Consolidated Water NASDAQ: CWCO reported lower first-quarter revenue and earnings as weaker manufacturing activity and wetter weather in Grand Cayman weighed on results, while management pointed to continued growth in bulk water and operations-and-maintenance services.
Chief Executive Officer Rick McTaggart said consolidated revenue declined in the quarter because of revenue decreases in the company’s manufacturing and retail segments. Manufacturing revenue was lower due to the timing and receipt of new purchase orders compared with the prior year, when a large purchase order received in late 2024 benefited first-quarter 2025 revenue. Retail revenue was affected by significantly wetter weather in Grand Cayman, which reduced the volume of water sold by 10.2%.
McTaggart said the retail decline was partially offset by “record-breaking tourism” in the Cayman Islands during the quarter, while the company’s bulk and services segments continued to grow.
Revenue Falls as Manufacturing, Retail Decline
Chief Financial Officer David W. Sasnett said first-quarter 2026 revenue totaled $30 million, down 11% from the first quarter of 2025. The decrease reflected a $4.4 million decline in manufacturing revenue and an $834,000 decline in retail revenue. Those decreases were partially offset by a $333,000 increase in bulk segment revenue and a $1.2 million increase in services segment revenue.
Retail revenue declined because of the 10.2% decrease in water volume sold, which Sasnett attributed to greater rainfall on Grand Cayman compared with the first quarter of 2025, when rainfall was well below historical norms.
Bulk revenue increased slightly, primarily because of new revenue from CW Bahamas’ Cat Island plant. McTaggart said one of two new desalination plants on Cat Island is contributing to results, and the second plant is expected to be commissioned during the current quarter.
Services revenue rose primarily due to operations-and-maintenance contract revenue, which totaled $8.9 million in the first quarter, up 15% from the prior-year period. Sasnett said part of the increase came from a new three-year contract with a Southern California municipal client signed by PERC in November. McTaggart said that contract is expected to generate approximately $4.5 million in revenue over three years. Sasnett also noted that about $500,000 of the O&M increase came from additional construction work and maintenance services completed for an O&M contract that expired at the end of March 2026.
Manufacturing revenue fell 76% to $1.4 million. Sasnett said the decline reflected a lower dollar volume of new purchase orders and, to a lesser extent, the timing of new orders and commencement of work. He said the company currently expects full-year 2026 manufacturing revenue to be below 2025, which he described as a record year for the segment.
Profit and Balance Sheet
Gross profit was $10.9 million, or 36% of total revenue, compared with $12.3 million, or 37% of revenue, in the first quarter of 2025. Sasnett attributed the decline to lower retail and manufacturing revenue.
Net income from continuing operations attributable to Consolidated Water shareholders was $3.8 million, or $0.24 per diluted share, compared with $4.9 million, or $0.31 per diluted share, in the prior-year quarter. Including discontinued operations, net income attributable to shareholders was $3.8 million, or $0.23 per diluted share, compared with $4.8 million, or $0.30 per diluted share, a year earlier.
As of March 31, 2026, cash and cash equivalents totaled $126.3 million, working capital was $144.3 million and stockholders’ equity was $223.6 million. Sasnett said the company had no significant outstanding debt. He also said projected liquidity requirements for the remainder of 2026 include about $8.6 million in capital expenditures for existing operations. Consolidated Water paid approximately $2.3 million in dividends in April.
C&W Bahamas accounts receivable increased to $23.9 million at March 31 from $20.7 million at Dec. 31, 2025. Sasnett said the company remains in frequent contact with Bahamas government officials, who continue to express an intention to significantly reduce delinquent receivable balances, though the company cannot determine if or when that reduction will occur.
Tourism, Cayman License and Retail Outlook
McTaggart said Cayman Islands demand is affected by tourism and rainfall. Stayover visitor arrivals rose 11.1% in the first quarter compared with the prior-year period, and March 2026 was the best month for visitation in the island’s history, he said. He added that tourism officials indicated April stayover numbers were also expected to be strong, though official figures had not yet been reported.
McTaggart noted that Cayman Airways is scheduled to begin seasonal nonstop service between Grand Cayman and Austin, Texas, on May 24, and that two major hotels in Grand Cayman are adding room inventory. He said lower rainfall in April 2026 compared with April 2025 should support second-quarter retail water sales volumes.
Regarding the Cayman Water utility license, McTaggart said the company received a new concession from the government in February 2025 that maintains the terms of its 1990 license until a new license from OfReg is negotiated and enacted. He said negotiations have been more active than in prior quarters but remain ongoing.
Project Pipeline and Hawaii Desalination Plant
Management said several U.S. growth opportunities remain active. McTaggart said the company sees a strong market for manufacturing products and services, particularly municipal water projects in Florida. He said evolving Florida water supply regulations and policies are pushing utilities toward alternative sources such as deeper, more brackish groundwater, which often require membrane-based treatment such as reverse osmosis.
McTaggart said some manufacturing capacity this year will be used to produce seawater reverse osmosis units and piping for the company’s Hawaii project. Accounting rules require Hawaii-related manufacturing revenue to be eliminated in consolidation, though he said it will eventually be recognized through the services segment as that project advances.
PERC is progressing on two previously announced water treatment plant construction projects: a $3.9 million drinking water plant expansion in Colorado and an $11.7 million wastewater recycling plant in Northern California. McTaggart said more than $13 million of remaining revenue from those projects is expected to be recognized primarily in 2026.
In Hawaii, McTaggart said construction service revenue is expected to remain below the record achieved in 2023 until construction begins on the 1.7 million gallon-per-day desalination plant in Kalaeloa for the Honolulu Board of Water Supply. He said the company continues to work through permitting, respond to regulatory inquiries and coordinate with the water board. While he said Consolidated Water still cannot provide a firm construction start date, the company has made progress on a key permit and continues to anticipate construction will begin later this year.
During the question-and-answer session, McTaggart said the Hawaii delay relates to one permit that is a prerequisite for other permits. He said the company does not see other problems and has not been told to make changes to the project.
Management Points to Long-Term Water Demand
McTaggart said the company remains focused on opportunities tied to water scarcity, advanced treatment, reuse and desalination. He said Consolidated Water’s balance sheet positions it to pursue desalination and water infrastructure opportunities in the Caribbean and North America, along with potential acquisitions or partnerships.
He also said the company is “actively looking at acquisitions” to help replicate PERC’s design-build business in the Florida market. Management said it expects its diversified operations, including Grand Cayman retail, Caribbean bulk water, U.S. manufacturing, design-build and O&M services, to support long-term growth.
About Consolidated Water NASDAQ: CWCO
Consolidated Water 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.
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