activities was $531,452 for additions to property, plant and equipment and construction in progress.
Current wording
Net cash provided by our investing activities was $31,539,511 primarily due to the sale of land and project documentation from discontinued operations in Mexico. The balance of our investing activities consisted of additions to property, plant and equipment and construction in progress.
Previous wording
Net cash used by our financing activities was $1,557,565, almost all of which related to the payment of dividends.
Current wording
Net cash used by our financing activities was $3,133,273, almost all of which related to the payment of dividends.
Previous wording
We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs. Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman Island: Seven Mile Beach and West Bay. For the three months ended March 31, 2024 and 2023, we generated approximately 22% and 24%, respectively, of our consolidated revenue and 37% and 40%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license.
Current wording
We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs. Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman Island: Seven Mile Beach and West Bay. For the three months ended June 30, 2024 and 2023, we generated approximately 25% and 17%, respectively, of our consolidated revenue and 39% and 27%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. For the six months ended June 30, 2024 and 2023, we generated approximately 23% and 20%, respectively, of our consolidated revenue and 38% and 32%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license.
Previous wording
Under the terms of our Cayman Islands license and our water sales agreements in The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis. Therefore, the impact of inflation on our gross profit, measured in consistent dollars, historically has not been material. However, we have not increased our retail water rates since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license. This lack of a rate increase over the long-term could adversely affect the profitability of our retail segment. Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our services segment could suffer similar adverse impacts in the future. Should the current inflationary trend continue, our consolidated results of operations and cash flows could be materially adversely affected. In general, our operating and maintenance contracts are adjusted annually for the impacts of inflation.
Current wording
has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license. This lack of a rate increase over the long-term could adversely affect the profitability of our retail segment. Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our manufacturing and services segments could suffer similar adverse impacts in the future. Should the current inflationary trend continue, our consolidated results of operations and cash flows could be materially adversely affected. In general, our operating and maintenance contracts are adjusted annually for the impacts of inflation.
Previous wording
While PERC’s operations and maintenance contracts are generally adjusted for inflation on an annual basis, such adjustment for some of these contracts is limited to 3% annually.
Current wording
While our operations and maintenance contracts are generally adjusted for inflation on an annual basis, such adjustment for some of these contracts is limited to 3% annually.
Previous wording
Kalaeloa Desalco, which is jointly owned by PERC and CW-Holdings, has signed a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Approximately 80% of the $150 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from the date the contract was executed to the date construction begins.
Current wording
Kalaeloa Desalco has signed a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Approximately 80% of the $147 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from the date the contract was executed to the date construction begins.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
Mexican pesos. In February 2021, AdR withdrew this amparo claim, and such withdrawal was accepted by the federal district court in Tijuana.
Current report — wording carried from elsewhere
General and administrative (“G&A”) expenses on a consolidated basis increased to $6,606,294 for 2024 as compared to $5,984,915 for 2023. The increase in G&A expenses for 2024 relates to additional G&A expenses of approximately $299,000 attributable to REC, which was acquired in the fourth quarter of 2023 and an increase in audit, audit related and other professional fees of approximately $293,000.
Current report — wording carried from elsewhere
Revenue generated by our retail water operations increased to $8,181,884 in 2024 from $7,573,329 in 2023 due to a 10% increase in the volume of water sold. We believe the increase in the volume of water sold in 2024 resulted in part from a 5.5% increase in the number of customer accounts in our license area from June 30, 2023 to June 30, 2024. In addition, significantly less rainfall on Grand Cayman in 2024 for the months of April and May as compared to 2023 was also a contributor to the increase in water sold from 2023 to 2024.
Current report — wording carried from elsewhere
Retail segment gross profit increased to $4,511,751 (55% of retail revenue) for 2024 from $4,140,197 (55% of retail revenue) for 2023 due to the revenue increase.
Current report — wording carried from elsewhere
Bulk segment revenue was $8,447,958 and $8,482,495 for 2024 and 2023, respectively. The slight decrease in bulk revenue from 2023 to 2024 reflects a decrease in the price of energy for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas’ rates.
Current report — wording carried from elsewhere
Gross profit for our bulk segment was $2,350,498 (28% of bulk revenue) and $2,550,760 (30% of bulk revenue) for 2024 and 2023, respectively. Gross profit as a percentage of revenue decreased in 2024 as compared to 2023 due to a reduction in the price of energy and an increase in repairs and maintenance expenses of almost $243,000.
Current report — wording carried from elsewhere
Manufacturing gross profit was $1,294,033 (33% of manufacturing revenue) for 2024 as compared to a gross profit of $926,770 (23% of manufacturing revenue) for 2023. The increase in manufacturing gross profit in dollars and as a percentage of revenue results from a higher margin product mix.
Current report — wording carried from elsewhere
Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $22,324,605 ($1.40 per share on a fully diluted basis), as compared to net income of $11,137,397 ($0.70 per share on a fully diluted basis) for 2023.
Current report — wording carried from elsewhere
The following discussion and analysis of our consolidated results of operations and results of operations by segment for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 relates only to our continuing operations.
Current report — wording carried from elsewhere
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2024 was $11,183,825 ($0.70 per share on a fully diluted basis), as compared to a net income from continuing operations of $11,604,261 ($0.73 per share on a fully diluted basis) for 2023.
Current report — wording carried from elsewhere
Consistent with prior periods, we record all non-direct G&A expenses in our retail segment and do not allocate any of these non-direct costs to our other three business segments. Retail G&A expenses remained relatively consistent at $8,483,148 for 2024 as compared to $8,442,642 for 2023.
Current report — wording carried from elsewhere
Services segment revenue decreased to $29,340,080 for 2024 from $36,815,664 for 2023. Construction revenue was $12,528,274 in 2024 as compared to $28,521,342 in 2023. We recognized approximately $6.3 million and $24.1 million in construction revenue for the Liberty Utilities contract in 2024 and 2023, respectively. This contract is substantially complete and we expect final completion of this contract by the end of the third quarter of 2024. Revenue generated under operations and maintenance contracts increased to $14,168,275 in 2024 from $7,729,821 in 2023. The acquisition of REC effective October 2023 constituted $3,739,859 of this operations and maintenance contracts revenue increase and the remainder of the increase related to new PERC contracts.
Current report — wording carried from elsewhere
Under the terms of our Cayman Islands license and our bulk water sales agreements in The Cayman Islands, The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis. Therefore, the impact of inflation on our gross profit from these revenue sources, measured in consistent dollars, historically has not been material. However, while we have received annual inflation adjustments for the rates we charge under our bulk water agreements, we have not increased the retail water rates for Cayman Water since January 2018 (despite the inflation that
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report — wording carried elsewhere
If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to