Consolidated Water (NASDAQ:CWCO) executives said 2025 results were largely in line with expectations across the company’s retail, bulk, and manufacturing businesses, while performance in its services segment fell short due to permitting delays tied to a major desalination project in Hawaii.
Chief Executive Officer Rick McTaggart told investors the shortfall in services revenue was “due completely to a permitting delay” for the company’s 1.7 million gallon-per-day seawater desalination project in Kalaeloa, Hawaii. McTaggart said the delay reflects the complexity of a multi-agency process and was “not due to any failures” by the company. Despite the pause in construction-related activity, he said the project achieved key milestones over the last year, including successful pilot testing, confirmation from the Honolulu Board of Water Supply that water quality matches its current supply and does not harm its system, and completion of 100% of the plant design.
2025 revenue dipped slightly; net income from continuing operations rose
Sasnett reported 2025 gross profit of $48.4 million. He noted the company’s consolidated gross margin improved in dollars and said gross profit percentages increased across all four business segments, attributing the performance to efficiency and cost control initiatives.
Net income from continuing operations was $18.6 million, or $1.16 per diluted share, compared with $17.9 million, or $1.12 per diluted share, in 2024. Including discontinued operations, net income attributable to shareholders was $18.3 million, or $1.14 per diluted share, versus $28.2 million, or $1.77 per diluted share, a year earlier.
Retail growth in Grand Cayman driven by low rainfall and customer gains
Retail revenue increased 6.6% to $33.6 million, driven by an 8.3% increase in water volume sold to a record 1.09 billion gallons and an approximately 7% increase in customer accounts in the company’s licensed area on Grand Cayman. Management cited historically low rainfall and continued growth in population and business activity as key drivers.
McTaggart also pointed to tourism as a supporting factor. Citing Cayman Islands Department of Tourism figures, he said tourist air arrivals rose 2.9% in 2025 to about 450,000, and preliminary data showed January 2026 was also a strong month for arrivals. However, he cautioned that early 2026 was much wetter, with rainfall up about 280% in the first two months of the year, which management expects will affect first-quarter 2026 sales.
On the regulatory front, McTaggart said the company received a new concession in February of last year that maintains the terms of its 1990 license until a new license is enacted by OfReg. Negotiations with OfReg have been “more active than in previous quarters,” he said, but remain ongoing.
Bulk segment steadier; fuel pass-through lowered revenue
Bulk segment revenue decreased by less than 1% in 2025, which Sasnett said was due to declining energy prices that reduced the energy pass-through component of rates in the Bahamas operation. In the Q&A, management said energy cost recovery is adjusted monthly based on average fuel and electricity costs.
While revenue edged lower, McTaggart said the bulk segment generated higher profitability in dollars and gross profit percentage, driven by lower costs of revenue and improved operational execution in the Bahamas and Cayman Islands.
Sasnett also provided an update on receivables in the Bahamas. CW Bahamas accounts receivable fell to $20.7 million as of Dec. 31, 2025, from $28.4 million a year earlier, reflecting payments received on delinquent balances from the Water and Sewerage Corporation (WSC). As of Feb. 28, the receivable from WSC stood at $22.6 million. Sasnett said the company remains in frequent contact with Bahamas government officials who have expressed an intention to reduce delinquent balances, but added management cannot determine if or when that reduction will occur.
Services segment pressured by project completions and Hawaii permitting
Management said services revenue declined primarily due to the completion of two major design-build projects in 2024 and the lull in Hawaii activity after pilot testing was completed in early 2025. Sasnett said services construction revenue fell to $13.5 million in 2025 from $18.6 million in 2024, reflecting the completion of projects including PERC’s contract with Liberty Utilities and the Red Gate contract in Grand Cayman, as well as lower construction revenue recognized on the Hawaii project.
McTaggart said the decline was partly offset by growth in recurring operations and maintenance work. Sasnett reported that O&M contract revenue rose 9% in 2025, driven by incremental contributions from PERC Water and REC in Colorado, including a new municipal client in Southern California and additional services for a large federal client during the second half of the year. During the Q&A, management said that federal contract is expected to end at the end of the month and, according to their understanding, will be transferred to a neighboring municipal utility rather than rebid.
McTaggart also highlighted two new construction awards announced during the quarter:
- A $3.9 million drinking water plant expansion in Colorado (secured by REC).
- An $11.7 million wastewater recycling plant in Northern California (secured by PERC Water), designed to convert untreated wastewater into irrigation water for a San Francisco Bay Area golf club.
Management said revenue from both projects is expected to be recognized primarily this year. For the Northern California project, McTaggart said the company plans to start construction after the rainy season to reduce delays, while lining up subcontractors and ordering long-lead equipment in the meantime.
On Hawaii, McTaggart said the deferral of construction has shifted revenue recognition and cash flows into future periods and that the company anticipates construction will commence later this year, though he said the exact timing is difficult to predict. In response to investor questions, management said the key outstanding permit involves Hawaii’s State Historic Preservation Division and is a prerequisite for subsequent building and ground clearance permits. Management indicated the client is responsible for obtaining that permit.
Manufacturing expansion and focus on municipal and nuclear markets
Manufacturing revenue increased 6% to $18.7 million. McTaggart said segment improvement reflected a mix shift toward higher-margin products for nuclear power and municipal water clients, along with a focus on boosting efficiency and throughput.
In August 2025, the company completed an expansion of its Fort Pierce, Florida facility, adding 17,500 square feet and bringing total manufacturing space to 47,500 square feet. Management said the added capacity enables higher production volume and the ability to manage multiple projects simultaneously. McTaggart said the timing aligns with increased bidding activity for municipal water projects in Florida and noted that, given long lead times, management expects those municipal initiatives to contribute to growth in 2027.
McTaggart also said the company holds NQA-1 certification from two major nuclear industry companies and is seeing renewed interest in U.S. nuclear power solutions, which management believes positions the manufacturing business for continued growth.
On capital allocation, Sasnett said the company ended 2025 with $123.8 million in cash and cash equivalents, working capital of $141.9 million, and stockholders’ equity of $221.7 million, while maintaining no significant outstanding debt. He said projected liquidity needs include approximately $11.1 million in capital expenditures for existing operations, including about $1 million in the first half of 2026 for a Bahamas project. The company increased its quarterly dividend by 27.3% to $0.14 per share beginning in the third quarter of 2025 and paid about $2.3 million in dividends in January 2026.
About Consolidated Water (NASDAQ:CWCO)
Consolidated Water Co Ltd. is a developer, operator and manufacturer of water treatment and desalination systems. The company designs, engineers, builds and operates reverse-osmosis desalination plants and water treatment facilities, offering both turnkey project delivery and ongoing operations and maintenance services. Its product portfolio includes modular desalination units, water distribution systems, filtration membranes and associated equipment for potable water production.
Consolidated Water serves municipalities, resorts, commercial enterprises and private customers in the Caribbean and the southeastern United States.
