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Consolidated Water Co. Ltd. (CWCO) Continues Impressive Growth Trend

Consolidated Water Company, over the course of its 41-year history, has evolved from a small private water utility in Grand Cayman to a Nasdaq-listed (1995) regional water provider expected to achieve 2014 revenues of $67 million, according to analysts polled by Capital IQ.

Today, CWCO designs, builds, operates and in some cases finances seawater reverse osmosis (SWRO) desalination plants and water distribution systems in five Caribbean countries with little or no naturally occurring fresh water, growing population and tourism levels, and where the use of SWRO is economically feasible.

CWCO accomplished its growth primarily via strategic acquisition, industry and technical expertise, and by capitalizing on its exclusive water utility franchise in Grand Cayman, which as of 2012 census had a population of roughly 56,700. The company supplies water to private bulk water customers, retail customers and government-owned utility companies in the Cayman Islands, the Bahamas, the British Virgin Islands, Bali and Belize.

Collectively, the company has 14 desalination plants with total production capacity of 26.4 millions of U.S. gallons per day. The company’s largest SWRO plant, which was commissioned in July 2006, is the Blue Hill plant in Nassau, Bahamas, with a production capacity of 7.2 million gallons per day.

A look at the company’s books shows that despite a dip in 2013, which the company attributes to lower retail sales volume, CWCO has achieved comfortable growth in the last three years.

2011 – net income of $6.6 million on revenues of $55.2 million
2012 – net income of $9.3 million on revenues of $65.5 million
2013 – net income of $8.6 million on revenues of $63.8 million

For the first nine months of 2014 the company reported net income of $5.3 million on $50.3 million in revenues, compared to net income of $7.5 million on revenues of $48.6 million for the comparable nine months of 2013.

As of March 31, 2014, CWCO had debt of $9.5 million; $41.2 million in working capital; $141.2 million in shareholders’ equity; and $160.4 million in total assets. The company also has a healthy dividend yield at 3.05% with an annual payout of $0.30. First-quarter 2014 dividend is set at $0.075 per share, unchanged from the fourth quarter declaration.

The solid growth and strong balance sheet points back to the company’s experienced leadership. CWCO CEO and engineer Frederick McTaggart joined the company as director in 1998 and has served in his current executive capacity since 2004. From April 1994-October 2000, McTaggart was the managing director of the Water Authority-Cayman, the government-owned water utility serving certain areas of the Cayman Islands. He also previously worked for the Caribbean Utilities Company, the electrical utility on Grand Cayman, as a mechanical engineer. He is joined and supported by a qualified and experienced team of professionals that share a corporate vision for continued growth.

Among other expansion opportunities, CWCO’s management is focused on new markets in Mexico and Southern California, a region dependent on water imported from the Colorado River and forecast to rapidly increase in population over the next 20 years. In Rosarito, Mexico, CWCO is progressing on its proposition for a conveyance pipeline and desalination plant with production facility estimated at $600 million.

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