Consolidated Water(US:CWCO)2020-08-17 21:29Financial Data and Key Metrics Changes - In Q2 2020, revenue increased by 4% to $19.1 million, primarily due to $3.4 million in revenue from PERC Water, offset by declines in other segments [9][10] - Gross profit for Q2 was $7.3 million, representing 38.3% of total revenue, down from 41.3% in the same quarter last year [10] - Net loss attributable to shareholders was $1.1 million, or $0.07 per share, compared to net income of $2.5 million, or $0.16 per share, in the previous year [10] Business Line Data and Key Metrics Changes - Retail segment revenue dropped by approximately 16% due to the cessation of tourism in the Cayman Islands [5][9] - Bulk segment revenue declined for non-COVID related reasons, including lower energy costs in the Bahamas [6][9] - Manufacturing segment revenue decreased by $511,000 due to a lower number of active projects [9] Market Data and Key Metrics Changes - The volume of water sold in the retail segment decreased by 16% in Q2 compared to the previous year, primarily due to the impact of COVID-19 on tourism [5][9] - Water production volumes in the Bahamas remained stable as the plants serve the general population, despite the pandemic's impact on the economy [5][6] Company Strategy and Development Direction - The company aims to expand its geographic reach and focus on areas where potable water is scarce, particularly through desalination and water reuse projects [19][20] - The acquisition of PERC Water is seen as a significant step towards addressing growth markets and enhancing water infrastructure [20][24] - The company is pursuing legal remedies regarding the terminated project in Mexico, emphasizing the importance of recovering costs related to the project [14][38] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic has adversely affected all segments, but the company remains well-positioned financially and operationally [3][7] - The company expects retail segment revenue and cash flows to be materially impacted until tourism and the economy in the Cayman Islands recover [17] - Management expressed optimism about the long-term growth drivers in their markets, despite current challenges [24] Other Important Information - Cash balances totaled $35 million as of June 30, 2020, providing sufficient liquidity for ongoing operations [12] - The company has not provided an allowance for doubtful accounts for accounts receivable in the Bahamas, despite historical delays in collections [11][12] Q&A Session Summary Question: Discussion on PERC's O&M contracts and revenue projections - Management indicated that while $1.7 million in O&M contracts is expected in the second half of 2020, projecting future revenues requires caution due to the renewal process of existing contracts [25][26][29] Question: Impact of COVID-19 on revenue and volumes in the Cayman Islands and Bahamas - Management confirmed that the 16% drop in retail sales volume is indicative of the impact of tourism cessation, while bulk water volumes remained stable [32][33] Question: Future costs related to the terminated Rosarito project - Management stated that costs are tapering down but legal costs may persist as they pursue claims related to the project [36][38] Question: Financial stability of the Cayman Islands government amid prolonged tourism shutdown - Management expressed confidence in the Cayman Islands' financial position, noting its low debt levels and good credit rating [41] Question: Expansion potential for PERC outside the Southwest - Management confirmed that PERC is exploring projects in Florida and Oregon, with potential for growth in other states [43][45]