Artesian Resources Corporation Reports 2nd Quarter and Year-to-Date 2022 Results

Artesian Resources Corporation

NEWARK, DE — Artesian Resources Corporation (Nasdaq: ARTNA) this week announced second quarter and year-to-date results for 2022.

  • Diluted net income per share increased to $0.53 in the second quarter and to $1.01 year-to-date
  • Net Income increased $0.5 million (12.0%) in the second quarter and $0.8 million (9.4%) year-to-date
  • Invested $29.6 million year-to-date in water and wastewater infrastructure, including acquisitions
  • In May 2022, completed the purchase of substantially all the operating water assets of the Town of Clayton, located in Kent County, Delaware

Second Quarter Results

Net income was $5.0 million, a $0.5 million, or 12.0%, increase compared to net income recorded during the three months ended June 30, 2021.

Revenues totaled $25.0 million for the three months ended June 30, 2022, $2.5 million, or 11.3%, more than revenues for the three months ended June 30, 2021. Comprising this increase:

Other utility operating revenue increased approximately $1.9 million primarily due to an increase in wastewater revenue resulting from the acquisition of Tidewater Environmental Services, Inc., or TESI, in January 2022 and an increase in industrial wastewater service revenue that began in June 2021.

Non-utility operating revenue increased approximately $1.0 million, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue.

Water sales revenue decreased $0.4 million, or 1.8%, primarily due to a decrease in overall water consumption, partially offset by an increase in fixed fee revenue related to added customers.

“We are pleased to announce these strong financial results, with our wastewater operations reflecting the accretive effect of our acquisition of TESI earlier this year along with a major industrial user going online in June 2021. Additionally, we are pleased to welcome our new customers upon closing on the acquisition of the Town of Clayton’s water system in May,” said Dian C. Taylor, Chair, President and CEO.

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“The completion of these acquisitions demonstrates our continued focus on expansion and growth. With the acquisition of TESI, we more than doubled the number of wastewater customers we serve; and our water system acquisitions, as well as robust home and business development in our service territories, increased the number of water customers we serve by 3.3% in the past year,” said Taylor.

Operating expenses, excluding depreciation and income taxes, increased $1.5 million, or 12.8%. Utility operating expense increases primarily are the result of increased costs associated with repair, maintenance and treatment of the Company’s water and wastewater systems as well as payroll and administrative costs. These increases are partially offset by a decrease in purchased water under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced.

Non-utility operating expenses increased $1.0 million primarily due to an increase in costs associated with a wastewater infrastructure design and construction contract and an increase in plumbing services related to Service Line Protection Plan repairs.

Long-term debt interest expense increased $0.2 million, primarily related to an increase in long-term debt interest related to the Series W First Mortgage Bond issued on April 29, 2022.

Year-to-Date Results

Net income was $9.5 million, a $0.8 million, or 9.4%, increase compared to net income recorded during the six months ended June 30, 2021. Diluted net income per share increased 8.6% to $1.01 for the six months ended June 30, 2022 compared to $0.93 for the first six months of 2021.

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Revenues totaled $47.2 million for the six months ended June 30, 2022, $4.1 million, or 9.5%, more than revenues for the six months ended June 30, 2021. Comprising this increase:

Other utility operating revenue increased approximately $3.0 million primarily due to an increase in wastewater revenue resulting from the acquisition of TESI in January 2022 and an increase in industrial wastewater service revenue that began in June 2021.

Non-utility operating revenue increased approximately $1.1 million, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue.

Water sales revenue remained consistent for the six months ended June 30, 2022 with the corresponding period in 2021. Overall water consumption decreased, partially offset by an increase in fixed fee revenue related to customer growth.

Operating expenses, excluding depreciation and income taxes, increased $2.6 million, or 11.1%. Utility operating expense increases are primarily the result of increased costs associated with repair, maintenance and treatment of The Company’s water and wastewater systems as well as increases in payroll and administrative costs. These increases are partially offset by a decrease in purchased water under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced.

Non-utility operating expenses increased $1.1 million primarily due to an increase in costs associated with a wastewater infrastructure design and construction contract and an increase in plumbing services related to Service Line Protection Plan repairs.

Long-term debt interest expense increased $0.2 million, primarily related to an increase in long-term debt interest related to the Series W First Mortgage Bond issued on April 29, 2022.

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Capital Expenditures

As part of Artesian’s ongoing effort to ensure high-quality reliable service to customers, $29.6 million was invested in the first six months of 2022 in water and wastewater infrastructure projects and acquisitions. These investments include the installation of transmission and distribution facilities, replacement of aging mains, rehabilitation of treatment facilities and redevelopment of wells and pumping equipment. The Company also acquired wastewater utility plant assets related to the acquisition of TESI and purchased the Town of Clayton’s water utility plant assets.

“We continue to make strategic capital investments in infrastructure projects, not only to increase reliability for our customers but to ensure that supply meets demands arising from continued growth in the number of customers we serve. Additionally, we have focused on further enhancing our self-supply, which resulted in a 42.9% reduction in Delaware’s purchased water costs year-to-date compared to the same period in 2021,” said Taylor.

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