Good morning. Thank you for joining us today to discuss Consolidated Water Company’s Third Quarter 2021 Results. Hosting the call today are Chief Executive Officer of Consolidated Water Company, Rick McTaggart, and the company’s Chief Financial Officer, David Sasnett. Following their remarks, we’ll open the call to your questions. Before we conclude today’s call, I’ll provide some important cautions regarding the forward-looking statements made by management during the call. I’d like to remind everyone that today’s call is being recorded and will be made available for telecom replay via instructions in yesterday’s press release, which is available in the Investor Relations of the company’s website. Now, I’d like to turn the call over to Consolidated Water Company’s CEO, Rick McTaggart. Sir, please go ahead.

Thank you, Kate, good morning, everyone. Thanks for joining us on today’s call. I hope everybody is well. During the third quarter, the continued cessation of tourism on Grand Cayman due to COVID-19 resulted in our retail segment revenue growing at only about 5% compared to the same year ago quarter with about 1% higher volume. These numbers are still well below historical levels because of border closures in Grand Cayman. However, our bulk water segment revenue increased 13% to 6.9 million performing better than anticipated. It also increased for the first nine months of 2021 up 8% to 19.8 million. In the third quarter, our manufacturing segment revenue generated by our Aerex subsidiary decreased as a result of reduced orders from a major customer. This was expected from last year, which is why early last year we began strengthening our manufacturing sales team at Aerex and focused them on new market sectors to diversify our product mix and customer base. As a result, all of our manufacturing revenue recognized in this past quarter was from new customers and/or products. In the first nine months of the year, we generated manufacturing revenue of 3.2 million from new customers and products. Our services revenue increased 6% to 10.5 million in the first nine months of the year, accounting for 21% of our overall revenue compared to 17% in the same year ago period. This was driven by growth in our PERC water subsidiary. Now before I go further, I'd like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for the quarter.

Thanks, Rick. Good morning, everyone. Thanks for joining us today. As Rick mentioned, we continue to face significant challenges due to the current environment as many companies do. But despite these challenges, we've maintained our strong financial foundation as we pursued new opportunities and continued to pay dividends. Yesterday we issued our quarterly press release which is available in the Investor Relations section of our website. We reported that revenue totaled 16.4 million in the third quarter, a decrease of 7% from the same quarter last year. The decline reflects decreases of 141,000 in services segment revenue, and 2.2 million in manufacturing segment revenue. These decreases were partially offset by revenue increases of 254,000 in our retail segment and 807,000 in our bulk segment. Our retail revenue increased due to a 1% increase in the volume of water sold by Cayman Water. The sales volumes for both 2021 and 2020 are significantly below the historical volumes for the retail segment prior to 2020 due to the continuing cessation of tourism in Grand Cayman, resulting from the border restrictions initiated in March 2020 in response to the COVID-19 pandemic. The increase in bulk segment revenue was attributable to an increase in energy costs for Consolidated Water Bahamas, which increased the energy pass through component or CW Bahamas rates. The decrease in services revenue was due to a decline in plant construction revenue of 525,000, which was partially offset by an increase to 385,000 in revenue from operating and maintenance contracts attributed to new customers. The decrease in manufacturing revenue in the third quarter of 2021 was due to the loss of orders from Aerex's former largest customer. We had not yet been successful in replacing this lost revenue. In late July, this customer communicated to Aerex that it expected to recommence its purchases of its specialized product from Aerex in 2022 and in subsequent years, but communicated such purchases would be at substantially reduced annual amounts compared to both the amount it purchased from Aerex in 2020 in prior years, and it is below what we had anticipated they would purchase. Our efforts to replace this revenue generated from this customer with revenue from existing and new customers have been adversely impacted by the current economic environment, which has increased raw material costs and resulted in raw material shortages and extended delivery times for such materials to Aerex. We believe these shortages and delivery delays have also adversely affected the financial condition of Aerex's current and prospective customers. Gross profit for the third quarter of 2021 was 5.7 million or 34.7% of revenues compared to 6.2 million or 35.2% of revenues in the third quarter of last year. For the third quarter of 2021, net income attributable to Consolidated Water shareholders, which includes the results of discontinued operations, was 286,000 or $0.02 per basic and fully diluted share. With respect to our balance sheet, our accounts receivable balances related to our Bahamas subsidiary amounted to 21.4 million at the end of the third quarter, which was up from 16.8 million at the end of last year. We believe the delays in collecting CW Bahamas receivables have been extended by the severe adverse impact of COVID-19 on the Bahamas government's revenue sources. Based on our discussions and collection history with the Bahamas government, we believe our accounts receivables from the WSC are fully collectible. The Bahamas government and the WSC continue to make intermittent payments on these accounts receivable, such as payments amounting to approximately 6.9 million in the third quarter, and 15.6 million in the first nine months of 2021. Furthermore, in October 2021, we received a 2.4 million payment that further reduced these accounts receivables. Outside of this liquidity matter relating to CW Bahamas, we're not presently aware of anything that would lead us to believe we will not have sufficient liquidity to meet our needs. As of September 30, 2021, our cash and cash equivalents totaled 40.4 million. Our working capital was 59.3 million, we had only 200,000 in debt, and our stockholders' equity totaled 157.4 million. This completes my financial summary, and I would now like to turn the call back over to Rick.

Thank you, David. Like many companies, our manufacturing segment has been adversely affected by supply chain challenges, including material shortages, price increases, and logistical delays, which have directly impacted our manufacturing processes. In some cases, our clients have delayed the delivery of our products to next year due to similar issues impacting their business. This has pushed out to next year certain orders we had expected to complete in this last half of 2021, and as a result, we expect revenue from our manufacturing segment for the second half of 2021 to be about equal to its revenue for the first half of this year. It's important to note that we haven't lost any orders and in some cases, we anticipate being able to negotiate pricing adjustments on projects due to these delays. We continue to book new orders and build manufacturing backlogs. We have refocused our sales efforts on the municipal water market, which has been very active this past year and is expected to benefit significantly from the recently passed federal infrastructure bill. We are actively building our municipality relationships and sales channels and rekindling relationships with consulting engineers that advise these municipalities. We see this further supporting revenue diversification and reducing customer dependence and concentration. It's important to recognize that municipal jobs have a longer lead time and delivery time, which are usually more complicated in terms of what the client and their engineers require as deliverables. Project revenue recognition on this type of project, which is custom work, will likely be stretched out over a longer period compared to the types of standardized products we historically produced for our former largest customer. This means our manufacturing backlog won't be processed all at once, or over just two quarters, and is more likely to be spread throughout next year. As we mentioned on the call last quarter, there's been an increasing need for seawater desalination facilities in the United States. Our team was recently shortlisted and invited to bid for a multi-decade design build operate project in Hawaii. This type of project is exactly what we've been successfully executing in the Caribbean for the past 45 plus years. We are very comfortable providing the long-term operational performance guarantees required by this potential client. Our extensive experience in designing, building, and operating these seawater desalination plants allowed us to be shortlisted for this major project. If we're successful in obtaining a contract and winning the bid, that would be our first seawater desalination plant in the United States. We are also closely following the progress on two other early stage seawater desalination projects, one in Texas and another in Southern California. PERC, which is based in Southern California, operates and maintains water treatment and reuse facilities under contracted engagements, which have renewable terms ranging from one to five years. Approximately 44% of PERC's revenue for the first nine months of this year was generated under O&M contracts that expire at various dates through December 2022, and these contracts are typically renewable on an annual basis. During the third quarter, PERC generated about 95% of its revenue from such contracts with various entities in California and Arizona. PERC continued to grow its recurring revenues in the third quarter by signing a new five-year contract to provide operating and maintenance services for a wastewater plant of the gaming and entertainment business in Southern California. We expect this O&M contract to generate about 400,000 per year. New project opportunities for PERC, both sole-sourced and competitively bid, continue to be strong and include bids for two major projects that were submitted in the first nine months of this year. The first bid is for a design build contract for a large wastewater treatment facility in California. We're leading a very strong engineering and construction team for this important project and are one of the three teams that submitted bids. We were also recently selected as the preferred bidder for another prospective project, the wastewater recycling plant in Southern California, and we're currently in contractual negotiations with the client. We expect to hear whether PERC is ultimately selected for each of these projects by early next year. Based on this overall increased bidding activity that reflects strengthening market demand, we believe PERC's performance in 2022 will exceed this year as new water treatment projects come to market after the lull due to the pandemic. Looking at our Cayman Islands business, in October, the Cayman Islands government announced that the country will reopen its borders for nearly all vaccinated travelers this Saturday, November 20. We see the reopening as a major step toward the reopening of hotels and resorts in Grand Cayman and expect a gradual return to normalcy for our retail water segments. As another positive sign, our major customer in Grand Cayman, the Water Authority of the Cayman Islands, recently invited us to bid for the design, construction, and tenure operation of a new 2.6 million gallon per day seawater desalination plant in Georgetown, Grand Cayman. This project has gained international attention, so we expect other companies to submit proposals. However, we believe that our strong local presence and hyper-energy efficient plant design will make us very competitive. Bids are due in early January for this project, and the client is expected to make an award sometime in the second quarter of next year. So stay tuned. Our strong balance sheet and liquidity support our efforts to expand our business organically and through acquisitions and new projects. This includes further broadening of our water solution offerings and markets, as well as pursuing acquisitions and strategic partnerships in seawater desalination and for our services business. Our strong balance sheet has also enabled us to ride out the continued adverse economic impacts of the pandemic, while allowing us to continue funding important growth initiatives. We see many positive factors coming into play in 2022. In addition to the anticipated diminishing impact of the pandemic and the return of tourism in Grand Cayman, we're also seeing increased project bidding activity in the United States and the Caribbean. All of these represent potential major catalysts for growth for our company in '22 and beyond. Now with that, Kate, I would like to open up the call for questions.

We will now begin the question-and-answer session. The first question is from Gerry Sweeney of ROTH Capital. Please go ahead.

I wanted to start with the retail segment, obviously, it's great news that the Caymans is opening up. Do you have any sense of how well prepared the tourism industry is for this opening up? Are the staff ready to go, or will that be a little bit of a headwind for a period of time?

Well, I mean, I don't have any sort of detailed information, Gerry. But I think it's going to take at least a few months to ramp up the business again there. My understanding is that some of the airlines are not resuming regular service until February. They were set to resume in October and the government canceled the reopening previously, but this one seems to be on schedule. So you're not going to have full airlift capacity probably until February next year, but it's a good start.

Yes. Without a doubt, right. It's at least open, we're going to get the ball rolling. And then, about the Hawaiian seawater desalination project. Just curious, is that a private project or is that a municipal funded opportunity?

No. That's a municipal project, Gerry. That used to be able to find something out about that. If you look around, that's a really nice project. We have a great team together for that. And we're hoping to be competitive on that. It's not being bid until early next year.

Okay. Regarding the Georgetown project in the Cayman Islands, I'm curious if there is a possibility for a competitive advantage since you have several plants there. Is there a chance to share resources, such as manpower and equipment, between projects? Could this be a viable strategy, or are we perhaps overanalyzing the potential for creating a top-tier bid?

Yes. I mean, as I mentioned in the script there, our local presence gives us a number of advantages, and I guess bundling, if that's what you want to call it, is one of them. We share resources across the six plants we have there. So a seventh plant is not going to be a major addition in fixed costs and that sort of thing. I think we do have an advantage from that perspective.

Got it. Then switching gears to Aerex, it sounds like the refocusing on sales and marketing is shifting to the municipal side. It seems to be starting to bear some fruit, but I'm just curious as to, I mean, the margin profile on that municipal work, it sounds like it is different. It's probably even percentage of accounting driven to a degree. Is that in the same profile as that large customer or is it a lower margin profile type work?

Well, I mean, once it's a different margin for sure. The municipal work is much more competitive. Initially, the work that we did for this other customer was very competitive. We've managed to improve processes and that sort of thing, so the margin is different. Once we start really recognizing some revenues from these projects as they flow through the shop, then I think you'll get a better sense of that, because it's almost all municipal work that we're doing now. A lot of this stuff is, as I mentioned, being held up due to delays from customers and delays with material deliveries.

Yes, certain milestones. Correct.

Gerry, the margins on this municipal stuff, we were making very high margins on the other stuff. As a result, I think going forward, you'll see some margin adjustment. But as Rick mentioned earlier, our margins have been adversely impacted because the utilization of plant overheads has been very low. We continue to absorb those costs because it's pretty hard to replace your workforce. You can't terminate people, and then all of a sudden, when production increases, go back and hire them again; it doesn't work that way. But as we continue to grow the business and see a greater percentage of Aerex's manufacturing capacity utilized, the impact of that fixed operating cost becomes less and less relative to gross profit percentage. You'll see an improvement in gross margin just from the greater utilization of the plant itself.

No, I can recognize it, 1.1 million of revenue manufacturing versus like, 3.8 last June, completely understand that overheads fixed and the incremental margins. I was just curious as maybe even the delta between municipal margins and the other customers, so we would have an idea.

No, I don't think we can give you that number, Gerry, because some of this municipal work varies in market, and some of it has very good margins on it. It's just a matter of the product mix. We're happy to be in this market; we think it's going to be a very good market for us and expect margins in it.

I completely understand. I have one more question about Aerex's manufacturing: what might be the theoretical capacity of that facility? Have you ever reached its maximum capacity? I realize it's difficult to specify potential revenue due to varying prices, especially in the current market, but I'm just trying to gauge the revenue potential of that facility based on the sales channel.

I can tell you, Gerry, prior to purchasing Aerex, they had years where they did 19 million in revenue; I believe somewhere around that 17, 18 to 19 million. That plant has that potential. We also have the ability to expand the plant for some reason, if we got major orders that pushed us beyond the existing capacity. We have land available there, which we purchased for the express purpose of expanding production capacity should the demand warrant in the future. So we're well placed, but Aerex has the potential to do 20 million in revenue; that's not beyond their reach, given the right mix of orders.

There are no other questions at this time. This concludes our question-and-answer session. I'd like to turn the call back over to Mr. McTaggart. Please go ahead, sir.

I'd like to thank everybody again for joining today and hope everybody has a very nice holiday season. We look forward to talking to you again in March when we release our year-end report. Thank you.

Thank you. Ladies and gentlemen, before we conclude today's call, I would like to provide the company’s Safe Harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the company's future revenue, future plans, objectives, expectations, events, assumptions, and estimates. Forward-looking statements can be identified by the use of words or phrases, usually containing the words believe, estimate, project, intend, expect, should, will, or similar expressions. Statements that are not historical facts are based on the company's current expectations, beliefs, assumptions, estimates, forecasts, and projections for its business and the industry and markets related to its business. Any forward-looking statement made during this conference call are not guarantees of future performance and involve certain risks, uncertainties, and assumptions, which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Factors that would cause or contribute to such differences include but are not limited to continued acceptance of the company's products and services in the marketplace, changes in its relationships with the government of the jurisdictions in which it operates, the outcome of its negotiations with the Cayman government regarding a new Retail License Agreement, and the collection of its delinquent accounts receivable in the Bahamas. The possible adverse impact of the COVID-19 virus on the company's business and various other risks are detailed in the company's periodic report filings with the Securities and Exchange Commission. For more information about risks and uncertainties associated with the company's business, please refer to the management discussion and analysis of financial conditions or results of operations and risk factors sections of the company's SEC filings, including but not limited to its Annual Report on the Form 10-K and quarterly reports for Form 10-Q. Any forward-looking statements made during the conference call speak as of today's date. The company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its event conditions or circumstances of which any forward-looking statement is based except as required by law. Before we end today's conference call, I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday's earnings release for dial-in and replay instructions available via the company's website at www.cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.