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Consolidated Water (CWCO) Wins $204M Deal for Desalination Plant

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Consolidated Water Co. Ltd. (CWCO - Free Report) announced that its indirect subsidiary Kalaeloa Desalco LLC signed a definitive agreement (DBOM Agreement) with the Honolulu Board of Water Supply (“BWS”) to design, build, operate and maintain a seawater reverse osmosis desalination plant. This plant will be Consolidated Water's 24th seawater reverse osmosis desalination plant and its first in the United States.

Kalaeloa Desalco LLC is jointly owned by CWCO’s wholly-owned subsidiaries — PERC Water Corporation and Consolidated Water U.S. Holdings, Inc.

Details of the Agreement

The contract's basic duration is around 24 years, and CWCO anticipates revenues of nearly $204 million during that time. The development, permitting, piloting, design and construction phases are expected to generate around $149.6 million of the total revenues in the first 44 months of the DBOM Agreement.

Over the 20-year operating phase of the deal, operation fees are projected around $2.7 million per year. The figure will be modified annually due to changes in certain materials and labor indices. This plant will help meet the rising water demand in Hawaii.

During the initial 44 months of the DBOM Agreement, Kalaeloa Desalco will develop, permit, pilot, design and construct the plant. The facility will be able to produce potable water from saline source water derived from seawater wells. The BWS’ water system will receive 1.7 million gallons of potable water per day from Kalaeloa Desalco on a round-the-clock basis.

Benefits of the Deal

Consolidated Water uses the Reverse Osmosis Technology, one of the most advanced technologies to convert seawater to potable water, at all of its water treatment plants. The U.S. desalination market is growing and its worth is set to touch $3.2 billion by 2027.  

The aforementioned deal is an acknowledgement of Consolidated Water’s expertise in treating sea water and making it suitable for human consumption.  The company is poised to benefit from rising demand for desalination units, given its expertise in the field.

Price Performance

In the past month, shares of Consolidated Water have risen 17.5% compared with the industry’s 0.1% growth.

 

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Consolidated Water currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same sector are Global Water Resources (GWRS - Free Report) , IDACORP, Inc’s (IDA - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GWRS’ long-term (three- to five-year) earnings growth rate is 15%. The Zacks Consensus Estimate for fiscal 2023 earnings per share (EPS) indicates a year-over-year increase of 29.2%.

IDA’s long-term earnings growth rate is 3.68%. The company delivered an average earnings surprise of 4.6% in the last four quarters.

NI’s long-term earnings growth rate is 6.9%. The Zacks Consensus Estimate for fiscal 2023 EPS indicates a year-over-year improvement of 6.8%.

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