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As climate change exacerbates drought conditions globally, the urgency to address water scarcity grows. Innovative solutions are imperative to ensure consistent access to clean water. Cadiz, Inc. (NASDAQ: CDZI) sets itself up as a pioneering force in water solutions. Established in 1983, Cadiz is dedicated to providing access to clean, reliable, and affordable water through a comprehensive range of solutions encompassing water supply, storage, pipelines, and treatment technologies.
Cadiz is a totally different company compared to the Cadiz of 20 years ago. Through acquisitions and the deployment of cutting-edge innovations, Cadiz is positioning itself as a leader in addressing the multifaceted challenges posed by climate change to water access and could be a smart stock to keep an eye on.
With a robust portfolio comprising 45,000 acres of land in California, 2.5 million acre-feet of water supply, and 220 miles of pipeline assets, Cadiz, Inc. (NASDAQ: CDZI) is well-positioned to address the evolving needs of the water treatment systems market.
Cadiz's Vision and Leadership
At the beginning of this year, the company announced Susan Kennedy's transition from Executive Chair of the Board to CEO. This leadership transition signals Cadiz's focus on scaling up development and operational capabilities to meet the evolving needs of the water treatment market. Kennedy's appointment, along with Scott Slater's continued advisory role, reflects Cadiz's dedication to strong leadership and operational excellence.
Further exemplifying the CDZI approach is its collaboration with Fenner Gap Mutual Water Company and the Victor Valley Wastewater Reclamation Authority. This partnership aims to develop integrated water infrastructure in San Bernardino County's Mojave Basin region, leveraging recycled water from wastewater treatment plants and pipeline facilities to enhance water supply efficiency and groundwater quality. By fostering innovative partnerships, Cadiz is driving sustainable water management practices and contributing to the resilience of local communities.
Securing Investments and Financial Stability
On March 15, 2024, CDZI secured a financing agreement totaling $41.2 million with Heerema International Group Services BV, extending its debt maturity to 2027. This agreement provides Cadiz with additional liquidity to accelerate the development of water supply, pipeline, filtration, and storage assets, positioning the company for sustained growth and value creation in the water solutions market.
Furthermore, the accomplishment of a financing transaction by Heerema International Group Services SA on April 25, 2024, by Cadiz Inc. strengthened the company's position and supplied liquidity to support the development of water supply projects in Southern California.
Partnering for Impact
CDZIs recent partnership with Solstra Communities California underscores its commitment to driving sustainable development and addressing California's urgent housing needs. Through this agreement, CDZI will deliver water from the Cadiz Water Supply and Storage Project to support the development of sustainable housing units, contributing to the creation of vibrant, resilient communities. By partnering with Solstra, Cadiz is demonstrating its commitment to leveraging water resources to drive positive social and environmental impacts.
Cascade Groundwater Alliance Treatment Project
In a significant development last month, Cadiz's subsidiary, ATEC Water Systems, won a $5.2 million contract to supply water treatment filtration systems for the Cascade Groundwater Alliance treatment project in Gresham, Oregon. This project underscores ATEC's rapid growth and expertise in addressing groundwater contamination. The contract involves manufacturing 140 filters to remove manganese from local groundwater, with delivery expected over the next 12 months.
Cadiz, Inc. Update Following B. Riley Securities 24th Annual Institutional Investor Conference
On May 30, Cadiz, Inc. (NASDAQ: CDZI) shared insights following its participation in the B. Riley Securities 24th Annual Institutional Investor Conference. In her address, Chairman and CEO Susan Kennedy discussed the company's strategic direction and highlighted key milestones.
Firm Contracts for Water Supply
A pivotal achievement for Cadiz this year has been securing firm contracts for water supply. These agreements encompass partnerships with two investor-owned utilities, one public water system, and one housing developer, collectively representing over 16,000 acre-feet per year or 65% of the capacity of the Northern Pipeline. Kennedy emphasized, "Having firm contracts in place for water supply is key to project financing, which will enable the company to finalize development and move into the construction stage."
Groundwater Storage Project
Regarding the groundwater storage project, Kennedy explained, "Water banking at Cadiz would be offered to the market the same way leasing an apartment unit in an apartment complex would work. Agencies with water supply to store during wet years would lease space in our aquifer and pay wheeling rates to use our pipelines to move water in and out of storage during dry years." The estimated cumulative total gross payments for water storage over the 50-year life of their permit is approximately $1.5 billion.
Project Financing and Development
Addressing the funding strategy, Kennedy outlined plans to pursue financing structures that move project development and capital costs off the balance sheet. She elaborated on the potential formation of a Master Limited Partnership (MLP), stating, "Our objective is to pursue financing structures that allow us to move project development and capital costs off balance sheet and reduce debt and interest costs on the Company's financial statements."
Long-Term Vision
In terms of the company's long-term vision, Kennedy expressed her aspiration for Cadiz to operate the largest water trading bank in the Southwestern United States. Kennedy underscored Cadiz's commitment to leading the repurposing of fossil fuel pipelines for water conveyance and serving as a model for improving global water access.
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Mark McKelvie
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