Consolidated Water Co. Ltd.

Good morning. Thank you for joining us today to discuss Consolidated Water Company's first quarter of 2026 Operating and Financial Cells. Hosting the call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart, and the Company Chief Financial Officer, David Sassnett. Following the remark, we will open the call to your questions. Before we conclude today's call, I will provide some important caution regarding the forward-looking statement made by management during the call. I would like to remind everyone that today's call has been recorded and it will be made available for telecom replay. Please see the instruction in yesterday's press release that has been posted to the investor relations section of the company's website. Now I would like to turn the call over to Consolidated Waters CEO, Rick McTigert. So please go ahead.

Good morning, everyone. In Q1, consolidated revenue declined due to revenue declines in our manufacturing and retail segments. Manufacturing revenue was lower due to the timing of receipt of new purchase orders for 2026 projects compared to last year. We had received a large purchase order in late 2024, which had favorably impacted our first quarter revenue last year. Retail revenue was impacted by much wetter weather conditions this past quarter, which reduced the water volume we sold in Grand Cayman by 10.2%. This decrease was partially offset by what turned out to be record-breaking tourism in the Cayman Islands during the quarter. However, revenue in our bulk and service segments continued to grow this past quarter, which partially offset the decline in our other two operating segments. Gross profit and operating income in our bulk and services segments also increased, underscoring the stable recurring nature of our Caribbean-based bulk water business and the momentum in our O&M services. Our services segment revenue increase was mainly due to a 15% increase and revenue from O&M contracts. The O&M revenue increase was partially due to revenue from a new municipal client in Southern California, which contracted with us in November last year under a three-year contract that's expected to generate approximately $4.5 million in revenue over the next three years. Now, before getting into more 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 Sassnett, who will take us through the financial details for the quarter.

Our 2026 revenue totaled $30 million. This is down 11% from the first quarter of last year. This revenue decrease was due to declines of $4.4 million in our manufacturing segment revenue and $834,000 in our retail segment revenue. These decreases were partially offset by increases of $333,000 in the bulk segment and $1.2 million in the service segment. Our retail revenue decreased due to a 10.2% decrease in the volume of water sold. The decrease for the Q1 of this year resulted from significantly greater rainfall on Grand Cayman during the quarter, as Q1 2025 rainfall was well below historical norms for the island. The slight increase in our bulk revenue was primarily due to new revenue from CW Bahamas' new Cat Island plant. The increase in services revenue was primarily due to revenue generated under O&M contracts that totaled $8.9 billion for the first quarter of 2026, an increase of 15% from the first quarter of 2025. A portion of the increase in O&M revenue was attributable to the new three-year contract mentioned previously by Rick for a California municipality obtained by PERC in November of last year. In addition, about $500,000 of the O&M revenue increase was due to additional construction work and maintenance services completed in 2026 for an O&M contract that expired at the end of March 2026. Our construction revenue remained relatively consistent at $2.1 million for the first quarter of 2026. Our manufacturing segment revenue decreased by $4.4 million or 76% to $1.4 million. As Rick mentioned, The decrease was due to a decrease in the total dollar volume of new purchase orders and, to a lesser extent, the timing of the receipt and commencement of work on new purchase orders. We feel it important to mention that, based on our current projections, we believe that manufacturing revenue for the full 2026 fiscal year will be less than the manufacturing revenue generated for 2025 fiscal year, which really was a record amount of revenue for our manufacturing segment. Gross profit for 2026 was $10.9 million, or 36% of total revenue, as compared to $12.3 million, or 37% of total revenue, in the first quarter of 2025. The decrease was due to the declines in retail revenue and manufacturing revenue mentioned previously. Net income from continuing operations attributable to consolidated water shareholders in the first quarter of 26 was $3.8 million, or $0.24 per diluted share. These numbers compared to net income of $4.9 million, or $0.313 per diluted share in the first quarter of 2025. And including discontinued operations, net income attributable to consolidated water shareholders for the first quarter of 2026 was 3.8 million or 23 cents per diluted share as compared to net income of 4.8 million or 30 cents per diluted share in the first quarter of 2025. Turning to our balance sheet, during the quarter CW Bahamas accounts receivable balances increased to $23.9 million as of March 31, 2026. That's compared to $20.7 million as of December 31, 2025. 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're unable to determine if or when such reduction will occur. Our cash and cash equivalents totaled $126.3 million as of March 31, 2026. Our working capital grew to $144.3 million, and stockholders' equity has now reached $223.6 million. These amounts represent an $18.5 million increase in cash and an $8.1 billion increase in working capital from the year-ago quarter. Our balance sheet continues to have no significant outstanding debt. Our projected liquidity requirements for the balance of 2026 include capital expenditures for existing operations of approximately $8.6 million. We paid approximately $2.3 million in dividends in April 2026. Our liquidity requirements today 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 to increase shareholder value. So this includes our financial summary for the quarter, and I'll turn the call back over to Rick.