Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Co.'s full year 2020 results. Hosting the call today is the Chief Executive Officer of Consolidated Water Co., Rick McTaggart, and the company's Chief Financial Officer, David Sasnett. Following their remarks, we'll open the call to your questions. At any time during the call, you may join the Q&A question queue by pressing star 1 on your keypad. To withdraw from the question queue, press star 2. Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call. I'd like to remind everyone today that today's call is being recorded and will be made available for telecom replay via instructions in yesterday's press release, which is available in the investor relations of the company's website. Now, I'd like to turn the call over to Consolidated Water Co. CEO Rick McTaggart. Sir, please go ahead.

Thank you, Tom, and good morning, everyone. I hope everyone is staying safe and healthy. Despite the unprecedented challenges caused by the pandemic, in 2020, we increased our total revenue by 6% to a record $72.6 million. Our services segment was the biggest contributor with services revenues up to $12.9 million, with $12.5 million of that amount generated by our PERP Water subsidiary that we acquired in October 2019. Likewise, services gross profit increased to $3.2 million versus just about a half a million in 2019. PERP Water provides design, engineering, construction, and management services for water treatment infrastructure in the arid southwestern U.S., It provides a platform upon which we can expand our core business of designing, constructing, and operating desalination plants to North America. FERC also presents opportunities for additional recurring revenue from operating and maintenance contracts, as well as design-build projects that can eventually turn into operating contracts. There's a lot more to talk about in terms of progress we made last year on our growth strategies for 2021. But before going further, I'd like to turn the call over to David, who will take us through the financial details for the year. I'll then return to add some additional comments around our operational activity and outlook. David.

Good morning, everyone. As Rick mentioned, and as it has for many other companies, the COVID-19 pandemic has created unprecedented challenges for us. But despite these challenges, We remained profitable in 2020. We increased our revenue, maintained our financial condition and liquidity, and continued to pursue new opportunities to grow our business, both organically and through acquisitions. Our total revenue in the full year of 2020 increased 6% to a record $72.6 million. This increase was driven by an increase of $1.2 million in services revenue, which as Rick mentioned was due to the acquisition of Perk Water to our services segment in late October 2019. The increase in our services segment revenue was offset partially by decreases in revenue for our retail, bulk, and manufacturing segments of $3.5 million, $2.7 million, and $1.2 million respectively. Our retail revenue declined due to a 13% decrease in the volume of water sold on Grand Cayman Island as a result of the tourist restrictions which were in effect for the last nine months of 2020 on Grand Cayman Island. The decrease in bulk segment revenue was due to the two new water supply contracts that commenced in February and July of 2019 with the Water Authority Cayman at a lower per gallon and the contracts they replaced. And our bulk segment revenue also decreased due to a decline in revenue of approximately $1.5 million for our Bahamas operation, which arose from lower energy prices, which correspondingly reduced the energy pass-through component of Cedar Bahamas rates. The decrease in our manufacturing segment revenue was due to a decrease in orders in the fourth quarter of 2020. Gross profit for the full year of 2020 was $26.8 million, or 36.9% of revenue, compared to $28.3 million, or 41.1% of revenue in 2019. This decline was largely attributable to decreased revenue generated by our retail water segment, and to a lesser extent, the bulk of manufacturing segments. For 2020, net income attributable to consolidated water shareholders was $3.7 million, which equates to $0.24 per fully diluted share as compared to $12.2 million or $0.80 per fully diluted share in 2019. Now turning to our financial condition, our accounts receivable balances related to our Bahamas business amounted to $16.8 million as of December 31, 2020 as compared to $18.4 million for the same time of the previous year. Historically, CW Bahamas has experienced delays in collecting its accounts receivables from the Water and Sewage Corporation of the Bahamas. When these delays have occurred, we hold discussions and meetings with representatives of the Water and Sewage Corporation and the Bahamas government. As a result, payment schedules are developed for WSC's delinquent accounts receivable. All previous delinquent accounts receivable from the WSC were eventually paid in full. As a result, we have never been required to provide an allowance for doubtful accounts for a Bahamian We believe that the delays we have experienced in collecting CW Bahamas receivables were initially extended due to the impact of Hurricane Doria, which devastated the northern Bahamas in September 2019. And those delays have been further extended as a result of the economic impact of the pandemic on the Bahamas government's revenue sources. We eventually, CW Bahamas accounts receivables will eventually be collected in full. As of December 31, 2020, our cash and cash equivalents total $43.8 million and working capital of $66 million. Our projected liquidity requirements for 2021 include capital expenditures for existing operations of about $6.3 million and about $1.3 million for dividends. Our liquidity requirements may also include future quarterly dividends, and such dividends are declared by our Board. Our dividend payments amounted to approximately $5.1 million for the year ended December 31, 2020. That summarizes this brief discussion of our financial results, and I'd like to turn the call back over to Rick. Thanks, David.