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Operator: Good morning. Thank you for joining us today to discuss Consolidated Water Company’s third quarter 2025 operating and financial results. Hosting the call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart; and the company’s Chief Financial Officer, David Sasnett. Following their remarks, we’ll 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. Please see the instructions in yesterday’s press release that has been posted to the Investor Relations section of the company’s website. Now I’d like to turn the call over to Consolidated Water’s CEO, Rick McTaggart. Sir, please go ahead.

Frederick McTaggart: Thank you, Chloe, and good morning, everyone. Thank you for joining us today to discuss our financial and operating results for our third quarter of 2025. In the third quarter, our diversified water business model, which encompasses regulated utility operations, design and construction services, O&M services, and manufacturing continued to deliver strong performance. This steady progress led to a notable increase in overall revenue and earnings per share from our continuing operations compared to the same period last year. Retail water sales in the exclusive utility service area on Grand Cayman were higher than the previous year because of ongoing strength of the economy in the Cayman Islands and drier weather conditions on Grand Cayman.

We experienced greater demand for water, resulting in a meaningful uptick in both sales and volumes sold. Although our Caribbean-based bulk segment revenue saw a modest decline this past quarter, primarily due to lower fuel-related charges that we pass through to customers, we achieved higher profitability in this segment. This improvement was driven by our consistent commitment to operational excellence, which allowed us to further reduce costs and enhance efficiency. Our services segment also saw healthy growth resulting from 2 construction projects that were underway this year, as well as steady gains from our recurring O&M contracts. These positive trends were partially offset by a decrease in consulting revenue, which was expected following the completion of a major plant commissioning and start-up project in California last year.

During the quarter, our manufacturing segment maintained its positive momentum. We saw further revenue growth and an improvement in gross margin, reflecting the production this past quarter of higher-margin specialized products for nuclear power and municipal water customers, as well as our continued focus on maximizing both production efficiency and capacity. The completion of our new 17,500 square foot manufacturing facility expansion this past quarter is expected to further enhance efficiency and throughput in that business. As previously reported, we hold NQA-1 certifications from 2 major nuclear industry companies and see renewed interest in U.S. nuclear power solutions. These specialized manufacturing qualifications position us for continued growth.

Design of the 1.7 million gallon per day seawater desalination plant for the Honolulu Board of Water Supply in Kalaoa, Hawaii, is now 100% complete, and we are focused on obtaining the remaining permits needed to allow our client to issue a notice to proceed with construction of the project. We continue to anticipate that construction of this project will commence early next year. We see this major project substantially adding to our revenue and earnings growth in 2026 and 2027. Now before getting into recent developments and our outlook for the rest of the year and beyond, I’d like to turn the call over to David, who will take us through the financial details for the quarter.

David Sasnett: Thank you, Rick, and good morning, everyone. Thanks for joining us today. Our revenue for the quarter totaled $35.1 million, which was up 5% from the $33.4 million we posted in the third quarter of 2024. This increase was due to revenue increases for the retail services and manufacturing segments. Our retail revenue increased $184,000 due to a 6% increase in the volume of water sold. Revenue increase was tempered somewhat by lower energy prices, which decreased the pass-through component of our rates that we charge at Cayman Water. Our bulk segment decreased $373,000 to $8.4 million due to a decline in energy prices, similar to the situation with Cayman Water. This decreased our rates in the Bahamas operations.

But as Rick said earlier, we managed to improve profitability in our bulk segment despite the decline in revenue. Services segment revenue increased by $1.6 million, primarily due to plant construction revenue increasing from $4.3 million in the third quarter of last year to $6.4 million in the third quarter of this year. Services segment revenue generated under our O&M contracts totaled $7.7 million in the third quarter of 2025, a slight increase from the amount we posted for the third quarter of 2024. Manufacturing segment revenue increased by $305,000 or 7% to $4.7 million, as compared to $4.4 million in the third quarter of 2024, and this was as a result of increased production activity. Gross profit for 2025 was $12.9 million or 37% of total revenue, as compared to $11.6 million or 35% of total revenue in the third quarter of 2024.

This increase was due to increases in retail services and manufacturing revenue, which enhanced our gross profit percentage. Net income from continuing operations attributable to Consolidated Water stockholders for the third quarter of 2025 was $5.6 million or $0.34 per diluted share, and this compares to net income of $5 million or $0.31 per diluted share for the third quarter of last year. Including our discontinued operations, net income attributable to Consolidated Water stockholders for the third quarter of 2025 was $5.5 million or $0.34 per diluted share, as compared to net income of $4.5 million or $0.28 per diluted share in the third quarter of 2024. Now turning to our financial condition and balance sheet. During the quarter, Consolidated Water Bahamas received significant payments on its delinquent accounts receivable from the Water & Sewage Corporation, which resulted in a decrease of $12.5 million in its accounts receivable balances over the course of this quarter to $16.8 million as of September 30, 2025.

This also represents an overall $5.7 million decrease in accounts receivables from the prior year-end for TW Bahamas. Our cash and cash equivalents totaled $123.6 million as of September 30, 2025. Our working capital was $141.7 million, and our stockholders’ equity was $220.4 million. And as we pointed out on previous calls, our company presently has no significant outstanding debt. Our cash and cash equivalents totaled — excuse me, our projected liquidity requirements for the balance of 2025 include capital expenditures for existing operations of approximately $4.5 million, and this includes approximately $1.3 million for our project in the Bahamas, and $266,000 for new equipment for Aerex manufacturing facility. We paid approximately $2.3 million in dividends in October, and our liquidity requirements may also include future quarterly dividends as such dividends are declared by our Board.

We continue to evaluate how to use our ample cash balances to increase shareholder value. This completes our financial summary for the quarter, and I’ll turn the call back over to Rick.

Frederick McTaggart: Thanks, David. As I mentioned earlier, our services segment saw healthy growth in Q3, resulting from the 2 construction projects that were underway this year. In addition, we were awarded 2 additional water treatment plant construction projects this past quarter, a drinking water plant expansion in Colorado, and a wastewater recycling plant in California. The revenue attributable to these new projects is expected to be realized primarily in 2026, and the combined value of these projects totals approximately $15.6 million. The first project was secured by REC, our Colorado subsidiary, reflecting its entrance into the design build market by winning its first construction contract in Lochbuie, Colorado. This $3.9 million drinking water plant expansion is a very good start and helps us to pursue larger design build opportunities in Colorado.

As announced earlier this month, our PERC Water subsidiary secured the other contract valued at $11.7 million to construct a wastewater recycling plant for a San Francisco Bay Area Golf Club. This innovative project, which will convert untreated wastewater into irrigation water, is expected to save 36 million to 38 million gallons of potable water annually. We expect revenue from this project to be recognized primarily in 2026. PERC is currently pursuing several design build opportunities in Arizona. We have seen an uptick in requests for customized design reports or CDRs. And in response, we are actively preparing these CDRs for several developers. As was the case with the Liberty Utilities project a couple of years ago in Arizona, we believe that some or all of these CDRs will ultimately lead to a design build contract for these important wastewater treatment facilities, but it does take time.

Turning to our manufacturing business. Our new 17,500 square foot manufacturing facility expansion this past quarter will enable more throughput and allow us to manage multiple projects simultaneously. This facility expansion couldn’t be timelier as we are seeing much increased bidding activity for municipal water projects in Florida. Florida has undergone significant population growth since the COVID pandemic and with more than 1.5 million new residents moving to the state. Furthermore, the state water regulator is requiring water utilities to tap into much deeper and more saline, lower Floridan aquifers for new water supply projects instead of the shallower and fresher aquifers, which have historically been used and damaged by overabstraction and saline water intrusion.

This population growth and the regulatory changes have strained freshwater resources and increased water treatment costs. Various municipal agencies in the fastest-growing areas of the state are just now catching up and bidding projects to increase drinking water supply using nanofiltration and low-pressure RO systems, which are required to treat the more saline aquifer water. We believe that our extensive experience manufacturing large-scale nanofiltration and RO systems, as well as our location in Fort Pierce, Florida, position us well to continue growing that part of our business in the Florida market. So looking again at the Hawaii project, we and our clients are focused on obtaining the remaining permits needed to allow our client to issue a notice to proceed with construction of the project.

This past quarter, our client received the permit to construct the 2 concentrate disposal wells for the project, which is one more big step towards commencement of construction. In addition, our client’s application for a permit from the state government division responsible for the preservation of archeological and historical artifacts is currently under final review. Once we have this linchpin permit in hand, we’ll be able to move forward with applications for several additional administrative permits, which are required before we can commence construction of the project. We continue to anticipate that full construction of the project will commence early next year. So as you saw, we had some new directors joined the Board in October. As part of our ongoing initiatives to strengthen our corporate governance and overall expertise related to our business, we recently announced the appointment of 3 new independent directors: Kim Adamson, Dr. Maria Elena Giner, and Geronimo Gutierrez Fernandez, and these were effective at the beginning of October.

These new directors collectively bring extraordinary technical, operational, regulatory, governance and financial expertise to the Board, spanning public utility management, large-scale infrastructure delivery, international water governance and international finance. Kim brings nearly 30 years of executive level water industry experience, including as General Manager of Public Water Utilities, various water-related Board positions, and senior leadership positions at Brown & Caldwell, Kiewit Infrastructure Group and Algonquin Power & Utilities Corporation. Maria Elena has over 35 years of executive leadership experience in large-scale water infrastructure, capital planning and asset management, environmental policy and regulatory strategy. She is a former U.S. Commissioner of the International Boundary and Water Commission, where she managed multiple international water infrastructure facilities and administered a capital program of over $1 billion.

Geronimo’s 20-year career in senior government positions includes serving as Mexico’s ambassador to the United States in 2017 and 2018, during which time he was extensively involved in the negotiations for the United States, Mexico, and Canada trade agreement. He brings to Consolidated Water deep expertise in infrastructure development and financing, was the former Managing Director of the North American Development Bank and his current position as Managing Partner of BEEL Infrastructure, a financial advisory and asset management firm in Mexico City. We look forward to their contributions and guidance as they enhance our Board’s capabilities, assist with our execution of our strategies and help us continue Consolidated Water’s upward trajectory.

As we wrap up the year and look ahead, our strong balance sheet and ample liquidity enable us to fund growth initiatives, both organic growth and potential acquisition opportunities. We believe continuing to build our diversified business across 4 segments is the best way to deliver long-term superior returns to our shareholders. We are very optimistic about our continued growth for a variety of reasons, which include continued growth in Grand Cayman, our ongoing construction projects in the U.S., and the increased project opportunities we are seeing for our manufacturing business in Florida. We believe our recent activities and successes and the current trends in our market represent strong catalysts for continued growth, increasing profitability and further strengthening of shareholder value.

Now with that, I’d like to open the call to your questions.

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Operator: [Operator Instructions] The first question comes from Gerry Sweeney with ROTH Capital.

Gerard Sweeney: I want to start with Hawaii. It sounds like the architectural permit is coming through soon. And then separately, there’s a couple of admin permits after that. I don’t want to use the — well, I’m going to use the word perfunctory, but those admin permits sort of just a perfunctory addition to what’s going on and there’s easily come through? Or is there anything we should be thinking about on that front?

Frederick McTaggart: Well, the archeological permit, I think, is the one that is really important to get because we have to have that. And there’s a lot of — I guess there’s a lot more discretion with that division than these other permits that will follow. The other permits are mainly building-related permits. So I wouldn’t say they’re perfunctory, but I mean, they’re definitely more administrative in nature than what we’ve been working on over the past year.

Gerard Sweeney: Administrative is probably a better word. And then assuming these come through, I would assume maybe 1 quarter, 1.5 quarters to ramp up the full sort of construction cadence and then proceeds through ’26, ’27, then sort of a wind down over a quarter or two. Is that sort of a correct cadence for the build-out?

Frederick McTaggart: Well, I mean, if you want a more accurate sort of look at it, I mean, look at our progress payment schedule that’s in the contract that we filed. I mean, generally, the middle of the project is where we’re spending the most money. There will be a ramp-up period, clearing the site and all that sort of stuff — ordering materials. But I mean, it’s a typical construction project. There’s nothing unique about it.

Gerard Sweeney: I wasn’t sure if there’d be a little bit of start and stop. Arizona, the CDR increase, is this a function of just activity picking up in the state? Or are you doing some more, I don’t know, customer outreach positioning, et cetera?

Frederick McTaggart: I think it’s just a function of how sort of well entrenched our salespeople are in Arizona. I mean, there’s just a lot — there’s always something going on with developers there around Phoenix, and our sales and marketing team really has a good understanding of these projects. So developers — I mean, they’re looking to do things that are quickest and cheapest way. So the CDR product that we offer gives them quite a bit of certainty on the cost, and we guarantee the schedule if they decide to hire us to build the project. So I think it’s a good fit for those guys. That’s why you see so much activity among the developers.

David Sasnett: I want to point out that we bought REC, they had no design build capabilities nor were they pursuing any. So we really had to sort of build the design — I use the word ‘build’ twice. We had to build the design build business in Colorado. And I think what you’re seeing now with the Lochbuie project, some of the other things we’re pursuing is finally the establishment of our sales activities relative to design build work in Colorado. We just couldn’t walk in there and flip the switch on the design build work, but now we have a lot of momentum. And I think our salespeople established credibility, our company has established credibility in the Colorado build market. And so now they’re pursuing these other projects. And I think we’ll win our share of them.

Gerard Sweeney: So I mean, the REC, you have a project that — you have some reference or project references, and that could help on the expansion into Colorado as well?

David Sasnett: Exactly.

Gerard Sweeney: One more question, then I’ll jump back in queue. I don’ want to dial in there. Manufacturing obviously added 17,500 feet. How much opportunity does that open up? Obviously, it’s more space, more — you can build more, et cetera. But you also mentioned it allows you to do multiple projects at one time. So I’m not sure if it’s — it unlocks two things. One, more space for more projects, but also improves just overall flow of work through the facility, even generating additional growth opportunities or capacity opportunities.

Frederick McTaggart: I mean it’s really — it’s all the same thing. I mean, it significantly improves the flow of work because you’re not actually cutting steel and welding and bending steel and stuff in the same area that you’re trying to assemble big pieces of equipment. So the new space is more of an assembly area. So the old shop will be available for exclusive use of fabricating the actual products, piping and plate and that sort of thing. So it’s a huge improvement, I think, to the workflow of the facility and allows us to build much bigger units and that sort of thing, because it provides that extra space just for assembly work.

Gerard Sweeney: Then on the margin front, obviously, the nuclear work is higher end. How should we think of margins with even some of the municipal work coming through and the expansion in the facility? Can we see a step-up in margins from the flow-through work, more municipal work and just — kind of preemptive thinking.

David Sasnett: Gerry, I think we posted 3 points of gross profit this quarter. If we can get every quarter, it would be at — I’m not expanding that, is what I’m saying. The bottom line is we believe regardless of the percentage involved with the gross profit, we believe that with the expansion, our overall gross profit dollars will improve, our revenue will improve for our manufacturing facility. The margins may fluctuate up and down depending on the product mix, and we talked about that in our [ Q ]. But obviously, the capital investment that we made in the expansion, we believe is totally justified by potential increased revenue and gross profit dollars that expansion will help us generate.

Operator: [Operator instructions]

Frederick McTaggart: Well, I guess there’s no more questions. Anybody else?

Operator: In this case, this concludes our question-and-answer session. I’d like to now turn the call back over to Mr. McTaggart.

Frederick McTaggart: Thanks, Chloe. I’d just like to thank everybody again for joining and being shareholders and interested investors, and look forward to speaking with you again in March of next year. Take care.

Operator: Thank you. Before we conclude today’s call, I would like to provide the company’s safe harbor statement that includes caution 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, including, 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 the use of words or phrases usually containing the words believe, 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 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 area 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 and other customers we serve, regulatory matters, including resolution 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 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 and Results of Operations and Risk Factors section of the company’s SEC filings, including, 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 of today’s date. The company expressly disclaims any obligations or undertaking 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 any forward-looking statement is based, except as required by law.

I would now 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 cwco.com. Thank you for attending today’s presentation. This concludes the conference call, and you may now disconnect.

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