Consolidated Water(US:CWCO)2024-08-14 20:22PART I - FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed consolidated financial statements detail the company's financial position and performance for the quarter ended June 30, 2024 Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in cash and cash equivalents to $96.7 million, strengthening the company's financial position Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $96,670,206 | $42,621,898 | | Total current assets | $150,758,855 | $112,714,375 | | Total assets | $235,161,960 | $218,437,592 | | Liabilities & Equity | | | | Total current liabilities | $19,530,591 | $23,904,646 | | Total liabilities | $23,160,461 | $26,606,918 | | Total equity | $212,001,499 | $191,830,674 | Condensed Consolidated Statements of Income Q2 2024 revenue decreased, but a substantial gain from discontinued operations boosted total net income attributable to stockholders to $15.9 million Income Statement Summary (Unaudited) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | $32,479,158 | $44,237,263 | | Gross Profit | $11,620,214 | $15,463,549 | | Income from Operations | $5,010,790 | $9,479,634 | | Net income from continuing operations (to CWCO) | $4,242,411 | $7,531,472 | | Net income (loss) from discontinued operations | $11,607,846 | ($207,701) | | Net income (to CWCO) | $15,850,257 | $7,323,771 | | Diluted EPS | $0.99 | $0.46 | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $212.0 million by June 30, 2024, driven primarily by net income - Total stockholders' equity grew to $212.0 million by June 30, 2024, an increase from $191.8 million at the end of 2023, mainly due to retained earnings from net income10 Condensed Consolidated Statements of Cash Flows Cash and cash equivalents increased by $55.3 million in the first six months of 2024, led by operating activities and the Mexico settlement Six Months Ended June 30, 2024 Cash Flow Summary (Unaudited) | Cash Flow Category | Amount | | :--- | :--- | | Net cash provided by operating activities | $26,905,891 | | Net cash provided by investing activities | $31,539,511 | | Net cash used in financing activities | ($3,133,273) | | Net increase in cash and cash equivalents | $55,312,129 | Notes to Condensed Consolidated Financial Statements The notes detail a $12.1 million gain from the Mexico project settlement and highlight contingencies like the expired Cayman Water license Revenue by Source (Six Months Ended June 30) | Revenue Source | 2024 | 2023 | | :--- | :--- | :--- | | Retail | $16,806,822 | $15,344,424 | | Bulk | $16,790,052 | $17,486,868 | | Services | $29,340,080 | $36,815,664 | | Manufacturing | $9,231,594 | $7,459,297 | | Total Revenue | $72,168,548 | $77,106,253 | - The company settled its dispute over the terminated Mexico project in May 2024, selling the project land for approximately US$32.0 million and resulting in a gain of $12.1 million reported under discontinued operations5962 - The exclusive retail license for Cayman Water has not been expressly extended since January 2018, and ongoing negotiations could materially reduce the retail segment's historical operating income and cash flows717374 - As of June 30, 2024, CW-Bahamas had accounts receivable from the Water and Sewerage Corporation of The Bahamas (WSC) totaling $25.4 million, of which approximately 79% was delinquent75 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased Q2 2024 revenue from lower services activity, offset by a significant gain from the Mexico project settlement Results of Operations Q2 2024 consolidated revenue fell to $32.5 million due to a sharp decline in services revenue as a major project neared completion - Services segment revenue decreased to $11.9 million in Q2 2024 from $24.1 million in Q2 2023, as construction revenue for the nearly complete Liberty Utilities contract fell to $1.4 million from $17.6 million113 - Retail revenue increased to $8.2 million in Q2 2024 from $7.6 million in Q2 2023, driven by a 10% increase in the volume of water sold111 - Manufacturing gross profit margin increased to 33% in Q2 2024 from 23% in Q2 2023, attributed to a higher margin product mix114 Financial Condition, Liquidity and Capital Resources The company's cash position strengthened to $96.7 million, though significant delinquent receivables in the Bahamas remain a liquidity risk - Cash and cash equivalents increased to $96.7 million as of June 30, 2024, a significant rise from $42.6 million at December 31, 2023, mainly due to the Mexico settlement129134 - The company projects capital expenditures of approximately $11.0 million for the remainder of 2024129 - A significant liquidity risk persists in the Bahamas, where receivables from the WSC were $25.4 million, with 79% delinquent as of June 30, 2024130 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes in its market risk exposure since year-end 2023 - There have been no material changes in the company's exposure to market risk since December 31, 2023150 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by this report151 - No changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, such controls were identified during the last fiscal quarter152 PART II - OTHER INFORMATION Item 1A. Risk Factors Key business risks include uncertainty over the Cayman Islands retail license, delinquent receivables in the Bahamas, and fixed-price contract costs - A primary risk is the ongoing negotiation for the Cayman Islands retail license, where an unfavorable outcome could significantly reduce operating income and cash flows from this segment155159 - The Bahamas subsidiary faces liquidity risks due to substantial delays in collecting receivables from the WSC, with $25.4 million outstanding and 79% delinquent as of June 30, 2024160161 - The profitability of construction, manufacturing, and operations contracts is highly dependent on the company's ability to accurately estimate costs, as most are fixed-price contracts162 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 5,904 shares of preferred stock to employees in June 2024 under exemptions from SEC registration - In June 2024, the company issued 5,904 shares of preferred stock to 124 employees for services rendered, utilizing exemptions from SEC registration163 Item 5. Other Information CEO Frederick W. McTaggart adopted a Rule 10b5-1 trading plan for the potential sale of up to 70,000 shares of common stock - On June 7, 2024, CEO Frederick W. McTaggart adopted a Rule 10b5-1 trading plan for the potential sale of up to 70,000 shares of common stock164 Item 6. Exhibits This section lists filed exhibits, including officer certifications and XBRL interactive data files - The exhibits filed with this report include officer certifications under Rule 13a-14(a)/15d-14(a) and Section 1350, along with XBRL data files165 Signatures