After a dip in volumes over the course of the COVID-19 pandemic lockdown measures and travel restrictions, Consolidated Water has seen an increase in the past few months since hotels have reopened, however its Chief Executive Officer Rick McTaggart said the increase will have little impact on its revenues.
The water company, which produces bulk water and supplies the Water and Sewerage Corporation (WSC), revealed last week that its bulk segment revenue decreased due to a $1.5 million decline in revenue from its Bahamas operation, due mainly to lower energy prices, which receded Bahamas rates; and a decrease in its manufacturing segment revenue due to a decrease in orders in the fourth quarter of 2020.
“The charges in The Bahamas are mainly fixed charges because there’s minimum take-or-pay volumes from the two plants. So there has been a drop in volume… It’s definitely not as pronounced as the retail drop in Grand Cayman and it hasn’t impacted revenues because, you know, they pay, they pay for the capacity there essentially in The Bahamas,” McTaggart said in the company’s four quarter 2020 earnings call released last week.
“So, on the other hand, we are seeing volumes come back up in the last few months. I think some of the hotels have reopened there. But it’s not going to make any big impact on our revenues there because of the take-or-pay.”
Consolidated Water’s Chief Financial Officer David Sasnett revealed that although the company’s accounts receivable balances for its Bahamas business amounted to $16.8 million as of December 31st, 2020, compared to $18.4 million for the same time during the previous year, the company is confident payments will be collected in full.
“Historically, Consolidated Water Bahamas has experienced delays in collecting its accounts receivables for Water & Sewerage Corporation of The Bahamas,” he said.
“When these delays have occurred, we hold discussions and meetings with representatives of the Water & Sewerage Corporation and the Bahamas government. As a result, payment schedules are developed for WSC’s delinquent accounts receivable. All previous delinquent accounts receivable from the WSC were eventually paid in full. As a result, we have never been required to provide an allowance for ample accounts for Bahamas receivables.
“We believe that the delays we have experienced in collecting Consolidated Water Bahamas receivables were initially extended due to the impact of Hurricane Dorian, which devastated the northern Bahamas in September 2019. And those delays have been further extended as a result of the economic impact of the pandemic on the Bahamas government’s revenue sources. We eventually see the Bahamas accounts receivables will eventually be collected in full.”