LOS ANGELES – Cadiz (NASDAQ:) Inc. (NASDAQ: CDZI / CDZIP), a California-based water options firm, has entered right into a definitive 50-year settlement with Santa Margarita Water District (SMWD) to provide water by way of its Northern Pipeline, originating from the Cadiz Water Venture within the Mojave Desert. The contract, which was unanimously authorised by SMWD’s board of administrators on June 5, stipulates the supply of 5,000 acre-feet per yr at a capped worth of $1,650 per acre-foot.
The settlement, following a time period sheet signed in February 2024, is predicted to offer vital income that can help the financing of the Northern Pipeline infrastructure. Cadiz will ship the water to groundwater banks alongside the 220-mile pipeline, which is able to then be obtainable for SMWD by way of State Water Contractors and native water suppliers.
This deal marks a step ahead for SMWD in diversifying its water provide portfolio and decreasing reliance on the Colorado River and State Water Venture sources. By using the Northern Pipeline, SMWD goals to speed up diversification, handle prices, and improve regional resilience.
Cadiz’s CEO, Susan Kennedy, highlighted the partnership with SMWD as a mirrored image of their shared dedication to conservation and effectivity. SMWD board member Frank Ury expressed the mission’s function in diversifying the district’s water provide and constructing resilience.
With this settlement, SMWD secures another supply path for a portion of its contractual rights to amass as much as 15,000 acre-feet per yr from the Cadiz Venture. The Northern Pipeline is anticipated to be operational by 2026, and Cadiz has already secured agreements for 65% of its capability, with negotiations underway for the remaining capability.
The phrases and situations of the settlement are detailed in Cadiz’s Present Report on Type 8-Ok filed on March 4, 2024. Cadiz Inc., established in 1983, focuses on offering sustainable water provide, storage, pipeline, and remedy options to deal with the impacts of local weather change on water entry.
This information relies on a press launch assertion and ought to be thought-about in gentle of the dangers and uncertainties inherent in forward-looking statements, which can embody potential development delays and situations required for water supply.
In different current information, water options firm Cadiz Inc. has been making strategic strikes to bolster water accessibility in California. The corporate lately signed a Letter of Intent to provide the Metropolis of Hesperia with 75,000 acre-feet of water. This settlement is a part of the “One Water” Initiative, which goals to develop a coordinated water administration technique in San Bernardino County’s Mojave River area.
As well as, Cadiz has entered into vital water provide agreements with Solstra Communities California LLC and Golden State Water Firm. The corporate will ship 1,275 acre-feet of water yearly to Solstra, supporting the event of over 4,000 properties close to Vandenberg Area Power Base. For Golden State, Cadiz will present water to the Metropolis of Barstow.
These current developments are a part of Cadiz’s broader technique to boost water provide reliability in California by using its current infrastructure. The corporate’s Northern Pipeline, which has a capability of 25,000 acre-feet per yr, is nearing full capability reservation. You will need to be aware that these are current developments and additional bulletins are anticipated quickly.
InvestingPro Insights
As Cadiz Inc. (NASDAQ: CDZI / CDZIP) embarks on a transformative 50-year settlement with Santa Margarita Water District, the corporate’s monetary standing and market place warrant a better examination. In line with InvestingPro information, Cadiz is positioned as a distinct segment participant within the water options trade, which could possibly be pivotal because it leverages its distinctive belongings within the Mojave Desert to satisfy the rising demand for water in Southern California.
InvestingPro Ideas counsel that whereas analysts are optimistic about Cadiz’s gross sales progress within the present yr, they continue to be cautious about its profitability, not anticipating the corporate to be worthwhile this yr. This outlook is especially related for traders contemplating the monetary commitments concerned within the Northern Pipeline mission. Moreover, Cadiz’s liquid belongings exceed its short-term obligations, which can present some monetary cushion because it undertakes this vital infrastructure mission.
When it comes to valuation, Cadiz is buying and selling at a excessive income valuation a number of and a excessive Value / Guide a number of, which may point out that the market has excessive expectations for the corporate’s future efficiency, regardless of it not being worthwhile over the past twelve months. Furthermore, the worth of Cadiz’s shares has fallen considerably over the past 5 years, which could current a extra engaging entry level for traders who consider within the long-term prospects of the corporate’s water provide initiatives.
It’s value noting that Cadiz doesn’t pay a dividend to shareholders, which could possibly be a consideration for income-focused traders. To achieve deeper insights into Cadiz Inc. and to entry extra InvestingPro Ideas, events can go to https://www.investing.com/professional/CDZI. There are at the moment 6 extra suggestions obtainable on InvestingPro, and readers trying to subscribe can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Professional and Professional+ subscription.
InvestingPro Knowledge metrics:
- Analysts anticipate gross sales progress within the present yr.
- Liquid belongings exceed short-term obligations.
- Buying and selling at a excessive income valuation a number of.
These insights and metrics present a snapshot of Cadiz Inc.’s monetary well being and market place because it forges forward with its strategic water provide settlement.
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