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Consolidated Water Reports Third Quarter Results

GEORGE TOWN, Cayman Islands, Nov. 9, 2017 /PRNewswire/ -- 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


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SOURCE Consolidated Water Co. Ltd.