Earnings Beat at Consolidated Water - Analyst Blog


Consolidated Water Co. Ltd. ( CWCO ) announced first quarter 2013 adjusted earnings per share of 26 cents, up 60% from the year-ago earnings. Earnings also beat the Zacks Consensus Estimate by a substantial 73.3%.

The earnings upside reflects the company's effective cost-control efforts and the proceeds from the British Virgin Islands (:BVI) government contract for water supplied to the Island of Tortola from the Baughers Bay facility.

Total Revenue

In contrast to earnings, Consolidated Water's revenue in the first quarter was slightly disappointing. The top line declined marginally to $16.6 million from $16.7 million in the prior-year period. This was due to a combined drop in Retail and Bulk water revenues partially offset by increased Services revenues.

Reported quarter revenue nevertheless surpassed the Zacks Consensus Estimate by 3.8%.

Operational Update

Revenue from the Retail water segment decreased 3% year over year to $6.4 million due to a 5% drop in water volume sales. Bulk water revenues also followed suit and shrank 2% year over year to $9.9 million. This was mainly on account of a 6% fall in water sales partly owing to the termination of the Lower Valley Plant contract.

On the other hand, Services revenues (including gains from management fees earned with respect to Ocean Conversion Ltd. (OCI) and stock sales to OCI-BVI) performed well, increasing to $0.3 million from $0.1 million.

Consolidated Water's total cost of revenues witnessed a 4.1% reduction to $10.3 million from the year-ago quarter. This was mainly due to deceleration in costs from the Retail and Bulk water businesses.

Gross profit jumped 5% year over year to $6.2 million on account of the substantial cost decrease overriding the slight decline in revenues.

Interest expenses in the first quarter were $0.13 million versus $0.4 million in the comparable year-ago quarter.

Financial Highlights

Consolidated Water's cash & cash equivalents increased 5.8% to $35.9 million as of Mar 31, 2013 from $33.9 million as of Dec 31, 2012.

Long-term debt declined as of Mar 31, 2013 to $4.8 million from $5.2 million as of Dec 31, 2012.

Consolidated Water's current ratio ranged from 7.4-to-1 indicating the company is well positioned to pay off its debt obligations.

Other Water Utility Releases

American States Water Company ( AWR ) reported first quarter 2013 earnings of 69 cents, exceeding the Zacks Consensus Estimate by 38%.

Aqua America, Inc. ( WTR ) posted first quarter 2013 earnings of 29 cents per share, outpacing the Zacks Consensus Estimate of 27 cents per share.

American Water Works Company Inc. ( AWK ) recorded earnings of 32 cents in the first quarter 2013, which trailed the Zacks Consensus Estimate by 5.9%.

Our View

Consolidated Water registered healthy earnings growth for the second time in a row by beating our expectations in the first quarter.

The company's operational start-up of the reverse osmosis desalination plant in Bali, Indonesia will certainly give its earnings stream a boost. Another of Consolidated Water's large-scale desalination plant in Mexico is progressing well and is expected to augment returns in the future.

Currently, Consolidated Water carries a Zacks Rank #3 (Hold). Based in Grand Cayman, Cayman Islands, the company through its subsidiaries, develops and operates seawater desalination plants and water distribution systems.

AMER WATER WORK (AWK): Free Stock Analysis Report

AMER STATES WTR (AWR): Free Stock Analysis Report

CONSOLTD WATER (CWCO): Free Stock Analysis Report

AQUA AMER INC (WTR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AWK , AWR , CWCO , WTR



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