Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Co.'s second quarter of 2023 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 question queue by pressing the star key followed by 1 on your telephone keypad. And to remove yourself from the queue, you may 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 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. Sir, please go ahead.

Thank you, Joe, and good morning, everyone. Thanks for joining us today to discuss our results for the second quarter of 2023. It's extremely gratifying for me to mark the company's 50th anniversary this month by reporting record quarterly revenues and earnings. As you saw in our release issued yesterday, we reported 110% increase in revenues to $44.2 million, with revenue up across all four of our business segments. Our top line results reflect increased activity and output by all of our business segments. Our retail water segment benefited from a 14% increase in the volume of water sold in Grand Cayman. We attribute this sales increase to improved tourist activity on Grand Cayman as tourism on the island last year was lower than historical levels due to the lingering impact of the pandemic. Our services segment revenue increased by $19 million in the second quarter, with $17.6 million in revenue from our progress on the construction of the $82 million advanced water treatment plant in Goodyear, Arizona that we announced in May of last year. Construction on that project is progressing as planned, and we anticipate generating significant additional revenue until its construction, commissioning, and Startup is completed in mid-2024. PERC's continued strong operating performance, revenue growth and synergies with other areas of our business have significantly improved our top and bottom line. Its strong operational presence in the southwestern U.S., a region that urgently needs new freshwater sources due to unprecedented drought conditions, has positioned us for further growth in this important segment of our business. In June, we entered into the U.S. desalination market for the first time with a $204 million 20-year contract to design, build, operate, and maintain a seawater desalination plant in Oahu, Hawaii. In all, we secured more than $350 million and more. Thanks, Rick, and good morning, everyone. As Rick mentioned, revenue for the second quarter

This year totaled $44.2 million, which is up 110% when compared to the same quarter of last year. This increase was driven by revenue increases of $1 million in our retail segment, $19 million in our services segment, and $3 million in our manufacturing segment. Our retail water revenue increased primarily due to a 14% increase in the volume of water we sold during the quarter. Our retail revenue also increased as a result of higher energy costs that increased the energy pass-through component of our water rates. The increase in our services segment revenue was due to an increase in plant design and construction revenue. As Rick mentioned, we recognized approximately $17.6 million in revenue in the second quarter of 2023 for the construction of the water treatment plant we discussed previously in Goodyear, Arizona. It's important to know that our segment results benefited this quarter from positive variance in actual construction costs for our design-build projects. These construction projects are originally estimated at a certain level of cost, and what we've seen over the first year or so of the Liberty Utilities contract and other contracts is that our actual construction costs are coming in a little bit less than our estimates, which allowed us to increase our profit recognition, and we got a nice bump This quarter, from the fact that we're doing better than expected, and I think that's a tribute to the quality of the people in our company that both budget these projects but then actually construct them, and they've done a great job at lowering costs from a level that's a little bit lower than what we thought we would incur for these projects. The revenue generated under our operations and maintenance contracts totaled $3.9 million in the second quarter of this year. That's up 11%. from the 3.5 million we recognized on ODEM contracts in the second quarter of 2022. We had an increase for our manufacturing segment revenue that was due to increased production activity. Things have somewhat normalized in the supply chain there and we're able to increase productivity of this segment. We're not having as many issues obtaining raw materials. We still have some and there's still some product delivery delays, but overall conditions have improved for our manufacturing segment. Our gross profit for the second quarter of 2023 was $15.5 million. That's 35% of total revenue. That's up 107% from the $7.5 million or 35.5% of total revenue that we recognized in the second quarter of last year. Net income from continuing operations attributable to stockholders for the second quarter Net Income for the first quarter of 2023 was $7.5 million or $0.47 per diluted share and this compares to net income of $2.7 million or $0.18 per diluted share for the second quarter of 2022. Net income attributable to consolidated water stockholders for the second quarter of 2003 which includes the results of discontinued operations was $7.3 million or $0.46 per fully diluted share. This was up from net income of $2.3 million or $0.15 per full year for the same period of last year. With respect to our balance sheet and our liquidity, we're still in excellent financial condition, very little debt. We have more than ample cash and liquidity. As a matter of fact, cash and cash equivalents total $47.7 million as of the end of June of this year. And our working capital was $75.5 million. We had debt of only $300,000. and our stockholders' equity totaled, I think, it's very impressive, $170.3 million. As of June 30th, our projected liquidity requirements for 2003 include capital expenditures for existing operations of approximately $7.6 million. This includes $600,000 that we expect to incur to replace our West Bay desalination water plant and approximately $4.3 million for construction of the new Red Gate desalination plant on Grand Cayman. We paid approximately $2.6 million in dividends for the first six months of 2023. Of course, our future liquidity requirements may also include any potential future dividends that are declared by our board. And with that, I'd like to turn the call back over to Rick.