Business Context and Reporting Period
Company: Consolidated Water Co. Ltd. (CWCO)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: The Company supplies potable water, treats wastewater, and provides water-related products and services in the Cayman Islands, The Bahamas, the U.S., and the British Virgin Islands. Operations are divided into Retail, Bulk, Services, and Manufacturing segments.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | 2026 (YTD) | 2025 (YTD) |
|---|---|---|
| Total Revenue | $62,844,062 | $67,306,464 |
| Gross Profit | $21,879,402 | $25,138,272 |
| Gross Margin | 34.8% | 37.3% |
| Net Income (Continuing Ops) | $8,184,185 | $10,397,676 |
| Net Income Attributable to Stockholders | $7,709,175 | $9,887,234 |
| Diluted EPS | $0.48 | $0.62 |
| Cash and Cash Equivalents | $132,629,006 | $112,246,599 |
| Working Capital | $144,638,951 | $141,934,445 |
| Total Debt (Current + Noncurrent) | $20,000 | $73,503 |
Material Changes vs. Prior Period
- Revenue Decline: Consolidated revenue decreased 6.6% year-over-year, primarily driven by a 63% drop in Manufacturing revenue ($4.1M vs. $11.0M) and a 4.5% decline in Retail revenue due to higher rainfall in the Cayman Islands reducing water demand.
- Segment Performance:
- Bulk: Revenue increased 11.9% to $18.7M, driven by higher pass-through energy rates and new plant revenue in The Bahamas.
- Services: Revenue increased 6.1% to $22.8M due to construction projects in Colorado and California, offsetting declines in Operations & Maintenance (O&M) contracts.
- Profitability: Net income attributable to stockholders decreased 22% to $7.7M. Gross margin compressed from 37.3% to 34.8% due to the lower-margin mix of revenue and reduced manufacturing volume.
- Cash Flow: Operating cash flow was $18.6M, a decrease from $20.5M in the prior year, though cash balances increased by $8.9M due to strong collections and lower capital expenditures relative to prior periods.
Guidance, Outlook, and Risks
- New Retail License: On June 18, 2026, the Cayman Islands regulator (OfReg) approved a new 25-year license for Cayman Water, effective August 1, 2026. Management estimates this new rate structure would have reduced revenue and operating income by approximately $1.1M for the first six months of 2026 compared to the prior structure.
- Hawaii Project Delays: The Kalaeloa Desalco project in Hawaii faces permitting delays. While a "Limited Notice to Proceed" was received in July 2026 allowing for $6M in equipment procurement, full construction commencement is deferred. This shifts revenue recognition to future periods.
- Bahamas Liquidity Risk: CW-Bahamas holds $18.8M in accounts receivable from the Water and Sewerage Corporation (WSC), of which 64% is delinquent. While Moody's upgraded The Bahamas' credit rating in April 2026, continued non-payment could materially impact liquidity and require increased credit loss allowances.
- Dividends: The Board declared a quarterly dividend of $0.14 per share, payable July 31, 2026.
Investor Verification Checklist
- Bahamas Receivables: Monitor the collection status of the $18.8M delinquent receivables from the WSC and any potential changes in credit loss provisions.
- Hawaii Permitting: Track the timeline for full permitting approval for the Kalaeloa Desalco plant to assess the impact on future revenue recognition.
- Manufacturing Outlook: Verify if the significant drop in manufacturing purchase orders is a temporary fluctuation or a structural decline in demand.
- License Implementation: Review the actual financial impact of the new Cayman Water license once it becomes effective in August 2026.