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CW

Consolidated Water Co. Ltd. (CWCO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered a clean beat: revenue $35.12M vs $32.90M consensus and diluted EPS $0.34 vs $0.23 consensus; gross margin scaled to 37% (+200 bps YoY) as mix and operating efficiency improved in Retail, Services, and Manufacturing. Bold beat reflects both topline strength and cost control . Revenue/EPS estimates marked with * and sourced from S&P Global; see Estimates Context.
  • Manufacturing momentum continued with gross margin at 40% and new capacity (+17,500 sq ft) to enable larger, simultaneous builds; Services advanced new wins with combined ~$15.6M projects for 2026, including a $11.7M CA wastewater recycling plant; Retail volumes rose 6% on drier Cayman weather .
  • Balance sheet remained strong: cash $123.6M, working capital $141.7M, no significant outstanding debt; Bahamas AR fell by $12.5M QoQ to $16.8M, improving liquidity profile .
  • Hawaii desalination project design reached 100%, permitting progressed (concentrate well permit obtained; archaeological permit under final review); management continues to anticipate construction commencement “early next year,” setting up material 2026–2027 revenue/earnings contributions .
  • Potential near-term stock catalysts: visible estimate beats, Hawaii permitting milestones, execution on newly awarded Services contracts, and continued Manufacturing margin performance .

What Went Well and What Went Wrong

What Went Well

  • Manufacturing margin expansion: “Manufacturing revenue grew by 7% and gross margin increased to 40%… higher margin products for nuclear power and municipal water clients” .
  • Services pipeline wins: “Two water treatment plant construction projects… combined value approximately $15.6 million,” primed for 2026 revenue .
  • Liquidity and receivables trending better: “CW Bahamas… decrease of $12.5 million in accounts receivable over the quarter to $16.8 million… company presently has no significant outstanding debt” .

What Went Wrong

  • Bulk revenue contracted: down 4% YoY on lower energy pass-through in Bahamas; while profitability improved, top-line headwind persisted .
  • Services consulting revenue down: consulting revenue declined $0.72M YoY given completion of a major Q4’24 commissioning/startup project; construction revenue also in transition pending Hawaii build start .
  • Permitting timelines: management emphasized archaeological permit is “really important” and non-perfunctory; remaining admin permits will follow, but timing risks remain ahead of construction ramp .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$33.39 $33.59 $35.12
Diluted EPS - Continuing Ops ($USD)$0.31 $0.32 $0.34
Gross Profit Margin %35.0% 38.2% 37.0%
Net Income - Continuing Ops Attributable to Stockholders ($USD Millions)$4.96 $5.18 $5.57

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q3 2024Q3 2025
Retail$7.59 $7.77
Bulk$8.77 $8.39
Services$12.68 $14.29
Manufacturing$4.36 $4.66
Total$33.39 $35.12

KPIs and operating details:

KPIQ3 2024Q3 2025
Retail water volume growth YoY—+6%
O&M revenue ($USD Millions)$7.49 $7.72
Construction revenue ($USD Millions)$4.25 $6.36
Manufacturing gross margin (%)—40%
Cash and Cash Equivalents ($USD Millions)—$123.6
Working Capital ($USD Millions)—$141.7
Bahamas AR ($USD Millions)—$16.8 (down $12.5M QoQ)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Hawaii desalination project construction startEarly 2026 initially referenced; later “early next year”Prior commentary: construction expected early next year, contingent on permits Reiterated: design 100% complete; concentrate well permit obtained; archaeological permit under final review; anticipate construction early next year Maintained timing, permitting progress
Services revenue contribution from new projects2026–2027Pipeline developing; CDRs in AZ; smaller DB projects in 2H25/1H26 Two new projects awarded: CO drinking water expansion ($3.9M), CA wastewater recycling ($11.7M), primary revenue recognition in 2026 Visibility raised
Manufacturing throughput/marginsOngoingExpansion underway; capacity near peak; margin mix improving New 17,500 sq ft expansion complete; higher throughput; gross margin at 40% in Q3 Raised capacity; margins strong
Dividend per shareQ4 2025$0.11 in Q2 2025 $0.14 declared for Q4 2025 Raised

Note: No formal numerical revenue/EBITDA/EPS guidance ranges were provided; management reiterated qualitative timing and project milestones .

Earnings Call Themes & Trends

TopicQ1 2025 (older)Q2 2025Q3 2025 (latest)Trend
Hawaii project progressPilot test approval; 90% design imminent; 2-year construction phase anticipated; inflation-adjustable costs 90% design submitted; permitting milestones pending; construction expected early next year Design 100% complete; concentrate well permit obtained; archaeological permit under final review; anticipate construction early next year Advancing toward NTP; permitting moving
Services pipelineSmaller DB projects expected; ~$20M combined, 12-month executes O&M +17%; CA renewals; entering CO design-build market Two new projects (~$15.6M) awarded; revenue mainly in 2026; AZ CDR activity elevated Improving visibility for 2026
ManufacturingStabilizing; expansion build underway 33% revenue growth; margin +6 pts; capacity near peak Gross margin 40%; expansion complete; larger simultaneous builds Capacity and margin step-up
Retail CaymanHigh volume growth (population/business); West Bay plant expansion +7% volume; expansion completed (+1MGD) +6% volume; continued strength on drier weather and more connections Structurally higher base volumes
Bahamas AR collections—Expect progress; scheduled payments discussed AR down $12.5M QoQ to $16.8M Improving collections

Management Commentary

  • “In Q3, our diversified water business model… continued to perform well… consolidated revenue increased by 5% and fully diluted EPS from continuing operations increased 10% YoY” .
  • “Design of the 1.7 million gallon per day seawater desalination plant… is now 100% complete… anticipate construction will commence early next year” .
  • “Manufacturing… gross margin increased to 40%… higher margin products for nuclear power and municipal water clients… new 17,500-square-foot manufacturing facility expansion… expected to further enhance efficiency and throughput” .
  • “We believe… current trends… represent strong catalysts for continued growth, increasing profitability, and further strengthening of shareholder value” .

Q&A Highlights

  • Hawaii permitting cadence: archaeological permit viewed as the critical path; remaining permits are “more administrative,” with construction ramp typical of large projects .
  • Arizona CDRs: activity driven by strong sales presence and developer demand for certainty on cost/schedule; management expects CDRs to lead to DB contracts over time .
  • Colorado design-build: REC’s first DB contract builds credibility to pursue larger opportunities; sales momentum establishing in-state presence .
  • Manufacturing capacity/margins: expansion creates dedicated assembly space enabling larger units and multi-project flow; margin mix will fluctuate, but gross profit dollars and revenue expected to improve .
  • Liquidity/capital allocation: enhanced cash generation outlook with improving AR and prospective projects; actively evaluating M&A and PPP opportunities while maintaining dividend policy .

Estimates Context

Actual vs Wall Street consensus (S&P Global) and prior quarter:

MetricQ2 2025 Estimate*Q2 2025 ActualQ3 2025 Estimate*Q3 2025 ActualQ4 2025 Estimate*
Revenue ($USD)$32.75M*$33.59M $32.90M*$35.12M $34.75M*
Diluted EPS - Continuing Ops ($USD)$0.20*$0.32 $0.23*$0.34 $0.28*
  • Both revenue and EPS exceeded consensus in Q3; momentum also evident in Q2 beats. Expect modest upward revisions to near-term estimates given operating performance and improving visibility into Services and Manufacturing .
  • Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter was an across-the-board beat driven by Retail strength, Services construction/O&M mix, and Manufacturing margin expansion; balance sheet optionality (cash $123.6M, no material debt) supports capital deployment in DB/O&M and potential M&A .
  • Hawaii is on track: 100% design complete and permitting progressing; early-2026 start appears increasingly plausible with some residual timing risk—this underpins the 2026–2027 step-up narrative .
  • Services visibility is improving with ~$15.6M of new projects and elevated AZ CDR activity; expect backlog/resourced capacity to support steadier revenue in 2026 .
  • Manufacturing’s 40% margin, expanded footprint, and Florida municipal demand (deeper saline aquifer treatment) point to durable throughput and margin mix opportunities .
  • Bulk segment revenue softness from fuel pass-through is less worrisome as profitability trends are favorable; Retail volumes remain structurally higher on demand growth and weather .
  • AR improvement in Bahamas reduces risk and tightens cash cycle, enhancing funding capacity for growth and shareholder returns (dividend raised to $0.14 for Q4) .
  • Near-term trading: positive estimate-revision impulse and potential permitting milestones offer catalysts; medium-term thesis centers on execution in Hawaii/Services and Manufacturing margin durability.