Consolidated Water 2025 Q1 Earnings Misses Targets as Net Income Falls 25.4%

Consolidated Water (CWCO) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company’s results surpassed Wall Street expectations, with net income reaching $4.8 million, or $0.30 per share, exceeding the anticipated $0.22 per share. Despite a decrease in services revenue, guidance for the design/build services segment anticipates improvement in the second half of the year, driven by smaller projects under contract. Management remains optimistic about long-term growth prospects.

Revenue
Consolidated Water's total revenue fell by 15.1% in Q1 2025, totaling $33.72 million compared to $39.69 million in Q1 2024. The retail segment reported $9.41 million, reflecting an increase due to higher sales volumes. Bulk revenue slightly rose to $8.41 million. The services segment experienced a significant decline, contributing $10.08 million, while manufacturing revenue grew to $5.81 million. Corporate revenue remained at zero.

Earnings/Net Income
The earnings per share (EPS) for Consolidated Water dropped by 26.8%, reaching $0.30 in Q1 2025 from $0.41 in Q1 2024. The net income similarly decreased, amounting to $4.96 million, down 25.4% from the $6.64 million in Q1 2024. The decline in EPS reflects a challenging quarter for the company.

Price Action
The stock price of Consolidated Water edged up 0.77% during the latest trading day, increased by 2.03% over the most recent full trading week, and decreased by 0.34% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing CWCO stock following a positive earnings surprise and holding it for 30 days has shown promising returns, outperforming the S&P 500. Investors employing this strategy have realized a 12.5% return compared to the S&P 500's 10.0%. This performance indicates a viable approach for investors seeking to capitalize on earnings surprises. The consistent outperformance suggests that Consolidated Water's stock might offer substantial opportunities, especially when revenue exceeds expectations.

CEO Commentary
Consolidated Water Co. Ltd. CEO Rick McTaggart highlighted growth in the retail, bulk, and manufacturing segments in Q1. While services revenue declined due to completed projects, operations and maintenance revenue increased by 9%, reflecting successful scaling. Retail sales benefitted from population growth, and the manufacturing segment experienced a 10% rise, with operating income increasing by 44%.

Guidance
The company anticipates improved design/build services revenue in the latter half of the year, driven by projects under contract. Construction of the $204 million seawater desalination plant in Hawaii is expected to commence early next year, pending permit approvals and client notice.

Additional News
Recently, Consolidated Water announced the achievement of a significant milestone for its $204 million seawater desalination plant project in Hawaii. The Honolulu Board of Water Supply approved pilot test reports, confirming the desalinated water's compatibility with existing supply systems. This approval clears the way for construction to begin once permits are secured. Additionally, the company resumed discussions with the Cayman Islands utility regulator for a new operating license, ensuring continued exclusive rights for water production and supply. Consolidated Water also received a new concession from the Cayman Islands government, securing its position within the service area.