Consolidated Water’s third-quarter revenue and profit fell as lower construction, operations and maintenance, and manufacturing activity outweighed growth in retail and bulk water sales. The company also highlighted new business opportunities, including a major Florida equipment order and a nearly $40 million water-purification project in California.
The quarter’s results reflect both a shift in the mix of work underway and changes in the company’s water businesses. Cayman Water began operating under a new 25-year retail license in August, while management said manufacturing revenue is expected to remain below 2025 levels for the full year.
Third-quarter results
- Revenue fell 11.9% to $30.9 million, from $35.1 million a year earlier. Higher retail and bulk revenue partly offset declines in services and manufacturing.
- Net income from continuing operations attributable to shareholders was $2.4 million, or $0.15 per diluted share, down from $5.6 million, or $0.34 per share, a year earlier.
- Including discontinued operations, net income was $2.3 million, or $0.14 per diluted share, compared with $5.5 million, or $0.34 per share, in the prior-year quarter.
- Consolidated Water ended September with $129.2 million in cash and cash equivalents and $145.1 million in working capital.
Revenue by business
- Retail revenue rose 5.7% to $8.2 million. Higher energy pass-through charges and an increased rate for a major commercial customer more than offset lower retail rates under the new license. Water sales volume increased 1%.
- Bulk revenue grew 20.8% to $10.1 million, mainly because of higher energy pass-through charges and, to a lesser extent, contributions from the new Cat Island desalination plants in the Bahamas. Gross profit increased, but higher diesel costs and added maintenance expenses reduced gross margin as a share of revenue.
- Manufacturing revenue declined 39.7% to $2.8 million, reflecting a lower dollar value of contracts completed or in progress. Management expects full-year 2026 manufacturing revenue to be below 2025 levels.
- Services revenue dropped 31.7% to $9.8 million. Construction revenue fell to $3.5 million from $6.4 million, while recurring operations and maintenance revenue declined to $6.1 million from $7.7 million. The O&M decline was primarily tied to the expiration of contracts with three California customers in the first quarter.
License, contracts and project pipeline
- Cayman Water’s new 25-year retail water license took effect August 1. It preserves the company’s exclusive right to produce, distribute and sell potable water in its licensed Grand Cayman service area. The new rate structure lowers base rates for customers while retaining an annual rate-adjustment mechanism subject to regulatory verification and approval.
- The company received about $10.1 million in purchase orders from an east-coast Florida municipality for nanofiltration water-treatment equipment and horizontal cartridge filters. Consolidated Water said these are its largest municipal orders to date for membrane-based treatment equipment and horizontal cartridge filters. Delivery is scheduled for November 2027.
- In Hawaii, the Honolulu Board of Water Supply issued a Limited Notice to Proceed in July, releasing about $6 million for long-lead equipment procurement for the seawater desalination project.
- After the quarter ended, Consolidated Water announced a roughly $39.8 million design-build agreement with the City of Pismo Beach, California, for the Central Coast Blue Advanced Water Purification Facility. The company will design, build and test the facility, train city personnel and support initial operations. Construction is expected to begin in spring 2027, with the overall design, permitting, construction and commissioning process expected to take about 24 months. The project is intended to add a local, drought-resistant water supply and help protect the groundwater basin from seawater intrusion.
- Management said the company had also bid on water-equipment manufacturing projects worth about $10 million, with decisions expected in the fourth quarter of 2026. It is tracking roughly $45 million in Florida municipal water projects expected to go out for bid within the next six months.
The license renewal secures Cayman Water’s exclusive service-area rights for 25 years, while the lower base rates reduce retail gross profit in the near term, according to management. The Florida equipment orders and Pismo Beach contract add to future work, but the Florida equipment deliveries are scheduled for 2027, and management continues to expect manufacturing revenue for 2026 to be below last year’s level.