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Operator: Good morning. Thank you for joining us today to discuss the results for Consolidated Water’s 2024 Full Year Operating and Financial Results. Hosting the call today is the Chief Executive Officer of Consolidated Water Company, Rick McTaggart; and the company’s Chief Financial Officer, David Sasnett. Following their remarks, we will open the call to your questions. [Operator Instructions] Before we conclude today’s call, I’ll provide some important cautions regarding the forward-looking statements made by management during the call. I’d like to remind everyone that today’s call is being recorded, and it will be made available for telecom replay per the instructions in yesterday’s press release, which is available in the Investor Relations section of the company’s website. Now, I’d like to turn the call over to Consolidated Water Company’s CEO, Rick McTaggart. Sir, please go ahead.

Rick McTaggart: Thank you, Nick, and good morning, everyone. Our revenue and operating income in 2024 from continuing operations were consistent with our expectations given that two of our major design build projects were completed early in the year. We also saw improvement in profitability across our retail and manufacturing segments, which we expected. Our strong retail water sales and our exclusive utility service area in Grand Cayman reflected a record volume of water sold to a record number of customers. This growth was primarily due to the ongoing growth in population and business activity on the island. Our bulk segment revenue and gross profit was relatively consistent from the previous year, while revenues from our Bahamas business declined due to reduced energy pass-through charges to our client, which also reduced our costs.

Revenue from our new operations and maintenance contract for the Water Authority’s newly constructed Red Gate II plant went into effect in May, partially offsetting the Bahamas decline. Our services revenue for the year declined by 48% due to the completion in the second quarter of last year of our Liberty Utilities and Red Gate 2 construction projects. Construction revenues from these large projects had a major impact on our 2023 revenue. The decline in construction revenue and services was partially offset by a substantial increase in recurring revenue from our operations and maintenance contracts. Most of this increase was generated by our new REC subsidiary in Colorado, which has provided us with a new channel to expand our business, including our design build business into water-stressed regions of Colorado.

O&M contracts managed by our PERC Water subsidiary also contributed meaningfully to the increase. Our multiyear seawater desalination project underway in Hawaii continued to advance through the development stage. This $204 million project to design, construct, operate and maintain a 1.7 million gallon per day seawater desalination plant for the Honolulu Board of Water Supply commenced in June of 2023 and has been steadily advancing through the pilot design and permitting stage. Due to delays to the project not caused by us, we now expect to begin construction of this project early next year. The construction phase will generate the largest portion of revenue from the project and is expected to favorably impact our revenue and earnings in 2026 and 2027.

We completed the pilot testing for the Hawaii project and have prepared and submitted the required enhanced pilot testing report to the client for review. The client must determine before the end of April, whether or not we demonstrated in our piloting that we were able to achieve a reasonable water quality match to their existing natural water supplies. Positive determination is a very important milestone in the development phase of the project as it will enable us to advance closer to the commencement of construction. We also reached the 60% design point for the project late last year and have submitted our design report to the client’s engineers for review and comment. In all the Hawaii project is comprised of a two-year development phase, which we are currently in, followed by a 2-year construction phase.

And then after construction and commissioning, we will operate the plant under a 20-year O&M agreement with the opportunity to obtain two five-year extensions and compliance option. It’s also important to note that about 80% of the plant’s construction cost is subject to adjustments for inflation from the date the contract was executed until the date construction begins. This will help preserve our gross margin and profitability against the continued high rate of inflation. Now before getting more into recent developments and our outlook for the year, I would like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for last year.

David Sasnett: Thank you, Rick, and good morning, everyone. Our revenue totaled $134 million in 2024 as compared to $180 million in 2023. And as Rick mentioned earlier, this decrease is attributable to a decrease in the Service segment revenue of $47 million arising from the completion in 2024, both of PERC’s construction contract with Liberty Utilities for their new wastewater facility in Arizona and OSHA Conversion’s construction contract with the Water Authority Cayman for their new Red Gate plant. Our retail revenue increased almost $1.6 million to $31.7 million for the year due to a 4.5% increase in the volume of water sold. We believe this greater volume of water sold reflects a 4.3% increase in the number of customer accounts we experienced during the year.

Our bulk segment revenue declined slightly from $34.6 million in 2023 to $33.7 million in 2024 as lower energy prices for CW-Bahamas decreased the energy pass-through component of CW-Bahamas rates. As I mentioned earlier, the decrease in services revenue was due to plant construction revenue, which decreased from $77.3 million in ’23 to $17.6 million in ’24, and that’s strictly due to the completion of the two contracts I mentioned earlier. Recurring revenue under our O&M contracts for the Services segment totaled $29.3 million in ’24, which represents an increase of 51% over last — of the previous year of 2023. Our new REC subsidiary, which we acquired in October 2023, contributed $6.1 million of the increase with the balance generated by PERC and new contracts they signed.

Our Manufacturing segment revenue increased slightly to $17.6 million for the year. Gross profit in 2024 totaled $45.6 million or 30% of total revenue — excuse me, 34% of total revenue compared to $61.9 million or 34% of total revenue in 2023. Net income from continuing operations attributable to Consolidated Water shareholders in 2024 was $17.9 million or $1.12 per diluted share. This compares to net income of $30.7 million or $1.93 per diluted share in 2023. Including discontinued operations, net income attributable to Consolidated Water shareholders in 2024 was $28.2 million or $1.77 per diluted share as compared to net income of $29.6 million or $1.86 per diluted share for 2023. Now turning to our balance sheet and liquidity. Our cash equivalents increased by $57 million during the year to a total of $99.4 million.

This reflects primarily $36.5 million of cash generated from operations. Our working capital was up $44 million to $132.8 million at the end of the year — our stockholders’ equity was $210 million. And as we talked earlier, we have practically no debt on our balance sheet. Our projected liquidity requirements for 2025 include capital expenditures for existing operations of approximately $10.3 million, and this includes $926,000 to be incurred in ’25 for our new West Bay plant and $1.8 million for the expansion of Aerex’s manufacturing facility. We paid out approximately $6.3 million in dividends to our common and preferred shareholders this year. Our liquidity requirements may also include future quarterly dividends if such dividends are declared by our Board.

And this completes our financial summary. And with that, I’ll turn the call back over to Rick.

Rick McTaggart: Thanks, David. We announced last month that our wholly owned subsidiary, Cayman Water Company received a new concession from the Cayman Islands government, granting it continued exclusive rights to produce and supply potable water within our service area on Grand Cayman. Due to regulatory changes enacted in 2018, Cayman Water is also required to obtain a new operating license from the islands utility regulator, OfReg. Discussions with OfReg for the new license, which we expect will involve a restructuring of the previous operating terms, are expected to begin soon. Until the new license is received, however, the existing operating license will remain in effect. Cayman Water operates three seawater reverse osmosis desalination plants and produce about 4 million gallons of potable water per day for the island’s growing population and businesses.

And then we’re also in the process of expanding our West Bay plant by a further 1 million gallons per day. As David mentioned, we’re incurring some capital expenditures for that this year. This expansion should be completed by the end of the second quarter of this year. Looking ahead, we remain excited about the future of Consolidated Water for many reasons. This includes the continued growth in water sales in Grand Cayman, the long-term stable recurring revenue from our Caribbean-based Bulk Water business and the growth potential of our US-based manufacturing, design build and O&M businesses. Our O&M business grew nicely in 2024 with the addition of REC in Colorado, and we see opportunities for further growth of this recurring revenue stream, both in Colorado and California.

As anticipated, our construction revenue declined in 2024, and we expect it to remain below 2023 until we commence construction of our seawater desalination project in Hawaii. However, we see this major construction phase substantially adding to our revenue and earnings in 2026 and 2027. We are currently constructing or negotiating contracts with three construction projects with a total value of approximately $20 million. We expect this to positively impact revenue and profit over the remainder of this year and into early 2026. Our manufacturing business is performing very well. Revenues have stabilized and margins have increased due to improved production efficiency and a product mix that rewards Aerex for its unique fabrication and quality assurance capabilities.

In other words, we’re making better margins on these jobs. We are very pleased with this positive trend, and we expect that to continue in 2025 and beyond. In fact, we are — as David mentioned, we are currently expanding our manufacturing facility to provide additional assembly and product storage space. We expect this additional building space to come online late this year when it will greatly enhance the capacity of our manufacturing business and allow us to run more jobs simultaneously. Supported by an exceptionally strong balance sheet, we will continue to invest in new infrastructure. This includes the expansion of our West Bay plant, serving the growing water needs of our utility customers in Grand Cayman, which we expect to ultimately drive future retail revenue growth.

Our strong balance sheet also enables us to move quickly and strategically on any potential acquisitions. As we progress through 2025, we anticipate that these positive factors will continue to support long-term growth, enhance profitability and strengthen shareholder value over the long term. Now with that, I’d like to open the call for questions. Nick?

Operator:

Rick McTaggart: Thanks, Nick. I’d just like to thank everybody again for joining us today to discuss the results for last year, and we look forward to talking with you again soon in presenting our first quarter 2025 results in May. Thank you, Nick. You can end the call.

Operator: Thank you. Before we conclude today’s call, I would like to provide the company’s safe harbor statement that includes cautions regarding forward-looking statements made during today’s call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, included, but not limited to, statements regarding the company’s future revenue, future plans, objectives, expectations and events, assumptions and estimates. Forward-looking statements can be identified by use of words or phrases usually containing the words belief, estimate, project, intend, expect, should, will or similar expressions. Statements that are not historical facts are based on the company’s current expectations, beliefs, assumptions, estimates, forecasts and projections for its business and the industry and markets related to its business.

Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Actual results and — actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, tourism and weather conditions in the areas we serve, the economic, political and social conditions of each country in which we conduct or plan to conduct business; our relationships with the government entities or other customers we serve; regulatory matters, including resolutions of the negotiations for the renewal of our retail license on Grand Cayman; our ability to successfully enter new markets and various other risks as detailed in the company’s periodic filings — report filings with the Securities and Exchange Commission.

For more information about risks and uncertainties associated with the company’s business, please refer to the Management’s Discussion and Analysis of Financial Conditions or Results of Operations and Risk Factors sections of the company’s SEC filings included, but not limited to, its annual report on the Form 10-K and quarterly reports for Form 10-Q. Any forward-looking statements made during the conference call speaks as of today’s date. The company expressly disclaims any obligations or undertakings to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions or circumstances of which forward-looking statements is based, except as required by law.

I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday’s earnings release for dial-in replay instructions available via the company’s website at www.cwco.com. Thank you for attending today’s presentation. This concludes the conference call. You may now disconnect.