Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Co.'s first quarter 2022 results. Hosting the call today is the Chief Executive Officer of Consolidated Water Co., Ruth McTaggart, and the company's Chief Financial Officer, David Sasnett. Following the remarks, we'll open the call to your questions. At any time during the call, you may join the Q&A queue by pressing star then 1 on your telephone keypad. Should you need operator assistance, please press star then zero to summons the operator. 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 it will be made available for telecom replay per the 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.'s CEO, Rick McTaggart. Please go ahead, sir.

Thank you, Chad, and good morning, everyone. Thanks for joining us today. As you saw in our earnings release issued yesterday evening, our first quarter of 2022 showed great improvements across three of our four business segments, specifically our retail, bulk, and services segments. Unfortunately, the results of our manufacturing segment came in below last year's levels, largely due to adverse global economic conditions, including but not limited to increasing raw materials prices, increasing human resource costs, tight labor markets, and extended and unexpected delays in the procurement and delivery of raw materials and equipment. We believe these adverse global economic conditions have also resulted in product order delays from our existing and prospective customers. However, as I mentioned, we made strong progress in other areas of our business that bodes well for our future results. Our total revenue for the first quarter increased 14% to $19.6 million. This top-line growth helped increase net income from continuing operations attributable to our stockholders by 79%. reaching $2.3 million or $0.15 per share. Our retail segment revenue increased by $602,000 which was the result of increased tourism activity due to the easing of travel restrictions to Grand Cayman for vaccinated travelers which occurred earlier this year. Our bulk segment revenue increased by $1.1 million and bulk segment operating income increased by $638,000. Our services segment revenue increased by $1.2 million, with operating income up for that segment by $231,000. During the quarter, we announced two major contract awards. The first award was to our California-based subsidiary, Perk Water, to design an advanced wastewater recycling facility in Goodyear, Arizona. This project is progressing as planned. and positively impacted this past quarter's financial results. This win also gives us the opportunity to negotiate with the client to construct the facility. The second project win was awarded to us to provide manufacturing and installation services for the refurbishment of the 20 million gallon per day groundwater treatment facility in Florida in Port St. Lucie. This project is ongoing but has been delayed due to site conditions, and this could result in an expanded project scope for us with these site condition changes. We believe our in-house manufacturing capabilities also provided us a competitive advantage in our recent bid for a project to design, build, and operate a new 2.64 million gallon per day Seawater Desalination Plant in Georgetown Grand Cayman. Earlier this week, we announced that we were awarded this project, which we expect to generate about $20 million in revenue over the 11 and a half year term of the contract. The majority of this revenue is expected to be generated by the construction and sale of the plant to our client during the first 18 months. Winning this contract was the result of our many years of experience designing, building, and operating some of the most energy-efficient seawater desalination plants in the world. And we believe the energy efficiency that we bid was key in our win for this project. We believe desalination is key to alleviating global water scarcity, and especially in the arid southwestern United States. where they need to take immediate steps to diversify their shrinking water sources by implementing drought-proof water resources like desalination. Water scarcity is also a pressing international concern. According to the World Data Labs Water Scarcity Clock, 2.4 billion people are currently living in water-deficient regions, and experts predict that this will reach 2.7 billion by 2030. Now, before I talk more about our progress across our business segments and the outlook for 2022, I'd like to turn the call over to David, who will take us through the financial details for the quarter.

Thanks, Rick, and good morning, everyone, and thanks for joining us this morning. Yesterday, we issued our earnings release for the first quarter of 2022, which you can find and the investor section of our website. Looking back over the quarter, we were encouraged by the return of tourism to the Cayman Islands via air and sea and the improvements we showed in two of our other business segments. However, our manufacturing business continues to face significant challenges as a result of the current economic environment around the world, most notably rising costs and supply chain constraints. But despite these challenges, we've maintained a strong financial condition as we pursue new opportunities and we've continued to pay meaningful dividends. We've reported that revenue totaled $19.6 million in the first quarter of 2022, an increase of 14% from the same year-ago period. The growth reflects increases of $602,000 in our retail segment revenue, $1.1 million in our bulk segment revenue, and $1.2 million in our services segment revenue. This was partially offset by a decrease of $455,000 in manufacturing segment revenue. As Rick mentioned, the increase in our retail revenue was due to the resumption of tourism to the Cayman Islands last quarter. This generated an 8% increase in the volume of water sold by our Cayman Water subsidiary. And we would hope and expect that over the course of 2002, we will continue to report increases in the volume of water sold by our retail segment when you compare it to 2021 and 2020. And eventually, we expect the tourism levels on Grand Cayman to return to normalcy. We just don't know when that will be, but hopefully sooner rather than later. The increase in bulk segment revenue is attributable to the higher energy pass-through charges to our customer, the Water and Sewage Corporation in the Bahamas, which were caused by higher costs for electricity and fuel that we used to power our desalination plant. bulk segment revenues increased to a lesser extent due to a 6% increase in the volume of water sold to our customer in the Bahamas. The increase in our service segment revenue is attributable to revenue from new design bill projects and operating contracts. The decrease in manufacturing segment revenue was due in part to contract delays requested by certain customers as well as The continuing unexpected delivery days are delays of raw materials and equipment. Our gross profit for the first quarter of 2022 was $7.1 million or 36.5% of revenue. This compares to $6.1 million or 35.8% of revenue in the same year-ago period. Our net income from continuing operations attributable to stockholders of Consolidated Water for the first quarter of 2022 was $2.3 million, or $0.15 per basic and diluted share. This is up from net income of $1.3 million, or $0.08 per basic and diluted share, for the same quarter of 2021. Net income attributable to Consolidated Water stockholders for the first quarter of 2022, which includes the results of discontinued operations, and others. This was up from net income of $989,000 or $0.06 per share the first quarter of 2021. Moving from our results of operations to our balance sheet, our accounts receivable balances related to our CW Bahamas business amounted to $21.2 million as of March 31, 2022. This was down slightly from the $21.5 million at the end of 2021. These receivables are due from the Water and Sewage Corporation of the Bahamas, and historically, all delinquent accounts receivable from the Water and Sewage Corporation have been paid in full to us, including the interest we charge on those receivables. In February of this year, we received a payment schedule from the Bahamas government pursuant to which the government plans to reduce C.W. Bahamas delinquent accounts receivables over the course of 2022 with the intention of eventually bringing all of CW Bahamas receivables from the Water and Sewage Corporation to current status. As of March 31, 2022, our cash equivalents totaled $43.1 million. Working capital was $70.9 million. We had debt of only around $200,000, and our stockholders' equity totaled $158.2 million. So with this, I'd like to turn things back over to Rick.