GEORGE TOWN, Cayman Islands, B.W.I., Nov. 17, 2003 -- Consolidated Water Co. Ltd., which develops and operates seawater conversion plants and water distribution systems in areas where natural supplies of drinking (i.e., potable) water are scarce, has reported higher revenue and net income for the third quarter and first nine months of 2003.
For the three months ended September 30, 2003, the Company's revenue increased 72% to approximately $5.0 million, compared with $2.9 million in the third quarter of 2002. Net income rose 85% to $1,121,298, or $0.20 per diluted share, in the most recent quarter, from $604,769, or $0.15 per diluted share, in the year-earlier period.
The weighted average number of fully-diluted shares outstanding increased 39% to 5,676,375 in the third quarter of 2003, compared with 4,095,369 in the prior-year quarter, reflecting the issuance of shares in a public stock offering in July 2003 and shares issued in conjunction with acquisitions completed during the past twelve months.
Revenue for the nine months ended September 30, 2003 increased 46% to a record $13.7 million, compared with $9.4 million in the corresponding period of the previous year. Net income increased 34% to $3,149,579, or $0.66 per diluted share, versus $2,342,528, or $0.57 per diluted share, in the prior-year period. The weighted average number of fully-diluted shares outstanding increased 17% to 4,770,941 in the first nine months of 2003, compared with 4,081,489 in the nine months ended September 30, 2002, for the reasons discussed above.
"Our recent acquisitions of Waterfields Company Limited, which operates a seawater conversion plant in Nassau, Bahamas, and Ocean Conversion (Cayman) Limited, propelled bulk water sales sharply higher in the most recent quarter, more than offsetting flat retail water sales in the Cayman Islands and a decline in bulk water sales in Belize," commented Rick McTaggart, President of Consolidated Water Co. Ltd. "Specifically, bulk water sales totaled $2.1 million in the most recent quarter, compared with less than $400,000 in the prior-year period, and we recorded $290,857 in service revenue that was contributed by operations that were part of the DesalCo Limited acquisition last February."
"Our gross profit margin improved modestly, to 41.6% of revenue, in the third quarter of 2003, from 41.2% a year earlier, as a lower cost of sales in our Retail operations more than offset the impact upon gross margin of higher than normal maintenance costs at our Belize bulk water production facilities," continued McTaggart.
"General and administrative expenses rose at a faster rate than revenue during the most recent quarter, due primarily to the amortization of financing fees, higher insurance premiums, and office and staff costs. We expect to reduce general and administrative expenses as we continue to assimilate the administrative functions of our recent acquisitions. The successful completion of a secondary stock offering in July allowed us to repay a bridge loan, thus reducing third quarter interest expense relative to second quarter levels, and we should incur no further amortization of fees related to such financing in the future."
"Despite higher general and administrative costs associated with acquisitions, and the impact of continued softness in Caribbean tourism upon our Retail operations in the Cayman Islands, we are pleased with the 85% improvement in net income and 33% gain in diluted earnings per share in the third quarter, and we expect an even more favorable earnings comparison in the quarter ending December 31, 2003," observed Jeffrey M. Parker, Chairman and Chief Executive Officer of the Company.
"For the full year 2003, we expect to achieve record diluted earnings per share of $0.85 to $0.90 per diluted share, on revenue approaching $20 million. This is somewhat less than our previous guidance of $1.00 to $1.05 per diluted share for the year. The shortfall is due in part to the completion of our acquisition of Waterfields Company effective August 1, 2003 rather than June 30th, as anticipated when we issued such guidance, and to lower selling prices in Belize under our new 23-year contract with the public water authority on Ambergris Caye. Such lower selling prices will continue to impact net earnings in the first half of 2004, following which plant upgrades, allowing for more efficient operations, should be completed."
"The Bahamas Government recently announced the need for up to 6.0 million additional gallons of desalinated water per day on the island of New Providence, the most populated island in the Bahamas, and we intend to seek approval for an expansion in the capacity of our existing 2.6 million gallon-per-day (US) Nassau plant and to bid on any new facilities, in order to supply the island with a greater portion of its water requirements. Currently New Providence must import by barge a significant amount of its potable water from other islands."
On October 31, 2003, the Company paid a quarterly cash dividend of $0.105 to shareholders of record on September 30, 2003. The Company has consistently paid dividends to owners of its common and redeemable preferred shares since 1985. The Company's Board of Directors has established a policy, but not a binding obligation, that it will seek to maintain a dividend payout ratio in the range of 50% to 60% of net income. While this policy is subject to modification by the Board of Directors, management expects the Company to continue increasing its cash dividends, if earnings and cash flows continue to grow.
The Company will host an investor conference call at 11:30 am EST today, November 17, 2003, to discuss its operating results for the most recent quarter, the outlook for the future, and related issues. To participate in the conference call, please dial 800-915-4836 (U.S.A. & Canada) or 973-317-5319 (Other Callers) a few minutes before 11:30 a.m. EST. A replay of the conference call will be available until November 24, 2003, by dialing 800-428-6051 (973-709-2089 for international callers) and entering the Access ID number 311678.
Consolidated Water Co. Ltd. is engaged in the development and operation of seawater conversion plants and/or water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. The Company currently operates water production and/or distribution facilities in the Cayman Islands, the British Virgin Islands, Barbados, Belize and the Commonwealth of the Bahamas.
The common stock of Consolidated Water Co. Ltd. is traded on the Nasdaq National Market under the symbol "CWCO". Additional information on the Company is available on its website at http://www.cwco.com .
