Consolidated Water Co. Ltd.

Good morning, everyone, and welcome. Thank you for joining us to discuss Consolidated Water Company's full year 2023 results. Hosting the call today is Chief Executive Officer of Consolidated Water Company, Rick McTaggart, and the company's Chief Financial Officer, David Tasman. Following the remarks, we'll open the call for your questions. At any time during the call, you may join the question and answer queue by pressing star and one on your keypad. If you would like to withdraw your questions, you may press star and two. 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 for 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 floor over to Consolidated Water Company CEO, Rick McTaggart. Sir, please go ahead.

Thank you, Jamie. Good morning, everyone. Thank you for joining us today to discuss our results for 2023. It's only fitting that 2023, which was our 50th year in business, was also the most successful year in the history of the company. In our press release issued yesterday, we reported revenue of more than 180 million with gross profit of almost 62 million. Revenue was up across all four of our business segments. Our retail water segment benefited from higher numbers of tourist visitors on Grand Cayman compared to 2022, which was lower than historical levels due to the pandemic. Our services segment revenue increased by $69.1 million in 2023, with much of that increase generated by construction of the $81 million water recycling plant for Liberty Utilities in Goodyear, Arizona. We successfully managed cost on this project and delivered it to the client much faster than expected, resulting in improved gross margins in our services segment. On January 12th of this year, we received a substantial completion certificate from the client, which was 18 days ahead of schedule. On March 19th, we received the approval of construction certificate from the county regulator, which was achieved 42 days ahead of schedule. We anticipate generating additional revenue from this project until it is fully completed in June of this year. FERC's strong operating performance and revenue growth continues to significantly improve 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 of this important segment of our business. In our U.S. desalination business, We commenced work in the fourth quarter on site investigations, engineering, permitting, and public outreach in accordance with our contract to design, build, operate, and maintain a 1.7 MGD seawater desalination plant in Oahu, Hawaii. Already this year, we have installed the seawater desalination and post-treatment pilot plants which use feed water from our clients' wells on the site. We are currently commissioning the pilot plant and will operate it for several months to collect detailed operating data that is required for final design and permitting of the full-scale project. This project includes a two-year development phase, two-year construction phase, and 20-year operating phase. with two potential five-year operating phase extensions at the client's option. Our U.S. footprint continued to expand in Q4 with the acquisition of Ramey Environmental Compliance, or REC. REC operates and maintains water and wastewater treatment plants and provides technical services to more than 100 clients in the Mountain and Eastern Plains regions of Colorado. and its business is very similar to that of PERC's O&M business. Now, before discussing more about recent developments and our outlook for the rest of this year, I'd like to turn the call over to our CFO, David Sassnett, who will take us through the financial details for 2023.

Thanks, Rick. Good morning, everyone. Our 2023 revenue totaled $180.2 million, and that represents a 92% increase from the revenue we generated in 2022. This increase was driven by revenue increases in all four of our business segments. Our retail segment was up 4.2 million, our bulk segment revenue increased 1.6 million, our services segment posted an increase in revenue of 69.1 million, and our manufacturing segment increased its revenue from last year by 11.2 million. Our retail revenue increased primarily due to a 15% increase in the volume of water we sold during the year, primarily due to increased tourism in Grand Cayman. This is especially encouraging because we didn't see a decrease in rainfall patterns there, so we think this increase bodes well for the future. Our bulk segment revenue increased primarily due to an increase in the price of the energy for CW Bahamas, which increased the energy pass-through component of CW Bahamas rates. The increase in our services segment revenue was due to an increase in plant construction revenue and O&M revenue. We recognized approximately $64.0 million in revenue for the year from the construction of the water treatment plant for Liberty Utilities in Goodyear, Arizona, and we also generated approximately $8.2 million in revenue from the construction of the new plant for the Water Authority in Grand Cayman. The revenue we generated under our operations and maintenance contracts totaled $19.4 million for 2023, which was up 37% from the $14.2 million of O&M revenue we recognized in 2022. Since acquiring PERC, the growth of our O&M business has been a strategic initiative of ours. This revenue is very stable, consistent, doesn't require an outlay of capital expenditures It's something that PERC does, we think, very well. They have a lot of expertise in this area. And we'll continue to focus on growing our O&M revenue as we move into 2024 and thereafter. Our manufacturing segment revenue increased due to increased production activity. Gross profit for the full year of 2023 was $61.9 million, or 34.4% of total revenue. as compared to $30.4 million or 32.3% of total revenue in 2022. The gross profit and gross margin improvement for 2023 reflects higher revenue, more profitable projects, and a focus on cost control. Net income from continuing operations attributable to consolidated water shareholders for the full year of 2023 was $30.7 million, $1.93 per diluted share. This compares to net income of $8.2 million or $0.54 per diluted share for 2022. Net income attributable to consolidated water stockholders for the full year of 2023, which includes the results of our discontinued operations, was $29.6 million or $1.86 per fully diluted share. This represents an increase from the net income of $5.9 million or $0.38 per fully diluted share that we posted for 2022. Now looking at our balance sheet and financial condition, our cash and cash equivalents totaled $42.6 million as of December 31st, 2023, and our working capital reached $88.8 million. Our debt was only $400,000, and our stockholders' equity was $186.8 million. As evidenced by these numbers, we continue to maintain ample levels of liquidity and credit capacity and an extremely solid financial condition. Our projected liquidity requirements for 2024 include capital expenditures for existing operations of approximately $9.5 million. This includes $2.8 million to be incurred in 2024 for our new West Bay plan as we bring additional production capacity online at this recently completed addition to our retail operations in Grand Cayman. We paid approximately $5.5 million in dividends in 2023, and we paid approximately $1.6 million in dividends for the first quarter of 2024. Our future liquidity requirements may also include any future potential dividends declared by our board. This completes our financial summary for the year. I now turn the call back over to Rick. Thank you, David.