CWCO Consolidated Water Company Ltd

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

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August 14, 2024

(Date of earliest event reported)

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CONSOLIDATED WATER CO. LTD.

(Exact Name of Registrant as Specified in Charter)

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Regatta Office Park

Windward Three, 4^th Floor

West Bay Road, P.O. Box 1114

Grand Cayman, KY1-1102

Cayman Islands

(Address of Principal Executive Offices)

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(345) 945-4277

(Registrant’s telephone number, including area code)

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Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

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Securities registered pursuant to Section 12(b) of the Act:

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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Emerging growth company  ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

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Item 2.02. Results of Operations and Financial Condition.

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On August 14, 2024, Consolidated Water Co. Ltd. (the “Company”) issued a press release announcing its results of operations for the second quarter ended June 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this report.

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The information in this report, including the exhibit hereto, is being “furnished” in accordance with General Instruction B.2 of Form 8-K. As such, this information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filings with the Securities and Exchange Commission unless it is explicitly so incorporated in such filings.

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(d) Exhibits

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SIGNATURE

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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‌Exhibit 99.1

Exhibit 99.1

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Consolidated Water Reports Second Quarter 2024 Operating Results

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GEORGE TOWN, Grand Cayman, Cayman Islands, August 14, 2024 -- Consolidated Water Co. Ltd. (NASDAQ Global Select Market: CWCO), a leading designer, builder and operator of advanced water supply and treatment plants, reported results for the second quarter ended June 30, 2024. All comparisons are to the same prior year period unless otherwise noted.

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Consolidated Water will hold a conference call at 11:00 a.m. Eastern time tomorrow to discuss the results (see dial-in information below).

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Second Quarter 2024 Financial Key Points

Second Quarter 2024 Operational Key Points

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Management Commentary

“Our second quarter results were fairly positive, especially considering the inherent variability in our service segment revenue and earnings due to the timing of our large design-build projects in Grand Cayman, Arizona and Hawaii,” stated company CEO, Rick McTaggart. “Our services revenue was down by about half due to the anticipated reduction in construction-related revenue as the Grand Cayman and Arizona projects were completed earlier this year.

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“Meanwhile, development activities continue to ramp up on the $147 million project to design, construct, operate and maintain a seawater desalination plant for the Board of Water Supply of Honolulu in Hawaii that we announced in June of last year. We are currently in the piloting, design and permitting stage, which we expect will lead into the full construction stage late next year.

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“The completion of the Hawaii project plant encompasses the current two-year development phase followed by a two-year construction phase. After construction and commissioning, we will operate the plant under a 20-year operations and maintenance agreement which has two additional 5-year extensions exercisable at the client’s discretion.

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“The reduction in construction-related revenue in the second quarter was partially offset by an increase in the revenue generated from operations and maintenance contracts by both PERC and REC. We acquired REC last October to provide a new channel for growth in the water-stressed regions of Colorado, and we’ve been pleased with REC’s integration into our company and the new opportunities we see developing in Colorado. Similar to our acquisition of PERC, we anticipate that our greater financial and management resources will enable REC to pursue larger projects that will accelerate REC’s growth over time.

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“Looking ahead to the remainder of the year and beyond, we remain very excited about our prospects. Many positive factors—including the consistent strong water sales growth in Grand Cayman, the long-term recurring revenues from our Caribbean-based bulk water and U.S.-based O&M businesses, stabilized manufacturing revenue and earnings, and the anticipated revenue and earnings from our $147 million design-build-operate project in Hawaii—altogether provide a very solid base for the company in the coming years.

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“Supported by our exceptionally strong balance sheet, we will continue to invest in new long-term projects such as two desalination plants on Cat Island in the Bahamas, as well as new infrastructure to serve the

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growing water needs of our utility customer in the Cayman Islands. We see these projects ultimately enhancing revenue growth.

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“The market for design-build projects is also showing no sign of slowing. While we are currently in a period between two large projects, we believe our efficient and aesthetically pleasing plant designs, our cost-efficient project delivery models and our significant industry experience will help us secure new projects.

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“In fact, we recently signed master design-build service agreements with two major national clients for a number of projects they are contemplating. We anticipate this will positively impact revenue and earnings in future periods. Combined with strong industry tailwinds, we anticipate that all of these factors will drive our long-term growth, enhance profitability, and further strengthen shareholder value.”

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Second Quarter 2024 Financial Summary

Revenue totaled $32.5 million, declining 27% from $44.2 million in the second quarter of 2023. The decrease was primarily due to decreases of $35,000 in the bulk segment, $12.2 million in the services segment and $161,000 in the manufacturing segment. The decreases were partially offset by an increase of $609,000 in the retail segment.

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Retail revenue increased primarily due to a 10% increase in the volume of water sold. The volume of water sold increased due to a 5.5% increase in the number of customer accounts in the company’s license area from June 30, 2023 to June 30, 2024. The increase was also due to significantly less rainfall on Grand Cayman in April and May of 2024 as compared to the same months a year ago.

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The marginal decrease in bulk segment revenue was due to lower energy costs, which decreased the energy pass-through component of the company’s bulk water rates.

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The decrease in services segment revenue was primarily due to plant construction revenue decreasing from $19.8 million in 2023 to $3.3 million in 2024 as the result of two construction projects nearing completion during the quarter. Revenue generated under operations and maintenance contracts totaled $7.1 million in the second quarter of 2024, an increase of 75% from the second quarter of 2023. Newly acquired REC contributed $1.9 million of the increase, with the remainder related to PERC contracts.

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Manufacturing segment revenue was relatively consistent at $3.9 million as compared to $4.1 million in the second quarter of 2023.

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Gross profit for the second quarter of 2024 was $11.6 million (36% of total revenue), as compared to $15.5 million (35% of total revenue) in the second quarter of 2023.

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Net income from continuing operations attributable to Consolidated Water stockholders for the second quarter of 2024 was $4.2 million or $0.26 per diluted share, compared to net income of $7.5 million or $0.47 per diluted share in the second quarter of 2023.

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Including discontinued operations, net income attributable to Consolidated Water stockholders for the second quarter of 2024 was $15.9 million or $0.99 per diluted share, up from net income of $7.3 million or $0.46 per diluted share in the second quarter of 2023. The increase was primarily due to the gain on sale of

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the land and documentation related to a discontinued project in Mexico totaling $12.1 million in the second quarter of 2024.

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Cash and cash equivalents totaled $96.7 million as of June 30, 2024, with working capital of $131.2 million, debt of $0.3 million, and stockholders’ equity of $206.7 million.

First Half 2024 Financial Summary

Revenue for the first half of 2024 was $72.2 million, down 6% compared to $77.1 million in the same year-ago period. The decrease was primarily driven by decreases of $0.7 million in the bulk segment and $7.5 million in the services segment. The decreases were partially offset by increases of $1.5 million in the retail segment and $1.8 million in the manufacturing segment.

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Retail revenue increased primarily due to an 8% increase in the volume of water sold. The volume of water sold increased due to a 5.5% increase in the number of customer accounts in the company’s license area from June 30, 2023 to June 30, 2024.

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The retail revenue increased also as a result of significantly less rainfall on Grand Cayman in April and May of 2024 as compared to the same months a year ago.

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The decrease in bulk segment revenue was due to a decrease in energy costs for CW-Bahamas, which decreased the energy pass-through component of CW-Bahamas’ rates.

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The decrease in services segment revenue was due to a $16.5 million decrease in plant construction revenue. Revenue generated under operations and maintenance contracts totaled $14.2 million in the first half of 2024, up 83% as compared to $7.7 million in the same year-ago period.

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The increase in manufacturing segment revenue was due to increased production activity.

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Gross profit for the first half of 2024 was $25.5 million (35% of total revenue), down 2% from $26.0 million (34% of total revenue) in the same year-ago period.

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Net income from continuing operations attributable to stockholders for the first half of 2024 was $11.2 million or $0.70 per diluted share, compared to net income of $11.6 million or $0.73 per diluted share for the first half of 2023.

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Including discontinued operations, net income attributable to Consolidated Water stockholders for the first half of 2024 was $22.3 million or $1.40 per fully diluted share, up from net income of $11.1 million or $0.70 per fully diluted share in the same period of 2023. The increase was primarily due to a gain on sale of land and project documentation of $12.1 million in the second quarter of 2024.

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Second Quarter Segment Results

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First Half Segment Results

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Conference Call

Consolidated Water management will host a conference call tomorrow to discuss these results, which will include a question-and-answer period.

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Date: Thursday, August 15, 2024

Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)

Toll-free dial-in number: 1-844-875-6913

International dial-in number: 1-412-317-6709

Conference ID: 3791392

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Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you require any assistance connecting with the call, please contact CMA at 1-949-432-7566.

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A replay of the call will be available after 1:00 p.m. Eastern time on the same day through August 22, 2024, as well as available for replay via the Investors section of the Consolidated Water website at www.cwco.com.

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Toll-free replay number: 1-877-344-7529

International replay number: 1-412-317-0088

Replay ID: 3791392

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About Consolidated Water Co. Ltd.

Consolidated Water Co. Ltd. develops and operates advanced water supply and treatment plants and water distribution systems. The company designs, constructs and operates seawater desalination facilities in the Cayman Islands, The Bahamas and the British Virgin Islands, and designs, constructs and operates water treatment and reuse facilities in the United States. The company recently entered the U.S. desalination market with a contract to design, construct, operate and maintain a seawater desalination plant in Hawaii.

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. For more information, visit cwco.com.

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Cautionary Note Regarding Forward-Looking Statements

This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "intend", "expect", "should", "will" 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 (i) continued acceptance of the company's products and services in the marketplace; (ii) changes in its relationships with the governments of the jurisdictions in which it operates; (iii) the outcome of its negotiations with the Cayman government regarding a new retail license agreement; (iv) the collection of its delinquent accounts receivable in the Bahamas; and (v) various other risks, as detailed in the company's periodic report filings with the Securities and Exchange Commission (“SEC”). For more information about risks and uncertainties associated with the company’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the company’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting the company’s Secretary at the company’s executive offices or at the “Investors – SEC Filings” page of the company’s website at http://ir.cwco.com/docs. Except as otherwise required by law, the company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Company Contact:
David W. Sasnett
Executive Vice President and CFO
Tel (954) 509-8200
Email Contact

Investor & Media Relations Contact:
Ron Both or Grant Stude
CMA Investor & Media Relations
Tel (949) 432-7566
Email Contact
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CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

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