Consolidated Water (CWCO)
Consolidated Water (CWCO) is a utility with some innovative technology in its pursuit to treat and provide water in parched areas.
CWCO is not your typical water utility. While its peers simply process and transport fresh water to customers, and collect the waste water that results post-use (and treats it), CWCO is in the business of desalination — converting unusable salt water into fresh water, and transporting it to some of the most underserved areas globally.
The company uses a process known as reverse osmosis, which implements a pressurized system to separate saline from fresh water and passing the water through a semi-permeable membrane that keeps the salt out. The process is used at CWCO’s 13 plants located throughout the Caribbean. The bulk of its 26 million gallons per day of capacity is located in the Cayman Islands and the Bahamas, with 92% of capacity located there.
CWCO fell after reporting disappointing first-quarter earnings of 4 cents per share and revenues of $16.3 million. Both numbers were shy of expectations — 9 cents per share and $17 million. The miss was largely due to a drop in profit-sharing from one of its affiliates in the BVI, as well as increased costs from the ongoing Baja, Calif. water desalination project.
However, it has since made a significant turnaround since its post-earnings low, rebounding nicely. As the company continues to broaden its geographic footprint, especially into important water-starved Mexico and California regions, revenues should strengthen and I expect the Street to take notice.