Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Co.'s third quarter 2021 results. Hosting the call today are 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 by pressing star then 1 on your touch-tone phone. To withdraw your question, 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 of the company's websites. Now I'd like to turn the call over to Consolidated Water Co.'s CEO, Rick McTaggart. Sir, please go ahead.

Thank you, Kate. Good morning, everyone. Thanks for joining us on today's call. I hope everybody is well. During the third quarter, the continued cessation of tourism on Grand Cayman due to COVID-19 resulted in our retail segment revenue growing at only about 5% compared to the same and a year-ago quarter on about 1% higher volume. And these numbers are still well below historical levels because of the border closures in Grand Cayman. However, our bulk water segment revenue increased 13% to $6.9 million, performing better than anticipated. It also increased for the first nine months of 2021 up 8% to $19.8 million. In the third quarter, our manufacturing segment revenue, which is generated by our AirX subsidiary, decreased as a result of reduced orders from a major customer. This was expected from last year, which is why early last year we began strengthening our manufacturing sales team at AirX and focused them on new market sectors to diversify our product mix and customer base. As a result, all of our manufacturing revenue that was recognized in this past quarter was from new customers and or products. And in the first nine months of the year, we generated manufacturing revenue of $3.2 million from new customers and products. Our services revenue increased 6% to $10.5 million in the first nine months of the year, which accounted for 21% of our overall revenue compared to 17% in the same year-ago period. This was driven by growth in our PERC Water subsidiary. Now, before I go further, I'd like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for the quarter.

Thanks, Rick. Good morning, everyone. Thanks for joining us today. As Rick mentioned, we continue to face significant challenges as a result of the current environment. and many more. But despite these challenges, we've maintained our strong financial foundation as we pursue new opportunities and we've continued to pay dividends. Yesterday we issued our quarterly press release, which is available on the investor relations section of our website. We reported that revenue totaled $16.4 million in the third quarter, a decrease of 7% from the same quarter of last year. The decline reflects decreases of $141,000 in services segment revenue and $2.2 million in manufacturing segment revenue. These decreases were partially offset by revenue increases of $254,000 in our retail segment and $807,000 in our bulk segment. Our retail revenue increased due to a 1% increase in the volume of water sold by Cayman Water. The sales volumes for both 2021 and 2020 are significantly below the historical volumes for the retail segment prior to 2020 as a result of the continuing cessation of tourism on Grand Cayman, which is due to the border restrictions initiated in March 2020 in response to the COVID-19 pandemic. The increase in bulk segment revenue was attributable to an increase in energy costs for Consolidated Water Bahamas, which increased the energy pass-through component of CW Bahamas rates. The decrease in services revenue was due to a decline in plant construction revenue of $525,000 which was partially offset by an increase of $385,000 in revenue from operating and maintenance contracts attributable to new customers. The decrease in manufacturing revenue in the third quarter of 2021 was due to the loss of orders from AIREX's former largest customer. We had not yet been successful in replacing this lost revenue. In late July, this customer communicated to AIREX that it expected to recommence its purchases of its specialized product from AIREX in 2022 and in subsequent years. but communicated that such purchases would be at substantially reduced annual amounts as compared to both the amounts it had purchased from Erics in 2020 and prior years, and it was below what we had anticipated they would purchase. Our efforts to replace this revenue previously generated from this customer with revenue from existing and new customers has been adversely impacted by the current economic environment, which has increased raw material costs, resulted in raw material shortages, and extended the delivery times for such materials to AIREX. We have also been adversely affected, excuse me, we believe these shortages in delivery days have also adversely affected the financial condition of AIREX's current and prospective customers. Gross profit for the third quarter of 2021 was $5.7 million or 34.7% of revenues as compared to $6.2 million or 35.2% of revenues in the third quarter of last year. For the third quarter of 2021, net income attributable to Consolidated Water shareholders, which includes the results of discontinued operations, was $286,002 per basic and fully deleted share. With respect to our balance sheet, our accounts receivable balances related to our Bahamas subsidiary amounted to $21.4 million at the end of the third quarter, which was up from the $16.8 million at the end of last year. We believe the delays in collecting CW Bahamas receivables have been extended by the severe adverse impact of COVID-19 on the Bahamas government's revenue sources. Based upon our discussions and collection history with the Bahamas government, we believe our accounts receivables from the WSC are fully collectible. In fact, the Bahamas government and the WSC continue to make intermittent payments on these accounts receivables. Such payments amounted to approximately $6.9 million in the third quarter and 15.6 million in the first nine months of 2021. Furthermore, in October 2021, we received a $2.4 million payment that further reduced these accounts receivables. The possible exception of this liquidity matter relating to CW Bahamas, we're not presently aware of anything that would lead us to believe we will not have sufficient liquidity to meet our needs. As of September 30th, 2021, Our cash and cash equivalents totaled $40.4 million. Our working capital was $69.3 million. We had only $200,000 in debt. And our stockholders' equity totaled $157.4 million. So this completes my financial summary. I'd now like to turn the call back over to Rick.