Q3 2025 Consolidated Water Co Ltd Earnings Call

Although our caribbean-based bulk segment Revenue saw a modest decline. This past quarter.

Primarily due to lower fuel-related charges that we passed through to customers, we achieved higher profitability in this segment.

This Improvement was driven by our consistent commitment to operational excellence, which allowed us to further, reduce costs and enhance efficiency.

Our services segment also saw healthy growth resulting from two construction projects that were underway this year.

These positive trends were partially offset by a decrease in consulting revenue, which was expected following the completion of a major plant commissioning and startup project in California last year.

During the quarter, our manufacturing segment maintained its positive momentum.

We saw further revenue growth and an improvement in gross margin, reflecting production. This past quarter, we had higher-margin, specialized products for nuclear power and municipal water customers, as well as our continued focus on maximizing both production efficiency and capacity.

The completion of our new 17,500 square foot.

Manufacturing facility expansion this past quarter is expected to further enhance efficiency and throughput in that business.

As previously reported, we hold n qa1 certifications from 2 major nuclear industry companies and see renewed interest.

in US, nuclear power Solutions,

these specialized manufacturing qualifications position us for continued growth.

Design of the 1.7 million gallon per day. Seawater desalination plant for the Honolulu Board of Water Supply and koloa Hawaii is now 100% complete.

And we are focused on obtaining, the remaining permits needed to allow our client to issue a notice to proceed with construction of the project.

We continue to anticipate that construction of this project will commence early next year.

Uh, substantially adding to our revenue and earnings growth in 2026 and 2027.

Now, before getting into recent developments and our outlook for the rest of the year and beyond, I'd like to turn the call over to David, who will take us through the financial details for the quarter.

Thank you, Rick, and good morning, everyone. Thanks for joining us today. Our revenue for the quarter totaled $35.1 million, which was up 5% from the $33.4 million we posted in the third quarter of 2024. This increase was due to revenue increases in the retail services and manufacturing segments.

Retail revenue increased to $184,000 due to a 6% increase in the volume of water sold. Revenue growth was tempered somewhat by lower energy prices.

Which decreased the pass-through component of our rates that we charge at Cayman Water?

373,000 and 8.4 million due to a decline in energy prices. Similar to the situation with Cayman Water, this decreased our rates in the Bahamas operations. But, as Rick said earlier,

We managed to improve profitability in our bulk segment, despite the decline in revenue.

In the Services segment, revenue increased by $1.6 million, primarily due to plant construction revenue rising from $4.3 million in the third quarter of last year to $6.4 million in the third quarter of this year.

Services. Segment, revenue generated under our om contracts totaled, 7.7 billion in the third quarter of 2025 of slight increase from the amount. We posted for the third quarter of 2024

manufacturing segment.

Ra Revenue increased by 305,000 or 7% to 4.7 billion as compared to 4.4 million in the third quarter of 2024. And this was, as a result of increased production activity,

Rush profit for 2025 was $12.9 billion, or 37% of total revenue, compared to $11.6 million, or 35% of total revenue, in the third quarter of 2024.

This increased procedural increases in retail services and Manufacturing Revenue which enhanced our gross profit percentage.

Net income from continuing operations attributable, to Consolidated water stockholders for the third quarter of 2025 was 5.6 million.

Or 34 cents per diluted share and this compares to net income of 5 million or 31 cents per diluted share for the third quarter of last year.

Including our discontinued operations. Net, income attributable, to Consolidated water stockholders for the third quarter of 2025 was 5.5 million.

Or 34% per diluted share as compared to net income of 4.5 million or 28 cents per diluted share in the third quarter of 2024.

Now, turning to our financial condition and balance sheet. During the quarter, Consolidated Water Bahamas received significant payments on its delinquent accounts receivable from the Water and Sewage Corporation, which resulted...

In a decrease of 12.5 million in its accounts, receivable balances.

Over the course of this quarter to 16.8 million as of September 30th 2025. And this also represents an overall 5.7 million decrease in accounts receivables from the prior year end.

For CW Bahamas, our cash and cash. Equivalents told 123.6 million as of September 30th, 2025 our working capital was 141.7 million and our stockholders Equity was 220.4 million. And as we pointed out on previous calls, our company presently has no significant outstanding debt.

Our cash and cash equivalents total. Excuse me, our projected liquidity requirements for the balance of 2025, including capital expenditures for existing operations of approximately $4.5 million.

And this includes approximately 1.3 million for our project in the Bahamas and 266,000 for new equipment, for Eric's manufacturing facility.

We paid approximately $2.3 million in dividends in October for our liquidity requirements. We also included future and quarterly dividends. Such dividends are declared by our board.

We continue to evaluate how to use our ample cash, balances to increase shareholder value.

This completes our financial serving for the quarter and I'll turn the call back over to Rick.

Thanks David.

As I mentioned earlier, our services segment saw a healthy growth in Q3, resulting from the two construction projects that were underway this year.

In addition, we were awarded two additional water treatment plant construction projects this past quarter: a drinking water plant expansion in Colorado and a wastewater recycling plant in California.

The revenue attributable to these new projects is expected to be realized primarily in 2026. The combined value of these projects totals approximately $15.6 million.

The first project was secured by Wreck or Colorado, a subsidiary, reflecting its entrance into the design-build market by winning its first construction contract in Lock Buoy, Colorado.

This 3.9 million drinking water plant expansion is a very good start and helps us to pursue larger design. Build opportunities in Colorado.

This Innovative project which will convert untreated waste water, uh, into irrigation, water is expected to save 36 to 38 million gallons of potable, water annually.

We expect revenue from this project to be recognized primarily in 2026.

Perk is currently pursuing several design, build opportunities. And Arizona we have seen an uptick in requests for customized design reports or cdrs. And in response, we are actively preparing these cdrs for several Developers.

As was the case with the Liberty Utilities project a couple of years ago.

In Arizona, we believe that some or all of these CDRs will ultimately lead to a design-build contract for these important wastewater treatment facilities, but it does take time.

Turning to our manufacturing business, our new 17,500-square-foot manufacturing facility expansion this past quarter will enable more throughput and allow us to manage multiple projects simultaneously.

This facility expansion couldn't be timelier, as we are seeing much increased bidding activity for municipal water projects in Florida.

Florida has undergone significant population growth since the COVID pandemic.

And, uh, with more than 1.5 million new residents moving to the state.

Furthermore, the state water regulator is requiring water utilities to tap into much deeper and more saline lower Florida aquifers.

For new water supply projects instead of the shallower and pressure aquifers, which have historically been uh, used and damaged by over abstraction and saline water intrusion.

This population growth and the regulatory changes have strained freshwater resources and increased water treatment costs.

Various Municipal agencies and the fastest growing areas of the state are just now catching up and bidding projects to increase drinking water supply. Using. Nano, filtration and low pressure roro systems, which are required to treat the more saline, aquifer water.

We believe that our extensive experience manufacturing large-scale nanofiltration and RO systems, as well as our location in Fort Pierce, Florida, positions us well to continue growing that part of our business in the Florida market.

so, looking again, at the Hawaii project,

We and our client are focused on obtaining the remaining permits needed to allow our client to issue a notice to proceed with construction of the project.

This past quarter, our client received the permit to construct. The 2 concentration Wells for the project which is 1 more big step towards commencement of construction.

In addition, our client's application for a permit from the state government division responsible for the preservation of archaeological and historical artifacts is currently under final review.

Once we have this lynchpin permit in hand, we'll be able to move forward with applications for several additional administrative permits, which are required before we can commence construction of the project.

We continue to anticipate that full construction of the project will commence early next year.

So as you saw, we had some new directors join the board um in October uh as part of our ongoing initiatives to strengthen our corporate governance and overall expertise related to our business.

We recently announced the appointment of three new independent directors.

Tim Adamson, Dr. Maria Elena Her, and Herona Gutierrez Fernandez. And these were effective at the beginning of October.

These new directors collectively bring extraordinary technical, operational, regulatory governance, and financial expertise to the board, spanning public utility management, large-scale infrastructure delivery, international water governance, and international finance.

Tim brings nearly 30 years of executive level, water industry experience including as general manager of public water, utilities, various water related board positions, and Senior leadership positions at Brown and Caldwell, Hewitt infrastructure group and Algonquin power and utilities Corporation.

Of executive leadership experience in large-scale water infrastructure, capital planning, and asset management, environmental policy, and regulatory strategy.

She is a former U.S. commissioner of the International Boundary and Water Commission, where she managed multiple international water infrastructure facilities and administered a capital program of over $1 billion.

The Ronemo 20-year career in senior government positions includes serving as Mexico's ambassador to the United States in 2017 and 2018, during which time he was extensively involved in the negotiations for the United States-Mexico-Canada trade agreement.

He brings the Consolidated Water, Deep expertise and infrastructure, development. And financing is the former managing director of the North American Development Bank and it is current position as managing partner of beel infrastructure.

A financial advisor in asset management firm in Mexico City.

We look forward to their contributions and guidance as they enhance our board's capabilities, assist with our execution of our strategies and help us continue Consolidated. Waters upward, trajectory,

As we wrap up the year and look ahead, our strong balance sheet and ample liquidity. Enable us to fund growth initiatives. Both organic growth and potential acquisition opportunities.

We believe continuing to build our diversified business across four segments is the best way to deliver long-term superior returns to our shareholders.

We are very optimistic about our continued growth for a variety of reasons, which include continued growth in Grand Cayman and our ongoing construction projects in the U.S.

And the increased project opportunities we are seeing for our manufacturing business in Florida.

We believe our recent activities and successes, along with the current trends in our market, represent a strong catalyst for continued growth, increasing profitability, and further strengthening of shareholder value.

Now, with that, I'd like to open the call to your questions.

We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone, if you're using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star. Then 2 at this time we will pause momentarily to assemble our roster.

The first question comes from. Jerry. Sweeney with Ross Capital. Please go ahead.

Good morning, Rick and David, thanks for taking my call.

Hey, Jerry. Hey Jerry.

Uh, I want to start with Hawaii. It sounds like the architectural permit is...

Coming through soon. And then, separately, there are a couple of admin permits after that.

I don't want to use the word, but I'm going to use the word 'perun.' Those admin permits...

Sort of, uh, just a period addition to what's going on. And there's easily come through, or is there anything we should be thinking about on that front?

Well, uh, the archaeological permit I think is the one that...

is really important to get because we have to

we have to have that and there's a lot of I guess there's a lot more discretion with that division than um these other permits that will follow.

The other permits for, you know, mainly building related permits.

um,

So I wouldn't say that for one, but I mean they're definitely more administrative in nature than.

What we've been working on over the past year. So,

Administrative is probably a better word.

Um, and then assuming these come through, I would assume maybe a quarter, a quarter and a half to ramp up the full sort of construction cadence. And then proceeds,

Through 2627, then sort of a wind down over a quarter or two, is that sort of a correct cadence?

For the build out.

uh,

well, um,

I mean, if you wanted more accurate, uh,

Site and all that sort of stuff coding materials.

but um, I mean it's a typical construction project, there's nothing

Okay.

Unique about it.

okay, once I'm sure if there'll be a little bit of start and stop but um, Arizona the um, CDR increase

Is this a function of?

Is just activity picking up in the state, or are you doing some more? I don't know. Customer outreach positioning, etc.

I think it's just a function of how sort of well entrenched our sales. People are in Arizona.

I mean, there's just a lot. There's always something going on with developers there around Phoenix.

and um,

Our sales and marketing team really has a good understanding of these projects. So, um,

you know, developers, I mean they're looking to do things that quickest and cheapest way. So,

But, um, you know, the CDR product that we offer.

Uh, this gives them quite a bit of certainty on the cost, and we guarantee the schedule if they decide to.

Do a higher us to build the project. So,

um,

I think it's a good fit for those guys. That's why you see so much activity among the developers.

Got it. Jerry we and then um, yeah. Sorry. Go ahead David

yeah, I want to point out that we bought, or you see, they had no design build

uh, capabilities nor were they pursuing any

So we really had to sort of build the design and use the word "billed" twice. We had to build the design-build business in Colorado. And I think what you're seeing now with a lot of our projects and some of the other things we're pursuing is finally the establishment of our sales activities relative to design-build work in Colorado. You know, we just couldn't walk in there and flip the switch.

On to the design and build work. But now we have a lot of momentum, and I think our salespeople have established credibility. Our company has established credibility in the Colorado build market.

And so now they're pursuing these other projects, and I think we'll be seeing our share of them. So, got it. So, I mean, the RC you have a project or two. You have some reference or project references, and that could help with the expansion in Colorado as well. Exactly. Correct. Yeah. Got it.

Uh, one more question. Then I'll jump back to you. I don't want to dominate everything, but manufacturing obviously I had 17,500 feet.

How much opportunity does that open up? Obviously, it's more space, more, you know.

You can build more Etc, but you also mentioned it allows you to do multiple projects at 1 time. So I'm not sure if it's

it. Unlocks 2 things, 1 more space for more projects but also improves just overall flow of work through the uh through the um the facility even generating additional growth opportunities or capacity opportunities.

Yeah, I mean it's really it's all the same thing. I mean, it it's significantly improves the flow of work because you're not.

Actually cutting.

For exclusive use of fabricating the actual products, piping, and plate, and that sort of thing. So it's a huge improvement. I think, uh,

To the workflow, the facility allows us to build much bigger.

You know, uh, units and that sort of thing. Um, because it it provides that extra space just for assembly work.

the expansion and and the facility, can we see a

more Municipal work and just

Yeah. I mean if we could do that every quarter, we'd be at—would be, uh, I'm not static, that's what I'm saying. But yeah, the bottom line is.

In the expansion, we believe it was totally justified by the potential increased revenue and gross profit dollars. That expansion will help us generate.

got it. Okay, I'll jump back in line. Thanks.

Thanks Sharon.

Again, if you have a question, please press star, then 1.

Well, I guess there's no more questions or anybody else.

In this case, this concludes our question and answer session. I'd like to now turn the call back over to Mr. MC tagger sir, please go ahead.

Thanks, Chloe. I'd like to thank everybody again for joining and being shareholders and interested investors. I look forward to speaking with you again in March of next year.

Take care.

Thank you. Before we conclude today's call, I would like to provide the company's Safe Harbor statement, which includes caution regarding forward-looking statements made during today's call.

The information that we have provided, in this conference call includes forward-looking statements within the meaning of the private Securities. Litigation Reform Act of 1995 including but not limited to statements regarding the company's future Revenue. Future plans objectives, expectations and events assumptions and estimates.

Forward-looking statements can be identified by the use of words or phrases. Usually containing the words believe estimate project intend expect should will or similar expressions.

Statements that are not historical facts. Are based on the company's current expectations, beliefs, assumptions estimates for cast and projections for its business and the industry and markets related to its business.

Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict.

Actual outcomes and results may differ materially from what is expressed in such forward-looking statements.

Factors that would cause or contribute to such differences include, but are not limited to:

tourism.

And weather conditions in the area we serve.

The economic political and social conditions of each country in which we conduct or plan to conduct business, our relationships with the government entities and other customers. We serve regulatory matters including resolution of the negotiations for the renewal of our retail license on Grand Cayman.

Our ability to successfully enter new markets, and various other risks as detailed in the company's periodic report filings with the Securities and Exchange Commission.

For more information about risks and uncertainties associated with the company's business, please refer to the Management's discussion and Analysis of financial conditions and results of operations and respect or section of the company's SEC. Filings including, but not limited to its annual report on the Forum 10K and quarterly reports for form 10q.

Any forward-looking statements made during the conference call. As of today's date, the company expressly disclaims any obligations or undertakings to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions, or circumstances on which any forward-looking statement is based, except as required by law.

I would now like to remind everyone that this call will be available for replay starting later this evening.

Please refer to yesterday's earnings release for dial-in replay restrictions available via the company's website at cwc.com. Thank you for attending today's presentation, this concludes the conference call and you may now disconnect