Consolidated Water Co Ltd's Hawaii Permit Delays and Contradictory Nuclear Market Scope in 2025 Earnings Calls

Date of Call: Mar 17, 2026

Financials Results

• Revenue: $132.1 million, a slight decrease of 1% from 2024
• EPS: $1.16 per diluted share (net income from continuing operations), compared to $1.12 per diluted share in 2024. Including discontinued operations, $1.14 per diluted share vs $1.77 per diluted share in 2024
• Gross Margin: 30% of total revenue, compared to 34% in 2024

Guidance:

• Anticipates construction of the Hawaii project will commence later this year, with its construction phase expected to substantially add to revenue and earnings growth in later reporting periods.
• Services segment construction revenue expected to remain below the record achieved in 2023 until Hawaii project construction begins.
• Revenue from new projects ($3.9M in Colorado and $11.7M in California) is expected to be realized primarily this year.
• Municipal water projects in Florida, driven by regulatory changes, are anticipated to contribute to growth in 2027.

Business Commentary:

Retail Water Business Growth:

• Consolidated Water's retail revenue increased 6.6% to $33.6 million, driven by an 8.3% increase in water volume sold to a record 1.09 billion gallons.
• This growth was due to historically low rainfall and increased population and business activity in the Cayman Islands.

Services Segment Revenue Decline:

• The services segment revenue decreased due to a completion of major design build projects and a lull in Hawaii project activity, impacting construction revenue.
• The decrease was also partially offset by a 9% increase in recurring revenue from O&M contracts.

Manufacturing Segment Improvement:

• The manufacturing segment revenue increased by 6% to $18.7 million, reflecting higher margin products and improved efficiency.
• The completion of a new facility expansion in Fort Pierce, Florida, enhanced production capacity and throughput.

Hawaii Desalination Project Delay:

• Revenue recognition for the Hawaii project was delayed due to a permitting issue with the State Historic Preservation Division.
• The company anticipates construction will commence later in the year, with the project expected to significantly contribute to future revenue and earnings growth.

Balance Sheet and Cash Position:

• The company reported cash and cash equivalents of $123.8 million and working capital of $141.9 million, reflecting a significant increase from the previous year.
• With no significant outstanding debt, Consolidated Water has ample liquidity to support future growth initiatives and potential strategic acquisitions.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed satisfaction with continued retail water growth, operational efficiency improvements, and a strengthened balance sheet. Statements include: 'Our retail water operations continued to grow... we saw ongoing growth' and 'Our strong balance sheet enables us to move quickly on desalination and water infrastructure opportunities.' The outlook highlights growth potential from diversified segments and new projects.

Q&A:

• Question from Jerry Sweeney (Roth Capital): Wanted to ask a couple more questions on the Hawaii desal project. Just curious as to what that permit is and who’s responsible for obtaining the permit.
  Response: The specific permit is from the State Historic Preservation Division, required before applying for other building permits. The client is responsible for obtaining it.

• Question from Jerry Sweeney (Roth Capital): Once that is received, then you do have to put in some other building permits, et cetera. Did I understand that correctly?
  Response: Yes, the historic preservation permit is a prerequisite for other permits, which are expected to be more straightforward once design is complete.

• Question from Jerry Sweeney (Roth Capital): You know, best guess, I mean, once the historical permit is achieved, I mean, do you have any idea of how long the other permits take, or is that sort of a little open-ended just because of the nature of permitting?
  Response: Timing is difficult to predict, but construction is expected to start sometime this year.

• Question from Jerry Sweeney (Roth Capital): The other thing I wanted to talk about was just the O&M revenue that ticked back up in the quarter... How does that business look in pipeline and opportunity go for on a go-forward basis look?
  Response: There are several large, competitive O&M opportunities being pursued, particularly in Southern California, where the company's presence and record are seen as advantages.

• Question from Jerry Sweeney (Roth Capital): Obviously, the West Bay facility was completed... I’m just curious as to how much of that water or that 1 million gallons a day is sort of spoken for or gonna be used, if you have a visibility on that.
  Response: Capacity is planned for a 5- to 10-year horizon; immediate usage depends on rainfall and peak demand patterns.

• Question from John Bair (Ascend Wealth Advisors): How quickly are the energy cost recovery increases reflected in your bulk services? Is that on a monthly, quarterly? How does that work?
  Response: Energy cost recovery is monthly, based on the average cost of fuel and electricity billed to clients.

• Question from John Bair (Ascend Wealth Advisors): The next one you mentioned, a federal contract for services that is finishing up at the end of the month, I believe it was. Is that a renewable contract?
  Response: The contract was renewed annually since COVID but was recently given to a neighboring municipal utility without bidding; it was not renewed with the company.

• Question from John Bair (Ascend Wealth Advisors): You said there’s a lot of municipal projects that are out there. Just wondering how much is... the balance between public-private opportunities versus purely the public projects.
  Response: Focus is on solid municipal projects, particularly in Florida due to regulatory changes requiring new drinking water capacity, driving demand for low-pressure RO systems.

• Question from John Bair (Ascend Wealth Advisors): Wondering if there’s any new opportunities, any new market opportunities that are addressable by your manufacturing segment...
  Response: The expanded facility focuses on the municipal RO system market, allowing production of large assemblies and skids for municipal plants, alongside continued demand in the nuclear market.

Contradiction Point 1

Hawaii Project Permit Process and Construction Timeline

Conflicting statements on the critical permit and the certainty of the construction start date.

Jerry Sweeney (Roth Capital) - Jerry Sweeney (Roth Capital)

2025Q4: The delayed permit is related to the State Historic Preservation Division. The client is responsible for obtaining it... Once design is complete (which it is), the next step is receiving regulatory sign-off to proceed with construction permits. - Rick McTaggart(CEO)

For the Hawaii desal project, what specific permit is causing the delay and who is responsible for obtaining it? - Gerard Sweeney (ROTH Capital Partners, LLC)

2025Q3: The archaeological permit is the key and critical one to obtain first... Once all permits are secured, construction is expected to commence early next year. - Frederick McTaggart(CEO)

Contradiction Point 2

Nuclear Market Opportunity Scope and Geography

Contradiction on whether the nuclear market is domestic-only or includes international opportunities.

John Bair (Ascend Wealth Advisors) - John Bair (Ascend Wealth Advisors)

2025Q4: The nuclear market is global. The company's products are used on projects in the U.S., Canada, Japan, and South Korea, among other countries. - Rick McTaggart(CEO)

Is the company's nuclear market opportunity more domestic or global? - John H. Bair (Ascend Wealth Advisors, LLC)

2025Q2: All customers are domestic; the company is qualified by nuclear solution companies to do fabrication work for them... The company does not pursue international work directly... - Frederick W. McTaggart(CEO)

Contradiction Point 3

Hawaii Desal Project Permit Status and Complexity

Contradiction on the number of remaining permits and the complexity of the permitting process.

Jerry Sweeney (Roth Capital) - Jerry Sweeney (Roth Capital)

2025Q4: The delayed permit is related to the State Historic Preservation Division. This permit is a prerequisite for applying for other building and ground clearance permits. While progress is being made, the process is slow and complex. - Rick McTaggart(CEO)

What specific permit is causing delays in the Hawaii desal project, and who is responsible for obtaining it? - Unidentified Participant (Western Standard)

2025Q2: Two main permits remain: the archaeological permit (expected to take time) and final approval for the water supply from the health department. - Frederick W. McTaggart(CEO)

Contradiction Point 4

Permit Responsibility for the Hawaii Desalination Project

Contradiction on who is responsible for obtaining key construction permits.

Jerry Sweeney (Roth Capital), can you provide an overview of the company's financial performance for the quarter? - Jerry Sweeney (Roth Capital)

2025Q4: The delayed permit is related to the State Historic Preservation Division. The client (Honolulu Board of Water Supply) is responsible for obtaining it. - Rick McTaggart(CEO)

What specific permit is causing the delay in the Hawaii desal project, and who is responsible for obtaining it? - Gerry Sweeney (ROTH Capital)

2025Q1: Certain permits (e.g., archaeological studies) are the client's responsibility, while building and construction permits are the company's. - Rick McTaggart(CEO)

Contradiction Point 5

Project Pipeline Focus and Geographic Opportunities

Contradiction on the company's stated geographic focus for new projects.

John Bair (Ascend Wealth Advisors) - John Bair (Ascend Wealth Advisors)

2025Q4: The focus is currently on solid municipal opportunities, particularly in Florida... The company is not actively pursuing data center-related opportunities. - Rick McTaggart(CEO)

What is the balance between public-private and purely public project opportunities, including newer ones like data center water? - John Bair (Ascend Wealth Advisors LLC)

2025Q1: The company is currently focused on opportunities closer to home, including potential projects in Florida and partnerships being developed there. There was no mention of specific wastewater projects in Barbados or Asia Pacific regions at this time. - Rick McTaggart(CEO)