Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Company's second quarter 2025 operating and financial results. Hosting the call today is the Chief Executive Officer of Consolidated Water, Rick McTigheR, and the company's Chief Financial Officer, Davis Kuffman. Following their remarks, we will 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 continue today's call, I will provide some important questions regarding the forward-looking statements made by the management during the call. I would like to remind everyone that today's call is being recorded and it will be made available for telecom replay. Please see the inspections and yesterday's press release that has been posted to the investment relations section of the company's website. Now, I would like to turn the call over to Consolidated Water's CEO, Rick McTigheR. Sir, please go ahead.

Thank you, Steve. Good morning, everyone. Thank you for joining us today to discuss our financial and operating results for our second quarter of 2025. As mentioned in our press release issue yesterday, our diversified water business model encompassing regulated utility, O&M services, and manufacturing performed well this past quarter with low revenues increasing by 3% and fully diluted earnings per share from continuing operations increasing by 23% compared to the same quarter of last year. The retail and manufacturing segments in particular reported quarter over quarter revenue increases of 6% and 33% respectively. Retail water sales in our exclusive utility service area on Grand Cayman were higher than the previous year primarily due to reduced rainfall during this past quarter. Manufacturing revenue and operating income rose due to increased production and higher margin products. Recent tariffs enacted by the United States government have not materially impacted our manufacturing business. Our Caribbean-based bulk water segment revenue declined slightly this past quarter due to lower fuel pasture charges. However, bulk profitability rose both in dollar terms and gross profits per strategy as a result of improved plant efficiency and reduced operating costs. Our service and segment revenue decreased in the second quarter of 2025 compared with the previous year largely due to the completion of the pilot plant testing phase of the Hawaii project which resulted in a decrease in project expenditures pending commencement of the construction phase of the project. This reduction was partially offset by higher revenue from recurring operations and maintenance contracts in both California and Colorado. In April, the Honolulu Board of Water Supply or BWS, our client on our multi-year seawater desalination project in Hawaii, approved our pilot test reports and recommendations and concluded that the desalinated water we produced during the piloting phase is a reasonable match to their existing water supply. And further that desalinated water from the new plant would not cause any detrimental impact to their distribution pipes or customer assets. So this significant milestone in the project paved the way to begin construction once final design approval and the requisite permits have been obtained. In June, we submitted our 90% design for the project to BWS and very shortly afterwards received comments from their engineer and various consultants. We are currently addressing these comments and plan to submit our responses shortly in keeping with the project schedule so that should advance the design process. We presently expect to begin construction of this project early next year once BWS issues a notice to proceed with construction. And on a cautionary note, some of the permits required before construction can start must be obtained by our client and are therefore outside of our control. And delays in obtaining any of these permits could also delay the construction start date. The construction phase of the Hawaii project is expected to generate the largest portion of revenue from this project and once commenced will be a major growth driver for our services segment in 2026 and 2027. Now before getting more into recent developments and our outlook for the year, I would like to turn the call over to our CFO, David Faffnet, who will take us through the financial details for the quarter.

Thank you, Rick. Good morning, everyone. Thank you for joining us today. I'll go through some of the numbers we mentioned earlier in more detail here. Our revenue totaled $33.6 million for this quarter, which is up 3% from the second quarter last year. And this is the revenue increases for both our retail and manufacturing segments. Our retail revenue was up $456,000 due to the 7% increase in the volume of water sold. And we attribute that volume increase to lower rainfall. And now it's on Grand Caymans for the second quarter of this year as compared to last year. Our bulk segment revenue actually decreased rightly to $8.3 million. But this is due to a decline in energy costs for C of the Bahamas that reduced the energy pass-through components of the waterways that we charge. Our services segment revenues decreased by $474,000 due to plant construction revenue that decreased from $4 million in the second quarter of last year to $2.8 million in the second quarter of this year. This decrease in construction revenue was a result of a $1 million increase in the revenue we recognized for the right project. This was due to the completion of the pilot grant testing phase of the project, which resulted in a decrease in project expenditures pending commencement of the construction phase of the project. Recurring services segment revenue generated under our OEM contracts totaled $8.3 million in the second quarter of this year, which represents an increase of 70% over the previous year. Those per ANRAC, our Colorado subsidiary, increased our OEM revenue this second quarter compared to the second quarter of 2024. Our manufacturing segment revenue increased by $1.3 million, or 33%, to $5.2 million in the second quarter of last year as a result of increased production activity. Our gross profit for the second quarter of 2025 was $12.8 million, or 38% of total revenue as compared to $11.6 million, or 36% of total revenue in the second quarter of 2024. The increase in gross profit both in dollars and in terms of gross profit percentage was due to increases in the retail and manufacturing segment, as well as decreased relative to operating costs for our bulk sector. Debt income for continuing operations attributable to consolidated order stockholders for the second quarter of 2025 was $5.2 million, or 32 cents per million each year, as compared to debt income of $4.2 million, or 26 cents per million each year in the second quarter of 2024. This decrease in debt income in EPS from 2024 to 2005 was due to our discontinued operations, including our discontinued operations. Debt income attributable to consolidated order stockholders for the second quarter of 2025 was $5.1 million, or 32 cents per million each year, as compared to debt income of $15.9 million, or 99 cents per million each year in the second quarter of 2024. This decrease in debt income in EPS from 2024 to 2005 was due to our discontinued operations, as we recognized again on the sale of the land and project documentation for our discontinued project in Mexico that totaled $12.1 million in the second quarter of last year. Prior to our balance sheet, our cash and cash credits continued to grow to total approximately $112.2 million as of June 30th, and our working capital was $137.4 million as of that date, and our stockholder's equity grew to $216.6 million. Our projected equity requirements for the balance of this year include capital expenditures for our existing operations of approximately $85 million. This includes $1.5 million to be incurred in 2025 for new used domination plants, to be built for the World Trade Corporation of the Bahamas on Cat Island, and $700,000 for the expansion of Ericsson's Manufacturing Facility, which is almost complete. We increased our quarterly cash dividend and declared a dividend of $0.14 per share for the third quarter this year. This third quarter dividend of $0.14 per share represents an increase of 27% from the previous dividend of this year, and we paid out approximately $2.3 million in dividends from July. Our future liquidity requirements also include quarterly dividends, such as dividends declared by the Board, and we continue to evaluate how to best utilize our large cash balance and ample liquidity to increase shareholder value. And this completes our funding for details for the quarter, and I'll turn the call back over to Rick.