Summary and Analysis of Cadiz Inc. Financial Report

Overview of Financial Performance

Cadiz Inc. is a diversified company with two main operating segments: Land and Water Resources, and Water Filtration Technology. The company’s financial performance for the three and nine months ended September 30, 2024, shows a mix of progress and challenges:

• Revenues increased significantly year-over-year, from $0.4 million to $3.2 million in Q3 2024, and from $1.3 million to $4.9 million in the first nine months of 2024. This was driven by strong growth in the Water Filtration Technology segment, particularly from a contract to deliver water filters for a project in Utah.

• However, the company continued to report net losses, though the losses narrowed slightly from $6.9 million to $6.8 million in Q3 2024, and from $24.7 million to $22.5 million in the first nine months of 2024. The losses were primarily due to ongoing high general and administrative expenses related to the company’s water development efforts, as well as increased interest expense.

• Cost of sales increased significantly, from $0.7 million to $2.4 million in Q3 2024, and from $1.5 million to $4.3 million in the first nine months of 2024. This was driven by higher costs in both the Land and Water Resources segment (alfalfa crop) and the Water Filtration Technology segment (ATEC operations).

• General and administrative expenses remained high, though they decreased slightly year-over-year, from $5.1 million to $5.3 million in Q3 2024, and from $14.3 million to $16.3 million in the first nine months of 2024. The decrease was primarily due to lower non-recurring corporate communications expenses.

• Interest expense increased significantly, from $1.2 million to $2.0 million in Q3 2024, and from $3.6 million to $5.9 million in the first nine months of 2024, due to increased borrowing under the company’s credit agreement.

Strengths and Weaknesses

Strengths:

• Significant growth in the Water Filtration Technology segment, driven by a major contract win
• Ability to raise additional capital through equity offerings to fund ongoing development

Weaknesses:

• Continued net losses, despite revenue growth, due to high operating expenses and interest costs
• Reliance on debt financing to fund operations and development
• Challenges in the alfalfa crop business, which has been a drag on profitability

Outlook

In the short-term, the company appears to have sufficient liquidity to meet its working capital needs, with the proceeds from the recent $21.9 million equity offering. However, in the longer-term, the company may need to raise additional capital to finance its water supply, storage, and conveyance projects, as well as further expansion of its agricultural and water filtration technology operations.

The company’s ability to successfully develop and monetize its water resources, while managing its costs, will be critical to its long-term success. Continued growth in the Water Filtration Technology segment could also provide a valuable revenue stream to supplement the company’s water-related activities.

Overall, Cadiz Inc. is making progress in diversifying its business and revenue streams, but still faces significant challenges in achieving profitability and sustainable growth.