Consolidated Water - Q3 2023
November 10, 2023
Transcript
Operator (participant)
Good morning. Thank you for joining us today to discuss Consolidated Water Company's Third Quarter of 2023 Results. Hosting the call today is the Chief Executive Officer of Consolidated Water Company, Rick McTaggart, and the company's Chief Financial Officer, David Sasnett. Following their remarks, we'll open the call to your questions. At any time during the call, you may join the question queue by pressing the star key, followed by one on your telephone keypad. If you would like to withdraw a question, please press star, then two. Should you need any operator assistance, you may press star, then zero. Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call.
I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay per the instructions in yesterday's press release, which is available in the investor relations section of the company's website. Now, I'd like to turn the call over to Consolidated Water Company's CEO, Rick McTaggart. Sir, please go ahead.
Rick McTaggart (CEO)
Thanks, Joe. Good morning, everybody. Thank you for joining us today to discuss our results for the third quarter of 2023. Like last quarter, we're reporting record quarterly revenue and earnings. As you saw in our press release yesterday, we reported a nearly 100% increase in revenue to $49.9 million compared to the third quarter last year. Revenue was up in three of our four business segments. Our Retail water segment benefited from a 16% increase in the volume of water sold in Grand Cayman, and we attribute this increase to improved tourist activity. Since third quarter last year, the island was still, you know, recovering from the lingering impacts of the pandemic.
Our Services segment revenue increased by $20.7 million in the third quarter, with much of that increase generated by the progress our PERC Water subsidiary has made on construction of an $82 million advanced water treatment plant in Goodyear, Arizona. We've managed to control our costs on this project much better than anticipated, resulting in improved gross margins for our Services segment. Construction on this project is progressing as planned, and we anticipate generating additional revenue from the project until its construction, commissioning, and startup is completed at the end of the second quarter of next year. PERC continued strong operating performance and revenue growth continued to significantly improve our top and bottom line.
Its strong operational presence in the southwestern U.S., a region that urgently needs new fresh water sources due to unprecedented drought conditions, has positioned us for further growth and development in this important segment of our business. In our U.S. desalination business, we commenced work last quarter on site investigations, engineering, permitting, and public outreach for our contract to design, build, operate, and maintain a 1.7 MGD seawater desalination plant in Oahu, Hawaii. This project includes a two-year development phase, a two-year construction phase, and a 20-year operating phase, with two potential five-year operating phase extensions, at the client's option. Our footprint continues to expand in the U.S. with the recently announced acquisition of Ramey Environmental Compliance, or REC, by PERC.
REC operates and maintains water and wastewater treatment plants and provides technical Services to more than 100 clients in the Mountain and Eastern Plains, regions of Colorado, and their business is very similar to what PERC's, PERC does in its own end business. Now, before discussing more about recent developments and talking about our outlook for the rest of the year, I'd like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for the quarter.
David Sasnett (CFO)
Thanks, Rick, and good morning, everyone. As Rick mentioned, the revenue for the third quarter was up to $49.9 million, which is a 99% increase compared to the third quarter of last year. This increase was driven by Retail revenue increases of $900,000 in our Retail segment, $20.7 million in our Services segment, and $3.3 million in our Manufacturing segment. Our Retail revenue increased primarily due to a 16% increase in the volume of water we sold during the quarter. This is due to increased tourism on Grand Cayman.
The number of tourists arriving by air, those are the tourists that stay overnight and use the hotels and increased our water volume, increased significantly in the third quarter of this year as compared to last year as the lingering effects of the pandemic have disappeared and we think tourism is back to normal on Grand Cayman. Retail revenue also increased as a result of higher energy costs that increased the energy pass-through component of our water rates. Our Bulk revenue decreased slightly, primarily due to a decrease in the price of energy paid by CW Bahamas. This decreased the energy pass-through component of CW Bahamas' rates. The decrease in Bulk segment revenue was partially offset by a 6% increase in CW Bahamas' volume of water sold.
I can say that we're producing about as much water as we can produce in the Bahamas for the Water and Sewerage Corporation, so operations there are very favorable to our company. The increase in Services segment revenue is due to an increase both in construction revenue and O&M revenue. We recognized approximately $20 million in revenue in the third quarter this year for the construction of the water treatment plant in Goodyear, Arizona, for Liberty Utilities.
And the Retail generated under operations and maintenance contracts in our Services segment also increased to a total of $5 million in the third quarter this year, up 48% as compared to $3.4 million in the third quarter of 2022, and this is attributable to both the better margins earned on our existing contracts and the addition of new contracts. The increase in our Manufacturing segment revenue was due to increased production activity, as some of the supply chain and economic issues that affected our Manufacturing operations in 2022 have abated. Gross profit for the third quarter of 2023 was $16.6 million, or 33% of total revenue, as compared to $6.8 million, or 27% of total revenue for the same quarter of last year.
Net income from continuing operations attributable to Consolidated Water shareholders for the third quarter of 2023 was $8.8 million, or $0.55 per diluted share. This compares to net income of $800,000, or $0.05 per diluted share for the same quarter of last year. Net income attributable to Consolidated Water shareholders for the third quarter of 2023, which includes the results of discontinued operations, was $8.6 million, or $0.54 per fully diluted share. This was up from net income of $300,000, or $0.02 per basic and fully diluted share for the third quarter of 2022. Now turning to our balance sheet and financial condition. Cash and cash equivalents totaled $48.8 million as of September 30, 2023.
This compares to $47.7 million as of June 30, 2023, with working capital at $83.1 million, debt of just $200,000, and stockholders' equity totaling $178 million. As of the end of the quarter, our projected liquidity requirements for the remainder of 2023 include capital commitments for our existing operations of approximately $5.1 million. This includes $292,000 that we expect to incur in 2023 to finish the refurbishment and replacement of our West Bay Desalination Plant. It also includes about $2.5 million for construction of the new Red Gate Desalination Plant on Grand Cayman for the Water Authority-Cayman. We had additionally approximately $4.7 million in raw material purchase commitments that were outstanding as of September 30, 2023.
We paid approximately $4 million in dividends this year, and our future liquidity requirements may also include any future potential dividends declared by our board. So this completes our financial summary for the quarter. Now I'd like to turn the call back over to Rick.
Rick McTaggart (CEO)
Thanks, David. We believe our strong results this past quarter once again reaffirm our growth strategy, which is to focus on the most water-stressed areas of the United States and the Caribbean, and provide not only desalination solutions, but also advanced wastewater treatment and recycling solutions such as those provided by PERC in the southwestern U.S. Looking at our Caribbean seawater desalination business, the revenue we recognized from the design and construction of the 2.6 million gallon per day Red Gate Desalination Plant in the Cayman Islands also contributed to the year-over-year increase in our Service segment. Construction of this project for a valued client that we have had for more than 30 years is progressing well and is expected to be completed in April next year.
Our Retail water utilities' new 1 million gallon per day West Bay Seawater Desalination Plant, which replaced a 30-year-old plant and provides additional capacity to supplement our Retail water business in Grand Cayman, is currently being commissioned and will be fully operational in time for us to meet the higher Retail water demand that we typically experience from mid-December through April every year in Grand Cayman. Cayman's post-pandemic travel rebound continues, as David mentioned, and during the winter season, major airlines such as Delta and Cayman Airways have been adding additional direct flights to the islands. Delta added a new flight from Minneapolis to Grand Cayman, which starts next year. Cayman Airways also announced the resumption of its seasonal service to Denver, Colorado, with weekly Saturday flights set to begin in December.
Also, Southwest Airlines, who currently flies from Fort Lauderdale to the island, is moving that flight up to Orlando, Florida. That's set to begin in the summer of next year. Given these favorable indicators, we expect a strong tourism season in the Cayman Islands, which should help our Retail business. In our Manufacturing segment, relief from severe supply chain constraints and customer-requested delivery delays that had adversely impacted our results last year, have allowed us this year to advance more of our order backlog through the Manufacturing and billing process. Over the last couple of years, we've also diversified our Manufacturing customer base in terms of customer concentration and types of products. We anticipate this diversification will facilitate improved results and provide greater consistency in future Manufacturing segment performance.
We also saw this year return of business from our historically largest Manufacturing customer, and this was business that had been suspended over the past several years, and we expect this level of business to continue into 2024 from this customer. Now, talking about Hawaii for a bit, work on the 1.7 MGD seawater desalination plant in O'ahu is underway and on track. The Hawaii plant will be the 24th desalination plant that we've constructed worldwide and our first desalination plant in the U.S.
We believe that our 50 years of experience designing, building, and operating these types of plants, which are some of the world's most energy-efficient seawater desalination plants, coupled with PERC's significant experience working with municipal clients and regulators in the U.S., will ensure that this project is successful and will exceed the expectations of our client, the Board of Water Supply of Honolulu. We believe that this entrance into the U.S. desalination market positions us well for additional opportunities in the western continental U.S., a region that continues to experience unprecedented drought conditions combined with growing populations. This is a note, according to the U.S. Drought Monitor, more than 22% of the western U.S. has been experiencing drought conditions, and this number is up more than 51% since October of last year.
Looking at PERC in a bit more detail, our subsidiary that provides world-class operational and asset management services in the western U.S., we believe PERC's growth potential remains very high. This potential is demonstrated by the number of design, build, and O&M contract opportunities that we are currently tracking in the western U.S. So far this year, we've been successful obtaining wastewater treatment plant O&M contracts at Edwards Air Force Base and on Catalina Island in California, which contributed to the increase in O&M revenues that David mentioned earlier for PERC. We've also through our PERC subsidiary's assistance, obtained the new seawater desalination plant in Hawaii. These new projects have positively impacted our Services segment results this year, and we expect that they will continue to do so through the coming year.
On the acquisition front, we announced on Tuesday that PERC had acquired a 100% ownership interest in Ramey Environmental Compliance, or REC. They're located in Frederick, Colorado, which is north of Denver. REC specializes in helping municipalities and districts comply with environmental regulations and properly manage their precious water resources through a variety of service offerings, including O&M contracts. REC brings deep experience and excellent relationships in the Colorado water and wastewater treatment industry. Its commitment to delivering superior water and wastewater Services has won numerous awards over the years, including national recognition for excellence by the EPA. The company's field staff is professionally certified for the operation, maintenance, and management of all types and sizes of water, wastewater, and industrial wastewater treatment systems.
In addition to the synergies of our culture and mission, the acquisition of REC immediately expands our operational presence into a new growth area of the western U.S. PERC and CWCO's greater financial capacity and incremental management expertise will help REC to qualify for larger and potentially more complex O&M contracts in its home market. The acquisition also creates an important new selling channel for PERC-style design build projects in the growing Colorado market. Our third quarter results demonstrate how we have effectively applied our financial and management expertise to grow PERC's business exponentially. We believe that our success with PERC can be replicated with this strategic acquisition, as well as with future opportunities. So looking ahead, we remain very optimistic about our future growth, for many reasons.
This includes the recovery of tourism in Grand Cayman, our current construction projects, which are underway there and in the U.S., as well as increased project bidding activity we are seeing in the U.S. We believe our recent activities and successes, along with our current positive trends in the market, represent strong drivers for growth, increased profitability, and further strengthening of our shareholders' value. Now, with that, I'd like to open the call up for questions, Joe.
Operator (participant)
We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw a question for any reason, please press star, then two.
At this time, we will take a moment to assemble our roster. Our first question here will come from Gerry Sweeney with Roth Capital. Please go ahead.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Good morning, Rick and David. Thanks for taking my call.
Rick McTaggart (CEO)
Hey, Gerry.
David Sasnett (CFO)
Good morning, Gerry.
Gerry Sweeney (Managing Director and Senior Research Analyst)
I appreciate the detail on the Ramey acquisition and how it fits into PERC, so that was one of my main questions coming in. So, I do appreciate that. But staying with PERC, obviously, you've had a history of some really nice wins, not just Goodyear, but Edwards Air Force Base, Catalina. Could you either qualitatively or quantitatively give us a little bit of view to, you know, the pipeline that you're seeing out there with potential projects, you know, over the short and medium term?
Rick McTaggart (CEO)
So right now, you know, we're focused on some opportunities, some O&M opportunities. Obviously, you know, they're longer term deals. They're gonna be well, they're being competitively bid, so, you know, it's something that we're gonna have to be mindful of our margins and that sort of thing. From the standpoint of the design build business, you know, we are looking at other opportunities that potentially could develop into next year, toward the end of next year. You know, we are also. Well, this isn't through PERC, but we can talk about that on another question. It-
David Sasnett (CFO)
We don't, I guess you're looking, Gerry, for some type of quantification as to-
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah, just, you know, I mean, is the pipeline, you know, as big as it's been, bigger? You know, there's a lot of dollars coming in because of, like, the Jobs Act.
David Sasnett (CFO)
I would say it's bigger than it's ever been. In terms of number of projects-
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah
David Sasnett (CFO)
and opportunities, it's very robust. It's difficult to quantify. Some of these things we will pursue, some of these things we don't pursue, Gerry.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah.
David Sasnett (CFO)
I can say that there's enough opportunity out there that we are going to have to go through an evaluation process, because we can't pursue everything.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah.
David Sasnett (CFO)
We recently had a strategic meeting along those lines. We wanna focus our business development activities on those projects that make the most sense for us, where we have the highest chance of winning and where we would earn what we consider to be sufficient margin to justify, you know, investments in pursuing that business. But it's a very good time for us to be owning PERC, because it seems like the situation in the Western United States is, gets worse day by day. So really, it's just-
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah
David Sasnett (CFO)
It's a very good time.
Rick McTaggart (CEO)
And, you know,
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yes, sorry.
Rick McTaggart (CEO)
The acquisition, the acquisition of the Colorado company, I mean, obviously that's early days, but we see additional opportunity there to develop a design build business, you know, through REC, which really was one of the key parameters of our decision to acquire that company.
David Sasnett (CFO)
Colorado has been very similar to Arizona and California. They've got water issues.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah.
David Sasnett (CFO)
And, you know, this is
Rick McTaggart (CEO)
They're growing quite, you know, pretty much twice the national average, you know, population-wise. So, it's a growing market there.
David Sasnett (CFO)
REC was a great opportunity for us because they are a very well-respected company, great capabilities, but similar to PERC, they didn't have the capital to grow.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Capitalize. Yeah.
David Sasnett (CFO)
And so they, you know, once we bring them into the fold with us, and we can apply PERC's qualifications and CWCO's qualifications to the business that REC's pursuing, we think we can be a significant player in Colorado. And the amount of cost, the $4.2 million to get into this market, it's a great deal for us, because if we had started the company ourselves, I certainly think we would have spent more than $4.2 million trying to penetrate that market. Now, we already have a company with a great reputation there that we can leverage to pursue business there. So we're pretty excited about the acquisition of Ramey.
We think, not initially, you know, not in the first six months or year, but once we establish things there and start pursuing business, using, you know, PERC team to help them, I think we've got a chance for very significant growth in Colorado.
Gerry Sweeney (Managing Director and Senior Research Analyst)
I got you. Fair to say, PERC brings technology, reference accounts, and Ramey, as well as Consolidated Water, and Ramey brings 100-plus customers and customer relationships, and it sounds as though, you know, the growth of Colorado is gonna drive, you know, either, you know, upgraded or enhanced water, wastewater and water recycling and other facilities. Is that a fair way of looking at it?
Rick McTaggart (CEO)
Yeah. I think, you know, there's needs there that are being unmet right now in the market, and, you know, we're gonna go in and try to meet those needs, particularly, you know, upgrading facilities. There's needs to upgrade facilities to meet the tighter, nutrient removal requirements that were enacted, I think about a year and a half, two years ago. And then, Colorado has also recently, enacted, Direct Potable Reuse, legislation, which, you know, opens up a whole new opportunity there for, for PERC because they're experts in that sort of, level of treatment of wastewater.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yep. Got it. Staying with PERC for a second, you know, could your, I think you did $20 million recorded $20 million in revenue in the quarter from the project. Back of the envelope, I have something like $45 million or $46 million. Am I, so that leaves just over $40 million left, or maybe just under $40 million, because of the $82 million. Am I roughly in the ballpark with that, with this?
David Sasnett (CFO)
Yes, you are. I mean, we've been very transparent in how much revenue we've recognized on this project.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yes, you have been. Yeah.
David Sasnett (CFO)
Literally from the date that we started construction. So if you go back and just simply add the numbers from last year, as reported in our 10-K, and then add in this 9 months for this year, you'll have what percentage of the $82 million we've recognized to date. And the remaining revenue, Gerry-
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yep.
David Sasnett (CFO)
Will be recognized in the fourth quarter of this year and in the first two quarters of next year, and then after that, the project will essentially be done.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Am I correct that a large portion of the project is scheduled to be completed this year with, you know, I don't want to say tag ends, but with the remainder, next year?
David Sasnett (CFO)
Yeah, I think that's. I don't have the exact construction schedule in front of me as we speak, but there will still be a lot of progress made in the fourth quarter this year.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Got it.
David Sasnett (CFO)
So, uh-
Gerry Sweeney (Managing Director and Senior Research Analyst)
I know this is, this may be a little forward looking. It sounds like margin. You're been executing very well. Margins are above trend. As far as you can tell, do you think that can continue?
David Sasnett (CFO)
No, I don't think it's going to continue. I think, you know, I would be surprised if there is a significant amount of further margin adjustment in future quarters. I think we've got a really good handle on the cost necessary to complete the project.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Mm-hmm.
David Sasnett (CFO)
I don't think there'll be any cumulative type adjustments of any significance going forward. If that's what you're asking.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah, I just wasn't sure if it would stay. I think it came in, you know, around 30%. I wasn't sure if it would trend down. You were just, I'm not sure if you had a good run, things were ahead of schedule or ahead of margin, and maybe they kind of revert back down to more, you know, previously projected levels, is what I'm really asking.
David Sasnett (CFO)
No, the accounting doesn't work that way.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Yeah.
David Sasnett (CFO)
Unless we have missed our cost estimate, the margin should be pretty steady going forward, and we're a lot more comfortable with the cost estimates now than we were during the first six months of construction.
Gerry Sweeney (Managing Director and Senior Research Analyst)
I got it.
David Sasnett (CFO)
When we proposed this project, it was a very scary kind of environment. I mean, there was a very tight labor market in the Arizona area, and-
Gerry Sweeney (Managing Director and Senior Research Analyst)
Mm-hmm.
David Sasnett (CFO)
Raw material prices were going through the roof. So our initial margins were lower because of the uncertainty and the anticipated additional cost. The people at PERC did a fantastic job, both in efficiency, construction efficiency and addressing the labor shortage issues that most of the other construction companies are having out there in Arizona, and they've done a good job of controlling costs. So they, you know, I have to say again, they've done a great job on the Sarival project today, on the Liberty Utilities, Liberty Utilities project, so.
Gerry Sweeney (Managing Director and Senior Research Analyst)
Got it. Super helpful. That's it for me. I'll jump back in line. So thanks, guys, and congrats on a great quarter.
Rick McTaggart (CEO)
Thanks, Gerry.
Operator (participant)
Again, if you have a question, you may press star, then one. Our next question will come from John Bair with Ascend Wealth Advisors. Please go ahead.
John Bair (President and Head of Equity Research)
Thank you, and good morning.
Rick McTaggart (CEO)
Good morning, John.
John Bair (President and Head of Equity Research)
Congratulations on a great quarter and really very solid momentum that you have. Wanted to ask about the opportunities that you might see with having won the water treatment contract on the military base, if there's other opportunities like that in the country that you might be able to address or pick up?
Rick McTaggart (CEO)
Yeah, I think, I think there are. I mean, I think we probably haven't mentioned it too much in the calls and stuff. I mean, we've been operating the Camp Pendleton wastewater system for the Marine Corps for several years now. You know, we added the Edwards Air Force Base contract this summer. You know, those types of contracts go out to bid, you know, pretty regularly. So, we anticipate continuing to, you know, pursue those types of agreements.
John Bair (President and Head of Equity Research)
Those extensions on the annual basis, does those go out for an annual bid? In other words, is it competitive or they have to continue to offer, you know, a bid against others for them to decide-
Rick McTaggart (CEO)
No.
John Bair (President and Head of Equity Research)
whether to extend the contract or not?
Rick McTaggart (CEO)
Well, it's at the client's discretion to extend, but, you know, those prices are already included in the, you know, bid that we put in for the initial one-year term. So, you know, you bid out the five years, basically, in your bid submission. So it's really up to the client to decide what they want to do the following year. But typically, we've, our experience has been that they renew them through the life of the contract.
David Sasnett (CFO)
Yeah, we've had very good experience there, John. I mean, it's no guarantee, though, the history-
John Bair (President and Head of Equity Research)
Well, and that follows on that you have experience with a couple of them that do you sort of become a preferred operator for other facilities? That's kind of where I was driving it, the opportunities throughout the, you know, U.S. base.
David Sasnett (CFO)
... U.S. base. We have Camp Pendleton and Edwards Air Force Base gives us a lot of credibility, and that counts for a lot when you're bidding on new contracts. So-
John Bair (President and Head of Equity Research)
Right.
David Sasnett (CFO)
You know, it's the momentum feeds itself, John.
John Bair (President and Head of Equity Research)
Yep.
David Sasnett (CFO)
Hopefully, we can continue.
John Bair (President and Head of Equity Research)
Yep. Right. And then, turning to the Hawaii contract, in your release that, you know, you've- you're moving on in the first phase. So at what point do you start receiving revenue on that project? And I guess it's gonna be like some of these other ones where it's, you know, as you move forward, that's when you, you know, receive revenues against the overall contract win.
Rick McTaggart (CEO)
Yeah, I mean, this is sort of more in David's up his alley, but, we're booking the revenues for that project based on costs that we incur, you know, to date. What do you call that?
David Sasnett (CFO)
It's called the input method.
Rick McTaggart (CEO)
Input method, yeah. So, I mean, although we have had some substantial payments from the client upfront for, you know, mobilization and, you know, various insurances and that sort of thing that were required for the project, we're in the development phase right now, so we're not incurring a lot of costs, you know, relative to the size of the contract that would allow us to book any meaningful revenues on that project yet. I mean, I think, we're in the process of designing the piloting study and doing, you know, public outreach and that sort of thing.
You know, by this time next year, I think we'll be, you know, it'll be a different picture, and we'll be booking some meaningful revenues from the development phase, which that total is about $11.5 million or something, I think, out of the contract. So, you know, the construction revenues are still probably a year and a half away. And then we start booking the, you know, the balance of that, which is about $138 million bucks, so.
David Sasnett (CFO)
The construction revenue itself is subject to adjustment because the contract has inflation clauses in it. So when we finish the design phase, the development phase, we'll have the final design for the plant, and the cost will be adjusted based upon, you know, CPI and things like that, so that we're not hit for inflation over the design period.
Rick McTaggart (CEO)
Yeah.
David Sasnett (CFO)
But the big impact from Hawaii will have an impact in 2024, but a really strong construction starts towards the end of 2024, or 2025.
Rick McTaggart (CEO)
Twenty-five, yeah.
John Bair (President and Head of Equity Research)
Yep. No, that's good. That's, you've elaborated a lot on, you know, my, what I was thinking on this, you know, when construction starts and so forth. So that's, that's very positive. Another question, you alluded to a pretty full pipeline of bid opportunities and so forth. Do you think that is as much a function of the federal IRA, you know, the supposed Inflation Reduction Act, and federal monies flowing into that? Or do you think it's more or just as much just the absolute need to develop new, you know, water resources capabilities?
Rick McTaggart (CEO)
The only project that we're aware of, I mean, or that I'm aware of personally, that's receiving those types of funds from the federal government is the Hawaii project. So, you know, presumably, that wouldn't have moved forward if they weren't able to get those sorts of commitments for the funding. But these other opportunities that we're seeing are either with, you know, private clients or, you know, projects that are just sort of in the normal course of business. I mean, it's not that I know of, that they're getting any supplemental funding from those federal sources.
David Sasnett (CFO)
Yeah, we haven't heard anything from our prospective clients that this is any federal monies involved in this. It's really just projects that are driven by the need-
Rick McTaggart (CEO)
Right.
David Sasnett (CFO)
- not necessarily by extra funding available.
John Bair (President and Head of Equity Research)
That's, that's interesting. That's very interesting. My last question is, you got a nice chunk of cash there. How do you have that positioned? Are you in short-term Treasuries? How are you addressing that?
David Sasnett (CFO)
Well, for the U.S. funds, I mean, our. We have cash in several different locations, John. Significant cash balances historically in the Bahamas, in Grand Cayman, and in the U.S. We don't move money around between countries that often, especially not between the U.S. and our foreign subsidiaries, because of tax considerations. We're sort of limited as to how much we can earn on our money in the Grand Cayman. The banks there aren't paying what they are in the U.S. But we earn a nice return, money market returns on the monies we have in the Bahamas.
We're also opening up interest-bearing accounts in the U.S. because PERC is generating a lot of cash right now, and we'll be starting. You'll see us reporting more interest income going forward as we invest this balances in short-term, very secure type of money market accounts.
John Bair (President and Head of Equity Research)
Sure. Very good. Well, thank you very much for taking my questions. Congratulations again on really strong momentum and very positive outlook, so.
David Sasnett (CFO)
Thank you.
Rick McTaggart (CEO)
Thanks, John.
John Bair (President and Head of Equity Research)
Worthwhile being patient.
Rick McTaggart (CEO)
That's what I say, yeah.
Operator (participant)
At this time, we will conclude our question-and-answer session. I'd like to now turn the call back over to Mr. McTaggart. Sir, please go ahead.
Rick McTaggart (CEO)
Thanks, Joe. Just like to thank everybody once again for joining us today, and I'm looking forward, David and I are looking forward to talking with you again, when we present our year-end results, I guess, in March of next year. So, take care, and hope everybody stays safe. Thanks, Joe.
Operator (participant)
Before we conclude today's call, I would like to provide the company's safe harbor statement. That includes cautions 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, forecasts, 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 and uncertainties and assumptions which 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 areas 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 or results of operations and risk factors section 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. Any forward-looking statements made during the conference call speak as of today's date. The company expressly disclaims any obligations or undertaking 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 of which any forward-looking statement is based, except as required by law. I would 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 instructions available via the company's website at www.cwco.com. Lastly, thank you for attending today's presentation. This will conclude the conference call today. You may now disconnect your lines.