Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 10, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2021 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-25248 | |
Entity Registrant Name | Consolidated Water Co. Ltd. | |
Entity Incorporation, State or Country Code | KY | |
Entity Tax Identification Number | 98-0619652 | |
Entity Address, Address Line One | Regatta Office Park | |
Entity Address, Address Line Two | Windward Three, 4th Floor, West Bay Road | |
Entity Address, Address Line Three | P.O. Box 1114 | |
Entity Address, City or Town | Grand Cayman | |
Entity Address, Postal Zip Code | KY1-1102 | |
Entity Address, Country | KY | |
City Area Code | 345 | |
Local Phone Number | 945-4277 | |
Title of 12(b) Security | Class A common stock | |
Security Exchange Name | NASDAQ | |
Trading Symbol | CWCO | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,210,699 | |
Entity Central Index Key | 0000928340 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 40,397,593 | $ 43,794,150 |
Certificate of deposit | 2,500,000 | 0 |
Accounts receivable, net | 26,381,981 | 21,483,976 |
Inventory | 2,545,998 | 3,214,178 |
Prepaid expenses and other current assets | 3,300,999 | 2,412,282 |
Contract assets | 483,190 | 516,521 |
Current assets of discontinued operations | 770,645 | 1,511,099 |
Total current assets | 76,380,406 | 72,932,206 |
Property, plant and equipment, net | 53,720,792 | 57,687,984 |
Construction in progress | 760,079 | 440,384 |
Inventory, noncurrent | 4,485,284 | 4,506,842 |
Investment in OC-BVI | 1,698,069 | 2,092,146 |
Goodwill | 10,425,013 | 13,325,013 |
Intangible assets, net | 3,564,166 | 4,148,333 |
Operating lease right-of-use assets | 2,855,346 | 1,329,561 |
Other assets | 1,796,287 | 1,926,594 |
Long-term assets of discontinued operations | 21,129,171 | 21,166,489 |
Total assets | 176,814,613 | 179,555,552 |
Current liabilities | ||
Accounts payable, accrued expenses and other current liabilities | 3,151,005 | 2,856,127 |
Accounts payable - related parties | 204,285 | 200,558 |
Accrued compensation | 1,488,891 | 1,434,106 |
Dividends payable | 1,317,987 | 1,300,022 |
Current maturities of operating leases | 563,154 | 455,788 |
Current portion of long-term debt | 54,698 | 42,211 |
Contract liabilities | 45,232 | 461,870 |
Current liabilities of discontinued operations | 252,720 | 188,434 |
Total current liabilities | 7,077,972 | 6,939,116 |
Long-term debt, noncurrent | 136,231 | 126,338 |
Deferred tax liabilities | 1,279,910 | 1,440,809 |
Noncurrent operating leases | 2,321,551 | 982,076 |
Net liability arising from put/call options | 582,000 | 690,000 |
Other liabilities | 141,000 | 362,165 |
Long-term liabilities of discontinued operations | 0 | 2,499 |
Total liabilities | 11,538,664 | 10,543,003 |
Commitments and contingencies | ||
Consolidated Water Co. Ltd. stockholders' equity | ||
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 30,916 and 31,068 shares, respectively | 18,550 | 18,641 |
Additional paid-in capital | 87,585,156 | 86,893,486 |
Retained earnings | 60,634,661 | 64,910,709 |
Total Consolidated Water Co. Ltd. stockholders' equity | 157,364,786 | 160,909,046 |
Non-controlling interests | 7,911,163 | 8,103,503 |
Total equity | 165,275,949 | 169,012,549 |
Total liabilities and equity | 176,814,613 | 179,555,552 |
Common Class A [Member] | ||
Consolidated Water Co. Ltd. stockholders' equity | ||
Common stock value | 9,126,419 | 9,086,210 |
Common Class B [Member] | ||
Consolidated Water Co. Ltd. stockholders' equity | ||
Common stock value | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Redeemable preferred stock, par value (in dollars per share) | $ 0.60 | $ 0.60 |
Redeemable preferred stock, authorized | 200,000 | 200,000 |
Redeemable preferred stock, issued | 30,916 | 31,068 |
Redeemable preferred stock, outstanding | 30,916 | 31,068 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.60 | $ 0.60 |
Common stock, authorized | 24,655,000 | 24,655,000 |
Common stock, issued | 15,210,699 | 15,143,683 |
Common stock, outstanding | 15,210,699 | 15,143,683 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.60 | $ 0.60 |
Common stock, authorized | 145,000 | 145,000 |
Common stock, issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Total revenue | $ 16,413,146 | $ 17,666,257 | $ 50,217,987 | $ 57,479,225 |
Total cost of revenue (including purchases from related parties of $104,813 and $361,004 for the three months ended, and $390,196 and $1,225,668 for the nine months ended September 30, 2021 and 2020, respectively) | 10,722,547 | 11,450,621 | 32,336,025 | 35,520,125 |
Gross profit | 5,690,599 | 6,215,636 | 17,881,962 | 21,959,100 |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 4,359,040 | 4,810,016 | 13,847,830 | 14,062,938 |
Gain (loss) on asset dispositions and impairments, net | 612 | (984) | (3,144,961) | 4,001 |
Income (loss) from operations | 1,332,171 | 1,404,636 | 889,171 | 7,900,163 |
Other income (expense): | ||||
Interest income | 168,880 | 164,761 | 503,889 | 411,020 |
Interest expense | (2,216) | (2,069) | (7,714) | (7,413) |
Profit-sharing income from OC-BVI | 6,075 | 6,075 | 16,200 | 30,375 |
Equity in the earnings of OC-BVI | 17,717 | 22,411 | 44,223 | 82,387 |
Net unrealized gain (loss) on put/call options | (54,000) | 39,000 | 108,000 | (42,000) |
Other | 15,712 | 15,314 | 35,292 | 59,341 |
Other income, net | 152,168 | 245,492 | 699,890 | 533,710 |
Income before income taxes | 1,484,339 | 1,650,128 | 1,589,061 | 8,433,873 |
Provision (benefit) for income taxes | (11,230) | (263,165) | (20,735) | 147,186 |
Net income from continuing operations | 1,495,569 | 1,913,293 | 1,609,796 | 8,286,687 |
Income from continuing operations attributable to non-controlling interests | 131,609 | 101,137 | 457,540 | 642,289 |
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 1,363,960 | 1,812,156 | 1,152,256 | 7,644,398 |
Total loss from discontinued operations | (1,078,367) | (377,321) | (1,542,540) | (4,448,798) |
Net income (loss) attributable to Consolidated Water Co. Ltd. stockholders | $ 285,593 | $ 1,434,835 | $ (390,284) | $ 3,195,600 |
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||
Continuing operations | $ 0.09 | $ 0.12 | $ 0.07 | $ 0.51 |
Discontinued operations | (0.07) | (0.03) | (0.10) | (0.30) |
Basic earnings (loss) per share | 0.02 | 0.09 | (0.03) | 0.21 |
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||
Continuing operations | 0.09 | 0.12 | 0.07 | 0.50 |
Discontinued operations | (0.07) | (0.03) | (0.10) | (0.29) |
Diluted earnings (loss) per share | 0.02 | 0.09 | (0.03) | 0.21 |
Dividends declared per common and redeemable preferred shares | $ 0.085 | $ 0.085 | $ 0.26 | $ 0.26 |
Weighted average number of common shares used in the determination of: | ||||
Basic earnings per share | 15,209,432 | 15,120,983 | 15,204,220 | 15,116,681 |
Diluted earnings per share | 15,351,882 | 15,273,529 | 15,345,120 | 15,270,494 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Cost of revenue. | ||||
Purchases from related parties | $ 104,813 | $ 361,004 | $ 390,196 | $ 1,225,668 |
General and administrative expense] | ||||
Purchases from related parties | $ 24,231 | $ 0 | $ 52,959 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Redeemable preferred stock [Member]Preferred stock [Member] | Common stock [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Non controlling interests [Member] | Total |
Balance at Dec. 31, 2019 | $ 20,251 | $ 9,029,765 | $ 88,356,509 | $ 66,352,733 | $ 14,193,616 | $ 177,952,874 |
Balance (in shares) at Dec. 31, 2019 | 33,751 | 15,049,608 | ||||
Issuance of share capital | $ 38,939 | (38,939) | ||||
Issuance of share capital (in shares) | 64,898 | |||||
Net income (loss) | 2,888,607 | 360,998 | 3,249,605 | |||
Purchase of noncontrolling interests in subsidiary | (2,444,047) | (6,055,953) | (8,500,000) | |||
Dividends declared | (1,289,378) | (1,289,378) | ||||
Stock-based compensation | 161,406 | 161,406 | ||||
Balance at Mar. 31, 2020 | $ 20,251 | $ 9,068,704 | 86,034,929 | 67,951,962 | 8,498,661 | 171,574,507 |
Balance (in shares) at Mar. 31, 2020 | 33,751 | 15,114,506 | ||||
Issuance of share capital | $ 3,674 | (3,674) | ||||
Issuance of share capital (in shares) | 6,123 | |||||
Net income (loss) | (1,127,842) | 180,154 | (947,688) | |||
Exercise of options | $ 217 | 4,201 | 4,418 | |||
Exercise of options (in shares) | 363 | |||||
Dividends declared | (1,287,474) | (1,287,474) | ||||
Stock-based compensation | 199,065 | 199,065 | ||||
Balance at Jun. 30, 2020 | $ 24,142 | $ 9,068,704 | 86,234,521 | 65,536,646 | 8,678,815 | 169,542,828 |
Balance (in shares) at Jun. 30, 2020 | 40,237 | 15,114,506 | ||||
Conversion of preferred stock | $ (4,526) | $ 4,526 | ||||
Conversion of preferred stock (in shares) | (7,543) | 7,543 | ||||
Buyback of preferred stock | $ (64) | (1,080) | (1,144) | |||
Buyback of preferred stock (in shares) | (107) | |||||
Net income (loss) | 1,434,835 | 101,137 | 1,535,972 | |||
Exercise of options | $ 283 | 5,460 | 5,743 | |||
Exercise of options (in shares) | 472 | |||||
Purchase of noncontrolling interests in subsidiary | (135,835) | (764,165) | (900,000) | |||
Dividends declared | (1,287,526) | (1,287,526) | ||||
Stock-based compensation | 486,991 | 486,991 | ||||
Balance at Sep. 30, 2020 | $ 19,835 | $ 9,073,230 | 86,590,057 | 65,683,955 | 8,015,787 | 169,382,864 |
Balance (in shares) at Sep. 30, 2020 | 33,059 | 15,122,049 | ||||
Balance at Dec. 31, 2020 | $ 18,641 | $ 9,086,210 | 86,893,486 | 64,910,709 | 8,103,503 | 169,012,549 |
Balance (in shares) at Dec. 31, 2020 | 31,068 | 15,143,683 | ||||
Issuance of share capital | $ 34,546 | (34,546) | ||||
Issuance of share capital (in shares) | 57,577 | |||||
Conversion of preferred stock | $ (129) | $ 129 | ||||
Conversion of preferred stock (in shares) | (215) | 215 | ||||
Buyback of preferred stock | $ (448) | (7,065) | (7,513) | |||
Buyback of preferred stock (in shares) | (747) | |||||
Net income (loss) | 988,772 | 128,793 | 1,117,565 | |||
Dividends declared | (1,296,197) | (649,880) | (1,946,077) | |||
Stock-based compensation | 176,210 | 176,210 | ||||
Balance at Mar. 31, 2021 | $ 18,064 | $ 9,120,885 | 87,028,085 | 64,603,284 | 7,582,416 | 168,352,734 |
Balance (in shares) at Mar. 31, 2021 | 30,106 | 15,201,475 | ||||
Issuance of share capital | $ 5,179 | (5,179) | ||||
Issuance of share capital (in shares) | 8,632 | |||||
Conversion of preferred stock | $ (538) | $ 538 | ||||
Conversion of preferred stock (in shares) | (896) | 896 | ||||
Buyback of preferred stock | $ (422) | (6,928) | (7,350) | |||
Buyback of preferred stock (in shares) | (704) | |||||
Net income (loss) | (1,664,649) | 197,138 | (1,467,511) | |||
Exercise of options | $ 126 | 1,583 | 1,709 | |||
Exercise of options (in shares) | 211 | |||||
Dividends declared | (1,294,697) | (1,294,697) | ||||
Stock-based compensation | 178,589 | 178,589 | ||||
Balance at Jun. 30, 2021 | $ 22,409 | $ 9,121,423 | 87,196,150 | 61,643,938 | 7,779,554 | 165,763,474 |
Balance (in shares) at Jun. 30, 2021 | 37,349 | 15,202,371 | ||||
Conversion of preferred stock | $ (4,996) | $ 4,996 | ||||
Conversion of preferred stock (in shares) | (8,328) | 8,328 | ||||
Net income (loss) | 285,593 | 131,609 | 417,202 | |||
Exercise of options | $ 1,137 | 14,213 | 15,350 | |||
Exercise of options (in shares) | 1,895 | |||||
Dividends declared | (1,294,870) | (1,294,870) | ||||
Stock-based compensation | 374,793 | 374,793 | ||||
Balance at Sep. 30, 2021 | $ 18,550 | $ 9,126,419 | $ 87,585,156 | $ 60,634,661 | $ 7,911,163 | $ 165,275,949 |
Balance (in shares) at Sep. 30, 2021 | 30,916 | 15,210,699 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Net cash provided by operating activities - continuing operations | $ 5,285,457 | $ 11,909,538 |
Net cash used in operating activities - discontinued operations | (820,785) | (1,390,227) |
Net cash provided by operating activities | 4,464,672 | 10,519,311 |
Cash flows from investing activities | ||
Purchase of certificate of deposit | (2,500,000) | |
Additions to property, plant and equipment and construction in progress | (973,270) | (1,571,450) |
Proceeds from asset dispositions | 45,560 | 450 |
Purchase of non-controlling interest in PERC | (900,000) | |
Net cash used in investing activities | (3,427,710) | (10,971,000) |
Cash flows from financing activities | ||
Dividends paid to common shareholders | (3,859,412) | (3,849,075) |
Dividends paid to preferred shareholders | (8,387) | (9,180) |
Dividends paid to non-controlling interests | (649,880) | |
Repurchase of redeemable preferred stock | (14,863) | (1,144) |
Proceeds received from exercise of stock options | 17,059 | 10,161 |
Principal repayments on long-term debt | (35,840) | (22,874) |
Net cash used in financing activities | (4,551,323) | (3,872,112) |
Net decrease in cash and cash equivalents | (3,514,361) | (4,323,801) |
Cash and cash equivalents at beginning of period | 43,794,150 | 42,071,083 |
Cash and cash equivalents at beginning of period - discontinued operations | 154,130 | 831,586 |
Less: cash and cash equivalents at end of period - discontinued operations | (36,326) | (399,454) |
Cash and cash equivalents at end of period | 40,397,593 | 38,179,414 |
Interest paid in cash | 7,714 | 7,413 |
Non-cash transactions: | ||
Dividends declared but not paid | 1,295,538 | 1,288,185 |
Transfers from (to) inventory to (from) property, plant and equipment and construction in progress | 191,434 | 12,649 |
Transfers from construction in progress to property, plant and equipment | 375,906 | 1,494,692 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,852,608 | 299,992 |
Purchase of equipment through issuance of long-term debt | 58,220 | 122,292 |
Aerex | ||
Cash flows from investing activities | ||
Acquisition of noncontrolling interest in subsidiaries | $ 0 | $ (8,500,000) |
Principal activity
Principal activity | 9 Months Ended |
Sep. 30, 2021 | |
Principal activity | |
Principal activity | CONSOLIDATED WATER CO. LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Principal activity Consolidated Water Co. Ltd. and its subsidiaries (collectively, the “Company”) supply potable water, treat water for reuse and provide water-related products and services to customers in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands. The Company produces potable water from seawater using reverse osmosis technology and sells this water to a variety of customers, including public utilities, commercial and tourist properties, residential properties and government facilities. The Company designs, builds and sells water production and water treatment infrastructure and manages water infrastructure for commercial and governmental customers. The Company also manufactures a wide range of specialized and custom water industry related products and provides design, engineering, operating and other services applicable to commercial, municipal and industrial water production, supply and treatment. |
Accounting policies
Accounting policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting policies | |
Accounting policies | 2. Accounting policies Basis of consolidation: The accompanying interim condensed consolidated financial statements are unaudited. These condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that, in the opinion of management, are necessary to fairly present the Company’s financial position, results of operations and cash flows as of and for the periods presented. The results of operations for these interim periods are not necessarily indicative of the operating results for future periods, including the fiscal year ending December 31, 2021. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) relating to interim financial statements and in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted in these condensed consolidated financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Foreign currency: Net foreign currency gains arising from transactions and re-measurements were $15,302 and $14,751 for the three months ended September 30, 2021 and 2020, respectively, and $29,353 and $56,050 for the nine months ended September 30, 2021 and 2020, respectively, and are included in “Other income - Other” in the accompanying condensed consolidated statements of income (loss). Cash and cash equivalents: Certain transfers from the Company’s Bahamas bank accounts to Company bank accounts in other countries require the approval of the Central Bank of The Bahamas. The equivalent United States dollar cash balances for deposits held in The Bahamas as of September 30, 2021 and December 31, 2020 were approximately $8.9 million and $15.9 million, respectively. Goodwill and intangible assets: For the year ended December 31, 2020, the Company estimated the fair value of its reporting units by applying the discounted cash flow method, which relied upon seven-year discrete projections of operating results, working capital and capital expenditures, along with a terminal value subsequent to the discrete period. These seven-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and operational strategies. The discount rates for the calculations represented the estimated cost of capital for market participants at the time of each analysis. The Company also estimated the fair value of each of it reporting units for the year ended December 31, 2020 by applying the guideline public company method. The Company weighted the fair values estimated for each of its reporting units under each method and summed such weighted fair values to estimate the overall fair value for each reporting unit. The respective weightings the Company applied to each method for the years ended December 31 were as follows: As of December 31, 2020 Method Retail Bulk Services Manufacturing Discounted cash flow 80 % 80 % 80 % 80 % Guideline public company 20 % 20 % 20 % 20 % Mergers and acquisitions — % — % — % — % 100 % 100 % 100 % 100 % The fair values the Company estimated for its retail, bulk, services and manufacturing reporting units exceeded their carrying amounts by 101%, 49%, 17%, and 31% respectively, as of December 31, 2020. Approximately 81% and 84% of Aerex’s revenue, and 88% and 86% of Aerex’s gross profit, for the three and nine months ended September 30, 2020, respectively, were generated from sales to one customer. Approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to this customer. In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases from Aerex following 2020 for a period of approximately one year. This customer informed Aerex at that time that it expected to recommence its purchases from Aerex beginning with the first quarter of 2022. As a result of this anticipated loss of revenue for Aerex, the Company updated its projections for its manufacturing reporting unit’s future cash flows. Such projections assumed, in part, that Aerex’s major customer would recommence its purchases from Aerex in 2022 but at a reduced aggregate amount, as compared to 2020. Based upon these updated projections, the Company tested its manufacturing reporting unit’s goodwill for possible impairment as of September 30, 2020 and December 31, 2020 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. As a result of these impairment tests, the Company determined that the estimated fair value of its manufacturing reporting unit exceeded its carrying value by approximately 22% as of September 30, 2020 and 31% as of December 31, 2020. In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years. The updated sales estimate for this customer based on this new information is substantially below the sales previously anticipated to this customer for 2022 and subsequent years that the Company used in the discounted cash flow projections prepared for purposes of testing the manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020. Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers have been adversely impacted by the continuing negative economic impacts of the COVID-19 pandemic, which have increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials and, the Company believes, also adversely affected the overall financial condition of Aerex’s current and prospective customer base. Accordingly, in light of this new information from Aerex’s former major customer, and present weak economic conditions that the Company believes will continue into 2022, the Company updated its projections of future cash flows for its manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. Based upon this testing, the Company determined that the carrying value of its manufacturing reporting unit exceeded its fair value by $2.9 million, and the Company recorded an impairment loss to reduce its manufacturing reporting unit’s goodwill by this amount for the three months ended June 30, 2021. If it is determined in the future that Aerex’s future cash inflows will be less than the Company’s present expectations, it may be required to record additional impairment losses to reduce the remaining carrying values as of September 30, 2021 of the manufacturing reporting unit’s goodwill of $1,985,211 and the unamortized balance of its intangible assets of $871,111 associated with the acquisition of Aerex. Any such impairment losses could have a material adverse impact on the Company’s consolidated results of operations. Revenue recognition: The following table presents the Company’s revenue disaggregated by revenue source (unaudited). Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Retail revenue $ 5,247,042 $ 4,993,069 $ 16,633,137 $ 18,216,797 Bulk revenue 6,868,134 6,061,475 19,826,075 18,368,156 Services revenue 3,210,584 3,351,935 10,514,669 9,942,748 Manufacturing revenue 1,087,386 3,259,778 3,244,106 10,951,524 Total revenue $ 16,413,146 $ 17,666,257 $ 50,217,987 $ 57,479,225 Retail revenue The Company produces and supplies water to end-users, including residential, commercial and governmental customers in the Cayman Islands under an exclusive retail license issued to Cayman Water by the Cayman Islands government to provide water in two of the three most populated areas on Grand Cayman Island. Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 35 days after the billing date. The Company recognizes revenue from water sales at the time water is supplied to the customer’s premises. The amount of water supplied is determined and invoiced based upon water meter readings performed at the end of each month. All retail water contracts are month-to-month contracts. The Company has elected the “right to invoice” practical expedient for revenue recognition on its retail water sale contracts and recognizes revenue in the amount to which the Company has a right to invoice. Bulk revenue The Company produces and supplies water to government-owned distributors in the Cayman Islands and The Bahamas. OC-Cayman provides bulk water to the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, under two agreements. The WAC in turn distributes such water to properties in Grand Cayman outside of Cayman Water’s retail license area. The Company sells bulk water in The Bahamas through its majority-owned subsidiary, CW-Bahamas, under two agreements with the Water and Sewerage Corporation of The Bahamas (“WSC”), which distributes such water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. CW-Bahamas also sold water to a private resort on Bimini through December 18, 2020, which generated revenue of approximately $46,000 and $118,000 for the three and nine months ended September 30, 2020, respectively. The Company has elected the “right to invoice” practical expedient for revenue recognition on its bulk water sale contracts and recognizes revenue in the amount to which the Company has a right to invoice. Services and Manufacturing revenue The Company provides design, engineering, management, procurement and construction services for desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas and the British Virgin Islands. The Company also develops, builds, sells, operates and manages water, wastewater and water reuse infrastructure through PERC. All of PERC's customers are companies or governmental entities located in the U.S. The Company, through Aerex, is a custom and specialty manufacturer of water treatment-related systems and products applicable to commercial, municipal and industrial water production. Substantially all of Aerex’s customers are U.S. companies. The Company generates services revenue from DesalCo and PERC and generates manufacturing revenue from Aerex. The Company recognizes revenue for its construction and specialized/custom manufacturing contracts The Company has elected the “right to invoice” practical expedient for revenue recognition on its services agreements and recognizes revenue in the amount to which the Company has a right to invoice. Revenue recognized and amounts billed on contracts in progress are summarized as follows: September 30, 2021 December 31, 2020 Revenue recognized to date on contracts in progress $ 6,808,572 $ 17,534,449 Amounts billed to date on contracts in progress (6,565,955) (17,791,928) Retainage 195,341 312,130 Net contract asset $ 437,958 $ 54,651 The above net balances are reflected in the accompanying condensed consolidated balance sheets as follows: September 30, 2021 December 31, 2020 Contract assets $ 483,190 $ 516,521 Contract liabilities (45,232) (461,870) Net contract asset $ 437,958 $ 54,651 As of September 30, 2021, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $6.4 million in aggregate transaction price for contracts with an original expected length of greater than one year . The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $445,000 during the remainder of the year ending December 31, 2021 and approximately $6.0 million thereafter . Practical Expedients and Exemptions The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. Comparative amounts: |
Segment information
Segment information | 9 Months Ended |
Sep. 30, 2021 | |
Segment information | |
Segment information | 3. Segment information The Company has four reportable segments: retail, bulk, services and manufacturing. The retail segment operates the water utility for the Seven Mile Beach and West Bay areas of Grand Cayman Island pursuant to an exclusive license granted by the Cayman Islands government. The bulk segment supplies potable water to government utilities in Grand Cayman and The Bahamas under long-term contracts. The services segment designs, constructs and sells water infrastructure and provides management and operating services to third parties. The manufacturing segment manufactures and services a wide range of custom and specialized water-related products applicable to commercial, municipal and industrial water production, supply and treatment. Consistent with prior periods, the Company records all non-direct general and administrative expenses in its retail business segment and does not allocate any of these non-direct expenses to its other three business segments. The accounting policies of the segments are consistent with those described in Note 2. The Company evaluates each segment’s performance based upon its income (or loss) from operations. All intercompany transactions are eliminated for segment presentation purposes. The Company’s segments are strategic business units that are managed separately because each segment sells different products and/or services, serves customers with distinctly different needs and generates different gross profit margins. Three Months Ended September 30, 2021 Retail Bulk Services Manufacturing Total Revenue $ 5,247,042 $ 6,868,134 $ 3,210,584 $ 1,087,386 $ 16,413,146 Cost of revenue 2,745,796 4,628,386 2,410,430 937,935 10,722,547 Gross profit 2,501,246 2,239,748 800,154 149,451 5,690,599 General and administrative expenses 3,067,696 313,420 758,540 219,384 4,359,040 Gain on asset dispositions and impairments, net 612 — — — 612 Income (loss) from operations $ (565,838) $ 1,926,328 $ 41,614 $ (69,933) 1,332,171 Other income, net 152,168 Income before income taxes 1,484,339 Benefit from income taxes (11,230) Net income from continuing operations 1,495,569 Income from continuing operations attributable to non-controlling interests 131,609 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,363,960 Net loss from discontinued operations (1,078,367) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 285,593 Depreciation and amortization expenses for the three months ended September 30, 2021 for the retail, bulk, services and manufacturing segments were $625,640, $761,429, $203,411 and $70,679, respectively. Three Months Ended September 30, 2020 Retail Bulk Services Manufacturing Total Revenue $ 4,993,069 $ 6,061,475 $ 3,351,935 $ 3,259,778 $ 17,666,257 Cost of revenue 2,586,901 4,400,717 2,513,272 1,949,731 11,450,621 Gross profit 2,406,168 1,660,758 838,663 1,310,047 6,215,636 General and administrative expenses 3,367,802 382,662 728,829 330,723 4,810,016 Loss on asset dispositions and impairments, net — — (984) — (984) Income (loss) from operations $ (961,634) $ 1,278,096 $ 108,850 $ 979,324 1,404,636 Other income, net 245,492 Income before income taxes 1,650,128 Benefit from income taxes (263,165) Net income from continuing operations 1,913,293 Income attributable to non-controlling interests 101,137 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,812,156 Net loss from discontinued operations (377,321) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 1,434,835 Depreciation and amortization expenses for the three months ended September 30, 2020 for the retail, bulk, services and manufacturing segments were $596,528, $971,914, $191,419 and $88,452, respectively. Nine Months Ended September 30, 2021 Retail Bulk Services Manufacturing Total Revenue $ 16,633,137 $ 19,826,075 $ 10,514,669 $ 3,244,106 $ 50,217,987 Cost of revenue 8,235,699 13,170,333 8,010,767 2,919,226 32,336,025 Gross profit 8,397,438 6,655,742 2,503,902 324,880 17,881,962 General and administrative expenses 9,757,179 994,779 2,152,145 943,727 13,847,830 Gain (loss) on asset dispositions and impairments, net (246,028) 1,500 (433) (2,900,000) (3,144,961) Income (loss) from operations $ (1,605,769) $ 5,662,463 $ 351,324 $ (3,518,847) 889,171 Other income, net 699,890 Income before income taxes 1,589,061 Benefit from income taxes (20,735) Net income from continuing operations 1,609,796 Income from continuing operations attributable to non-controlling interests 457,540 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,152,256 Net loss from discontinued operations (1,542,540) Net loss attributable to Consolidated Water Co. Ltd. stockholders $ (390,284) Depreciation and amortization expenses for the nine months ended September 30, 2021 for the retail, bulk, services and manufacturing segments were $1,892,848, $2,621,481, $607,906 and $216,346, respectively. Nine Months Ended September 30, 2020 Retail Bulk Services Manufacturing Total Revenue $ 18,216,797 $ 18,368,156 $ 9,942,748 $ 10,951,524 $ 57,479,225 Cost of revenue 8,343,018 12,906,606 7,418,305 6,852,196 35,520,125 Gross profit 9,873,779 5,461,550 2,524,443 4,099,328 21,959,100 General and administrative expenses 10,008,423 935,808 2,112,869 1,005,838 14,062,938 Gain on asset dispositions and impairments, net — 200 3,801 — 4,001 Income (loss) from operations $ (134,644) $ 4,525,942 $ 415,375 $ 3,093,490 7,900,163 Other income, net 533,710 Income before income taxes 8,433,873 Provision for income taxes 147,186 Net income from continuing operations 8,286,687 Income from continuing operations attributable to non-controlling interests 642,289 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 7,644,398 Net loss from discontinued operations (4,448,798) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 3,195,600 Depreciation and amortization expenses for the nine months ended September 30, 2020 for the retail, bulk, services and manufacturing segments were $1,796,588, $2,906,213, $562,756 and $296,926, respectively. As of September 30, 2021 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,233,715 $ 21,646,332 $ 1,579,404 $ 922,530 $ 26,381,981 Inventory, current and non-current $ 2,755,862 $ 3,702,618 $ — $ 572,802 $ 7,031,282 Property, plant and equipment, net $ 26,467,981 $ 25,185,215 $ 503,704 $ 1,563,892 $ 53,720,792 Construction in progress $ 624,805 $ 31,737 $ — $ 103,537 $ 760,079 Intangibles, net $ — $ — $ 2,693,056 $ 871,110 $ 3,564,166 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 60,254,674 $ 71,640,368 $ 15,535,680 $ 7,484,075 $ 154,914,797 Assets of discontinued operations $ 21,899,816 Total assets $ 176,814,613 As of December 31, 2020 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,444,455 $ 17,022,813 $ 1,420,609 $ 596,099 $ 21,483,976 Inventory, current and non-current $ 2,787,163 $ 3,795,544 $ — $ 1,138,313 $ 7,721,020 Property, plant and equipment, net $ 27,947,545 $ 27,611,567 $ 487,973 $ 1,640,899 $ 57,687,984 Construction in progress $ 305,110 $ 31,737 $ — $ 103,537 $ 440,384 Intangibles, net $ — $ — $ 3,200,555 $ 947,778 $ 4,148,333 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 4,885,211 $ 13,325,013 Total segment assets $ 56,425,159 $ 74,771,798 $ 14,470,322 $ 11,210,685 $ 156,877,964 Assets of discontinued operations $ 22,677,588 Total assets $ 179,555,552 |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings per share | |
Earnings per share | 4. Earnings per share Earnings per share (“EPS”) is computed on a basic and diluted basis. Basic EPS is computed by dividing net income (loss) (less preferred stock dividends) available to common stockholders by the weighted average number of common shares outstanding during the period. The computation of diluted EPS assumes the issuance of common shares for all potential common shares outstanding during the reporting period and, if dilutive, the effect of stock options as computed under the treasury stock method. The following summarizes information related to the computation of basic and diluted EPS: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders $ 1,363,960 $ 1,812,156 $ 1,152,256 $ 7,644,398 Less: preferred stock dividends (2,628) (2,810) (8,362) (9,099) Net income from continuing operations available to common shares in the determination of basic earnings per common share 1,361,332 1,809,346 1,143,894 7,635,299 Total loss from discontinued operations (1,078,367) (377,321) (1,542,540) (4,448,798) Net income (loss) available to common shares in the determination of basic earnings per common share $ 282,965 $ 1,432,025 $ (398,646) $ 3,186,501 Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,209,432 15,120,983 15,204,220 15,116,681 Plus: Weighted average number of preferred shares outstanding during the period 31,861 34,191 30,701 34,355 Potential dilutive effect of unexercised options and unvested stock grants 110,589 118,355 110,199 119,458 Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,351,882 15,273,529 15,345,120 15,270,494 |
Discontinued operations
Discontinued operations | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued operations - Mexico project development | |
Discontinued operations - Mexico project development | 5. Discontinued operations - Mexico project development In May 2010, the Company acquired, through its wholly-owned Netherlands subsidiary, CW-Cooperatief, a 50% interest in NSC, a development stage Mexican company. CW-Cooperatief thereafter purchased, through the conversion of a loan it made to NSC, additional shares that increased its ownership interest in NSC to 99.99%. NSC was formed to pursue a project (the “Project”) that originally encompassed the construction, operation and minority ownership of a 100 million gallon per day seawater reverse osmosis desalination plant to be located in northern Baja California, Mexico and accompanying pipelines to deliver water to the Mexican potable water system. Through a series of transactions that began in 2012, NSC purchased 20.1 hectares of land for approximately $21.1 million on which the proposed Project’s plant would be constructed. Following an assessment by the State of Baja, California (the “State”) of the need for such a desalination plant and the passage of enabling legislation in November 2015, the State officially commenced the tender for the Project. The scope of the Project was defined by the State as a first phase to be operational in 2019 consisting of a 50 million gallon per day plant and an aqueduct that connected to the Mexican potable water infrastructure and a second phase to be operational in 2024 consisting of an additional 50 million gallons per day of production capacity. A consortium (the “Consortium”) comprised of NSC, NuWater S.A.P.I. de C.V. (“NuWater”) and Suez Medio Ambiente México, S.A. de C.V. (“Suez MA”), a subsidiary of SUEZ International, S.A.S., submitted its tender for the Project in April 2016 and in June 2016, the State designated the Consortium as the winner of the tender process for the Project. In August 2016, NSC and NuWater incorporated a new company under the name Aguas de Rosarito S.A.P.I. de C.V. (“AdR”), a special purpose company, to complete the Project and executed a shareholders agreement for AdR agreeing among other things that (i) AdR would purchase the land and other Project assets from NSC on the date that the Project begins commercial operations and (ii) AdR would enter into a Management and Technical Services Agreement with NSC effective on the first day that the Project begins commercial operations. NSC initially owned 99.6% of the equity of AdR. In February 2018, CW-Holdings acquired the remaining 0.4% ownership in AdR from NuWater. On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the State Water Commission of Baja, California (“CEA”), the Government of Baja California, as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”). The APP Contract required AdR to design, construct, finance and operate a seawater reverse osmosis desalination plant (and accompanying aqueduct) with a capacity of up to 100 million gallons per day in two phases: the first with a capacity of 50 million gallons per day and an aqueduct to the Mexican public water system in Tijuana, Baja California and the second phase with a capacity of 50 million gallons per day. The first phase was to be operational within 36 months of commencing construction and the second phase was to be operational by January 2025. The APP Contract further required AdR to operate and maintain the plant and aqueduct for a period of 37 years starting from the commencement of operation of the first phase. At the end of the operating period, the plant and aqueduct would have been transferred to CEA. The APP Contract was subsequently amended by the parties in June 2018 to increase the scope of Phase 1 and to allow for changes in the water tariff due to the changes in the exchange rate for the peso, interest rates and construction costs that had and would occur from the date the APP Contract was signed to the date construction commenced. Through June 30, 2020, NSC had paid approximately $3.0 million to acquire rights of way for the aqueduct to be constructed for the Project to deliver water to the Mexico public water system. 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 reasoning provided in the Letter for the decision to terminate the APP Contract is that the Project (a) is not financially feasible due to increases in the construction, operating and financing costs for the Project in addition to negative changes in economic conditions (e.g. interest rates and currency exchange rates); (b) is not sustainable for CEA and CESPT given its financial unfeasibility; (c) puts pressure to increase the rates charged to customers; (d) would force the Government of the State to cover a deficit of CEA and CESPT, thus preventing the State Government from spending on investment programs or social expenditures; and (e) negatively affects the general interest. The Letter requested that AdR provide an inventory of the assets that currently comprise 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 requires this list of non-recoverable expenses made by AdR in connection with the Project be submitted to CEA and CESPT within 20 As a consequence of the termination of the APP Contract, the rights of way NSC and AdR acquired for the aqueduct no longer have any value due to the loss of their strategic importance derived from their incorporation in the Project. Consequently, the Company recorded an impairment loss of approximately ($3.0 million) for the three months ended June 30, 2020 to write off its investment in these rights of way. The Company also recorded adjustments during the three months ended June 30, 2020 of $2.6 million and $2.2 million to reduce its operating lease right-of-use assets and operating lease liabilities, respectively, due to the planned cancellation (or transfer to the State) of a long-term land lease associated with the Project. As a result of the cancellation of the APP Contract, during the three months ended September 30, 2020, the Company discontinued all project development activities associated with the Project and engaged a real estate broker 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 all Project development expenses and the impairment loss incurred by the Company, have been reclassified from the services segment to discontinued operations in the accompanying condensed financial statements. Summarized financial information for the Mexico project development is as follows: September 30, December 31, 2021 2020 Cash $ 36,326 $ 154,130 Prepaid expenses and other current assets 88,777 88,978 Value added taxes receivable 645,542 1,267,991 Property, plant and equipment, net 2,273 5,682 Land 21,126,898 21,126,898 Other assets — 33,909 Total assets of discontinued operations $ 21,899,816 $ 22,677,588 Total liabilities of discontinued operations $ 252,720 $ 190,933 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ — $ — $ — $ — Income from operations $ — $ — $ — $ — Net loss from discontinued operations $ 1,078,367 $ 377,321 $ 1,542,540 $ 4,448,798 Gain on sale of discontinued operations $ — $ — $ — $ — Depreciation expense $ 1,136 $ 1,137 $ 3,409 $ 3,409 AdR initiated an amparo 20 The Company, AdR and NSC plan to vigorously pursue all legal remedies and courses of action available under the APP Contract and applicable law (including international treaties and agreements) with respect to any rights they may have upon termination of the APP Contract, including the reimbursement of expenses and investments. As a Netherlands company, CW-Cooperatief, believes it has certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States The Company cannot provide any assurances that it will be able to obtain reimbursement for any expenses or investments made with respect to the Project. The Company, AdR and NSC have terminated the various agreements ancillary to the Project as a result of the termination of the APP Contract. Project Litigation Immediately following CW-Cooperatief’s acquisition of its initial 50% ownership in NSC, the remaining 50% ownership interest in NSC was held by an unrelated company, Norte Sur Agua, S. de R.L. de C.V. (“NSA”). NSA subsequently transferred ownership of half of its shares in NSC to EWG Water LLC (“EWG”) and the other half of its shares in NSC to an individual (the “individual shareholder”). In February 2012, CW-Cooperatief paid $300,000 to enter into an agreement (the “Option Agreement”) that provided it with an option, exercisable through February 7, 2014, to purchase the shares of NSC owned by the individual shareholder for a price of $1.0 million along with an immediate usufruct and power of attorney to vote those shares. Such shares constituted 25% of the ownership of NSC as of February 2012. In May 2013, NSC repaid a $5.7 million loan payable to CW-Cooperatief by issuing additional shares of its stock. As a result of this share issuance to CW-Cooperatief, the Company indirectly acquired 99.99% of the ownership of NSC. The Option Agreement contained an anti-dilution provision that required CW-Cooperatief to transfer or otherwise cause the individual shareholder to acquire, for a total price of $1 (regardless of their par or market value), shares in NSC of an amount sufficient to maintain the individual shareholder’s 25% ownership interest in NSC if (i) any new shares of NSC were issued subsequent to the execution of the Option Agreement (causing the individual shareholder’s 25% ownership interest in NSC to be decreased); and (ii) CW-Cooperatief did not exercise its share purchase option by February 7, 2014. CW-Cooperatief exercised its option and paid the $1.0 million to the individual shareholder to purchase the Option Agreement shares in February 2014. In January 2018, EWG initiated an ordinary mercantile claim against the individual shareholder, NSC and CW-Cooperatief, (with AdR being named as a third party to be called to trial) before the Tenth Civil Judge in Tijuana, Baja California for Mercantile Matters (the “Tenth Civil Judge”). In the ordinary mercantile claim, EWG challenged, among other things, the transactions contemplated under the Option Agreement, and therefore, the capital investment transactions that increased the ownership interest of CW-Cooperatief in NSC to 99.99% as a consequence of the Option Agreement. EWG requested that the court, as a preliminary matter (a) suspend the effectiveness of the challenged transactions; (b) order certain public officials in Mexico to record the pendency of the lawsuit in the public records (including a special request to register a lien over the real estate owned by NSC); (c) appoint an inspector for NSC to oversee its commercial activities; and (d) order public officials in Mexico and credit institutions abroad to refrain from authorizing or executing any legal act related with the activities of the plaintiff, the co-defendants and the third party called to trial to avoid damages to third parties, including those with whom negotiations or any form of commercial or administrative activities, or activities of any other nature related with the “Rosarito” water desalination project, are being conducted. The Tenth Civil Judge granted, ex-parte, the preliminary relief sought by EWG, which resulted in the issuance of official writs to several governmental and public entities involved with the “Rosarito” water desalination project, including the registration of the pendency of the lawsuit in certain public records. On October 16, 2018, NSC was served with the ordinary mercantile claim. On November 7, 2018, NSC filed a legal response to the claim, vigorously opposing the claims made by EWG. In addition to such legal response, NSC filed (i) a request to submit the claim to arbitration, based on certain provisions of the by-laws of NSC, (ii) an appeal remedy against the preliminary relief, and (iii) a request for the setting of a guarantee to release the preliminary relief granted in favor of EWG. On October 1, 2020, and following an order from a Federal Judge obtained by NSC, the Tenth Civil Judge resolved to (i) move the claim of EWG to arbitration, and (ii) suspend the corresponding ordinary mercantile procedure. EWG challenged such resolution, arguing that its notification was not lawful. The Tenth Civil Judge dismissed such challenge, and thereafter EWG filed a remedy against such dismissal. NSC appeared before the court to vigorously oppose such remedy, which has been dismissed. To date, the referral to arbitration has not occurred and, as such, the procedure is currently suspended. Notwithstanding the resolution of the Tenth Civil Judge to move to arbitration, subparagraphs a) through d) that follow describe certain separate amparo claims, and appeal remedies arising from or relating to such ordinary mercantile claim and amparo claims, all in chronological order. Due to the current global COVID-19 pandemic, most tribunals in Mexico suspended their activities intermittently since March 2020, with certain such tribunals partially restarting on different dates and with different special rules. As such, several resolutions are pending issuance. a) Appeal filed by NSC against the preliminary relief sought by EWG. The appeal remedy filed by NSC on November 7, 2018, mentioned previously, suspended the proceeding (through the posting of a guarantee by NSC) and was resolved in December 2019 and communicated to EWG in January 2020. Such resolution revoked the order of the Tenth Civil Judge whereby EWG was granted the preliminary relief. b) Amparo filed by EWG against the revocation of the preliminary relief. In January 2020, EWG filed a new amparo claim against the resolution of the appeal remedy previously mentioned in subparagraph a). NSC has responded to this new amparo to vigorously oppose such amparo claim of EWG and to uphold the resolution of such appeal remedy. To this date, the resolution to this amparo claim has not been made public or communicated to NSC. However, from publicly available information it may be concluded that the claim has been dismissed by the amparo court, considering that public excerpts make reference to such dismissal. If such dismissal has occurred, no public information evidences that EWG has filed a remedy against such dismissal. As such, the revocation of the preliminary relief is not affected. c) Amparo apparently filed by EWG against a resolution of the Tenth Civil Judge. In August 2021, counsel to NSC and AdR became aware, from publicly available information of Mexican Federal courts, of an amparo claim filed by EWG, against the resolution of the Tenth Civil Judge dismissing the remedy filed by EWG against the October 1, 2021 resolution within the mentioned ordinary mercantile claim. NSC has filed before the corresponding amparo court a writ vigorously opposing this claim. Within this amparo claim, the Third District Court in Tijuana granted a suspension in favor of EWG, merely for the effect of holding in place the referral to arbitration subject matter of the October 1, 2021 resolution mentioned above. Such suspension was conditioned on the posting of a guarantee in the amount of 50,000 Mexican pesos which, as of the date hereof, has not been posted. Regardless of the effects of the suspension and the lack of the posting of a guarantee, in September 2021, NSC filed an appeal remedy against its granting. Recently, AdR was notified of this claim. However, considering that NSC has vigorously opposed it, and that AdR is a third party with interest, it is not necessary for AdR to appear before the court for this claim and submit arguments against EWG. To date, CW-Cooperatief has not been notified of this amparo claim. Further, a final hearing on the main merits of the claim, as well as on the arguments filed by the parties has been deferred on several occasions. The next scheduled date for such hearing is December 15, 2021. d) Appeal filed by NSC against the suspension granted in favor of EWG. The appeal remedy mentioned in the second paragraph of item c) immediately above was admitted by the superior court on October 18, 2021 and is still pending to be resolved. Notwithstanding the resolution to move to arbitration mentioned previously, CW-Cooperatief has not been officially served with the ordinary mercantile claim, and AdR has not been notified that it has to appear for such trial. In any event, AdR is only a named third party called to trial in this claim, and no claims have been made by EWG against AdR. The Company cannot presently determine what impact the resolution of this litigation may have on its consolidated financial condition, results of operations or cash flows. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Leases | 6. Leases The Company leases property and equipment under operating leases, primarily office and warehouse locations. For leases with terms greater than twelve months, the related asset and obligation are recorded at the present value of the lease payments over the term. Many of these leases contain rental escalation clauses which are factored into the determination of the lease payments when appropriate. When available, the lease payments are discounted using the rate implicit in the lease; however, the Company’s current leases do not provide a readily determinable implicit rate. Therefore, the Company’s incremental borrowing rate is estimated to discount the lease payments based on information available at the lease commencement. These leases contain both lease and non-lease components, which the Company has elected to treat as a single lease component. The Company elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase obligations, of twelve months or less in its condensed consolidated balance sheets for all classes of underlying assets. Lease costs for such short-term leases are expensed on a straight-line basis over the lease term. The land used by the Company to operate its seawater desalination plants in the Cayman Islands and The Bahamas is owned by the Company or leased to the Company for immaterial annual amounts and are not included in the lease amounts presented in the condensed All lease assets denominated in a foreign currency are measured using the exchange rate at the commencement of the lease. All lease liabilities denominated in a foreign currency are remeasured using the exchange rate as of the condensed consolidated balance sheet date. Effective March 9, 2021, the Company entered into a new office lease for the existing office located in Coral Springs, Florida under similar terms compared to the prior lease. This new lease expires, including all renewal options, on March 8, 2031. Lease assets and liabilities The following table presents the lease-related assets and liabilities and their respective classification on the condensed consolidated balance sheets: September 30, December 31, 2021 2020 ASSETS Current Accounts receivable, net $ 21,131 $ — Prepaid expenses and other current assets 8,228 108,303 Current assets of discontinued operations 10,570 — Noncurrent Operating lease right-of-use assets 2,855,346 1,329,561 Long-term assets of discontinued operations — 33,909 Total lease right-of-use assets $ 2,895,275 $ 1,471,773 LIABILITIES Current Current maturities of operating leases $ 563,154 $ 455,788 Current liabilities of discontinued operations 9,778 29,432 Noncurrent Noncurrent operating leases 2,321,551 982,076 Noncurrent liabilities of discontinued operations — 2,499 Total lease liabilities $ 2,894,483 $ 1,469,795 Weighted average remaining lease term: Operating leases 7.1 years 3.4 years Operating leases - discontinued operations 0.4 years 1.1 years Weighted average discount rate: Operating leases 4.96% 4.15% Operating leases - discontinued operations 3.48% 3.48% The components of lease costs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Operating lease costs $ 165,899 $ 191,507 $ 518,524 $ 576,971 Short-term lease costs 24,781 — 54,541 5,518 Lease costs - discontinued operations 7,684 20,048 22,571 120,753 Total lease costs $ 198,364 $ 211,555 $ 595,636 $ 703,242 Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in measurement of liabilities: Operating cash outflows for operating leases $ 541,054 $ 605,306 Operating cash outflows for operating leases - discontinued operations 24,007 119,480 Future lease payments relating to the Company’s operating lease liabilities as of September 30, 2021 were as follows: Years ending December 31, Total 2021 $ 172,762 2022 694,215 2023 663,190 2024 410,464 2025 268,896 Thereafter 1,235,418 Total future lease payments 3,444,945 Less: imputed interest (560,240) Total lease obligations 2,884,705 Less: current obligations (563,154) Noncurrent lease obligations $ 2,321,551 |
Fair value
Fair value | 9 Months Ended |
Sep. 30, 2021 | |
Fair value | |
Fair value | 7. Fair value As of September 30, 2021 and December 31, 2020, the carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, accrued compensation, dividends payable and other current liabilities approximate their fair values due to the short-term maturities of these instruments. Under US GAAP, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. US GAAP guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company reviews its fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value as of September 30, 2021 and December 31, 2020: September 30, 2021 Level 1 Level 2 Level 3 Total Assets: Recurring Certificate of deposit $ — $ 2,500,000 $ — $ 2,500,000 Liabilities: Recurring Net liability arising from put/call options $ — $ — $ 582,000 $ 582,000 December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities: Recurring Net liability arising from put/call options $ — $ — $ 690,000 $ 690,000 The activity for the Level 3 liability for the nine months ended September 30, 2021: Net liability arising from put/call options Balance as of December 31, 2020 $ 690,000 Unrealized gain (108,000) Balance as of September 30, 2021 $ 582,000 Put/call options are reported at fair value as either assets or liabilities in the condensed consolidated balance sheets. These fair values are calculated using discounted cash flow analysis valuation techniques that incorporate unobservable inputs, such as future cash flows, weighted-average cost of capital and expected future volatility. The inputs for these valuations are considered Level 3 inputs. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Contingencies. | |
Contingencies | 8 . Contingencies COVID-19 The worldwide coronavirus (COVID-19) pandemic was formally recognized by the World Health Organization on March 11, 2020. In response to this pandemic, the governments of the countries in which the Company operates - the Cayman Islands, The Bahamas, and the United States - implemented preventative measures to slow the spread of COVID-19, measures which have had profound adverse consequences for the economies of those countries. Tourism, a major economic driver for the Cayman Islands, has temporarily ceased due to closing of the country to tourist arrivals by air and sea travel. Tourist arrivals to The Bahamas by air and sea have declined significantly due to the pandemic and continue to be only a small fraction of pre-pandemic numbers due to travel restrictions within and outside of The Bahamas, as well the continued reluctance of people to travel internationally. Overall economic activity in the United States has also declined. As a result of the impact of the COVID-19 pandemic on the economies of the countries in which the Company operates, the Company has experienced, and could continue to experience, decreases in consolidated revenue, cash flows generated from operations, and overall liquidity as compared to comparable prior periods. Furthermore, the prolonged extension of the economic downturn created by the COVID-19 pandemic could further adversely affect the markets for the Company’s products and services. Such adverse market effects could further adversely impact the Company’s expected future cash flows from its four reporting units and could require the Company to record impairment losses to reduce the carrying values of one or more of these reporting units due to a decline in their fair values. Although the Company cannot presently quantify the future financial impacts of the COVID-19 pandemic, such impacts will likely have a material adverse impact on the Company’s consolidated financial condition, results of operations, and cash flows. Given the uncertainty associated with the resolution of this pandemic, the Company cannot presently determine how long such adverse financial impacts may last. Cayman Water The Company sells water through its 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 was not expressly extended after January 2018, the Company continues to supply water under the terms of the 1990 license, as further discussed in the following paragraph. 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 September 30, 2021 and 2020, the Company generated approximately 32% and 28%, respectively, of its consolidated revenue and 44% and 39%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 license. For the nine months ended September 30, 2021 and 2020, the Company generated approximately 33% and 32%, respectively, of its consolidated revenue and 47% and 45%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 license. The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement. The most recent express extension of the 1990 license expired on January 31, 2018. The Company continues to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with its understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension. The Company continues to pay the royalty required under the 1990 license. In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”). OfReg is an independent and accountable regulatory body with a view of protecting the rights of consumers, encouraging affordable utility services and promoting competition. OfReg, which began operations in January 2017, has the ability to supervise, monitor and regulate multiple utility undertakings and markets. Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for the economic regulation of the water utility sector and the negotiations with the Company for a new retail license from the WAC to OfReg in May 2017. The Company began license negotiations with OfReg in July 2017 and such negotiations are ongoing. The Company has been informed during its retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of its license in a manner that could significantly reduce the operating income and cash flows the Company has historically generated from its retail license. The Company is presently unable to determine what impact the resolution of its retail license negotiations will have on its cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows the Company has historically generated from Cayman Water’s retail operations and could require the Company to record impairment losses to reduce the carrying values of its retail segment assets. Such impairment losses could have a material adverse impact on the Company’s consolidated financial condition and results of operations. CW-Bahamas CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $21.4 million as of September 30, 2021 and $16.8 million as of December 31, 2020. From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC. When these delays occur, the Company holds discussions and meetings with representatives of the WSC and The Bahamas government, and as a result, payment schedules are developed for WSC’s delinquent accounts receivable. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, CW-Bahamas has never been required to provide an allowance for doubtful accounts for any of its accounts receivable, despite the periodic accumulation of significant delinquent balances. As of September 30, 2021, the Company has not provided an allowance for doubtful accounts for CW-Bahamas’ accounts receivable from the WSC. The Bahamas government and the WSC continue to make intermittent payments on these accounts receivable, and such payments amounted to approximately $6.9 million and $15.6 million for the three and nine months ended September 30, 2021, respectively. Presently, Moody’s Investors Service and Standard & Poor’s have assigned a credit rating to The Bahamas of Ba3 and B+, respectively. If CW-Bahamas continues to be unable to collect a significant 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) the Company may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) the Company may be required to provide an allowance for doubtful accounts for CW-Bahamas’ accounts receivable. Any of these events could have a material adverse impact on the Company’s consolidated financial condition, results of operations, and cash flows. |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related party transactions | |
Related party transactions | 9. Related party transactions The Company, through PERC and the services segment, purchases engineering and technology support services from various companies with a minority shareholder who is also a minority shareholder of PERC. During the three months ended September 30, 2021 and 2020, the Company made total purchases of services from these companies of approximately $105,000 and $361,000, respectively, and approximately $390,000 and $1,226,000 during the nine months ended September 30, 2021 and 2020, respectively. These total purchases are included in the Company’s cost of revenue in the accompanying condensed consolidated statements of income (loss). On February 1, 2021, PERC entered into a sublease agreement with a related company commencing March 14, 2021 and ending August 31, 2021. This lease has been extended on a month-to-month basis subsequent to August 31, 2021. During the three months ended September 30, 2021, the Company recognized approximately $24,000 of expense related to this lease, and approximately $53,000 during the nine months ended September 30, 2021. This lease amount is included in the Company's general and administrative expenses in the accompanying condensed consolidated statements of income (loss). The total amount of accounts payable outstanding to these companies as of September 30, 2021 and December 31, 2020, was approximately $204,000 and $201,000, respectively. |
Impact of recent accounting sta
Impact of recent accounting standards | 9 Months Ended |
Sep. 30, 2021 | |
Impact of recent accounting standards | |
Impact of recent accounting standards | 10. Impact of recent accounting standards Adoption of New Accounting Standards: None. Effect of newly issued but not yet effective accounting standards: In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements, however the adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent events | |
Subsequent events | 11. Subsequent events The Company evaluated subsequent events through the time of the filing of this report on Form 10-Q. Other than as disclosed in these condensed consolidated financial statements, the Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its condensed consolidated financial statements. |
Accounting policies (Policies)
Accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting policies | |
Basis of consolidation | Basis of consolidation: The accompanying interim condensed consolidated financial statements are unaudited. These condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that, in the opinion of management, are necessary to fairly present the Company’s financial position, results of operations and cash flows as of and for the periods presented. The results of operations for these interim periods are not necessarily indicative of the operating results for future periods, including the fiscal year ending December 31, 2021. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) relating to interim financial statements and in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted in these condensed consolidated financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. |
Foreign currency | Foreign currency: Net foreign currency gains arising from transactions and re-measurements were $15,302 and $14,751 for the three months ended September 30, 2021 and 2020, respectively, and $29,353 and $56,050 for the nine months ended September 30, 2021 and 2020, respectively, and are included in “Other income - Other” in the accompanying condensed consolidated statements of income (loss). |
Cash and cash equivalents | Cash and cash equivalents: Certain transfers from the Company’s Bahamas bank accounts to Company bank accounts in other countries require the approval of the Central Bank of The Bahamas. The equivalent United States dollar cash balances for deposits held in The Bahamas as of September 30, 2021 and December 31, 2020 were approximately $8.9 million and $15.9 million, respectively. |
Goodwill and intangible assets | Goodwill and intangible assets: For the year ended December 31, 2020, the Company estimated the fair value of its reporting units by applying the discounted cash flow method, which relied upon seven-year discrete projections of operating results, working capital and capital expenditures, along with a terminal value subsequent to the discrete period. These seven-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and operational strategies. The discount rates for the calculations represented the estimated cost of capital for market participants at the time of each analysis. The Company also estimated the fair value of each of it reporting units for the year ended December 31, 2020 by applying the guideline public company method. The Company weighted the fair values estimated for each of its reporting units under each method and summed such weighted fair values to estimate the overall fair value for each reporting unit. The respective weightings the Company applied to each method for the years ended December 31 were as follows: As of December 31, 2020 Method Retail Bulk Services Manufacturing Discounted cash flow 80 % 80 % 80 % 80 % Guideline public company 20 % 20 % 20 % 20 % Mergers and acquisitions — % — % — % — % 100 % 100 % 100 % 100 % The fair values the Company estimated for its retail, bulk, services and manufacturing reporting units exceeded their carrying amounts by 101%, 49%, 17%, and 31% respectively, as of December 31, 2020. Approximately 81% and 84% of Aerex’s revenue, and 88% and 86% of Aerex’s gross profit, for the three and nine months ended September 30, 2020, respectively, were generated from sales to one customer. Approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to this customer. In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases from Aerex following 2020 for a period of approximately one year. This customer informed Aerex at that time that it expected to recommence its purchases from Aerex beginning with the first quarter of 2022. As a result of this anticipated loss of revenue for Aerex, the Company updated its projections for its manufacturing reporting unit’s future cash flows. Such projections assumed, in part, that Aerex’s major customer would recommence its purchases from Aerex in 2022 but at a reduced aggregate amount, as compared to 2020. Based upon these updated projections, the Company tested its manufacturing reporting unit’s goodwill for possible impairment as of September 30, 2020 and December 31, 2020 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. As a result of these impairment tests, the Company determined that the estimated fair value of its manufacturing reporting unit exceeded its carrying value by approximately 22% as of September 30, 2020 and 31% as of December 31, 2020. In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years. The updated sales estimate for this customer based on this new information is substantially below the sales previously anticipated to this customer for 2022 and subsequent years that the Company used in the discounted cash flow projections prepared for purposes of testing the manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020. Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers have been adversely impacted by the continuing negative economic impacts of the COVID-19 pandemic, which have increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials and, the Company believes, also adversely affected the overall financial condition of Aerex’s current and prospective customer base. Accordingly, in light of this new information from Aerex’s former major customer, and present weak economic conditions that the Company believes will continue into 2022, the Company updated its projections of future cash flows for its manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. Based upon this testing, the Company determined that the carrying value of its manufacturing reporting unit exceeded its fair value by $2.9 million, and the Company recorded an impairment loss to reduce its manufacturing reporting unit’s goodwill by this amount for the three months ended June 30, 2021. If it is determined in the future that Aerex’s future cash inflows will be less than the Company’s present expectations, it may be required to record additional impairment losses to reduce the remaining carrying values as of September 30, 2021 of the manufacturing reporting unit’s goodwill of $1,985,211 and the unamortized balance of its intangible assets of $871,111 associated with the acquisition of Aerex. Any such impairment losses could have a material adverse impact on the Company’s consolidated results of operations. |
Revenue recognition | Revenue recognition: The following table presents the Company’s revenue disaggregated by revenue source (unaudited). Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Retail revenue $ 5,247,042 $ 4,993,069 $ 16,633,137 $ 18,216,797 Bulk revenue 6,868,134 6,061,475 19,826,075 18,368,156 Services revenue 3,210,584 3,351,935 10,514,669 9,942,748 Manufacturing revenue 1,087,386 3,259,778 3,244,106 10,951,524 Total revenue $ 16,413,146 $ 17,666,257 $ 50,217,987 $ 57,479,225 Retail revenue The Company produces and supplies water to end-users, including residential, commercial and governmental customers in the Cayman Islands under an exclusive retail license issued to Cayman Water by the Cayman Islands government to provide water in two of the three most populated areas on Grand Cayman Island. Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 35 days after the billing date. The Company recognizes revenue from water sales at the time water is supplied to the customer’s premises. The amount of water supplied is determined and invoiced based upon water meter readings performed at the end of each month. All retail water contracts are month-to-month contracts. The Company has elected the “right to invoice” practical expedient for revenue recognition on its retail water sale contracts and recognizes revenue in the amount to which the Company has a right to invoice. Bulk revenue The Company produces and supplies water to government-owned distributors in the Cayman Islands and The Bahamas. OC-Cayman provides bulk water to the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, under two agreements. The WAC in turn distributes such water to properties in Grand Cayman outside of Cayman Water’s retail license area. The Company sells bulk water in The Bahamas through its majority-owned subsidiary, CW-Bahamas, under two agreements with the Water and Sewerage Corporation of The Bahamas (“WSC”), which distributes such water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. CW-Bahamas also sold water to a private resort on Bimini through December 18, 2020, which generated revenue of approximately $46,000 and $118,000 for the three and nine months ended September 30, 2020, respectively. The Company has elected the “right to invoice” practical expedient for revenue recognition on its bulk water sale contracts and recognizes revenue in the amount to which the Company has a right to invoice. Services and Manufacturing revenue The Company provides design, engineering, management, procurement and construction services for desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas and the British Virgin Islands. The Company also develops, builds, sells, operates and manages water, wastewater and water reuse infrastructure through PERC. All of PERC's customers are companies or governmental entities located in the U.S. The Company, through Aerex, is a custom and specialty manufacturer of water treatment-related systems and products applicable to commercial, municipal and industrial water production. Substantially all of Aerex’s customers are U.S. companies. The Company generates services revenue from DesalCo and PERC and generates manufacturing revenue from Aerex. The Company recognizes revenue for its construction and specialized/custom manufacturing contracts The Company has elected the “right to invoice” practical expedient for revenue recognition on its services agreements and recognizes revenue in the amount to which the Company has a right to invoice. Revenue recognized and amounts billed on contracts in progress are summarized as follows: September 30, 2021 December 31, 2020 Revenue recognized to date on contracts in progress $ 6,808,572 $ 17,534,449 Amounts billed to date on contracts in progress (6,565,955) (17,791,928) Retainage 195,341 312,130 Net contract asset $ 437,958 $ 54,651 The above net balances are reflected in the accompanying condensed consolidated balance sheets as follows: September 30, 2021 December 31, 2020 Contract assets $ 483,190 $ 516,521 Contract liabilities (45,232) (461,870) Net contract asset $ 437,958 $ 54,651 As of September 30, 2021, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $6.4 million in aggregate transaction price for contracts with an original expected length of greater than one year . The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $445,000 during the remainder of the year ending December 31, 2021 and approximately $6.0 million thereafter . Practical Expedients and Exemptions The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. |
Comparative amounts | Comparative amounts: |
Accounting policies (Tables)
Accounting policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting policies | |
Schedule of Estimated fair value of reporting segment | As of December 31, 2020 Method Retail Bulk Services Manufacturing Discounted cash flow 80 % 80 % 80 % 80 % Guideline public company 20 % 20 % 20 % 20 % Mergers and acquisitions — % — % — % — % 100 % 100 % 100 % 100 % |
Schedule of Disaggregation of revenue | The following table presents the Company’s revenue disaggregated by revenue source (unaudited). Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Retail revenue $ 5,247,042 $ 4,993,069 $ 16,633,137 $ 18,216,797 Bulk revenue 6,868,134 6,061,475 19,826,075 18,368,156 Services revenue 3,210,584 3,351,935 10,514,669 9,942,748 Manufacturing revenue 1,087,386 3,259,778 3,244,106 10,951,524 Total revenue $ 16,413,146 $ 17,666,257 $ 50,217,987 $ 57,479,225 |
Summary of revenue recognized and amounts billed on services segment and manufacturing segment contracts in progress | Revenue recognized and amounts billed on contracts in progress are summarized as follows: September 30, 2021 December 31, 2020 Revenue recognized to date on contracts in progress $ 6,808,572 $ 17,534,449 Amounts billed to date on contracts in progress (6,565,955) (17,791,928) Retainage 195,341 312,130 Net contract asset $ 437,958 $ 54,651 |
Summary of net balances of billings reflected in the accompanying consolidated balance sheet | The above net balances are reflected in the accompanying condensed consolidated balance sheets as follows: September 30, 2021 December 31, 2020 Contract assets $ 483,190 $ 516,521 Contract liabilities (45,232) (461,870) Net contract asset $ 437,958 $ 54,651 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment information | |
Schedule of segment reporting information, by segment | Three Months Ended September 30, 2021 Retail Bulk Services Manufacturing Total Revenue $ 5,247,042 $ 6,868,134 $ 3,210,584 $ 1,087,386 $ 16,413,146 Cost of revenue 2,745,796 4,628,386 2,410,430 937,935 10,722,547 Gross profit 2,501,246 2,239,748 800,154 149,451 5,690,599 General and administrative expenses 3,067,696 313,420 758,540 219,384 4,359,040 Gain on asset dispositions and impairments, net 612 — — — 612 Income (loss) from operations $ (565,838) $ 1,926,328 $ 41,614 $ (69,933) 1,332,171 Other income, net 152,168 Income before income taxes 1,484,339 Benefit from income taxes (11,230) Net income from continuing operations 1,495,569 Income from continuing operations attributable to non-controlling interests 131,609 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,363,960 Net loss from discontinued operations (1,078,367) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 285,593 Depreciation and amortization expenses for the three months ended September 30, 2021 for the retail, bulk, services and manufacturing segments were $625,640, $761,429, $203,411 and $70,679, respectively. Three Months Ended September 30, 2020 Retail Bulk Services Manufacturing Total Revenue $ 4,993,069 $ 6,061,475 $ 3,351,935 $ 3,259,778 $ 17,666,257 Cost of revenue 2,586,901 4,400,717 2,513,272 1,949,731 11,450,621 Gross profit 2,406,168 1,660,758 838,663 1,310,047 6,215,636 General and administrative expenses 3,367,802 382,662 728,829 330,723 4,810,016 Loss on asset dispositions and impairments, net — — (984) — (984) Income (loss) from operations $ (961,634) $ 1,278,096 $ 108,850 $ 979,324 1,404,636 Other income, net 245,492 Income before income taxes 1,650,128 Benefit from income taxes (263,165) Net income from continuing operations 1,913,293 Income attributable to non-controlling interests 101,137 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,812,156 Net loss from discontinued operations (377,321) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 1,434,835 Depreciation and amortization expenses for the three months ended September 30, 2020 for the retail, bulk, services and manufacturing segments were $596,528, $971,914, $191,419 and $88,452, respectively. Nine Months Ended September 30, 2021 Retail Bulk Services Manufacturing Total Revenue $ 16,633,137 $ 19,826,075 $ 10,514,669 $ 3,244,106 $ 50,217,987 Cost of revenue 8,235,699 13,170,333 8,010,767 2,919,226 32,336,025 Gross profit 8,397,438 6,655,742 2,503,902 324,880 17,881,962 General and administrative expenses 9,757,179 994,779 2,152,145 943,727 13,847,830 Gain (loss) on asset dispositions and impairments, net (246,028) 1,500 (433) (2,900,000) (3,144,961) Income (loss) from operations $ (1,605,769) $ 5,662,463 $ 351,324 $ (3,518,847) 889,171 Other income, net 699,890 Income before income taxes 1,589,061 Benefit from income taxes (20,735) Net income from continuing operations 1,609,796 Income from continuing operations attributable to non-controlling interests 457,540 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 1,152,256 Net loss from discontinued operations (1,542,540) Net loss attributable to Consolidated Water Co. Ltd. stockholders $ (390,284) Depreciation and amortization expenses for the nine months ended September 30, 2021 for the retail, bulk, services and manufacturing segments were $1,892,848, $2,621,481, $607,906 and $216,346, respectively. Nine Months Ended September 30, 2020 Retail Bulk Services Manufacturing Total Revenue $ 18,216,797 $ 18,368,156 $ 9,942,748 $ 10,951,524 $ 57,479,225 Cost of revenue 8,343,018 12,906,606 7,418,305 6,852,196 35,520,125 Gross profit 9,873,779 5,461,550 2,524,443 4,099,328 21,959,100 General and administrative expenses 10,008,423 935,808 2,112,869 1,005,838 14,062,938 Gain on asset dispositions and impairments, net — 200 3,801 — 4,001 Income (loss) from operations $ (134,644) $ 4,525,942 $ 415,375 $ 3,093,490 7,900,163 Other income, net 533,710 Income before income taxes 8,433,873 Provision for income taxes 147,186 Net income from continuing operations 8,286,687 Income from continuing operations attributable to non-controlling interests 642,289 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 7,644,398 Net loss from discontinued operations (4,448,798) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 3,195,600 Depreciation and amortization expenses for the nine months ended September 30, 2020 for the retail, bulk, services and manufacturing segments were $1,796,588, $2,906,213, $562,756 and $296,926, respectively. As of September 30, 2021 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,233,715 $ 21,646,332 $ 1,579,404 $ 922,530 $ 26,381,981 Inventory, current and non-current $ 2,755,862 $ 3,702,618 $ — $ 572,802 $ 7,031,282 Property, plant and equipment, net $ 26,467,981 $ 25,185,215 $ 503,704 $ 1,563,892 $ 53,720,792 Construction in progress $ 624,805 $ 31,737 $ — $ 103,537 $ 760,079 Intangibles, net $ — $ — $ 2,693,056 $ 871,110 $ 3,564,166 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 60,254,674 $ 71,640,368 $ 15,535,680 $ 7,484,075 $ 154,914,797 Assets of discontinued operations $ 21,899,816 Total assets $ 176,814,613 As of December 31, 2020 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,444,455 $ 17,022,813 $ 1,420,609 $ 596,099 $ 21,483,976 Inventory, current and non-current $ 2,787,163 $ 3,795,544 $ — $ 1,138,313 $ 7,721,020 Property, plant and equipment, net $ 27,947,545 $ 27,611,567 $ 487,973 $ 1,640,899 $ 57,687,984 Construction in progress $ 305,110 $ 31,737 $ — $ 103,537 $ 440,384 Intangibles, net $ — $ — $ 3,200,555 $ 947,778 $ 4,148,333 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 4,885,211 $ 13,325,013 Total segment assets $ 56,425,159 $ 74,771,798 $ 14,470,322 $ 11,210,685 $ 156,877,964 Assets of discontinued operations $ 22,677,588 Total assets $ 179,555,552 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings per share | |
Schedule of computation of basic and diluted EPS | The following summarizes information related to the computation of basic and diluted EPS: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders $ 1,363,960 $ 1,812,156 $ 1,152,256 $ 7,644,398 Less: preferred stock dividends (2,628) (2,810) (8,362) (9,099) Net income from continuing operations available to common shares in the determination of basic earnings per common share 1,361,332 1,809,346 1,143,894 7,635,299 Total loss from discontinued operations (1,078,367) (377,321) (1,542,540) (4,448,798) Net income (loss) available to common shares in the determination of basic earnings per common share $ 282,965 $ 1,432,025 $ (398,646) $ 3,186,501 Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,209,432 15,120,983 15,204,220 15,116,681 Plus: Weighted average number of preferred shares outstanding during the period 31,861 34,191 30,701 34,355 Potential dilutive effect of unexercised options and unvested stock grants 110,589 118,355 110,199 119,458 Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,351,882 15,273,529 15,345,120 15,270,494 |
Discontinued operations (Tables
Discontinued operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued operations - Mexico project development. | |
Schedule of financial information for Mexico project development | Summarized financial information for the Mexico project development is as follows: September 30, December 31, 2021 2020 Cash $ 36,326 $ 154,130 Prepaid expenses and other current assets 88,777 88,978 Value added taxes receivable 645,542 1,267,991 Property, plant and equipment, net 2,273 5,682 Land 21,126,898 21,126,898 Other assets — 33,909 Total assets of discontinued operations $ 21,899,816 $ 22,677,588 Total liabilities of discontinued operations $ 252,720 $ 190,933 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ — $ — $ — $ — Income from operations $ — $ — $ — $ — Net loss from discontinued operations $ 1,078,367 $ 377,321 $ 1,542,540 $ 4,448,798 Gain on sale of discontinued operations $ — $ — $ — $ — Depreciation expense $ 1,136 $ 1,137 $ 3,409 $ 3,409 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Schedule of lease-related assets and liabilities | The following table presents the lease-related assets and liabilities and their respective classification on the condensed consolidated balance sheets: September 30, December 31, 2021 2020 ASSETS Current Accounts receivable, net $ 21,131 $ — Prepaid expenses and other current assets 8,228 108,303 Current assets of discontinued operations 10,570 — Noncurrent Operating lease right-of-use assets 2,855,346 1,329,561 Long-term assets of discontinued operations — 33,909 Total lease right-of-use assets $ 2,895,275 $ 1,471,773 LIABILITIES Current Current maturities of operating leases $ 563,154 $ 455,788 Current liabilities of discontinued operations 9,778 29,432 Noncurrent Noncurrent operating leases 2,321,551 982,076 Noncurrent liabilities of discontinued operations — 2,499 Total lease liabilities $ 2,894,483 $ 1,469,795 Weighted average remaining lease term: Operating leases 7.1 years 3.4 years Operating leases - discontinued operations 0.4 years 1.1 years Weighted average discount rate: Operating leases 4.96% 4.15% Operating leases - discontinued operations 3.48% 3.48% |
Schedule of Lease, Cost | The components of lease costs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Operating lease costs $ 165,899 $ 191,507 $ 518,524 $ 576,971 Short-term lease costs 24,781 — 54,541 5,518 Lease costs - discontinued operations 7,684 20,048 22,571 120,753 Total lease costs $ 198,364 $ 211,555 $ 595,636 $ 703,242 |
Schedule of Cash Flow, Supplemental | Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in measurement of liabilities: Operating cash outflows for operating leases $ 541,054 $ 605,306 Operating cash outflows for operating leases - discontinued operations 24,007 119,480 |
Schedule of future lease payments relating to the Company's operating lease liabilities | Future lease payments relating to the Company’s operating lease liabilities as of September 30, 2021 were as follows: Years ending December 31, Total 2021 $ 172,762 2022 694,215 2023 663,190 2024 410,464 2025 268,896 Thereafter 1,235,418 Total future lease payments 3,444,945 Less: imputed interest (560,240) Total lease obligations 2,884,705 Less: current obligations (563,154) Noncurrent lease obligations $ 2,321,551 |
Fair value (Tables)
Fair value (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair value. | |
Schedule of Fair value hierarchy for assets and liabilities | The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value as of September 30, 2021 and December 31, 2020: September 30, 2021 Level 1 Level 2 Level 3 Total Assets: Recurring Certificate of deposit $ — $ 2,500,000 $ — $ 2,500,000 Liabilities: Recurring Net liability arising from put/call options $ — $ — $ 582,000 $ 582,000 December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities: Recurring Net liability arising from put/call options $ — $ — $ 690,000 $ 690,000 |
Schedule of Net liability arising from put/call options | The activity for the Level 3 liability for the nine months ended September 30, 2021: Net liability arising from put/call options Balance as of December 31, 2020 $ 690,000 Unrealized gain (108,000) Balance as of September 30, 2021 $ 582,000 |
Accounting policies (Details)
Accounting policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Foreign Currency Transaction Gain (Loss), before Tax [Abstract] | |||||
Foreign Currency Transaction Gain (Loss), before Tax | $ 15,302 | $ 14,751 | $ 29,353 | $ 56,050 | |
Bahamas [Member] | |||||
Deposits held in foreign bank | 8,900,000 | 8,900,000 | $ 15,900,000 | ||
Certificate of deposit [Member] | |||||
Short term deposits | $ 8,500,000 | $ 8,500,000 | $ 8,500,000 |
Accounting policies - Goodwill
Accounting policies - Goodwill and intangible assets (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2021USD ($) | Sep. 30, 2020customer | Jun. 30, 2021 | Sep. 30, 2020customer | Dec. 31, 2020USD ($)customer | Sep. 30, 2021USD ($) | |
Goodwill | $ 13,325,013 | $ 10,425,013 | ||||
Retail [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 100.00% | |||||
Estimated Fair Value Carrying Amount Exceeded Percentage | 101 | |||||
Goodwill | $ 1,170,511 | 1,170,511 | ||||
Bulk [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 100.00% | |||||
Estimated Fair Value Carrying Amount Exceeded Percentage | 49 | |||||
Goodwill | $ 1,948,875 | 1,948,875 | ||||
Services [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 100.00% | |||||
Estimated Fair Value Carrying Amount Exceeded Percentage | 17 | |||||
Goodwill | $ 5,320,416 | 5,320,416 | ||||
Manufacturing Units [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 100.00% | |||||
Estimated Fair Value Carrying Amount Exceeded Percentage | 31 | |||||
Goodwill | $ 4,885,211 | 1,985,211 | ||||
Discounted Cash Flow Method [Member] | Retail [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 80.00% | |||||
Discounted Cash Flow Method [Member] | Bulk [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 80.00% | |||||
Discounted Cash Flow Method [Member] | Services [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 80.00% | |||||
Discounted Cash Flow Method [Member] | Manufacturing Units [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 80.00% | |||||
Guideline Public Company Method [Member] | Retail [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 20.00% | |||||
Guideline Public Company Method [Member] | Bulk [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 20.00% | |||||
Guideline Public Company Method [Member] | Services [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 20.00% | |||||
Guideline Public Company Method [Member] | Manufacturing Units [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 20.00% | |||||
Aerex | ||||||
Number of customers | customer | 1 | 1 | 1 | |||
Aerex | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||||
Percentage of total | 81.00% | 84.00% | 80.00% | |||
Aerex | Gross Profit [Member] | Customer Concentration Risk [Member] | ||||||
Percentage of total | 88.00% | 86.00% | 89.00% | |||
Aerex | Manufacturing Units [Member] | ||||||
Estimated Fair Value Carrying Amount Exceeded Percentage | 22 | 31 | ||||
Goodwill | $ 1,985,211 | |||||
Impairment of goodwill | $ 2,900,000 | |||||
Aerex | Discounted Cash Flow Method [Member] | Manufacturing Units [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 80.00% | 80.00% | 80.00% | |||
Aerex | Guideline Public Company Method [Member] | Manufacturing Units [Member] | ||||||
Estimated Fair Value Percentage Segment Reporting Information | 20.00% | 20.00% | 20.00% |
Accounting policies - Disaggreg
Accounting policies - Disaggregated revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Total Revenue | $ 16,413,146 | $ 17,666,257 | $ 50,217,987 | $ 57,479,225 |
Minimum [Member] | ||||
Contracts in progress | ||||
Number of days after consumption billings are collected | 30 days | |||
Maximum [Member] | ||||
Contracts in progress | ||||
Number of days after consumption billings are collected | 35 days | |||
Retail revenue [Member] | ||||
Total Revenue | 5,247,042 | 4,993,069 | $ 16,633,137 | 18,216,797 |
Bulk revenue [Member] | ||||
Total Revenue | 6,868,134 | 6,061,475 | 19,826,075 | 18,368,156 |
Services revenue [Member] | ||||
Total Revenue | 3,210,584 | 3,351,935 | 10,514,669 | 9,942,748 |
Manufacturing revenue [Member] | ||||
Total Revenue | $ 1,087,386 | $ 3,259,778 | $ 3,244,106 | $ 10,951,524 |
Accounting policies - Revenue r
Accounting policies - Revenue recognized and billed on services (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Accounting policies | ||||
Amount of revenue recognized on a subsidiary that was sold | $ 46,000 | $ 118,000 | ||
Revenue recognized to date on contracts in progress | $ 6,808,572 | $ 17,534,449 | ||
Amounts billed to date on contracts in progress | (6,565,955) | (17,791,928) | ||
Retainage | 195,341 | 312,130 | ||
Net contract asset | 437,958 | 54,651 | ||
Contract assets | 483,190 | 516,521 | ||
Contract liabilities | (45,232) | (461,870) | ||
Net contract asset | $ 437,958 | $ 54,651 |
Accounting policies - Performan
Accounting policies - Performance obligations (Details) | Sep. 30, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 445,000 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 6,400,000 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 6,000,000 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 2 years |
Segment information (Details)
Segment information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of Reportable Segments | segment | 4 | ||||
Revenue | $ 16,413,146 | $ 17,666,257 | $ 50,217,987 | $ 57,479,225 | |
Cost of revenue | 10,722,547 | 11,450,621 | 32,336,025 | 35,520,125 | |
Gross profit | 5,690,599 | 6,215,636 | 17,881,962 | 21,959,100 | |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 4,359,040 | 4,810,016 | 13,847,830 | 14,062,938 | |
Gain (loss) on asset dispositions and impairments, net | 612 | (984) | (3,144,961) | 4,001 | |
Income (loss) from operations | 1,332,171 | 1,404,636 | 889,171 | 7,900,163 | |
Other income, net | 152,168 | 245,492 | 699,890 | 533,710 | |
Income before income taxes | 1,484,339 | 1,650,128 | 1,589,061 | 8,433,873 | |
Benefit from income taxes | (11,230) | (263,165) | (20,735) | 147,186 | |
Net income from continuing operations | 1,495,569 | 1,913,293 | 1,609,796 | 8,286,687 | |
Income from continuing operations attributable to non-controlling interests | 131,609 | 101,137 | 457,540 | 642,289 | |
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 1,363,960 | 1,812,156 | 1,152,256 | 7,644,398 | |
Net loss from discontinued operations | (1,078,367) | (377,321) | (1,542,540) | (4,448,798) | |
Net income (loss) attributable to Consolidated Water Co. Ltd. stockholders | 285,593 | 1,434,835 | (390,284) | 3,195,600 | |
Accounts receivable, net | 26,381,981 | 26,381,981 | $ 21,483,976 | ||
Inventory, current and non-current | 7,031,282 | 7,031,282 | 7,721,020 | ||
Property, plant and equipment, net | 53,720,792 | 53,720,792 | 57,687,984 | ||
Construction in progress | 760,079 | 760,079 | 440,384 | ||
Intangibles, net | 3,564,166 | 3,564,166 | 4,148,333 | ||
Goodwill | 10,425,013 | 10,425,013 | 13,325,013 | ||
Total segment assets | 154,914,797 | 154,914,797 | 156,877,964 | ||
Assets of discontinued operations | 21,899,816 | 21,899,816 | 22,677,588 | ||
Total assets | 176,814,613 | 176,814,613 | 179,555,552 | ||
Retail [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 5,247,042 | 4,993,069 | 16,633,137 | 18,216,797 | |
Cost of revenue | 2,745,796 | 2,586,901 | 8,235,699 | 8,343,018 | |
Gross profit | 2,501,246 | 2,406,168 | 8,397,438 | 9,873,779 | |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 3,067,696 | 3,367,802 | 9,757,179 | 10,008,423 | |
Gain (loss) on asset dispositions and impairments, net | 612 | (246,028) | |||
Income (loss) from operations | (565,838) | (961,634) | (1,605,769) | (134,644) | |
Accounts receivable, net | 2,233,715 | 2,233,715 | 2,444,455 | ||
Inventory, current and non-current | 2,755,862 | 2,755,862 | 2,787,163 | ||
Property, plant and equipment, net | 26,467,981 | 26,467,981 | 27,947,545 | ||
Construction in progress | 624,805 | 624,805 | 305,110 | ||
Goodwill | 1,170,511 | 1,170,511 | 1,170,511 | ||
Total segment assets | 60,254,674 | 60,254,674 | 56,425,159 | ||
Bulk [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 6,868,134 | 6,061,475 | 19,826,075 | 18,368,156 | |
Cost of revenue | 4,628,386 | 4,400,717 | 13,170,333 | 12,906,606 | |
Gross profit | 2,239,748 | 1,660,758 | 6,655,742 | 5,461,550 | |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 313,420 | 382,662 | 994,779 | 935,808 | |
Gain (loss) on asset dispositions and impairments, net | 1,500 | 200 | |||
Income (loss) from operations | 1,926,328 | 1,278,096 | 5,662,463 | 4,525,942 | |
Accounts receivable, net | 21,646,332 | 21,646,332 | 17,022,813 | ||
Inventory, current and non-current | 3,702,618 | 3,702,618 | 3,795,544 | ||
Property, plant and equipment, net | 25,185,215 | 25,185,215 | 27,611,567 | ||
Construction in progress | 31,737 | 31,737 | 31,737 | ||
Goodwill | 1,948,875 | 1,948,875 | 1,948,875 | ||
Total segment assets | 71,640,368 | 71,640,368 | 74,771,798 | ||
Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 3,210,584 | 3,351,935 | 10,514,669 | 9,942,748 | |
Cost of revenue | 2,410,430 | 2,513,272 | 8,010,767 | 7,418,305 | |
Gross profit | 800,154 | 838,663 | 2,503,902 | 2,524,443 | |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 758,540 | 728,829 | 2,152,145 | 2,112,869 | |
Gain (loss) on asset dispositions and impairments, net | (984) | (433) | 3,801 | ||
Income (loss) from operations | 41,614 | 108,850 | 351,324 | 415,375 | |
Accounts receivable, net | 1,579,404 | 1,579,404 | 1,420,609 | ||
Property, plant and equipment, net | 503,704 | 503,704 | 487,973 | ||
Intangibles, net | 2,693,056 | 2,693,056 | 3,200,555 | ||
Goodwill | 5,320,416 | 5,320,416 | 5,320,416 | ||
Total segment assets | 15,535,680 | 15,535,680 | 14,470,322 | ||
Manufacturing Units [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 1,087,386 | 3,259,778 | 3,244,106 | 10,951,524 | |
Cost of revenue | 937,935 | 1,949,731 | 2,919,226 | 6,852,196 | |
Gross profit | 149,451 | 1,310,047 | 324,880 | 4,099,328 | |
General and administrative expenses (including purchases from related parties of $24,231 and $0 for the three months ended, and $52,959 and $0 for the nine months ended September 30, 2021 and 2020, respectively) | 219,384 | 330,723 | 943,727 | 1,005,838 | |
Gain (loss) on asset dispositions and impairments, net | (2,900,000) | ||||
Income (loss) from operations | (69,933) | $ 979,324 | (3,518,847) | $ 3,093,490 | |
Accounts receivable, net | 922,530 | 922,530 | 596,099 | ||
Inventory, current and non-current | 572,802 | 572,802 | 1,138,313 | ||
Property, plant and equipment, net | 1,563,892 | 1,563,892 | 1,640,899 | ||
Construction in progress | 103,537 | 103,537 | 103,537 | ||
Intangibles, net | 871,110 | 871,110 | 947,778 | ||
Goodwill | 1,985,211 | 1,985,211 | 4,885,211 | ||
Total segment assets | $ 7,484,075 | $ 7,484,075 | $ 11,210,685 |
Segment information - Additiona
Segment information - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Retail [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | $ 625,640 | $ 596,528 | $ 1,892,848 | $ 1,796,588 |
Bulk [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | 761,429 | 971,914 | 2,621,481 | 2,906,213 |
Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | 203,411 | 191,419 | 607,906 | 562,756 |
Manufacturing Units [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | $ 70,679 | $ 88,452 | $ 216,346 | $ 296,926 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings per share | ||||
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | $ 1,363,960 | $ 1,812,156 | $ 1,152,256 | $ 7,644,398 |
Less: preferred stock dividends | (2,628) | (2,810) | (8,362) | (9,099) |
Net income from continuing operations available to common shares in the determination of basic earnings per common share | 1,361,332 | 1,809,346 | 1,143,894 | 7,635,299 |
Total loss from discontinued operations | (1,078,367) | (377,321) | (1,542,540) | (4,448,798) |
Net income (loss) available to common shares in the determination of basic earnings per common share | $ 282,965 | $ 1,432,025 | $ (398,646) | $ 3,186,501 |
Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders (in shares) | 15,209,432 | 15,120,983 | 15,204,220 | 15,116,681 |
Weighted average number of preferred shares outstanding during the period (in shares) | 31,861 | 34,191 | 30,701 | 34,355 |
Potential dilutive effect of unexercised options and unvested stock grants | 110,589 | 118,355 | 110,199 | 119,458 |
Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | 15,351,882 | 15,273,529 | 15,345,120 | 15,270,494 |
Discontinued operations - Mexic
Discontinued operations - Mexico project development- Narratives (Details) $ / shares in Units, gal in Millions | Aug. 28, 2020USD ($) | Aug. 28, 2020MXN ($) | Jun. 29, 2020 | Aug. 22, 2016 | Sep. 30, 2021MXN ($) | Aug. 22, 2016gal | Nov. 30, 2015gal | Feb. 28, 2014USD ($) | May 31, 2013USD ($)$ / shares | Feb. 29, 2012USD ($) | May 31, 2010gal | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2021USD ($)ha | Dec. 31, 2019 | Feb. 28, 2018 | Jan. 31, 2018 |
Schedule of Investments [Line Items] | |||||||||||||||||
Land | $ 21,100,000 | ||||||||||||||||
Period Required To Operate And Maintain Plant And Aqueduct | 37 years | ||||||||||||||||
Number of days to submit list of non-recoverable expenses made | 20 days | ||||||||||||||||
Amount of non-recoverable expenses | $ 51,144,525 | $ 137,333,114 | |||||||||||||||
Impairment loss on long-lived assets | $ 3,000,000 | ||||||||||||||||
Adjustment to reduce operating lease right of use assets | 2,600,000 | $ 2,600,000 | |||||||||||||||
Adjustment to reduce operating lease liabilities | $ 2,200,000 | 2,200,000 | |||||||||||||||
Payments For Option Exercised | $ 1,000,000 | ||||||||||||||||
Share Price | $ / shares | $ 1 | ||||||||||||||||
Aguas de Rosarito S.A.P.I. de C.V [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Equity Method Investment, Ownership Percentage | 50.00% | ||||||||||||||||
Option agreement [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Payments To Enter Option Agreement | $ 300,000 | ||||||||||||||||
NSC Agua [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 50.00% | ||||||||||||||||
Total Voting Interest Percentage After Conversion Of Loan | 99.99% | ||||||||||||||||
Total Percentage Of Ownership Interest In An Acquired Company | 99.99% | ||||||||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 100 | 100 | |||||||||||||||
Area of Land | ha | 20.1 | ||||||||||||||||
Equity Method Investment, Ownership Percentage | 50.00% | ||||||||||||||||
Period in which construction must be completed | 36 months | ||||||||||||||||
Payments for land and rights of way held for development | $ 3,000,000 | ||||||||||||||||
Payments For Option Exercised | $ 1,000,000 | ||||||||||||||||
Percentage of Voting Interest Acquired through Option Agreement | 25.00% | 25.00% | |||||||||||||||
Guarantee amount required for suspension | $ 50,000 | ||||||||||||||||
NSC Agua [Member] | Aguas de Rosarito S.A.P.I. de C.V [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Equity Method Investment, Ownership Percentage | 99.60% | 0.40% | |||||||||||||||
NSC Agua [Member] | First Phase [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 50 | 50 | |||||||||||||||
NSC Agua [Member] | Second Phase [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 50 | 50 | |||||||||||||||
NSC Agua [Member] | Option agreement [Member] | |||||||||||||||||
Schedule of Investments [Line Items] | |||||||||||||||||
Total Voting Interest Percentage After Conversion Of Loan | 99.99% | ||||||||||||||||
Repayment of inter-company loan payable | $ 5,700,000 | ||||||||||||||||
Option Agreement Expiration Date | Feb. 7, 2014 |
Discontinued operations - Mex_2
Discontinued operations - Mexico project development (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total assets of discontinued operations | $ 21,899,816 | $ 22,677,588 |
Discontinued Operations | Mexico Project Development | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash | 36,326 | 154,130 |
Prepaid expenses and other current assets | 88,777 | 88,978 |
Value added taxes receivable (net of allowance of $967,115 and $316,217, respectively) | 645,542 | 1,267,991 |
Property, plant and equipment, net | 2,273 | 5,682 |
Land | 21,126,898 | 21,126,898 |
Other assets | 33,909 | |
Total assets of discontinued operations | 21,899,816 | 22,677,588 |
Total liabilities of discontinued operations | 252,720 | 190,933 |
Value added tax, net of allowance | $ 967,115 | $ 316,217 |
Discontinued operations - Finan
Discontinued operations - Financial Information (Details) - Discontinued Operations - Mexico Project Development - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net loss from discontinued operations | $ 1,078,367 | $ 377,321 | $ 1,542,540 | $ 4,448,798 |
Depreciation expense | $ 1,136 | $ 1,137 | $ 3,409 | $ 3,409 |
Leases - Lease assets and liabi
Leases - Lease assets and liabilities (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current | ||
Current assets of discontinued operations | $ 10,570 | |
Noncurrent | ||
Operating lease right-of-use assets | 2,855,346 | $ 1,329,561 |
Long-term assets of discontinued operations | 33,909 | |
Total lease right-of-use assets | 2,895,275 | 1,471,773 |
Current | ||
Current maturities of operating leases | 563,154 | 455,788 |
Current liabilities of discontinued operations | 9,778 | 29,432 |
Noncurrent | ||
Noncurrent operating leases | 2,321,551 | 982,076 |
Noncurrent liabilities of discontinued operations | 0 | 2,499 |
Total lease obligations | $ 2,894,483 | $ 1,469,795 |
Operating leases, weighted average remaining lease term | 7 years 1 month 6 days | 3 years 4 months 24 days |
Operating leases, weighted average discount rate | 4.96% | 4.15% |
Discontinued Operations | ||
Noncurrent | ||
Operating leases, weighted average remaining lease term | 4 months 24 days | 1 year 1 month 6 days |
Operating leases, weighted average discount rate | 3.48% | 3.48% |
Accounts Receivable [Member] | ||
Current | ||
Operating lease assets, current | $ 21,131 | |
Prepaid Expenses and Other Current Assets [Member] | ||
Current | ||
Operating lease assets, current | $ 8,228 | $ 108,303 |
Leases - Components of lease co
Leases - Components of lease cost (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Leases | ||||
Operating lease costs | $ 165,899 | $ 191,507 | $ 518,524 | $ 576,971 |
Short-term lease costs | 24,781 | 54,541 | 5,518 | |
Lease costs - discontinued operations | 7,684 | 20,048 | 22,571 | 120,753 |
Total lease costs | $ 198,364 | $ 211,555 | $ 595,636 | $ 703,242 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Leases | ||
Operating cash outflows for operating leases | $ 541,054 | $ 605,306 |
Operating cash flows from operating leases - discontinued operations | $ 24,007 | $ 119,480 |
Leases - Future lease payments
Leases - Future lease payments (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Leases | ||
2021 | $ 172,762 | |
2022 | 694,215 | |
2023 | 663,190 | |
2024 | 410,464 | |
2025 | 268,896 | |
Thereafter | 1,235,418 | |
Total future lease payments | 3,444,945 | |
Less: imputed interest | (560,240) | |
Total lease obligations | 2,884,705 | |
Less: current obligations | (563,154) | $ (455,788) |
Noncurrent lease obligations | $ 2,321,551 | $ 982,076 |
Fair value (Details)
Fair value (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Recurring | ||
Net liability arising from put/call options | $ 582,000 | $ 690,000 |
Fair Value, Inputs, Level 3 [Member] | ||
Recurring | ||
Net liability arising from put/call options | 582,000 | $ 690,000 |
Certificate of deposit [Member] | ||
Recurring | ||
Fair value, Assets | 2,500,000 | |
Certificate of deposit [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Recurring | ||
Fair value, Assets | $ 2,500,000 |
Fair value - Activity for the L
Fair value - Activity for the Level 3 asset (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Net asset arising from put/call options | |
Balance as of December 31, 2020 | $ 690,000 |
Unrealized gain | (108,000) |
Balance as of September 30, 2021 | $ 582,000 |
Contingencies (Details)
Contingencies (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020 | Sep. 30, 2021USD ($)segment | Sep. 30, 2020 | Dec. 31, 2020USD ($) | |
Contingencies | |||||
Number of reporting units | segment | 4 | ||||
Cayman Water Retail Operations, Percentage Of Revenue | 32.00% | 28.00% | 33.00% | 32.00% | |
Cayman Water Retail Operations, Percentage Of Gross Profit | 44.00% | 39.00% | 47.00% | 45.00% | |
WSC [Member] | |||||
Contingencies | |||||
Accounts Receivable, Net | $ 21.4 | $ 21.4 | $ 16.8 | ||
Payments in accounts receivable | $ 6.9 | $ 15.6 |
Related party transactions (Det
Related party transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||||
Accounts payable outstanding | $ 204,285 | $ 204,285 | $ 200,558 | ||
PERC Water Corporation | |||||
Related Party Transaction [Line Items] | |||||
Purchases of services | 105,000 | $ 361,000 | 390,000 | $ 1,226,000 | |
Accounts payable outstanding | 204,000 | 204,000 | $ 201,000 | ||
Amount of expense related to sublease agreement | $ 24,000 | $ 53,000 |