Business Overview / Sources of Revenue

Consolidated Water Co. Ltd. (CWCO) designs, builds, and operates advanced water supply, treatment, and reuse plants, primarily using seawater reverse osmosis (SWRO) desalination technology[2][4]. The company earns revenue through four segments:

- Retail: Selling potable water directly to residential, commercial, and government customers, especially in Grand Cayman[4][5].
- Bulk: Supplying water to government-owned distributors[4].
- Services: Designing, constructing, managing, and operating water and wastewater plants for third parties[4].
- Manufacturing: Producing and servicing custom water treatment systems and equipment[4].

In 2024, CWCO’s strong retail water sales and improved manufacturing segment profitability reflected growth in its core Caribbean markets, although total revenue was impacted by the completion of major construction projects[5]. While specific percentage breakdowns are not provided in the search results, retail and manufacturing emerged as key contributors to profitability in 2024[5].

Revenue Growth Potential and Recurrence

Consolidated Water Co (CWCO) derives a significant portion of its revenue from recurring streams, primarily through long-term operations and maintenance (O&M) contracts. In 2024, O&M revenue grew 51%, totaling $29.3 million, with these recurring contracts now making up a sizable share of the company’s revenue base[1][5][3]. This growth was driven partly by new U.S.-based subsidiaries and contract wins.

Looking forward, CWCO’s recurring revenue base and expansion into water-stressed U.S. regions support stable growth, although overall revenue can fluctuate with the timing of large construction projects[1][2][5]. Management expects additional design/build projects to bolster revenues in late 2025 and beyond[4]. While short-term revenue may remain volatile, CWCO’s recurring revenue should continue to increase, positioning the company for mid-to-high single-digit annual revenue growth over the next five years, depending on project cycles and new contract wins[1][3][5].

Economic Moat Factors

Consolidated Water Co. (CWCO) does not possess an economic moat according to Morningstar's assessment[1]. As a water utility company developing and operating seawater desalination plants and water distribution systems, CWCO operates in four segments: retail, bulk, services, and manufacturing[1]. While the company has a strong balance sheet with $100 million in cash and negligible debt as of March 2025[2], this financial strength alone doesn't constitute a moat. The company lacks significant competitive advantages in terms of switching costs, network effects, economies of scale, or brand power that would protect it from competition or allow for sustained above-average returns. The regulated nature of water utilities typically limits pricing power, and CWCO's relatively small size (307 employees[1]) suggests it doesn't benefit from substantial scale advantages compared to larger utility operators.

Leadership

Frederick W. McTaggart serves as President, CEO, and Director of Consolidated Water Co. He has been a director since 1998, became President in October 2000, and has held the CEO role since January 1, 2004. McTaggart is not listed as a founder. Details regarding his ownership stake are not provided in the available information. The broader executive team includes Ramjeet Jerrybandan (COO) and David W. Sasnett (EVP and CFO since 2006), reflecting significant tenure and experience within management[1][4][5].

Financial Health

Consolidated Water Co (CWCO) shows solid financial health with $107.9 million in cash and only $0.2 million in debt as of March 31, 2025, giving it an exceptionally strong cash-to-debt ratio of approximately 540:1[1]. The company maintains $136.2 million in working capital and $213.3 million in stockholders' equity[1]. While revenue declined 15% to $33.7 million in Q1 2025 due to completed construction projects[1][5], the company remains profitable with Q1 2025 EPS of $0.30[2]. CWCO recently increased its quarterly dividend by 27.3% to $0.14 per share[3], suggesting confidence in its cash flow generation. The search results don't provide specific data on free cash flow margins or share repurchase activities.

Last updated Jun 6, 2025