Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Company's 2025 Full Year Operating and Financial Results. Hosting this call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart, and the company's Chief Financial Officer, David Sassnett. 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 1 on your keypad. To withdraw your question, you may press star then two. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. Please see the instructions in yesterday's press release that has been posted to the investor relations section of the company's website. Now I'd like to turn the call over to Consolidated Waters CEO, Rick McTaggart. Sir, please go ahead.

Thank you, Chloe. Good morning, everyone. Our retail bulk and manufacturing revenues and operating incomes in 2025 were consistent with our expectations for the year. However, our services revenue did not perform as expected due completely to a permitting delay relating to our 1.7 million gallon per day seawater desalination project in Kalailoa, Hawaii. We believe this type of delay is common for the complex multi-agency permitting process required for the project of this scale and has not been due to any failures on the part of Consolidated Water. In fact, over the past year, we have achieved all other major project milestones under this phase of the Hawaii project, which include successful pilot testing, receipt of confirmation from the Honolulu Board of Water Supply that we are able to produce water that is a reasonable match to the quality of their current water supply, and that we are able to produce water that causes no detrimental impact to the the Board of Water Supplies system or their customers' assets. And then finally, we completed 100% of the design for this project. Achieving these other significant project milestones enables us to begin construction once all permits have been issued. We continue to work closely with the Honolulu Board of Water Supply and the regulatory authorities to advance the permitting process and mitigate schedule impacts. While our total revenue on a consolidated basis was slightly down compared to the previous year, our consolidated gross margin in terms of percentage and dollars improved, and our consolidated net income from continuing operations noticeably increased compared to 2024. Gross profit generated by all four of our business segments increased in terms of percentage, which speaks very well for our attention to efficiency and cost control. Our retail water operations continued to grow in 2025, driven by the strength of the Cayman Islands economy and historically low rainfall in our exclusive utility service area on Grand Cayman. We saw ongoing growth in population and business activity on the island, coupled with very low precipitation, which resulted in a record volume of water sold to a record number of customers in 2025. Although our Caribbean-based bulk segment revenue declined slightly this past year, primarily due to lower fuel-related charges that we passed through to our customers, we achieved higher profitability in dollars and gross profit percentage in this segment. This improvement was driven by lower costs of revenue, reflecting our focus, again, on operational excellence in our Bahamas and Cayman Islands bulk businesses. Our services segment revenue decreased in 2025, primarily due to the completion of two major design build projects in 2024, and the Lowell and Hawaii project activity while awaiting the issuance of a key project permit. And this was subsequent to completion of the pilot plant testing phase of the Hawaii project in early 2025. The services segment revenue decrease is also due to a lesser extent to a decrease in non-recurring consulting revenue. which actually has picked back up in the last quarter. The decrease in services segment construction and consulting revenue was partially offset by a 9% increase in recurring revenue from O&M contracts. This increase in O&M revenue was attributable to incremental revenue generated by both our Perkwater subsidiary and REC in Colorado. and it includes revenue from a new municipal client in Southern California and from additional services provided to a large federal client for the second half of last year under a contract which expires at the end of this month. Our manufacturing segment during the year continued to improve its revenue and gross margin, which reflects the production this past year of primarily higher margin products for companies nuclear power and municipal water clients, as well as our continued focus on maximizing efficiency and throughput of our facility. Completion of our new 17,500 square foot manufacturing facility in the third quarter of 2025 has further enhanced efficiency and throughput and is key to growing that business segment through continued customer and product diversification. And that diversification is occurring primarily in the municipal water client, the municipal section of our business. Now, before getting into recent developments and our outlook for the rest of the year and beyond, I'd like to turn the call over to our CFO, David Sassman, who will take us through the financial details for 2025.

Thanks, Rick. Good morning, everyone. Our 2025 revenue totaled $132.1 million, which is a slight decrease of 1% from 2024. This decrease was primarily due to decreased revenue for our services segment, as well as a modest decrease in the bulk segment revenue. And the decrease was partially offset by revenue increases in the retail segment and in our manufacturing segment. Retail revenue increased 6.6% to $33.6 million due to an 8.3% increase in the volume of water sold to a record 1.09 billion gallons. This increase resulted from significantly lower rainfall, in fact, historically low rainfall on Grand Canyon, and an approximate 7% increase in the number of customer accounts in our license area. Our bulk segment revenue decreased less than 1%, and this decrease was due to a decline in energy prices, which decreased the energy pass-through component of our rates in the Bahamas operations. The decrease in services segment revenue was primarily due to plant construction revenue decreasing from $18.6 million in 2024 to $13.5 million in 2025, and this decrease was the result of $8.2 million of additional revenue from PERC's contract with Liberty Utilities, and $1.3 million in revenue for the Red Gate contract and Grand Cayman in 2024. These contracts were both substantially completed in mid-2024. Construction revenue recognized on the Hawaii project also declined by $2.9 million in 2025 due to completion of the pilot plant testing phase of the project. These decreases in construction revenue were partially offset by construction revenue generated under new contracts. Services segment revenue generated under our O&M contracts totaled 32.1 billion in 2025, which represents an increase of 9% from 2024. The increase was due to incremental revenue generated by both PERC and by REC. Our manufacturing segment revenue increased by 1.1 million or 6% to $18.7 million as compared to $17.6 million in 2024. Our gross profit for 2025 was $48.4 million, which represents 30% of total revenue as compared to $45.6 million or 34% of total revenue in 2024. And this improvement is due to increases in both the retail and manual purchasing statement revenue. Our net income from continuing operations In 2025, it was $18.6 million, or $1.16 per delivered share. This compares to net income of $17.9 million, or $1.12 per delivered share in 2024. Including discontinued operations, our net income accrued to consolidated water shareholders in 2025 was $18.3 million, or $1.14 per delivered share. This compares to net income of $28.2 million, $1.77 per delimited share of 2024. Turning to our balance sheet, during the year, CWB Bahamas accounts receivable balances decreased to $20.7 million as of December 31, 2025, as compared to $28.4 million as of December 31, 2024. This decrease was the result of receiving significant payments in addition to current billings on CWB Bahamas delinquents accounts receivable from the WS state. as of February 28th, this receivable from the WSC amounted to 22.6 million. We continue to be in frequent contact with officials of the Bahamas government who continue to express their intention to significantly reduce CW Bahamas delinquent accounts receivable balances. However, we are presently unable to determine if or when such reduction will occur. Our cash and cash equivalents totaled 123.8 million. as of December 31st, 2025, and our working capital as of that date was $141.9 million, and our stockholders' equity was $221.7 million. The working capital and cash amounts as of December 31st, 2025, represent a $24.4 million increase in cash and a $9.1 million increase in working capital from the prior year end. As we have consistently reported on our calls, our balance sheet currently has no significant outstanding debt. Our projected liquidity requirements for the balance of 2025 include capital expenditures for existing operations of approximately 11.1 million, and this includes approximately 1 million in the first half of 2026 for a project in Bahamas. We increased our quarterly debt cash dividend by 27.3%, to 14 cents per share, beginning in the third quarter of 2025. and we paid approximately 2.3 million in dividends in January of 2026. Our liquidity requirements may also include future quarterly dividends if such dividends are declared by our board. And we continue to evaluate how to best utilize our ample cash balance and outstanding liquidity to increase shareholder value. So this completes our financial summary for the year, and I'll turn the call back over to Rick.