Earnings call transcript Q4 2022

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Operator

Good morning and thank you for joining us today to discuss Consolidated Water Company's Full Year 2022 Results. Hosting the call today is the Chief Executive Officer, Consolidated Water Company, Rick McTaggart; and the company's Chief Financial Officer, David Sasnett.

Following their remarks, we will open the call to your questions. [Operator Instructions]

Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call. release, everyone be call replay of made instructions yesterday's remind and being per the to in in will available it available press company's like website. that Relations is today's recorded, the the I'd Investor is section which for telecom

Now, to call turn over Company's Consolidated Water I'd Rick ahead. McTaggart. like CEO, Sir, the to please go

Rick McTaggart

morning, Thank Thanks for and today. good everyone. Joe you, us joining

our in our of a earnings release to afternoon, million yesterday $XX.X reported in increased XXXX. revenues year saw issued XX% across of we for increase year. last all you segments revenue generated full record a four As the business our We

this of XX.X% the Our in in of the large retail tourist Cayman due Islands. volume and sold increase the to activity revenues water was from to return a increase water Cayman benefited Grand

of $XX water increased on PERC most segment advanced million of by in in and recognizing progressing anticipate this Services is planned construction Arizona. Goodyear, announced from as this is of project the million Our progress The we last to additional construction Water completed project the We due year. this and treatment in with plant $XX the until revenue this new year revenue mid-XXXX. of significant contract a May

we Water the Cayman a with XX under the new Also desalination build are Grand on operate plant of broke contract the QX, ground on Cayman and year in constructing that we presently designed Authority and Islands. design

in this announced project also of May year. last We

year-over-year contract contributed the revenues. in recognized increase Service this we segment from also revenue The to

XX on majority this of XX with operation be by years. the plant total earned contract the of term XX-year We $XX million first the approximate plant anticipate about rest the months, construction the the this of over generated revenue over values. the the desalination $XX the based following million XXXX expect during from to to the generated January We of

the we XX.X get So year to that's how term.

water PERC for an milestone million Southern a operate XX-year announced $XX.X to we with facilities win contract expanded advanced of California. the October, In treatment two in award maintain and

experienced impact was contract plans win in all, region quarters. Western that class major which of affirms longest-term has XX is conditions growing $XXX to the provides the supports unprecedented in our our that this than ever expect this on over world So, drought in or business services the over segment U.S. PERC the that signed. million and projects certainly. has secured for earnings coming last longest a multi-year we positive years have PERC This the more we In contract the XXXX,

before who Sasnett, rest and year. Now year, discussing the outlook the will through to our the our us take CFO, to more I the the of about financial projects would turn details these like for over call of David

David Sasnett

XXXX good Yesterday, can and press Rick, you the Thanks, full our we release website. year morning, issued that find results press fiscal Investors in a everyone. of our and section in release,

compared million revenue for the in XXXX. we $XX.X XXXX which reported Rick to XX% mentioned, up was As $XX.X million, totaled

all of revenue. an in four $X.X our million additional million increase Services segment, our This in our in Bulk in Retail $XX and Manufacturing our amounts $X.X of in the segments, increases driven million business by segment, following segment segment, was $X.X million

on As we of volume discussed increased water in earlier, XX.X% the our the Grand to increase Cayman. retail primarily sold due revenue a we

Bahamas, costs increase favorable CW-Bahamas a increasing energy higher pass increase in to was of of increased with component a increased retail it the for costs through energy due this in due our rate and through rates. segment the water the of pass our more that slightly result to Bulk The mix. increased Our revenue also revenue energy as component an energy rates

and design was the water revenue segment both of Manufacturing Goodyear, production progress most plant due operating and construction to revenue, in of the construction the segment The our treatment activity. The Services increase in PERC’s resulted revenue, in increased on increase our revenue was to from and plant due with maintenance in Arizona. increases increase

Our was $XX.X which total XX% or full XXXX million million profit the XXXX. XX% total revenue, year the or for of of of in gross revenue $XX.X from up XX% is

and consolidated income attributable of discontinued was up $X.XX diluted in in Net fully net XXXX. CWCO diluted or to of of $X.X share. operations, from is to per and basic $X.XX Net XXXX from million or to was basic million million This net which income per share results water and continuing the or income for income compared diluted operations stockholders $XXX,XXX attributable per share XXXX. includes $X.X $X.X $X.XX stockholders, or $X.XX basic share per

turning Now sheet. balance our to

Our the of the September end and This $XX.X cash end million cash million quarter. as of equivalents as year. the totaled $XX.X to compares of the of XXXX XX,

As XXXX, December working of totaled $XX.X capital XX, million. our

and stockholder’s $XXX.X million. totaled $XXX,XXX our Our debt equity only was

liquidity is to Cayman. desalination of our the for of of million. desalination capital for projected approximately construction and in XXXX operations for XXXX expected requirements million XXXX, that expenditures As million incurred $XX.X on new West plant for existing $X.X $X.X XX, include our plant Bay includes of approximately Grand be This December replacing the

we our $X.X and any and valued million equity to of well, in water paid requirements. option dividends of our Board. our dividends liquidity approximately declared stock January future of million. $X.X year, we XX% cash was shares October -- paid PERC this actually comprised We XXXX. approximately in purchase of by our $X.XX million. in course, the also to remaining January This for XXXX, order this common January We completed of and about $X.X include subsidiary transaction million future at In exercised XXX,XXX They exercised we in XXXX,

revolving we financing quarter with Scotiabank In of credit of needs. some a million capital the line assist and the third to Islands our with in $XX XXXX, Cayman obtained us short-term working

any the utilize required not to borrowings to that this under been available of However, date, are have line. we

the financial quarter, that Rick. call back So our turn the to over I'll for and completes summary

Rick McTaggart

David. Thanks,

at appears normal which to cruise and this looking the now to rapid been all of pleasantly in August, returned. retail to early Grand government were in return the Cayman, restrictions Islands Cayman travel So the year. the by COVID-related visits ship eliminated surprised for back operations island, our we've tourism Last by levels

It reported less has been challenges the that to early industry. due year XX% to than to aviation airlift still is XX% capacity last in the islands

visitors up island. costs to seems than the limiting number to this driving the of However, ticket be more

local weeks islands. visitor Overall, and numbers rooms levels. to in being XXXX, article across hotel cars rental last are According boat in below posted Cayman demand for out, were the the still to a recent are booked advance posted paper an trips Islands week, selling pre-COVID are

to looks far XXXX, historical so see However, it levels in the soon. a full islands return may like

As fourth we building for in ground Construction Grand Authority. I in is Water February. building we're main quarter, Cayman new the during mentioned the Gate Red well broke that the the plant completed underway of for the Seawater parts with now Osmosis earlier, Reverse structural

a desal a for strong We're landscape So continue in in regional competitive a opportunities we very presence give looking seen at us which decisive few to hopeful Caribbean haven't a interesting some follow more actually becoming that years. crowded for we this market, quite our opportunities, in ahead what's active will market. advantage desal projects

soon. desalination Honolulu, X.X for awaiting designing, We the are in million of a also June to this day at bid extending and project be new award did seawater we've we per now sometime client We last the in contract of building year, times made official the been announcement and our several and the an request plant gallon the award announcement operating Hawaii. anticipate of

comparable is in the years. -- XX is types the over successfully project Hawaii that in of we've the projects to This Caribbean last completed

its as We coupled on our designing, Just with design-build building puts similar and experience seawater top in list projects desalination U.S. and relationships this extensive note PERC's in XXth the operating will the market August, company project in future. company us plants knowledge the for a deep and short the believe strong anniversary. celebrate

their Looking exceed to expectations. performance our at company, California-based PERC, continues our

enabling successfully management other expertise operations our leverage and are resources. and growing financial have corporate and our its to capitalize integrated We strength on by it

see result, from factor was financial a performance. our PERC can You big improved last year's in

year, including in X provide last project model, clients believe to design, from for several aspects delivery Arizona the a facility Liberty a and this all In solution, only Under contract deal contractors our this awarded PERC unique of we for design, of turnkey because was they commission treatment as project, per with We PERC PERC gallon schedule and the plant May cost, construct model. and and million won Utilities. this project where engineering full opposed with Liberty performance. wastewater day to our companies

design traditional XXXX. schedule Arizona proceeding in accelerated water process to plants a models. us and lower million delivery overall design, and project revenue planned an enables in compared Our project commission generated cost us to for treatment to and at $X.X build is as This construct on

long seawater are for wastewater we much PERC's recycling of record couple prime and following candidate and a believe project operations -- of track wastewater to look a ahead, award-winning California high-quality very opportunities recycle Southern we we PERC likes very which given all California, Looking maintenance. interesting. of designs in that potential are with one such and and much desalination projects

We year-over-year Now and pleased to in segment. were at business. our see our quarterly Manufacturing looking Manufacturing growth continued

us from constraints to began see and economic We see process. manufacturing chain we to This began some of the allowed relief challenging the order large advance to more our backlog quarter, the in conditions. During last relief quarter. some supply through

our our leverage our to manufacturing across to other enhance capabilities competitiveness segments. continue We business

water our piping, project air PERC's piping example, manufacturing for providing business stainless Arizona. For in Goodyear, is steel

equipment so desalination and that one future we water provide of and the the piping similar Similarly, for building our will equipment for ourselves all and reverse for are currently for all projects might osmosis obtain. Cayman, seawater Grand on manufacturing expect we provided we the Aerex operation authority two to one continue plants

our expect from we So ahead, improved results looking business. Manufacturing

acquisition the one two potential be transactions. the PERC front, to presently On first water. complementary evaluating completed, would If we're

partnership application. a membrane involve would technology and process mining development and industrial for an second The introduction to the of

and in XXXX growth as Grand the and grow as see construction projects increased successful bidding These the in recovery and include the in looking continued ahead, our for well Water. exponentially. of Consolidated PERC integration we the Caribbean. reflected of we Also the Cayman, acquisition there U.S. tourism activity expertise and U.S. Our continued project positive to ongoing our how applied factors many effectively Water results driving financial management

believe We that secured And with the are ahead. these segment. for Services major in positive greater growth We this $XXX have supporting expect our positive at future than of will in earnings our all quarters. to -- a and more million impact activities XXXX indicators multiyear continued in that more than positive in for we and returns growth continued strong outlook projects trends our

open I'd like now up questions. for Joe, to call So the

Operator

Instructions] And will come Please first ROTH [Operator go session. We Capital. question-and-answer now our question will Sweeney with begin the ahead. from Gerry here

Gerard Sweeney

Good Thanks Rick morning, David. and my call. for taking

Rick McTaggart

Gerard. you How doing? are Hi,

Gerard Sweeney

a is Doing some of few of well. wanted California. or PERC. has there's at how do doubt, at drought probably of I seeing long-term alleviated. slippage or No been any or anomaly, on pushing rain, a to a around drought if questions (ph) been curious Obviously, positive been have level. macro we in probably somewhat PERC California. look conditions you're add This But this a year project lots opportunities those Maybe that? for short-term an projects back

Rick McTaggart

following, it they're we're any delaying this indication stuff point. we that that haven't The seen at

Gerard Sweeney

this for Got projects PERC, a plate, understand but on just how capacity or big for year next and bit their a it. that obviously, secondarily, certainly further. little projects have do year utilization then much a year, I managing they to want have lot last they year, And

Rick McTaggart

and the that a it's we Well, think have the there, business. I and all to finding right right -- Jerry, management people great about the I mean talent team grow

mean the team the we the successful had plate identify expand right so on now have project right finding there managers. our and out been I several people has projects to engineers, we've we And far, recruit and additional that to very have business. staff,

standpoint it's speak I of working I the well. David financial that. can far, very let resources, to And mean been From all so

David Sasnett

gained process. these Jerry, industry. far. external of portion work. major very that contracts, We've remember, is out management in been big PERCs a lot to to oversee on Yeah. we're subcontracting personnel right the a And successful the so It's people really we hiring important design construction of in reputation build the the an need What the

are people opportunity work to about think for us. I excited the

I bonding that The we only this at we market see company time limiting factor true in have are cap $XXX million that capacity. we is point have and a limited

slowed point project. At in point that we the So with until only projects thing will capacity, that's us and you capacity sort once time. completion restricting of time, some growth finish the the a at comes be that's our more can of this in gain

in there, when a so to with Goodyear, the complete we project $XX surety raise that our issue will can worth more finished and fully example, our million plus and We right bonding demonstrated For it's that in they're we Arizona, us. cap. capacity without to these take willing the cap of risk have projects feather

slows thing down that's at moment. So only that the the

Gerard Sweeney

speaking have Okay. isn't you in would million $XX remaining I believe. a to of of majority coming And meaning on that Perfect. scheduled project chunk correct? this that first done XXXX. revenue year. the -- completed project, of of a there there Liberty, million the by had end of through Is a the... be big I I half think in And know XXXX, $X.X completion But was

David Sasnett

When million into XXXX, say year. majority of $XX the next be year next recognized next in The year. I will we're

Gerard Sweeney

you. Got Okay.

XXXX, say, quarters Okay. that is a as -- can spread consistently of load is And you it. lot back that much got and because... or over that is as In four it

David Sasnett

Yes, do the months, have we'll ever -- because consistent we'll months equipment of months. based ever we it's It's consistent more upon in following and ever expensive the inputs than the some put preceding consistent.

somewhat be will consistent. won't it So, sporadic. be It

Gerard Sweeney

a Got it. what good. along But coming levels new of little I'm ramped final or the like things October. it it 'XX in fourth back right. came question, restrictions know slower the not But if were because assuming fourth year. and really quarter in And the sure you pretty percent maybe pre-COVID. were after exactly do I'm volume sounds up or versus I think that's lifted was quarter in utilization towards to then bit

bit little a sort took time to to it capacity. get of So of back full

have if on any curious input that? Just you

Rick McTaggart

me, And can I there in Jerry. into figures get for don't were think of you, mean when have most I Board right. in the of busy. of was I don't tell Yes. December colder growth have February year. meeting, it you last I quote the our but front to has after occurred those numbers tourist we I very XX When any months,

Gerard Sweeney

was no great, That’s big available, not, was just Yes. it curious it’s if if deal. fine. I

quarter, Great look to I Okay. and backlog appreciate it, congratulations. and great XXXX. forward

Rick McTaggart

Thank Take Jerry. care. you,

Operator

Our next Matt come ahead. with Investments. Suarez question [indiscernible] will from Please go

Unidentified Participant

Rosarito have sheet, letting your for me question. have Good looks and ask paid ago. you a plans de what like balance about I let asset? extremely XX of (ph) the you Baja Hey. what your solid that the morning. about Thanks what idle Can are and purchase Obviously, years an but value is know question me you for that current for today Playas land, it

David Sasnett

the we value sell on the you appraised would what sheet, don't the That's would Well, as to I the that than balance balance that we on We're our recorded It's is have sell it's tempting price significantly land, we we reflected Matt. for higher the paid the the -- land $XX.X would that what million. that presently marketing about give to for, it. because have land sheet. it. want amount I infer be think that, but the

market We'd to like to it continue right land. sell at We the price. this

certainly not value. the We're significantly the in against is amount, for Mexican sell to the we below claim it indirectly our going land government. market involved think, but

confident cancellation have in arbitration there that a the our feel we build sell than what you us land, land initiated But Baja, invested. of read with do that of get when you international financial plant California. know the If for we we've government that on in statements, gets more to Mexico court the we'll we contract

Unidentified Participant

the out netted if the land it current then Okay. sold, of get does claim? just And gets

David Sasnett

take the That's award mean court whatever us value the that the would that the we damages correct. out received. I of land we

Unidentified Participant

good. Okay. Thank Very you.

Operator

Our Ascend go come Instructions] Bair Advisors. ahead. next question with [Operator will from John Please Wealth

John Bair

Thank you. Good morning, and David. Rick

Rick McTaggart

John. morning, Good

David Sasnett

Hey. Good morning.

John Bair

do a do XXX% type to or consider that? deal good and X of how and forward, did where it look your quarter were you it's momentum. -- do you that cash those you M&A go anticipate similar stock and go be Aerex cash a structure PERC with Nice would On couple would acquisition? -- at not full And if you or a A front, questions. you

Rick McTaggart

of I the that interest that early Well, now, the say to a shareholders. I the but look the is it's mean, continue little thing. of on in it. and sort we right at selling to on in it depends of best transaction size mean willingness It depends the parties' business the

tell industrial can that venture-type I So, you deal joint of more the is arrangement. a

how shareholders, it's do sure say a we to we'll there's the for can The period the work early that includes that But other best acquisition, out. the that's making transition to a going little which business. for

David Sasnett

of request bought we we other at sold acquisition shareholders. on of when Nordic the John, the stock part cost the PERC the to PERC, XX% as

on amount presume not acquisition that costs just did we our and or be the would the very paid it's large going have anything through Given of would in our of I a forward most cash we unless acquisition stock. issuance of balance sheet, the cash

John Bair

I bit. you Good. in supply prepared constraints easing to remarks a also release good. in up chain his press ask on and your Rick about wanted this That's little touched the

had it? And way to this able you sooner the previously the to that question that Is the needed than get is, components you so, expected. orders look means to that were assuming satisfy that I'm at you the

David Sasnett

on terrible before No, back improved. to And has to due initially things this it all but that by touched factors. at supply it's not chaos economic It's carried was we was I John. had off look chain better before then as it really quite think were the where is other to COVID,

to an the getting production ago. and some we where delay humming times. isn't was pushing be best to it still and increase seen can delivery But in It still, the description plant. now four get a materials still gotten chain the just It better. time of But to this costs point in would takes supply a improved it. we've years like It's it's stuff. long Our start for

John Bair

to your you so able margins input orders your up, that So, to on improve if have forth? to that pass costs and are gone along add previous that

Rick McTaggart

through the plant, through may not. have, to for inflationary the of contract the the we Water particular, allowed desal Some adjustments of for in Aerex we plant do that cost the orders purchase contracts other manufacturing Authority have

PERC all for it's close suppliers in So, for the as matter. that with about projects pricing the locking the

locking and early the costs subcontractor sign in after mean, as I possible contract. supplier as you

new So those -- mean any priced being then and getting orders I are the manufacturing, all we're new cost. through at

So, any range these of I any on seen losses orders. don't think sort is we've of

David Sasnett

No, been our John. pressure amount of substantial there's a on not inflationary yet, margins

John Bair

Hopefully the luck and continue continuing you questions will good. Appreciate taking my That's going good. margins -- forward. Okay. Very improve. good hopefully, to

forward Looking to it. Thanks.

Rick McTaggart

John. Take you, Thank care.

Operator

to All our to session. back concludes please the this turn McTaggart. this right. ahead. go like I'd call At Sir, time, now over question-and-answer Mr.

Rick McTaggart

Thank All to and we quarter results. certainly right. Joe. release for Good when we just everybody first thank forward you I you, hearing look our questions, in May joining again want us from to today.

have great a So day.

Operator

Ladies we of this company's today's plans, the events, The and cautions assumptions within future call the limited Reform expectations information regarding the and Private includes gentlemen, Litigation Securities statements objectives, Act before of revenues, XXXX, I future safe the made statement estimates. to, that including, have meaning we and call. provided but during provide forward-looking conclude in statements today's includes not forward-looking that to like harbor conference would call, company's regarding statements

will the of expect, not are in its similar business Forward-looking estimates, markets Statements estimate, or assumptions, on current phrases be industry are words and the the beliefs, to expressions. historical projections containing that expectations, the can company's or business. forecasts and for by use usually belief, should, project, statements its based related intend, facts identified words

and would to forward-looking limited are contribute to to conference or serve. results performance conditions Any forward-looking not and this during outcomes not expressed is Factors statements and we such in difficult in call materially statements. guarantees the such may include, involve weather risks, cause from and Actual made differences tourism certain are uncertainties of which future differ are that areas assumptions, what predict. but

regulatory on our matters, negotiations detailed of manufacturing Grand political the other country ability and as The license relationships various successfully entities in with business, plan conduct impact markets, and including or to Securities report other Exchange retail customers and company's and conditions resolution pandemic, new conduct our the risks of of our our we the periodic renewal each economic, enter of which with social the COVID-XX for serve, particularly and the to the segments, in retail on we Cayman, Commission. filings government

the business, please about including, SEC more Factors Form uncertainties associated of on for Risk of discussions report but the XX-Q. company's Operations quarterly For reports Results its and annual analysis limited management's discussion risks refer the with and section and company's of information financial XX-K and not to Form or to, filings,

expressly or forward-looking any during conference in based, obligations call as as made any revise thereto with events, speaks changes during or is any its undertaking disclaims statements any the statements of the circumstances today's any conference its date. of Any to or by forward-looking required call or company law. conditions update The except made statement reflect in forward-looking expectations regard which changes to

today's yesterday's evening. will This earnings available Please release for Thank the presentation. at conference to starting this call, attending website the concludes via today's conference you later that replay refer www.cwco.com. Before company's everyone this instructions end call replay for to for be would now remind available I call. like dial-in we

lines. may You disconnect your now

Consolidated Water (CWCO) 31 Mar 232022 Q4 Earnings call transcript