Good morning. Thank you for joining us today to discuss Consolidated Water Company's First Quarter 2022 Results. Hosting the call today is the 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 will be recorded, and it will be made available for telecom replay for the instructions in yesterday's press release, which is available in the Investor Relations section of the company's website. Now I'd like to turn the call over to Consolidated Water Company's CEO, Rick McTaggart. Please go ahead, sir.

Thank you, Chad, and good morning, everyone. Thanks for joining us today. As you saw in our earnings release issued yesterday evening, our first quarter of 2022 showed great improvements across three of our four business segments, specifically our retail, bulk, and services segments. Unfortunately, the results of our manufacturing segment came in below last year's level, largely due to adverse global economic conditions, including, but not limited to, increasing raw materials prices, increasing human resource costs, tight labor markets, and extended and unexpected delays in the procurement and delivery of raw materials and equipment. We believe these adverse global economic conditions have also resulted in product order delays from our existing and prospective customers. However, as I mentioned, we made strong progress in other areas of our business that bode well for our future results. Our total revenue for the first quarter increased 14% to $19.6 million. This top-line growth helped increase net income from continuing operations attributable to our stockholders by 79%, reaching $2.3 million or $0.15 per share. Our Retail segment revenue increased by $602,000, which was a result of increased tourism activity due to the easing of travel restrictions to Grand Cayman for vaccinated travelers, which occurred earlier this year. Our Bulk segment revenue increased by $1.1 million, and Bulk segment operating income increased by $638,000. Our Services segment revenue increased by $1.2 million, with operating income up for that segment by $231,000. During the quarter, we announced two major contract awards. The first award was to our California-based subsidiary, PERC Water, to design an advanced wastewater recycling facility in Goodyear, Arizona. This project is progressing as planned and positively impacted this past quarter's financial results. This win also gives us the opportunity to negotiate with the client to construct the facility. The second project win was awarded to us to provide manufacturing and installation services for the refurbishment of the 20 million gallon per day groundwater treatment facility in Florida and Port St. Lucie. This project is ongoing but has been delayed due to site conditions, and this could result in expanded project scope for us with these site condition changes. We believe our in-house manufacturing capabilities also provided us a competitive advantage in our recent bid for the project to design, build, and operate a new 2.64 million gallon per day seawater desalination plant in Georgetown, Grand Cayman. Earlier this week, we announced that we were awarded this project, which we expect to generate about $20 million in revenue over the 11.5-year term of the contract. The majority of this revenue is expected to be generated by the construction and sale of the plant to our client during the first 18 months. Winning this contract was the result of our many years of experience designing, building, and operating some of the most energy-efficient seawater desalination plants in the world, and we believe the energy efficiency that we bid was key in our win for this project. We believe desalination is key to alleviating global water scarcity, especially in the arid Southwestern United States, where they need to take immediate steps to diversify their shrinking water sources by implementing drought-proof water resources like desalination. Water scarcity is also a pressing international concern; according to the World Data Labs Water Scarcity Clock, 2.4 billion people are currently living in water-deficient regions, and experts predict that this will reach 2.7 billion by 2030. Now, before I talk more about our progress across our business segments and the outlook for 2022, I'd like to turn the call over to David, who will take us through the financial details for the quarter.

Thanks, Rick, and good morning, everyone, and thanks for joining us this morning. Yesterday, we issued our earnings release for the first quarter of 2022, which you can find in the Investors section of our website. Looking back over the quarter, we were encouraged by the return of tourism to the Cayman Islands and the improvements we showed in two of our other business segments. However, our manufacturing business continues to face significant challenges as a result of the current economic environment around the world, most notably rising costs and supply chain constraints. But despite these challenges, we've maintained a strong financial condition as we pursue new opportunities, and we've continued to pay meaningful dividends. We reported revenue totaling $19.6 million in the first quarter of 2022, an increase of 14% from the same year-ago period. The growth reflects increases of $602,000 in our Retail segment revenue, $1.1 million in our Bulk segment revenue, and $1.2 million in our Services segment revenue. This was partially offset by a decrease of $455,000 in Manufacturing segment revenue. As Rick mentioned, the increase in our retail revenue was due to the resumption of tourism to the Cayman Islands last quarter. This generated an 8% increase in the volume of water sold by our Cayman Water subsidiary, and we would hope and expect that over the course of 2022, we will continue to report increases in the volume of water sold by our Retail segment when you compare it to 2021 and 2020. We expect the tourism levels on Grand Cayman to return to normalcy, hopefully sooner rather than later. The increase in Bulk segment revenue is attributable to the higher energy pass-through charges to our customer, the Water and Sewage Corporation in the Bahamas, caused by higher costs for electricity and fuel that we used to power our desalination plant. Bulk segment revenues increased to a lesser extent due to a 6% increase in the volume of water sold to our customer in the Bahamas. The increase in our Service segment revenue is attributable to revenue from new design-build projects and operating contracts. The decrease in Manufacturing segment revenue was due in part to contract delays requested by certain customers as well as the continuing unexpected delivery delays of raw materials and equipment. Our gross profit for the first quarter of 2022 was $7.1 million or 36.5% of revenue. This compares to $6.1 million or 35.8% of revenue in the same year-ago period. Our net income from continuing operations attributable to stockholders of Consolidated Water for the first quarter of 2022 was $2.3 million or $0.15 per basic and diluted share. This is up from net income of $1.3 million or $0.08 per basic and diluted share for the same quarter of 2021. Net income attributable to Consolidated Water stockholders for the first quarter of 2022, which includes the results of discontinued operations, was $1.7 million or $0.11 per basic and fully diluted share. This was up from a net income of $989,000 or $0.06 per share in the first quarter of 2021. Moving from our results of operations to our balance sheet, our accounts receivable balances related to our CW Bahamas business amounted to $21.2 million as of March 31, 2022. This was down slightly from the $21.5 million at the end of 2021. These receivables are due from the Water and Sewage Corporation of the Bahamas. Historically, all delinquent accounts receivable from the Water and Sewage Corporation have been paid in full to us, including the interest we charge on those receivables. In February of this year, we received a payment schedule from the Bahamas government pursuant to which the government plans to reduce CW Bahamas delinquent accounts receivables over the course of 2022, with the intention of eventually bringing all CW Bahamas' receivables from the Water and Sewage Corporation to current status. As of March 31, 2022, our cash and cash equivalents totaled $43.1 million. Working capital was $70.9 million. We had debt of only around $200,000, and our stockholders' equity totaled $158.2 million. So with this, I'd like to turn things back over to Rick.

Thanks, David. As I mentioned earlier, we were awarded a contract in January by the city of Port St. Lucie, Florida, to replace membrane elements and upgrade equipment at the city's 20 MGD J.E. Anderson Reverse Osmosis Water Treatment plant. We believe this project resulted from our efforts to enhance and expand our municipality relationships, particularly with consulting engineers that advise these municipalities. This is part of our diversification exercise for Aerex. During the quarter, we continued to diversify our manufactured products, customer base, and leverage our sales teams across our four business segments. We expect this integrated sales approach will further support the diversification of our manufacturing segment's client base and geographical markets. Our in-house manufacturing expertise and capabilities gave us a significant competitive advantage in our bid for the just awarded Red Gate seawater desalination plant, an advantage we can utilize in future bids for contracts across all of our business segments. Our Services segment, led by our PERC Water subsidiary, continues to see increased project opportunities in strengthening markets. During the quarter, we took steps to aggressively pursue potential new projects and business. Activity in PERC's primary markets for infrastructure, construction contracts, and operations agreements has picked up, and PERC is currently pursuing more than a dozen potential design-build projects and operations contracts. The sales and marketing cycle for design-build projects is usually lengthy, so it may be a while before we know the outcome of some of our current marketing efforts. However, it is important to note that some of the projects we are pursuing are not in response to a tender process, but instead involve the preparation and submission to the prospective clients of a customized design report, which we refer to as a CDR. We believe PERC's CDR process provides us with a unique competitive advantage as it gives the customer a guaranteed solution for the water problems at a guaranteed maximum price, resulting in the most cost-effective and efficient methodology for addressing their water treatment and reuse needs. Earlier, I mentioned PERC had won a major contract in January to design an advanced water reuse facility in the city of Goodyear, Arizona. This facility will address the increasing demand in our client service territory in Goodyear and Litchfield Park as both cities have experienced significant residential and commercial growth over the past decade. The new facility will help our client provide additional reclaimed water for other beneficial uses such as irrigation, which will offset and conserve millions of gallons of potable water for human consumption and domestic purposes. Our plans to expand our service revenues and the wastewater reuse market are supported by our strong balance sheet and a growing pipeline of potential projects. Looking at the Cayman Islands, we are very encouraged by the return of tourism to the Cayman Islands as the country's reopening plan continues. In February, the Cayman Islands government dropped all post-arrival COVID-19 tests for fully vaccinated travelers citing a decline in local infection cases. The quarantine period for partially vaccinated or unvaccinated individuals' risk was reduced from 10 to 7 days. Hopefully, eventually, that will go to zero. Several major airlines resumed their flights to the islands and cruise ships were welcomed back in March of 2022. As David mentioned, we expect the resurgence of tourism to help our retail water sales return to normal levels over time as hotels and businesses continue to serve the thousands of tourists and vacationers returning to the Cayman Islands. Now turning to our Bahamas operations, as many of you know, our CW Bahamas operations through our client, the Water and Sewage Corporation of the Bahamas, supplies the majority of the piped water on the island of New Providence, Bahamas, which includes Nassau, the Bahamas' largest city, political capital, and commercial hub. New Providence is also the most populous island in the Bahamas with about 275,000 residents or 70% of the country's population. We anticipate our bulk business will continue its stable and profitable performance, and with the return of tourism to the Bahamas and the resulting significant increase in economic activity, we see new potential opportunities to expand that business as water demand grows in New Providence and in the family islands. Given the overall strong progress in our first quarter, we remain very optimistic about the future of Consolidated Water. We offer our customers decades of experience and an excellent track record in efficient and cost-effective approaches to designing, building, and operating both seawater desalination facilities and wastewater treatment and recycling plants. Combined with our strong financial position, low-cost operating structure, and inherent synergies between our four operating segments, we believe we enjoy numerous competitive advantages as we pursue new opportunities in growing markets. Now, I'd like to open the call up to questions, Chad.

Thank you, sir. The first question will be from Gerry Sweeney from ROTH Capital. Please go ahead.

Hey, good morning, Rick and David, thanks for taking my call.

Good morning, Gary.

Cayman Retail, you mentioned that it was — I think volumes were up 8%. Where does volume relate to current volume relate to what it was pre-pandemic? Obviously, we're sort of trending back up, but I want to see potentially how much further volume needs to come back to sort of get back to a normalized level?

Yes, I mean we're still down quite a bit. I think last year, we were down about 20% from pre-pandemic levels, not just 25%. Yes, per month yes. So we still have ways to go back. So to get back, however, recognize that the changes that the government made to travel — easing travel restrictions and that sort of thing we made sort of halfway through the first quarter. So I would expect the second quarter to be better. The summer is usually a little slower. But when we get to the fourth quarter this year, we should be back on track. I would think, at least from the standpoint of the number of tourists that are coming. The other thing to keep in mind is the revenues that we lost were from our higher rate customers. So, all the hotels and commercial properties pay a higher rate than the residential users. So it's sort of a multiplier effect there on the dollars that we'll see come back for that additional water that we're selling.

Got it, that's very helpful, thank you. And then you talked about the Bahamas as well, maybe higher volumes coming through there or a higher - more of an opportunity, I'm not sure exactly how you phrased it. But is that higher volume, would that translate into higher volume for your facility or translate into maybe even an opportunity for an expansion of your, I think, Blue Hills facility or even adding additional facilities into the Bahamas?

Yes, I mean the Blue Hills plant is pretty much operating at full capacity. We see the growth potential there as significant. So it could involve expanding those plants at some point. The Windsor plant, which was the sort of newest one there, we have a little bit of additional capacity, I think that we could get out of that by doing some modifications. But once they get past that level, then you're talking about building new plants and that sort of thing. So that's what we're hoping the result will be in the future that they'll need us to expand those plants.

Hey Gerry, they're taking every gallon that we can produce in Blue Hills. We're producing more than ever before for them. They're using every gallon and they have similar demands for Windsor. So we're hopeful there down the road that things continue; they'll need additional capacity.

Got it. In New Providence, I mean, I apologize, I'm not exactly familiar with the entire makeup of the island. But is there an increasing build-out of resorts, or is it increasing population? Is it increasing water usage, just any thoughts on what's happening in driving some of that demand?

Yes, I mean we don't have all the details because we're not distributing the water on the island. But I can tell you just anecdotally, I mean, I was there at the beginning of March to one of the bigger hotels, and I mean the place was packed, looking — seems like there's a big return of tourists to the Bahamas. They don't have any sort of quarantine restrictions and — it's just sort of a reciprocal deal where you got to have a COVID test before you go there and then before you come back to the U.S. So I mean, their tourism business seems to be going very well. So that would be driving it and then just population growth — there's a lot of smaller islands in the Bahamas, and everybody seems to end up in New Providence eventually to get work.

I got you, okay. You also discussed the Liberty project, but also mentioned that you were pursuing the plant construction opportunity. Could you provide any additional details around when that may be determined in potential size or anything along those lines?

Yes, that's something that's in progress, Gerry. If anything amounts from that, we'll certainly advise investors as soon as possible, but we do have the opportunity to negotiate the build contract with them. I think that's the key.

Got it. Final question, the DBO Cayman Islands 2.64 million gallons, 11.5 years, I think you said about $20 million? Does that all - the construction side and does that - what segment does that fall into it is manufacturing and?

No, it falls into services. That plan will actually, as we sign the contract, be constructed by the South Coast and city area in the Cayman Islands.

Okay.

Services consist of PERC and the Selco. That will show up as manufacturing revenue — excuse me, construction revenue in our services segment.

Got it and then...

You operate.

Yes, and also, the operating contract will be a bulk water sale agreement. The revenue we generate from the operation of the plant selling the water to or authority will show up in our bulk segment.

Okay, that was the next question. On the construction side, over 18 months, how does the percentage of completion accounting work? I know it's not exactly $20 million because of the service side, but how will that flow through over the next 18 months?

So actually, we don't — the percentage of completion methodology is no longer allowed under GAAP with their new revenue — but they have something — we use something very similar to it called the inputs method. Yes, so you can think of it as a percentage of completion. There are some total differences to unlock, and the inputs method is opposed to the percentage and completion method. Yes, that will be recognized in a manner consistent with revenues we recognized from previous construction projects. As the work progresses, and we incur costs, we'll be recognizing revenue and gross profit.

Got it, okay that's it from me. So I appreciate the time. Thank you.

Thank you, Gerry.

The next question is from John Bair from Ascend Wealth Advisors. Please go ahead.

Thanks good morning, gentlemen nice quarter, looks encouraging it picking up.

Thank you.

Interesting, too, I have family that lives in Goodyear. So I'll have to never been out there, but I may have to go out and visit. Two questions, number one, can you speak to the possible M&A landscape, are you actively looking at some possible bolt-ons there? And then secondly, kind of digging up from the grave here, can you shed any light on any progress, if any, regarding recapture of assets or money really for the Rosarito project?

Yes, sure, John, and good morning. The M&A stuff, I mean — we still have a couple of opportunities that we're following. One is a technology opportunity that would give us some advantages, a technical advantage in some markets. Another one would be to expand PERC's operating service area. There are other opportunities that are more sort of exotic quasi PPP opportunities that we're looking at in the Southwest U.S. So those would be — there wouldn't be M&A, but there would be sort of organic growth stuff that we would partner with other groups to pursue. The PERC market right now is just exploding for us. So I mean, we're focusing a lot of our resources and attention on managing that sort of growth. I'll be honest with you, I mean, there's not a lot of M&A opportunities out there, but we haven't forgotten about it, but we're focused quite a bit on managing the growth in our existing business with PERC. From the standpoint of the Mexico litigation, I mean, that's something that's ongoing. We disclosed in the filings that we've taken it's an international venue. So we're just working our way through that. That's something that could take three or four years to resolve if it goes full course. We'll obviously give you as an investor an update if anything material occurs along those lines.

Yes, I figured it will be a long drawn-out process. Is there — how frequently do you get any kind of updates? I mean do you have to badger them or kind of how does that work?

We're driving the process, John. So our lawyers are driving this. I mean, I'm working quite regularly with them to move this forward. I mean, it's not a matter of badgering the government. They have to respond to the arbitration request.

There's a protocol in place, John, we're following that protocol. Our attorneys make the proper motions and file the appropriate documents at the proper time, and the process moves along on its own. The government can't — Mexico can't really hold it up. The international rules for this kind of stuff.

Well, that doesn't mean that they'll conform to that. I guess what I was trying to get — it did sounds like there are time schedules. So you get feedback and you have a certain amount of time that you can respond to it, and you do that, and then they have a certain amount of time, and that kind of the way it goes?

Yes, pretty much. I mean, we haven't gotten into the details of the case yet. I mean, we're still — we've given notices and notices to appoint arbitrators and that sort of thing. But I can tell you, we're not into the meat of the case yet with them.

Yes. And I don't know if you can say this or say anything about this or not, but is that kind of on a cost I guess, within the SG&A aspect, is it a fairly meaningful amount of certainly time and money that's being spent on that or how does that fit in?

Well, I mean, essentially, if you look at the difference between our continuing operations results and the total results with discontinued operations. I mean, that's what it's costing us to maintain a presence there in Mexico that we need and pay for these legal costs. So you can kind of peel that out on a quarterly basis.

And John, we disclosed in our 10-K that the legal fees will be meaningful, substantial; it's not cheap to run this. I mean, we hired what we believe to be an excellent law firm, one of the best in the world at doing this. We think it's money well spent given what we know about the litigation, the arbitration, whatever. But we'll have to spend some money to take this through the four-year process, it typically requires. We will be spending — you'll see, our estimate is — well, we haven't provided an estimate; let me just say that it will — these revenue will be material to our results of operations.

Yes.

They'll be recorded as discontinued operations, it will be segregated from our continuing operations.

Okay, while you put a lot of time and cash into it. So I hope you get a good chunk back, if not all, and some. Thank you very much for taking my call. Take care.

Thanks, John.

Thank you. At this time, this concludes our question-and-answer session. I'd like to turn the call back over to Mr. McTaggart. Sir, please go ahead.

Yes, I'd just like to thank everybody again for joining us this morning, and I look forward to speaking with you again in August when we release our second quarter results and holding an investor call. Thank you.

And thank you, sir. 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 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 and 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 statements 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, tourism and weather conditions in the areas we serve, the impacts of the COVID-19 pandemic, particularly on our retail and manufacturing segments, economic, political and social conditions of each country in which we conduct or plan to conduct business, our relationships with government entities and other customers we serve, regulatory matters, including resolution of the negotiations for the renewal of our retail license on Grand Cayman, and our ability to successfully enter new markets, among various other risks, and is 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's discussion and analysis of financial conditions or results of operations and Risk Factors section of the company's SEC filings, including, but not limited to, its annual report on the Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements made during the conference call speak as of today's date. The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations regarding thereto or any changes in events, 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 now 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 replay instructions available on the company's website at www.cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.