Toggle SGML Header (+)


Section 1: 8-K (FORM 8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

November 9, 2017

(Date of earliest event reported)

 

CONSOLIDATED WATER CO. LTD.

(Exact Name of Registrant as Specified in Charter)

 

Cayman Islands, B.W.I.   0-25248   98-0619652
(State or Other Jurisdiction of Incorporation)   (Commission File No.)   (IRS Employer Identification No.)

 

Regatta Office Park

Windward Three, 4th Floor

West Bay Road, P.O. Box 1114

Grand Cayman, KY1-1102

Cayman Islands

(Address of Principal Executive Offices)

 

(345) 945-4277

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 
 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On November 9, 2017, Consolidated Water Co. Ltd. (the “Company”) issued a press release announcing its results of operations for the third quarter ended September 30, 2017. A copy of the press release is attached as Exhibit 99.1 to this report.

 

The information in this report, including the exhibit hereto, is being “furnished” in accordance with General Instruction B.2 of Form 8-K. As such, this information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filings with the Securities and Exchange Commission unless it is explicitly so incorporated in such filings.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

  

Exhibit No.   Title
     
99.1   Press release issued by the Company on November 9, 2017.

 

 2 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CONSOLIDATED WATER CO. LTD.
     
       
  By: /s/ David W. Sasnett  
  Name:   David W. Sasnett
  Title: Executive Vice President & Chief Financial Officer
       
Date: November 9, 2017      

 

 3 

 

 

EXHIBIT INDEX

 

Exhibit   Description
     
99.1   Press release issued by the Company on November 9, 2017.

 

 4 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

Consolidated Water Reports Third Quarter Results

 

·Total Revenues increased 15.2% to $16.6 million; Gross Profit of $6.3 million increased 6.6% from prior year.
·Net Income of $1.2 million or $0.08 per share.
·Net Income - excluding Bali loss of $569,000 - was $1.7 million or $0.11 per share.
·Year-to-Date Operating Cash Flow of $11.7 million - significantly higher than last year.

 

GEORGE TOWN, Cayman Islands, November 9, 2017—Consolidated Water Co. Ltd. (NASDAQ: CWCO), a leading developer and operator of seawater desalination plants, reported financial and operating results for the third quarter ended September 30, 2017.

 

Management Commentary

 

President and CEO Rick McTaggart commented, “Third quarter results reflected positive year-over-year comparisons across all key financial metrics. Such results were led by an increase in manufacturing revenues due to an increase in the average value of manufacturing orders and were supported by the continued steady performance of our core desalination operations.”

 

“Although our affiliate company OC-BVI sustained some hurricane-related damage to its facilities in the British Virgin Islands, the impact of OC-BVI on our financial results for the quarter was not material. We are proud of the tremendous response from our BVI employees, who have worked tirelessly to minimize disruptions in the water supply and assist in the recovery efforts.”

 

“Our third quarter results continued to reflect our investment in the large Rosarito project. This project represents a major milestone for the company, on which construction is now expected to commence in 2018 instead of this year as previously predicted. It is important to recognize that this is a complex project that is inherently subject to some unanticipated delays, as it encompasses various governmental, regulatory and financial initiatives that involve not only us but other stakeholders in the project. We remain confident about the completion of these initiatives as well as the merits of the project and its future positive impacts on our shareholder value.”

 

Third Quarter 2017 Financial Results

 

Total revenues for the 2017 third quarter were $16.6 million, $2.2 million higher than the $14.4 million reported in last year’s third quarter due to increases in retail, bulk, and manufacturing segment revenues, which more than offset a slight decline in services revenues. Gross profit increased 6.6% to $6.3 million from $5.9 million. Net income attributable to Consolidated Water stockholders was $1.2 million, or $0.08 per fully diluted share, inclusive of $864,000 in operating expenses related to the Rosarito desalination plant. This represents a substantial improvement from the $1.9 million net loss that was reported in the comparable 2016 quarter, inclusive of $606,000 of Rosarito project-related expenses. During the quarter the Company incurred a net loss of $569,000 or $0.04 per share related to Bali, a market which the Company has announced it will exit.

 

Nine Months 2017 Financial Results

 

Total revenues for the first nine months of 2017 were $47.5 million, an increase of $3.7 million from the $43.8 million reported in last year’s comparable period. Gross profit was up 4.9% to $19.6 million from $18.7 million. Net income attributable to Consolidated Water stockholders was $4.4 million, or $0.29 per fully diluted share, an increase of 84.5% from the $2.4 million, or $0.16 per fully diluted share, earned in the similar year-ago period.

 

Net cash provided by operating activities for the nine months ended September 30, 2017 was $11.7 million, well ahead of last year’s $4.5 million. Year-to-date capital expenditures were $3.0 million. Cash and cash equivalents increased to $46.8 million as of September 30, 2017.

 

Segment Results

 

Three Months Ended September 30, 2017 (Unaudited)

 

   Retail   Bulk   Services   Manufacturing 
Revenues  $5,570,654   $7,881,464   $111,302   $3,008,783 
Cost of revenues   2,488,441    5,582,401    114,667    2,078,888 
Gross profit   3,082,213    2,299,063    (3,365)   929,895 

 

Three Months Ended September 30, 2016 (Unaudited)

 

   Retail   Bulk   Services   Manufacturing 
Revenues  $5,447,200   $7,429,732    125,929   $1,382,492 
Cost of revenues   2,464,841    4,922,162    168,577    910,450 
Gross profit   2,982,359    2,507,570    (42,648)   472,042 

 

 

 

 

Summary and Outlook

 

“Our core desalination business continues to provide stable, positive results, and we see incremental growth opportunities in this business as commercial development continues in the Cayman Islands and the Bahamas. This quarter’s improvement in our manufacturing business was significant, and we anticipate an increasing backlog for this business,” noted Mr. McTaggart.

 

“We continue to work diligently to achieve financing for the Rosarito project in anticipation of receiving final governmental and financing approvals. To date we have invested over $22.8 million in assets for the project and a cumulative $22.6 million in development expenses. Our balance sheet remains very strong with a healthy cash position at the end of the third quarter, and we have returned $3.3 million to shareholders year-to-date in the form of cash dividends,” concluded Mr. McTaggart.

 

Investor Conference Call

 

The Company will host a conference call at 11:00 a.m. Eastern Time (EST) on Friday, November 10, 2017 to review the Company’s operating results for the third quarter of 2017, along with other relevant topics of interest. Shareholders and other interested parties may participate in the conference call by dialing 844-875-6913 (international participants dial 412-317-6709) and requesting participation in the “Consolidated Water Company Call” a few minutes before 11:00 a.m. EST on Friday, November 10, 2017.

 

A replay of the conference call will be available one hour after the call through Friday, November 17, 2017 at 9:00 a.m. EST by dialing 877-344-7529 (international participants dial 412-317-0088) and entering the conference ID # 10114039.

 

About Consolidated Water Co. Ltd.

 

Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce. The Company operates water production and/or distribution facilities in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas, and Bali, Indonesia. The Company also manufactures and services a wide range of products and provides design, engineering, management, operating and other services applicable to commercial and municipal water production, supply and treatment, and industrial water and wastewater treatment in the United States.

 

Consolidated Water Co. Ltd. is headquartered in George Town, Grand Cayman, in the Cayman Islands. The Company’s ordinary (common) stock is traded on the NASDAQ Global Select Market under the symbol “CWCO”. Additional information on the Company is available on its website at http://www.cwco.com.

 

This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe”, “estimate”, “project”, “intend”, “expect”, “should” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company’s products and services in the marketplace, changes in its relationships with the governments of the jurisdictions in which it operates, the outcome of its negotiations with the Cayman government regarding a new retail license agreement, its ability to successfully secure contracts for water projects, including the project under development in Baja California, Mexico, its ability to develop and operate such projects profitably, and its ability to manage growth and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission (“SEC”).

 

By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

 

For further information, please contact our investor relations firm, MBS Value Partners:

Lynn Morgen: (212) 223 4147 lynn.morgen@mbsvalue.com
Eric Prouty: (646) 456 9539 eric.prouty@mbsvalue.com

Viktoriia Nakhla: (646) 625-4800 viktoriia.nakhla@mbsvalue.com

 

(Financial Highlights Follow)

 

 

 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30,   December 31, 
   2017   2016 
   (Unaudited)     
ASSETS          
Current assets          
Cash and cash equivalents  $46,976,764   $39,254,116 
Accounts receivable, net   13,007,883    16,500,798 
Inventory   2,291,082    2,305,879 
Prepaid expenses and other current assets   2,430,570    1,096,200 
Current portion of loans receivable   1,377,956    1,633,588 
Costs and estimated earnings in excess of billings   1,673,460    85,211 
Total current assets   67,757,715    60,875,792 
Property, plant and equipment, net   50,759,258    53,084,105 
Construction in progress   1,433,341    885,494 
Inventory, non-current   4,408,321    4,606,088 
Loans receivable   1,093,641    2,135,428 
Investment in OC-BVI   3,124,910    4,086,630 
Intangible assets, net   4,116,982    5,195,476 
Goodwill   9,784,248    9,784,248 
Land held for development   20,558,424    20,558,424 
Other assets   2,803,617    2,392,843 
Total assets  $165,840,457   $163,604,528 
           
LIABILITIES AND EQUITY          
Current liabilities          
Accounts payable and other current liabilities  $5,332,446   $4,898,908 
Dividends payable   1,189,924    1,187,214 
Note payable to related party   392,000    490,000 
Billings in excess of costs and estimated earnings   294,156    102,966 
Total current liabilities   7,208,526    6,679,088 
Deferred tax liability   1,502,649    1,915,241 
Other liabilities   1,160,307    904,827 
Total liabilities   9,871,482    9,499,156 
Commitments and contingencies          
Equity          
Consolidated Water Co. Ltd. stockholders’ equity          
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 33,974 and 35,225 shares, respectively   20,384    21,135 
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 14,901,711 and 14,871,664 shares, respectively   8,941,027    8,922,998 
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued   -    - 
Additional paid-in capital   86,106,647    85,621,033 
Retained earnings   52,648,399    51,589,337 
Cumulative translation adjustment   (549,555)   (549,555)
Total Consolidated Water Co. Ltd. stockholders’ equity   147,166,902    145,604,948 
Non-controlling interests   8,802,073    8,500,424 
Total equity   155,968,975    154,105,372 
Total liabilities and equity  $165,840,457   $163,604,528 

  

 

 

 

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2017   2016   2017   2016 
Retail revenues  $5,570,654   $5,447,200   $18,111,274   $17,710,271 
Bulk revenues   7,881,464    7,429,732    23,615,787    22,136,086 
Services revenues   111,302    125,929    360,758    710,576 
Manufacturing revenues   3,008,783    1,382,492    5,444,678    3,261,827 
Total revenues   16,572,203    14,385,353    47,532,497    43,818,760 
                     
Cost of retail revenues   2,488,441    2,464,841    7,895,617    7,779,831 
Cost of bulk revenues   5,582,401    4,922,162    15,750,402    14,345,747 
Cost of services revenues   114,667    168,577    320,586    638,389 
Cost of manufacturing revenues   2,078,888    910,450    3,967,945    2,366,060 
Total cost of revenues   10,264,397    8,466,030    27,934,550    25,130,027 
Gross profit   6,307,806    5,919,323    19,597,947    18,688,733 
General and administrative expenses   4,896,323    4,528,679    14,695,184    13,925,439 
Impairment loss on long-lived assets   578,480    2,000,000    1,578,480    2,000,000 
Impairment of goodwill   -    1,750,000    -    1,750,000 
Income (loss) from operations   833,003    (2,359,356)   3,324,283    1,013,294 
                     
Other income (expense):                    
Interest income   70,741    137,806    301,813    514,532 
Interest expense   (1,016)   (1,246)   (11,178)   (95,615)
Profit sharing income from OC-BVI   36,450    38,475    46,575    87,075 
Equity in the earnings of OC-BVI   138,913    101,301    127,955    232,523 
Impairment loss on investment in OC-BVI   -    (875,000)   -    (925,000)
Net unrealized gain (loss) on put/call options   171,000    (275,000)   323,000    (275,000)
Other   31,206    110,968    83,791    507,183 
Other income (expense), net   447,294    (762,696)   871,956    45,698 
Income (loss) before income taxes   1,280,297    (3,122,052)   4,196,239    1,058,992 
Provision for (benefit from) income taxes   (136,447)   (146,198)   (412,592)   (389,860)
Net income (loss)   1,416,744    (2,975,854)   4,608,831    1,448,852 
Income (loss) attributable to non-controlling interests   255,605    (1,110,522)   191,916    (944,790)
Net income (loss) attributable to Consolidated Water Co. Ltd. stockholders  $1,161,139   $(1,865,332)  $4,416,915   $2,393,642 
                     
Basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders  $0.08   $(0.13)  $0.30   $0.16 
                     
Diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders  $0.08   $(0.13)  $0.29   $0.16 
                     
Dividends declared per common share  $0.075   $0.075   $0.225   $0.225 
                     
Weighted average number of common shares used in the determination of:                    
Basic earnings per share   14,898,246    14,815,248    14,886,738    14,803,216 
Diluted earnings per share   15,072,142    14,852,967    15,054,343    14,940,635 

 

 

 

 

(Back To Top)