CWCO Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenue:: $32.9 million, a 2% decrease from Q2 2025.

Retail Revenue:: $8.7 million, stable despite a 2% decrease in water sales volume, supported by a rate increase for a major non-potable customer.

Bulk Revenue:: $9.9 million, up 20% year-over-year, driven by higher energy pass-through charges and contributions from new desalination plants in the Bahamas.

Services Revenue:: $11.6 million, a 1% increase, primarily due to higher construction revenue, offset by lower O&M revenue following contract expirations.

Manufacturing Revenue:: $2.7 million, down 49% year-over-year due to fewer new purchase orders.

Gross Profit:: $11.0 million (33% of revenue), down from $12.8 million (38% of revenue) in the prior year.

Net Income:: $4.0 million ($0.25 per diluted share), compared to $5.2 million ($0.32 per diluted share) in Q2 2025.

Balance Sheet:: Cash and cash equivalents of $132.6 million, with no significant debt.

2Strategic Updates and Business Highlights

New Retail License:: Received a 25-year retail water utility license in Grand Cayman, effective August 1, providing long-term earnings visibility and regulatory clarity.

Tourism Growth:: Strong tourism momentum in the Cayman Islands, with a 11.3% increase in stay-over visitors in the first half of 2026, expected to drive water demand.

Desalination Projects:: Two new desalination plants in the Bahamas contributing to revenue; a new project in Hawaii is set to begin procurement of materials, with construction anticipated to start later this year.

Manufacturing Orders:: Secured $10.1 million in purchase orders for municipal water treatment equipment in Florida, indicating strong demand in the municipal market.

3Forward Guidance and Outlook

Manufacturing Revenue:: Expected to be lower than 2025 levels, but backlog and recent orders provide optimism for improvement in future quarters.

Hawaii Project:: Anticipated construction start later in 2026, contingent on obtaining necessary permits.

Market Opportunities:: Continued focus on expanding in the Florida market and exploring opportunities in other states, including Texas and California.

4Bad News, Challenges, or Points of Concern

Manufacturing Decline:: Significant 49% drop in manufacturing revenue raises concerns about order volume and market competitiveness.

O&M Revenue Decline:: Decreased O&M revenue due to expired contracts, with increased competition noted in the O&M market.

Delinquent Accounts Receivable:: Ongoing issues with CW Bahamas' accounts receivable, with uncertainty regarding when reductions will occur.

Regulatory Delays:: The need for an archeological permit in Hawaii is delaying progress on the desalination project, which could impact timelines.

5Notable Q&A Insights

Hawaii Project Permitting:: The archeological permit is a prerequisite for applying for other necessary permits, complicating the timeline for the Hawaii project.

Manufacturing Opportunities:: While Florida is currently busy, the company is also exploring opportunities in other states, particularly on the West Coast.

O&M Market Competition:: Increased competition in California for O&M contracts, with the company focusing on its value proposition as a smaller player with lower overhead. Overall, CWCO's Q2 2026 results reflect a mixed performance with growth in certain segments but challenges in manufacturing and O&M revenues. The company remains optimistic about future opportunities, particularly in the context of strong tourism and new projects in the pipeline.