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    CWCO
    Earnings call· Jun 2026(Q2 FY26)

    Consolidated Water Co. Q2 FY26 earnings call CWCO

    Aug 11, 2026 Source

    Executive summary

    Consolidated Water Q2 FY26 — Growth in Retail, Bulk, and Services Despite Manufacturing Softness

    Consolidated Water delivered a mixed second quarter, with strong performance in its retail, bulk, and services segments offsetting significant softness in manufacturing. The company secured a critical 25-year license for its Grand Cayman operations and advanced key projects, including a major Florida equipment order and progress on the Hawaii desalination plant despite permitting hurdles. Management remains cautiously optimistic about future growth, leveraging its strong balance sheet and expanding market opportunities in water infrastructure.

    Highlights

    5

    • Bulk revenue increased 20% year-over-year, driven by higher energy pass-through charges and new desalination plants.

    • Retail revenue increased modestly despite a 2% volume decrease, due to a base water rate increase for a major non-potable customer.

    • Services segment construction revenue increased $2.5 million, contributing to overall segment growth.

    • Secured $10.1 million in purchase orders for municipal water treatment equipment in Florida, representing the largest such order to date.

    • New 25-year retail water utility license in Grand Cayman provides long-term earnings visibility and regulatory clarity.

    Concerns

    5

    • Manufacturing revenue decreased 49% year-over-year to $2.7 million, and is expected to be below 2025 levels for the full year.

    • Gross profit decreased to $11.0 million (33% of revenue) from $12.8 million (38% of revenue) in the prior year quarter, primarily due to lower manufacturing profit and services mix change.

    • Net income from continuing operations decreased to $4.0 million ($0.25 diluted EPS) from $5.2 million ($0.32 diluted EPS) in Q2 2025.

    • Services O&M revenue declined following the expiration of two contracts in Q1 2026.

    • Hawaii desalination project faces permitting delays, specifically an archeological permit, which is a prerequisite for other necessary permits.

    Guidance & targets

    5
    CategoryTargetConfidence
    Manufacturing revenue
    less than 2025 levels
    medium materiality
    High
    Hawaii desalination plant construction start
    before the end of this year
    high materiality
    Medium
    Southern California municipal O&M contract revenue
    $4.5 million
    medium materiality
    High
    Florida municipal membrane equipment order delivery
    November of 2027
    medium materiality
    High
    Capital expenditures for existing operations
    $4.8 million
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Retail
    Revenue remained relatively consistent despite a 2% decrease in water sales volume in Grand Cayman, mitigated by a higher rate charged to a major non-potable water customer and increased volume to that customer.
    Water sales volume: -2% YoYBase water rate increase for major non-potable customer: Yes
    		$8.7 millionrelatively consistent——
    Bulk
    Revenue and gross profit increased significantly due to higher energy pass-through charges and contributions from two new desalination plants on Cat Island, Bahamas.
    Higher energy pass-through charges by CW Bahamas: YesRevenue from new Cat Island desalination plants: Yes
    		$9.9 million20%—Gross profit increased 27%
    Services
    Revenue increased slightly due to higher construction revenue from two water treatment plant projects, partially offset by lower O&M revenue after two contracts expired in Q1 2026.
    Construction revenue increase: $2.5 millionO&M revenue decline: Yes (due to contract expiration)New Southern California municipal O&M contract: $4.5 million over 3 years
    		$11.6 million1%——
    Manufacturing
    Revenue decreased significantly due to a decrease in the total dollar amount of new purchase orders.
    Decrease in total dollar amount of new purchase orders: Yes
    		$2.7 million-49%——

    Operational metrics

    10
    Total revenue growth
    -2%YoY
    Q2 FY26

    Total revenue was $32.9 million for the second quarter of 2026.

    Gross profit margin
    33%vs 38% in Q2 FY25
    Q2 FY26

    Gross profit was $11.0 million in Q2 FY26 compared to $12.8 million in Q2 FY25. The decrease was primarily due to lower manufacturing gross profit and a change in revenue mix in the Services segment.

    Cash and cash equivalents
    $132.6 million
    as of June 30, 2026

    Balance sheet position at quarter-end.

    Working capital
    $144.6 million
    as of June 30, 2026

    Balance sheet position at quarter-end.

    Stockholders' equity attributable to Consolidated Water
    $225.6 million
    as of June 30, 2026

    Balance sheet position at quarter-end.

    CW Bahamas accounts receivable
    $18.8 milliondecreased from $20.7 million as of December 31, 2025
    as of June 30, 2026

    Represents the majority of consolidated accounts receivable. The Bahamas government has expressed intent to reduce delinquent balances.

    Dividends paid
    $2.3 million
    July 2026

    Paid subsequent to quarter-end.

    Grand Cayman stayover arrivals
    288,000 visitorsup 11.3% from H1 2025; 2.8% above 2019 pre-COVID level
    H1 2026

    Strong tourism momentum is a key demand driver for retail water sales.

    Grand Cayman rainfall probability
    >70%below average rainfall
    current wet season

    Prediction from the Cayman Islands National Weather Service, which could provide an additional driver for retail water demand.

    Customer water rate reduction
    6.5%compared with prior license
    new license

    Expected lower average cost of water per gallon for customers under the new 25-year license.

    Industry KPIs

    3
    MetricValueDetails
    Retail sales growth-2%%
    Adjusted operating EPS$0.25per diluted share
    CAPEX multi year capital investment plan$4.8 millionUSD

    Orderbook & backlog

    1
    Florida municipal water treatment equipment purchase orders$10.1 millionJuly 2026

    Largest municipal membrane equipment order in dollar terms; delivery scheduled for November 2027.

    Deals & partnerships

    3
    Southern California municipalO&M contract$4.5 million3 years

    New O&M contract partially offsetting revenue decline from expired contracts.

    Hawaii clientDesign, Construct, Operate, and Maintain (DCOM) seawater desalination plant

    Limited notice to proceed issued for the 1.7 MGD Kalaeloa seawater desalination plant. Procurement of $6 million in long-lead materials authorized.

    Florida municipalPurchase orders for municipal water treatment equipment$10.1 million

    Purchase orders for municipal water treatment equipment, with delivery scheduled for November 2027.

    Capital programs

    1
    Kalaeloa, Hawaii Seawater Desalination Plantunderway
    Period spend: $6 million
    Start: July 2026 (limited notice to proceed)

    Benefit: 1.7 million gallon per day

    Limited notice to proceed issued in July 2026 for procurement of long-lead materials and equipment. Construction expected to start later this year. Project includes design, construction, operation, and maintenance.

    Risks & headwinds

    5
    Manufacturing segment softnessQ2 FY26 and full year FY26

    Revenue decreased 49% YoY to $2.7 million; full year 2026 revenue expected to be less than 2025.

    Mitigation: Current backlog and recent order activity (e.g., $10.1M Florida order) give confidence for improvement in future quarters, especially in 2027.

    Services O&M revenue declineQ2 FY26

    O&M revenue declined after two contracts expired in Q1 2026.

    Mitigation: Partially offset by a new Southern California municipal O&M contract expected to generate $4.5 million over 3 years. Actively pursuing larger O&M opportunities in California.

    Hawaii desalination project permitting delaysCurrent, impacting construction start in CY26

    Archeological permit is a prerequisite for other important permits, causing delays.

    Mitigation: Company is discussing ways to proceed with other permit applications with the archeological regulator's blessing and exploring methods to speed up the process; limited notice to proceed for long-lead materials helps reduce scheduling pressure.

    CW Bahamas accounts receivable delinquencyOngoing

    Accounts receivable decreased to $18.8 million from $20.7 million (as of Dec 31, 2025), but the timing of significant reduction is uncertain.

    Mitigation: Frequent contact with Bahamas government officials who express intention to significantly reduce balances.

    Increased competition in O&M marketCurrent

    Engineering companies not previously involved in O&M are now entering the market.

    Mitigation: Company believes its smaller size and less overhead offer a better value proposition and is working to qualify for larger projects.

    What to watch in Q3 FY26

    4

    Hawaii project construction start

    before end of CY26
    CurrentLimited notice to proceed issued; permitting ongoing
    TargetConstruction commencement

    Why it matters

    The start of construction on this significant project is expected to drive future revenue and earnings growth.

    we remain cautiously optimistic💬 that construction of the Hawaii project will begin before the end of this year.

    Q&A highlights

    4

    Clarification on the 'last permit' for the Hawaii project and the timeline for receiving it.

    The archeological permit is not the last one, but a prerequisite for other important permits. The company is exploring ways to proceed with other permit applications with the archeological regulator's blessing to avoid further delays.

    “Just to clarify, it's not the last permit. That's sort of a in sort of permit and it prevents us at the moment from applying for other important permits because you have to have that archeological permit in place.”

    asked by Gerard Sweeney · answered by Frederick McTaggart

    2 min read5 chapters

    Detailed Narrative

    01

    New Grand Cayman Retail Water License

    Consolidated Water secured a new 25-year retail water utility license from OfReg for its Grand Cayman operations, effective August 1. This license provides long-term regulatory clarity and earnings visibility, preserving Cayman Water's exclusive right to produce and distribute potable water. While the new rates are expected to lower the average cost of water per gallon by about 6.5% for customers, the company anticipates continued investment in reliable water infrastructure.

    02

    Hawaii Desalination Project Progress

    The company received a limited notice to proceed for the Kalaeloa, Hawaii seawater desalination plant, authorizing procurement of approximately $6 million in long-lead materials. Increased communications with permitting agencies support the expectation of construction starting later this year. This project is anticipated to significantly contribute to future revenue and earnings growth once construction commences, despite ongoing efforts to navigate archeological and other permitting requirements.

    03

    Strong Florida Market for Manufacturing

    Consolidated Water sees an active market for its manufacturing products and services in Florida, driven by the growing need for membrane-based treatment systems to meet long-term supply needs. Recent purchase orders totaling $10.1 million for municipal water treatment equipment, scheduled for November 2027 delivery, underscore this strong outlook. The company's experience and manufacturing location position it well to capitalize on these growth opportunities, benefiting 2026 and 2027 performance.

    04

    Strategic Business Development and Balance Sheet Strength

    The company strengthened its leadership team with the appointment of Sachin Chawla as Senior Vice President of Business Development, aiming to identify and advance opportunities in desalination, water reuse, and industrial water. Consolidated Water's strong balance sheet, with $132.6 million in cash and no significant debt, provides flexibility for decisive moves on infrastructure opportunities, strategic acquisitions, and partnerships to accelerate growth.

    05

    Caribbean Bulk Business Stability and Expansion

    The Caribbean-based bulk businesses continue to be a stable source of long-term recurring revenue. The segment benefited from two new desalination plants on Cat Island in the Bahamas, commissioned in December and April, which are now supplying potable water to the Water and Sewage Corporation. This expansion contributed to a 20% increase in bulk revenue and a 27% increase in bulk gross profit year-over-year.

    AI-generated summary of the company’s earnings call. Not investment advice.