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SEC Filing
Nov. 14, 2012
2012 Q3 Data
Check list:
1.Major Business.
Seawater distilling mainly in Cayman island(around 60%), Bahamas(around 40%).
Revenue: Retail Segment: 1/3 Bulk Segment: 2/3.
Retail price is roughly $30/kgallon
Bulk price is around $7/kgallon.
The Cayman island water currently might charge $25/k gallon for end user. Compare to $11.3/kgallon at Toronto and $11.7/kgallon at New York.
The Bahamas only charge about $12/kgallon for end user.
in BVI lawsuit, it defined $13.91/kgallon as fair price that BVI should pay to CWCO.
10 Major plants:
Bulk segment:
Blue Hill, Nassau, Bahamas: 12.1 mgd. Contract will expire at around 2031.
Windsor, Nassau, Bahamas: 3.1 mgd Contract will expire at Mar. 1, 2013.
North Side Water Works plants, Grand Cayman: 2.4 mgd.
Red Gate, Grand Cayman: 1.3 mgd, Will expire at July 2, 2017.
North Sound, Grand Cayman: 1.6 mgd, Will expire at Apr. 1, 2014.
Lower Valley, Grand Cayman: 1.1 mgd, Will expired at Jan. 12, 2013
Retail segment:
Abel Castillo Water Works (“ACWW”), Grand Cayman: 2 plants 2.2 mgd,
Britannia, Grand Cayman: 715 kgd
West Bay, Grand Cayman 910 kgd
2.Balance sheet.
Recent Price $6.95, Tangible book value: $8.67, Share outstanding:$14.58, Market Cap: $101m.
Current asset: $58m, Current liability $8.6m, Debt: $7.3m, Inventory: $1.5m, Cash:$40m.
3.Credit facility.
Principles, interest rate, covenant, outstanding, payment schedule,
4.Financial data by years.
| 3Q12 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 48.8 | 55.1 | 50.7 | 58 | 65.7 | 54.1 | 38.2 | 26.2 | 23.3 | 19.1 | 12.2 |
| OP Income | 5.5 | 5.4 | 5.3 | 8.2 | 9.8 | 9.2 | 7.2 | 4.2 | 5.0 | 4.0 | 2.6 |
| Income/s | 0.38 | 0.42 | 0.43 | 0.74 | 0.50 | 0.79 | 0.59 | 0.45 | 0.53 | 0.83 | 0.63 |
| CF-WC | 11.3? | 12.5 | 11.9 | 18.8 | 17.1 | 14.8 | 13.1 | 7.4 | 9.1 | 7.3 | 4.2 |
| CAPX | 3.1 | 14* | 1.3 | 2.6 | 6.6 | 7.8 | 25.9 | 1.6 | 0.7 | 2.2** | 3.1 |
| Cash | 40.2 | 53.6 | 46.1 | 44.4 | 36.2 | 38.5 | 37.3 | 12.0 | 9.2 | 8.2 | 0.6 |
| Debt | 7.2 | 24.4 | 17.3 | 21.1 | 22.3 | 23.5 | 24.7 | 22.8 | 16.6 | 20.4 | 2.6 |
| Dividend | 3.3 | 4.9 | 4.4 | 5.0 | 3.8 | 3.7 | 3.1 | 2.8 | 2.6 | 1.9 | 1.7 |
| Exec Comp | 2.2 | 1.4 | 1.8 | 1.6 | 2.1 | 1.6 | 0.9 | 1.5 | 1.2 | 0.6 | |
| Employees | 123 | 113 | 120 | 124 | 96 | 121 | 72 |
**2003: Exclude $19.5 + $8.9 acquisition??
5.Cost structure
CapX upfront + electricity cost + labor cost.
6.Insider holding, options, Insider trading info, share buy back.
Frederick W. McTaggart (CEO) 135k. All insider < 4%.
7.Management compensation.
ref above.
8.Employee numbers. Revenue/Employee. Compensation/Employee.
123,
9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?
10.Auditor
Marcum LLP, previous(2008) is called Rachlin LLP .
11.Major events.
(1) Just settle down a $10.6m law with BVI(British virgin island government). Will receive $6.7m*44% in Q4.
(2) Q3 2012 start build 0.5 mdg plant in Bali, Indonesia. However, they don't have a contract yet.
(3) Since 2010, it start to build 100 mdg plant in Mexico. So far it has spend 1.2m(3Q12), 3.0m(2011), 1.7m(2010) on this project.
(4) May 2012, it created joint venture with NPDC in Nassau to enter retail business. However, the contract was blocked by the local government water company which is their bulk water customer.
(5) The retail license with Cayman government expired at 2010. Since then it had argument with the government about the renew of the license. Currently it charges its customer 20% higher than the government do. Eventually they should be able to sign a new contract but the retail margin could be affected.
(6) The contract of the 3.1 mdg Windsor plant in Bahamas will expire March 1, 2013. Two plants totally 2.7 mdg at Cayman will expire soon as well.
12.Comments.
(1) The main risk comes with its intense relationship with local government in recent years. Both in Cayman, BVI, Bahamas. That is the main reason for its low stock price right now.
(2)The Mexico plant could be very risky for the company as the project is so big($500m) and the government there might be corrupted as well. Up to Q3 2012, it had spend $1.2m(3Q12) +$3.0m(2011)+$1.7m(2010). Another $4.4m will be spent by Q2 2013.
(3)Insider ownership quite low and management compensation are quite high.
(4)Overall, it is pretty cheap given we can fairly expect an 10m/year FCF and grows potential is quite good.
Mar. 21, 2017
Current price $10.5, Shares outstanding: 14.87m, Market Cap: $155m.
(1) The Bahamas contract extended for 15 years with $8.7m CapX requirement and 18% deduction in base rates. It will still be profitable for the company in the short term.
(2) The Mexico project is close to the construction stage while the final decision will be made middle 2017. The first phase will be 50mg/d which will be running with in 3 years once starting construction. The second phase 50mg/d will be finished before 2024. It needs $500m to complete and is twice the size of CWCO. The first phase funding on CWCO might be 1/4 of the total funding. Currently the company has over $40m in cash.
(3) The Cayman contract still is not renewed.
(4) There is an acquisition of 50% interest of one of its supplier for $7.7m doesn't go very well and has some wrote off of goodwill.
(5) Despite all those, the company generates quite good cash flow although the profit is down some level. Compare to the Mexico project, the profit is less an issue. The major task is to get the project going. Currently the chances is much higher than before although there are still risk there.
