Consolidated Water Q2 2026 Earnings Report

Consolidated Water EPS Results

• Actual EPS: $0.25
• Consensus EPS: $0.20
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Consolidated Water Revenue Results

• Actual Revenue: $32.87 million
• Expected Revenue: $30.60 million
• Beat/Miss: Beat by +$2.27 million
• YoY Revenue Growth: N/A

Consolidated Water Announcement Details

• Quarter: Q2 2026
• Date: 8/10/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 11:00AM ET

Consolidated Water (NASDAQ:CWCO) Co. Ltd. is a developer, operator and manufacturer of water treatment and desalination systems. The company designs, engineers, builds and operates reverse-osmosis desalination plants and water treatment facilities, offering both turnkey project delivery and ongoing operations and maintenance services. Its product portfolio includes modular desalination units, water distribution systems, filtration membranes and associated equipment for potable water production.

Consolidated Water serves municipalities, resorts, commercial enterprises and private customers in the Caribbean and the southeastern United States. Its operating facilities supply potable water in the Bahamas, the Cayman Islands, the British Virgin Islands and the U.S. Virgin Islands. In Florida, the company provides design‐build delivery and maintenance services for municipal and industrial water systems, leveraging its experience with island and coastal water challenges.

Founded in the early 20th century in Nassau, Bahamas, Consolidated Water began as a local utility and has since expanded into an international water‐solutions provider. The company completed its initial public offering in 1994 and trades on the NASDAQ under the symbol CWCO. Headquartered in Nassau with regional offices in the United States, Consolidated Water is led by an experienced management team focused on reliable, sustainable water production and infrastructure development.

Consolidated Water Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Second-quarter revenue fell 2% year over year to $32.9 million, while net income declined to $3.9 million, or $0.24 per diluted share, from $5.1 million, or $0.32, primarily because of weaker manufacturing results.
• Negative Sentiment: Manufacturing revenue dropped 49% to $2.7 million, and management expects full-year 2026 manufacturing revenue to remain below 2025’s record level; services O&M revenue also declined after two contracts expired.
• Positive Sentiment: The company reported growth in retail, bulk, and construction services, including a 20% increase in bulk revenue and contributions from two new Cat Island desalination plants. A new three-year Southern California O&M contract is expected to generate approximately $4.5 million.
• Positive Sentiment: Management highlighted a strong forward pipeline, including $10.1 million of Florida municipal equipment orders scheduled for delivery in November 2027 and a limited notice to proceed for roughly $6 million of long-lead procurement for the Hawaii desalination project.
• Neutral Sentiment: Consolidated Water received a new 25-year Grand Cayman retail water license, providing regulatory certainty but reducing average customer water costs by about 6.5%; the Hawaii project still faces permitting hurdles, with construction only cautiously expected to begin by year-end.

Presentation

[Operator]

Good morning. Thank you for joining us today to discuss Consolidated Water Company's second quarter of 2026 operating and financial results. Hosting the call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart, and the company's Chief Accounting Officer, Douglas Vizzini. 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 one on your telephone keypad. Before we conclude today's call, I will provide some important cautions regarding the forward-looking statements made by 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 instructions 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 Water CEO, Rick McTaggart.

[Operator]

Sir, please go ahead.

[Rick McTaggart, CEO at Consolidated Water]

Thanks, Nick. Good morning, everyone. I appreciate you joining us today. While our consolidated second quarter revenue reflected softness in manufacturing, we were pleased to see growth across our retail, bulk, and services segments, along with some important developments that support our outlook for the balance of this year and into 2027. Retail revenue increased modestly despite wetter weather, which reduced Grand Cayman water sales volume by 2%. The increase in retail revenue is driven by a base water rate increase for a major non-potable water customer, and this was following the May 2026 expiration of its concessionary water purchase agreement. Our bulk revenue increased 20% and bulk gross profit increased 27%, mainly due to higher energy pass-through charges by our Bahamas company. Results also benefited from two new Cat Island desalination plants, which are supplying potable water to the Water and Sewerage Corporation of The Bahamas.

[Rick McTaggart, CEO at Consolidated Water]

Cost reductions lowered G&A expenses across our retail, bulk, and service segments. In our services segment, those savings were offset by higher cost of revenue due to a greater mix of construction revenue and a lower proportion of higher margin O&M design and consulting revenue in our services segment. Services O&M revenue declined after two contracts expired in Q1 of this year. This decline was partially offset by a new Southern California municipal O&M contract that is expected to generate approximately $4.5 million over three years. In our services segment, construction revenue increased, driven by two previously announced water treatment projects, one in Colorado, which is a $3.9 million drinking water plant expansion, and the second $11.7 million wastewater recycling plant in California. Both projects are scheduled for substantial completion this year.

[Rick McTaggart, CEO at Consolidated Water]

In July, our Hawaii client issued a limited notice to proceed for our project to design, construct, operate, and maintain a 1.7 million gallon per day seawater desalination plant in Kalaeloa, Hawaii. This limited notice to proceed authorizes us to begin procuring certain long lead materials and equipment for the project with the value of approximately $6 million. Communications and information exchanges with important permitting agencies have recently increased in Hawaii, which supports our expectation that construction on this project will start later this year. Once construction starts, we believe the project will significantly contribute to revenue and earnings growth in future periods. Subsequent to the end of the second quarter, we announced the receipt of purchase orders totaling approximately $10.1 million for municipal water treatment equipment in Florida.

[Rick McTaggart, CEO at Consolidated Water]

These purchase orders represent our largest municipal membrane equipment order in dollar terms and our largest horizontal cartridge filter order to date, demonstrating the strength and breadth of our manufacturing capabilities. Before getting into recent developments and our outlook for the rest of the year and beyond, I would like to note that our Chief Financial Officer, David Sasnett, who normally joins us on these calls, is unable to participate today as he's recovering from the flu. In his place, I will turn the call over to our Chief Accounting Officer, Doug Vizzini, who will take us through the financial details for the quarter.

[Douglas Vizzini, Chief Accounting Officer at Consolidated Water]

Thanks, Rick. Good morning, everyone, and thank you for joining us today. Our revenue totaled $32.9 million for second quarter of 2026, representing a 2% decrease from the second quarter of 2025. The decrease was due to lower manufacturing revenue, which was partially offset by revenue increases in our retail, bulk, and services segments. Retail revenue was $8.7 million and remained relatively consistent versus the prior quarter, despite an approximate 2% decrease in the volume of water sold. The impact of the lower sales volume was mitigated by a higher rate charged to a major non-potable water customer and an increase in the volume of water sold to that customer. Bulk revenue was $9.9 million, increasing 20% versus the prior quarter, primarily due to higher energy pass-through charges by CW-Bahamas, driven by higher energy costs.

[Douglas Vizzini, Chief Accounting Officer at Consolidated Water]

Bulk revenue also benefited, to a lesser extent, from revenue earned from CW-Bahamas new plans on Cat Island in The Bahamas. Services revenue was $11.6 million, increasing 1% versus the prior quarter due to a higher construction revenue, partially offset by lower O&M revenue following the expiration of contracts with two customers in the first quarter of 2026. Construction revenue increased $2.5 million due to work on two water treatment plant projects. Manufacturing revenue was $2.7 million, decreasing 49% from the prior quarter due to a decrease in the total dollar amount of new purchase orders. Based on our current projections, we continue to believe that manufacturing revenue for the full 2026 year will be less than the manufacturing revenue generated in 2025. Gross profit was $11.0 million, or 33% of total revenue, compared to $12.8 million, or 38% of total revenue in the prior quarter.

[Douglas Vizzini, Chief Accounting Officer at Consolidated Water]

The decrease was primarily due to lower manufacturing gross profit and a change in revenue mix in the services segment. Net income from continuing operations attributable to Consolidated Water stockholders was $4.0 million, or $0.25 per diluted share, compared to $5.2 million, or $0.32 per diluted share in the prior year quarter. Including discontinued operations, net income attributable to Consolidated Water stockholders was $3.9 million, or $0.24 per diluted share, compared to $5.1 million, or $0.32 per diluted share in the second quarter of 2025. Now turning to our balance sheet. Cash and cash equivalents totaled $132.6 million as of June 30, 2026, with working capital of $144.6 million and stockholders' equity attributable to Consolidated Water of $225.6 million. Our balance sheet continues to have no significant debt.

[Douglas Vizzini, Chief Accounting Officer at Consolidated Water]

CW-Bahamas accounts receivable, which represents the majority of our consolidated accounts receivable, decreased to $18.8 million as of June 30, 2026, from $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 are unable to determine when such reduction will occur. Our projected liquidity requirements for the balance of 2026 include capital expenditures for our existing operations of approximately $4.8 million. We also paid approximately $2.3 million in dividends in July 2026, and our liquidity requirements may also include future quarterly dividends if such dividends are declared by our board. We continue to evaluate how to best utilize our strong cash position to increase shareholder value. This completes our financial summary for the quarter.

[Douglas Vizzini, Chief Accounting Officer at Consolidated Water]

Now I'll turn the call back over to Rick.

[Rick McTaggart, CEO at Consolidated Water]

Thank you, Doug. I'll just run through some updates here. During the quarter, we completed negotiations with the Cayman Islands water utility regulator, OfReg, for our retail water utility license in Grand Cayman. We received the new license from OfReg in mid-June, and it became effective on August 1. After so many years of negotiations, this new 25-year license provides certainty to this very important part of our business. The license preserves Cayman Water's exclusive right to produce and distribute potable water to customers in our licensed area and gives us long-term earnings visibility as we continue investing in reliable water infrastructure for residents, businesses, and visitors on Seven Mile Beach and West Bay, Grand Cayman. The new license sets out reduced water rates, base water rates, and an annual inflation-based rate adjustment mechanism that is similar to our previous license.

[Rick McTaggart, CEO at Consolidated Water]

For customers, the new rates are expected to lower the average cost of water per gallon by about 6.5% compared with the prior license. For Consolidated Water, it provides long-term regulatory clarity for a business that has historically been a significant contributor to our revenue and gross profit. The new license comes as Grand Cayman continues to experience strong tourism momentum, a key demand driver for our retail water sales. As mentioned on previous calls, demand for our water in the Cayman Islands is affected by, number one, stayover tourism, and number two, rainfall. The Cayman Islands continued its strong tourism momentum in Q2. Stayover visitations increased year-over-year in April, May, and June.

[Rick McTaggart, CEO at Consolidated Water]

In the first half of 2026, stayover arrivals totaled more than 288,000 visitors, which is up 11.3% from the first half of 2025 and 2.8% above the island's comparable 2019 pre-COVID level. A local newspaper has reported that if current trends continue, 2026 could set a new annual stayover tourism record. This growth has been supported by strong North American tourism demand, expanded airlift, including a new direct flight from Austin, Texas, and new hotel inventory in Cayman. Looking ahead, public tourism announcements point to a positive outlook for the balance of 2026. While the weather is always difficult to predict, the Cayman Islands National Weather Service has indicated a greater than 70% probability of below average rainfall during this current wet season. If this prediction is realized, those conditions could provide an additional driver for retail water demand this year.

[Rick McTaggart, CEO at Consolidated Water]

We were pleased with the performance of our Caribbean-based bulk businesses, which remain a stable source of long-term recurring revenue. During the quarter, bulk results benefited from our two new desalination plants on Cat Island in The Bahamas that supply potable water to the Water and Sewerage Corporation of The Bahamas. The first facility was commissioned in December last year, and the second in April this year, so the quarter reflected contributions from both plants. Turning to manufacturing, we still expect, as Doug mentioned earlier, full year 2026 results to fall below last year's record level, but current backlog and recent order activity that we mentioned earlier gives us confidence that manufacturing revenue can improve in future quarters. In particular, the orders we have received in the active municipal market in Florida support a strong outlook for 2027.

[Rick McTaggart, CEO at Consolidated Water]

This outlook is supported in part by the $10.1 million purchase orders we received last month for a municipal water treatment project in Florida, with delivery currently scheduled for November of 2027. We continue to see an active market for our products and services, particularly with municipal projects in Florida. The key driver is the growing need for membrane-based treatment systems as utilities look to alternative water sources, including brackish groundwater, to meet long-term supply needs and drinking water requirements. Our extensive experience manufacturing large-scale membrane-based water treatment systems, combined with our Fort Pierce, Florida, manufacturing location, positions us well to capitalize on growth opportunities in the Florida market, which we believe will benefit 2026 and 2027 performance. As mentioned earlier, our construction revenue increased $2.5 million due to work on two previously announced construction projects, both of which are scheduled to be substantially completed this year.

[Rick McTaggart, CEO at Consolidated Water]

The Colorado drinking water plant expansion has been a good entry point for us in that market with a current O&M customer and helps position us for additional design-build opportunities in the future. Although new O&M and design-build opportunities in California are not as active as they were over the last two to three years, we continue to pursue some very attractive opportunities, some of which are larger than previous projects we've done in California. As I mentioned on past earnings conference calls, our customized design report or CDR program remains an important business development tool for identifying and advancing potential design-build and O&M opportunities. Through the CDR process, we prepare comprehensive project-specific plans that incorporate life cycle costs, schedule, and performance metrics, helping prospective clients evaluate project scope, cost, schedule, and water quality certainty before committing to construction.

[Rick McTaggart, CEO at Consolidated Water]

In Arizona, we have several CDRs outstanding with residential developers and are broadening our CDR sales effort to include industrial clients. Based on recent developments I mentioned at the beginning of the call, we remain cautiously optimistic that construction of the Hawaii project will begin before the end of this year. The limited notice to proceed with the procurement of long lead equipment should help reduce potential scheduling pressure and allow the project to move forward more efficiently once the required permits are in place. The recent uptick in communications and information exchanges with key regulatory authorities in Hawaii supports our cautious optimism. Looking ahead, we feel very good about where we are today. Our Grand Cayman retail operations, recurring Caribbean bulk water revenue, and expanding opportunities across U.S. manufacturing, design-build, and O&M markets gives us multiple ways to grow.

[Rick McTaggart, CEO at Consolidated Water]

With strong demand for reliable water infrastructure and a healthy balance sheet, we believe we are well positioned to continue creating value for our shareholders. To support this growth, we also strengthened our leadership team with the appointment of Sachin Chawla as our Senior Vice President of Business Development. Sachin brings meaningful experience across water infrastructure and treatment markets, and we believe he can help us identify and advance additional opportunities in desalination, water reuse, industrial water, and other areas where our technical and operating expertise is highly relevant. Our strong balance sheet gives us the flexibility to move decisively on desalination and water infrastructure opportunities across all of our markets, while also evaluating strategic acquisitions and partnerships that could accelerate growth. Now with that, Nick, I'd like to open the call up for questions.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. At this time, we'll pause momentarily to assemble the roster. The first question will come from Gerry Sweeney with ROTH Capital. Please go ahead.

[Gerry Sweeney, Analyst at ROTH Capital]

Good morning, Rick. Thanks for taking my call.

[Rick McTaggart, CEO at Consolidated Water]

Yeah, sure, Gerry.

[Gerry Sweeney, Analyst at ROTH Capital]

I know you touched upon it in your prepared remarks around the Hawaii Desal project, but my understanding, I believe it is just the one permit, the archaeological permit, that is maybe the last gate to getting the project going. You did mention increased talks, I think, with regulatory agencies. But I was curious if you would just give any more detail, if possible, is that the last permit? Is that the gating factor? Any additional information on maybe when that permit can be received.

[Rick McTaggart, CEO at Consolidated Water]

Yeah, sure, Gerry. Just to clarify, it is not the last permit. That is sort of a linchpin sort of permit, and it prevents us at the moment from applying for other important permits because you have to have that archaeological permit in place. We are discussing ways to proceed with the applications on some of the other permits we need with the blessing of the archaeological regulator. Yeah, it is definitely not the last one we need, but we have to have that as a prerequisite for some other permits.

[Gerry Sweeney, Analyst at ROTH Capital]

I got you. The other permits are sort of, for lack of a better term, standard construction permits that are normal in any of these type of projects. Is that fair to say?

[Rick McTaggart, CEO at Consolidated Water]

Yeah, some of them are. Other ones are with, I think, the drinking water regulator there in Hawaii. So, we're looking at ways similar to the limited notice to proceed. We're looking at ways to speed up the process without suffering further delays because of this linchpin permit delay.

[Gerry Sweeney, Analyst at ROTH Capital]

Got it. Switching gears to manufacturing, obviously nice win for the Florida membrane project. Just curious as to opportunities maybe even outside of Florida, how the market is developing and potential opportunities.

[Rick McTaggart, CEO at Consolidated Water]

Yeah, we're definitely looking at the West Coast, because we have PERC out there, and they get involved in some projects that require the types of piping and equipment that Aerex manufactures. So, we're looking at other states as well that have the sorts of membrane-based treatment systems, like Texas, that may need equipment that Aerex manufactures. So I think the main point is that Florida's really busy right now. I don't know. I think there's a lot of work there, so it's not vital that we look elsewhere for work. We try to get it when we can, but the state's very busy, and we have excellent relationships with the consulting engineers and the people that are driving these projects, so.

[Gerry Sweeney, Analyst at ROTH Capital]

Got it. Makes sense. Finally, maybe just on the O&M front, obviously that's a nice recurring type revenue. Curious as to the market opportunity on that front. I think it got a little bit more competitive in the past year or two, but any commentary would be appreciated. Thank you.

[Rick McTaggart, CEO at Consolidated Water]

Sorry, just the first couple lines that you said. What was the basis of the question?

[Gerry Sweeney, Analyst at ROTH Capital]

The O&M market.

[Rick McTaggart, CEO at Consolidated Water]

Okay.

[Gerry Sweeney, Analyst at ROTH Capital]

How it is developing.

[Rick McTaggart, CEO at Consolidated Water]

There are some big O&M opportunities in California. There are not a lot of them, but there are certainly some things that are coming up that are of a lot of interest to us. As I mentioned in the remarks, much larger than what we currently do there. It will be a bit of a challenge to land these jobs. You have a lot of competition out there now. There are companies that were not involved in O&M that are now engineering companies that are in our market, so we will do our best. We think that we have a better value proposition being a smaller company, less overheads. It is just a matter of getting qualified for some of these larger projects, which we think we can do.

[Gerry Sweeney, Analyst at ROTH Capital]

Got it. Great. I appreciate it. I will jump back in line. Thanks.

[Rick McTaggart, CEO at Consolidated Water]

Yep.

[Operator]

Again, if you have a question, please press star and then one. Please stand by as we poll for questions. Showing no further questions, this will conclude our question and answer session. I would like to now turn the call back over to Mr. McTaggart. Sir, please go ahead.

[Rick McTaggart, CEO at Consolidated Water]

Thanks, Nick. Just like to, again, thank everybody for joining us today, and I look forward to speaking with you again in November when we release our Q3 results. Take care.

[Operator]

Thank you. Before we conclude today's call, I would like to provide the company's Safe Harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes statements that may constitute forward-looking statements, usually containing the words believe, estimate, project, intend, expect, should, will, or other similar expressions.

[Operator]

These forward-looking statements include, but are not limited to, statements regarding the anticipated construction schedule and completion of the Kalaeloa desalination facility, the effect of permitting delays on that schedule, the companies and the Honolulu Board of Water Supply's efforts to mitigate those delays, the company's ability to perform its design, build, operate, and maintain obligations with respect to the Kalaeloa facility, including the anticipated 20-year operating term and any exercise of the related extension options, and the company's ability to design, fabricate, and deliver the Florida purchase orders on the anticipated schedule, including by November 2027. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

[Operator]

For more information about risks and uncertainties associated with the company's business, please refer to the management discussion and analysis of financial condition and results of operations and risk factors sections of the company's SEC filings, including but not limited to its annual reports on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting the company's secretary at the company's executive offices or at the Investors-SEC Filings page of the company's website at ir.cwco.com/docs. Except as otherwise required by law, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Any forward-looking statements made during the conference call speaks as of today's date.

[Operator]

The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions, or circumstances of which any forward-looking statement is based, except as required by law. I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday's earnings release for dial-in replay instructions available via the company's website at cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.

Participants

Executives

• Rick McTaggart, CEO
• Douglas Vizzini, Chief Accounting Officer

Analysts

• Gerry Sweeney, Analyst at ROTH Capital