Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Company's first quarter of 2024 results. Hosting the call today is Chief Executive Officer of Consolidated Water Company, Rick McTaggart, and the company's Chief Financial Officer, David Sassman. Following their 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 keypad. Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by the company during the call. I'd like to remind everyone that today's call is being recorded and 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 Company's CEO, Rick McTaggart. Sir, please go ahead.

Thank you, Rocco, and good morning, everyone. Thank you for joining us today to discuss our results for our first quarter of 2024. As you saw in our press release issued yesterday, we reported a 21% increase in revenue to $39.7 million for the quarter, with substantial growth across three of our four business segments. Our retail water segment benefited from a 10% increase in the volume of retail water sold within our utility service area on Grand Cayman. And we believe this was due to resident population growth and lower rainfall amounts on Grand Cayman during the first quarter of this year compared to the first quarter of 2023. Retail revenues also benefited to a lesser extent from non-recurring water sales to the Water Authority, KMAN, and water truckers during the quarter. Our services segment revenue was $17.4 million this quarter, a 37% or $4.7 million increase compared to last year. This increase resulted from slightly higher design-build revenues and a 93% increase in recurring operating and maintenance revenue generated by PERC and our newest subsidiary, Ramey Environmental Compliance, or REC. During the first quarter, we recognized $1.8 million in operations and maintenance revenue from REC, which we acquired in October of last year. REC's stellar track record and industry reputation provides a very effective new channel for the company to provide design, build, and operation services in water stress regions of Colorado. 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. REC's O&M business is very similar to PERF's. Earthstrong operating performance and revenue growth continues to significantly improve the results of our services segment in our top and bottom line. Its expanding presence in the southwest U.S., a region that urgently needs new freshwater resources due to population growth and continued drought conditions, has positioned us for further growth and development in this important segment of our business. In Hawaii during the quarter, we continued our site investigations, engineering, permitting, and public outreach under our contract to design, construct, operate, and maintain a $150 million seawater desalination plant in Oahu, Hawaii. We're pleased to report that we completed the installation and commissioning of the Hawaii pilot plant during the quarter and on schedule. This pilot plan is collecting the detailed operating data necessary for the final design and permitting of the full-scale project and is scheduled to continue operating well into 2025. The Hawaii project is comprised of a two-year development phase and two-year construction phase, followed by a 20-year operating phase, after which there are two potential five-year operating phase extensions that can be implemented at the client's option. Now, before discussing more about recent developments and our outlook for the rest of the year, I'd like to turn the call over to our CFO, David Sassnett, who will take us through the financial details for the quarter.

David. Thanks, Rick. Thanks, Rick. Good morning, everyone. As Rick mentioned, our retail revenue for the first quarter of 2024 totaled $39.7 million, which represents a 21% increase in the revenue we generated for the first quarter of last year. This increase was driven by revenue increases of $854,000 in our retail segment, $4.7 million in our services segment, and $1.9 million in our manufacturing segment. These increases were partially offset by a decrease of $662,000 and our bulk segment revenue. Our retail revenue increased due to an overall 6% increase in the volume of water we sold during the quarter. However, the volume of water sold to consumers within our retail service area actually increased by 10%, to a record 267.6 million gallons for the quarter. This increase was partially offset by lower sales to the Water Authority Cayman, which purchased water for our retail operations in the first quarter of 2015 and also purchased water in the first quarter of 2024, but to a lesser extent than last year. We believe the increase in volume of water sold within our retail service area was impacted by resident population growth and less rainfall on Grand Cayman in the first quarter of 2024 as compared to the first quarter of 2023. In September of last year, the government of the Cayman Islands reported that results of a labor survey which estimated that the population of the Cayman Islands had increased to more than 83,000 by mid-2023, reflecting a 2.6% increase over the previous 12-month period. Most of this growth has been driven by an increase of more than 10,000 expatriate workers on the islands between December 2021 and June 2023. This government data is consistent with a 2.8% increase in the number of customers, within our retail service area between March 2023 and March 2024. We desalinated and sold more water in the first quarter of 2024 than in any other quarter in the history of our company. Our bulk segment revenue decreased by 7% or $662,000 due to a decrease of 2% in the volume of water sold by our Bahamas subsidiary, as well as lower energy costs that decreased the energy pass-through component of our bulk water rates in the Bahamas. The increase in services segment revenue was due to an increase in both construction revenue and revenue from operations and maintenance contracts. Most notably, revenue generated under operations and maintenance contracts increased 93% to $7.1 million in the first quarter as compared to the first quarter of last year. Included in this $7.1 million increase is approximately $1.8 million generated from our new subsidiary, REC. The remainder of this increase in O&M revenue is attributable to new contracts for PERC. The increase in our manufacturing segment revenue was due to increased production activity. Gross profit in the first quarter was $13.9 million, or 35% of total revenue, which was up 31% from $10.6 million, or 32% of total revenue in the first quarter of last year. Net income attributable to consolidated water stockholders for the first quarter of 2024, which included the results of discontinued operations, was 6.5 million or 40 cents per diluted share. This was up from our net income of 3.8 million or 24 percent per diluted share for the first quarter of 2023. Now turning to the balance sheet and our financial condition, our cash and cash equivalents totaled 46.2 million as of March 31st, 2024, Working capital was $95 million, and our debt was just $333,000. Our total stockholders' equity was $192.1 million. As evidenced by these strong numbers, we continue to maintain ample levels of liquidity and credit capacity and an extremely solid financial condition. Including our working capital as of March 31, 2024, are $25.6 million of accounts receivable due to our CW Bahamas subsidiary from the Water and Sewage Corporation of the Bahamas. During meetings with the Water and Sewage Corporation in March 2024 and with representatives of the Bahamas government in April 2024, we were informed that the Bahamas government intends to reduce CW Bahamas accounts receivable to below $20 million by June 30th and then to below $10 million by the end of this year. Our projected liquidity requirements for the balance of 2024 include capital expenditures for existing operations of approximately $9 million, which includes approximately $2.8 million to be incurred for our new West Bay plant. Our liquidity requirements may also include future quarterly dividends if such dividends are declared by the Board. We paid approximately $1.6 million in dividends in April 2024. And this completes our financial summary. Would that like to turn the call back over to Rick?