Consolidated Water Co. Ltd.

What they do

The company produces potable water from seawater using reverse osmosis technology and sells it to retail customers in Grand Cayman under an exclusive government license and to government-owned utilities in the Cayman Islands and The Bahamas. It also designs, constructs and operates water production, treatment and reuse plants for third parties, largely in the United States, and manufactures specialized water-related products through its Aerex subsidiary. It holds a 50% voting and 43.53% equity interest in Ocean Conversion (BVI) Ltd., which supplies bulk water to the British Virgin Islands Water and Sewerage Department.

Revenue drivers

• Services Operations — Design, construction, management and operation of water production, treatment and reuse plants for third parties, plus consulting; about 35% of 2025 consolidated revenue, with revenue mix shifting between construction and higher-margin O&M, design and consulting.
• Retail Water Operations — Potable water produced from seawater and sold to residential, commercial and government end-users in two of the three most populated areas of Grand Cayman under an exclusive license; about 26% of 2025 consolidated revenue and $8.7 million in Q2 2026.
• Bulk Water Operations — Potable water sold to government-owned utilities in the Cayman Islands and The Bahamas; about 25% of 2025 consolidated revenue and $9.9 million in Q2 2026, up 20% on higher energy pass-through charges and two new Cat Island plants.
• Manufacturing Operations — Specialized and custom water-related equipment and systems for commercial, municipal and industrial use through Aerex; about 14% of 2025 consolidated revenue and $2.7 million in Q2 2026, down 49% on fewer new purchase orders.

Recent performance

Second quarter 2026 revenue decreased 2% to $32.9 million, with retail up 0.3% to $8.7 million, bulk up 20% to $9.9 million, services up 1% to $11.6 million and manufacturing down 49% to $2.7 million. Net income from continuing operations attributable to company stockholders was $4.0 million, or $0.25 per diluted share, versus $5.2 million, or $0.32 per diluted share, in the prior-year quarter. Including discontinued operations, net income attributable to company stockholders was $3.9 million, or $0.24 per diluted share, compared to $5.1 million, or $0.32 per diluted share. For the six months ended June 30, 2026, revenue was $62.8 million versus $67.3 million a year earlier, with gross profit of $21.9 million versus $25.1 million. Cash and cash equivalents rose to $132.6 million and working capital to $144.6 million at June 30, 2026.

Strategy

Management states it intends to expand and diversify products, services and markets to meet global demand for clean water, targeting the United States and the Caribbean and pursuing acquisitions or joint ventures that complement existing businesses and add markets. The company continues to invest in water infrastructure, including commissioning a seawater desalination plant on Cat Island, The Bahamas, in 2026, bringing the total to two plants on the island. In Q2 2026 it received a 25-year exclusive water production and supply concession and utility license for Seven Mile Beach and West Bay, Grand Cayman, and extended O&M agreements for Water Authority-Cayman's North Sound and North Side Water Works plants through March 31, 2027. It also appointed Sachin Chawla as senior vice president, strategy and growth, citing his desalination and utility operations experience.

Risks

• Customer concentration and contract loss — Services revenue fell about $2.2 million in Q2 2026 from the Q1 2026 expiration of PERC contracts with two customers, and a former Aerex major customer substantially reduced purchases beginning in 2022.
• Manufacturing order volatility — Manufacturing revenue dropped 49% in Q2 2026 to $2.7 million due to fewer new purchase orders, and prior results were boosted by a large late-2024 order.
• Goodwill and long-lived asset impairment — The company carries $12.9 million of goodwill and $2.0 million of net intangible assets at June 30, 2026, and previously recorded a $2.9 million goodwill impairment on its manufacturing reporting unit in 2021.
• Energy cost and pass-through exposure — Bulk revenue and gross profit increased in Q2 2026 primarily from higher energy pass-through charges at CW-Bahamas driven by significantly higher energy costs.

Outlook

Management pointed to Q2 2026 revenue growth in retail, bulk and services against the manufacturing decline, and cited a new southern California municipal contract awarded to PERC in November 2025 expected to generate approximately $4.5 million over three years. Two announced water treatment plant construction projects, a $3.9 million drinking water plant expansion in Colorado and an $11 million project, drove construction revenue up $2.5 million. The company also flagged the 25-year Grand Cayman concession and the two new Cat Island desalination plants as recent additions to its operating base.