Profile: Consolidated Water Co Ltd (CWCO.O)
2 Mar 2015
Consolidated Water Co. Ltd. develops and operates seawater desalination plants (that utilize reverse osmosis technology) and water distribution systems in areas where naturally occurring supplies of potable water are scarce or nonexistent. The Company operates in three segments: retail water operations, bulk water operations and services operations. The Company’s retail water operations supply water to end-users, including residential, commercial and government customers. Its bulk water operations supply water to government-owned distributors. The Company’s retail and bulk operations serve customers in the Cayman Islands, The Bahamas, Belize, the British Virgin Islands and Indonesia. Its services operations provide engineering and management services, which include the design and construction of desalination plants and the management and operation of desalination plants owned by affiliated companies.
Retail Water Operations
The retail water operations segment produces and supplies water to end-users, including residential, commercial and government customers. The Company sells water through its retail operations to a variety of residential, commercial and government customers through its wholly owned subsidiary Cayman Water, which operates under an exclusive license issued to the Company by the Cayman Islands government under The Water (Production and Supply) Law of 1979. Pursuant to the license, the Company has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area which consists of two of the three most populated areas of Grand Cayman Island, the Seven Mile Beach and West Bay areas.
Under the Company’s license, it pays a royalty to the government of 7.5% of its gross retail water sales revenues (excluding energy adjustments). The selling prices of water sold to the Company’s customers are determined by the license and vary depending upon the type and location of the customer and the monthly volume of water purchased. The license provides for an automatic adjustment for inflation or deflation on an annual basis, subject to temporary limited exceptions, and an automatic adjustment for the cost of electricity on a monthly basis. The Water Authority-Cayman (WAC), on behalf of the government, reviews and confirms the calculations of the price adjustments for inflation and electricity costs.
The Company’s retail operations in the Cayman Islands produce potable water at four reverse osmosis seawater conversion plants in Grand Cayman located at its Abel Castillo Water Works (ACWW), Britannia and West Bay sites. It owns the land for its ACWW and West Bay plants and has entered into a lease for the land for its Britannia plant until January 1, 2027. The current production capacity of the two plants located at ACWW is 2.2 million gallons of water per day. The production capacity of the Britannia plant is 715,000 gallons of water per day. The production capacity of the West Bay plant is 910,000 gallons of water per day.
Bulk Water Operations
The bulk water operations segment produces potable water from seawater and sells this water to governments and private customers. The Company sells bulk water in the Cayman Islands through its wholly owned subsidiary OC-Cayman. It sells water to the Water Authority-Cayman (WAC) from three reverse osmosis seawater conversion plants in Grand Cayman that are owned by the WAC but operated by OC-Cayman: the Red Gate, North Sound and North Side Water Works plants, which have production capacities of approximately 1.3 million, 1.6 million and 2.4 million gallons of water per day, respectively. The Company also operated and sold water from the Lower Valley plant, which is owned by the WAC and has a production capacity of 1.1 million gallons per day, through the January 2013 expiration date of its operating contract for that plant. The WAC now operates the Lower Valley plant. The plants that the Company operates for the WAC are located on land owned by the WAC.
In Belize, the Company sells bulk water through its wholly owned subsidiary CW-Belize. The Company owns the reverse osmosis seawater conversion plant in Belize and leases the land on which its plant is located from the Belize government. The land lease expires in March 2026. The production capacity of the plant is 550,000 gallons of water per day.
The Company sells bulk water in The Bahamas to the Water and Sewerage Corporation of The Bahamas (WSC) and to a private resort on Bimini through its majority owned subsidiary, CW-Bahamas. The Company supplies bulk water in The Bahamas from its Windsor, Blue Hills and Bimini plants. The water supply agreement for the Company’s Windsor plant, which has a capacity of 3.1 million gallons per day, expired in July 2013.
The Company supplies water from the Blue Hills plant, the Company’s seawater conversion facility, under the terms of a 20-year water supply agreement with the WSC. The Bimini plant has a capacity of 115,000 gallons per day and supplies water to a private resort under a water supply agreement that expires in December 2020. The high pressure pumps for the Company’s plants in the Bahamas are diesel-driven. Electricity for the remainder of its plant operations is supplied by Bahamas Electricity Corporation.
The services operations segment provides engineering and management services, including designing and constructing desalination plants, and managing and operating plants owned by affiliated companies. The Company provides design, engineering and construction services for desalination projects through DesalCo, which is recognized by suppliers as an original equipment manufacturer of reverse osmosis seawater desalination plants for the Company. DesalCo also provides management services to the Company’s affiliates.
The Company’s engineering department also conducts research and development. It frequently tests new components and technology offered by suppliers in its business and, at times, it collaborates with suppliers in the development of their products.
The Company competes with GE Water, Veolia and IDE.
Consolidated Water Co Ltd
TRAFALGAR PL, WEST BAY RD
GRAND CAYMAN 1-1102
Company Web Links
- Consolidated Water Co. Ltd. to Present at 27th Annual ROTH Capital Conference on Tuesday, March 10, 2015
- Consolidated Water Co. Ltd. Declares Second Quarter Cash Dividend
- Consolidated Water Co. Ltd. to Present at Noble Financial Capital Markets' Eleventh Annual Equity Conference on Monday, January 19, 2015
- Consolidated Water Co. Ltd. Declares First Quarter Cash Dividend
- Consolidated Water Co. Ltd. to Present at LD MICRO "Main Event" Investor Conference on Tuesday, December 2, 2014