Profits flow in for private water company

| 09/11/2018 | 41 Comments
Cayman News Service

Abel Castillio Water Works

(CNS): The president and CEO of Consolidated Water, Frederick McTaggart, reported in the company’s latest financial report that it enjoyed a double-digit increase in gross profit across all business segments in the third quarter of this year. The company, which operates desalination plants here and around the region and also supplies water to the West Bay area of Grand Cayman, said its retail desalination operations benefitted from higher volumes and fuel pass-through charges, and its manufacturing operations improved thanks to increased order flows and higher use.

“Income from operations for the third quarter more than doubled year-over-year to $2.6 million, and net earnings for the period were up over 3.5 times from 2017 levels, thanks to a one-time gain of approximately $1.9 million, reflecting the favorable resolution of outstanding litigation in the British Virgin Islands,” McTaggart said in the release about the report.

“Our capital allocation priorities remain the same: investing in the business and returning the capital to our shareholders in the form of dividends. Our capital expenditures will decrease now that the Windsor plant is completed but will remain above last year’s levels as we also continue to work on the expansion of the Abel Castillo Water Works plant in Grand Cayman. The improvements to this plant will continue through the first quarter of 2019,” he added.

Currently in discussions to sell its operations in Belize, the company said it had repatriated $2.75 million from that country after many years of difficulties in transferring funds due to the economic conditions in the region.

Total revenues for the third quarter 2018 were $18.8 million, representing a 13.6% increase from $16.6 million in the third quarter of 2017. The first nine months of 2018 were up 5.3% compared with 2017, the company reported.

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Comments (41)

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  1. Anonymous says:

    got us like slaves to govt…

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  2. Anonymous says:

    Of course their profits are skyrocketing..Seven Mile Beach including Camana Bay and several large condos and homes and the Kimpton has been built.

    Water Consumption has probably doubled in the last couple of years but we have not seen a one slight hint of reduction in price. Who monitors these monopolies?

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    • Anonymous says:

      I totally agree and yet they are doing nothing to update their technology and still using old antiquated water meters. They only focus on the profits and the customers continue to suffer.

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  3. Anonymous says:

    Don’t ever use their water if you have a pool to fill..Trust me I learned the hard way…Call Flowers and have them deliver bulk water to fill your pool.It’s faster and trust me a whole lot cheaper…It is no wonder their profits are so ridiculously high…

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  4. Rick Finlay says:

    Caymanians can participate in the success of CWCO by purchasing shares in the company on NASDAQ through any local broker or the company itself.

    This is a home grown success but still the crabs want to pull others back into the bucket.

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    • Anonymous says:

      Rick, most of us are not paid as well as you are as a director of Cayman Water and cannot afford to invest in your company..Cayman Water is a home grown success because it is a monopoly and because of Caymanians being forced to use and pay for your services..Tell me what other choice I have if I live on the Western Peninsula?..NONE..I have to drink water therefore you make money..GUARANTEED PROFIT!!!

      Caymanians every day are forced to pay whatever you charge for water which is exorbitant and lord forbid if a pipe breaks, smiles break out all over Cayman Water at the poor customers misfortune..rejoicing begins as to how it helps boost profits for the year end! but oh yeah but your solution is you will give you a payment plan and you will be loyal to us for the rest of your life..ugh!!!

      If you want Caymanians to invest why not figure out a way of reducing the cost or giving back a small reduction in shares of each customers annual bill.

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      • Anonymous says:

        Amen! Well said!!!..Giving one share a year to each customer who pays their bill on time would go a long way to make us feel like we are doing something else but lining the pockets of the board of directors and the shareholders…

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    • Anonymous says:

      A couple of questions for the Board member.

      1. Only 37% of revenue but 51% of profits are generated in Cayman. When I pay my water bill, why should I not feel that I an subsidizing somebody’s water bill in the Bahamas?

      2. On November 2, 2018, the Company received a letter from OfReg in which OfReg rejected the Company’s most recent commercial proposal.

      You have been “negotiating” a license renewal since July 2010 so any sensible person would assume that you have not been negotiating in good faith but rather your only interest is to stall the process in order to maintain the excessive charges in Cayman exemplified in 1. above that you as a Director has signed off on. Can you explain that with asking me to purchase over-priced shares as well as water?

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  5. Water water everywhere and not a cheap drop to drink says:

    Please keep OfReg out of this, it willcost the taxpayer another half million in consultancy fees.

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  6. Anonymous says:

    Pure unadulterated rip off. Take our own sea water desalinate it and then charge us an arm and leg for our own water!

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  7. Anonymous says:

    Isn’t this the same company that was recently in the news for charging a customer $25,000 for a month of water? No wonder they are rolling in it…When are we going to find ways to stop this monopolies from ripping off their customers.. Cayman needs a good Consumer Protection Agency or a law with teeth in it to stop these predators…

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    • Anonymous says:

      It’s the same thing I was thinking, damn!!!!

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    • Anonymous says:

      This is one that we know about..Can you imagine how many of their customers are going through the same ordeal..Cayman Water should be ashamed of themselves.

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  8. Anonymous says:

    jamaicans had to get storage tanks to get away from their govt…why not us???

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  9. Anonymous says:

    gonna do what a friend did. he got some storage tanks and buys water from flower …$50 per thousand gals…his bill went from 200 to 400 a month to $50 bucks lasting 3.5 months…and no he dont have to worry about the company using meter’s cube……gals?
    you cant win …so compromise…

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    • Anonymous says:

      If Cayman Water keeps this up, this maybe a good business to get into.

      • Anonymous says:

        You can, buy shares in the company.

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        • Anonymous says:

          Not me! I won’t buy shares in CUC for the same reason… They are monopolies that make huge profits by taking advantage of my people..There are more things in life and better companies out there to invest my money in.

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    • Anonymous says:

      You do realize that Flowers buy their water from WAC, right?

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      • Anonymous says:

        There is a big difference between WAC(Water Authority) and Consolidated Water or Cayman Water as they are known locally…

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  10. Anonymous says:

    Cayman Government needs to put an end to these monopolistic entities. Water is something that everybody should have the right to. It should not be used by Cayman Water or anyone else to reap huge profits for something that is necessary for life.

    Government needs to have Cayman Water turned over to the Water Authority. Having an entity that can literally cut you off from drinking water is no different that living in a desert somewhere where water can be available but people thirst to death because the big companies refuse to find a way to get it to them just because their profit margins would be low..

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    • Anonymous says:

      You just contradicted yourself. Stop monopolies! Now, create one!

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      • Anonymous says:

        I would rather my government have the monopoly because I can at least vote out the government every four years but there is not a damn thing I can do with what Cayman Water is doing to us..

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  11. Anonymous says:

    Maybe the poor guy that had the $25K bill helped to top up their profits for the year..

    These people have no conscience or morals. Every business should be able to make a profit but by taking advantage of the unfortunate is downright unethical..

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    • Anonymous says:

      The government needs to allow us to be able to build and use cisterns again. By stopping us from doing this, it allows companies such as this one to continue to take advantage of their customers. It is a monopoly on something that we cannot do without..We can live without electricity, maybe even gas but we can’t live without water and these people know that and they will continue to treat us this way until we stand up and fight.

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  12. Anonymous says:

    water auth charges 1.5% if bills not paid by 21 every mt? civil service pay always later in mt except december…so…

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    • Anonymous says:

      You need to work on your budgeting. The electric and water utilities, but not the phone companies, charge you for the service AFTER you have used it.

      Can you go to any grocery store in Cayman and take groceries for an entire month and you only have to pay the bill at the end of the month when you get paid?

      A 1.5% charge on unpaid bills is probably to cover the risk of you not being able to pay your bill at the end of the month in which you are fired from the job.

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      • Anonymous says:

        I love how some people like to defend companies that charge these fees to ‘cover ‘ any risks,maybe we should charge them a fee to cover the risk of poor or lack of service

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      • Anonymous says:

        This is the mentality of those that work and own Cayman Water. Profits at any expense including these excessive charges.

        Please understand this is water we are talking about not groceries. The body can live without food a lot longer than it can without water.

        Threatening to charge us and cut us off from water is below any ethical and morals that anyone should have.

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  13. Anonymous says:

    Only 37% of revenue, but 51% of profits generated in Cayman.

    From their 10Q:
    https://www.sec.gov/Archives/edgar/data/928340/000114420418058352/tv505708_10q.htm

    The Company sells water through its retail operations under a license issued in July 1990 by the Cayman Islands government that grants Cayman Water the exclusive right to provide potable water to customers within its licensed service area. As discussed below, this license was set to expire in July 2010 but has since been extended while negotiations for a new license take place. Pursuant to the license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman, the Seven Mile Beach and West Bay areas. For the three months ended September 30, 2018 and 2017, the Company generated approximately 33% and 33%, respectively, of its consolidated revenues and 45% and 48%, respectively, of its consolidated gross profit from the retail water operations conducted pursuant to Cayman Water’s exclusive license. For the nine months ended September 30, 2018 and 2017, the Company generated approximately 37% and 38%, respectively, of its consolidated revenues and 51% and 52%, respectively, of its consolidated gross profit from the retail water operations conducted pursuant to Cayman Water’s exclusive license.

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    The license was originally scheduled to expire in July 2010 but has been extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement. The most recent extension of the license expired on January 31, 2018. The Company continues to provide water subsequent to January 31, 2018 on the assumption that the license has been further extended to allow the parties to continue negotiations without interruption to an essential service.

    In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”). OfReg is an independent and accountable regulatory body with a view of protecting the rights of consumers, encouraging affordable utility services, and promoting competition. OfReg, which began operations in January 2017, has the ability to supervise, monitor and regulate multiple utility undertakings and markets. Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for economic regulation of the water utility sector and the retail license negotiations from the WAC to OfReg in May 2017. The Company began license negotiations with OfReg in July 2017 and such negotiations are continuing. On November 2, 2018, the Company received a letter from OfReg in which OfReg rejected the Company’s most recent commercial proposal. Further, OfReg indicated that if the Company is unwilling to submit a new proposal offering certain additional concessions, then OfReg will have to consider its other available options. The Company has not yet determined how it will respond to this correspondence from OfReg. The Company cannot make any assurances that it will be able to reach an agreement with OfReg for a new license or that the terms of any license agreed to will be on terms as favorable to the Company as the terms of the license that expired January 31, 2018.

    The Cayman Islands government could ultimately grant a third party a license to service some or all of Cayman Water’s present service area. However, as set forth in the existing license, “the Governor hereby agrees that upon the expiry of the term of this Licence or any extension thereof, he will not grant a licence or franchise to any other person or company for the processing, distribution, sale and supply of water within the Licence Area without having first offered such a licence or franchise to the Company on terms no less favourable than the terms offered to such other person or company.”

    The Company is presently unable to determine what impact the resolution of its retail license negotiations will have on its cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows the Company has historically generated from Cayman Water retail operations and could require the Company to record impairment losses to reduce the carrying values of its retail segment assets. Such impairment losses could have a material adverse impact on the Company’s financial condition and results of operations.

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    • Anonymous says:

      Taking advantage of us is what they are good at…If they tried this in any other country they would be kicked to the curb..

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      • Anonymous says:

        Yes, because like in all things Caymanians are to passive and won’t stand up against these monopoly giants..On top of that we have a weak Government that won’t rock the boat and demand changes.

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        • Anonymous says:

          Totally agree..They will keep doing this to us until there is none of us left..When will Caymanians stand up and be counted?

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