Good morning. Thank you for joining us today for Consolidated Water Company's 2nd Quarter 2021 Results. Hosting the call today is the Chief Executive Officer of Consolidated Water Company, who serves as CAGR and the company's Before we conclude today's call, I'll provide some important cautions regarding the forward looking statements made by management during the call. I would like to remind everyone that today's call is being recorded and will be made available for TransCon replay via instructions in yesterday's press release, which is available in the Investor Relations of the company's website. Now, I'd like to turn the call over to Consolidated Auto Company's CEO, Rick Cagat.
Sir, please go ahead.
Thank you, Ashnavi. Good morning, everyone. Thanks for joining us on the call today. I hope everyone is well. Our Q2 2021 results reflect the continuing adverse impacts of the pandemic on certain segments of our business as well as an adjustment to the carrying value of our manufacturing segment necessitated by new order projections for Aerex's historically largest Manufacturing customer.
Improved performance of our Bulk Water segment as well as growth of our Services segment have partially offset these impacts. Our services segment revenue increased 8% to $3,800,000 which accounted for 23% of our consolidated revenues. This was up from 18% in the Q2 of last year. Our Kirkwater subsidiary was responsible for this growth in our Services segment. Based in Southern California, Kirk operates and Water treatment and reuse facilities under contracted engagements, which have renewable terms that range from 1 to 5 years, with the majority having renewal dates beyond this year.
During the Q2, Perk generated about 90% of its Revenue from such contracts with various entities in California and Arizona. Revenue from our bulk water segment increased 14% to $6,700,000 in the second quarter Due to higher volume sales and electricity pass through charges, bulk water gross profit increased 21% to $2,300,000 compared to the Q2 of last year. However, our retail water segment continued to be adversely Affected by the pandemic due to a moratorium on tourism and border restrictions that the Cayman Islands government enacted in March of last year to safeguard their population from COVID-nineteen. According to the most recent statistics, Only 651 reported infections and 2 coronavirus related deaths have occurred in the Cayman Islands since the pandemic began. Cayman Islands government strategy to protect its citizens from the pandemic has been similar to that of other Commonwealth Countries like Canada, New Zealand and Australia, which have enacted strict lockdowns, extended quarantines and criminal penalties for breaches of Recently, however, government officials announced a 5 phase border reopening plan through November of this year, which is available on the official Cayman Islands government website.
The final phases of the Plan, which includes the reopening of the islands to a limited number of vaccinated tourists, are contingent on achieving at least an 80% vaccination rate The local population. The vaccination rate is currently at 68% It has not moved much in the past several weeks. Consequently, we would not expect to see any change in the performance of our retail water segment And for the resumption of tourism and Grand Cayman until the first half of next year at least. Our manufacturing segment revenue declined due to the loss of orders from Aerex's largest customer as we've also discussed last quarter. However, while this customer informed us in July 2021 that they expect to recommence Their orders in 2022 and subsequent years, we expect that these new orders will be at much lower volumes than in the past less than what we anticipated previously.
With this change in projected future revenue, along with the continuing weakness in the economy arising from COVID-nineteen that required us to record an impairment loss in the second quarter for from new projects and new customers, which we expect to offset some of the revenue loss from our largest customer. We expect to book revenue from these new projects in the latter half of this year and extending into 2022 as we begin production on these orders. At the end of the quarter, our cash levels totaled $41,200,000 Working capital was $69,000,000 with only about $200,000 in debt. So we believe our strong balance sheet Liquidity position us to ride out the current adverse economic impacts of the pandemic, enabling us to fund our growth initiatives. Funding activity for new projects in our services and manufacturing segments has increased significantly over the last few months.
And so we're looking forward to future months and years with great anticipation. So before I talk further about this, I would like to turn the call over to our CFO, David Skosnet, who will take us through the financial details for the quarter. Thanks, Rick, and good morning, everyone. As Rick mentioned, the pandemic has continued to create significant challenges for us as it has for many companies. Despite these challenges, we have maintained a strong financial foundation as we pursue new opportunities So organically and acquisitively, and we have continued to pay dividends.
Revenue totaled $16,700,000 the Q2, which decreased 13% from the same quarter of the prior year. This decline included decreases of $292,000 in our retail segment revenue and $3,200,000 in manufacturing segment revenue. The decreases in these two segments were partially offset by revenue Increases of $846,000 in our Bulk segment and $287,000 in our Services segment. Retail revenue declined due to a 2% decrease from the volume of water sold by Camp and Water. Sales volumes for both 20 21 in 2020 have been significantly below the historical volumes for the retail segment prior to 2020 due to the continued moratorium on tourism in Grand Cayman.
The increase in bulk segment revenue was due to an increase in CW Bahama's revenue of 840 $4,000 due to higher energy costs, which correspondingly increased the energy pass through component of CW Bahamas rates. The increase in bulk segment revenue is also due to a 9% increase in the volume of water sold by CW Thomas. Decrease in manufacturing revenue in the Q2 of 2021 was due to the decrease in orders from Eric's former largest customer as discussed previously by Rick. And this customer informed Eric since 2020 that it was suspending its purchases of a specialized product until 2022. In late July 2021, this customer again communicated to Aerex that it is expected to recommence its purposes of the specialized Product from Merix in 2022 and subsequent years.
But it also said such purchases would be at substantially reduced annual amounts In terms of both the amounts you did purchase from Merix in 2020 and prior years and from the amounts we previously believed they were purchased from us. We continue to expect, although cannot guarantee that the orders for this customer will resume as they have indicated. However, as Rick will cover later, they are also discussing with us Other products that Aerex could potentially manufacture for them. Gross profit for the Q2 of 2021 was $6,100,000 or 36% of revenues as compared to $7,300,000 or 38% of revenues for the Q2 of last year. This decline was largely due to lower revenue generated by our retail water operations and manufacturing segments.
EBITDA total revenue decrease Our bulk segment gross profit increased 21 percent to $2,300,000 For the Q2 of 2021, Net loss attributable to Consolidated Water shareholders, which includes the results of discontinued operations, was $1,700,000 or a loss of $0.11 Per basic and fully diluted share. But if you exclude the manufacturing segment impairment loss of $2,900,000 net income attributable to consolidated water Our accounts receivable balances related to our Bahamas business are down to $0.02 per basic and full year share. Turning to our balance sheet. Our accounts receivable balances related to our Bahamas business amounted to $21,300,000 at the end of the second quarter, which was up from $16,800,000 at the end of last year. We believe the increase in accounts receivable This increase resulted from the adverse impact of the pandemic on the revenue sources for the Bahamas and its government.
Such delinquent accounts receivables we have experienced in the past were eventually paid in full. Also given our recent contact with the government of the Bahamas Ministry of Finance, We believe that reducing this balance is a priority for them. So based upon their payment history, our majority owns a subsidiary T Mobile Bahamas has never been required to provide an allowance without lookouts for any of its accounts receivables despite the periodic Accumulation of significant legal dialysis. And as of June 30, 2021, we had not provided an allowance for doubtful accounts received at the common accounts receivables. It is important to note that so far in 2021, we have received 14,400,000 The hanging accounts receivable including 2 payments in the last 2 weeks totaling $5,700,000 We believe that recent payment history is a clear indication that Bahamas government is moving towards reducing the balance of these delinquent accounts receivables.
As of June 30, 2021, our cash and cash equivalents totaled $41,200,000 and our working capital totaled $69,000,000 We believe this Position affords us more than sufficient financial resources to maintain our normal operations while still pursuing our strategic initiatives. And this completes my financial report. I'd like to turn the call back over to Rick. Thanks, David. In our manufacturing segment, one of our Key strategic initiatives has been to build a diversified book of business for Aerex.
It is not concentrated on one specialized product to a large customer. With this in mind, we have continued to develop our sales channels in order to create a more diversified customer base and product line. Since we acquired Aerex, its revenue has been predominantly from the sales of a specialized water treatment product to 1 customer. The Q1 of 2020 last year, we increased resources and our sales team and began to focus on other sectors and customers to diversify our revenue base. As a result, in the first half of this year, We generated manufacturing revenue of $2,200,000 from new customers and or products, Which was equal to all of the revenue generated last year from customers and other than Aerex's major customer.
We presently have contracted project backlog of approximately $9,000,000 from new customers and or products, which have begun to impact revenues in the second half of this year and will carry into 2022. In addition, we have recently bid for $4,800,000 of additional work, which we hope to receive news on in the near future. Our manufacturing sales team is doing a great job diversifying Aerex's revenue stream, but it will still take more time Hopefully, replaced a significantly reduced revenue stream from Aerex's historically largest customer. It is important to note that Aerex maintains an excellent relationship with its largest customer and has recently sent us requests. They have recently sent us requests for proposals and quotes for other products.
Earlier this year, Terex passed a highly technical and demanding Quality assurance examination performed by another major customer for the purpose of qualifying Air X for various highly technical manufacturing projects. And thus, we now have that customer's clearance to perform this work. As a result, we expect to continue to receive orders for products other than the specialized products we've historically made for this customer over the last few years. Given our success in diversifying our product and client base, Increased product bidding activity and the magnitude of our current contracted project backlog, we expect a significant increase And manufacturing revenue in the second half of this year as compared to the first. We are able to sustain and build on these successes over the next Couple of years, we would further expect our manufacturing revenue to be back to historical levels with less customer and product risk concentration.
We're also seeing an increase in bidding activity for new design build projects and operating contracts In our services segment through PERC Water. In fact, PERC is now at its busiest level since we acquired the majority Ownership interest in this subsidiary in late 2019. Expected customers in California and Arizona are seeking cost Effective solutions to their wastewater treatment and potable water challenges, particularly those being caused by the unprecedented drought in the region. FERC is currently awaiting decisions by clients on design build projects and operating contracts, Which we recently did, which are valued at more than $55,000,000 and could result in Current revenues of more than $2,000,000 per year over the life of these operating and maintenance agreements. After a long dry spell, we are currently pursuing 2 significant seawater desalination projects in the United States.
1 is a 30 year design build operate project and the other is a manufacturing project. Our more than 45 years of experience in designing, building and operating these seawater desalination plants allowed us to prequalify for both of these very important projects. And if we are successful in obtaining these contracts, these will be our 1st seawater desalination plants In the United States. As David mentioned, our strong balance sheet and greater liquidity supports our efforts to Expand our business organically and through acquisitions and new projects. This includes Further broadening of our water solutions offerings in target markets as well as pursuing acquisitions and strategic partnerships in seawater Combination and Forest Services business.
So while we've had many challenges over the past year due to the pandemic, In all, our opportunities and growth prospects are very encouraging. We expect improved financial results in the second half of this year as compared to the 1st 6 months due to our successful efforts to diversify Aerex's revenue and customer base as well as PERC's strengthening business activity. Given the strong industry tailwinds potentially enhanced By the major increase in federal infrastructure spending recently passed in the U. S, we will continue to focus on those opportunities that will provide increasing value for our shareholders. And we remain confident that we will emerge from this long pandemic better and stronger than ever.
And I would like to open the call for questions.
Our first question comes from Gerry Sweeney with Roth Capital. Please go ahead.
Good morning, Rick and David. Thanks for taking my call. I want to start on the services side. Rick, I believe you said, I think that $3,800,000 let me make sure that's the right number for services. Did you say the majority of that is from contract work, some O and M structures today and not from project work?
I didn't put it down. I said that for services, we had about 55,000,000 Dollars and outstanding bids, the mix of design build work and operating contracts. You were talking about the existing revenue, right, Jerry? Yes. Yes.
Yes. Sorry. Yes. About 90% of that is O and M work. Okay.
Operations and maintenance contracts. Perks have been very successful in growing that part of the business. We're now seeing an increase in bid activity for the time build projects. We hope to increase that percentage of revenue area of our footprint. Got you.
That $55,000,000 that Rick you were just mentioning about, Do you know when some of those award timelines are scheduled to be released or updated? Yes, I wish I did. I mean, a lot of this stuff is moving around because of budget campaigns on the client It's difficult to project. Got it. Okay.
But then I mean in that $57,000,000 more of additional O and M mark. Is that In recurring work, yes. Yes. Got it. Okay.
That's great. On the manufacturing side, I appreciate the financial little bit more detail on the backlog. It's helpful. You discussed some of the technical aspects of what Eric does and being qualified. If we look at the backlog we see building today and Projects we're going after.
Is there a material difference in margins of this work versus The work that they're choosing to do for the former customer? Well, the former Customers still going to buy from us and they're still going to buy that product from us. Former largest customer. Former largest customer, yes. The thing is It's always tough to get information from them.
There's regarded on that. But that business was very high margin work. We think there are a couple of projects out there, both with just former customer and with other customers that will be able to utilize Aeryx's Unique manufacturing capabilities and generate very healthy margins in excess of, let's say, 30% on those manufacturing contracts. That's really the focus of the business is to grow in areas where margin Eric's differentiates itself and can utilize its capabilities to generate higher margin. There's a substantial amount of work out there with more basic that Eric is also pursuing.
And that does not generate the kind of margin This former business did. So if you're looking at historical margins, 2020 2019, it's going to be hard to get back to that quickly. Healthy margins. Got it. So maybe to summarize, Targeting higher end margin work.
However, that's a little bit longer lead time and you're going to backfill potentially with some lower margin work. The bread and butter, Eric, we're bidding on a lot of stuff and it's more commodity type products, so the margins are lower. We want to keep the operation fully utilized to the extent we can. Part of the issue in the Q1 or 1st 6 months for Aerex is that Its margins are down because we kept all the manufacturing people on staff. We made a commitment to keep them even though production activity was low for the 1st 6 months.
So you'll see margin improve in the second half of the year as production activity increases. It's not easy to pay. It's not it's not easy to build a workforce and we didn't want to lay off a bunch of people because there was a delay in the work that we were getting in the second half. So I Completely understand and completely agree. I mean, just their talent, you got to keep them and manage it.
So I wouldn't have any issues with that. And you did say, We're looking for a substantial increase second half versus first half. And I don't know if you use substantial, but I want to make We're looking for an increase. Significant. Got it.
I have to make sure. Yes. That was better second half than the first half, Jerry, especially in manufacturing. Okay. Got it.
And then just turning to the south Obviously, it looks like Bahamas looks reasonably well. And it looks like the Retail side in the Caymans, we're just looking at obviously some pull through, but retail operations in the Caymans are going to be slow to rebound With this 5 phase opening and that 80% sort of vaccine rate. Back of the envelope, Looks like retail is probably about $1,000,000 of gross profit drag through this pandemic. Is that sort of a fair Assessment. Well, if you look at the results for the second two quarters of last year And unless there's a huge difference in rainfall patterns, I mean, we have a core group of people there that are using to water the residents.
And you can expect second half of this year to look a lot like the second half of last year. There's no reason for it to be different here, other than arrangement patterns. So not increasing rates, so you would think they're using about the same volume of water they did last year? I mean what I was really driving for was Your manufacturing rebounding. You have opportunities in PERC.
Bulk water seems to be doing fine. At some point, we I would expect the Caymans to open up and there's $1,000,000 of gross profit dollars that eventually flow through. So There are several levers of profitability that can flow through over the next 12 to 18 months. Correct, yes. That was more Jerry, hopefully that will be something that I I understand.
I will sooner rather than later.
With the question and answer session, I would like to turn the conference Back over to Mr. McTaggart for opening remarks.
Thank you. I'd just like to thank everybody who joined this morning and Stay safe, and we'll talk to you again in November.
Thank you, ladies and gentlemen. As always, 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 the problematic statements regarding the company's future revenue, future plans, objectives, expectations, events, presentation 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 of Amoxic's political facts are based on the company's current expectations, beliefs, assumptions, estimates or forecasts and projections for its business and their industry end markets related to the business.
Any forward looking statements made during the conference call are not guarantees of future performance and involve certain risks, uncertainties and assumptions or certain risks. Actual outcomes and results we look forward to you are more than expressed In such forward looking statements, factors of the costs are contributing to such statements include, but are not limited to continued acceptance of the company's products and services in the marketplace. Changes in its relationships with the government of the jurisdictions in which it operates the outcome of its negotiations with the The new government regarding the new retail license agreement, the collection of this telephone account receivable in the Bahamas, the positive adverse impact of the COVID-nineteen virus on the company's adjusted and various other risks and details in the company's Periodic report, filings with the Securities and Exchange Commission, SEC. For more information about risks And as a result, please refer to the management's discussion and analysis of financial conditions or results of Operations and Risk Factors sections of the company's SEC filings and filings are not limited to its annual Reports on the Form 10 K and quarterly reports for Form 10 Q. Any forward looking statements made during the conference call Please, as of today's date, the company expressly disclaims any obligation or communication to update or revise any forward looking statements Note 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 statements is based, except on various of the pre required by law.
Before we close today's conference call, I would now like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday's earnings release for Dial in replay instructions available via the continuing website at www.cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.