Good morning. Thank you for joining us today to discuss Consolidated Water Company's Second Quarter 2025 Operating and Financial Results. Hosting the call today is the Chief Executive Officer of Consolidated Water, Frederick McTaggart; and the company's Chief Financial Officer, David Sasnett. Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by the management during the call. I would like to remind everyone that today's call is being recorded, and it will be made available for telecom replay. Please see the instructions in yesterday's press release that has been posted to Investor Relations section of the company's website. Now I would like to turn the call over to Consolidated Water CEO, Frederick McTaggart. Sir, please go ahead.

Thank you, Steve, and good morning, everyone. Thank you for joining us today to discuss our financial and operating results for our second quarter of 2025. As mentioned in our press release issued yesterday, our diversified water business model, encompassing regulated utility, O&M services, and manufacturing performed well this past quarter with total revenues increasing by 3% and fully diluted earnings per share from continuing operations increasing by 23% compared to the same quarter of last year. The retail and manufacturing segments, in particular, reported quarter-over-quarter revenue increases of 6% and 33%, respectively. Retail water sales in our exclusive utility service area in Grand Cayman were higher than the previous year, primarily due to reduced rainfall during this past quarter. Manufacturing revenue and operating income rose due to increased production and higher margin products. Recent tariffs enacted by the United States government have not materially impacted our manufacturing business. Our Caribbean-based bulk water segment revenue declined slightly this past quarter due to lower fuel pass-through charges; however, bulk profitability rose both in dollar terms and gross profit percentage as a result of improved plant efficiencies and reduced operating costs. Our services segment revenue decreased in the second quarter of 2025 compared with the previous year, largely due to the completion of the pilot plant testing phase of the Hawaii project, which resulted in a decrease in project expenditures pending commencement of the construction phase of the project. This reduction was partially offset by higher revenue from recurring operations and maintenance contracts in both California and Colorado. In April, the Honolulu Board of Water Supply or BWS, our client on our multiyear seawater desalination project in Hawaii approved our pilot test reports and recommendations and concluded that the desalinated water we produced during the piloting phase is a reasonable match to their existing water supply and further that desalinated water from the new plant would not cause any detrimental impact to their distribution pipes or customer assets. So this significant milestone in the project paves the way to begin construction once final design approval and the requisite permits have been obtained. In June, we submitted our 90% design for the project to BWS and very shortly afterwards received comments from their engineer and various consultants. We are currently addressing these comments and plan to submit our responses shortly in keeping with the project schedule. So that should advance the design process. We presently expect to begin construction of this project early next year once BWS issues a notice to proceed with construction. And on a cautionary note, some of the permits required before construction can start must be obtained by our client and are therefore outside of our control and delays in obtaining any of these permits could also delay the construction start date. The construction phase of the Hawaii project is expected to generate the largest portion of revenue from this project and once commenced, will be a major growth driver for our Services segment in 2026 and 2027. Now before getting more into recent developments and our outlook for the year, I would like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for the quarter.

Thank you, Rick. Good morning, everyone. Thank you for joining us today. I'll go through some of the numbers which Rick mentioned earlier in more detail here. Our revenue totaled $33.6 million for this quarter, which was up 3% from the second quarter last year, and this was due to revenue increases for both our retail and manufacturing segments. Our retail revenue was up $456,000 due to a 7% increase in the volume of water sold, and we attribute that volume increase to lower rainfall amounts on Grand Cayman for the second quarter of this year as compared to last year. Our bulk segment revenue actually decreased slightly to $8.3 million, but this was due to a decline in energy cost for CW-Bahamas that reduced the energy pass-through components of the water rates that we charge. Our Services segment revenue decreased by $474,000 due to plant construction revenue that decreased from $4 million in the second quarter of last year to $2.8 million in the second quarter of this year. This decrease in construction revenue was a result of a $1 million increase in the revenue we recognized for the Hawaii project. This was due to the completion of the pilot plant testing phase of the project, which resulted in a decrease in project expenditures pending commencement of the construction phase for the project. Recurring services segment revenue generated under our O&M contracts totaled $8.3 million in the second quarter of this year, which represents an increase of 17% over the previous year. Both PERC and REC, our Colorado subsidiary, increased their O&M revenue in this second quarter as compared to the second quarter of 2024. Our manufacturing segment revenue increased by $1.3 million or 33% to $5.2 million from the second quarter of last year as a result of increased production activity. Gross profit for the second quarter of 2025 was $12.8 million or 38% of total revenue as compared to $11.6 million or 36% of total revenue in the second quarter of 2024. The increase in gross profit, both in dollars and in terms of gross profit percentage was due to increases in the retail and manufacturing segment as well as decreased relative to operating costs for our bulk segment. Net income from continuing operations attributable to Consolidated Water stockholders for the second quarter of 2025 was $5.2 million or $0.32 per diluted share. This compares to net income of $4.2 million or $0.26 per diluted share in the second quarter of 2024. Including our discontinued operations, net income attributable to Consolidated Water stockholders for the second quarter of 2025 was $5.1 million, which represents a return of $0.32 per diluted share as compared to net income of $15.9 million or $0.99 per diluted share in the second quarter of 2024. This decrease in net income and EPS from 2024 to 2025 was due to our discontinued operations as we recognized a gain on the sale of the land and project documentation for our discontinued project in Mexico that totaled $12.1 million in the second quarter of last year. Turning to our balance sheet. Our cash and cash equivalents continued to grow to total approximately $112.2 million as of June 30, our working capital was $137.4 million as of that date, and our stockholders' equity grew to $216.6 million. Our projected liquidity requirements for the balance of this year include capital expenditures for our existing operations of approximately $85 million. This includes $1.5 million to be incurred in 2025 for new desalination plants to be built for the Water and Sewage Corporation of the Bahamas on Cat Island and $700,000 for the expansion of Aerex's manufacturing facility, which is almost complete. We increased our quarterly cash dividend and declared a dividend of $0.14 per share for the third quarter of this year. This third quarter dividend of $0.14 per share represents an increase of 27% from the previous dividend of this year. We paid out approximately $2.3 million in dividends in July. Our future liquidity requirements may also include quarterly dividends as such dividends declared are by the Board. We continue to evaluate how to best utilize our large cash balance and ample liquidity to increase shareholder value. And this completes our financial details for the quarter, and I'll turn the call back over to Rick.

Thanks, David. Earlier this year, we completed an expansion of our West Bay seawater desalination plant to meet growing demand for water in our Grand Cayman utility service area. This expansion added an additional 1 million gallons per day of desalinated water production capacity to the already existing 1 million gallons of daily production capacity that was commissioned only 2 years ago. To keep pace with growing demand over the next 2 to 3 years, we plan to construct additional water storage at our West Bay site as well as build new water production and storage on land. We are in the process of purchasing located at the southern end of our service area in Grand Cayman to keep pace with demand growth. Enabled by an exceptionally strong balance sheet, we will continue to invest in these new assets and long-term projects, including the new desalination plants on Cat Island and the Bahamas, which we expect to complete later this year. These investments, which are needed to meet the growing water needs of our customers in the Cayman Islands and the Bahamas are expected to ultimately support future revenue growth in both the retail and bulk segments. Our manufacturing business has stabilized as promised, and we believe that we have successfully mitigated revenue and profit variability in this business segment going forward by broadening our product and client base. A meaningful part of our manufacturing revenue is generated by water purification and other equipment that we fabricate for the nuclear power industry. We have been ASME NQA-1 certified by 2 large nuclear industry players for many years and have been cleared by a third potential client to go through the requisite audit process needed to obtain a third ASME NQA-1 certification. Given the recent strong interest in nuclear power solutions to meet growing demand for 24/7 electrical power in the U.S., we are hopeful that our unique manufacturing qualifications will provide opportunities to further grow our manufacturing business through this important sector. During the quarter, we substantially completed construction of an additional 17,500 square feet of manufacturing space at our Fort Pierce, Florida facility and expect to occupy the new space later this month, subject to final inspections and permitting. The additional space will allow us to take on more simultaneous and larger projects thereby increasing our throughput capacity. REC, our Colorado subsidiary continues to perform well with quarterly revenue up more than 17%. Earlier this year, we entered the Colorado design build market by winning our first construction contract in Lochbuie, Colorado. This $4.5 million drinking water plant expansion, while relatively small in comparison to some of our recent design build projects, is a great start and helps us to pursue larger design build opportunities in Colorado. In addition to Colorado, the Arizona market continues to present significant opportunities for future design build projects. Our team is currently engaged in multiple preliminary discussions with potential clients and recently submitted 4 customized design reports or CDRs, as we refer to them, to residential developers and industrial clients near Phoenix. Similar to the Liberty Utilities project in Arizona, we believe that some or all of these CDRs will ultimately lead to design-build contracts for these important wastewater treatment facilities in Arizona. We're confident that our award-winning designs, cost-efficient delivery models and extensive industry experience will help us win upcoming projects. Our decision to diversify beyond the Caribbean seawater desalination market many years ago has been successful and positions us for continued growth. We now have a diverse portfolio across 4 business segments, delivering consistent value to shareholders through strategic acquisitions over the last decade. As we finish 2025 and look ahead, we expect these positive factors to sustain steady long-term growth, enhance profitability and increase shareholder value. Now with that, I'd like to open the call up for questions.

The first question comes from Gerry Sweeney with ROTH Capital.

Congrats on a nice quarter. I don't have too many questions, but other than maybe some higher-level understanding of maybe the market opportunities and to segment them into, let's say, the Caribbean and then sort of U.S. On the U.S. front, PERC and REC, how is that pipeline developing? Obviously, a lot of talk in the West and Southwest about water, water scarcity, etc. And I think the market was hotter, then maybe some lead times got extended, but I'm just curious what the pipeline is looking like? And what are your thoughts on just the market tenor in general?

Well, on the wastewater side, certainly, we're seeing continued interest. And as I mentioned, in these projects generated by developments and small industrial projects that we've been pursuing through these customized design reports. So I mean, these projects could range anywhere from sort of $10 million to $30 million in size. It would be design build jobs for wastewater treatment plants. So the Phoenix area continues to grow there, and they continue to need wastewater treatment solutions. On the California side, I mean, it's been mostly O&M contract renewals and opportunities there, not much happening on the design build side in California at this point.

Got it. And Colorado, what's that market look like? Obviously, you had that small design win at $4.5 million one, but does a win in the state create a little bit more opportunity for you guys?

Absolutely. I mean it gives us a good base. We knew the client at Lochbuie through many years operating their wastewater plant there. So there's other opportunities. There's a lot of small towns and areas north of Denver that require upgrades, expansions to their wastewater and water treatment facilities just because of natural growth around that area. So we see a number of similar opportunities to Lochbuie.

Got it. Moving on to the Caribbean, the Cayman is experiencing steady growth, as shown by the expansion of your West Bay plants. I have two questions. Firstly, regarding the Bahamas, it seems that there are constraints related to water, and at some point, action will be necessary. This could present an opportunity in the Bahamas. Secondly, are there any other opportunities in the region?

Yes. I mean, I think you covered it. We're very focused just on the Cayman Islands market and the Bahamas at this point in the Caribbean. The Bahamas, we're building these 2 plants on Cat Island, which is our first contract outside of New Providence, Nassau for water supply. We're very excited about that. So we want to get those wrapped up and see what comes next because there's certainly needs throughout the Bahamas for additional water supply. We hope that they talk to us about that.

Got it. One last question. Regarding manufacturing, you mentioned the expansion of the Aerex facility in Fort Pierce. I'm interested to know if this expansion allows for a larger market opportunity. It seems like you might have been constrained by space, which limited the number and size of jobs you could pursue. Does this expansion create new opportunities for growth?

Yes, absolutely, Gerry. When building these large pieces of equipment, you need a place to put them, right? This expansion will free up our shop floor for increased throughput on fabrication. We will be able to store some of these larger pieces of equipment in the warehouse and conduct complex assembly work on water treatment skids there. This way, we won't be using welder space in the shop. We believe this is a significant advantage for the facility, and it will ultimately enable us to generate more revenue from that business due to the additional space.

It absolutely increases our capacity, Gerry, and that's something we needed given what we think is going to happen with the business in the coming years.

Yes. The main growth driver in the manufacturing Aerex segment is that nuclear has garnered significant attention recently. However, what are some of the factors behind Aerex?

We have a very diversified business now, with the nuclear work playing a significant role. Aerex is well known in Florida, and there are numerous new municipal projects for water treatment and membrane treatment plants happening in the area. We have been actively bidding on some substantial jobs. Additionally, our pipe fabrication business covers a range of requirements, from high-pressure piping for membrane plants to large stainless steel piping for wastewater plants. This continues to provide a solid revenue base for our Aerex business. Overall, it's the nuclear work, the municipal projects, and the pipe fabrication that are keeping us quite busy right now.

The next question comes from John Bair with Ascend Wealth Advisors.

I wanted to circle back on the nuclear. And is this business that you're addressing primarily domestic? And do you have any international opportunities with supplying product or material to other plants?

All of our customers are domestic. While two of our products are being exported, the majority of our business is focused on domestic customers.

So is there opportunity or do you see opportunity to expand this for international? Because internationally, they're looking at increasing nuclear capability as well. So just kind of curious how that trend is playing out.

Yes, John, to clarify, we're not selling directly to the clients. We are qualified by companies that provide nuclear solutions, and we perform fabrication work for them. Therefore, we aren't engaging directly with the facilities or end users. These clients operate internationally, and if they require fabrication work, we are certainly capable of providing that. However, I can't state that we are actively seeking international opportunities due to the nature of our agreements with our customers. We do not serve the end users in this market.

Okay. Okay. Fair enough. And then is a lot of this addressing like retrofit or upgrade as opposed to actual new builds?

I'm not aware of any new builds. This is water treatment equipment for existing facilities.

Can any of this apply towards the smaller SMR market that seems to be gaining some interest?

It certainly could, yes.

Okay. And then I wanted to ask another area. Are you seeing more interest or bidding opportunities based on reshoring of manufacturing across the geographic U.S., not just necessarily in the West Coast or elsewhere? Do you see opportunities there?

We have not been involved in anything like that yet. I can't say that that's been an area that we see opportunity in at the moment.

Okay. And then another question on future CapEx needs for existing installations, upgrades or replacement. What do you see in that regard?

Yes. Let me go back for a moment to discuss onshoring manufacturing. I want to clarify for investors that we do not have a specific product line to market to engineering companies that design large plants. Our focus is more on custom projects, particularly with Aerex. We are considering the development of some standardized products that would align better with the industrial market. This would allow us to provide specifications and brochures to major consulting engineers, who could then integrate them into new chip plants, auto plants, or other projects they are working on. Regarding your second question on CapEx, most of our new asset investments and expenditures are expected to be in the Cayman utility business due to its growth. We need to construct new water storage tanks and ultimately build a new reverse osmosis plant in the southern part of the system. Besides that, other projects like Cat Island are currently utilizing capital for long-term investments.

Okay. And one last question. I didn't see anything in the press release, and I haven't had a chance to look into the queue. But I know in the past, your friends in the Bahamas tend to be a little bit slow in paying their bills. What have you seen there? How has that been working out?

We have been focused on resolving the payment issues. Over the past few months, we have had several discussions and meetings, and we are now seeing an increase in payments. There has been a commitment on the Bahamas side to bring that account up to date, and we are making some progress.

It didn't show up in the Q, John, but hopefully, when we report the next quarter's results, that's favorable.

The next question comes from Matt with Western Standard.

I have a couple of questions. My first is about the gross margin on the manufacturing side of the business, which really stood out to me. Can you discuss what was driving that?

It's quite straightforward. We had some jobs with higher margins and managed to price them more effectively. Our resources at the facility are currently operating at full capacity for its size. We were exceptionally busy throughout the quarter, with no downtime, and we also achieved better pricing on several projects that went through the shop.

But Matt, we have been strategically focusing on higher-margin projects from the start. The sales team in our manufacturing segment is really concentrating on that and has become more proactive in pursuing higher-margin jobs. As Rick mentioned, our facility is very efficient and is operating close to capacity, which allows us to spread fixed overhead over a larger amount of revenue, resulting in increased margins. So, it's a combination of improved sales and productivity.

But keep in mind, I mean, when we get this new building online this month, that's going to change the game. I think that will significantly increase the capacity of that facility.

Okay. Great. Is there a time period that you're hoping to fill the incremental capacity?

We're bidding on some larger jobs right now. So I mean, depending on whether we're successful or not, I mean, it will certainly be put to use as soon as we hear about some of these new jobs. I mean these are bigger municipal jobs that may take a little bit more time to go through the process, but they would certainly impact 2026 revenues if we were successful.

Yes, they would use all capacity, Matt, more or less. So we've got potential out there to fully utilize everything we're building very quickly.

That's great. All right. Secondly is on the O&M revs. There was a pretty nice sequential increase there. I don't know if I missed it in your prepared remarks, but can you talk about if there was one or multiple incremental wins there? And any color on the business for the rest of the year?

One of the projects we negotiated adjustments to the contract for 24/7 operation, which positively influenced the revenues for that project. Additionally, there were some incremental cost increases in other projects. We didn't launch any major projects or a significant number of smaller ones, so the revenue growth is primarily coming from several existing contracts.

Yes, contracts.

Okay. Two more quick ones. One is Hawaii. I think in the past, you talked about waiting on some permits. Are we still waiting on the same permits? Or what is remaining before we've got the green light?

There are two significant permitting issues at this stage. First, we need an archeological permit for the site. We anticipated that this would take a considerable amount of time, as we had to conduct studies to ensure we wouldn't harm any historical artifacts or sites, or encounter any ancient graves. Those studies are complete, and we are currently navigating the regulatory approval process. We always understood this would be a lengthy process and have considered it the critical path for obtaining the permits. The second important aspect is that now that the design is nearly finalized, we need to submit it to the health department for final approval of the water supply. This process could take some time; it may be quick, but I can't say for sure. We were not able to submit it until the design was completed, which we expect to finalize in the next month or two.

Okay. All right. Great. Lastly is the good old Bahamas receivable. I think it seems to be kind of holding the line, but is there any additional color from the government there?

Yes. I mentioned earlier when John asked the question. Although it's not reflected in the Q, we had some progress since the end of the quarter. We have an understanding with the government that they're going to make some scheduled payments there. And we're positive about the outlook for reducing that over the next month.

This has never been a problem for them regarding whether we return the money. They are very clear about their position that they will pay. They do not have any issues with the invoices or anything. It has been a smooth process for several years.

At this time, this concludes our question-and-answer session. I would like to turn the call back over to Mr. McTaggart. Please go ahead.

Thanks, Steve. Just thank everybody again for joining us today to discuss our results, and we certainly look forward to speaking with you again to go over our third quarter results in November. Thanks, everybody.

Thank you. Before we finish today's call, I want to share the company's safe harbor statement that highlights caution regarding the forward-looking statements made during the call. The information we provided in this conference call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about the company's future revenues, plans, objectives, expectations, events, assumptions, and estimates. Forward-looking statements can be recognized by words or phrases typically including believe, estimate, project, intend, expect, should, will, or similar expressions. Any statements that are not historical facts depend on the company's current expectations, beliefs, assumptions, estimates, forecasts, and projections related to its business and the associated industries and markets. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that can be hard to predict. Actual results may vary significantly from what is suggested in these statements. Factors that could lead to such differences include tourism and weather conditions in the areas we serve, the economic, political, and social conditions of each country where we operate or plan to operate, our relationships with government entities and customers, regulatory issues, including negotiations for the renewal of our retail license in Grand Cayman, our ability to successfully enter new markets, and various other risks outlined in the company’s periodic report filings with the Securities and Exchange Commission. For more information regarding the risks and uncertainties related to the company’s business, please refer to the Management Discussion and Analysis of Financial Condition, Results of Operations, and Risk Factors in the company’s SEC filings, including its annual report on Form 10-K and quarterly report on Form 10-Q. Any forward-looking statements made during the call are valid as of today’s date. The company explicitly disclaims any obligation to update or revise these statements to reflect changes in expectations or any events, conditions, or circumstances related to them, except as required by law. I want to remind everyone that this call will be available for replay starting later this evening. Please check yesterday's earnings release for dial-in replay instructions on our website. Thank you for joining today's presentation. This concludes the conference call. You may now disconnect. Thank you.