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 the Chief Executive Officer of Consolidated Water, Mr. Rick McTaggart and company’s Chief Financial Officer, Mr. David Sasnett. Following their remarks, we will open the call to your questions. Before we conclude today’s call, I will provide some important cautions regarding the forward-looking statements made by management in the call. I would 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 would like to turn the call over to Consolidated Water’s CEO, Mr. Rick McTaggart. Please go ahead, sir.

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 remains 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 plants 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 will 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 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 reason, 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 would like to turn the call over to David, our CFO, who will take us through the financial details for the quarter. Afterwards, I will return to talk a little more about our operational activity and outlook for the remainder of the year. David?

Thanks, Rick. 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 on 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 cost in the Bahamas, which [correspondingly] 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…

Thanks, David. On June 29, we received notification that the State of Baja California, Mexico had 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 received the termination letter that the state was 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 correction 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 that have 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 6 months…

[Operator Instructions] First question comes from Gerry Sweeney with ROTH Capital. Please go ahead.

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

Hi, Gerry.

Hi, Gerry.

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

Gerry, this is David. When 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 trying to project their revenues, you want to assume that they will get renewals of all existing contracts, then that would be a reasonable assumption. But we did added 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 towards the timeframe 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. So 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 is 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, little less certain than that.

Okay, take it half a step back. Maybe I misinterpreted when I read the queue, but I thought for the press release, I thought there is two new O&M contracts that you won just recently had a value of $1.7 million in the second half of this year?

That’s correct.

Just those two right, but then how long is the average contract for PERC?

The average contract for PERC is it ranges anywhere from 1 to 5 years?

Okay.

So, when you are predicting I think when you are predicting O&M revenues some of those contracts come up for renewal, assuming that we get the renewals, then revenue will continue to grow and if everything else remained the same and we renewed all the contracts, you get them more contracts to the impact of the new contracts would be incremental over a 12 month period of about below a $3 million close to $3.4 million go into the O&M revenue, so..

Yes, well, that was my next question was, on the O&M side or I guess in the services side, how much of that is O&M from PERC and how much of it is designed built from PERC?

I believe that’s disclosed in our queue I will take a look at it real quick here.

Right.

You look at actually Gerard if you look at the risk factor, points out exactly how much is in.

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

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

How many?

I ended up in here for you Gerry, for the 3 months ended PERC selling in revenue was $2.5 million. And for the six months ended it was $4.1 million this just the O&M revenue.

I apologize. I did not be read everything except the risk factors that came on.

That’s okay.

I apologize on that front. That’s helpful. So -- and then maybe switching gears to the revenue on the desal business, the Caymans and the Bahamas. So obviously, the Caymans in 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.

Gerry, the other big factor, correct?

Yes, right.

Gerry?

Go ahead, Rick.

So the first half of the year is typically, our biggest sales in the retail business, because of the 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, the historically rainfall has also impacted the sales slightly from time to time, but, the 16% change, because the hotels are closed, I would say that’s a pretty – that’s a pretty consistent way to look at it in the retail segment going forward and just to remind you, 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 onetime events, the contract changes in Cayman in. And then the, the electricity rates if you think electricity is going to continue to be lower than, that’s going to be the impact on the sales going forward.

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

Let me just – Gerry, let me put 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 can get 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.

No, absolutely. This is a broad brush. Yes, got it. And then a third question, I will jump back in 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 run down for the second half of this year into next year? I mean, you had some lease calls, but I know you terminated. I think, there was 26,000 every other month or 13,000 a month. You have probably some salaries there. You probably have some third-party cost associated with legal now. Any type of guidance you can provide on where some of those costs go over the next two to four quarters?

So, Gerry, on the lease, just to clarify we said that we expect to terminate it or to transfer it 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 is going to view our claim and then we will obviously have some legal costs going forward to try to recoup our money there and to defend the claim. So I’d say they are 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.

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

Yes. I mean, the contract and the law gives us the right to recoup all of our costs that 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 Q, I mean, we have done some legal challenges or the timetable to submit a tally 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 are moving forward with finalizing our numbers and finalizing the submission to the state and we will let everybody know when that goes in and what the reactions are in due course.

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

Alright.

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

Good morning, everyone.

Hey, Mike. How are you?

First, just a question on Cayman in general, as government indicating that tourism probably – will probably be seized 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, just the government continue to have the ability to pay its bills?

Yes, so your guess is as good as mine on when they are going to actually open back up, Mike. They have said, October 1, subject to review at the time. And, they had said September 1, and then as I got closer, they changed it. So I don’t know they are really very concerned about bringing the virus back into the country. They have been virus free for, I don’t know, three or four weeks now no cases. So I don’t know what they are 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 a, one in one of the better positions around the world I mean they haven’t had much debt historically. So I think, they are doing a borrowing. I don’t remember how many million it is right now. They are 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, to be able to render this quite well in over the medium term.

Okay, that’s all I had, gentlemen. Thank you.

Alright, Mike.

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

Thank you. Morning, Rick and David.

Good morning, John.

Two questions. Your information about at 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 do they do any international work or are there any opportunities there that they are either actively involved in or looking to do?

So, John, at present, they don’t have projects and active projects, there are operations outside of the Southwest so primarily California, Arizona, Utah. We are we have combined our business development teams, obviously with the acquisition. So they are working with us looking at a project in Florida and also major project with some partners up in Oregon. So those projects would be they are definitely good projects and PERC is well qualified to do them so that’s one of the things that they have leveraged off of us on, having exposure to different markets and we expect their business to grow into these markets in the future.

What about a big state like Texas or at that area, Oklahoma, I mean, certainly water needs badly as well do they have anything?

No not at the moment, but again, we have 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. We did not do anything in Oklahoma. I am 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.

Okay, great. And then the other question is with the Rosarito project, how long would I don’t have phrases, 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 would come back to the table and say, well, let’s go ahead and pursue it. I mean, I realized that economic situation there is tough, but lot of potential water for there are folks down there that isn’t going to be available. So just curious…

Yes, I mean, obviously, my opinion is that it’s a big mistake what they did, I mean, just from a technical standpoint, but that doesn’t hold much water right now. They could come back to us. I have no idea what they have in mind, what their reaction will be 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 as the project was not financially feasible. So it’s kind of – it’s hard to say, John, but I mean, we will work with them, however they want. I mean, my main goal is to try to recover our cost and our investment cost at the moment and if anything else, any other opportunity presents itself and we will certainly look at it.

Is there any proprietary information that, in other words, they have 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 or?

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 we are going to do a large plant like was envisioned with our project, I mean, I don’t know that they will be able to use any of that. So, my goal is really to recover the costs in developing those permits and that site plan for the intake structures. The actual design of the plan, we never got that 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.

Okay, okay. Alright. Very disappointing and hopefully they will 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, alright, thank you very much and good luck the rest of the year.

Thanks, John.

Yes.

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

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

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 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 and events, assumptions and estimates. Forward-looking statements can be identified by the use of words or phrases usually containing the word 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 involves 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 government of the jurisdictions in which it operates. The outcome of negotiations with the Cayman government regarding a new retail license agreement, the future financial performance 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 analysts of financial conditions or 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 maybe required by law. Before we could end today’s conference call, I would now 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. Thank you for attending today’s presentation. This concludes the conference call. You may now disconnect.