Sign in

You're signed outSign in or to get full access.

CW

Consolidated Water Co. Ltd. (CWCO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat vs consensus: diluted EPS from continuing operations was $0.32, above Wall Street’s $0.20; revenue was $33.6M vs $32.75M; EBITDA was ~$7.0M vs ~$5.3M. These were driven by retail strength, higher manufacturing margins, and rising O&M services; services construction was soft but expected as Hawaii awaits permits. Values retrieved from S&P Global.* *
  • Segment mix: retail +6% YoY to $8.64M, manufacturing +33% to $5.23M; bulk revenue -2% to $8.27M on lower energy pass-throughs; services -4% to $11.45M with O&M +17% to $8.26M offsetting lower construction/design. Gross margin expanded 240 bps YoY to 38.2%.
  • Strategic progress: Hawaii desalination project reached key milestones (pilot test approval; 90% design submitted), targeting construction start early next year pending permits; West Bay plant expansion adding 1 MGD was completed.
  • Capital returns and balance sheet: dividend raised to $0.14 in Q3 2025 (+27% QoQ); cash rose to $112.2M with working capital $137.4M, equity $216.6M.
  • Near-term catalysts: continued O&M growth, manufacturing capacity expansion and higher-margin mix, progress on Hawaii permits, and improving Bahamas collections reported post-quarter on the call.

What Went Well and What Went Wrong

What Went Well

  • Retail volumes +7% on Grand Cayman due to less rainfall; retail revenue +6% YoY to $8.64M. “Our diversified water business model… continues to serve the company… with consolidated revenue increasing by 3% and diluted EPS increasing 23%.”
  • Manufacturing revenue +33% to $5.23M with gross margin up six percentage points; management cites higher-margin jobs and near-capacity utilization, with facility expansion enabling larger projects.
  • O&M momentum: services O&M revenue +17% YoY to $8.26M (REC and PERC), offsetting construction/design declines; recurring revenue remains a growth pillar.

What Went Wrong

  • Services construction revenue fell to $2.83M (from $4.00M); design/consulting declined to $0.37M; timing related to Hawaii transitioning from pilot/design to construction phase.
  • Bulk revenue -2% YoY to $8.27M due to lower energy pass-throughs in Bahamas, despite improved profitability from lower operating costs.
  • Regulatory/collections overhangs: continued negotiation on Cayman retail operating license and delinquent Bahamas receivables—management notes progress post-quarter but still a watch item.

Financial Results

Headline P&L vs prior year and prior quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$32,479,158 $33,715,385 $33,591,079
Gross Profit ($USD)$11,620,214 $12,306,287 $12,831,985
Gross Margin (%)35.8% 36.5% 38.2%
Diluted EPS – Continuing Ops ($)$0.26 $0.31 $0.32
Net Income – Total ($USD)$15,850,257 $4,791,029 $5,096,205

Segment revenue breakdown

SegmentQ2 2024 ($USD)Q2 2025 ($USD)
Retail$8,181,884 $8,638,026
Bulk$8,447,958 $8,274,816
Services$11,922,469 $11,448,202
Manufacturing$3,926,847 $5,230,035
Total$32,479,158 $33,591,079

Services composition

Services DetailQ2 2024 ($USD)Q2 2025 ($USD)
Construction revenue$4,004,072 $2,825,935
O&M revenue$7,068,922 $8,255,408
Design & consulting$849,475 $366,859
Total services$11,922,469 $11,448,202

KPIs and Balance Sheet Highlights

KPIQ2 2024Q2 2025
Cash & Cash Equivalents ($USD)$99,350,121 $112,246,599
Working Capital ($USD)$132,849,656 $137,417,539
Stockholders’ Equity ($USD)$209,960,695 $216,563,683
O&M Services Revenue ($USD)$7,068,922 $8,255,408
Retail VolumesN/A+7% YoY (Grand Cayman)

Actuals vs Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD)$32,750,000*$33,591,079 +$841,079 / +2.6%*
EPS – Primary ($)$0.20*$0.32 +$0.12 / +60%*
EBITDA ($USD)$5,300,000*~$6,959,240*+~$1,659,240 / +31%*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2025$0.11 (Q2 dividend level) $0.14 declared for Q3 2025 Raised
Hawaii desalination project startEarly 2026Expected construction “early next year” (Q1 commentary) Still “early next year” pending permits; 90% design submitted Maintained
West Bay capacity expansionQ2 2025Expected completion by end of Q2 2025 Completed; +1 MGD capacity Achieved

No explicit numeric revenue/margin guidance was provided; management reiterated project timelines and O&M growth narrative.

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Hawaii desalination project progressPilot testing complete; inflation adjustment on ~80% construction fees; construction expected early next year Pilot test approved; construction expected early next year 90% design submitted; permits (archaeological, health department) pending; expect construction early next year Advancing; permit-critical path
Services O&M growth51% YoY in 2024; REC added channel O&M +9% YoY; pipeline of ~$20M smaller projects O&M +17% YoY; contract changes and incremental increases Strengthening
Manufacturing (nuclear & municipal)Stabilized margins; capacity expansion planned Higher-margin mix; growth outlook positive Gross margin +6 pts; new building online; bidding larger municipal jobs Positive mix & capacity
Cayman retail licensingNew concession; license talks to begin; prior license remains New concession reaffirmed License negotiation noted in cautionary statements Ongoing regulatory
Bahamas receivablesEnergy pass-through reduced revenue; collections noted as issue historically N/APost-quarter progress on scheduled payments; optimism Improving
Tariffs/macroN/AN/AUS tariffs not materially impacting manufacturing Neutral

Management Commentary

  • “Manufacturing revenue increasing 33% and gross margin improving by six percentage points… we are very encouraged by the revitalized interest in nuclear power solutions for the U.S.” — CEO Rick McTaggart
  • “Services segment revenue from recurring O&M contracts increased by 17%, which partially offset decreases in construction revenue and design and consulting revenue.” — CEO Rick McTaggart
  • “We submitted our 90% design for the [Hawaii] project and are currently addressing comments… Provided all permitting milestones are achieved, we expect to commence construction… early next year.” — CEO Rick McTaggart
  • “Gross profit… 38.2% of total revenue… due to increases in retail and manufacturing revenue, as well as decreased cost of revenue for the bulk segment.” — Company release

Q&A Highlights

  • US pipeline: Phoenix area design-build opportunities ($10–$30M), Colorado market entry (Lock Buoy $4.5M) expected to open more municipal jobs; California mostly O&M renewals.
  • Manufacturing capacity: Fort Pierce expansion allows larger jobs and higher throughput; focus on higher-margin projects; potential full utilization in 2026 if bids land.
  • Hawaii permits: Archaeological permit and health department approval are the gating items; with design finishing, submissions imminent; timing uncertain but still aligned to early next year start.
  • Bahamas receivables: Agreement for scheduled payments; improvement observed post-quarter; confidence in collections.
  • Capital allocation/M&A: Active M&A targets, exploring PPP opportunities in US Southwest/Texas; dividend already raised, ongoing evaluation of cash returns.

Estimates Context

  • Q2 2025 beat: EPS $0.32 vs $0.20*, revenue $33.6M vs $32.75M*, EBITDA ~$7.0M vs ~$5.3M*. Values retrieved from S&P Global.* *
  • Implication: Consensus likely to revise upward on O&M run-rate and manufacturing margin trajectory; services construction timing remains the main swing factor tied to Hawaii permits.

Key Takeaways for Investors

  • Q2 quality beat driven by margin expansion and O&M growth; mix shift toward higher-margin manufacturing is sustainable with added capacity.
  • Retail demand remains robust in Cayman; West Bay expansion adds capacity to support ongoing volume growth.
  • Services construction lull should reverse as Hawaii moves into construction; early next year start remains the key catalyst subject to permits.
  • O&M growth (REC and PERC) is compounding, providing recurring revenue stability and smoothing construction cyclicality.
  • Balance sheet strength (cash $112.2M) supports M&A/PPP optionality and continued capital returns; dividend increased to $0.14.
  • Watch items: Bahamas receivable collections trajectory (improving), Cayman license finalization, and Hawaii permit timing.
  • Near-term trading lens: Continued estimate upside bias given margin/O&M trends; medium-term thesis hinges on Hawaii construction revenue in 2026–2027 and scaling US design-build.