Consolidated Water(US:CWCO)2025-08-11 20:45PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets and liabilities increased as of June 30, 2025, driven by higher cash and contract liabilities, leading to a rise in total equity Balance Sheet Summary (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $257,503,568 | $243,313,181 | | Cash and cash equivalents | $112,246,599 | $99,350,121 | | Accounts receivable, net | $41,952,382 | $39,580,982 | | Total Liabilities | $35,296,128 | $28,003,534 | | Contract liabilities | $12,898,666 | $9,126,654 | | Total Equity | $222,207,440 | $215,309,647 | Condensed Consolidated Statements of Income Q2 2025 revenue and net income increased, whereas H1 2025 revenue decreased with a corresponding decline in net income from continuing operations Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $33,591,079 | $32,479,158 | | Gross Profit | $12,831,985 | $11,620,214 | | Net Income from Continuing Operations (to Stockholders) | $5,178,761 | $4,242,411 | | Diluted EPS from Continuing Operations | $0.32 | $0.26 | H1 2025 vs H1 2024 Performance | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $67,306,464 | $72,168,548 | | Gross Profit | $25,138,272 | $25,498,237 | | Net Income from Continuing Operations (to Stockholders) | $10,102,871 | $11,183,825 | | Diluted EPS from Continuing Operations | $0.63 | $0.70 | Condensed Consolidated Statements of Cash Flows Operating cash flow decreased, with cash used in investing and financing activities, resulting in an overall increase in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $20,523,005 | $26,905,891 | | Net Cash from Investing Activities | ($4,177,011) | $31,539,511 | | Net Cash from Financing Activities | ($3,566,383) | ($3,133,273) | | Net Increase in Cash | $12,779,611 | $55,312,129 | Notes to Condensed Consolidated Financial Statements These notes detail business activities, accounting policies, segment performance, the Mexico project, and significant contingencies like license renegotiation and accounts receivable - The company's principal activity is supplying potable water, treating wastewater, and providing water-related products and services in the Cayman Islands, The Bahamas, the United States, and the British Virgin Islands19 Revenue by Source (Six Months Ended June 30) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Retail | $18,049,368 | $16,806,822 | | Bulk | $16,686,532 | $16,790,052 | | Services | $21,526,470 | $29,340,080 | | Manufacturing | $11,044,094 | $9,231,594 | | Total Revenue | $67,306,464 | $72,168,548 | - The company settled its dispute regarding the terminated Mexico project in May 2024, receiving US$31.96 million for the sale of land and project documentation, resulting in a significant gain from discontinued operations in Q2 2024767779 - Significant contingencies include the ongoing renegotiation of the Cayman Water retail license with OfReg, which could materially impact future operating income, and delinquent accounts receivable from the Water and Sewerage Corporation of The Bahamas (WSC) totaling $29.3 million as of June 30, 20259495 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, condition, liquidity, and capital resources, analyzing consolidated and segment results, and highlighting key risks Results of Operations Q2 2025 saw consolidated revenue and gross profit increases, while H1 2025 revenue decreased due to lower services, with an improved gross profit margin - Q2 2025 revenue increased to $33.6 million from $32.5 million in Q2 2024, with gross profit rising to $12.8 million (38% margin) from $11.6 million (36% margin)138 - H1 2025 revenue decreased to $67.3 million from $72.2 million in H1 2024, mainly due to a $7.8 million decline in services revenue. Gross profit was stable at approximately $25 million159 - Retail revenue grew 7% in Q2 and 10% in H1 2025 due to increased water sales volume, attributed to lower rainfall in Grand Cayman141162 - Manufacturing revenue increased significantly in both Q2 (33%) and H1 (20%) 2025 due to higher production activity and a better product mix, boosting the segment's gross profit150170171 Financial Condition, Liquidity and Capital Resources The company maintains strong liquidity, but faces significant risk from delinquent accounts receivable in The Bahamas, with planned capital expenditures - As of June 30, 2025, the company had cash and cash equivalents of $112.2 million and working capital of $137.4 million183 - A significant liquidity concern is the $29.3 million in accounts receivable due from the WSC in The Bahamas, of which approximately 81% was delinquent as of June 30, 2025184 - Projected capital expenditures for the rest of 2025 are approximately $8.5 million, including projects in The Bahamas and the expansion of Aerex's manufacturing facility182 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes in its market risk exposure since year-end 2024 - There were no material changes in the company's market risk exposure since year-end 2024210 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter212 - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls215 PART II OTHER INFORMATION Item 1A. Risk Factors This section highlights significant risks, including Cayman Islands license renegotiation, Bahamas accounts receivable delays, and contract profitability estimation challenges - The renegotiation of the Cayman Islands retail license with OfReg could result in a material reduction of operating income and cash flows historically generated from these operations218223 - The Bahamas subsidiary (CW-Bahamas) faces substantial delays in collecting accounts receivable from the WSC, with $29.3 million outstanding and 81% delinquent as of June 30, 2025, posing a liquidity risk224225 - The profitability of construction, manufacturing, and operations contracts is highly dependent on the company's ability to accurately estimate costs, as significant overruns could materially impact financial results229230 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In June 2025, the company issued preferred stock to employees for services and option exercises, exempt from SEC registration - In June 2025, the company issued a total of 9,083 shares of preferred stock to employees for services and through stock option exercises, which were exempt from SEC registration233234 Item 5. Other Information No directors or officers adopted or terminated any pre-arranged stock trading plans during the second quarter of 2025 - No directors or officers adopted or terminated any pre-arranged stock trading plans during the second quarter of 2025235 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data