Consolidated Water Co. Ltd. (CWCO) filed Quarterly Report for the period ended 2009-09-30.
Consolidated Water Co. Ltd. intends to develop and operate seawater conversion plants and water distribution systems in areas of the world where naturally-occurring supplies of potable water are scarce or nonexistent. It currently operates a public water utility in certain areas of the Cayman Islands under a 20-year exclusive license from the Government of the Cayman Islands. The company has signed contracts for its first overseas operations in the Commonwealth of the Bahamas. (PRESS RELEASE) Consolidated Water Co. Ltd. has a market cap of $209.35 million; its shares were traded at around $14.4 with a P/E ratio of 21.18 and P/S ratio of 3.19. The dividend yield of Consolidated Water Co. Ltd. stocks is 2.08%. Consolidated Water Co. Ltd. had an annual average earning growth of 15.1% over the past 5 years.
Highlight of Business Operations:
General and administrative (“G&A”) expenses on a consolidated basis were $2,671,169 for the three months ended September 30, 2009 as compared to $2,128,654 for same quarter of 2008. Increases in (i) employee costs of approximately $108,000 attributable to salary increases; (ii) professional fees of approximately $148,000; (iii) bank charges of $87,000 incurred by our Bahamas subsidiary to convert Bahamian dollars to U.S. dollars and subsequently transfer such dollars to other Company bank accounts; and (iv) costs incurred of approximately $69,000 to bid new projects constituted the majority of the additional G&A expense for 2009.
Consistent with prior periods, we record all non-direct G&A expenses in our retail business segment and do not allocate any of these non-direct costs to our other two business segments. Retail G&A expenses for the three months ended September 30, 2009 were $2,166,765 up $462,558 from the $1,704,207 in G&A expenses for the three months ended September 30, 2008. The increase in G&A expenses for the three months ended September 30, 2009 as compared to the comparable prior year period is primarily due to increases in (i) employee costs of approximately $94,000 attributable to salary increases; (ii) professional fees of approximately $135,000; and (iii) costs incurred of approximately $69,000 to bid new projects.
Net income attributable to controlling interests for the nine months ended September 30, 2009 was $7,075,657 ($0.49 per share on a fully-diluted basis) as compared to $5,433,513 ($0.37 per share on a fully-diluted basis) for the nine months ended September 30, 2008. Our results for both of these periods were adversely affected by the losses we recorded for our equity investment in OC-BVI (discussed below) which amounted to $(2,780,270) and $(1,772,570) for 2009 and 2008, respectively.
General and administrative (“G&A”) expenses on a consolidated basis were $7,842,434 for the nine months ended September 30, 2009 as compared to $6,754,902 for same period of 2008. Increases in (i) employee costs of approximately $153,000 attributable to salary increases; (ii) professional fees of approximately $141,000; (iii) insurance expenses of $96,000 due to higher premiums; (iv) bank charges of approximately $164,000 resulting from our Bahamas subsidiary s conversion of Bahamian dollars to U.S. dollars and the subsequent transfer of such dollars to other Company bank accounts; and (v) costs incurred of approximately $128,000 to bid new projects constituted the majority of the additional G&A expense for 2009. Our G&A expense for 2009 also includes approximately $183,000 in penalties and interest assessed against our Belize operations for delinquent business taxes.
Consistent with prior periods, we record all non-direct G&A expenses in our retail business segment and do not allocate any of these non-direct costs to our other two business segments. Retail G&A expenses for the nine months ended September 30, 2009 were $6,265,793, up $783,051 from the $5,482,742 in G&A expenses for the nine months ended September 30, 2008. Employee costs for 2009 exceeded those for 2008 by approximately $234,000 due to salary increases. Costs incurred in connection with bidding for new projects in 2009 exceeded such costs for 2008 by approximately $128,000 and professional fees for 2009 were approximately $127,000 higher than for 2008.
During 2007, OC-BVI completed, for a total cost of approximately $8.2 million, the construction of a 700,000 U.S. gallons per day desalination plant located at Bar Bay, Tortola (the “Bar Bay plant”). We provided OC-BVI with a $3.0 million loan to fund part of this plant s construction costs, of which $2.0 million remained outstanding as of June 30, 2009. Principal on this loan was payable in quarterly installments of $125,000 with a final balloon payment of $2.0 million due on August 31, 2009 and interest on the loan was due quarterly at the rate of LIBOR plus 3.5%. On August 20, 2009, we amended the terms of this loan with OC-BVI, increasing its balance to $2,800,000 by converting $800,000 in trade receivables due to us from OC-BVI. Under the terms of this amendment, the interest rate on the loan was increased to the rate of LIBOR plus 5.5% and the maturity date for the final balloon payment extended to August 31, 2011. On December 19, 2008, OC-BVI and the BVI government executed a binding term sheet (the “Bar Bay Agreement”) for the purchase of water by the BVI government from OC-BVI s Bar Bay plant. The parties intend the Bar Bay Agreement to govern the terms of sale of water by OC-BVI to the BVI government until the parties execute a definitive contract. Under the terms of the Bar Bay Agreement, OC-BVI will deliver up to 600,000 U.S. gallons of water per day to the BVI government from the Bar Bay plant and the BVI government will be obligated to pay for this water at a specified price as adjusted by a monthly energy factor. Prior to completion of the construction of the first phase of certain additional facilities by OC-BVI in August 2009, the BVI government was not obligated to purchase any minimum volumes of water from OC-BVI. However, since completion of this first phase the BVI government has been obligated to purchase at least 600,000 gallons of water per day from the plant. The first phase of such facilities construction involves the installation of water pipes from the plant to a BVI government-owned reservoir site and from this site to the BVI government s piped water distribution system. A second phase of construction requires OC-BVI to complete a storage reservoir on the BVI government site within twelve months of the signing of the proposed seven-year definitive contract. The proposed seven-year definitive contract is expected to include a seven-year extension option exercisable by the BVI government. Negotiations on the definitive contract continued to be in-progress through the date of this filing. OC-BVI began selling water from the Bar Bay
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