Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2023 | |
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 | Windward Three, 4th Floor, West Bay Road | |
Entity Address, Address Line Two | 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 | 15,747,464 | |
Entity Central Index Key | 0000928340 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 48,845,606 | $ 50,711,751 |
Accounts receivable, net | 38,114,847 | 27,046,182 |
Inventory | 7,915,456 | 5,727,842 |
Prepaid expenses and other current assets | 5,430,079 | 5,643,279 |
Contract assets | 8,972,740 | 2,913,722 |
Current assets of discontinued operations | 298,591 | 531,480 |
Total current assets | 109,577,319 | 92,574,256 |
Property, plant and equipment, net | 50,063,524 | 52,529,545 |
Construction in progress | 6,446,049 | 3,705,681 |
Inventory, noncurrent | 5,048,222 | 4,550,987 |
Investment in OC-BVI | 1,388,917 | 1,545,430 |
Goodwill | 10,425,013 | 10,425,013 |
Intangible assets, net | 2,408,888 | 2,818,888 |
Operating lease right-of-use assets | 1,720,637 | 2,058,384 |
Other assets | 3,389,634 | 1,669,377 |
Long-term assets of discontinued operations | 21,129,288 | 21,129,288 |
Total assets | 211,597,491 | 193,006,849 |
Current liabilities | ||
Accounts payable, accrued expenses and other current liabilities | 11,436,484 | 8,438,315 |
Accrued compensation | 2,697,033 | 2,267,583 |
Dividends payable | 1,570,319 | 1,375,403 |
Current maturities of operating leases | 471,506 | 546,851 |
Current portion of long-term debt | 114,964 | 114,964 |
Contract liabilities | 9,528,749 | 8,803,921 |
Deferred revenue | 391,558 | 315,825 |
Current liabilities of discontinued operations | 259,853 | 389,884 |
Total current liabilities | 26,470,466 | 22,656,585 |
Long-term debt, noncurrent | 133,770 | 216,117 |
Deferred tax liabilities | 466,285 | 560,306 |
Noncurrent operating leases | 1,481,005 | 1,590,542 |
Other liabilities | 153,000 | 219,110 |
Total liabilities | 28,704,526 | 25,242,660 |
Commitments and contingencies | ||
Consolidated Water Co. Ltd. stockholders' equity | ||
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 48,088 and 34,383 shares, respectively | 27,125 | 20,630 |
Additional paid-in capital | 91,716,763 | 89,205,159 |
Retained earnings | 76,807,700 | 61,247,699 |
Total Consolidated Water Co. Ltd. stockholders' equity | 177,999,519 | 159,667,213 |
Non-controlling interests | 4,893,446 | 8,096,976 |
Total equity | 182,892,965 | 167,764,189 |
Total liabilities and equity | 211,597,491 | 193,006,849 |
Related Party [Member] | ||
Current liabilities | ||
Accounts payable - related parties | 0 | 403,839 |
Common Class A [Member] | ||
Consolidated Water Co. Ltd. stockholders' equity | ||
Common stock value | 9,447,931 | 9,193,725 |
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, 2023 | Dec. 31, 2022 |
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 | 45,209 | 34,383 |
Redeemable preferred stock, outstanding | 45,209 | 34,383 |
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 | 15,746,552 | 15,322,875 |
Common stock, outstanding | 15,746,552 | 15,322,875 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.60 | |
Common stock, authorized | 145,000 | |
Common stock, issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Revenue | $ 49,854,075 | $ 25,051,705 | $ 126,960,328 | $ 65,676,737 |
Cost of revenue (including related party expenses of $0 and $640,937 for the three months ended, and $0 and $1,480,369 for the six months ended, June 30, 2023 and 2022, respectively) | 33,239,647 | 18,207,932 | 84,323,269 | 44,211,703 |
Gross profit | 16,614,428 | 6,843,773 | 42,637,059 | 21,465,034 |
General and administrative expenses (including related party expenses of $0 and $24,231 for the three months ended, and $0 and $48,462 for the six months ended, June 30, 2023 and 2022, respectively) | 5,872,490 | 5,610,650 | 17,894,067 | 15,403,458 |
Gain on asset dispositions and impairments, net | 3,499 | 6,916 | 21,237 | |
Income from operations | 10,741,938 | 1,236,622 | 24,749,908 | 6,082,813 |
Other income (expense): | ||||
Interest income | 196,567 | 56,701 | 396,348 | 348,304 |
Interest expense | (34,020) | (2,042) | (108,111) | (8,847) |
Profit-sharing income from OC-BVI | 12,150 | 6,075 | 38,475 | 24,300 |
Equity in the earnings of OC-BVI | 37,182 | 19,921 | 108,012 | 71,238 |
Net gain on put/call options | 0 | (247,000) | 0 | 29,000 |
Other | 24,187 | (2,635) | 87,532 | 84,734 |
Other income, net | 236,066 | (168,980) | 522,256 | 548,729 |
Income before income taxes | 10,978,004 | 1,067,642 | 25,272,164 | 6,631,542 |
Provision for income taxes | 1,976,453 | 26,616 | 4,366,005 | 83,041 |
Net income from continuing operations | 9,001,551 | 1,041,026 | 20,906,159 | 6,548,501 |
Income from continuing operations attributable to non-controlling interests | 163,428 | 217,415 | 463,775 | 691,042 |
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 8,838,123 | 823,611 | 20,442,384 | 5,857,459 |
Net loss from discontinued operations | (232,994) | (505,917) | (699,858) | (1,533,064) |
Net income attributable to Consolidated Water Co. Ltd. stockholders | $ 8,605,129 | $ 317,694 | $ 19,742,526 | $ 4,324,395 |
Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||
Continuing operations | $ 0.56 | $ 0.05 | $ 1.30 | $ 0.38 |
Discontinued operations | (0.01) | (0.03) | (0.05) | (0.10) |
Basic earnings per share | 0.55 | 0.02 | 1.25 | 0.28 |
Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders | ||||
Continuing operations | 0.55 | 0.05 | 1.28 | 0.38 |
Discontinued operations | (0.01) | (0.03) | (0.04) | (0.10) |
Diluted earnings per share | 0.54 | 0.02 | 1.24 | 0.28 |
Dividends declared per common and redeemable preferred shares | $ 0.095 | $ 0.085 | $ 0.265 | $ 0.255 |
Weighted average number of common shares used in the determination of: | ||||
Basic earnings per share | 15,742,854 | 15,290,597 | 15,734,234 | 15,287,233 |
Diluted earnings per share | 15,928,604 | 15,450,276 | 15,909,725 | 15,440,261 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cost of revenue. | ||||
Purchases from related parties | $ 0 | $ 685,481 | $ 0 | $ 2,165,850 |
General and administrative expense. | ||||
Purchases from related parties | $ 0 | $ 24,231 | $ 0 | $ 72,693 |
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, 2021 | $ 17,181 | $ 9,146,216 | $ 87,812,432 | $ 60,603,056 | $ 8,086,538 | $ 165,665,423 |
Balance (in shares) at Dec. 31, 2021 | 28,635 | 15,243,693 | ||||
Issuance of share capital | $ 25,098 | (25,098) | ||||
Issuance of share capital (in shares) | 41,830 | |||||
Net income | 1,716,815 | 241,430 | 1,958,245 | |||
Dividends declared | (1,303,014) | (1,303,014) | ||||
Stock-based compensation | 188,985 | 188,985 | ||||
Balance at Mar. 31, 2022 | $ 17,181 | $ 9,171,314 | 87,976,319 | 61,016,857 | 8,327,968 | 166,509,639 |
Balance (in shares) at Mar. 31, 2022 | 28,635 | 15,285,523 | ||||
Issuance of share capital | $ 5,577 | (5,577) | ||||
Issuance of share capital (in shares) | 9,295 | |||||
Net income | 2,289,886 | 232,197 | 2,522,083 | |||
Exercise of options | $ 185 | 2,511 | 2,696 | |||
Exercise of options (in shares) | 309 | |||||
Dividends declared | (1,301,840) | (464,200) | (1,766,040) | |||
Stock-based compensation | 205,137 | 205,137 | ||||
Balance at Jun. 30, 2022 | $ 22,943 | $ 9,171,314 | 88,178,390 | 62,004,903 | 8,095,965 | 167,473,515 |
Balance (in shares) at Jun. 30, 2022 | 38,239 | 15,285,523 | ||||
Purchase of Remaining Non-Controlling Interests in PERC | (638,275) | (638,275) | ||||
Conversion of preferred stock | $ (3,951) | $ 3,951 | ||||
Conversion of preferred stock (in shares) | (6,585) | 6,585 | ||||
Net income | 317,694 | 217,415 | 535,109 | |||
Exercise of options | $ 1,653 | 22,390 | 24,043 | |||
Exercise of options (in shares) | 2,755 | |||||
Dividends declared | (1,302,110) | (1,302,110) | ||||
Stock-based compensation | 413,539 | 413,539 | ||||
Balance at Sep. 30, 2022 | $ 20,645 | $ 9,175,265 | 88,614,319 | 61,020,487 | 7,675,105 | 166,505,821 |
Balance (in shares) at Sep. 30, 2022 | 34,409 | 15,292,108 | ||||
Balance at Dec. 31, 2022 | $ 20,630 | $ 9,193,725 | 89,205,159 | 61,247,699 | 8,096,976 | 167,764,189 |
Balance (in shares) at Dec. 31, 2022 | 34,383 | 15,322,875 | ||||
Issuance of share capital | $ 26,870 | (26,870) | ||||
Issuance of share capital (in shares) | 44,783 | |||||
Purchase of Remaining Non-Controlling Interests in PERC | $ 221,030 | 1,006,248 | (3,667,305) | (2,440,027) | ||
Purchase of remaining non-controlling interests in PERC (in shares) | 368,383 | |||||
Net income | 3,813,626 | 163,121 | 3,976,747 | |||
Dividends declared | (1,342,015) | (1,342,015) | ||||
Stock-based compensation | 463,893 | 463,893 | ||||
Balance at Mar. 31, 2023 | $ 20,630 | $ 9,441,625 | 90,648,430 | 63,719,310 | 4,592,792 | 168,422,787 |
Balance (in shares) at Mar. 31, 2023 | 34,383 | 15,736,041 | ||||
Issuance of share capital | $ 7,985 | (7,985) | ||||
Issuance of share capital (in shares) | 13,309 | |||||
Buyback of preferred stock | $ (122) | (1,708) | (1,830) | |||
Buyback of preferred stock (in shares) | (203) | |||||
Net income | 7,323,771 | 137,226 | 7,460,997 | |||
Exercise of options | $ 360 | 6,891 | 7,251 | |||
Exercise of options (in shares) | 599 | |||||
Dividends declared | (1,340,972) | (1,340,972) | ||||
Stock-based compensation | 461,695 | 461,695 | ||||
Balance at Jun. 30, 2023 | $ 28,853 | $ 9,441,625 | 91,107,323 | 69,702,109 | 4,730,018 | 175,009,928 |
Balance (in shares) at Jun. 30, 2023 | 48,088 | 15,736,041 | ||||
Conversion of preferred stock | $ (4,762) | $ 4,762 | ||||
Conversion of preferred stock (in shares) | (7,936) | 7,936 | ||||
Net income | 8,605,129 | 163,428 | 8,768,557 | |||
Exercise of options | $ 3,034 | $ 1,544 | 87,935 | 92,513 | ||
Exercise of options (in shares) | 5,057 | 2,575 | ||||
Dividends declared | (1,499,538) | (1,499,538) | ||||
Stock-based compensation | 521,505 | 521,505 | ||||
Balance at Sep. 30, 2023 | $ 27,125 | $ 9,447,931 | $ 91,716,763 | $ 76,807,700 | $ 4,893,446 | $ 182,892,965 |
Balance (in shares) at Sep. 30, 2023 | 45,209 | 15,746,552 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Net cash provided by operating activities - continuing operations | $ 9,245,264 | $ 16,926,429 |
Net cash used in operating activities - discontinued operations | (849,639) | (1,123,193) |
Net cash provided by operating activities | 8,395,625 | 15,803,236 |
Cash flows from investing activities | ||
Purchase of certificate of deposit | (2,518,493) | |
Maturity of certificate(s) of deposit | 5,018,493 | |
Additions to property, plant and equipment and construction in progress | (4,123,770) | (2,947,937) |
Proceeds from asset dispositions | 21,410 | 31,181 |
Purchase of non-controlling interest in PERC | (2,440,027) | |
Net cash used in investing activities | (6,542,387) | (416,756) |
Cash flows from financing activities | ||
Dividends paid to common shareholders | (3,977,676) | (3,841,842) |
Dividends paid to preferred shareholders | (9,933) | (8,154) |
Dividends paid to non-controlling interests | (1,102,475) | |
Buyback of redeemable preferred stock | (1,830) | |
Proceeds received from exercise of stock options | 99,764 | 26,739 |
Principal repayments on long-term debt | (82,347) | (51,564) |
Net cash used in financing activities | (3,972,022) | (4,977,296) |
Net increase (decrease) in cash and cash equivalents | (2,118,784) | 10,409,184 |
Cash and cash equivalents at beginning of period | 50,711,751 | 40,358,059 |
Cash and cash equivalents at beginning of period - discontinued operations | 442,252 | 750,048 |
Less: cash and cash equivalents at end of period - discontinued operations | (189,613) | (432,002) |
Cash and cash equivalents at end of period | 48,845,606 | 51,085,289 |
Non-cash transactions: | ||
Dividends declared but not paid | 1,500,218 | 1,302,754 |
Conversion (on a one-to-one basis) of 7,936 and 6,585, respectively, shares of redeemable preferred stock to common stock | 4,762 | 3,951 |
Transfers from inventory to property, plant and equipment and construction in progress | 224,952 | 246,238 |
Transfers from construction in progress to property, plant and equipment | 525,673 | 413,416 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 249,145 | |
Purchase of equipment through issuance of long-term debt | 68,422 | |
Transfers from prepaids to property, plant and equipment | 255,379 | |
Transfers from prepaids to inventory | 238,032 | |
Redeemable preferred stock [Member] | ||
Non-cash transactions: | ||
Issuance of shares of common stock for services rendered | 287,922 | 133,197 |
Common stock [Member] | ||
Non-cash transactions: | ||
Issuance of shares of common stock for services rendered | 621,811 | $ 521,016 |
Issuance of 368,383 and 0, respectively, shares of common stock for the purchase of non-controlling interests in PERC | $ 5,359,973 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Conversion (on a one-to-one basis) of 7,936 and 6,585, respectively, shares of redeemable preferred stock to common stock | 7,936 | 6,585 |
Redeemable preferred stock [Member] | ||
Issuance of 44,873 and 41,830, respectively, shares of common stock for services rendered | 13,309 | 9,295 |
Common stock [Member] | ||
Issuance of 44,873 and 41,830, respectively, shares of common stock for services rendered | 44,783 | 41,830 |
Issuance of 368,383 and 0, respectively, shares of common stock for the purchase of non-controlling interests in PERC | 368,383 | 0 |
Principal activity
Principal activity | 9 Months Ended |
Sep. 30, 2023 | |
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 wastewater and 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, 2023 | |
Accounting policies | |
Accounting policies | 2. Accounting policies Basis of consolidation: On January 4, 2023, as a result of CW-Holdings' exercise of a call option in October 2022, CW-Holdings purchased the remaining 39% ownership interest in PERC for $2.4 million in cash and 368,383 shares of the Company’s common stock, having a value of approximately $5.36 million based upon the opening trading price of the Company’s common stock on The Nasdaq Global Market on the date of the transaction. After giving effect to this purchase, CW-Holdings owns 100% of the outstanding capital stock of PERC. In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii. On June 2, 2023, Kalaeloa Desalco, which is jointly owned by PERC and CW-Holdings, signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. 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 consolidated financial position, results of operations and cash flows as of and for the periods presented. The consolidated 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, 2023. 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, 2022. Foreign currency: Net foreign currency gains (losses) arising from transactions and re-measurements were $22,077 and ($8,068) for the three months ended September 30, 2023 and 2022, respectively, and $72,253 and $20,966 for the nine months ended September 30, 2023 and 2022, respectively, and are included in “Other income (expense) - Other” in the accompanying condensed consolidated statements of income. 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, 2023 and December 31, 2022 were approximately $5.1 million and $5.7 million, respectively. Goodwill and intangible assets: As of December 31, 2022, the Company elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing conducted in prior years for all reporting units other than the manufacturing reporting unit. The Company assessed relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events. Based upon this qualitative assessment the Company determined that it was more likely than not that the fair values of its Cayman Water and bulk segment reporting units exceeded their carrying values as of December 31, 2022. Based upon the Company’s negotiated, arms-length purchase of the remaining 39% equity interest in PERC from its minority shareholders for $7.8 million in January 2023, the fair value of the Company’s PERC reporting unit exceeded its carrying value by 79% as of December 31, 2022. For the year ended December 31, 2022, the Company estimated the fair value of its manufacturing reporting unit 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 the analysis. The Company also estimated the fair value of its manufacturing reporting unit for the year ended December 31, 2022 by applying the guideline public company method. The Company weighted the fair values estimated for its manufacturing reporting unit under each method and summed such weighted fair values to estimate the overall fair value for the reporting unit. The respective weightings the Company applied to each method for the year ended December 31, 2022 were 80% to the discounted cash flow method and 20% to the guideline public company method. The fair value the Company estimated for its manufacturing reporting unit exceeded its carrying amount by 63% as of December 31, 2022. The Company believes that the inherent uncertainties associated with the accounting estimates and assumptions it uses for its estimates of its manufacturing reporting unit’s fair value have increased due to the current, less predictable economic conditions, which have resulted in increasing raw material prices, extended and unexpected delays in the procurement and delivery of its raw materials, and have also, the Company believes, adversely affected its customers. Should interest rates rise significantly in the future the Company would likely be required to increase the discount rate it uses under the discounted cash flow method to estimate the fair value of this reporting unit, and such increased discount rate in and of itself could decrease the estimated fair value of the manufacturing reporting unit under the discounted cash flow method. As noted previously, based upon the Company’s estimation prepared as of December 31, 2022, the fair value of the Company’s manufacturing reporting unit exceeded its carrying value by 63%. However, if the Company determines in the future that Aerex’s discounted future cash inflows will be less than its present expectations, the Company may be required to record impairment losses to reduce the remaining carrying values of its manufacturing reporting unit’s goodwill and its remaining unamortized intangible assets balances, which amounted to $1,985,211 and $684,444, respectively, as of September 30, 2023. Any such impairment losses could have a material adverse impact on the Company’s consolidated results of operations. Income taxes: The Company is not presently subject to income taxes in the other countries in which it operates. Revenue recognition: The following table presents the Company’s revenue disaggregated by revenue source. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Retail revenue $ 7,216,574 $ 6,274,650 $ 22,560,998 $ 19,114,653 Bulk revenue 8,488,615 8,667,931 25,975,483 24,442,324 Services revenue 29,427,664 8,731,124 66,243,328 18,530,427 Manufacturing revenue 4,721,222 1,378,000 12,180,519 3,589,333 Total revenue $ 49,854,075 $ 25,051,705 $ 126,960,328 $ 65,676,737 Services revenue consists of the following: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Construction revenue $ 24,204,446 $ 4,781,613 $ 52,563,822 $ 5,347,023 Operations and maintenance revenue 5,021,081 3,394,142 12,750,902 10,740,623 Design and consulting revenue 202,137 555,369 928,604 2,442,781 Total services revenue $ 29,427,664 $ 8,731,124 $ 66,243,328 $ 18,530,427 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. Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 45 days after the billing date. Receivables not collected within 45 days subject the customer to disconnection from water service. 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 utilities 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. 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 designs, builds, sells, operates and maintains, and provides consulting services related to 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 also 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, through Aerex, is a custom and specialty manufacturer of systems and products applicable to commercial, municipal and industrial water production and treatment. Substantially all of Aerex’s customers are U.S. companies. The Company generates construction, operations and maintenance, design and consulting revenue from PERC and DesalCo and generates manufacturing revenue from Aerex. The Company recognizes revenue for its construction and custom/specialized manufacturing contracts During the three and nine months ended September 30, 2023, the Company adjusted its previous estimates of the total contract costs for two of its construction contracts. These adjustments increased the services segment’s income from operations and the Company’s consolidated net income by $1,787,275 and $1,350,108, respectively, for the three months ended September 30, 2023, and $3,549,028 and $2,680,936 for the nine months ended September 30, 2023, respectively. This adjustment increased diluted earnings per share by $0.08 and $0.17 for the three and nine months ended September 30, 2023, respectively. The Company has elected the “right to invoice” practical expedient for revenue recognition on its operations and maintenance, design and consulting contracts 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, December 31, 2023 2022 Revenue recognized to date on contracts in progress $ 86,655,434 $ 25,469,014 Amounts billed to date on contracts in progress (94,162,641) (33,407,182) Retainage 6,951,198 2,047,969 Net contract liability $ (556,009) $ (5,890,199) The above net balances are reflected in the accompanying condensed consolidated balance sheets as follows: September 30, December 31, 2023 2022 Contract assets $ 8,972,740 $ 2,913,722 Contract liabilities (9,528,749) (8,803,921) Net contract liability $ (556,009) $ (5,890,199) The significant increase in contract assets from December 31, 2022 to September 30, 2023 is primarily attributable to the construction contract with the WAC for the Red Gate plant. As of September 30, 2023, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $189.3 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 $28.8 million during the remainder of the year ending December 31, 2023 and approximately $160.5 million thereafter . In addition, the Company recognized revenue of approximately $9.6 million in the nine months ended September 30, 2023, that was included in the contract liability balance as of December 31, 2022. 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, 2023 | |
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 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 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, 2023 Retail Bulk Services Manufacturing Total Revenue $ 7,216,574 $ 8,488,615 $ 29,427,664 $ 4,721,222 $ 49,854,075 Cost of revenue 3,371,891 5,835,837 20,174,645 3,857,274 33,239,647 Gross profit 3,844,683 2,652,778 9,253,019 863,948 16,614,428 General and administrative expenses 4,225,825 347,668 861,835 437,162 5,872,490 Income (loss) from operations $ (381,142) $ 2,305,110 $ 8,391,184 $ 426,786 10,741,938 Other income, net 236,066 Income before income taxes 10,978,004 Provision for income taxes 1,976,453 Net income from continuing operations 9,001,551 Income from continuing operations attributable to non-controlling interests 163,428 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 8,838,123 Net loss from discontinued operations (232,994) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 8,605,129 Depreciation and amortization expenses for the three months ended September 30, 2023 for the retail, bulk, services and manufacturing segments were $593,306, $748,594, $182,825 and $68,197, respectively. Three Months Ended September 30, 2022 Retail Bulk Services Manufacturing Total Revenue $ 6,274,650 $ 8,667,931 $ 8,731,124 $ 1,378,000 $ 25,051,705 Cost of revenue 3,231,973 6,446,549 7,333,982 1,195,428 18,207,932 Gross profit 3,042,677 2,221,382 1,397,142 182,572 6,843,773 General and administrative expenses 3,818,459 473,534 936,708 381,949 5,610,650 Gain on asset dispositions and impairments, net 1,499 2,000 — — 3,499 Income (loss) from operations $ (774,283) $ 1,749,848 $ 460,434 $ (199,377) 1,236,622 Other expense, net (168,980) Income before income taxes 1,067,642 Provision for income taxes 26,616 Net income from continuing operations 1,041,026 Income attributable to non-controlling interests 217,415 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 823,611 Net loss from discontinued operations (505,917) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 317,694 Depreciation and amortization expenses for the three months ended September 30, 2022 for the retail, bulk, services and manufacturing segments were $567,086, $707,788, $175,732 and $71,734, respectively. Nine Months Ended September 30, 2023 Retail Bulk Services Manufacturing Total Revenue $ 22,560,998 $ 25,975,483 $ 66,243,328 $ 12,180,519 $ 126,960,328 Cost of revenue 10,355,817 18,010,718 46,466,864 9,489,870 84,323,269 Gross profit 12,205,181 7,964,765 19,776,464 2,690,649 42,637,059 General and administrative expenses 12,668,467 1,080,543 2,855,067 1,289,990 17,894,067 Gain (loss) on asset dispositions and impairments, net (7,287) 12,270 — 1,933 6,916 Income (loss) from operations $ (470,573) $ 6,896,492 $ 16,921,397 $ 1,402,592 24,749,908 Other income, net 522,256 Income before income taxes 25,272,164 Provision for income taxes 4,366,005 Net income from continuing operations 20,906,159 Income from continuing operations attributable to non-controlling interests 463,775 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 20,442,384 Net loss from discontinued operations (699,858) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 19,742,526 Depreciation and amortization expenses for the nine months ended September 30, 2023 for the retail, bulk, services and manufacturing segments were $1,813,280, $2,316,923, $528,258 and $204,320, respectively. Nine Months Ended September 30, 2022 Retail Bulk Services Manufacturing Total Revenue $ 19,114,653 $ 24,442,324 $ 18,530,427 $ 3,589,333 $ 65,676,737 Cost of revenue 9,404,124 16,781,251 14,849,029 3,177,299 44,211,703 Gross profit 9,710,529 7,661,073 3,681,398 412,034 21,465,034 General and administrative expenses 10,613,975 1,187,909 2,554,721 1,046,853 15,403,458 Gain on asset dispositions and impairments, net 2,699 2,000 16,538 — 21,237 Income (loss) from operations $ (900,747) $ 6,475,164 $ 1,143,215 $ (634,819) 6,082,813 Other income, net 548,729 Income before income taxes 6,631,542 Provision for income taxes 83,041 Net income from continuing operations 6,548,501 Income from continuing operations attributable to non-controlling interests 691,042 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 5,857,459 Net loss from discontinued operations (1,533,064) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 4,324,395 Depreciation and amortization expenses for the nine months ended September 30, 2022 for the retail, bulk, services and manufacturing segments were $1,820,567, $2,114,888, $502,809 and $213,249, respectively. As of September 30, 2023 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,710,301 $ 23,506,832 $ 10,007,905 $ 1,889,809 $ 38,114,847 Inventory, current and non-current $ 2,920,717 $ 4,881,541 $ 2,539,885 $ 2,621,535 $ 12,963,678 Contract assets $ — $ — $ 6,698,713 $ 2,274,027 $ 8,972,740 Property, plant and equipment, net $ 26,709,318 $ 20,962,912 $ 805,227 $ 1,586,067 $ 50,063,524 Construction in progress $ 6,348,267 $ 35,990 $ — $ 61,792 $ 6,446,049 Intangibles, net $ — $ — $ 1,724,444 $ 684,444 $ 2,408,888 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 59,409,833 $ 62,538,537 $ 53,885,758 $ 14,335,484 $ 190,169,612 Assets of discontinued operations $ 21,427,879 Total assets $ 211,597,491 As of December 31, 2022 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,953,927 $ 16,554,940 $ 5,838,721 $ 1,698,594 $ 27,046,182 Inventory, current and non-current $ 2,759,659 $ 4,037,684 $ — $ 3,481,486 $ 10,278,829 Contract assets $ — $ — $ 1,249,069 $ 1,664,653 $ 2,913,722 Property, plant and equipment, net $ 27,697,490 $ 22,510,658 $ 759,409 $ 1,561,988 $ 52,529,545 Construction in progress $ 3,643,889 $ — $ — $ 61,792 $ 3,705,681 Intangibles, net $ — $ — $ 2,064,444 $ 754,444 $ 2,818,888 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 65,853,789 $ 56,118,243 $ 36,319,078 $ 13,054,971 $ 171,346,081 Assets of discontinued operations $ 21,660,768 Total assets $ 193,006,849 |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2023 | |
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 (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, 2023 2022 2023 2022 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders $ 8,838,123 $ 823,611 $ 20,442,384 $ 5,857,459 Less: preferred stock dividends (4,295) (2,925) (11,305) (8,609) Net income from continuing operations available to common shares in the determination of basic earnings per common share 8,833,828 820,686 20,431,079 5,848,850 Total loss from discontinued operations (232,994) (505,917) (699,858) (1,533,064) Net income available to common shares in the determination of basic earnings per common share $ 8,600,834 $ 314,769 $ 19,731,221 $ 4,315,786 Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,742,854 15,290,597 15,734,234 15,287,233 Plus: Weighted average number of preferred shares outstanding during the period 45,950 35,366 38,385 31,041 Potential dilutive effect of unexercised options and unvested stock grants 139,800 124,313 137,106 121,987 Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,928,604 15,450,276 15,909,725 15,440,261 |
Discontinued operations - Mexic
Discontinued operations - Mexico project development | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued operations - Mexico project development | |
Discontinued operations | 5. Discontinued operations - Mexico project development In 2010, the Company began the pursuit, through its Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and its Mexico subsidiary, N.S.C. Agua, S.A. de C.V. (“NSC”), of a project (the “Project”) that encompassed the construction, operation and minority ownership of a 100 million gallons 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 was to 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 required public tender for the Project. A consortium (the “Consortium”) comprised of NSC, Suez Medio Ambiente México, S.A. de C.V. (“Suez MA”), a subsidiary of SUEZ International, S.A.S., and NuWater S.A.P.I. de C.V. (“NuWater”) 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”) to pursue completion of 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 operation and (ii) AdR would enter into a Management and Technical Services Agreement with NSC effective on the first day that the Project begins commercial operation. 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”), and 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. On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract. The Letter requested that AdR provide an inventory of the assets that 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 required that this list of non-recoverable expenses made by AdR in connection with the Project be submitted to CEA and CESPT within 20 business days from the date of receipt of the Letter. AdR initiated an amparo claim before a federal district court in Tijuana, Baja California, to challenge the provision of the applicable law requiring submittal of the list of non-recoverable expenses within the 20 business days term, as AdR considered such term to be unreasonably short due to the magnitude of the Project and the scope of supporting documentation required to be provided with respect to the non-recoverable expenses. AdR obtained an initial provisional suspension of the lapsing of such 20-day term from the court, and on August 10, 2020 the court made such suspension definitive until the completion of the amparo trial. As such, the 20-day term for filing the list of non-recoverable expenses was suspended. Therefore, on August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which was comprised of 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos. In February 2021, AdR withdrew this amparo claim, and such withdrawal was accepted by the federal district court in Tijuana. To date, AdR has not received a formal response from CEA or CESPT to its submission of non-recoverable expenses. The Company believes CW-Cooperatief, as a Netherlands company, 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 On February 9, 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest. CW-Cooperatief intends to pursue vigorously the relief sought in the arbitration, in addition to pursuing all other legal remedies and courses of action available under the operative contracts and applicable law with respect to their rights, damages, fees and expenses. The Company cannot provide any assurances that CW-Cooperatief will be able to obtain the relief sought in the arbitration, and the Company has incurred and will continue to incur legal and other arbitration-related expenses that are material to its consolidated results of operations and cash flows. During July 2022, the State initiated discussions with the Company to potentially resolve the issues related to the cancellation by the government of the Rosarito desalination plant contract as well as potentially addressing the State’s acute water shortage issues. The Company cannot presently determine the outcome of the discussions and the Company has not terminated its efforts to obtain relief through the international arbitration process as a result of these discussions. 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. As a result of the cancellation of the APP Contract, in 2020 the Company discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project. Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as the costs for legal and administrative activities to pursue reimbursement from the State of Baja California following the cancellation of the APP Contract, have been classified as discontinued operations in the accompanying condensed consolidated financial statements. Summarized financial information for the discontinued Mexico project development operation is as follows: September 30, December 31, 2023 2022 Cash $ 189,613 $ 442,252 Accounts receivable 12,675 12,675 Prepaid expenses and other current assets 96,303 76,553 Land 21,126,898 21,126,898 Other assets 2,390 2,390 Total assets of discontinued operations $ 21,427,879 $ 21,660,768 Total liabilities of discontinued operations $ 259,853 $ 389,884 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ — $ — $ — $ — Loss from discontinued operations $ 232,994 $ 505,917 $ 699,858 $ 1,533,064 Depreciation expense $ — $ — $ — $ — Mexico Project litigation a) EWG request of precautionary measures In January 2018, EWG Water LLC (“EWG”) initiated an ordinary mercantile claim against, among others, 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 such claim, EWG challenged, among other things, the transactions contemplated under a certain option agreement (entered into in 2012), and therefore, the capital investment transactions occurring in May 2013 that increased the ownership interest of CW-Cooperatief in NSC to 99.99%. 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. Within the above-mentioned claim, the Tenth Civil Judge granted EWG certain preliminary measures against NSC, which were later overturned by an Upper Court. In July 2023, EWG filed a motion before a local court in Playas de Rosarito, Baja California (the “Rosarito Court”) to obtain precautionary measures consisting of the securing of assets owned by NSC (particularly real estate), as a procedure prior to the commencement of an arbitration that allegedly would be initiated by EWG against NSC to claim the payment of an indemnification for damages derived from a so-called simulation of legal acts. In the opinion of the Rosarito Court, such motion did not require notification to NSC or the presentation of counterarguments by NSC to the motion prior to securing the assets of NSC. On July 28, 2023, the Rosarito Court issued a resolution in which it: (i) granted the precautionary measures requested by EWG, subject to the posting of a bond in the amount of MXN$1,500,000 (One Million Five Hundred Thousand Mexican Pesos), and (ii) ordered that once the precautionary measures were executed, NSC would be summoned to that procedure and EWG would have three business days to prove that it initiated the arbitration. To the Company’s knowledge, EWG has not posted the bond set by the Rosarito Court. Therefore: (i) the precautionary measures have not been enforced, (ii) no securing or attachment has been registered against the real estate of NSC; and (iii) NSC has not been formally summoned to this procedure. Furthermore, NSC is unaware of any arbitration commenced by EWG regarding this matter. b) NSC amparo lawsuit On August 16, 2023, NSC filed an amparo suit (i.e., application for constitutional relief) before the Eleventh Federal District Court in Tijuana (“Eleventh Federal Court”) against the precautionary measures granted to EWG by the Rosarito Court. In its amparo suit, NSC also requested the Eleventh Federal Court to grant an order to put on hold said precautionary measures. A preliminary order to stay was granted by the Eleventh Federal Court, followed by a definitive injunction, subject to the posting of a guarantee. NSC has submitted the guarantee to the court. The Company cannot presently determine what impact the resolution of this matter may have on its consolidated financial statements. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 6. Leases The Company’s leases consist primarily of leases for office and warehouse space. 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 is not included in the lease amounts presented in the condensed consolidated balance sheets. 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. 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, 2023 2022 ASSETS Current Prepaid expenses and other current assets $ 192,394 $ 35,624 Current assets of discontinued operations 813 7,979 Noncurrent Operating lease right-of-use assets 1,720,637 2,058,384 Total lease right-of-use assets $ 1,913,844 $ 2,101,987 LIABILITIES Current Current maturities of operating leases $ 471,506 $ 546,851 Current liabilities of discontinued operations 743 7,361 Noncurrent Noncurrent operating leases 1,481,005 1,590,542 Total lease liabilities $ 1,953,254 $ 2,144,754 Weighted average remaining lease term: Operating leases 6.2 years 6.6 years Operating leases - discontinued operations 0.1 years 0.8 years Weighted average discount rate: Operating leases 5.45% 5.11% Operating leases - discontinued operations 4.96% 4.96% The components of lease costs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease costs $ 181,201 $ 168,910 $ 544,530 $ 523,107 Short-term lease costs 78,189 25,345 128,992 75,629 Lease costs - discontinued operations 14,942 10,185 34,371 29,767 Total lease costs $ 274,332 $ 204,440 $ 707,893 $ 628,503 Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in measurement of liabilities: Operating cash outflows for operating leases $ 589,354 $ 582,044 Operating cash outflows for operating leases - discontinued operations 8,405 6,923 Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of September 30, 2023 were as follows: Years ending December 31, Total 2023 $ 175,649 2024 482,694 2025 361,961 2026 274,959 2027 229,416 Thereafter 778,460 Total future lease payments 2,303,139 Less: imputed interest (350,628) Total lease obligations 1,952,511 Less: current obligations (471,506) Noncurrent lease obligations $ 1,481,005 |
Fair value
Fair value | 9 Months Ended |
Sep. 30, 2023 | |
Fair value | |
Fair value | 7. Fair value As of September 30, 2023 and December 31, 2022, 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. As of September 30, 2023 and December 31, 2022, the Company does not have assets and liabilities measured at fair value to present in the fair value hierarchy. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and contingencies. | |
Contingencies | 8 . Contingencies Cayman Water The Company sells water through its Cayman Water 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, 2023 and 2022, the Company generated approximately 14% and 25%, respectively, of its consolidated revenue and 23% and 44%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 license. For the nine months ended September 30, 2023 and 2022, the Company generated approximately 18% and 29%, respectively, of its consolidated revenue and 29% 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 a royalty of 7.5% of the revenue that Cayman Water collects as 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 consolidated 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 $23.2 million and $16.3 million as of September 30, 2023 and December 31, 2022, respectively. Approximately 76% and 65% of the accounts receivable balances were delinquent as of those dates, respectively. From time to time, 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. CW-Bahamas recently held discussions with the Ministry of Finance of the Government of The Bahamas which stated that the Government intends to return all of CW-Bahamas’ accounts receivable from the WSC to current status. In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3. Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3. Moody’s iterated these ratings in April 2023, noting that such ratings are “stable.” Based upon its review of this Moody’s correspondence, the Company continues to believe that no allowance for doubtful accounts is required for CW-Bahamas’ accounts receivable from the WSC. If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) 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, 2023 | |
Related party transactions | |
Related party transactions | 9. Related party transactions The Company, through PERC, purchased engineering and technology support services from various companies formerly affiliated with PERC, as a minority shareholder in these companies was also a minority shareholder of PERC. On January 4, 2023, as a result of CW-Holdings' exercise of a call option in October 2022, CW-Holdings purchased the remaining 39% ownership interest in PERC. After giving effect to this purchase, CW-Holdings owns 100% of the outstanding capital stock of PERC and, consequently, transactions with the formerly affiliated companies no longer constitute related party transactions. During the three and nine months ended September 30, 2022, the Company made total purchases of services from these companies of approximately $685,000 and $2,166,000, respectively. These total purchases are included in the Company’s cost of revenue in the accompanying condensed consolidated statements of income. PERC entered into a sublease agreement with one of these formerly affiliated companies that commenced on March 14, 2021 and ended August 31, 2021. This lease was extended on a month-to-month basis subsequent to August 31, 2021. During the three and nine months ended September 30, 2022, the Company recognized approximately $24,000 and $73,000, respectively, of expense related to this lease. This lease expense is included in the Company's general and administrative expenses in the accompanying condensed consolidated statements of income. The total amount of accounts payable outstanding to these companies as of December 31, 2022, was approximately $404,000. |
Impact of recent accounting sta
Impact of recent accounting standards | 9 Months Ended |
Sep. 30, 2023 | |
Impact of recent accounting standards | |
Impact of recent accounting standards | 10. Impact of recent accounting standards Adoption of new accounting standards: Financial Accounting Standard Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments, Effect of newly issued but not yet effective accounting standards: None. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent events | |
Subsequent events | 11. Subsequent events On November 2, 2023 (the “Closing Date”), the Company, through its wholly-owned indirect subsidiary, PERC, entered into a stock purchase agreement (the “Purchase Agreement”) with Linda Ramey and Robert W. Ramey (collectively, the “Sellers”). Pursuant to the terms of the Purchase Agreement, effective as of October 1, 2023 (the “Effective Date”), PERC purchased a 100% ownership interest in Ramey Environmental Compliance, Inc., a Colorado company (“REC”), for an aggregate purchase price of approximately $4,200,000. Of the total purchase price, (a) approximately $3,850,000 was paid on the Closing Date and (b) $350,000 will be paid on the earlier of (i) the second anniversary of the Effective Date and (ii) the expiration of the “Term” (as defined in the respective employment agreements between REC and the Sellers), provided that neither of the employment agreements between REC and the sellers has been terminated by REC for “Cause” (as defined in the employment agreements) or by the Sellers without “Good Reason” (as defined in the employment agreements) before the expiration of the “Term” (as defined in the employment agreements). The Company has not yet completed its initial accounting for this business combination related to its opening balance sheet as of the date of these financial statements. REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado. REC is headquartered in Frederick, Colorado. 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, 2023 | |
Accounting policies | |
Basis of consolidation | Basis of consolidation: On January 4, 2023, as a result of CW-Holdings' exercise of a call option in October 2022, CW-Holdings purchased the remaining 39% ownership interest in PERC for $2.4 million in cash and 368,383 shares of the Company’s common stock, having a value of approximately $5.36 million based upon the opening trading price of the Company’s common stock on The Nasdaq Global Market on the date of the transaction. After giving effect to this purchase, CW-Holdings owns 100% of the outstanding capital stock of PERC. In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii. On June 2, 2023, Kalaeloa Desalco, which is jointly owned by PERC and CW-Holdings, signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. 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 consolidated financial position, results of operations and cash flows as of and for the periods presented. The consolidated 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, 2023. 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, 2022. |
Foreign currency | Foreign currency: Net foreign currency gains (losses) arising from transactions and re-measurements were $22,077 and ($8,068) for the three months ended September 30, 2023 and 2022, respectively, and $72,253 and $20,966 for the nine months ended September 30, 2023 and 2022, respectively, and are included in “Other income (expense) - Other” in the accompanying condensed consolidated statements of income. |
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, 2023 and December 31, 2022 were approximately $5.1 million and $5.7 million, respectively. |
Goodwill and intangible assets | Goodwill and intangible assets: As of December 31, 2022, the Company elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing conducted in prior years for all reporting units other than the manufacturing reporting unit. The Company assessed relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events. Based upon this qualitative assessment the Company determined that it was more likely than not that the fair values of its Cayman Water and bulk segment reporting units exceeded their carrying values as of December 31, 2022. Based upon the Company’s negotiated, arms-length purchase of the remaining 39% equity interest in PERC from its minority shareholders for $7.8 million in January 2023, the fair value of the Company’s PERC reporting unit exceeded its carrying value by 79% as of December 31, 2022. For the year ended December 31, 2022, the Company estimated the fair value of its manufacturing reporting unit 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 the analysis. The Company also estimated the fair value of its manufacturing reporting unit for the year ended December 31, 2022 by applying the guideline public company method. The Company weighted the fair values estimated for its manufacturing reporting unit under each method and summed such weighted fair values to estimate the overall fair value for the reporting unit. The respective weightings the Company applied to each method for the year ended December 31, 2022 were 80% to the discounted cash flow method and 20% to the guideline public company method. The fair value the Company estimated for its manufacturing reporting unit exceeded its carrying amount by 63% as of December 31, 2022. The Company believes that the inherent uncertainties associated with the accounting estimates and assumptions it uses for its estimates of its manufacturing reporting unit’s fair value have increased due to the current, less predictable economic conditions, which have resulted in increasing raw material prices, extended and unexpected delays in the procurement and delivery of its raw materials, and have also, the Company believes, adversely affected its customers. Should interest rates rise significantly in the future the Company would likely be required to increase the discount rate it uses under the discounted cash flow method to estimate the fair value of this reporting unit, and such increased discount rate in and of itself could decrease the estimated fair value of the manufacturing reporting unit under the discounted cash flow method. As noted previously, based upon the Company’s estimation prepared as of December 31, 2022, the fair value of the Company’s manufacturing reporting unit exceeded its carrying value by 63%. However, if the Company determines in the future that Aerex’s discounted future cash inflows will be less than its present expectations, the Company may be required to record impairment losses to reduce the remaining carrying values of its manufacturing reporting unit’s goodwill and its remaining unamortized intangible assets balances, which amounted to $1,985,211 and $684,444, respectively, as of September 30, 2023. Any such impairment losses could have a material adverse impact on the Company’s consolidated results of operations. Income taxes: The Company is not presently subject to income taxes in the other countries in which it operates. |
Revenue recognition | Revenue recognition: The following table presents the Company’s revenue disaggregated by revenue source. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Retail revenue $ 7,216,574 $ 6,274,650 $ 22,560,998 $ 19,114,653 Bulk revenue 8,488,615 8,667,931 25,975,483 24,442,324 Services revenue 29,427,664 8,731,124 66,243,328 18,530,427 Manufacturing revenue 4,721,222 1,378,000 12,180,519 3,589,333 Total revenue $ 49,854,075 $ 25,051,705 $ 126,960,328 $ 65,676,737 Services revenue consists of the following: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Construction revenue $ 24,204,446 $ 4,781,613 $ 52,563,822 $ 5,347,023 Operations and maintenance revenue 5,021,081 3,394,142 12,750,902 10,740,623 Design and consulting revenue 202,137 555,369 928,604 2,442,781 Total services revenue $ 29,427,664 $ 8,731,124 $ 66,243,328 $ 18,530,427 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. Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 45 days after the billing date. Receivables not collected within 45 days subject the customer to disconnection from water service. 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 utilities 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. 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 designs, builds, sells, operates and maintains, and provides consulting services related to 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 also 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, through Aerex, is a custom and specialty manufacturer of systems and products applicable to commercial, municipal and industrial water production and treatment. Substantially all of Aerex’s customers are U.S. companies. The Company generates construction, operations and maintenance, design and consulting revenue from PERC and DesalCo and generates manufacturing revenue from Aerex. The Company recognizes revenue for its construction and custom/specialized manufacturing contracts During the three and nine months ended September 30, 2023, the Company adjusted its previous estimates of the total contract costs for two of its construction contracts. These adjustments increased the services segment’s income from operations and the Company’s consolidated net income by $1,787,275 and $1,350,108, respectively, for the three months ended September 30, 2023, and $3,549,028 and $2,680,936 for the nine months ended September 30, 2023, respectively. This adjustment increased diluted earnings per share by $0.08 and $0.17 for the three and nine months ended September 30, 2023, respectively. The Company has elected the “right to invoice” practical expedient for revenue recognition on its operations and maintenance, design and consulting contracts 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, December 31, 2023 2022 Revenue recognized to date on contracts in progress $ 86,655,434 $ 25,469,014 Amounts billed to date on contracts in progress (94,162,641) (33,407,182) Retainage 6,951,198 2,047,969 Net contract liability $ (556,009) $ (5,890,199) The above net balances are reflected in the accompanying condensed consolidated balance sheets as follows: September 30, December 31, 2023 2022 Contract assets $ 8,972,740 $ 2,913,722 Contract liabilities (9,528,749) (8,803,921) Net contract liability $ (556,009) $ (5,890,199) The significant increase in contract assets from December 31, 2022 to September 30, 2023 is primarily attributable to the construction contract with the WAC for the Red Gate plant. As of September 30, 2023, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $189.3 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 $28.8 million during the remainder of the year ending December 31, 2023 and approximately $160.5 million thereafter . In addition, the Company recognized revenue of approximately $9.6 million in the nine months ended September 30, 2023, that was included in the contract liability balance as of December 31, 2022. 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, 2023 | |
Accounting policies | |
Schedule of Disaggregation of revenue | The following table presents the Company’s revenue disaggregated by revenue source. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Retail revenue $ 7,216,574 $ 6,274,650 $ 22,560,998 $ 19,114,653 Bulk revenue 8,488,615 8,667,931 25,975,483 24,442,324 Services revenue 29,427,664 8,731,124 66,243,328 18,530,427 Manufacturing revenue 4,721,222 1,378,000 12,180,519 3,589,333 Total revenue $ 49,854,075 $ 25,051,705 $ 126,960,328 $ 65,676,737 Services revenue consists of the following: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Construction revenue $ 24,204,446 $ 4,781,613 $ 52,563,822 $ 5,347,023 Operations and maintenance revenue 5,021,081 3,394,142 12,750,902 10,740,623 Design and consulting revenue 202,137 555,369 928,604 2,442,781 Total services revenue $ 29,427,664 $ 8,731,124 $ 66,243,328 $ 18,530,427 |
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, December 31, 2023 2022 Revenue recognized to date on contracts in progress $ 86,655,434 $ 25,469,014 Amounts billed to date on contracts in progress (94,162,641) (33,407,182) Retainage 6,951,198 2,047,969 Net contract liability $ (556,009) $ (5,890,199) |
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, December 31, 2023 2022 Contract assets $ 8,972,740 $ 2,913,722 Contract liabilities (9,528,749) (8,803,921) Net contract liability $ (556,009) $ (5,890,199) |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment information | |
Schedule of segment reporting information, by segment | Three Months Ended September 30, 2023 Retail Bulk Services Manufacturing Total Revenue $ 7,216,574 $ 8,488,615 $ 29,427,664 $ 4,721,222 $ 49,854,075 Cost of revenue 3,371,891 5,835,837 20,174,645 3,857,274 33,239,647 Gross profit 3,844,683 2,652,778 9,253,019 863,948 16,614,428 General and administrative expenses 4,225,825 347,668 861,835 437,162 5,872,490 Income (loss) from operations $ (381,142) $ 2,305,110 $ 8,391,184 $ 426,786 10,741,938 Other income, net 236,066 Income before income taxes 10,978,004 Provision for income taxes 1,976,453 Net income from continuing operations 9,001,551 Income from continuing operations attributable to non-controlling interests 163,428 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 8,838,123 Net loss from discontinued operations (232,994) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 8,605,129 Depreciation and amortization expenses for the three months ended September 30, 2023 for the retail, bulk, services and manufacturing segments were $593,306, $748,594, $182,825 and $68,197, respectively. Three Months Ended September 30, 2022 Retail Bulk Services Manufacturing Total Revenue $ 6,274,650 $ 8,667,931 $ 8,731,124 $ 1,378,000 $ 25,051,705 Cost of revenue 3,231,973 6,446,549 7,333,982 1,195,428 18,207,932 Gross profit 3,042,677 2,221,382 1,397,142 182,572 6,843,773 General and administrative expenses 3,818,459 473,534 936,708 381,949 5,610,650 Gain on asset dispositions and impairments, net 1,499 2,000 — — 3,499 Income (loss) from operations $ (774,283) $ 1,749,848 $ 460,434 $ (199,377) 1,236,622 Other expense, net (168,980) Income before income taxes 1,067,642 Provision for income taxes 26,616 Net income from continuing operations 1,041,026 Income attributable to non-controlling interests 217,415 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 823,611 Net loss from discontinued operations (505,917) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 317,694 Depreciation and amortization expenses for the three months ended September 30, 2022 for the retail, bulk, services and manufacturing segments were $567,086, $707,788, $175,732 and $71,734, respectively. Nine Months Ended September 30, 2023 Retail Bulk Services Manufacturing Total Revenue $ 22,560,998 $ 25,975,483 $ 66,243,328 $ 12,180,519 $ 126,960,328 Cost of revenue 10,355,817 18,010,718 46,466,864 9,489,870 84,323,269 Gross profit 12,205,181 7,964,765 19,776,464 2,690,649 42,637,059 General and administrative expenses 12,668,467 1,080,543 2,855,067 1,289,990 17,894,067 Gain (loss) on asset dispositions and impairments, net (7,287) 12,270 — 1,933 6,916 Income (loss) from operations $ (470,573) $ 6,896,492 $ 16,921,397 $ 1,402,592 24,749,908 Other income, net 522,256 Income before income taxes 25,272,164 Provision for income taxes 4,366,005 Net income from continuing operations 20,906,159 Income from continuing operations attributable to non-controlling interests 463,775 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 20,442,384 Net loss from discontinued operations (699,858) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 19,742,526 Depreciation and amortization expenses for the nine months ended September 30, 2023 for the retail, bulk, services and manufacturing segments were $1,813,280, $2,316,923, $528,258 and $204,320, respectively. Nine Months Ended September 30, 2022 Retail Bulk Services Manufacturing Total Revenue $ 19,114,653 $ 24,442,324 $ 18,530,427 $ 3,589,333 $ 65,676,737 Cost of revenue 9,404,124 16,781,251 14,849,029 3,177,299 44,211,703 Gross profit 9,710,529 7,661,073 3,681,398 412,034 21,465,034 General and administrative expenses 10,613,975 1,187,909 2,554,721 1,046,853 15,403,458 Gain on asset dispositions and impairments, net 2,699 2,000 16,538 — 21,237 Income (loss) from operations $ (900,747) $ 6,475,164 $ 1,143,215 $ (634,819) 6,082,813 Other income, net 548,729 Income before income taxes 6,631,542 Provision for income taxes 83,041 Net income from continuing operations 6,548,501 Income from continuing operations attributable to non-controlling interests 691,042 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders 5,857,459 Net loss from discontinued operations (1,533,064) Net income attributable to Consolidated Water Co. Ltd. stockholders $ 4,324,395 Depreciation and amortization expenses for the nine months ended September 30, 2022 for the retail, bulk, services and manufacturing segments were $1,820,567, $2,114,888, $502,809 and $213,249, respectively. As of September 30, 2023 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,710,301 $ 23,506,832 $ 10,007,905 $ 1,889,809 $ 38,114,847 Inventory, current and non-current $ 2,920,717 $ 4,881,541 $ 2,539,885 $ 2,621,535 $ 12,963,678 Contract assets $ — $ — $ 6,698,713 $ 2,274,027 $ 8,972,740 Property, plant and equipment, net $ 26,709,318 $ 20,962,912 $ 805,227 $ 1,586,067 $ 50,063,524 Construction in progress $ 6,348,267 $ 35,990 $ — $ 61,792 $ 6,446,049 Intangibles, net $ — $ — $ 1,724,444 $ 684,444 $ 2,408,888 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 59,409,833 $ 62,538,537 $ 53,885,758 $ 14,335,484 $ 190,169,612 Assets of discontinued operations $ 21,427,879 Total assets $ 211,597,491 As of December 31, 2022 Retail Bulk Services Manufacturing Total Accounts receivable, net $ 2,953,927 $ 16,554,940 $ 5,838,721 $ 1,698,594 $ 27,046,182 Inventory, current and non-current $ 2,759,659 $ 4,037,684 $ — $ 3,481,486 $ 10,278,829 Contract assets $ — $ — $ 1,249,069 $ 1,664,653 $ 2,913,722 Property, plant and equipment, net $ 27,697,490 $ 22,510,658 $ 759,409 $ 1,561,988 $ 52,529,545 Construction in progress $ 3,643,889 $ — $ — $ 61,792 $ 3,705,681 Intangibles, net $ — $ — $ 2,064,444 $ 754,444 $ 2,818,888 Goodwill $ 1,170,511 $ 1,948,875 $ 5,320,416 $ 1,985,211 $ 10,425,013 Total segment assets $ 65,853,789 $ 56,118,243 $ 36,319,078 $ 13,054,971 $ 171,346,081 Assets of discontinued operations $ 21,660,768 Total assets $ 193,006,849 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders $ 8,838,123 $ 823,611 $ 20,442,384 $ 5,857,459 Less: preferred stock dividends (4,295) (2,925) (11,305) (8,609) Net income from continuing operations available to common shares in the determination of basic earnings per common share 8,833,828 820,686 20,431,079 5,848,850 Total loss from discontinued operations (232,994) (505,917) (699,858) (1,533,064) Net income available to common shares in the determination of basic earnings per common share $ 8,600,834 $ 314,769 $ 19,731,221 $ 4,315,786 Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,742,854 15,290,597 15,734,234 15,287,233 Plus: Weighted average number of preferred shares outstanding during the period 45,950 35,366 38,385 31,041 Potential dilutive effect of unexercised options and unvested stock grants 139,800 124,313 137,106 121,987 Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders 15,928,604 15,450,276 15,909,725 15,440,261 |
Discontinued operations - Mex_2
Discontinued operations - Mexico project development (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued operations - Mexico project development | |
Schedule of financial information for Mexico project development | Summarized financial information for the discontinued Mexico project development operation is as follows: September 30, December 31, 2023 2022 Cash $ 189,613 $ 442,252 Accounts receivable 12,675 12,675 Prepaid expenses and other current assets 96,303 76,553 Land 21,126,898 21,126,898 Other assets 2,390 2,390 Total assets of discontinued operations $ 21,427,879 $ 21,660,768 Total liabilities of discontinued operations $ 259,853 $ 389,884 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ — $ — $ — $ — Loss from discontinued operations $ 232,994 $ 505,917 $ 699,858 $ 1,533,064 Depreciation expense $ — $ — $ — $ — |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 ASSETS Current Prepaid expenses and other current assets $ 192,394 $ 35,624 Current assets of discontinued operations 813 7,979 Noncurrent Operating lease right-of-use assets 1,720,637 2,058,384 Total lease right-of-use assets $ 1,913,844 $ 2,101,987 LIABILITIES Current Current maturities of operating leases $ 471,506 $ 546,851 Current liabilities of discontinued operations 743 7,361 Noncurrent Noncurrent operating leases 1,481,005 1,590,542 Total lease liabilities $ 1,953,254 $ 2,144,754 Weighted average remaining lease term: Operating leases 6.2 years 6.6 years Operating leases - discontinued operations 0.1 years 0.8 years Weighted average discount rate: Operating leases 5.45% 5.11% Operating leases - discontinued operations 4.96% 4.96% |
Schedule of Lease, Cost | The components of lease costs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease costs $ 181,201 $ 168,910 $ 544,530 $ 523,107 Short-term lease costs 78,189 25,345 128,992 75,629 Lease costs - discontinued operations 14,942 10,185 34,371 29,767 Total lease costs $ 274,332 $ 204,440 $ 707,893 $ 628,503 |
Schedule of Cash Flow, Supplemental | Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in measurement of liabilities: Operating cash outflows for operating leases $ 589,354 $ 582,044 Operating cash outflows for operating leases - discontinued operations 8,405 6,923 |
Schedule of future lease payments relating to the Company's operating lease liabilities | Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of September 30, 2023 were as follows: Years ending December 31, Total 2023 $ 175,649 2024 482,694 2025 361,961 2026 274,959 2027 229,416 Thereafter 778,460 Total future lease payments 2,303,139 Less: imputed interest (350,628) Total lease obligations 1,952,511 Less: current obligations (471,506) Noncurrent lease obligations $ 1,481,005 |
Accounting policies (Details)
Accounting policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Cash and cash equivalents | $ 5,100,000 | $ 5,100,000 | $ 5,000,000 | ||
Deposits held in foreign bank | 5,100,000 | 5,100,000 | |||
Foreign Currency Transaction Gain (Loss), before Tax [Abstract] | |||||
Foreign Currency Transaction Gain (Loss), before Tax | $ 22,077,000 | $ (8,068,000) | $ 72,253 | $ 20,966 | |
Bahamas [Member] | |||||
Deposits held in foreign bank | $ 5,700,000 |
Accounting policies - Additiona
Accounting policies - Additional Information (Details) $ in Thousands, gal in Millions | 1 Months Ended | ||
Jun. 02, 2023 gal | Jan. 04, 2023 USD ($) shares | Jan. 31, 2023 USD ($) | |
PERC Water Corporation | |||
Ownership interest held | 100% | ||
Kalaeloa Desalco | |||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 1.7 | ||
PERC Water Corporation | |||
Ownership interest acquired | 39% | 39% | |
Shares of the Company's common stock | shares | 368,383 | ||
Cash | $ 2,400 | $ 7,800 | |
Common stock value | $ 5,360 |
Accounting policies - Goodwill
Accounting policies - Goodwill and intangible assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2023 | |
Goodwill | $ 10,425,013 | $ 10,425,013 |
Intangible assets, net | 2,818,888 | 2,408,888 |
Retail [Member] | ||
Goodwill | 1,170,511 | 1,170,511 |
Bulk [Member] | ||
Goodwill | 1,948,875 | 1,948,875 |
Services [Member] | ||
Goodwill | 5,320,416 | 5,320,416 |
Intangible assets, net | 2,064,444 | 1,724,444 |
Manufacturing Units [Member] | ||
Goodwill | 1,985,211 | 1,985,211 |
Intangible assets, net | $ 754,444 | $ 684,444 |
Discounted Cash Flow Method [Member] | ||
Estimated Fair Value Percentage Segment Reporting Information | 80% | |
Guideline Public Company Method [Member] | ||
Estimated Fair Value Percentage Segment Reporting Information | 20% | |
Aerex | Manufacturing Units [Member] | ||
Estimated Fair Value Carrying Amount Exceeded Percentage | 63 | |
PERC Water Corporation | ||
Estimated Fair Value Percentage Segment Reporting Information | 79% |
Accounting policies - Disaggreg
Accounting policies - Disaggregated revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Total Revenue | $ 49,854,075 | $ 25,051,705 | $ 126,960,328 | $ 65,676,737 |
Contracts in progress | ||||
Increase in net income | $ 1,350,108 | $ 2,680,936 | ||
Increase in diluted earning | $ 0.08 | $ 0.17 | ||
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 | 45 days | |||
Retail revenue [Member] | ||||
Total Revenue | $ 7,216,574 | 6,274,650 | $ 22,560,998 | 19,114,653 |
Bulk revenue [Member] | ||||
Total Revenue | 8,488,615 | 8,667,931 | 25,975,483 | 24,442,324 |
Services revenue [Member] | ||||
Total Revenue | 29,427,664 | 8,731,124 | 66,243,328 | 18,530,427 |
Contracts in progress | ||||
Increase in net income | 1,787,275 | 3,549,028 | ||
Manufacturing revenue [Member] | ||||
Total Revenue | 4,721,222 | 1,378,000 | 12,180,519 | 3,589,333 |
Construction Sevices [Member] | ||||
Total Revenue | 24,204,446 | 4,781,613 | 52,563,822 | 5,347,023 |
Operations and Maintenance [Member] | ||||
Total Revenue | 5,021,081 | 3,394,142 | 12,750,902 | 10,740,623 |
Design and Consulting Services [Member] | ||||
Total Revenue | $ 202,137 | $ 555,369 | $ 928,604 | $ 2,442,781 |
Accounting policies - Performan
Accounting policies - Performance obligations (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2023 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Amount recognized revenue included in the contract liability balance | $ 9.6 | |
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 | $ 28.8 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 9 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-31 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, Remaining Performance Obligation, Amount | $ 189.3 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-12-31 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, Remaining Performance Obligation, Amount | $ 160.5 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 2 years |
Accounting policies - Revenue r
Accounting policies - Revenue recognized and billed on services (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounting policies | ||
Revenue recognized to date on contracts in progress | $ 86,655,434 | $ 25,469,014 |
Amounts billed to date on contracts in progress | (94,162,641) | (33,407,182) |
Retainage | 6,951,198 | 2,047,969 |
Net contract asset | (556,009) | (5,890,199) |
Contract assets | 8,972,740 | 2,913,722 |
Contract liabilities | (9,528,749) | (8,803,921) |
Net contract liability | $ (556,009) | $ (5,890,199) |
Segment information (Details)
Segment information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of Reportable Segments | segment | 4 | ||||
Number of other business segments | segment | 3 | ||||
Revenue | $ 49,854,075 | $ 25,051,705 | $ 126,960,328 | $ 65,676,737 | |
Cost of revenue | 33,239,647 | 18,207,932 | 84,323,269 | 44,211,703 | |
Gross profit | 16,614,428 | 6,843,773 | 42,637,059 | 21,465,034 | |
General and administrative expenses | 5,872,490 | 5,610,650 | 17,894,067 | 15,403,458 | |
Gain (loss) on asset dispositions and impairments, net | 3,499 | 6,916 | 21,237 | ||
Income from operations | 10,741,938 | 1,236,622 | 24,749,908 | 6,082,813 | |
Other income, net | 236,066 | (168,980) | 522,256 | 548,729 | |
Income before income taxes | 10,978,004 | 1,067,642 | 25,272,164 | 6,631,542 | |
Benefit for income taxes | 1,976,453 | 26,616 | 4,366,005 | 83,041 | |
Net income from continuing operations | 9,001,551 | 1,041,026 | 20,906,159 | 6,548,501 | |
Income from continuing operations attributable to non-controlling interests | 163,428 | 217,415 | 463,775 | 691,042 | |
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | 8,838,123 | 823,611 | 20,442,384 | 5,857,459 | |
Net loss from discontinued operations | (232,994) | (505,917) | (699,858) | (1,533,064) | |
Net income attributable to Consolidated Water Co. Ltd. stockholders | 8,605,129 | 317,694 | 19,742,526 | 4,324,395 | |
Accounts receivable, net | 38,114,847 | 38,114,847 | $ 27,046,182 | ||
Inventory, current and non-current | 12,963,678 | 12,963,678 | 10,278,829 | ||
Contract assets | 8,972,740 | 8,972,740 | 2,913,722 | ||
Property, plant and equipment, net | 50,063,524 | 50,063,524 | 52,529,545 | ||
Construction in progress | 6,446,049 | 6,446,049 | 3,705,681 | ||
Intangibles, net | 2,408,888 | 2,408,888 | 2,818,888 | ||
Goodwill | 10,425,013 | 10,425,013 | 10,425,013 | ||
Total segment assets | 190,169,612 | 190,169,612 | 171,346,081 | ||
Assets of discontinued operations | 21,427,879 | 21,427,879 | 21,660,768 | ||
Total assets | 211,597,491 | 211,597,491 | 193,006,849 | ||
Retail [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 7,216,574 | 6,274,650 | 22,560,998 | 19,114,653 | |
Cost of revenue | 3,371,891 | 3,231,973 | 10,355,817 | 9,404,124 | |
Gross profit | 3,844,683 | 3,042,677 | 12,205,181 | 9,710,529 | |
General and administrative expenses | 4,225,825 | 3,818,459 | 12,668,467 | 10,613,975 | |
Gain (loss) on asset dispositions and impairments, net | 1,499 | (7,287) | 2,699 | ||
Income from operations | (381,142) | (774,283) | (470,573) | (900,747) | |
Accounts receivable, net | 2,710,301 | 2,710,301 | 2,953,927 | ||
Inventory, current and non-current | 2,920,717 | 2,920,717 | 2,759,659 | ||
Property, plant and equipment, net | 26,709,318 | 26,709,318 | 27,697,490 | ||
Construction in progress | 6,348,267 | 6,348,267 | 3,643,889 | ||
Goodwill | 1,170,511 | 1,170,511 | 1,170,511 | ||
Total segment assets | 59,409,833 | 59,409,833 | 65,853,789 | ||
Bulk [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 8,488,615 | 8,667,931 | 25,975,483 | 24,442,324 | |
Cost of revenue | 5,835,837 | 6,446,549 | 18,010,718 | 16,781,251 | |
Gross profit | 2,652,778 | 2,221,382 | 7,964,765 | 7,661,073 | |
General and administrative expenses | 347,668 | 473,534 | 1,080,543 | 1,187,909 | |
Gain (loss) on asset dispositions and impairments, net | 2,000 | 12,270 | 2,000 | ||
Income from operations | 2,305,110 | 1,749,848 | 6,896,492 | 6,475,164 | |
Accounts receivable, net | 23,506,832 | 23,506,832 | 16,554,940 | ||
Inventory, current and non-current | 4,881,541 | 4,881,541 | 4,037,684 | ||
Property, plant and equipment, net | 20,962,912 | 20,962,912 | 22,510,658 | ||
Construction in progress | 35,990 | 35,990 | |||
Goodwill | 1,948,875 | 1,948,875 | 1,948,875 | ||
Total segment assets | 62,538,537 | 62,538,537 | 56,118,243 | ||
Services [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 29,427,664 | 8,731,124 | 66,243,328 | 18,530,427 | |
Cost of revenue | 20,174,645 | 7,333,982 | 46,466,864 | 14,849,029 | |
Gross profit | 9,253,019 | 1,397,142 | 19,776,464 | 3,681,398 | |
General and administrative expenses | 861,835 | 936,708 | 2,855,067 | 2,554,721 | |
Gain (loss) on asset dispositions and impairments, net | 16,538 | ||||
Income from operations | 8,391,184 | 460,434 | 16,921,397 | 1,143,215 | |
Accounts receivable, net | 10,007,905 | 10,007,905 | 5,838,721 | ||
Inventory, current and non-current | 2,539,885 | 2,539,885 | |||
Contract assets | 6,698,713 | 6,698,713 | 1,249,069 | ||
Property, plant and equipment, net | 805,227 | 805,227 | 759,409 | ||
Intangibles, net | 1,724,444 | 1,724,444 | 2,064,444 | ||
Goodwill | 5,320,416 | 5,320,416 | 5,320,416 | ||
Total segment assets | 53,885,758 | 53,885,758 | 36,319,078 | ||
Manufacturing Units [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 4,721,222 | 1,378,000 | 12,180,519 | 3,589,333 | |
Cost of revenue | 3,857,274 | 1,195,428 | 9,489,870 | 3,177,299 | |
Gross profit | 863,948 | 182,572 | 2,690,649 | 412,034 | |
General and administrative expenses | 437,162 | 381,949 | 1,289,990 | 1,046,853 | |
Gain (loss) on asset dispositions and impairments, net | 1,933 | ||||
Income from operations | 426,786 | $ (199,377) | 1,402,592 | $ (634,819) | |
Accounts receivable, net | 1,889,809 | 1,889,809 | 1,698,594 | ||
Inventory, current and non-current | 2,621,535 | 2,621,535 | 3,481,486 | ||
Contract assets | 2,274,027 | 2,274,027 | 1,664,653 | ||
Property, plant and equipment, net | 1,586,067 | 1,586,067 | 1,561,988 | ||
Construction in progress | 61,792 | 61,792 | 61,792 | ||
Intangibles, net | 684,444 | 684,444 | 754,444 | ||
Goodwill | 1,985,211 | 1,985,211 | 1,985,211 | ||
Total segment assets | $ 14,335,484 | $ 14,335,484 | $ 13,054,971 |
Segment information - Additiona
Segment information - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retail [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | $ 593,306 | $ 567,086 | $ 1,813,280 | $ 1,820,567 |
Bulk [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | 748,594 | 707,788 | 2,316,923 | 2,114,888 |
Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | 182,825 | 175,732 | 528,258 | 502,809 |
Manufacturing Units [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation, Depletion and Amortization | $ 68,197 | $ 71,734 | $ 204,320 | $ 213,249 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings per share | ||||
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders | $ 8,838,123 | $ 823,611 | $ 20,442,384 | $ 5,857,459 |
Less: preferred stock dividends | (4,295) | (2,925) | (11,305) | (8,609) |
Net income from continuing operations available to common shares in the determination of basic earnings per common share | 8,833,828 | 820,686 | 20,431,079 | 5,848,850 |
Total loss from discontinued operations | (232,994) | (505,917) | (699,858) | (1,533,064) |
Net income available to common shares in the determination of basic earnings per common share | $ 8,600,834 | $ 314,769 | $ 19,731,221 | $ 4,315,786 |
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) | 15,742,854 | 15,290,597 | 15,734,234 | 15,287,233 |
Weighted average number of preferred shares outstanding during the period (in shares) | 45,950 | 35,366 | 38,385 | 31,041 |
Potential dilutive effect of unexercised options and unvested stock grants | 139,800 | 124,313 | 137,106 | 121,987 |
Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders | 15,928,604 | 15,450,276 | 15,909,725 | 15,440,261 |
Discontinued operations - Mex_3
Discontinued operations - Mexico project development- Narratives (Details) gal in Millions | 12 Months Ended | |||||||||||
Feb. 09, 2022 USD ($) | Feb. 09, 2022 MXN ($) | Aug. 28, 2020 USD ($) | Aug. 28, 2020 MXN ($) | Jun. 29, 2020 | Aug. 22, 2016 gal | Dec. 31, 2010 gal | Jul. 28, 2023 MXN ($) | Feb. 28, 2018 | Aug. 31, 2016 | May 31, 2013 | Dec. 31, 2012 USD ($) ha | |
Schedule of Investments [Line Items] | ||||||||||||
Number of days to submit list of non-recoverable expenses made | 20 days | |||||||||||
Amount of non-recoverable expenses | $ 51,144,525 | $ 137,333,114 | ||||||||||
Loss Contingency, Damages Sought, Value | $ 137,000,000 | |||||||||||
Minimum [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Loss Contingency, Damages Sought, Value | $ 51,000,000 | |||||||||||
NSC Agua [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Area of Land | ha | 20.1 | |||||||||||
Land | $ 21,100,000 | |||||||||||
NSC Agua [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Amount of bond posted | $ 1,500,000 | |||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 100 | 100 | ||||||||||
Period in which construction must be completed | 36 months | |||||||||||
Period Required To Operate And Maintain Plant And Aqueduct | 37 years | |||||||||||
NSC Agua [Member] | Aguas de Rosarito S.A.P.I. de C.V [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Equity Method Investment, Ownership Percentage | 0.40% | 99.60% | ||||||||||
NSC Agua [Member] | First Phase [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 50 | |||||||||||
NSC Agua [Member] | Second Phase [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Seawater Reverse Osmosis Desalination Plant Per Day Processing Capacity | gal | 50 | |||||||||||
NSC Agua [Member] | Option agreement [Member] | ||||||||||||
Schedule of Investments [Line Items] | ||||||||||||
Total Percentage Of Ownership Interest In An Acquired Company | 99.99% |
Discontinued operations - Mex_4
Discontinued operations - Mexico project development (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total assets of discontinued operations | $ 21,427,879 | $ 21,660,768 |
Discontinued Operations. | Mexico Project Development | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash | 189,613 | 442,252 |
Accounts receivable | 12,675 | 12,675 |
Prepaid expenses and other current assets | 96,303 | 76,553 |
Value added taxes receivable (net of allowance of $1,940,725 and $1,711,234, respectively) | 21,126,898 | 21,126,898 |
Land | 2,390 | 2,390 |
Other assets | $ 21,427,879 | $ 21,660,768 |
Discontinued operations - Mex_5
Discontinued operations - Mexico project development - Financial Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Discontinued Operations. | Mexico Project Development | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss from discontinued operations | $ 232,994 | $ 505,917 | $ 699,858 | $ 1,533,064 |
Leases - Lease assets and liabi
Leases - Lease assets and liabilities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current | ||
Current assets of discontinued operations | $ 813 | $ 7,979 |
Noncurrent | ||
Operating lease right-of-use assets | 1,720,637 | 2,058,384 |
Total lease right-of-use assets | 1,913,844 | 2,101,987 |
Current | ||
Current maturities of operating leases | 471,506 | 546,851 |
Current liabilities of discontinued operations | 743 | 7,361 |
Noncurrent | ||
Noncurrent operating leases | 1,481,005 | 1,590,542 |
Total lease liabilities | $ 1,953,254 | $ 2,144,754 |
Operating leases, weighted average remaining lease term | 6 years 2 months 12 days | 6 years 7 months 6 days |
Operating leases, weighted average discount rate | 5.45% | 5.11% |
Discontinued Operations. | ||
Noncurrent | ||
Operating leases, weighted average remaining lease term | 1 month 6 days | 9 months 18 days |
Operating leases, weighted average discount rate | 4.96% | 4.96% |
Prepaid Expenses and Other Current Assets [Member] | ||
Current | ||
Operating lease assets, current | $ 192,394 | $ 35,624 |
Leases - Components of lease co
Leases - Components of lease cost (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Operating lease costs | $ 181,201 | $ 168,910 | $ 544,530 | $ 523,107 |
Short-term lease costs | 78,189 | 25,345 | 128,992 | 75,629 |
Lease costs - discontinued operations | 14,942 | 10,185 | 34,371 | 29,767 |
Total lease costs | $ 274,332 | $ 204,440 | $ 707,893 | $ 628,503 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||
Operating cash outflows for operating leases | $ 589,354 | $ 582,044 |
Operating cash flows from operating leases - discontinued operations | $ 8,405 | $ 6,923 |
Leases - Future lease payments
Leases - Future lease payments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases | ||
2023 | $ 175,649 | |
2024 | 482,694 | |
2025 | 361,961 | |
2026 | 274,959 | |
2027 | 229,416 | |
Thereafter | 778,460 | |
Total future lease payments | 2,303,139 | |
Less: imputed interest | (350,628) | |
Total lease obligations | 1,952,511 | |
Less: current obligations | (471,506) | $ (546,851) |
Noncurrent lease obligations | $ 1,481,005 | $ 1,590,542 |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Contingencies | |||||
Cayman Water Retail Operations, Percentage Of Revenue | 14% | 25% | 18% | 29% | |
Cayman Water Retail Operations, Percentage Of Gross Profit | 23% | 44% | 29% | 45% | |
Percentage of revenue collected paid | 7.50% | 7.50% | |||
Percentage of delinquent account receivables | 76% | 76% | 65% | ||
Consolidated Water Bahamas [Member] | |||||
Contingencies | |||||
Accounts Receivable, Net | $ 23.2 | $ 23.2 | $ 16.3 |
Related party transactions (Det
Related party transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2022 | Jan. 31, 2023 | Jan. 04, 2023 | Dec. 31, 2022 | |
PERC Water Corporation | |||||
Related Party Transaction [Line Items] | |||||
Purchases of services | $ 685,000 | $ 2,166,000 | |||
Accounts payable outstanding | $ 404,000 | ||||
Amount of expense related to sublease agreement | $ 24,000 | $ 73,000 | |||
PERC Water Corporation | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest acquired | 39% | 39% | |||
PERC Water Corporation | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest held | 100% |
Subsequent events (Details)
Subsequent events (Details) - PERC Water Corporation - USD ($) | Nov. 02, 2023 | Jan. 04, 2023 |
Subsequent Event [Line Items] | ||
Ownership interest held | 100% | |
Ramey Environmental Compliance, Inc (REC) | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Ownership interest acquired | 100% | |
Aggregate purchase price | $ 4,200,000 | |
Amount of consideration paid | 3,850,000 | |
Amount of consideration to be paid at a later date | $ 350,000 |