Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Company's first quarter 2021 results. Hosting the call today is the Chief Executive Officer of Consolidated Water Company, Rick McTaggart, and the company's Chief Financial Officer, David Sasnett. Following your remarks, we'll open the call to your questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw from the question queue, please press star then 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 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 section 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, Kate, and good morning, everybody. I hope everyone's well. Our first quarter 2021 results reflect the company's continued focus on expanding our services segment to mitigate the negative effects of the pandemic on some of our other business segments. Our services revenue increased 14% to $3.5 million. which accounted for 21% of our consolidated revenues compared to 15% of our consolidated revenues in the first quarter of 2020. PERF Water produced this growth in our services segment and generated about 70% of its revenue through operations contracts with government entities in California this past quarter. PERC operates and maintains water treatment and reuse facilities under contracted engagements that range from one to five years with varying renewal options. The majority of these contracts have renewal dates beyond 2021. Our retail business segment continued to be adversely affected by the pandemic due to continuing travel restrictions to the Cayman Islands. The Cayman Islands government recently relaxed quarantine and pre-arrival COVID testing requirements for fully vaccinated people arriving to the islands, and we hope that a gradual reopening to tourism will continue in the coming months. As discussed on previous calls, our manufacturing segment revenue declined due to a delay of orders from our former largest customer, and we expect this delay to continue into 2022. Although we continue to build a good manufacturing revenue backlog from new projects and new customers, which we expect to offset some lost revenue from this order delay, most of these new project revenues are expected to impact our results later in the year and into 2022. Before I go further into the company's operations, I'd like to turn the call over to David, who will take us through the financial details for the first quarter of this year.

Thanks, Rick, and good morning, everyone. Our total revenue for the first quarter of 2021 decreased 17.5% to $17.1 million. This decrease reflects decreases of $1.5 million in our retail segment revenue, $194,000 in the bulk segment revenue, and 2.3 million in our manufacturing segment revenue. The decrease in revenue for these segments was partially offset by an increase of about 426,000 in our services segment revenue. The increase in services revenue was due to operating and maintenance contracts attributable to new contracts, which served to more than offset a decline in our plant construction revenue. Our retail revenue declined 20% Excuse me, our retail revenue declined as a result of a 20% decrease in the volume of water we sold on Grand Cayman Island. And as you probably are well aware now, this volume decrease was due to the temporary cessation of tourism on Grand Cayman as all Cayman Island airports and seaports were closed back in March of 2020 in response to the COVID-19 pandemic. The decrease in our bulk segment revenue was attributable to a decrease in consolidated water Bahamas revenue of approximately $166,000, which was due to lower energy prices for the first quarter of this year as compared to the first quarter of last year. These lower energy prices correspondingly decreased the energy pass-through component of CW Bahamas rates. As Rick mentioned earlier, the decrease in the manufacturing segment revenue was due to the loss of orders from Eric's former As we've stated, we hope that this customer will recommence ordering from us early in 2022, although there are no assurances that that will happen. Gross profit for the first quarter of 2021 was $6.1 million, or 35.8% of revenue, as compared to $8.4 million, or 40.7% of revenue, in the first quarter of 2020. This decline in gross profit was largely attributable to decreased revenue generated by our retail water operations and, to a lesser extent, decreased revenue for the bulk and manufacturing segments. Although revenue for our bulk segment decreased, our bulk segment gross profit actually increased 12% to $2.1 million as our repairs and maintenance and other operating costs for this quarter, the first quarter of this year, was less than the same quarter of last year. For the first quarter of 2021, net income attributable to our shareholders was $989,000, or $0.06 per fully diluted share, as compared to $2.9 million, or $0.19 per fully diluted share, for the first quarter of 2020. Now, with respect to our balance sheet and financial condition, our accounts receivable balances related to our Bahamas business continued to increase and amounted to $19.5 million as of March 31, 2021, as compared to $16.8 million as of the end of 2020. As of April 30th, our Bahamas business accounts receivable reached an all-time high of approximately $21.7 million. We believe the growth in these receivable balances results from the severe adverse impact the COVID-19 pandemic has had on the revenue sources for the Bahamas and its government. Although our Bahamian receivables are quite substantial, this is not the first time they have exceeded the $20 million mark in total, and these receivables have always been paid eventually. It's important to note that the Bahamian government has never defaulted on any of our invoices. Based upon this collection history and our discussions with Bahamian government officials, we continue to believe that these accounts receivables are fully collectible. As of March 31, 2021, our cash and cash equivalents totaled $42.8 million, and our working capital was approximately $67.4 million. And we believe we have more than efficient cash and liquidity to continue normal operations while still pursuing our strategic initiatives. Now, with that, I'd like to turn the call back over to Rick.