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Water Sales to Domestic Customers More Than Offset Weakness in Tourism
Consolidated Water Co., Ltd., which develops and operates seawater conversion plants and water distribution systems in areas where natural supplies of drinking (i.e., potable) water are scarce, reported its operating results for the second quarter and first half of 2002.
For the three months ended June 30, 2002, the Company's water sales increased 7.8% to a record $3.2 million, compared with $3.0 million in the second quarter of 2001. Net income declined slightly to $811,259 in the most recent quarter, when compared with net income of $875,332 in the prior-year period. The Company earned $0.20 per diluted share in the most recent quarter, compared with $0.22 per diluted share in the quarter ended June 30, 2001. The weighted average number of diluted shares outstanding totaled 4,097,902 in the second quarter of 2002, versus 3,993,668 average diluted shares outstanding in the year-earlier quarter.
For the six months ended June 30, 2002, water sales rose 8.3% to a record $6.3 million, versus $5.9 million in the corresponding period of the previous year. The Company reported net income of $1,737,760, or $0.43 per diluted share, in the first half of 2002, compared with net income of $1,706,222, or $0.43 per diluted share, in the year-earlier period. The weighted average number of diluted shares outstanding totaled 4,077,390 in the six months ended June 30, 2002, compared with 3,978,420 average diluted shares outstanding in the six months ended June 30, 2001.
"We are generally quite pleased with our Company's operating results during the second quarter of 2002," stated Rick McTaggart, President of Consolidated Water Co. Ltd. "Revenue growth in our primary market, the Cayman Islands, was maintained and in line with management's expectations during the most recent quarter, despite a reduction in tourist arrivals that we attribute to the softness in the U.S. economy. Water consumption by new customers that were connected pursuant to the Britannia water plant purchase more than offset reduced demand from hotels and other tourist-oriented businesses. Meanwhile, water sales and net income in Belize were up 14% and 11%, respectively, in the second quarter."
"Net income for the second quarter was 7% below prior-year levels, primarily due to early-stage losses at our Bahamas operations, slightly lower gross operating margins at our Britannia water plant when compared with our other, more fully-utilized plants, higher audit fees, increased insurance costs and additional expenses related to the printing and mailing to investors of our annual report and other financial information," continued McTaggart.
"The purchase of the Britannia reverse osmosis plant in February expanded our water production capacity on Grand Cayman by 440,000 U.S. gallons per day (gpd)," commented Jeffrey Parker, Chairman and Chief Executive Officer of Consolidated Water Co. Ltd. "During the most recent quarter, the plant delivered approximately 170,000 gpd to the Hyatt Hotel and golf course at concessionary rates, and another 130,000 gpd to other customers at listed selling prices. This leaves an additional 140,000 gpd of available capacity at the Britannia plant to satisfy future demand, and we are confident that the profitability of the plant will expand significantly as capacity utilization increases."
"Water sales and net income set new records for the first half of 2002, and our expectations are that new records will also be established for the year ending December 31, 2002," continued Parker. "We continue to believe that Consolidated Water can 'export' its operating expertise in water desalination to a number of other countries in the Caribbean and in other parts of the world where naturally occurring supplies of potable water are scarce."
The Company has paid cash dividends consistently since 1985. A quarterly cash dividend of $0.105 per share was paid on July 31, 2002 in respect of the quarter ended June 30, 2002, and the Company's Board has declared a similar dividend, payable October 31, 2002, in respect of the quarter ending September 30, 2002. This is equivalent to an annualized cash dividend rate of $0.42 per share.