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CW

Consolidated Water Co. Ltd. (CWCO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was soft with broad misses versus consensus: revenue $28.41M vs $33.60M est, EPS $0.09 vs $0.26 est, and EBITDA $2.75M vs $6.50M est, reflecting the trough between large construction projects and mix shift toward O&M contracts [Values retrieved from S&P Global]*.
  • FY 2024 revenue declined 26% to $134.0M as two major construction projects finished early in the year; O&M recurring revenue rose 51% to $29.3M, retail revenue grew 5% to $31.7M, and manufacturing revenue was stable .
  • Strategic catalysts: Cayman Water received a new government concession extending exclusive rights on Grand Cayman, with OfReg license negotiations to follow; West Bay plant expansion (+1M gpd) targeted for completion by end of Q2 2025; Hawaii DBO desalination construction start now “early next year,” pushing construction-phase revenue into 2026–2027 .
  • Balance sheet remains robust ($99.4M cash, $132.8M working capital, minimal debt), supporting capex ($~10.3M in 2025), manufacturing capacity expansion, and opportunistic M&A .

What Went Well and What Went Wrong

What Went Well

  • Retail utility delivered record sales volumes in Grand Cayman (1.01B gallons, +4.5%) on rising connections (+4.3%) and economic growth; CEO: “record volume of water sold to a record number of customers” .
  • O&M recurring revenue scaled to $29.3M (+51%), driven by REC Colorado (+$6.1M) and PERC Water contracts; enhances revenue stability and segment margins .
  • Manufacturing margins improved on product mix and efficiency; CEO: “Revenues have stabilized and margins have increased… we’re making better margins on these jobs” and facility expansion expected to add capacity in late 2025 .

What Went Wrong

  • Services (construction) revenue fell sharply to $17.6M (from $77.3M in 2023) as Liberty (AZ) and Red Gate II (Cayman) projects wound down; this was the primary driver of FY revenue decline .
  • Bahamas bulk revenue decreased (to $33.7M) due to lower energy pass-through rates, reducing both client charges and costs; mix was partly offset by new Red Gate O&M contract .
  • Q4 2024 missed Wall Street estimates across revenue, EPS, and EBITDA, reflecting timing delays and limited construction activity ahead of Hawaii’s construction phase [Values retrieved from S&P Global]*.

Financial Results

Quarterly Actuals

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$53.25*$32.48 $33.39 $28.41*
Diluted EPS - Continuing Operations ($USD)$0.65*$0.26 $0.31 $0.11*
Gross Profit Margin (%)36.22%*36.00% 34.8% 29.89%*
Net Income from Continuing Ops ($USD Millions)$9.84*$4.24 $4.96 $1.46*
EBITDA ($USD Millions)$14.15*$6.68*$6.36*$2.75*
  • Values retrieved from S&P Global.

Actual vs Estimates (Consensus, S&P Global)

MetricQ2 2024 EstimateQ2 2024 ActualSurpriseQ3 2024 EstimateQ3 2024 ActualSurpriseQ4 2024 EstimateQ4 2024 ActualSurprise
Revenue ($USD Millions)$37.30*$32.48*-$4.82*$31.75*$33.39*+$1.64*$33.60*$28.41*-$5.19*
Primary EPS ($USD)$0.28*$0.99*+$0.71*$0.25*$0.27*+$0.02*$0.26*$0.09*-$0.17*
EBITDA ($USD Millions)$7.00*$6.68*-$0.32*$6.30*$6.36*+$0.06*$6.50*$2.75*-$3.75*
  • Values retrieved from S&P Global.

Segment Breakdown (FY)

SegmentFY 2023 Revenue ($M)FY 2024 Revenue ($M)FY 2023 Gross Profit ($M)FY 2024 Gross Profit ($M)
Retail$30.16 $31.74 $16.27 $17.54
Bulk$34.60 $33.67 $10.47 $10.31
Services (Total)$97.97 $50.96 $31.17 $12.44
Manufacturing$17.49 $17.60 $4.02 $5.32
Total$180.21 $133.97 $61.93 $45.62

KPIs

KPIFY 2023FY 2024Notes
Retail water sold (Billion gallons)—1.01 +4.5% YoY volume
Customer connections growth (%)—+4.3% Grand Cayman license area
Services O&M revenue ($M)$19.37 $29.31 +51% YoY; REC +$6.1M, PERC +$3.9M
Cash & equivalents ($M, year-end)$42.62 $99.35 Strong liquidity

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Hawaii DBO construction startNext construction phase“Late next year” (from 2024 commentary) “Early next year” (from Mar 2025 commentary) Delayed (shift into early next year)
Hawaii revenue impact2026–2027Not explicitly rangedConstruction phase expected to “substantially” add to revenue/earnings in 2026–2027 Qualitative, reaffirmed
Cayman Water concession/license2025License renewal pendingNew concession granted; license talks with OfReg to begin; existing license remains in effect Regulatory milestone achieved
West Bay plant expansion (+1M gpd)Complete by end Q2 2025N/ACapex underway; completion targeted by end Q2 2025 New project timing disclosed
2025 Capex (existing operations)FY 2025N/A~$10.3M (incl. West Bay ~$0.93M; Aerex expansion ~$1.8M) New disclosure
Quarterly dividendQ4 2024 onward$0.095/share$0.11/share (+15.8%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Hawaii desalination projectPiloting/design/permitting on $147M; construction planned late next year; inflation-adjusted construction price $204M scope progressing; construction expected “early next year”; ~80% construction fee inflation-adjustable Timeline pushed; margin protected
O&M growth (REC, PERC)O&M +75% YoY in Q2; REC +$1.9M (Q2) and +$2.1M (Q3) O&M +51% YoY to $29.3M in FY; REC +$6.1M Structural growth, recurring
Retail Grand CaymanVolume +10% Q2; +4.2% Q3; favorable macro; seasonality noted Record FY volume (+4.5%); new concession; West Bay expansion Strong demand, secured rights
Bahamas (bulk, Cat Island)Lower pass-through rates cut revenue; new Cat Island project (15-year) FY bulk down slightly on energy; O&M additions offset; potential expansion in Nassau Mixed: revenue headwind, project pipeline positive
ManufacturingStable revenue; gross profit +84% in Q3; product mix/efficiency focus Margins improved; capacity expansion planned for late 2025 Improving margins, capacity build
Regulatory/licensingN/ANew Cayman concession, license discussions to begin with OfReg; old license in force Positive regulatory visibility

Management Commentary

  • “Our strong retail water sales in our exclusive utility service area on Grand Cayman reflected a record volume of water sold to a record number of customers” — CEO Rick McTaggart .
  • “O&M recurring revenue increased 51% to $29.3 million… generated by REC… and PERC” — FY press release .
  • “Due to delays unrelated to us, we now expect to begin the construction of [Hawaii] early next year… about 80% of the plant’s construction fee is subject to adjustments for inflation” — CEO Rick McTaggart .
  • “We are… expanding our manufacturing facility… [which] will greatly enhance the capacity of our manufacturing business” — CEO Rick McTaggart .
  • “Cayman Water… received a new concession… continued exclusive rights to produce and supply potable water within its service area” — Company announcement and call .

Q&A Highlights

  • The Q4 2024 call did not include a substantive Q&A segment in the published transcript .
  • For context from prior quarters:
    • Hawaii timeline and revenue mix (construction is ~80% of project revenue; two-year construction) .
    • O&M ramp (REC contributions, competitive pipeline in AZ/CA/CO) .
    • Bahamas expansion (Cat Island plants, potential Nassau capacity increase) .

Estimates Context

  • Q4 2024: Revenue $28.41M vs $33.60M est (miss), EPS $0.09 vs $0.26 est (miss), EBITDA $2.75M vs $6.50M est (miss). Coverage is light (EPS estimates: 1; Revenue estimates: 2), which can amplify reported surprises [Values retrieved from S&P Global]*.
  • Q3 2024: Revenue beat ($33.39M vs $31.75M) and EPS beat ($0.27 vs $0.25), consistent with O&M growth offsetting construction decline [Values retrieved from S&P Global]* .
  • Q2 2024: Large EPS beat driven by Mexico discontinued ops gain (reported EPS $0.99 vs $0.28 est), but revenue missed as construction wound down [Values retrieved from S&P Global]* .

Key Takeaways for Investors

  • Near-term earnings air-pocket: With construction between cycles, Q4 underperformed consensus; trading setups should factor continued mix toward O&M until Hawaii construction commences “early next year” .
  • Structural tailwinds: Retail demand in Cayman is robust, supported by new concession and West Bay expansion; recurring O&M revenues and manufacturing margin gains provide stability through cycle .
  • Hawaii project remains the pivotal swing factor: inflation-adjustable pricing protects margins; construction phase should drive step-up in revenue/EBITDA in 2026–2027; timing risk remains the key watch item .
  • Liquidity/optionality: $99.4M cash and minimal debt support capex ($~10.3M for 2025), manufacturing expansion, and selective M&A; dividend was raised to $0.11/share in Q4 2024 .
  • Bahamas portfolio: Energy pass-through dampens reported bulk revenue when power prices fall; Cat Island and potential Nassau expansion provide incremental growth vectors .
  • Estimates likely to reset lower near term: Consensus underappreciated the construction lull; expect revisions focused on O&M/retail trajectory and timing of Hawaii construction [Values retrieved from S&P Global]*.
  • Monitoring points: OfReg license terms in Cayman, Red Gate/North Sound O&M contributions, REC/PERC pipeline wins in AZ/CA/CO, and precise Hawaii construction start date .
Note: Asterisks (*) denote values retrieved from S&P Global.