Consolidated Water (CWCO) Q2 2020 Earnings Call Transcript

Consolidated Water (CWCO 0.56%)
Q2 2020 Earnings Call
Aug 17, 2020, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. Thank you for joining us today to discuss Consolidated Water's results for second quarter ended June 30, 2020. Joining us today is chief executive officer of Consolidated Water, Mr. Rick McTaggart; and company's chief financial officer, Mr.

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 in 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 last Friday'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's CEO, Mr. Rick McTaggart. Please go ahead, sir.

Rick McTaggart -- Chief Executive Officer

Thank you, Nick, and good morning, everyone. Thanks for joining us on today's call. During the second quarter, our core water production and distribution and manufacturing operations remain stable and profitable although at reduced production levels due to the impact of the COVID-19 pandemic. This allowed our financial condition and liquidity to remain strong with cash balances totaling $35 million.

In Q2, our services segment revenue was up by more than $3.3 million due to the contribution from PERC Water, our new majority-owned subsidiary that we acquired in the fourth quarter of last year. PERC performed better than we expected in the first half of this year given the current market conditions created by the pandemic. During the quarter, PERC was awarded two new contracts and secured four contract renewals for operating and maintaining advanced water treatment plant in California. We continue to see attractive opportunities for PERC in a very active market.

PERC's management team is extremely talented and motivated. And when we were presented with the opportunity in early August to increase our ownership in PERC, we seized it and boosted our ownership from 51% to 61%. I'll provide additional information on PERC's growth opportunities later after David discusses our financial results. As has been the case with most businesses, the COVID-19 pandemic adversely impacted all of our segments to varying degrees during the quarter.

The volume of water sold by our retail segment and consequently retail revenue dropped by approximately 16% last quarter compared to the previous year's quarter due to the temporary cessation of tourism in the Cayman Islands, resulting from the government actions to close the country in order to mitigate the spread of the COVID-19 pandemic. Although the Bahamas tourism industry and economy has been severely hurt by the COVID-19 pandemic, our water production volumes remained stable in the Bahamas because our plants primarily serve the general population. Bulk segment revenue generated in the Bahamas and the Cayman Islands declined in the second quarter compared to last year for non-COVID-related reasons, which David will explain. Even though COVID-19 has impacted our business, looking beyond the pandemic, our products and services remain public health and economic imperatives for the communities we serve.

Customers still need turnkey and affordable sources of drinking water from our desalination plants, and wastewater still must be treated to the highest standards for environmentally responsible disposal or reuse. Consolidated Water remains well-positioned financially, technically, and operationally to address the needs of the communities we serve or will serve in the future. Before I go further, I'd like to turn the call over to David, our CFO, who will take us through the financial details for the quarter. Afterwards, I'll return to talk a little more about our operational activity and outlook for the remainder of the year.

David?

David Sasnett -- Chief Financial Officer

Thanks, Rick, and good morning, everyone. As Rick mentioned, our second quarter was impacted significantly by our recently canceled Mexico project and by the COVID-19 pandemic. Rick will discuss the recent developments in Mexico in just a moment. With respect to the remainder of our results, our revenue in the second quarter increased 4% to $19.1 million compared to last year, solely due to the addition of $3.4 million in revenue from PERC.

The incremental PERC revenue was partially offset by revenue decreases of $1 million in the retail segment, $1.1 million in our bulk segment, and $511,000 in the manufacturing segment. Our retail revenue declined because of a 16% decrease in the volume of water sold due to the lack of tourism on Grand Cayman that resulted from the closing of all Cayman Islands' airports and seaports in March 2020 in response to the COVID-19 pandemic. The decrease in bulk water revenue was primarily due to lower energy costs in the Bahamas, which correspondently decreased the energy pass-through component of our rates. Our bulk revenue also decreased due to the lower rate that came into effect in July 2019 for the North Side Water Works plant under our new contract for this plant with the Water Authority-Cayman.

The decrease in manufacturing revenue was due to a lower number of active projects. Our gross profit for Q2 was $7.3 billion or 38.3% of total revenue, down 3% from $7.6 million or 41.3% of total revenue in the same quarter last year. In the second quarter of 2020, net loss attributable to Consolidated Water shareholders was $1.1 million or $0.07 per basic and fully diluted share. This compares to net income of $2.5 million or $0.16 per basic and fully diluted share in the same period last year.

The decrease in our net income was principally due to the $3 million impairment loss that we recorded for the rights of ways we had acquired for the Mexican project. Turning to our balance sheet. Our accounts receivable balances related to our Bahamas business amounted to $19.9 million as of June 30, 2020, compared to $18.4 million as of December 31, 2019. We believe the Bahamas government's ability to pay in a timely manner has been impacted by COVID-19.

However, we're continuing to work with the Bahamian government to collect these receivables. Historically, our Bahamas subsidiary has experienced delays in collecting its accounts receivables of the Water & Sewage Corporation in the Bahamas. When these delays occur, we hold discussions and meetings with representatives of the Bahamas government. As a result, payment schedules are developed for delinquent accounts receivable.

All previous delinquent accounts receivable from the Bahamas were eventually paid in full. Based upon this payment history, we have never ever been required to provide an allowance for doubtful accounts for any of our accounts receivables for our business in the Bahamas despite the periodic accumulation of significant delinquent balances. As of June 30, 2020, we had not provided an allowance for doubtful accounts for our accounts receivable business in the Bahamas. And it's important to note that the Bahamas government made a payment of $4 million on these receivables in the month of July.

At June 30, 2020, our cash and cash equivalents totaled $35 million. Our projected liquidity requirements for the balance of 2020 include capital expenditures for existing operations of about $1 million and about $1.3 million for dividends payable and the support to recognize that we spent $900,000 in August to acquire the additional 10% ownership in PERC. We believe our cash position and available funds provide us with the sufficient liquidity we need to meet things as we go forward. This wraps up my brief discussion of our financial results for the quarter.

Now, I'd like to turn the call back over to Rick.

Rick McTaggart -- Chief Executive Officer

Thanks, David. On June 29, we received notification at the state of Baja California, Mexico that terminated our contract for the construction and operation of a desalination plant and aqueduct in Rosarito, Mexico. Quite frankly, we were shocked and tremendously disappointed with the state's decision to terminate a project that would have provided a drought-proof and natural disaster-resistant drinking water supply to more than 2.5 million people in the region. It's a project that we believed, until we receive the termination letter, that the state both supported and intended to complete.

Like most other countries in the world, Mexico's economy has been damaged by the COVID-19 pandemic, as well as other factors which, we believe, has reduced the state's revenue sources. Furthermore, the recent devaluation of the peso has made the project more expensive, and this factored into the state's decision to cancel, we understand. At this point, it is uncertain how much, if any, of our developmental costs and investments we can recoup or how long any such recruitment will take. We are vigorously pursuing all legal remedies and courses of action available under the contract and applicable law with respect to collection of these amounts.

Now, turning to our business in the Cayman Islands. Our operations on Grand Cayman continue to be adversely affected by COVID-19 preventative measures which were enacted by the government back in March. As a result of these measures taken, tourism in the Cayman Islands has temporarily ceased, and economic activity on Grand Cayman has slowed dramatically. The preventative measures taken by the Cayman Islands government in response to the pandemic did not commence to the latter half of March and thus affected our retail sales primarily in the second quarter.

Our retail sales volume for the first six months declined only by 3% compared to that same period last year. However, retail sales volume for the second quarter was 16% less than that for the same quarter of last year. We also sold bulk water in Grand Cayman to the government-owned water utility, which, in turn, provides us water to areas that are more residential and less tourist-related. Consequently, our bulk water volumes sold in Grand Cayman were relatively stable compared to the same periods last year, similar to our Bahamas business.

In May 2020, the Cayman Islands government started a phased relaxation of the shelter-in-place restrictions at the local level. And most recently, the government designated October 1, 2020, as the planned date for the phased reopening of the Cayman Islands borders, although this date is subject to reassessment at this time -- or at the time in October. We expect that our retail segment revenue and cash flows will continue to be materially adversely impacted until such time as tourism and the economy in the Cayman Islands recovers from the impact and effects of the COVID-19 pandemic. For our business in the Bahamas, tourist travel to New Providence Island where we operate has been suspended, and economic activity in the Bahamas has slowed dramatically as a result of COVID-19.

In May, the Bahamian government relaxed some of the shelter-in-place regulations but then reinstated the regulations effective August 4 through August 19, at least. In July, the government enacted a limited reopening of the Bahamas to air travel but then reinstated travel restrictions again shortly thereafter due to the increase in COVID-19 cases. While the world is focused on defeating the global pandemic, global challenges with water availability and shortages continue to grow, and desalination and water reuse continue to present the best solutions for many areas around the world. Today, nearly 90 million cubic meters of water is being produced daily by more than 18,500 desalination plants in operation globally.

These plants are providing drinking water to more than 300 million people. So as we look to expand geographic reach beyond our current areas of operation, our mission remains focused on providing water services to those areas of the world where the supply of naturally occurring potable water is scarce and particularly areas where reverse osmosis technology is economically and environmentally feasible. Historically, we focused on seawater desalination projects in the Caribbean, where government and private customers long ago embraced our design, build, own, and operate project delivery model. However, because of the extreme financial strains caused by the COVID-19 pandemic, we believe that many state and local governments in the United States will find our project delivery model well suited to expand and improve vital water services for these cash-strapped communities.

In addition to the growing demand for potable water, water management challenges are also increasing the opportunity for wastewater treatment and reuse projects. Our acquisition of PERC, which is based in Southern California, represented a major step toward addressing this growth market and its many emerging opportunities. Similar to our existing approach, PERC provides its customers with a comprehensive solution for deploying or upgrading their water infrastructure. They develop, design, and build state-of-the-art facilities for both water and wastewater recycling then provide ongoing operational and management services to keep these facilities operating at peak performance.

Since PERC's founding in 1998, it has completed and continues to support numerous water infrastructure projects, including new facilities, facility upgrades, short- and long-term operations services, and asset management engagement. For this, they won numerous industry awards, recognizing their innovative designs and highly efficient project delivery model. At present, PERC generates most of its revenue from O&M, operations and maintenance, contracts for water treatment, and reuse facilities owned by third parties. Given the challenging market conditions brought on by COVID-19, PERC performed better in the first half of the year than we expected.

PERC secured, as I mentioned earlier, two new O&M contracts effective April, as well as four contract extensions in the first half of the year. We expect PERC's two new O&M contracts will add revenues of approximately $1.7 million in the second half of this year. PERC's growth potential is largely due to its excellent product and service offerings and its strong presence in the Southwestern United States, where water supplies are increasingly under stress. PERC has been highly complementary to our existing business and overall mission, supporting our pursuit of water reuse projects and other emerging opportunities with a comprehensive suite of solutions for improving water infrastructure.

PERC also provides us a solid platform upon which to expand to North America, our core business of designing, constructing and operating desalination plants Given these compelling growth factors, earlier this week, we acquired an additional 10% in PERC from another shareholder for $900,000, raising our ownership to 61%. Overall, Consolidated Water continues to be well-positioned to successfully navigate these uncertain and turbulent times, thanks to a strong balance sheet and well-established growth strategy that brought us PERC and as we anticipate other successful future acquisitions. Looking beyond the pandemic, we expect the growth driver is inherent in our markets to persist over the long term, which bodes well for Consolidated Water and our efforts to enhance shareholder value over the years to come. Now, with that, I'd like to open the call for questions.

Nick?

Questions & Answers:

Operator

[Operator instructions] First question comes from Gerry Sweeney of ROTH Capital. Please go ahead.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Hey, good morning, Rick and Dave. Thanks for taking my call.

Rick McTaggart -- Chief Executive Officer

Hi, Gerry.

David Sasnett -- Chief Financial Officer

Hi, Gerry.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Just wanted to talk a little bit about PERC since it was some of the key points that you raised in your remarks. I'm assuming that $1.7 million of the O&M contracts that you're expecting to hit in the second half of 2020 -- I mean, can we extrapolate that out to like $3.4 million on a full-year basis?

David Sasnett -- Chief Financial Officer

Gerry, this is David. What you could for those particular contracts, PERC has a number of contracts that are up for renewal. This is part of their business. So when you look forward, try to project the revenues, if you want to assume that they'll get renewals of all existing contracts, then that would be a reasonable assumption.

But we did add a risk factor in our 10-Q this quarter to point out the fact that a number of these contracts expire over the course of the next few months. I think the deadline we provided or the time frame we provided was July of 2021. We are hopeful that they can get renewals of all those contracts. But there are renewal options in the contracts exercisable at the discretion of the customer.

I mean, PERC's O&M business is fluid because of the renewal processes. But over the long term, we hope to continue to grow that business because PERC has proven to be very good at bringing in new contracts and also obtaining extensions of existing contracts. But I don't think it's fair just to automatically extrapolate going forward. I think it requires some -- it's a little less certain than that.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

OK. Taking a half a step back, maybe I misinterpreted when I read the Q, but I thought -- or the press release. I thought there's two new O&M contracts that you won just recently had a value of $1.7 million in the second half of this year.

David Sasnett -- Chief Financial Officer

That's correct because the...

Gerry Sweeney -- ROTH Capital Partners -- Analyst

There was two, right? But then how long is the average contract for PERC?

David Sasnett -- Chief Financial Officer

The average contract for PERC is -- it ranges anywhere from one to five years.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

OK.

David Sasnett -- Chief Financial Officer

So when you're projecting O&M revenue, some of those contracts come up for renewal. Assuming that we get the renewals, then revenue would continue to grow. And if everything else remained the same and we renewed all the contracts, have gotten more contracts, the impact to the new contracts would be incremental revenue over a 12-month period of about below $3 million, close to $3.4 million. But there are other factors to go into the O&M revenue.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Yes. Well, my next question was on the O&M side, or I guess that's in the services side. How much of that is O&M from PERC? And how much of it is design build from PERC?

David Sasnett -- Chief Financial Officer

I believe that's disclosed in our Q. I'll take a look at it real quick here.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Right.

David Sasnett -- Chief Financial Officer

If you look at -- actually, Gerry, if you look at the risk factor, it points out exactly how much is in...

Gerry Sweeney -- ROTH Capital Partners -- Analyst

OK. I will look at it. I have it here in front of me, but I'll just go through it.

Rick McTaggart -- Chief Executive Officer

That could change before the end of the year as well, Gerry. I mean, it depends on when the design -- I said that could change the mix before the end of the year depending on the design-build work.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

So how many...

David Sasnett -- Chief Financial Officer

And I have the number here for you, Gerry. For the three months ended, PERC's O&M revenue was $2.5 million. And for the six months ended, it was $4.1 million. That's their O&M revenue.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

I apologize. I did not read -- I've read everything except the risk factors.

David Sasnett -- Chief Financial Officer

That's OK.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

I apologize on that front. I was just going through that. That's helpful. And then maybe switching gears to the revenue on the desal business, the Caymans, and the Bahamas.

So obviously, the Caymans and the Bahamas are shut down for tourism. Is this a decent run rate on revenue or volumes in this sort of COVID world where there isn't tourism? And then conversely, I know historically, there's also been some seasonality as tourism has picked up, but does that change because the weather gets a little cooler potentially and there is no tourism? I'm just trying to see how we look at the revenue from that on the water side from that perspective.

David Sasnett -- Chief Financial Officer

Gerry, the other big factor --

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Yes, right.

Rick McTaggart -- Chief Executive Officer

Gerry?

David Sasnett -- Chief Financial Officer

Go ahead, Rick.

Rick McTaggart -- Chief Executive Officer

So the first half of the year is typically our biggest sales in the retail business because of its drier conditions and tourism is up. So the 16% drop we saw in the second quarter, I think that's fairly indicative of what we should expect through the end of this year. Historically, rainfall has also impacted the sales slightly from time to time but a 16% change because the hotels are closed. I'd say that's a pretty consistent way to look at it in the retail segment going forward.

And just to remind that the bulk segments were not adversely impacted on volume sales because of COVID. It was other things, which, again, we can roll forward because they were basically one-time events, the contract changes in Cayman and then the electricity rates. If you think electricity is going to continue to be low, then that's going to be the impact on the sales going forward.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Got it. I should delineate it. I understood bulk was less. It did have a COVID impact.

David Sasnett -- Chief Financial Officer

Let me just -- Gerry, let me point out two additional things. The energy pass-through doesn't have a huge impact on margins, so you should keep that in mind. And the other thing is don't discount the impact of rainfall. If it will really drop, the Grand Cayman, out of necessity, the existing population would have to use more water.

And we have seen significant fluctuations in the volume of water used in times of excessive rainfall and during droughts. So I think the 16% decrease gives you a good indication of how much of the water we sell on Seven Mile Beach relates to tourism, but it's not an absolute number.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

No. Absolutely. This is broad brush. Yes, got it.

And then a third question, and I will jump back in the line. Mexico costs, they were down this quarter but, obviously, a disappointment that Rosarito is not coming through. How do we look at these costs? How do they, I mean, run down for the second half of this year into next year? I mean, you had some lease calls that I know you'd terminated. I think there were 26,000 every other month or 13,000 a month.

You had probably some salaries there. You probably have some third-party costs associated with legal now. Any type of guidance you can provide on where some of those costs could go for the next two to four quarters?

Rick McTaggart -- Chief Executive Officer

So, Gerry, on the lease, just to clarify, we said that we expect to terminate it or to transfer to the state, so we haven't terminated the C.F.E. lease yet. On the cost side, I mean, the running cost for the business, obviously, are tapering down. We still have staff there that are dealing with the claim, so I wouldn't expect a huge change in those numbers, at least until we get our arms around how the state's going to view our claim.

And then we'll obviously have some legal costs, going forward, to try to recoup our money there and to defend the claims. So I'd say they're going to be lower, but I really can't say how much. I mean, if this is a prolonged legal exercise, it could take more time to get it resolved.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Got it. And then on the claims front, it was my understanding that you had, at least in the contract, some ability to recoup costs, and I believe, at least on the assets. But was there an opportunity to -- and I'll paint this as potentially. But is there an opportunity to recoup some costs, not only in the asset investment side but also sort of on the manpower type of -- in human capital component invested in the project?

Rick McTaggart -- Chief Executive Officer

Yes. I mean, the contract and the law gives us the right to recoup all of our costs related to the development of the project and the assets that we purchased to execute the project, so I mean, that's what we intend to do. As we mentioned in the in the Q, I mean, we've done some legal challenges or the time to able to submit totality of these costs, and that was successful. So it gives us a little more time to get everything in order and get it in the correct official formats that the state wants for the submission.

So we're moving forward with finalizing our numbers and finalizing the submission to the state, and we'll let everybody know when that goes in and what the reactions are in due course.

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Got it. I appreciate it. And pretty solid quarter, I think, considering the circumstances. But I will jump back in queue.

Thank you.

Rick McTaggart -- Chief Executive Officer

All right.

Operator

Thank you. [Operator instructions] Our next question from Michael Gaugler, Janney Montgomery Scott. Please go ahead.

Michael Gaugler -- Janney Montgomery Scott LLC -- Analyst

Good morning, everyone.

Rick McTaggart -- Chief Executive Officer

Hey, Mike. How are you?

Michael Gaugler -- Janney Montgomery Scott LLC -- Analyst

Rick, just a question on Cayman, in general. Is government indicating that tourism would probably be ceased through year-end? And then kind of as a follow-up, how are the finances on Cayman with tourism down for such a prolonged period? I mean, does the government continue to have the ability to pay its bills?

Rick McTaggart -- Chief Executive Officer

Yes. So your guess is as good as mine on when they're going to actually open back up, Mike. They've said October 1, subject to review at the time. And they had said September 1.

And then as that got closer, they changed it, so I don't know. They're really very concerned about bringing the virus back into the country. They've been virus-free for, I don't know, three or four weeks now, no cases. So I don't know what they're going to do.

I mean, I hope that they open it back up by the end of the year, and then it will be up to the tourists to decide whether they want to go through the screening procedures that most countries are requiring to travel now. So from the standpoint of their financial position, I think Cayman is one of the better positions around the world. I mean, they haven't had much debt historically, so I think they're doing a borrowing. I don't remember how many million it is right now.

They're going through a competitive process to borrow some money to keep things moving along, but they certainly have a good credit rating, and they don't have much debt. So I would expect them to be able to weather this quite well over the medium term.

Michael Gaugler -- Janney Montgomery Scott LLC -- Analyst

OK. That's all I had, gentlemen. Thank you.

Rick McTaggart -- Chief Executive Officer

All right, Mike.

Operator

[Operator instructions] Next question comes from John Bair, Ascend Wealth Advisors. Please go ahead.

John Bair -- Ascend Wealth Advisors -- Analyst

Thank you. Good morning, Rick and David.

Rick McTaggart -- Chief Executive Officer

Good morning, John.

John Bair -- Ascend Wealth Advisors -- Analyst

Two questions. Your information about PERC seems to be that they are geographically focused in the southwest. So my question is wondering whether they operate in other parts of the country. Is there expansion potential there, or do they have operations outside of the southwest? And secondly, on that, did they do any international work, or are there any opportunities there that they're either actively involved in or looking to do?

Rick McTaggart -- Chief Executive Officer

Yes. So, John, at present, they don't have active projects or operations outside of the Southwest, so they're primarily California, Arizona, Utah. We've combined our business development teams, obviously, with the acquisition. So they are working with us, looking at a project in Florida and also a major project with some partners up in Oregon.

So those projects would be -- they're definitely good projects, and PERC is well qualified to do them. So that's one of the things that they've leveraged off or less on having exposure to different markets, and we expect their business to grow into these markets in the future.

John Bair -- Ascend Wealth Advisors -- Analyst

What about a big state like Texas or that area of Oklahoma? I mean, there's certainly water needs badly in those areas as well. They have a --

Rick McTaggart -- Chief Executive Officer

Not at the moment. But again, we've been following projects in Texas for a number of years on the desal side. So the combination of the business development teams, I think, will pay dividends in some of these other states. I don't know -- we don't do anything in Oklahoma.

I'm not aware of anything up there. But certainly, Texas, Florida, California, Arizona, Oregon, those are the areas that the business development team is most focused on at the moment.

John Bair -- Ascend Wealth Advisors -- Analyst

OK. Great. And then the other question is with the Rosarito project. How long would -- I don't know how to phrase this, actually.

But how long do you try to pursue this? Is there any time clock ticking on what you have to do to get resolution? And do you have any sense if there is any possibility that it'd be resurrected and that they'd come back to the table and say, yes, let's go ahead and pursue it? I mean, I realize that the economic situation there is tough but a lot of potential water for the folks down there that aren't going to be available, so just curious.

Rick McTaggart -- Chief Executive Officer

Yes. I mean, obviously, my opinion is that it's a big mistake what they did, I mean, just from a technical standpoint, that doesn't hold much water right now. They could come back to it. I have no idea what they have in mind, what their reaction when we present the claim.

But obviously, the driver here was that the economic conditions had changed in the region, and it didn't make what they told us in the termination letters that the project was not financially feasible. So it's kind of -- it's hard to say, John, but I mean, we'll work with them however they want. I mean, my main goal is to try to recover our costs and our investment costs at the moment. And if anything else, any other opportunity presents itself, then we'll certainly look at it.

John Bair -- Ascend Wealth Advisors -- Analyst

Is there any proprietary information that, in other words, they've had access to maybe design plans or anything like that, that they could kind of utilize on their own if they decided to try to build that project themselves at this point? Is there anything along those lines?

Rick McTaggart -- Chief Executive Officer

Well, I mean, we did a lot of work just developing the intake strategy. The ocean intake, the lease on the power plant site, the permitting, all that was done for that particular site. So unless they're going to do a large plant like was envisioned with our project, I mean, I don't know that they'll -- to be able to use any of that stuff. So my goal is really to recover the costs in developing those permits and that site plan for the intake structures.

The actual designs of the plan, we never got far enough where we were presenting any of those for approval to the state, so they don't have access to any of that information.

John Bair -- Ascend Wealth Advisors -- Analyst

OK, OK. All right. Very disappointing. And hopefully, they'll have in a pivotal event and change their minds and you can proceed on, but not going to hold my breath on that one.

So all right. Thank you very much, and good luck to the rest of the year.

Rick McTaggart -- Chief Executive Officer

Thanks, John.

John Bair -- Ascend Wealth Advisors -- Analyst

Yes.

Operator

This concludes our question-and-answer session. Now, I'd like to turn the conference back over to Mr. Rick McTaggart for any closing remarks. Please go ahead.

Rick McTaggart -- Chief Executive Officer

Yes. Thank you, Nick. I'd just like to, again, thank everybody for dialing in today, and I wish you all the best, and we'll talk to you again, I guess, in November. Take care and stay safe.

Operator

Thank you, ladies and gentlemen. Now, 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 call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, included, but not limited to, statements regarding the company's future revenue, future plans, objectives, expectations, and 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. Important factors, which may affect these actual outcomes and results include, or but not limited to, continued acceptance of the company's projects and services in the marketplace, changes in its relationship with the governments of the jurisdictions in which it operates; the outcome of negotiations with the Cayman government regarding a new retail license agreement; the future financial performances of its subsidiaries that manufacture water treatment-related systems and projects and provide the design, engineering, management, operating and other services applicable to commercial, municipal and industrial water production; the collection of its delinquent accounts receivables in the Bahamas, its ability to integrate and profitably operate recently acquired subsidiary, PERC Water Corporation; the possible adverse impact of the COVID-19 virus on the company's business and various other risks as detailed in the company's periodic reportings with the Securities 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 and results of operations and Risk Factors section of the company's SEC filings included, 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 speaks 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 with regard thereto or any changes in its events, conditions or circumstances, of which any forward-looking statement is based, except as where it may be required by law. Before we can end today's conference call, I would like to remind everyone that this call will be available for replay starting later this evening and running through August 24.

Please refer to today's earnings release for dial-in replay instructions available via the company's website at www.cwco.com. [Operator signoff]

Duration: 43 minutes

Call participants:

Rick McTaggart -- Chief Executive Officer

David Sasnett -- Chief Financial Officer

Gerry Sweeney -- ROTH Capital Partners -- Analyst

Michael Gaugler -- Janney Montgomery Scott LLC -- Analyst

John Bair -- Ascend Wealth Advisors -- Analyst

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