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What changed in Consolidated Water Co. Ltd.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Consolidated Water Co. Ltd.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+239 added−245 removedSource: 10-K (2024-03-27) vs 10-K (2023-03-30)

Top changes in Consolidated Water Co. Ltd.'s 2023 10-K

239 paragraphs added · 245 removed · 182 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

58 edited+14 added−14 removed58 unchanged
Biggest changeAquilex, a U.S. company located in Coral Springs, Florida, provides financial, engineering, information technology, administrative and supply chain management support services to our subsidiaries and affiliate. We include Aquilex in our retail segment for financial segment reporting purposes; however, it provides services to all four of our business segments. ​ Bulk Segment ​ Consolidated Water (Bahamas) Limited (“CW-Bahamas”).
Biggest changeWe include Aquilex in our retail segment for financial segment reporting purposes; however, it provides services to all four of our business segments. ​ Bulk Segment ​ Consolidated Water (Bahamas) Limited (“CW-Bahamas”). We own 90.9% of CW-Bahamas, which provides bulk water under long-term contracts to the Water and Sewerage Corporation of The Bahamas (“WSC”), a government agency.
Reverse osmosis is a fluid separation process in which the saline water (i.e. seawater) is pressurized and the fresh water is separated from the saline water by passing through a semi-permeable membrane which rejects the salts. The saline water is first passed through a pretreatment system, which generally consists of fine filtration and treatment chemicals, if required.
Reverse osmosis is a fluid separation process in which the saline water (i.e. seawater) is pressurized and the fresh water is separated from the saline water by passing through a semi-permeable membrane which rejects the salts. The saline water is first passed through a pretreatment system, which generally consists of fine filtration and, if required, treatment chemicals.
We expect that OC-BVI will be required to compete against SUEZ/Veolia, Seven Seas Water and other parties for any future business opportunities that may arise in the British Virgin Islands. ​ United States .
We expect that OC-BVI will be required to compete against SUEZ/Veolia, Seven Seas Water, TSG and other parties for any future business opportunities that may arise in the British Virgin Islands. ​ United States .
We believe that potential new markets for us include (i) any location where a need for potable water exists and reverse osmosis desalination of seawater or brackish water is an economically viable means of meeting such need; (ii) any location with a need for the water treatment and water reuse infrastructure development and management services we provide; and (iii) those new customers that require specialized water production and treatment products and systems such as those we manufacture. ​ 12 Table of Contents Cayman Islands.
We believe that potential new markets for us include (i) any location where a need for potable water exists and reverse osmosis desalination of seawater or brackish water is an economically viable means of meeting such need; (ii) any location with a need for the water treatment and water reuse infrastructure development and management services we provide; and (iii) those new customers that require specialized water production and treatment products and systems such as those we manufacture. ​ Cayman Islands.
Our agreement with the WAC for the NSWW plant expires in 2026. ​ Bulk Water Operations in The Bahamas ​ We sell bulk water in The Bahamas through our majority-owned subsidiary, CW-Bahamas, to the WSC, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. ​ We supply bulk water in The Bahamas from our Windsor and Blue Hills plants. ​ Our water supply agreement with the WSC for our Windsor plant, which has a capacity of 2.8 million gallons per day, expires in August 2033 and requires us to deliver and requires the WSC to purchase a minimum of 16.8 million gallons per week. ​ We supply water from the Blue Hills plant, our largest seawater reverse osmosis desalination facility with a capacity of 12.0 million gallons per day, under the terms of a water supply agreement with the WSC that expires in March 2032 that requires us to deliver and requires the WSC to purchase a minimum of 63.0 million gallons of water each week. ​ The high-pressure pumps at our Windsor and Blue Hills plants in The Bahamas are diesel engine-driven.
Our agreement with the WAC for the Red Gate plant expires in 2034. ​ Bulk Water Operations in The Bahamas ​ We sell bulk water in The Bahamas through our majority-owned subsidiary, CW-Bahamas, to the WSC, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. ​ We supply bulk water in The Bahamas from our Windsor and Blue Hills plants. ​ Our water supply agreement with the WSC for our Windsor plant, which has a capacity of 2.8 million gallons per day, expires in August 2033 and requires us to deliver and requires the WSC to purchase a minimum of 16.8 million gallons per week. ​ We supply water from the Blue Hills plant, our largest seawater reverse osmosis desalination facility with a capacity of 12.0 million gallons per day, under the terms of a water supply agreement with the WSC that expires in March 2032 that requires us to deliver and requires the WSC to purchase a minimum of 63.0 million gallons of water each week. ​ The high-pressure pumps at our Windsor and Blue Hills plants in The Bahamas are diesel engine-driven.
We maintain a standby generator with sufficient capacity to operate essential equipment at our Windsor and Blue Hills plants and are able to produce 100% of the production capacity with these plants during temporary interruptions in the electricity supply from BPL. ​ Services Operations ​ For fiscal years 2022 and 2021, our services operations accounted for approximately 31% and 21%, respectively, of our consolidated revenue. ​ We provide design, engineering and construction services for desalination infrastructure projects through DesalCo, an original equipment manufacturer of seawater reverse osmosis desalination plants.
We maintain a standby generator with sufficient capacity to operate essential equipment at our Windsor and Blue Hills plants and are able to produce 100% of the production capacity with these plants during temporary interruptions in the electricity supply from BPL. ​ Services Operations ​ For fiscal years 2023 and 2022, our services operations accounted for approximately 54% and 31%, respectively, of our consolidated revenue. ​ We provide design, engineering and construction services for desalination infrastructure projects through DesalCo, an original equipment manufacturer of seawater reverse osmosis desalination plants.
The WAC in turn distributes that water to properties in Grand Cayman outside of our retail license area. ​ The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed, built and operated by OC-Cayman: the North Sound, Red Gate and North Side Water 8 Table of Contents Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 1.3 million and 2.4 million gallons of water per day, respectively.
The WAC in turn distributes that water to properties in Grand Cayman outside of our retail license area. ​ The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed and built by DesalCo and operated by OC-Cayman: the North Sound, Red Gate and North Side Water Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 1.3 million and 2.4 million gallons of water per day, respectively.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ 7 Table of Contents See also ITEM 1A.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ See also ITEM 1A.
NSC was formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which 6 Table of Contents was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”). ​ On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the Comisión Estatal del Agua de Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”). ​ On June 29, 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.
NSC was formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”). ​ In August 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the Comisión Estatal del Agua de Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”). ​ In June 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.
DesalCo also provides management and procurement services for desalination plants and engineering services relating to municipal water production, distribution and treatment. DesalCo also conducts research and development. DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their products.
DesalCo also provides management and procurement services for desalination plants and engineering services relating to municipal water production, distribution and treatment. DesalCo also conducts research and development. DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their 9 Table of Contents products.
Our manufacturing operations consist of Aerex, an original equipment manufacturer and service provider of a wide range of specialized and custom products applicable to desalination, municipal water treatment and 9 Table of Contents industrial water and wastewater treatment. Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.
Our manufacturing operations consist of Aerex, an original equipment manufacturer and service provider of a wide range of specialized and custom products applicable to desalination, municipal water treatment and industrial water and wastewater treatment. Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Material Commitments, Expenditures and Contingencies - Cayman Water Retail License . ​ Our retail operations in the Cayman Islands produce potable water at four seawater reverse osmosis desalination plants in Grand Cayman located at our Abel Castillo Water Works (“ACWW”), Britannia and West Bay sites.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Material Commitments, Expenditures and Contingencies - Cayman Water Retail License . ​ Our retail operations in the Cayman Islands produce potable water at three seawater reverse osmosis desalination plants in Grand Cayman located at our Abel Castillo Water Works (“ACWW”) and West Bay sites.
Presently, we: ​ ● produce and sell potable water through the development and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater; ● develop, sell and manage water treatment and water reuse system infrastructure that meets regulatory, environmental and commercial needs and requirements; ● fabricate/manufacture specialized and custom equipment and products employed in the production and treatment of water for municipal, commercial and industrial purposes; and ● provide water-related management and consulting services. ​ We expect to continue to expand and diversify our products, services and markets to meet the ever-expanding global demand for water. ​ Key elements of our strategy include: ​ Market expansion.
Presently, we: ​ ● produce and sell potable water through the design, construction and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater; ● design, construct, sell, operate and manage water production, water treatment and water reuse system infrastructure that meets regulatory, environmental and commercial needs and requirements; ● fabricate/manufacture specialized and custom equipment and products employed in the production and treatment of water for municipal, commercial and industrial purposes; and ● provide water-related management and consulting services. ​ We expect to continue to expand and diversify our products, services and markets to meet the ever-expanding global demand for water. ​ Key elements of our strategy include: ​ Market expansion.
We have 13 management employees and 45 administrative and clerical employees. The remaining employees are engaged in engineering, purchasing, plant maintenance and operations, pipe laying and repair, leak detection, new customer connections, meter reading and laboratory analysis of water quality. We have no collective bargaining agreements with our employees, and none are represented by labor unions.
We have 20 management employees and 52 administrative and clerical employees. The remaining employees are engaged in engineering, purchasing, plant maintenance and operations, pipe laying and repair, leak detection, new customer connections, meter reading and laboratory analysis of water quality. We have no collective bargaining agreements with our employees, and none are represented by labor unions.
Aerex competes in the highly fragmented industry for manufactured water production and treatment equipment and systems against a large number of manufacturers, fabricators and service providers, many of which have greater resources than Aerex. ​ Similar to Aerex, PERC competes in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC. ​ Environmental and Health Regulatory Matters ​ Cayman Islands.
Aerex competes in the highly fragmented industry for manufactured water production and treatment equipment and systems against a large number of manufacturers, fabricators and service providers, many of which have greater resources than Aerex. ​ PERC and REC compete in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC and REC. ​ Environmental and Health Regulatory Matters ​ Cayman Islands.
In the British Virgin Islands, SUEZ/Veolia operates seawater reverse osmosis desalination plants in West End, Tortola, and on Virgin Gorda and generally bids against OC-BVI for projects. Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands 13 Table of Contents government.
In the British Virgin Islands, SUEZ/Veolia operates seawater reverse osmosis desalination plants in West End, Tortola, and on Virgin Gorda and generally bids against OC-BVI for projects. Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands government.
For additional information about our business segments and geographical information about our operating revenue and long-lived assets, see Note 14 to our consolidated financial statements at ITEM 8 of this Annual Report. ​ Retail Water Operations ​ For fiscal years 2022 and 2021, our retail water operations accounted for approximately 27%, and 33%, respectively, of our consolidated revenue.
For additional information about our business segments and geographical information about our operating revenue and long-lived assets, see Note 14 to our consolidated financial statements at ITEM 8 of this Annual Report. ​ Retail Water Operations ​ For fiscal years 2023 and 2022, our retail water operations accounted for approximately 17%, and 27%, respectively, of our consolidated revenue.
We have competed with companies such as SUEZ/Veolia, IDE Technologies, and TSG for the contracts with The Bahamas government to build and operate seawater desalination plants in the past. We expect to compete with these companies and others for any future water supply contracts in The Bahamas. ​ British Virgin Islands .
We have competed with companies such as SUEZ/Veolia, IDE Technologies, and TSG for the contracts with The Bahamas government to build and operate seawater desalination plants in the past. We expect to compete with these companies and others for any future water supply contracts in The Bahamas. 13 Table of Contents ​ British Virgin Islands .
We operate all but one of the reverse osmosis desalination plants owned by the WAC on Grand Cayman and supply water under two agreements held by OC-Cayman with the WAC. ​ According to the most recent information published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was estimated in 2021 to be 71,105 after the census count.
We operate all but one of the reverse osmosis desalination plants owned by the WAC on Grand Cayman and supply water under two agreements held by OC-Cayman with the WAC. ​ According to the most recent information published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was estimated in 2022 to be 81,546 after the 2021 census count.
We believe that this technology is the most effective and efficient conversion process for our markets. However, 10 Table of Contents we are always seeking ways to maximize efficiencies in our current processes and investigating new, more efficient processes to convert seawater to potable water.
We believe that this technology is the most effective and efficient conversion process for our markets. However, we are always seeking ways to maximize efficiencies in our current processes and investigating new, more efficient processes to convert seawater to potable water.
We manufacture and service a wide range of specialized and custom water-related products and systems applicable to commercial, municipal and industrial water production, supply and treatment. In 2022, our manufacturing operations generated approximately 7% of our consolidated revenue. ​ ● Affiliate Operations.
We manufacture and service a wide range of specialized and custom water-related products and systems applicable to commercial, municipal and industrial water production, supply and treatment. In 2023, our manufacturing operations generated approximately 10% of our consolidated revenue. ​ ● Affiliate Operations.
Although the 1990 license was not expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
We design, construct and sell water production and water treatment plants, and we manage and operate water production plants, and water treatment and reuse infrastructure for third parties. We also provide water related consulting services. In 2022, our services operations generated approximately 31% of our consolidated revenue. ​ ● Manufacturing Operations.
We design, construct and sell water production and water treatment plants, and we manage and operate water production plants, and water treatment and reuse infrastructure for third parties. We also provide water related consulting services. In 2023, our services operations generated approximately 54% of our consolidated revenue. ​ ● Manufacturing Operations.
Bad debts have historically represented less than 1% of our total annual retail sales. In addition to their past due invoice balance, customers that have had their service disconnected must pay re-connection charges. ​ Historically, demand on our water production and pipeline distribution has varied throughout the year.
The provision for credit losses has historically represented less than 1% of our total annual retail sales. In addition to their past due invoice balance, customers that have had their service disconnected must pay re-connection charges. ​ Historically, demand on our water production and pipeline distribution has varied throughout the year.
This water supply agreement expires March 2031. ​ OC-BVI purchases electrical power to operate this plant from BVI Electric Co. and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when BVI Electric Co. is unable to provide power to the plant. ​ OC-BVI’s plant on the island of Jost Van Dyke has a capacity of 60,000 gallons per day.
This water supply agreement expires March 2031. ​ OC-BVI purchases electrical power to operate this plant from the BVI Electricity Corporation and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when the BVI Electricity Corporation is unable to provide power to the plant. ​ 10 Table of Contents OC-BVI’s plant on the island of Jost Van Dyke has a capacity of 60,000 gallons per day.
We purchase electrical power to operate this plant from BVI Electric Co. ​ Reverse Osmosis Technology ​ The conversion of seawater to potable water is called desalination. The primary method of seawater desalination used throughout the world is reverse osmosis.
We purchase electrical power to operate this plant from the BVI Electricity Corporation. ​ Reverse Osmosis Technology ​ The conversion of seawater to potable water is called desalination. The primary method of seawater desalination used throughout the world is reverse osmosis.
In August 2022, the Cayman Islands government lifted the COVID-19 pandemic related travel restrictions that had eliminated tourist travel to the Cayman Islands since March 2020. ​ Bulk Water Operations ​ For fiscal years 2022 and 2021, our bulk water operations accounted for approximately 35%, and 40%, respectively, of our consolidated revenue.
In August 2022, the Cayman Islands government lifted the COVID-19 pandemic related travel restrictions that had eliminated tourist travel to the Cayman Islands since March 2020. 8 Table of Contents ​ Bulk Water Operations ​ For fiscal years 2023 and 2022, our bulk water operations accounted for approximately 19%, and 35%, respectively, of our consolidated revenue.
Cayman Water operates under an exclusive retail license granted by the Cayman Islands government to provide water to customers within a prescribed service area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands.
Cayman Water operates under an exclusive retail license granted by the Cayman Islands government to provide water to customers within a prescribed service area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands. Cayman Water owns and operates four seawater reverse osmosis desalination plants.
In 2022, our retail water operations generated approximately 27% of our consolidated revenue. ​ ● Bulk Water Operations. We produce potable water from seawater utilizing reverse osmosis technology and supply this water to government-owned distributors in the Cayman Islands and The Bahamas. In 2022, our bulk water operations generated approximately 35% of our consolidated revenue. ​ ● Services Operations .
In 2023, our retail water operations generated approximately 17% of our consolidated revenue. ​ ● Bulk Water Operations. We produce potable water from seawater utilizing reverse osmosis technology and supply this water to government-owned distributors in the Cayman Islands and The Bahamas. In 2023, our bulk water operations generated approximately 19% of our consolidated revenue. ​ ● Services Operations .
We maintain diesel engine-driven standby generators at all three retail plant sites with sufficient capacity to operate our distribution pumps and other essential equipment during any temporary interruptions in electricity supply.
Ltd., a publicly traded utility company. We maintain diesel engine-driven standby generators at all three retail plant sites with sufficient capacity to operate our distribution pumps and other essential equipment during any temporary interruptions in electricity supply.
Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as all expenses we incur in connection with our on-going international arbitration with the Mexico government to obtain reimbursement for the costs we incurred in connection with the Project are reported as discontinued operations in our consolidated financial statements. ​ Our Operations ​ For fiscal year 2022, our retail water, bulk water, services and manufacturing segments generated approximately 27%, 35%, 31% and 7%, respectively, of our consolidated revenue.
Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as all expenses we incur in connection with our on-going international arbitration with the Mexico government to obtain reimbursement for the costs we incurred in connection with the Project are reported as discontinued operations in our consolidated financial statements. ​ Our Operations ​ For fiscal year 2023, our retail water, bulk water, services and manufacturing segments generated approximately 17%, 19%, 54% and 10%, respectively, of our consolidated revenue.
According to the figures published by the Department of Tourism Statistics Information Center, in 2022 as compared to 2021, tourist air arrivals increased over 1000% to approximately 284,000 and tourist cruise ship arrivals increased from zero to approximately 743,000. ​ We believe that our water sales in the Cayman Islands are more positively impacted by stay-over tourists that arrive by air than by those arriving by cruise ship, since cruise ship tourists generally only visit the island for one day or less and do not remain on the island overnight.
According to the figures published by the Department of Tourism Statistics Information Center, in 2023 as compared to 2022, tourist air arrivals increased over 50% to approximately 429,000 and tourist cruise ship arrivals increased 70% to approximately 1,270,000. ​ We believe that our water sales in the Cayman Islands are more positively impacted by stay-over tourists that arrive by air than by those arriving by cruise ship, since cruise ship tourists generally only visit the island for one day or less and do not remain on the island overnight.
We supply water to the WSC through the water supply agreements for our Blue Hills and Windsor plants, which are located in Nassau. New Providence is the most populous island in The Bahamas, with more than 70% of the country’s population.
We supply water to the WSC through the water supply agreements for our Blue Hills and Windsor plants, which are located in Nassau. New Providence is the most populous island in The Bahamas, with more than 70% of the country’s population. A 2022 census placed the population of New Providence at approximately 297,000.
The most recent express extension of the license expired on January 31, 2018.
The 7 Table of Contents most recent express extension of the license expired on January 31, 2018.
Our corporate organizational structure as of December 31, 2022 is as follows: ​ ​ Retail Segment ​ Cayman Water Company Limited (“Cayman Water”) .
Our corporate organizational structure as of December 31, 2023 is as follows: ​ ​ 5 Table of Contents ​ Retail Segment ​ Cayman Water Company Limited (“Cayman Water”) .
In August 2020, we acquired an additional 10% of PERC, increasing our ownership of this subsidiary to 61%. PERC develops, builds, and sells wastewater and water reuse infrastructure. PERC also provides management services for wastewater and water reuse infrastructure under long-term operations and maintenance contracts.
In August 2020, we acquired an additional 10% of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs and sells wastewater and water reuse infrastructure. PERC also provides management services for wastewater and water reuse infrastructure under long-term operations and maintenance contracts.
We have historically experienced low employee turnover. ​ As of March 24, 2023, we employed a total of 223 persons, 62 in the Cayman Islands, 140 in the United States, 19 in The Bahamas and two in The Netherlands. We also managed the five employees of OC-BVI in the British Virgin Islands.
We have historically experienced low employee turnover. ​ As of March 20, 2024, we employed a total of 293 persons, 63 in the Cayman Islands, 209 in the United States, 19 in The Bahamas and two in The Netherlands. We also managed the five employees of OC-BVI in the British Virgin Islands.
The plants we operate for the WAC are located on land owned by the WAC. ​ Our agreement with the WAC for the North Sound and Red Gate plants expires in 2024.
The plants we operate for the WAC are located on land owned by the WAC. ​ Our agreement with the WAC for the North Sound and NSWW plants expire in 2026.
We own 50% of the voting rights and 43.53% of the equity rights of Ocean Conversion (BVI) Ltd., which produces and supplies bulk water to the British Virgin Islands Water and Sewerage Department. ​ As of December 31, 2022, the number of water production and water treatment plants we and our affiliate operated in each country, and the production capacities of these plants, were as follows: ​ ​ ​ ​ ​ ​ Water Production Plant Location Plants Capacity (1) Cayman Islands 7 9.9 Bahamas 2 14.8 British Virgin Islands 2 0.8 Total 11 25.5 (1) In millions of gallons per day. ​ ​ ​ ​ ​ ​ Water Treatment Plant Location Plants Capacity (1) United States 27 52.5 ​ ​ ​ ​ ​ (1) In estimated millions of gallons per day. ​ 4 Table of Contents Strategy ​ We are a comprehensive water solutions company that serves a variety of customers through multiple product and service offerings.
We own 50% of the voting rights and 43.53% of the equity rights of Ocean Conversion (BVI) Ltd., which produces and supplies bulk water to the British Virgin Islands Water and Sewerage Department. ​ As of December 31, 2023, the number of water production and water treatment plants we and our affiliate operated in each country, and the production capacities of these plants, were as follows: ​ ​ ​ ​ ​ ​ Water Production Plant Location Plants Capacity (1) Cayman Islands 6 ​ 9.3 Bahamas 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 Total 10 24.9 (1) In millions of gallons per day. ​ ​ ​ ​ ​ ​ Water Treatment Plant Location Plants Capacity (1) United States 31 ​ 59.7 ​ ​ ​ ​ ​ (1) In estimated millions of gallons per day. ​ As of December 31, 2023, Ramey Environmental Compliance, Inc. performed operations, maintenance, and monitoring services for 72 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ 4 Table of Contents Strategy ​ We are a comprehensive water solutions company that serves a variety of customers through multiple product and service offerings.
Consistent with other U.S. companies, Aerex and PERC must comply with various federal laws and regulations, such as those administered by the U.S. Environmental Protection Agency and the Occupational Safety and Health Administration, as well as state and local laws and regulations. ​ We are not aware of any existing or pending environmental legislation which may negatively affect our operations.
Environmental Protection Agency and the Occupational Safety and Health Administration, as well as state and local laws and regulations. ​ We are not aware of any existing or pending environmental legislation which may negatively affect our operations.
OC-BVI also pays our subsidiary, DesalCo, fees for certain engineering and administrative services. We account for our investment in OC-BVI under the equity method of accounting. ​ Discontinued Operations - Mexico Project Development ​ Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), N.S.C. Agua, S.A. de C.V. (“NSC”) and Aguas de Rosarito S.A.P.I. de C.V. (“AdR”).
We account for our investment in OC-BVI under the equity method of accounting. ​ Discontinued Operations - Mexico Project Development ​ Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), N.S.C. Agua, S.A. de C.V. (“NSC”) and Aguas de Rosarito S.A.P.I. de C.V. (“AdR”). CW-Cooperatief is a wholly-owned Netherlands subsidiary incorporated in 2010. CW-Cooperatief owns 99.9% of NSC, a Mexican company.
In the past, DesalCo has provided consulting services to the WSC and constructed and sold desalination plants to the WAC, and is presently constructing the Red Gate desalination plant for the WAC. ​ On October 24, 2019, we acquired 51% of the common stock of PERC, a U.S. company headquartered in Fountain Valley, California, which commenced operations in 1998.
Serving as a contractor to OC-Cayman, DesalCo is presently constructing the new Red Gate desalination plant for the WAC. ​ In October 2019, we acquired 51% of the common stock of PERC, a U.S. company headquartered in Fountain Valley, California, which commenced operations in 1998.
We own the land for our ACWW and West Bay plants and have entered into a lease for the land for our Britannia plant that expires January 1, 2027. The current aggregate production capacity of the two plants located at ACWW is 3.0 million gallons of water per day.
We own the land for our ACWW and West Bay plants. The current aggregate production capacity of the two plants located at ACWW is 3.0 million gallons of water per day. The production capacity of the West Bay plant is 1,000,000 gallons of water per day. ​ Electricity to our plants is supplied by Caribbean Utilities Co.
As a result of our decades of experience in seawater desalination, we believe our expertise and experience with respect to the development and operation of desalination plants and similar facilities is easily transferable to locations outside of our current operating areas. ​ Wastewater Treatment Technology ​ Our wastewater treatment comprises various technologies which rely on the action of microorganisms to treat wastewater.
As a result of our decades of experience in seawater desalination, we believe our expertise and experience with respect to the development and operation of desalination plants and similar facilities is easily transferable to locations outside of our current operating areas. ​ Wastewater Treatment Technology ​ Our approach to wastewater treatment integrates advanced technologies and processes to ensure high-quality water reuse while addressing environmental and operational concerns.
Presently, DesalCo is providing management and purchasing services to our affiliate OC-BVI in the British Virgin Islands.
Presently, DesalCo is providing management and purchasing services to our affiliate OC-BVI in the British Virgin Islands. In the past, DesalCo has provided consulting services to the WSC and constructed the desalination plants sold by OC-Cayman to the WAC.
A Cayman Islands company, DesalCo provides design, management, engineering and construction services for desalination projects as well as management and engineering services relating to municipal water distribution and treatment. ​ PERC Water Corporation (“PERC”). On October 24, 2019, we purchased, through our wholly-owned U.S. subsidiary, Consolidated Water U.S. Holdings, Inc.
A Cayman Islands company, DesalCo provides design, management, engineering and construction services for desalination projects as well as management and engineering services relating to municipal water distribution and treatment.
OC-Cayman provides bulk water under long-term contracts to the WAC, which distributes the water to properties located outside our exclusive retail license service area on Grand Cayman. OC-Cayman built, sold and operates three seawater reverse osmosis desalination plants owned by the WAC. ​ Services Segment ​ DesalCo Limited (“DesalCo”).
CW-Bahamas owns and operates our largest desalination plant and one other desalination plant. ​ Ocean Conversion (Cayman) Limited (“OC-Cayman”). OC-Cayman provides bulk water under long-term contracts to the WAC, which distributes the water to properties located outside our exclusive retail license service area on Grand Cayman.
In January 2023, we acquired the remaining 39% ownership interest in PERC. ​ Manufacturing Segment ​ Aerex Industries, Inc. (“Aerex”) . Aerex, a U.S. company located in Fort Pierce, Florida, is an original equipment manufacturer of a wide range of specialized and custom products and systems applicable to desalination, municipal water treatment and industrial water and wastewater treatment.
Aerex, a U.S. company located in Fort Pierce, Florida, is an original equipment manufacturer of a wide range of specialized and custom products and systems applicable to desalination, municipal water treatment and industrial water and wastewater treatment. Aerex’s products include reverse osmosis desalination 6 Table of Contents equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.
(“CW-Holdings”), 51% of the equity in PERC, a U.S. company headquartered in Fountain Valley, California. PERC develops, builds, sells, operates and manages water, wastewater and water reuse infrastructure. In August 2020, we purchased an additional 10% ownership interest of PERC, increasing our ownership of this subsidiary to 61%.
In August 2020, we purchased an additional 10% ownership interest of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs, sells, operates and manages water, wastewater and water reuse infrastructure. ​ Ramey Environmental Compliance, Inc. (“REC”).
The most current data published by the Bahamas Ministry of Tourism for 2022 shows that the number of cruise ship arrival and air arrival tourists were approximately 2,136,000 and 1,137,000, respectively. ​ British Virgin Islands . The British Virgin Islands are a British Overseas Territory and are situated east of Puerto Rico.
According to statistics published by the Bahamas Ministry of Tourism, in 2023 as compared to 2022, the number of air arrivals increased 17% to approximately 1,327,000 and cruise ship arrivals increased 46% to approximately 3,114,000. ​ British Virgin Islands . The British Virgin Islands are a British Overseas Territory and are situated east of Puerto Rico.
We own 50% of the voting stock of OC-BVI, a British Virgin Islands company, which sells bulk water to the Government of the British Virgin Islands Water and Sewerage Department. We own an overall 43.53% equity interest in OC-BVI’s profits and certain profit-sharing rights that raise our effective interest in OC-BVI’s profits to approximately 45%.
We own an overall 43.53% equity interest in OC-BVI’s profits and certain profit-sharing rights that raise our effective interest in OC-BVI’s profits to approximately 45%. OC-BVI also pays our subsidiary, DesalCo, fees for certain engineering and administrative services.
We have been advised by the Government of the Cayman Islands that we will not receive any duty concessions in any new retail water license signed with the government. ​ The Bahamas ​ The Commonwealth of The Bahamas is an independent nation and a constitutional parliamentary democracy with the King of England as the constitutional head of state.
We have been advised by the Government of the Cayman Islands that we will not receive any duty concessions in any new retail water license signed with the government. ​ The Bahamas ​ Under the current laws of the Commonwealth of The Bahamas, no income, corporation, capital gains or similar taxes are payable by us.
We consider our relationships with our employees to be very good. ​ During the COVID-19 pandemic, we implemented a number of significant safety measures based on current guidelines recommended by the Centers for Disease Control for employees who work at our facilities. ​ 14 Table of Contents Available Information ​ Our website address is http://www.cwco.com.
We consider our relationships with our employees to be very good. ​ 14 Table of Contents Available Information ​ Our website address is http://www.cwco.com.
PERC’s primary markets are California and the Southwest U.S., but it conducts business in other areas of the U.S. In January 2023, we acquired the remaining 39% ownership interest in PERC. ​ Manufacturing Operations ​ For fiscal years 2022 and 2021, our manufacturing operations accounted for approximately 7% and 6%, respectively, of our consolidated revenue.
PERC’s primary markets are California and the Southwest U.S., but it conducts business in other areas of the U.S. ​ Effective October 1, 2023, we purchased, through our wholly-owned subsidiary PERC, a 100% ownership interest in REC, a Colorado company headquartered in Frederick, Colorado.
The following paragraphs set forth some of the key governmental regulations in the jurisdictions in which we operate outside of the United States. ​ 11 Table of Contents Cayman Islands ​ The Cayman Islands are a British Overseas Territory with a stable political climate since 1670, when the Treaty of Madrid ceded the Cayman Islands to England.
The following paragraphs set forth some of the key governmental regulations in the jurisdictions in which we operate outside of the United States. ​ Cayman Islands ​ The Cayman Islands have no taxes on profits, income, distributions, capital gains or appreciation.
Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components. Aerex also offers engineering, design, consulting, inspection, training and equipment maintenance services to its customers. ​ Affiliate ​ Ocean Conversion (BVI) Ltd. (“OC-BVI”) .
Aerex also offers engineering, design, consulting, inspection, training and equipment maintenance services to its customers. ​ Affiliate ​ Ocean Conversion (BVI) Ltd. (“OC-BVI”) . We own 50% of the voting stock of OC-BVI, a British Virgin Islands company, which sells bulk water to the Government of the British Virgin Islands Water and Sewerage Department.
The ultimate appellate court is the Privy Council in London. ​ Markets and Service Areas ​ We operate in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands.
We are also required to pay a value added tax on materials and services we purchase. ​ 12 Table of Contents Markets and Service Areas ​ We operate in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands.
Cayman 5 Table of Contents Water owns and operates four seawater reverse osmosis desalination plants. Cayman Water and the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, are Grand Cayman’s only water utilities. ​ Aquilex, Inc. (“Aquilex”) .
Cayman Water and the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, are Grand Cayman’s only water utilities. ​ Aquilex, Inc. (“Aquilex”) . Aquilex, a U.S. company located in Coral Springs, Florida, provides financial, engineering, information technology, administrative and supply chain management support services to our subsidiaries and affiliate.
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We own 90.9% of CW-Bahamas, which provides bulk water under long-term contracts to the Water and Sewerage Corporation of The Bahamas (“WSC”), a government agency. CW-Bahamas owns and operates our largest desalination plant and one other desalination plant. ​ Ocean Conversion (Cayman) Limited (“OC-Cayman”).
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OC-Cayman operates three seawater reverse osmosis desalination plants owned by the WAC. ​ Services Segment ​ PERC Water Corporation (“PERC”). In October 2019, we purchased, through our wholly-owned U.S. subsidiary, Consolidated Water U.S. Holdings, Inc. (“CW-Holdings”), 51% of the equity in PERC, a U.S. company headquartered in Fountain Valley, California.
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CW-Cooperatief is a wholly-owned Netherlands subsidiary incorporated in 2010. CW-Cooperatief owns 99.9% of NSC, a Mexican company.
Added
Effective October 1, 2023, we purchased, through our wholly-owned subsidiary PERC, a 100% ownership interest in REC, a Colorado company headquartered in Frederick, Colorado. REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado. ​ DesalCo Limited (“DesalCo”).
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The production capacity of the Britannia plant is 715,000 gallons of water per day. The production capacity of the West Bay plant is 885,000 gallons of water per day. ​ Electricity to our plants is supplied by Caribbean Utilities Co. Ltd., a publicly traded utility company.
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Serving as a subcontractor to OC-Cayman, DesalCo designed and constructed the three reverse osmosis plants that OC-Cayman currently operates for (and previously sold to) the WAC and is presently constructing the new Red Gate plant for the WAC. ​ Kalaeloa Desalco LLC (“Kalaeloa Desalco”).
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The sequential batch reactor (“SBR”) technology we typically use is a conventional, proven method which has been used to treat organic wastewater for many years. More than 1,000 SBR treatment facilities are in use in the United States ranging in size from 10,000 gallons per day to 22 million gallons per day.
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In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii.
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Increasingly, we utilize membrane bioreactor (“MBR”) technology which utilizes micro or ultra-filtration membranes to enhance biological wastewater treatment.
Added
In June 2023, Kalaeloa Desalco signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Manufacturing Segment ​ Aerex Industries, Inc. (“Aerex”) .
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The improvements offered by MBR technology include a reduced physical footprint for the facility, higher quality treated effluent and the ability to treat more challenging influent. ​ PERC has improved upon the standard SBR and MBR processes and whenever possible locates its equipment in concealed areas and in aesthetically pleasing buildings that minimize foul odors. ​ Raw Materials and Sources of Supply ​ All materials, parts and supplies essential to our business operations are obtained from multiple sources and we use the latest industry technology.
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REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Manufacturing Operations ​ For fiscal years 2023 and 2022, our manufacturing operations accounted for approximately 10% and 7%, respectively, of our consolidated revenue.
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The King of England appoints the Governor of the Cayman Islands to make laws with the advice and consent of the Parliament of the Cayman Islands. The Parliament of the Cayman Islands consists of 19 elected members and two members appointed by the Governor from the Civil Service. The Cabinet is responsible for day-to-day government operations.
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Typical technology uses include that of micro and ultra filtration, reverse osmosis, and ultraviolet advanced oxidation systems, often with sodium hypochlorite or hydrogen peroxide as oxidizers, to meet the stringent water quality parameters set by California.
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The Cabinet consists of the Premier and six other ministers who are chosen by the Premier from its 19 popularly elected members, and the two Civil Service members. The elected members choose from among themselves a leader, who is designated the Premier, and is in effect the leader of the elected government.
Added
This is particularly relevant for applications like Title 22 reuse and Indirect Potable Reuse, where safety and quality are paramount. ​ We utilize Membrane Bioreactor (“MBR”) technology, which is a wastewater treatment process that has been used for several decades to produce high quality recycled water for non-potable reuse.
Removed
The Governor has reserved powers and the United Kingdom retains full control over foreign affairs and defense. The Cayman Islands are a common law jurisdiction and have adopted a legal system similar to that of the United Kingdom. ​ The Cayman Islands have no taxes on profits, income, distributions, capital gains or appreciation.
Added
MBR technology, which integrates micro or ultra-filtration membranes with biological wastewater treatment processes, offers several advantages. These include a reduced physical footprint, which is crucial in areas where space is at a premium, and the production of higher quality treated effluent, which is vital for ensuring the safety and reliability of water reuse.
Removed
The basis of the Bahamian law and legal system is the English common law tradition with a Supreme Court, Court of Appeals, and a Magistrates court. ​ Under the current laws of the Commonwealth of The Bahamas, no income, corporation, capital gains or similar taxes are payable by us.
Added
Additionally, MBR's capability to handle more challenging influent makes it a versatile solution for a variety of wastewater treatment needs. ​ We employ various methods to improve the aesthetic and environmental integration of our clients’ facilities.
Removed
We are also required to pay a value added tax on materials and services we purchase. ​ British Virgin Islands ​ The British Virgin Islands (“BVI”) is a British Overseas Territory, with the King of England as the Head of State and His Majesty’s representative, the Governor, responsible for external affairs, defense and internal security, the Civil Service and administration of the courts.
Added
We conceal equipment and housing technologies in buildings that are both aesthetically pleasing and odor friendly, thereby addressing two of the common challenges in wastewater treatment facilities: odor and visual impact.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

27 edited+1 added−23 removed49 unchanged
Biggest changeIf we fail to abide by laws, rules and regulations relating to human and workers’ rights, we could be subject to suit and our reputation could be harmed, which could result in losses in our business and financial results. ​ We are subject to various federal, state, local and foreign laws and regulations concerning human rights, including laws prohibiting discrimination, harassment, and forced or child labor, and establishing wage and hour standards.
Biggest changeIn addition, any complaints or lawsuits against us based on water quality and contamination may receive negative publicity that can damage our reputation and adversely affect our business and trading price of our common stock. 18 Table of Contents If we fail to abide by laws, rules and regulations relating to human and workers’ rights, we could be subject to various actions and our reputation, business and financial results could be adversely affected. ​ We are subject to various federal, state, local and foreign laws and regulations concerning human rights, including laws prohibiting discrimination, harassment, and forced or child labor, and establishing wage and hour standards.
Our business is highly dependent on the purchase of our products and services by government and municipalities, and we believe that contracts with similar termination provisions will continue to be a source of a substantial portion of our revenue for the foreseeable future. ​ If a customer terminates one of our contracts for convenience, we generally may recover, at most, our incurred or committed costs, settlement expenses, and payment for on work completed or products delivered prior to the termination.
Our business is highly dependent on the purchase of our products and services by government and municipalities, and we believe that contracts with similar termination provisions will continue to be a source of a substantial portion of our revenue for the foreseeable future. ​ If a customer terminates one of our contracts for convenience, we generally may recover, at most, our incurred or committed costs, settlement expenses, and payment for work completed or products delivered prior to the termination.
We continue to pay the royalty of 7.5% of revenue we collect required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We continue to pay a royalty of 7.5% of the revenue we collect as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
Any government that regulates our operations may issue legislation or adopt new regulations, including but not limited to: ​ ● restricting foreign ownership (by us); ● providing for the expropriation of our assets by the government; ● providing for nationalization of public utilities by the government; ● providing for different water quality standards; ● unilaterally changing or renegotiating our license and agreements; ● restricting the transfer of U.S. currency; or 19 Table of Contents ● causing currency exchange fluctuations/devaluations or enacting changes in tax laws. ​ As new laws and regulations are issued, we may be required to modify our operations and business strategy, which we may be unable to do in a cost-effective manner.
Any government that regulates our operations may issue legislation or adopt new regulations, including but not limited to: ​ ● restricting foreign ownership (by us); ● providing for the expropriation of our assets by the government; ● providing for nationalization of public utilities by the government; ● providing for different water quality standards; ● unilaterally changing or renegotiating our license and agreements; ● restricting the transfer of U.S. currency; or ● causing currency exchange fluctuations/devaluations or enacting changes in tax laws. ​ As new laws and regulations are issued, we may be required to modify our operations and business strategy, which we may be unable to do in a cost-effective manner.
In particular, the loss of the services of Frederick W. McTaggart, our President and Chief Executive Officer, could be detrimental to our operations and our continued success. Mr. McTaggart has an employment agreement expiring on December 31, 2025. Each year, the term of this agreement may be extended for an additional year. However, we cannot guarantee that Mr.
In particular, the loss of the services of Frederick W. McTaggart, our President and Chief Executive Officer, could be detrimental to our operations and our continued success. Mr. McTaggart has an employment agreement expiring on December 31, 2026. Each year, the term of this agreement may be extended for an additional year. However, we cannot guarantee that Mr.
If, for financial or other reasons, the WSC does not comply with the terms of our water supply agreements our consolidated financial condition, results of operations, and cash flows could be materially adversely affected. ​ 18 Table of Contents Our operations are affected by tourism and are subject to seasonal fluctuations and other factors beyond our control that could affect the demand for our water. ​ Demand for our water in the Cayman Islands and The Bahamas is affected by variations in the level of tourism and local weather, primarily rainfall.
If, for financial or other reasons, the WSC does not comply with the terms of our water supply agreements our consolidated financial condition, results of operations, and cash flows could be materially adversely affected. ​ Our operations are affected by tourism and are subject to seasonal fluctuations and other factors beyond our control that could affect the demand for our water. ​ Demand for our water in the Cayman Islands and The Bahamas is affected by variations in the level of tourism and local weather, primarily rainfall.
McTaggart will continue to work for us during the term of his agreement or will extend his employment agreement with us. ​ 20 Table of Contents Our business could be adversely affected by cyber threats or other interruptions in information technology, communications networks and operations. ​ As part of our operations, we rely on computer systems to process transactions and communicate with our customers, suppliers and other third parties.
McTaggart will continue to work for us during the term of his agreement or will extend his employment agreement with us. ​ Our business could be adversely affected by cyber threats or other interruptions in information technology, communications networks and operations. ​ As part of our operations, we rely on computer systems to process transactions and communicate with our customers, suppliers and other third parties.
Any construction, manufacturing, and operating costs for our contracts that significantly exceed our initial estimates could have a material adverse impact our consolidated financial condition, results of operations, and cash flows. ​ Certain of PERC’s contracts with its customers may be terminated at any time at the customer’s convenience or with relatively short advance notice.
Any construction, manufacturing, and operating costs for our contracts that significantly exceed our initial estimates could have a material adverse impact our consolidated financial condition, results of operations, and cash flows. 16 Table of Contents ​ Certain of PERC’s contracts with its customers may be terminated at any time at the customer’s convenience or with relatively short advance notice.
As a result, it may be difficult for investors to execute service of process within the United States upon us and such other persons, or to enforce judgments obtained against such persons in United States courts, and bring any action, including actions predicated upon the civil liability 21 Table of Contents provisions of the United States securities laws.
As a result, it may be difficult for investors to execute service of process within the United States upon us and such other persons, or to enforce judgments obtained against such persons in United States courts, and bring any action, including actions predicated upon the civil liability provisions of the United States securities laws.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any given time. This presence in turn depends on the individual decisions of investors and general economic and market conditions over which we have no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and 20 Table of Contents sellers of our common stock at any given time. This presence in turn depends on the individual decisions of investors and general economic and market conditions over which we have no control.
For example, a United States judgment awarding remedies unobtainable in any legal action in the courts of the Cayman Islands, such as treble damages, would likely not be enforceable under any circumstances. ​ The relatively low trading volume of our stock may adversely impact the ability to sell our shares. ​ The average daily trading volume of our common stock in 2022 was approximately 102,300 shares, a much lower trading volume than that of many other companies listed on the NASDAQ Global Select Market.
For example, a United States judgment awarding remedies unobtainable in any legal action in the courts of the Cayman Islands, such as treble damages, would likely not be enforceable under any circumstances. ​ The relatively low trading volume of our stock may adversely impact the ability to sell our shares. ​ The average daily trading volume of our common stock in 2023 was approximately 131,600 shares, a much lower trading volume than that of many other companies listed on the NASDAQ Global Select Market.
Any delay or default in payment could adversely affect our consolidated financial condition, results of operations, and cash flows. ​ We are exposed to the risk of variations in currency exchange rates. ​ Although we report our results in United States dollars, most of our revenue is earned in other currencies.
Any delay or default in payment could adversely affect our consolidated financial condition, results of operations, and cash flows. ​ We are exposed to the risk of variations in currency exchange rates. ​ Although we report our results in United States dollars, a significant portion of our revenue is earned in other currencies.
Because we base our contract prices in part on our estimation of future construction, manufacturing and operating costs, the profitability of our plants and our manufacturing and management contracts is dependent on our ability to estimate these costs accurately.
Because we base our contract prices in part on our estimation of future construction, manufacturing and operating costs, the profitability of our plants and our manufacturing and operations and maintenance contracts is dependent on our ability to estimate these costs accurately.
Approximately 65% of this December 31, 2022 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
Approximately 80% of this December 31, 2023 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
In 2022 and 2021, we generated approximately 27% and 33%, respectively, of our consolidated revenue and 44% and 47%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was 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.
In 2023 and 2022, we generated approximately 17% and 27%, respectively, of our consolidated revenue and 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was 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.
An inability by us to substitute feed water from an uncontaminated water source or to adequately treat the contaminated plant feed water or our processed water in a cost-effective manner may have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ Potential government decisions, actions and regulations could negatively affect our operations. ​ We are subject to the local regulations of the Cayman Islands, The Bahamas and the British Virgin Islands, all of which are subject to change.
An inability by us to substitute feed water from an uncontaminated water source or to adequately treat the contaminated plant feed water or our processed water in a cost-effective manner may have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ Potential government decisions, actions and regulations could negatively affect our operations. ​ We are subject to the local regulations of the countries in which we operate, all of which are subject to change.
Although the 1990 license was not expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
A natural disaster could also disrupt the delivery of equipment and supplies, including electricity, necessary to our operations.
A natural disaster could also disrupt the delivery of equipment and supplies, 17 Table of Contents including electricity, necessary to our operations.
As a result, our Bahamas subsidiary could have insufficient liquidity to continue operations, and our consolidated results of operations could be materially adversely affected. ​ CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $16.3 million as of December 31, 2022.
As a result, our Bahamas subsidiary could have insufficient liquidity to continue operations, and our consolidated financial results could be materially adversely affected. ​ CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $26.9 million as of December 31, 2023.
The loss of the WSC as a customer would adversely affect us. ​ One bulk water customer, the WSC, accounted for approximately 32% of our consolidated revenue for 2022.
The loss of the WSC as a customer would adversely affect us. ​ One bulk water customer, the WSC, accounted for approximately 17% of our consolidated revenue for 2023.
Should these economic conditions and issues continue, our operations could be adversely affected, which could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ The profitability of our contracts is dependent upon our ability to accurately estimate construction and operating costs. ​ The cost estimates we prepare in connection with the construction and operation of our water plants, the water infrastructure we construct and sell to third parties, and our manufacturing contracts, are subject to inherent uncertainties.
Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ The profitability of our contracts is dependent upon our ability to accurately estimate construction and operating costs. ​ The cost estimates we prepare in connection with the construction and operation of our water plants, the water infrastructure we construct and sell to third parties, and our manufacturing contracts, are subject to inherent uncertainties.
The profit margins we initially expect to generate from a management contract could be further reduced if future operating costs for that contract exceed our estimates of such costs.
The profit margins we initially expect to generate from an operations and maintenance contract could be further reduced if future operating costs for that contract exceed our estimates of such costs.
Our outstanding accounts receivable are not covered by collateral or credit insurance.
Our 19 Table of Contents outstanding accounts receivable are not covered by collateral or credit insurance.
As of December 31, 2022, we have not provided an allowance for doubtful accounts for CW-Bahamas’ accounts receivable from the WSC. ​ In its latest report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
Based upon this payment history, we have not provided for a material allowance for credit losses for CW-Bahamas’ accounts receivable from the WSC as of December 31, 2023. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3. ​ If CW-Bahamas is unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide an allowance for doubtful accounts for CW-Bahamas’ accounts receivable.
Moody’s iterated these ratings in April and October 2023, noting that such ratings are “stable.” ​ If CW-Bahamas is unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable.
We are unable at this time to determine if or when demand for our water in the Cayman Islands will return to pre-pandemic levels. ​ Performance shortfalls under any of our bulk supply contracts could result in penalties or cancellation of the contract. ​ Our bulk water supply agreements require us to meet specified minimum quality, quantity and energy consumption guarantees.
During the COVID-19 pandemic, the resulting cessation of tourism to the Cayman Islands through August 2022 significantly reduced demand for our water. ​ Performance shortfalls under any of our bulk supply contracts could result in penalties or cancellation of the contract. ​ Our bulk water supply agreements require us to meet specified minimum quality, quantity and energy consumption guarantees.
A downturn in tourism or greater than expected rainfall in the locations we serve could adversely impact our results of operations and cash flows. The COVID-19 pandemic and the resulting cessation of tourism to the Cayman Islands through August 2022 significantly reduced demand for our water.
A downturn in tourism or greater than expected rainfall in the locations we serve could adversely impact our results of operations and cash flows.
Removed
Based upon this payment history, CW-Bahamas has never been required to provide an allowance for doubtful accounts for any of its accounts receivable, despite the periodic accumulation of significant delinquent balances.
Added
Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3.
Removed
Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ Most of our services segment revenue is generated under short-term contracts.
Removed
An inability to obtain extensions of these contracts or to obtain new contracts to replace the revenue that is lost from contracts that are not extended could adversely impact our financial results. ​ PERC, our principal services segment subsidiary, generates most of its revenue from contracts (“O&M contracts”) to operate and maintain water treatment and reuse facilities owned by third parties.
Removed
For 2022, we generated revenue of approximately $13.7 million under these O&M contracts. PERC’s O&M contracts have terms ranging from one to ten years, with varying renewal options exercisable solely at the discretion of the customer. Approximately 16% of PERC’s revenue for 2022 was generated under O&M contracts that expire at various dates through December 31, 2023.
Removed
If we are unable to obtain extensions of these expiring O&M contracts or are unable to replace the revenue lost from contracts that expire with revenue from new O&M contracts, our consolidated financial condition, results of operations, and cash flows would be adversely affected. ​ 16 Table of Contents If the future financial performance of Aerex falls short of our most recent financial projections for this subsidiary, we may be required to record impairment losses to reduce the carrying values of the goodwill and intangible assets of our manufacturing segment. ​ Approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to one customer.
Removed
While Aerex sells various products to this customer, Aerex’s revenue from this customer has historically been derived primarily from one specialized product. In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases of the specialized product from Aerex following 2020 for a period of approximately one year.
Removed
This customer informed Aerex at that time that it expected to recommence its purchases of the specialized product from Aerex beginning with the first quarter of 2022. As a result of this anticipated loss of revenue for Aerex, we updated our projections for our manufacturing reporting unit’s future cash flows.
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Such projections assumed, in part, that Aerex’s major customer would recommence its purchases from Aerex in 2022 but at a reduced aggregate amount, as compared to 2020.
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Based upon these updated projections, we tested our manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively.
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As a result of these impairment tests, we determined that the estimated fair value of our manufacturing reporting unit exceeded its carrying value by approximately 31% as of December 31, 2020.
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In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases of the specialized product from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years.
Removed
Our updated sales estimate for this customer based on this new information was substantially below the anticipated sales to this customer for 2022 and subsequent years that we used in the discounted cash flow projections we prepared for purposes of testing our manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020.
Removed
Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by the negative economic conditions (caused in part by the COVID-19 pandemic).
Removed
These negative economic conditions also increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials, and adversely affected the overall financial condition of Aerex’s current and prospective customer base.
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Accordingly, in light of this new information from Aerex’s former major customer and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively.
Removed
Based upon this testing, we determined that the carrying value of our manufacturing reporting unit exceeded its fair value by $2.9 million, and we recorded an impairment loss to reduce our manufacturing segment’s goodwill by this amount for the three months ended June 30, 2021.
Removed
The accounting estimates and assumptions we employ to estimate the fair values of our manufacturing and reporting units constitute “critical accounting estimates” for us because: ● the nature of these estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change (for example, should interest rates rise significantly in the future we would likely be required to increase the discount rate we use under the discounted cash flow method we use to estimate the fair values of our reporting units, and such increased discount rate in and of itself could decrease the estimated fair value of our reporting units under the discounted cash flow method); and ● the impact of the estimates and assumptions on financial condition and results of operations is material.
Removed
We believe the inherent uncertainties associated with the accounting estimates and assumptions we use for our estimates of our reporting units’ fair values have increased due to current, less predictable economic conditions, which have resulted in increasing raw material prices, extended and unexpected delays in the procurement and delivery of our raw materials, and have also, we believe, adversely affected our customers.
Removed
Based upon our estimation prepared as of December 31, 2022, the fair value of our manufacturing reporting unit exceeded its carrying value by 63%.
Removed
If we determine in the future that Aerex’s discounted future cash inflows will be less than our present expectations, we may be required to record additional impairment losses to reduce the remaining carrying values 17 Table of Contents of our manufacturing segment’s goodwill and its remaining unamortized intangible assets balances, which amounted to $1,985,211 and $754,444, respectively, as of December 31, 2022.
Removed
Any such impairment losses could have a material adverse impact on our consolidated results of operations. Current economic conditions are adversely impacting the supply chain for our operations and could have a material adverse impact on our financial results.
Removed
As a result of the current economic conditions, we are experiencing issues with our supply chain for the raw materials, components, chemicals, and capital expenditures used in our operations, including rapidly increasing prices, scarcities/shortages, and longer fulfillment times and unexpected delays for our orders to suppliers.
Removed
In addition, any complaints or lawsuits against us based on water quality and contamination may receive negative publicity that can damage our reputation and adversely affect our business and trading price of our common stock.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOn this site, we have a 2,600 square foot building which houses our water production facilities, a 2,400 square foot building which houses the potable water distribution pumps, a water quality testing laboratory, and office space and water storage capacity consisting of three potable water tanks each with a capacity of 1.0 million gallons with an aggregate storage capacity of 3.0 million gallons. 22 Table of Contents ​ Britannia Plant ​ We own our Britannia seawater reverse osmosis desalination plant which is located in the Seven Mile Beach area and consists of a seawater reverse osmosis production plant with a capacity of 715,000 gallons of water per day, a potable water storage tank with a capacity of 840,000 gallons, potable water high service pumps, and various ancillary equipment.
Biggest changeThis site contains a 5,000 square foot concrete building which houses our water production facility, a 2,400 square foot building which houses the potable water distribution pumps, a water quality testing laboratory, and office space and water storage capacity consisting of three potable water tanks each with a capacity of 1.0 million gallons. ​ Britannia Plant ​ Although we own our Britannia seawater reverse osmosis desalination plant which is located in the Seven Mile Beach area, this plant is not currently operational.
The first facility was completed in July 2006, has a production capacity of 7.2 million gallons per day, and is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from the Bahamas Power and Light to power all other loads in the plant.
The first facility was completed in July 2006, has a production capacity of 7.2 million gallons per day, and is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant.
The second facility was completed in March of 2012 and is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from the Bahamas Power and Light to power all other loads in the plant.
The second facility was completed in March 2012 and is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant.
PROPERTIES ​ Cayman Islands Properties ​ Abel Castillo Water Works ​ We own and operate our Abel Castillo Water Works, which is located in the Seven Mile Beach area and encompasses 12,812 square feet of buildings, two seawater reverse osmosis desalination plants with an aggregate capacity of 3.0 million gallons per day, a high service distribution pump house, warehouse space and three potable water storage tanks each with a capacity of 1.0 million gallons and one potable water storage tank with a capacity of 2.0 million gallons with an aggregate storage capacity of 5.0 million gallons.
PROPERTIES ​ Cayman Islands Properties ​ Abel Castillo Water Works ​ We own and operate our Abel Castillo Water Works, which is located in the Seven Mile Beach area and encompasses 12,812 square feet of buildings, two seawater reverse osmosis desalination plants with an aggregate capacity of 3.0 million gallons per day, a high service distribution pump house, warehouse space and three potable water storage tanks each with a capacity of 1.0 million gallons and one potable water storage tank with a capacity of 2.0 million gallons.
Cayman Water expects to use this site for the construction of new corporate headquarters, emergency operations center and warehouse facility at some point in the future. ​ Bahamas Properties ​ Windsor Plant ​ Our Windsor water production facility, located in Nassau, New Providence, has a production capacity of 2.8 million gallons per day.
Cayman Water expects to use this site for the construction of a new headquarters, emergency operations center and warehouse facility at some point in the future. ​ Bahamas Properties ​ Windsor Plant ​ Our Windsor water production facility, located in Nassau, New Providence, has a production capacity of 2.8 million gallons per day.
The plant is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant. The plant is contained within a 12,000 sq. ft. steel building, and a warehouse, workshop and offices contained within a 2,600 sq. ft. concrete building.
The plant is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant. The plant is contained within a 12,000 sq. ft. steel building, and a warehouse, workshop and offices are contained within a 2,600 sq. ft. concrete building.
Properties ​ Aerex owns its 30,000 square foot manufacturing facility located on 6.4 acres of land in Fort Pierce, Florida and has approximately 6,000 square feet of office space in downtown Fort Pierce under a lease that expires on June 30, 2023. ​ Our Aquilex warehouse consists of 4,100 square feet located in Sunrise, Florida that has been leased through September 2025.
Properties ​ Aerex owns a 30,000 square foot manufacturing facility located on 6.4 acres of land in Fort Pierce, Florida and has approximately 6,000 square feet of office space in downtown Fort Pierce under a lease that expires on June 30, 2026. ​ 23 Table of Contents Our Aquilex warehouse consists of 4,100 square feet located in Sunrise, Florida that has been leased through September 2025.
We have the legal right to maintain (and expand or contract as necessary) these systems on public and private land within our licensed service area. ​ Corporate Office ​ We occupy approximately 5,700 square feet of office space at the Regatta Office Park, West Bay Road, Grand Cayman, Cayman Islands under a lease that expires in April 2024. ​ Other Property ​ In October 2022, Cayman Water purchased for $2.94 million approximately 2.8 acres of land in the West Bay area of Grand Cayman.
We have the legal right to maintain (and expand or contract as necessary) these systems on public and private land within our licensed service area. ​ Corporate Office ​ We occupy approximately 5,700 square feet of office space at the Regatta Office Park, West Bay Road, Grand Cayman, Cayman Islands under a lease that expires in April 2024.
We also own and maintain a 1.0 million gallon welded steel elevated water storage tank that was constructed by us and is operated by the WSC. 23 Table of Contents ​ U.S.
The second facility is contained within a steel building with a footprint of 10,640 square feet located adjacent to the initial production facility on land owned by the WSC. We also own and maintain a 1.0 million gallon welded steel elevated water storage tank that was constructed by us and is operated by the WSC. ​ U.S.
This lease expired in August 2021 and is currently on a month-to-month basis. ​ Mexico Properties ​ NSC and AdR own 20.1 hectares and 0.18 hectares of land, respectively, in Rosarito Beach, Baja California, Mexico. ​ ITEM 3. LEGAL PROCEEDINGS ​ None. ​ ​ ITEM 4. MINE SAFETY DISCLOSURE ​ Not applicable. ​ PART II ​
This lease expired in August 2021 and is currently on a month-to-month basis. ​ REC leases approximately 7,500 square feet of office space in Frederick, Colorado that serves as its corporate headquarters under a lease that expires on October 1, 2029. ​ Mexico Properties ​ NSC and AdR own 20.1 hectares and 0.18 hectares of land, respectively, in Rosarito Beach, Baja California, Mexico. ​
The site is located on 4.2 acres, including 485 feet of waterfront. ​ West Bay Plant ​ We own and operate our West Bay plant located on 6.1 acres in West Bay. The plant began operating in 1995, was expanded over the years, and now has a production capacity of approximately 885,000 gallons per day.
The site is located on 4.2 acres, including 485 feet of waterfront. ​ West Bay Plant ​ In 2023, we commissioned a new seawater reverse osmosis desalination plant in the West Bay area and decommissioned the previous plant located on the same property.
Removed
The second facility is contained within a steel building with a footprint of 10,640 square feet located adjacent to the initial production facility on land owned by the WSC.
Added
The new plant began operating in November 2023, with a capacity of 1,000,000 gallons per day and is expandable to 2,000,000 gallons per day.
Added
However, we still have and operate a potable water storage tank with a capacity 22 Table of Contents of 840,000 gallons, potable water high service pumps, and various ancillary equipment.
Added
We expect to renew this lease. ​ Other Property ​ In October 2022, Cayman Water purchased for $2.94 million approximately 2.8 acres of land in the West Bay area of Grand Cayman.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our Class A common stock is listed on the NASDAQ Global Select Market and trades under the symbol “CWCO”. ​ No trading market exists for our redeemable preferred stock, which is only issued to, or purchased by, long-term employees of our company. ​ On January 3, 2022, March 30, 2022 and January 3, 2023, we issued a total of 23,411 shares, 18,419 shares and 25,986 shares of our common stock, respectively, to Executive Officers under the 2008 Equity Incentive Plan.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our Class A common stock is listed on the NASDAQ Global Select Market and trades under the symbol “CWCO”. ​ No trading market exists for our redeemable preferred stock, which is only issued to, or purchased by, long-term employees of our company. ​ On January 3, 2023, March 31, 2023 and January 2, 2024, we issued a total of 25,986 shares, 13,797 shares and 29,392 shares of our common stock, respectively, to Executive Officers under our 2008 Equity Incentive Plan.
However, the payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Listed below, for each quarter of the last two fiscal years, are the per share dividends declared on our issued and outstanding shares of common shares and redeemable preferred stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 First Quarter ​ $ 0.085 ​ $ 0.085 Second Quarter ​ 0.085 ​ 0.085 Third Quarter ​ 0.085 ​ 0.085 Fourth Quarter ​ 0.085 ​ 0.085 ​ ​ $ 0.34 ​ $ 0.34 ​ Exchange Controls and Other Limitations Affecting Security Holders ​ Our Company is not subject to any governmental laws, decrees or regulations in the Cayman Islands which restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.
However, the payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Listed below, for each quarter of the last two fiscal years, are the per share dividends declared on our issued and outstanding shares of common shares and redeemable preferred stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 First Quarter ​ $ 0.085 ​ $ 0.085 Second Quarter ​ 0.085 ​ 0.085 Third Quarter ​ 0.095 ​ 0.085 Fourth Quarter ​ 0.095 ​ 0.085 ​ ​ $ 0.36 ​ $ 0.34 ​ Exchange Controls and Other Limitations Affecting Security Holders ​ Our Company is not subject to any governmental laws, decrees or regulations in the Cayman Islands which restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.
EXECUTIVE COMPENSATION”. ​ Currently 2,023,850 Bahamian Depository Receipts (“BDRs”) that constitute ownership of 404,770 shares of our common stock are listed and traded on the Bahamian International Stock Exchange. Our common shares that underlie these BDRs are held in a custodial account in The Bahamas.
EXECUTIVE COMPENSATION”. ​ 25 Table of Contents Currently 2,023,850 Bahamian Depository Receipts (“BDRs”) that constitute ownership of 404,770 shares of our common stock are listed and traded on the Bahamian International Stock Exchange. Our common shares that underlie these BDRs are held in a custodial account in The Bahamas.
The BDRs are entitled to dividend payments, when declared, on our common stock in proportion to the BDRs’ relative value to our common stock. ​ Holders ​ As of March 24, 2023, we had 718 holders of record of our common stock. ​ 24 Table of Contents Dividends ​ Our Board of Directors declares and approves any and all dividends. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
The BDRs are entitled to dividend payments, when declared, on our common stock in proportion to the BDRs’ relative value to our common stock. ​ Holders ​ As of March 20, 2024, we had 706 holders of record of our common stock. ​ Dividends ​ Our Board of Directors declares and approves any and all dividends. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
On December 9, 2022, we issued a total of 30,767 shares of our common stock to our Directors under the Non-Executive Directors’ Share Plan in consideration for their service on our Board of Directors and the committees thereof. See “ITEM 11.
On December 12, 2023, we issued a total of 22,831 shares of our common stock to our Directors under our Non-Executive Directors’ Share Plan in consideration for their service on our Board of Directors and the committees thereof. See “ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS of this Annual Report. ​ ITEM 6. SELECTED FINANCIAL DATA ​ Not applicable. ​
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS of this Annual Report. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGross profit as a percentage of revenue decreased in 2022 as compared to 2021 principally due to incremental repairs and maintenance expenses for CW-Bahamas of approximately $361,000 and incremental chemical costs of approximately $554,000 arising from higher chemical prices and greater chemicals usage. ​ Bulk segment G&A expenses increased to $1,570,732 for 2022 as compared to $1,365,735 for 2021 primarily due to relatively small increases in a variety of expense categories. ​ Services Segment: The services segment contributed $2,424,217 and $414,394 to our income from operations for 2022 and 2021, respectively. ​ Services segment revenue increased to $28,835,428 for 2022 compared to $13,884,857 for 2021 due to increases in both plant design and construction revenue and operating and maintenance revenue, with most of the revenue increase resulting from PERC’s progress on its contract with Liberty Utilities for the construction of a water treatment plant in Goodyear, Arizona which commenced in the third quarter of 2022.
Biggest changeGross profit in dollars increased in 2023 as compared to 2022 principally due to the increase in revenue. ​ Bulk segment G&A expenses increased to $1,737,264 for 2023 as compared to $1,570,732 for 2022 due to relatively small increases in a variety of expense categories. ​ Services Segment: The services segment contributed $26,897,080 and $2,424,217 to our income from operations for 2023 and 2022, respectively. ​ Services segment revenue increased to $97,966,650 for 2023 compared to $28,835,428 for 2022.
Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by the negative economic conditions (caused in part by the COVID-19 pandemic).
Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by negative economic conditions (caused in part by the COVID-19 pandemic).
The most recent express extension of the license expired on January 31, 2018.
The most recent express extension of the license expired on January 31, 2018.
We continue to pay the royalty of 7.5% of revenue we collect required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We continue to pay a royalty of 7.5% of the revenue we collect as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
Our payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Dividend reinvestment and common stock purchase plan ​ This plan is available to our shareholders, who may reinvest all or a portion of their common stock dividends into shares of common stock at prevailing market prices and may also invest optional cash payments to purchase additional shares at prevailing market prices as part of this plan. ​ 37 Table of Contents Impact of inflation ​ Under the terms of our Cayman Islands license and our water sales agreements in The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis.
Our payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Dividend Reinvestment and Common Stock Purchase Plan ​ This plan is available to our shareholders, who may reinvest all or a portion of their common stock dividends into shares of common stock at prevailing market prices and may also invest optional cash payments to purchase additional shares at prevailing market prices as part of this plan. ​ Impact of Inflation ​ Under the terms of our Cayman Islands license and our water sales agreements in The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis.
We determine the fair value of each reporting unit and compare these fair values to the carrying amounts of the reporting units. To the extent the carrying amount of the reporting unit exceeds the fair value of the reporting unit, an impairment loss is recorded.
We determine the fair value of each reporting unit and compare these fair values to the carrying amounts of the reporting units. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment loss is recorded.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report. ​ Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 ​ Discontinued Operations – Mexico Project Development In 2010, we began the pursuit, through our Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and our Mexico subsidiary, N.S.C. Agua, S.A. de C.V.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report. ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 ​ Discontinued Operations – Mexico Project Development In 2010, we began the pursuit, through our Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and our Mexico subsidiary, N.S.C. Agua, S.A. de C.V.
Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively.
Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections 29 Table of Contents of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively.
The application of our critical accounting policies involve estimates or assumptions that constitute “critical accounting estimates” for us because: ● the nature of these estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and ● the impact of the estimates and assumptions on financial condition and results of operations is material.
The application of our critical accounting policies involves estimates or assumptions that constitute “critical accounting estimates” for us because: ● the nature of these estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and ● the impact of the estimates and assumptions on financial condition and results of operations is material.
While Aerex sells various products to this customer, Aerex’s revenue from this customer has historically been derived primarily from one specialized product. In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases of the specialized product from Aerex following 2020 for a period of approximately one year.
While Aerex sells various products to this customer, Aerex’s revenue from this customer had historically been derived primarily from one specialized product. In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases of the specialized product from Aerex following 2020 for a period of approximately one year.
We cannot presently determine the outcome of the discussions and we have not terminated our efforts to obtain relief through the international arbitration process as a result of these discussions. ​ We cannot provide any assurances that we will be able to obtain reimbursement for any expenses or investments made with respect to the Project. ​ As a result of the cancellation of the APP Contract, in 2020 we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project.
We cannot presently determine the outcome of the discussions and we have not terminated our efforts to obtain relief through the international arbitration process as a result of these discussions. ​ We cannot provide any assurances that we will be able to obtain reimbursement for any expenses or investments made with respect to the Project. ​ 32 Table of Contents As a result of the cancellation of the APP Contract, in 2020 we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project.
(“NSC”), of a project (the “Project”) that encompassed the construction, operation and minority ownership of a 100 million gallon per day seawater reverse osmosis desalination plant to be located in northern Baja California, Mexico and accompanying pipelines to deliver water to the Mexican potable water system.
(“NSC”), of a project (the “Project”) that encompassed the construction, operation and minority ownership of a 100 million gallons per day seawater reverse osmosis desalination plant to be located in northern Baja California, Mexico and accompanying pipelines to deliver water to the Mexican potable water system.
The APP Contract was subsequently amended by the parties in June 2018 to increase the scope of Phase 1 and to allow for changes in the water tariff due to the changes in the exchange rate for the peso, interest rates and construction costs that had and would occur from the date the APP Contract was signed to the date construction commenced. ​ On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract.
The APP Contract was 31 Table of Contents subsequently amended by the parties in June 2018 to increase the scope of Phase 1 and to allow for changes in the water tariff due to the changes in the exchange rate for the peso, interest rates and construction costs that had and would occur from the date the APP Contract was signed to the date construction commenced. ​ On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands 36 Table of Contents government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ The Cayman Islands government could seek to grant a third party a license to service some or all of Cayman Water’s present service area.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ The Cayman Islands government could seek to grant a third party a license to service some or all of Cayman Water’s present service area.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ Overview ​ Our water production operations and activities, and those of our affiliate OC-BVI, are conducted at 11 plants in three countries: the Cayman Islands, The Bahamas, and the British Virgin Islands.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ Overview ​ Our water production operations and activities, and those of our affiliate OC-BVI, are conducted at 10 plants in three countries: the Cayman Islands, The Bahamas, and the British Virgin Islands.
In February 2018, we acquired the remaining 0.4% ownership in AdR from NuWater. ​ 30 Table of Contents On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the State Water Commission of Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”).
In February 2018, we acquired the remaining 0.4% ownership in AdR from NuWater. ​ On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the State Water Commission of Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”).
Management identifies our reporting units for goodwill impairment testing purposes, which consist of Cayman Water, the bulk segment (which is comprised of CW-Bahamas and OC-Cayman), PERC, and the manufacturing segment (i.e., Aerex), and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.
Management 28 Table of Contents identifies our reporting units for goodwill impairment testing purposes, which consist of Cayman Water, the bulk segment (which is comprised of CW-Bahamas and OC-Cayman), PERC, and the manufacturing segment (i.e., Aerex), and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.
Therefore, the impact of inflation on our gross profit, measured in consistent dollars, historically has not been material. However, we have not increased our retail water rates since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license.
Therefore, the impact of inflation on 39 Table of Contents our gross profit, measured in consistent dollars, historically has not been material. However, we have not increased our retail water rates since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license.
We assessed the relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each unit included 27 Table of Contents macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events.
We assessed the relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each reporting unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events.
The Letter requested that AdR provide an inventory of the assets that currently comprise the “Project Works” (as defined in the APP Contract) for the purpose of acknowledging and paying the non-recoverable expenses made by AdR in connection with the Project, with such reimbursement to be calculated in accordance with the terms of the APP Contract.
The Letter requested that AdR provide an inventory of the assets that comprised the “Project Works” (as defined in the APP Contract) for the purpose of acknowledging and paying the non-recoverable expenses made by AdR in connection with the Project, with such reimbursement to be calculated in accordance with the terms of the APP Contract.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES - CW-Bahamas Liquidity . 26 Table of Contents ​ Critical Accounting Policies and Estimates Our critical accounting policies relate to (i) the valuations of our goodwill, intangible assets and long-lived assets; and (ii) revenue recognition on our construction and manufacturing contracts.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES - CW-Bahamas Liquidity . ​ Critical Accounting Policies and Estimates Our critical accounting policies relate to (i) the valuations of our goodwill, intangible assets and long-lived assets; and (ii) revenue recognition on our construction and manufacturing contracts.
We continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
We 27 Table of Contents continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
During 2022, we supplied approximately 4.6 billion gallons of water to the WSC from these plants, as compared to 4.4 billion gallons during 2021. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable.
During 2023, we supplied approximately 4.8 billion gallons of water to the WSC from these plants, as compared to 4.6 billion gallons during 2022. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable.
Such impairment losses could have a material adverse impact on our consolidated financial condition, results of operation and cash flows . ​ CW-Bahamas Performance Guarantees ​ Our contracts to supply water to the WSC from our Blue Hills and Windsor plants require us to guarantee delivery of a minimum quantity of water per week.
Such impairment losses could have a material adverse impact on our consolidated financial condition and results of operations . ​ CW-Bahamas Performance Guarantees ​ Our contracts to supply water to the WSC from our Blue Hills and Windsor plants require us to guarantee delivery of a minimum quantity of water per week.
These seven-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and 28 Table of Contents operational strategies. The discount rates for the calculations represented the estimated cost of capital for market participants at the time of each analysis.
These seven-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and operational strategies. The discount rates for the calculations represented the estimated cost of capital for market participants at the time of the analysis.
In 2022 and 2021, we generated approximately 27% and 33%, respectively, of our consolidated revenue and 44% and 47%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement.
In 2023 and 2022, we generated approximately 17% and 27%, respectively, of our consolidated revenue and 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement.
Although the 1990 license was not expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
This letter invited Mexico to seek a resolution of this investment dispute through consultation and negotiation, but stated that if the dispute cannot be resolved in this manner, CW-Cooperatief elects to refer the dispute to the International Centre for the Settlement of International Disputes for arbitration, as provided for in the Treaty.
This letter invited Mexico to seek a resolution of this investment dispute through consultation and negotiation, but stated that if the dispute could not be resolved in this manner, CW-Cooperatief would refer the dispute to the International Centre for the Settlement of International Disputes for arbitration, as provided for in the Treaty.
Our Grand Cayman operations consist of four company-owned seawater reverse osmosis desalination plants which provide water to approximately 7,950 retail residential and commercial connections within a government licensed area and three government-owned seawater reverse osmosis plants which supply bulk water to the WAC.
Our Grand Cayman operations consist of three company-owned seawater reverse osmosis desalination plants which provide water to approximately 8,095 retail residential and commercial connections within a government licensed area and three government-owned seawater reverse osmosis plants which supply bulk water to the WAC.
We estimate total project or manufacturing costs and profit to be earned on each long-term, fixed price contract prior to commencement of work on the contract and update these estimates as work on the contract progresses.
We estimate total costs to be incurred and profit to be earned on each long-term, fixed price contract prior to commencement of work on the contract and update these estimates as work on the contract progresses.
Contract costs include labor, materials and amounts payable to subcontractors. We follow this method since we can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. Under this input method, we record revenue and recognize profit or loss as work on the contract progresses.
Contract costs include labor, materials, subcontractor costs and other expenses. We follow this method since we can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. Under this input method, we record revenue and recognize profit or loss as work on the contract progresses.
Goodwill and Intangible Assets ​ Goodwill represents the excess cost of an acquired business over the fair value of the assets and liabilities of the acquired business.
Goodwill and Intangible Assets ​ Goodwill represents the excess cost of an acquired business over the fair value of the assets and liabilities of the acquired business as of the date of acquisition.
Dividends ​ ● On January 31, 2022, we paid a dividend of $0.085 to shareholders of record on January 3, 2022. ● On April 29, 2022, we paid a dividend of $0.085 to shareholders of record on April 1, 2022. ● On July 29, 2022, we paid a dividend of $0.085 to shareholders of record on July 1, 2022. ● On October 31, 2022, we paid a dividend of $0.085 to shareholders of record on October 3, 2022 . ● On January 31, 2023, we paid a dividend of $0.085 to shareholders of record on January 3, 2023. ● On February 21, 2023, our Board declared a dividend of $0.085 payable on April 28, 2023 to shareholders of record on April 3, 2023. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
Dividends ● On January 31, 2023, we paid a dividend of $0.085 to shareholders of record on January 3, 2023. ● On April 28, 2023, we paid a dividend of $0.085 to shareholders of record on April 3, 2023. ● On July 31, 2023, we paid a dividend of $0.085 to shareholders of record on July 3, 2023. ● On October 31, 2023, we paid a dividend of $0.095 to shareholders of record on October 2, 2023 . ● On January 31, 2024, we paid a dividend of $0.095 to shareholders of record on January 2, 2024. ● On February 20, 2024, our Board declared a dividend of $0.095 payable on April 30, 2024 to shareholders of record on April 1, 2024. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
Ltd. stockholders for 2022 was $5,856,294 ($0.38 per share on a fully diluted basis), as compared to $875,579 ($0.06 per share on a fully diluted basis) for 2021. ​ The following discussion and analysis of our consolidated results of operations and results of operations by segment for the year ended December 31, 2022 as compared to the year ended December 31, 2021 relates only to our continuing operations. ​ Net income from continuing operations attributable to Consolidated Water Co.
Ltd. stockholders for 2023 was $29,585,391 ($1.86 per share on a fully diluted basis), as compared to $5,856,294 ($0.38 per share on a fully diluted basis) for 2022. ​ The following discussion and analysis of our consolidated results of operations and results of operations by segment for the year ended December 31, 2023 as compared to the year ended December 31, 2022 relates only to our continuing operations. ​ Net income from continuing operations attributable to Consolidated Water Co.
The increase in manufacturing segment gross profit in dollars reflects the increased revenue.
The increase in manufacturing gross profit in dollars reflects the increase in revenue.
This net cash provided reflects net income generated for the year ended December 31, 2022 of $6,969,207 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital.
This net cash provided reflects net income generated for the year ended December 31, 2023 of $30,159,182 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital.
Consequently, should we be required (or elect) to transfer any profits generated by our U.S. operations to our parent company in the Cayman Islands, the amount of any such profits transferred would be subject to a 30% withholding tax. ​ Liquidity Position ​ Our projected liquidity requirements for 2023 include capital expenditures for our existing operations of approximately $14.1 million, which includes $2.8 million to be incurred in 2023 for the replacement of the West Bay seawater desalination plant and approximately $7.5 million for construction of the WAC’s new Red Gate plant.
Consequently, should we be required (or elect) to transfer any profits generated by our U.S. operations to our parent company in the Cayman Islands, the amount of any such funds transferred would be subject to a 30% withholding tax. ​ Liquidity Position ​ Our projected liquidity requirements for 2024 include capital expenditures for our existing operations of approximately $9.5 million, which includes $2.8 million to be incurred in 2024 for our new West Bay plant.
The increase in bulk segment revenue from 2021 to 2022 is attributable to an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates. ​ Gross profit for the bulk segment was $9,958,854 (30% of bulk segment revenue) and $9,041,597 (34% of bulk segment revenue) for 2022 and 2021, respectively.
The increase in bulk segment revenue from 2022 to 2023 is attributable to a 6% increase in water volume and an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates. ​ Gross profit for the bulk segment was $10,466,926 (30% of bulk revenue) and $9,958,854 (30% of bulk revenue) for 2023 and 2022, respectively.
The following table sets forth the comparative combined estimated production capacity of our services segment as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2022 ​ 2021 Location Plants Capacity (1) Location Plants Capacity (1) United States 27 ​ 52.5 United States 28 ​ 52.6 (1) In estimated millions of gallons per day. ​ Cayman Islands ​ We have been operating our business on Grand Cayman since 1973 and have been using reverse osmosis technology to convert seawater to potable water since 1989.
The following table sets forth the comparative combined estimated production capacity of our services segment as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2023 ​ 2022 Location Plants Capacity (1) Location Plants Capacity (1) United States 31 ​ 59.7 United States 27 ​ 52.5 (1) In estimated millions of gallons per day. ​ As of December 31, 2023, REC performed operations, maintenance, and monitoring services for 72 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Cayman Islands ​ We have been operating our business on Grand Cayman since 1973 and have been using reverse osmosis technology to convert seawater to potable water since 1989.
Based upon our negotiated, arms-length purchase of the remaining 39% equity interest in PERC from its minority shareholders for $7.8 million in January 2023, the fair value of our PERC reporting unit exceeded its carrying value by 79% as of December 31, 2022. ​ Due to the factors discussed in the following paragraphs, we elected to test the goodwill associated with our manufacturing reporting unit for possible impairment using the quantitative tests applied in prior years. ​ In connection with our acquisition of Aerex in 2016, we recorded goodwill of $8,035,211.
Based upon our negotiated, arms-length purchase of the remaining 39% equity interest in PERC from its minority shareholders for $7.8 million in January 2023, the fair value of our PERC reporting unit exceeded its carrying value by 79% as of December 31, 2022. ​ Due to the factors discussed in the following paragraphs, we elected to test the goodwill associated with our manufacturing reporting unit for possible impairment for 2022 using the quantitative tests applied in prior years. ​ Approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to one customer.
Aerex, is a custom and specialty manufacturer in the U.S. of water treatment-related systems and products applicable to commercial, municipal and industrial water production. 29 Table of Contents We recognize revenue for our construction and our specialized/custom manufacturing contracts over time under the input method using costs incurred (which represents work performed) to date relative to total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations as such measure best reflects the transfer of control of the promised good to the customer.
We recognize revenue for our construction and our specialized/custom manufacturing contracts over time under the input method using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations, as such measure best reflects the transfer of control of the promised good to the customer.
Gross profit for 2022 was $30,355,123 (32% of total revenue) as compared to $23,507,191 (35% of total revenue) for 2021. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows. ​ General and administrative expenses (“G&A expenses”) on a consolidated basis increased to $21,070,234 for 2022 as compared to $18,350,359 for 2021.
Gross profit for 2023 was $61,927,105 (34% of total revenue) as compared to $30,355,123 (32% of total revenue) for 2022. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows. ​ General and administrative expenses (“G&A expenses”) on a consolidated basis increased to $24,752,366 for 2023 as compared to $21,070,234 for 2022.
We paid approximately $1.4 million for dividends in January 2023.
We paid approximately $1.6 million for dividends in January 2024.
Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board. ​ On January 4, 2023, we purchased the remaining 39% of PERC from its minority shareholders for approximately $2.44 million in cash and 368,383 shares of the Company’s common stock. ​ As of December 31, 2022, we had cash and cash equivalents of $50.7 million and working capital of $69.9 million. ​ With the exception of the liquidity matter relating to CW-Bahamas that is discussed in the paragraphs that follow, we are not presently aware of anything that would lead us to believe that we will not have sufficient liquidity to meet our needs. ​ CW-Bahamas Liquidity ​ CW-Bahamas’ accounts receivable balance (which include accrued interest) due from the WSC amounted to $16.3 million as of December 31, 2022.
Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board. ​ As of December 31, 2023, we had cash and cash equivalents of $42.6 million and working capital of $88.8 million. ​ With the exception of the liquidity matter relating to CW-Bahamas that is discussed in the paragraphs that follow, we are not presently aware of anything that would lead us to believe that we will not have sufficient liquidity to meet our needs. ​ CW-Bahamas Liquidity ​ CW-Bahamas’ accounts receivable balance (which include accrued interest) due from the WSC amounted to $26.9 million as of December 31, 2023.
In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases of the specialized product from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years.
As a result of these impairment tests, we determined that the estimated fair value of our manufacturing reporting unit exceeded its carrying value by approximately 31% as of December 31, 2020. ​ In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases of the specialized product from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years.
Representatives of the Bahamas government have informed us that their delays in paying our accounts receivables did/do not reflect any type of dispute with us with respect to the amounts owed. To date, we have not been required to provide an allowance for any delinquent CW-Bahamas accounts receivable as such amounts were eventually paid in full.
Representatives of the Bahamas government have informed us that their delays in paying our accounts receivables did/do not reflect any type of dispute with us with respect to the amounts owed. To date, all amounts due from CW-Bahamas were eventually paid in full, and we believe that the present accounts receivable from the WSC are fully collectible.
Ltd. stockholders for 2022 was $8,227,343 ($0.54 per share on a fully diluted basis), as compared to $3,449,658 ($0.23 per share on a fully diluted basis) for 2021. ​ Revenue for 2022 increased to $94,104,972 from $66,863,502 in 2021, as all four segments experienced revenue increases.
Ltd. stockholders for 2023 was $30,672,135 ($1.93 per share on a fully diluted basis), as compared to $8,227,343 ($0.54 per share on a fully diluted basis) for 2022. ​ Revenue for 2023 increased to $180,211,233 from $94,104,972 in 2022, as all four segments experienced revenue increases.
Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are tested for impairment annually or upon the identification of a triggering event. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment.
Goodwill and intangible assets recorded as a result of a business combination and determined to have an indefinite useful life are not amortized but are tested for impairment annually or upon the identification of a triggering event.
The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprises of estimated total contract costs. If, as work progresses, the actual contract costs exceed estimates, the profit recognized on revenue from that contract decreases.
The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprise of estimated total contract costs.
Approximately 65% of the December 31, 2022 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time, CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
Approximately 80% of the December 31, 2023 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.
Cash used was primarily for additions to property, plant and equipment and construction in progress of $7,542,761.
Cash used for additions to property, plant and equipment and construction in progress was $5,047,884.
Gross profit in dollars increased in 2022 as compared to 2021 principally due to the increase in revenue.
Gross profit increased from 2022 to 2023 due to the increase in revenue.
In general, our operating and maintenance contracts are adjusted annually for the impacts of inflation. ​ Increases in fuel and energy costs and other items could create additional credit risks for us, as our customers’ ability to pay our invoices could be adversely affected by such increases. ​ ​ ITEM 7A.
Increases in fuel and energy costs and other items could create additional credit risks for us, as our customers’ ability to pay our invoices could be adversely affected by such increases. ​ ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ​ Not applicable. ​ 40 Table of Contents
Retail revenue also increased due to higher energy costs which increased the energy pass-through component of our water rates and a more favorable rate mix, as much of the volume increase for the quarter was due to higher sales volumes to tourist industry related businesses, which in general purchase higher volumes and therefore pay higher per gallon rates than other retail customers. ​ Retail segment gross profit increased to $13,405,250 (52% of retail revenue) for 2022 as compared to $11,044,016 (50% of retail revenue) for 2021 due to the revenue increase. ​ Consistent with prior periods, we record all non-direct G&A expenses in our retail segment and do not allocate any of these non-direct costs to our other three business segments.
Retail revenue also increased by approximately $1,014,639 due to higher energy costs which increased the energy pass-through component of our retail water rates. 33 Table of Contents Retail segment gross profit increased to $16,266,822 (54% of retail revenue) for 2023 as compared to $13,405,250 (52% of retail revenue) for 2022 due to the revenue increase. ​ Consistent with prior periods, we record all non-direct G&A expenses in our retail segment and do not allocate any of these non-direct costs to our other three business segments.
As a result of the cancellation of this contract, we recorded an impairment loss for rights of way acquired for the contract’s proposed aqueduct of approximately ($3.0 million) in 2020.
As a result of the cancellation of this contract, we recorded an impairment loss for rights of way acquired for the contract’s proposed aqueduct of approximately ($3.0 million) in 2020. Construction and Manufacturing Contract Revenue Recognition We design, construct, and sell desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas, and the British Virgin Islands.
We recognize the full amount of any estimated loss on a contract at the time the estimates indicate such a loss. The cost estimates we prepare in connection with our construction and manufacturing contracts are subject to inherent uncertainties.
The cost estimates we prepare in connection with our construction and manufacturing contracts are subject to inherent uncertainties.
We did not renew our CW-Bahamas $2.5 million certificate of deposit at year-end. ​ Cash Flows from Financing Activities ​ Net cash used by our financing activities was $6,304,873, almost all of which related to the payment of dividends. ​ Material Commitments, Expenditures and Contingencies ​ Cayman Water Retail License ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
Material Commitments, Expenditures and Contingencies ​ Cayman Water Retail License ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
The Blue Hills contract expires in 2032 and requires us to deliver 63.0 million gallons of water each week. The Windsor contract expires in 2033 and requires us to deliver 16.8 million gallons of water each week. ​ Adoption of new accounting standards ​ None. Effect of newly issued but not yet effective accounting standards ​ None.
The Blue Hills contract expires in 2032 and requires us to deliver 63.0 million gallons of water each week.
We evaluate the possible impairment of goodwill annually as part of our reporting process for the fourth quarter of each fiscal year.
Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment. We evaluate the possible impairment of goodwill annually as part of our reporting process for the fourth quarter of each fiscal year.
The following table sets forth the comparative combined production capacity of our retail and bulk segments and our affiliate as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2022 ​ 2021 Location Plants Capacity (1) Location Plants Capacity (1) Cayman Islands 7 9.9 Cayman Islands 7 9.9 Bahamas 2 ​ 14.8 ​ Bahamas ​ 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 ​ British Virgin Islands ​ 2 ​ 0.8 ​ 11 ​ 25.5 ​ ​ ​ 11 ​ 25.5 (1) In millions of gallons per day. ​ 25 Table of Contents Our water treatment and reuse facilities are conducted at 27 plants in the United States.
The following table sets forth the comparative combined production capacity of our retail and bulk segments and our affiliate as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2023 ​ 2022 Location Plants Capacity (1) Location Plants Capacity (1) Cayman Islands 6 ​ 9.3 Cayman Islands 7 ​ 9.9 Bahamas 2 ​ 14.8 ​ Bahamas ​ 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 ​ British Virgin Islands ​ 2 ​ 0.8 ​ 10 ​ 24.9 ​ ​ ​ 11 ​ 25.5 (1) In millions of gallons per day. ​ Effective October 1, 2023, the Company purchased, through its wholly-owned subsidiary PERC, a 100% ownership interest in Ramey Environmental Compliance, Inc., a Colorado company that operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado.
As of December 31, 2022, we have not provided an allowance for doubtful accounts for CW-Bahamas’ accounts receivable from the WSC. ​ In February 2022, we received correspondence from the Ministry of Finance of the Government of the Bahamas that stated that the Government intends to return all of CW-Bahamas’ accounts receivable from the WSC to current status. ​ In its latest report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
As of February 29, 2024, this receivable amounted to $24.6 million. ​ CW-Bahamas held discussions with the WSC in March 2024 during which the WSC stated that the Government intends to substantially reduce CW-Bahamas’ accounts receivable from the WSC over the course of 2024. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
We cannot provide any assurances that CW Cooperatief will be able to obtain the relief sought in the arbitration, and we will incur legal and other arbitration-related expenses that we expect will be material to our consolidated results of operations and cash flows. 31 Table of Contents During July 2022, the State initiated discussions with us to potentially resolve the issues related to the cancellation by the government of the Rosarito desalination plant contract as well as potentially addressing the State’s acute water shortage issues.
We cannot provide any assurances that CW Cooperatief will be able to obtain the relief sought in the arbitration, and we have incurred and will continue to incur legal and other arbitration-related expenses that are material to our consolidated results of operations and cash flows.
Contract assets increased by approximately $2.4 million due to an increase in the Red Gate plant construction and Aerex's manufacturing activities.
Contract assets increased by approximately $18.6 million primarily due to a $8.2 million increase for the construction of the Red Gate plant for the WAC and a $8.4 million increase for PERC which relates primarily to the Liberties Utilities contract.
The current economic conditions could continue (or further deteriorate) and therefore could continue to adversely impact the future results of our manufacturing segment. ​ FINANCIAL CONDITION ​ The significant changes in the components of our consolidated balance sheet as of December 31, 2022 as compared to December 31, 2021 (other than the change in our cash and cash equivalents, which is discussed later in “LIQUIDITY AND CAPITAL RESOURCES”) and the reasons for these changes are discussed in the following paragraphs. ​ Current inventory increased by approximately $3.2 million primarily due to an increase in Aerex’s inventory, as Aerex began a major new contract in the fourth quarter of 2022.
Gross profit as a percentage of revenue increased due to increased revenue and the resulting reduced impact of fixed factory overhead on this financial measure. ​ G&A expenses for the manufacturing segment increased to $1,838,284 for 2023 as compared to $1,485,342 for 2022 principally due to an increase of approximately $129,000 in employee costs attributable to pay raises, new hires and increased bonus accruals. ​ FINANCIAL CONDITION ​ The significant changes in the components of our consolidated balance sheet as of December 31, 2023 as compared to December 31, 2022 (other than the change in our cash and cash equivalents, which is discussed later in “LIQUIDITY AND CAPITAL RESOURCES”) and the reasons for these changes are discussed in the following paragraphs. ​ Accounts receivable increased by approximately $11.2 million primarily due to a $10.3 million increase in CW-Bahamas’ accounts receivable.
We design, construct, and sell wastewater and water reuse infrastructure in the U.S. through PERC.
We design, construct, and sell wastewater and water reuse infrastructure in the U.S. through PERC. Aerex, is a custom and specialty manufacturer in the U.S. of water treatment-related systems and products applicable to commercial, municipal and industrial water production.
Our net losses from discontinued operations for 2022 and 2021 were ($2,371,049) and ($2,574,079), respectively. Our net losses from discontinued operations for 2022 and 2021 includes provisions of $377,326 and $963,540, respectively, for uncollectible value added taxes paid to, and reimbursable by, the Mexican federal government. ​ Consolidated Results ​ Including discontinued operations, net income attributable to Consolidated Water Co.
Our net losses from discontinued operations for 2023 and 2022 were ($1,086,744) and ($2,371,049), respectively. ​ Consolidated Results ​ Including discontinued operations, net income attributable to Consolidated Water Co.
Manufacturing segment revenue increased from 2021 to 2022 due to an increase in production activity that resulted from an easing of some of the supply change difficulties that restricted production for 2021 and most of 2022. ​ Manufacturing segment gross profit was $1,129,225 (18% of manufacturing segment revenue) and $243,964 (6% of manufacturing segment revenue) for 2022 and 2021, respectively.
The growth in manufacturing revenue for 2023 reflects increased production activity due to relief in supply chain and economic conditions that had resulted in significant product delivery delays in 2022. ​ Manufacturing segment gross profit was $4,024,469 (23% of manufacturing revenue) and $1,129,225 (18% of manufacturing revenue) for 2023 and 2022, respectively.
The respective weightings we applied to each method for 2021 were 80% to the discounted cash flow method and 20% to the guideline public company method. ​ The fair values we estimated for our Cayman Water, bulk segment, PERC and manufacturing reporting units exceeded their carrying amounts by 32%, 51%, 15% and 15%, respectively, as of December 31, 2021. ​ For 2022, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for all goodwill reporting units other than the manufacturing unit.
For 2022, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for all reporting units other than the manufacturing unit.
Construction in progress increased by approximately $3.0 million due to construction activity for Cayman Water’s replacement of its West Bay desalination plant. 34 Table of Contents Accounts payable, accrued expenses and other liabilities increased by approximately $5.6 million primarily due to an increase in subcontractor costs for PERC’s contract with Liberty Utilities and Aerex’s manufacturing projects.
Accounts payable, accrued expenses and other current liabilities increased by approximately $3.2 million primarily due to a $4.0 million increase in subcontractor costs payable for PERC’s contract with Liberty Utilities and Kalaeloa Desalco’s contract with the Board of Water Supply of the City and County of Honolulu, Hawaii .
The respective weightings we applied to each method for the year ended December 31, 2022 were 80% to the discounted cash flow method and 20% to the guideline public company method. ​ The fair value we estimated for our manufacturing reporting unit exceeded its carrying amount by 63% as of December 31, 2022. ​ We believe the inherent uncertainties associated with the accounting estimates and assumptions we use for our estimates of our manufacturing reporting unit’s fair value have increased due to the current, less predictable economic conditions, which have resulted in increasing raw material prices, extended and unexpected delays in the procurement and delivery of our raw materials, and have also, we believe, adversely affected our customers.
The respective weightings we applied to each method for the year ended December 31, 2022 were 80% to the discounted cash flow method and 20% to the guideline public company method. ​ The fair value we estimated for our manufacturing reporting unit exceeded its carrying amount by 63% as of December 31, 2022. ​ Long-lived Assets ​ We review the carrying amounts of our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.
Based upon our experience, we believe that the present accounts receivable from the WSC are fully collectible and therefore have not provided any allowance for possible non-payment of these receivables. Such accounts receivable balances due from The Bahamas government amounted to $16.3 million as of December 31, 2022. See further discussion of this matter at ITEM 7.
Such accounts receivable balances due from The Bahamas government amounted to $26.9 million as of December 31, 2023. See further discussion of this matter at ITEM 7.
Retail G&A expenses increased to $14,552,866 for 2022 as compared to $12,841,259 for 2021. The most significant components of the increase in G&A expenses for 2022 were incremental bonus accruals and stock compensation expense of $976,501 arising from the improved financial performance of the Company.
Retail G&A expenses increased to $16,905,010 for 2023 as compared to $14,552,866 for 2022. The most significant increase in G&A expenses for 2023 relates to employee costs, which increased by $1,760,230 due to pay raises, increased stock compensation expense and higher bonus accruals.
The more significant of such items and changes in working capital components included depreciation and amortization of $6,187,308, an increase in contract liabilities of $8,290,043, an increase in accounts payable and accrued expenses of $6,756,433, an increase in inventory of $3,387,011, an increase in prepaid expenses and other assets of $3,365,747 and an increase in contract assets of $2,423,761. ​ Cash Flows from Investing Activities ​ Net cash used by our investing activities was $4,981,036.
The more significant of such items and changes in working capital components included depreciation and amortization of $6,576,454, an increase in accounts receivable of $10,970,521 attributable principally to CW-Bahamas, an increase in contract assets of $18,639,335 due primarily to the Red Gate and Liberty Utilities construction contracts, a decrease in contract liabilities of $2,566,910 and an increase in accounts payable, accrued expenses and accrued compensation of $3,161,386. ​ Cash Flows from Investing Activities ​ Net cash used by our investing activities was $10,887,019.
Contract liabilities increased by $8.3 million primarily due to approximately $7.0 million in billings made by the services segment in connection with PERC’s new contract with Liberty Utilities. Aerex also had an increase of approximately $1.3 million in billings in the manufacturing segment.
Contract liabilities decreased by approximately $2.6 million primarily due to a $6.9 million reduction by the services segment in connection with PERC’s contract with Liberty Utilities and a decrease in Aerex’s contract liabilities of $1.6 35 Table of Contents million.
Other components of the G&A expenses increase relate to (i) professional and legal fees, which increased by $167,445; (ii) incremental business development expenses of $170,461 and (iii) insurance costs, which increased by $123,938. ​ Bulk Segment: ​ The bulk segment contributed $8,393,729 and $7,677,362 to our income from operations for 2022 and 2021, respectively. ​ Bulk segment revenue was $32,991,066 and $26,800,869 for 2022 and 2021, respectively.
Business development expenses increased by approximately $182,000 primarily due to the costs associated with the acquisition of REC (which was completed in November 2023). ​ Bulk Segment: ​ The bulk segment contributed $8,742,382 and $8,393,729 to our income from operations for 2023 and 2022, respectively. ​ Bulk segment revenue was $34,595,058 and $32,991,066 for 2023 and 2022, respectively.
In addition, interest income decreased by approximately $238,000 for 2022 as compared to 2021 primarily due to the decrease in CW-Bahamas’ average delinquent accounts receivable balances due from the WSC. ​ 32 Table of Contents Results by Segment ​ Retail Segment: ​ The retail segment incurred a loss from operations of ($1,187,013) for 2022 as compared to a loss from operations of ($2,044,094) for 2021. ​ Revenue generated by our retail water operations increased to $25,954,013 in 2022 from $22,104,953 in 2021 in part due to a 12.5% increase in the volume of water sold.
We exercised our call option in the fourth quarter of 2022 and acquired the remaining 39% of PERC in January 2023. ​ Results by Segment ​ Retail Segment: ​ The retail segment incurred a loss from operations of ($660,253) for 2023 as compared to a loss from operations of ($1,187,013) for 2022. ​ Revenue generated by our retail water operations increased to $30,158,051 in 2023 from $25,954,013 in 2022 principally due to a 15% increase in the volume of water sold.
The loss from operations for 2021 reflects an impairment loss recorded for our manufacturing segment’s goodwill of $2,900,000 due to a decline in Aerex’s projected future cash flows. ​ Manufacturing segment revenue was $6,324,465 and $4,072,823 for 2022 and 2021, respectively.
Manufacturing Segment: ​ The manufacturing segment contributed $2,188,418 to our income from operations for 2023 as compared to incurring an operating loss of ($358,748) for 2022. ​ Manufacturing segment revenue was $17,491,474 and $6,324,465 for 2023 and 2022, respectively.
Revenue recognized on this contract in 2022 was approximately $9.5 million. 33 Table of Contents ​ The gross profit for the services segment was $5,861,794 (20% of services segment revenue) in 2022 as compared to $3,177,614 (23% of services revenue) for 2021. The increase in gross profit dollars results from the increased revenue.
The decrease in design and consulting revenue from 2022 to 2023 is attributable to the work performed in 2022 on the design contract for the Liberty Utilities plant currently under construction. ​ The gross profit for the services segment was $31,168,888 (32% of services revenue) in 2023 as compared to $5,861,794 (20% of services revenue) for 2022.
The rise in G&A for 2022 is also due in part to inflationary factors which have increased many of our G&A expenses. ​ Other income, net, decreased to $464,810 in 2022, as compared to $1,623,595 in 2021 primarily due to a loss of ($128,000) recorded in 2022 for the valuation of the put/call options associated with the acquisition of PERC, as compared to a gain recorded on these options of $818,000 in 2021.
The remainder of the G&A increase is attributable to increases across a variety of categories including provision for credit losses of $408,489. ​ Other income, net, increased to $828,313 in 2023, as compared to $464,810 in 2022 due to an increase in interest income of approximately $249,000 primarily due to a higher balance of interest earning assets, and an increase of approximately $68,000 in the equity in earnings of and profit-sharing income from our affiliate, OC-BVI, and an unrealized loss recorded in 2022 of $128,000 for the valuation of the put/call options associated with the initial acquisition of a controlling interest in PERC.
Based upon our review of this Moody’s report, we continue to believe no allowance for doubtful accounts is required for CW-Bahamas’ accounts receivable from the WSC. ​ 35 Table of Contents Discussion of Cash Flows for the Year Ended December 31, 2022 ​ Our cash and cash equivalents increased to $50,711,751 as of December 31, 2022 from $40,358,059 as of December 31, 2021. ​ Cash Flows from Operating Activities ​ Net cash provided by our operating activities was $21,331,805.
Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ 36 Table of Contents Discussion of Cash Flows for the Year Ended December 31, 2023 ​ Our cash and cash equivalents decreased to $42,621,898 as of December 31, 2023 from $50,711,751 as of December 31, 2022. ​ Cash Flows from Operating Activities ​ Net cash provided by our operating activities was $7,970,762.

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