LOS ANGELES - Cadiz Inc. (NASDAQ: NASDAQ:CDZI), a California-based water solutions company, has announced through its subsidiary ATEC Water Systems that it has secured three new contracts valued at $1.6 million. The contracts are for the provision of filtration systems designed to remove arsenic, iron, and manganese from groundwater supplies. These systems are scheduled for delivery in 2025 and are expected to serve nearly 100,000 people across rural and suburban communities in California, Washington, and Oregon.
ATEC Water Systems, a wholly owned subsidiary of Cadiz, specializes in affordable and scalable water treatment solutions for contaminated groundwater sources. The company's treatment systems, which use patent-pending filter media processes, have been installed at over 450 locations to address a variety of groundwater contaminants.
The recent contracts will utilize ATEC's 42" and 48" wide filters, capable of processing up to 10 million gallons of water per day. This development comes as Cadiz, which acquired ATEC's assets in 2023 for $2 million, witnesses a surge in orders due to stricter water quality regulatory standards and the growing need to incorporate groundwater into community water supplies.
Susan Kennedy, CEO and Board Chair of Cadiz, expressed the company's commitment to addressing the global challenge of groundwater contamination and anticipates strong growth for ATEC in 2025. ATEC's Chief Operating Officer, Lee Odell, also emphasized the company's role in aiding water districts and communities to improve their groundwater quality.
Cadiz, founded in 1983, has a broad portfolio of water supply, storage, pipeline, and treatment solutions, owning 45,000 acres of land in California and significant water and pipeline assets. The company's forward-looking statements in the press release indicate expectations of continued revenue growth for the ATEC segment, projecting $15 million for the fiscal year 2024.
This announcement is based on a press release statement from Cadiz, Inc. and does not constitute an endorsement of the company's claims. The information provided here reflects the company's current contracts and expectations for future growth.
In other recent news, Cadiz Inc. has maintained a Buy rating from B.Riley, which highlighted the company's potential for a significant positive shift if it successfully establishes a master limited partnership (MLP). This strategic move is aimed at supporting the Cadiz Project, an $800 million initiative that seeks to develop groundwater banking and construct the Southern Pipeline. In addition to this, Cadiz has appointed Cathryn Rivera as its new Chief Operating Officer, marking the beginning of a significant phase of operational expansion. Rivera is expected to drive the execution of Cadiz's groundbreaking groundwater banking project.
Moreover, Cadiz has secured near full capacity deals for its Northern Pipeline, with purchase commitments for 85% of the pipeline's capacity. This includes a recent agreement with Cucamonga Valley Water District to supply 5,000 acre-feet of water annually, expected to generate approximately $170 million of net revenue over 40 years. Cadiz's subsidiary, ATEC Water Systems, also secured three contracts worth $1.5 million for their iron and manganese filtration systems.
Finally, Cadiz entered into agreements with Solstra Communities California LLC and Golden State Water Company. Cadiz will supply Solstra with 1,275 acre-feet of water annually, supporting the development of over 4,000 homes, while Golden State Water Company will receive water for the City of Barstow. These are all recent developments in Cadiz's commitment to sustainable water supply.
InvestingPro Insights
Cadiz Inc.'s recent contract wins align with analysts' expectations of sales growth for the company in the current year, as indicated by InvestingPro Tips. The company's revenue growth of 27.18% over the last twelve months as of Q2 2024 supports this positive outlook. However, investors should note that Cadiz is currently operating at a loss, with a negative gross profit margin of -47.17% and an operating income margin of -858.56% for the same period.
Despite these challenges, the market seems to be pricing in future growth potential, as evidenced by the company's high Price / Book multiple of 7.61. This valuation suggests investors are betting on Cadiz's long-term prospects in the water solutions industry, particularly given the increasing demand for groundwater treatment systems highlighted in the article.
It's worth noting that Cadiz's stock price has seen a significant uptick of 37.33% over the last six months, indicating growing investor confidence. However, potential investors should be aware that the company does not currently pay a dividend, as per InvestingPro Tips.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Cadiz Inc., providing a more comprehensive view of the company's financial health and market position.
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