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- 1. Corporate Presentation November2019 NASDAQ:CWCO
- 2. NASDAQ:CWCO Important Cautions RegardingForward-Looking Statements This presentation includes statements that may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "intend", "expect", "should", "will" or similar expressions. These 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. Factors that would cause or contribute to such differences include, but are not limited to (i) continued acceptance of the company's products and services in the marketplace;(ii) changes in its relationships with the governments of the jurisdictions in which it operates; (iii) the outcome of its negotiations with the Cayman government regarding a new retail license agreement; (iv) its ability to complete the project under development in Baja California, Mexico; (v) the future financial performance of its subsidiary that manufactures water treatment-related systems and products and provides design, engineering, management, operating and other services applicable to commercial, municipal and industrial water production; (vi) the collection of its delinquent accounts receivable in the Bahamas; (vii) its ability to integrate and profitably operate recently acquired subsidiary PERC Water Corporation; and (viii) various other risks, as detailed in the company's periodic report filings with the Securities and Exchange Commission (“SEC”). For more information about risks and uncertainties associated with the company’s business, please refer to the “Management’s 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 report 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 http://ir.cwco.com/docs/. Except as otherwise required by law, the company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. © Consolidated Water Co. Ltd. 2019 All Rights Reserved. Product of CMA. 110819 2
- 3. NASDAQ:CWCO Key Stats (NASDAQ:CWCO) 3 Revenue GrowthStock Price (11/8/19) $17.14 52 Week Low-High $10.76 - $17.87 Avg. Vol. (3-mo.) 62,710 Shares Outstanding 15.0M Public Free Float (est.) 95% Insider Holdings (est.) 5% Institutional Holdings 56% Market Cap $258M Enterprise Value $216M Total Revenue ttm $69.2M Gross Profit ttm $28.5M Net Income ttm $12.9M Net Income Margin ttm 19% Cash @ 9/30/19 $42.0M Total Assets $182.8M Total Debt $0.0M Total Liabilities $9.8M Dividend Yield 1.9% Book Value per Common Share $10.89 Founded 1973 U.S. IPO 1995 Full-time Employees 108 3 ttm = Trailing twelve months ended September 30, 2019 Sources: Nasdaq.com, Yahoo! Finance, and company estimates ($millions) $55.3M $59.4M $65.7M $69.2M 2016 2017 2018 TTM Services Manufacturing Bulk Retail Revenue excludes CW-Belize which was sold in February 2019.
- 4. NASDAQ:CWCO Who We Are •Develop and operate advanced water supply and treatment plants and water distribution systems • Focused on areas of the world where freshwater supplies are limited or non-existent • 25.6 million gallons per day produced by 12 plants in three countries—primarily in the Caribbean/Bahamas 1 • Equipment manufacturer & service provider for municipal water treatment and industrial water/wastewater treatment in the U.S. • Long-term engagements protect margins, generate recurring revenue • Pursuing both organic and acquisitive growth strategies, while providing shareholders solid dividend yield 41) Production capacity of retail, bulk and affiliate operations as of December 31, 2018, excluding Belize which was sold in February 2019 and CW-Bali which was sold in June 2019.
- 5. NASDAQ:CWCO $16.4B $37.6B 17 18 1920 21 22 23 24 25 26 5 Global Opportunity for Desalination • Market to double by 2026, reaching $37.6 billion @ 9.5% CAGR • 1,700+ desalination plants globally, more being commissioned • Multiple catalysts for desalination market growth: • Shrinking/limited fresh water resources • Adverse environment changes • Growing populations • Increasing fresh water prices • Improving regulatory and tax environments • Market maturing in Middle East, Africa, Southern Europe, and some parts of the Caribbean • However, huge potential in developing and highly- populated regions of Asia Pacific and Latin America Source: Credence Research Sep 2018 Global Desalination Market Growth
- 6. NASDAQ:CWCO We Address thisOpportunity through Four Operating Segments Retail Water Bulk Water Manufacturing Services Cayman Islands: Exclusive government license to operate as a water utility. Produce and supply water to residential, commercial and government customers. Serve two of the three most populated and rapidly developing areas on Grand Cayman Island. Retail TTM revenue: $26.7M or 39% of total revenue. Cayman Islands & The Bahamas: We produce and supply water to government- owned distributors. British Virgin Islands: We own 43.53% of the equity rights of Ocean Conversion (BVI) Ltd., which produces and supplies bulk water to the British Virgin Islands Water & Sewerage Department. Bulk TTM revenue: $28.6M or 41% of total revenue. Manufacture and service a wide range of water-related products. Design, engineer, manage, operate, and provide other services for commercial, municipal and industrial water production, supply and treatment. Substantially all customers are U.S. companies. Manufacturing TTM revenue: $12.9M or 19% of total revenue. Plant construction, management and operating services. Services TTM revenue: $1.0M or 2% of total revenue. 6TTM = Trailing twelve months ended September 30, 2019
- 7. NASDAQ:CWCO 7 Global Presence British VirginIslands 2 Plants, 0.8M gal./day The Bahamas 3 Plants, 14.9M gal./day Aerex Industries Ft. Pierce, FL Cayman Islands 7 Plants, 9.9M gal./day Rosarito, Mexico (In Development) 1 Plant, 50.0M + 50.0M gal./day US Office Coral Springs, FL Overview Countries of Operation: 4 Plants in Operation: 12 Gallons per Day, current: 25.6M 1 Plants Under Development: 1 Additional Gallons per Day in development: 100M We focus on Areas of the World Where Freshwater Supplies are Limited or Non-Existent 1) Production capacity of retail, bulk and affiliate operations as of December 31, 2018, excluding Belize which was sold in February 2019 and CW-Bali which was sold in June 2019. PERC Water Corporation Costa Mesa, CA
- 8. NASDAQ:CWCO 8 Desalination: How itWorks Intake Water sourced directly from the ocean or from seawater well. Reverse Osmosis Process Semi-permeable membrane breaks connection between salt and water molecules by rejecting the salt. Pretreatment Filtered to remove suspended particles (sand, grit, algae) and chemicals (hydrocarbons). Desalination Water pumped through special membrane. Removes >99% dissolved solids (salt, minerals), bacteria, and viruses. 40% conversion from salt to fresh water. Waste Brine discharged in environmentally responsible manner into ocean or deep injection well. Post-treatment Water chlorinated and pH adjusted as needed. Minerals can be added to match taste of existing water supply. To the Public Potable water stored and released to municipal customers (bulk segment) or distributed through our utility directly to end users (retail segment).
- 9. NASDAQ:CWCO We operateplants and water distribution systems for our commercial & industrial customers, as well as those of other companies. Our experience and know-how ultimately reduces the cost of water. We provide financing for our projects as requested by our customers. Allows us to provide the full-turn key solution, even the financing. 45 years’ experience building plants and distribution systems, and delivering specialized water equipment. Fast-tracked construction schedules. Specialized manu- facturing capabilities. Turn-key solutions for areas with limited fresh water supply. Proven, highly efficient engineering design derived from operating experience. Extensive design experience by top water engineers. Our Value Proposition 9
- 10. NASDAQ:CWCO 10 Aerex Industries • Acquired51% interest in Aerex Industries in February 2016 • OEM (original equipment manufacturer) and service provider for municipal water treatment and industrial water/wastewater treatment • Provides a platform to penetrate the lucrative U.S. water and wastewater market • Diversifies revenue sources
- 11. NASDAQ:CWCO 11 Competitive Advantages 45years of broad industry experience Can design, build and operate highly energy-efficient plants Ability to provide “Turn-Key” water treatment and distribution solutions Operating margins protected by long-term water supply contracts with inflation and energy cost hedges Specialized manufacturing expertise (Aerex) Strong balance sheet ($42.0M cash, no debt)
- 12. NASDAQ:CWCO Net IncomeRevenue GrossProfit 12 Financial Performance ($millions) $23.0M $24.0M $26.7M $28.5M 2016 2017 2018 TTM Services Manufacturing Bulk Retail $55.3M $59.4M $65.7M $69.2M 2016 2017 2018 TTM Services Manufacturing Bulk Retail $4.0M $6.1M $11.3M $12.9M 2016 2017 2018 TTM Dividend Yield: 1.9% TTM = Trailing twelve months ended September 30, 2019 Revenue excludes CW-Belize which was sold in February 2019. Gross profit excludes CW-Belize which was sold in February 2019.
- 13. NASDAQ:CWCO 13 Rosarito Project –Under Development • New major project under development in Rosarito, Baja California, Mexico • 100M gal./day seawater desalination plant • Two development phases of 50M gal./day each • Opportunity to export water to U.S. markets • Financing by third-party non-recourse debt and equity • CWCO will own equity position in the plant • Water to be sold under long-term contract (37 years) • CWCO/Suez JV to also have 40-year O&M (operations & maintenance) contract Rosarito, Baja California
- 14. NASDAQ:CWCO 14 Rosarito Project –Next Steps • State water agency to establish and register various payment trusts, guaranties and bank credit lines • Acquire remaining rights-of-way for the aqueduct • Execute debt and equity agreements • Begin construction
- 15. NASDAQ:CWCO 15 Acquisition Strategy • Targetexisting water treatment-related businesses. • Follow successful approach used in last several transactions. • Primary target is complementary business to base business model: companies that operate advanced water treatment plants for governments or governmental agencies under medium to long term contracts. • Also looking at manufacturing and technology companies, similar to Aerex Industries, that provide a competitive edge to obtain new contracts and/or access to new markets. • Will utilize existing cash and can leverage strong balance sheet if debt is required.
- 16. NASDAQ:CWCO 16 • PERC Wateris an award-winning water infrastructure company headquartered in Costa Mesa, CA. • Develops, designs, builds, operates and manages water and wastewater infrastructure throughout Western U.S. • Strong presence in the Southwest, where water shortages are increasingly prevalent. • Provides a proven platform to expand our core business of designing, constructing and operating desalination plants to water-short regions of the U.S., particularly the Southwest. • Demonstrates strategy to widen our geographical footprint, expand into new markets, and diversify our revenue stream with synergistic product and service offerings. PERC Water Acquisition Expands Product Offerings & Presence in the U.S.
- 17. NASDAQ:CWCO Revenue Growth ($millions) 17 Key Takeaways •Expert in all facets of desalination plants and water distribution systems with decades of experience • Long-term contracts provide recurring revenue stream with margin protection • High-growth global market opportunities • Manufacturing operations diversifies revenue, provides access to U.S. market • PERC acquisition diversifies revenue sources and provides opportunity for further expansion in the U.S. • Favorable organic and acquisitive expansion opportunities • Strong balance sheet supports ability to invest • Rosarito project anticipated to be transformative $55.3M $59.4M $65.7M $69.2M 2016 2017 2018 TTM Dividend Yield: 1.9% Revenue excludes CW-Belize which was sold in February 2019.
- 18. NASDAQ:CWCO 18 Contact Us Investor Relations RonBoth CMA Tel 949.432.7566 CWCO@cma.team U.S. Office: Aquilex, Inc. 5810 Coral Ridge Drive Suite 220 Coral Springs, FL 33076 Tel 954-509-8200 Corporate HQ: Consolidated Water Co. Ltd. Regatta Office Park Windward Three, 4th Floor West Bay Road PO Box 1114 Grand Cayman, KY1-1102 Cayman Islands Tel 345-945-4277 info@cwco.com www.cwco.com NASDAQ:CWCO
- 19. NASDAQ:CWCO Frederick W. McTaggart President,Chief Executive Officer and Director Director of the company since 1998. President since October 2000 and Chief Executive Officer since January 1, 2004. Chief Financial Officer from February 2001 to January 2004. From April 1994 to October 2000, was the Managing Director of the Water Authority-Cayman, the government-owned water utility serving certain areas of the Cayman Islands. BS in Building Construction from the Georgia Institute of Technology. David W. Sasnett EVP and Chief Financial Officer Executive Vice President and Chief Financial Officer since June 2006. Served on Board of Directors from December 2004 through May 2015. March 2014 - April 2015, a member of the Board of Directors of DubLi Inc. Former CFO of VoIP Inc., a publicly traded provider of VoIP communication services. Earlier was VP of Finance and Controller for MasTec, a specialty contractor and infrastructure provider traded on the NYSE. CFO of Catalina Lighting, a NYSE listed manufacturer and distributor of residential lighting from 1996-2002. 12 years at Deloitte & Touche. Certified Public Accountant. John Tonner EVP and Chief Commercial Officer Joined as COO Sept. 2011. Appointed EVP in 2013 and CCO in 2016. Previously president and partner in Water Consultants International, a leading desalination consulting firm. 30 years of engineering experience with reverse osmosis and membrane technology. Has patented reverse osmosis energy recovery techniques. Registered as a Chartered Engineer, Chartered Environmentalist and European Ingenieur. Provided due diligence oversight for the some of the largest desalination projects in Asia, Australia and Middle East. Honors degree in Mechanical Engineering from University of Paisley, Scotland. Ramjeet Jerrybandan EVP of Operations Joined in 1998 as the Operations Engineer in Grand Cayman. Promoted to Operations Manager (Cayman) in 2005, became VP of Overseas Operations in May 2006 and promoted to EVP of Operations in December 2016. Appointed as company secretary in 2013. Hold Bachelor of Science degree in Industrial Engineering and Master of Science degree in Engineering Management from University of the West Indies. Advanced Diploma in Business Administration from the Association of Business Executives of London. Extensive training in Information Technology, including industrial automation systems. Robert B. Morrison VP of Procurement and Logistics VP of Procurement and Logistics since 2010. Previously was purchasing manager at DesalCo Ltd. until Consolidated Water’s acquisition of the company in 2003, when he was appointed VP of Purchasing and IT. A Certified Supply Chain Management Professional, with more than 30 years experience in purchasing and logistics. Earlier was principal Purchasing Officer for the Ministry of Works & Engineering of the Bermuda government, and Purchasing Manager for American-Standard in Toronto, Canada. Armando Averhoff VP of Information Technology Joined Consolidated Water in November of 2010 as Director of Information Technology and was promoted to VP of Information Technology in August 2014. More than 25 years of experience with various aspects of information technology including infrastructure design, networking, servers, application development, ERP systems and computer operations. Previously was IT Director at Arrow Cargo Airlines and Computer Operations Manager at LNR Property Corporation. Brent Brodie VP of Sales and Marketing Appointed Director of Sales and Marketing in September 2010 and promoted to VP of Sales and Marketing in 2012. 12 years’ experience serving in a variety of positions with GE Water and Process Technologies. Most recently as Capital Equipment Sales Manager for the Caribbean region. Responsible for the management of multiple market channels, including Direct Sales, Indirect Distribution, Sales Representatives, Joint Ventures and OEMs. Bachelor of Science in Chemical Engineering from University of Minnesota. Master of Business Administration (Marketing Emphasis) from the University of Michigan. Douglas R. Vizzini VP of Finance Joined in January 2007 as Corporate Controller and promoted to VP of Finance in 2012. 20 years of experience including more than eight years with the accounting firm of Deloitte & Touche, and 10 years as corporate controller for various public companies. Bachelor of Accounting and Master of Science in Taxation from Florida International University and is a Certified Public Accountant. Jamie Bryan VP of Manufacturing Joined in May 2019 as VP of Manufacturing. 22 years’ experience of operational management experience in engineering, manufacturing, plant integration and development, product development, and distribution. Earlier, Bryan assumed increasing responsibilities at a family of manufacturing companies, including a global leader in water distribution and infrastructure products. He also previously served as electrical and mechanical engineer at a national water systems provider, as well as a plant manager for a custom architectural stone manufacturer. Master of Business Administration, a B.S. in Mechanical Engineering and a B.S. in Electrical Engineering from Kent State University. 19 Executive Management Team
- 20. NASDAQ:CWCO 20 Consolidated Balance Sheet September30, December 31, 2019 2018 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 41,991,071 $ 31,337,477 Restricted cash 1,610,471 - Accounts receivable, net 22,955,201 24,228,095 Inventory 3,031,011 2,232,721 Prepaid expenses and other current assets 2,151,903 1,035,796 Current portion of loans receivable - 734,980 Costs and estimated earnings in excess of billings 1,656,392 835,669 Current assets of discontinued operations - 1,959,494 Total current assets 73,396,049 62,364,232 Property, plant and equipment, net 62,106,181 58,880,818 Construction in progress 925,570 6,015,043 Inventory, non-current 4,534,038 4,545,198 Investment in OC-BVI 1,879,448 2,584,987 Goodwill 8,004,597 8,004,597 Land and rights of way held for development 24,161,024 24,161,024 Intangible assets, net 1,331,111 1,891,667 Operating lease right-of-use assets 4,393,737 - Other assets 2,046,090 2,123,999 Long-term assets of discontinued operations - 1,944,033 Total assets $ 182,777,845 $ 172,515,598 LIABILITIES AND EQUITY Current liabilities Accounts payable, accrued expenses and other current liabilities $ 2,152,023 $ 4,570,641 Accrued compensation 1,367,856 1,286,468 Dividends payable 1,290,291 1,286,493 Current maturities of operating leases 647,709 - Billings in excess of costs and estimated earnings - 109,940 Current liabilities of discontinued operations - 646,452 Total current liabilities 5,457,879 7,899,994 Deferred tax liability 494,513 659,874 Noncurrent operating leases 3,809,573 - Other liabilities 75,000 199,827 Total liabilities 9,836,965 8,759,695 Commitments and contingencies Equity Consolidated Water Co. Ltd. stockholders' equity Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 33,751 and 34,796 shares, respectively 20,251 20,878 Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,027,574 and 14,982,906 shares, respectively 9,016,544 8,989,744 Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued - - Additional paid-in capital 87,858,251 87,211,953 Retained earnings 65,847,791 59,298,161 Cumulative translation adjustment - (549,555) Total Consolidated Water Co. Ltd. stockholders' equity 162,742,837 154,971,181 Non-controlling interests 10,198,043 8,784,722 Total equity 172,940,880 163,755,903 Total liabilities and equity $ 182,777,845 $ 172,515,598
Editor's Notes
- #3 Good Morning ladies and gentlemen, Before we get started please take note of this slide regarding forward looking statements you might here today.