NEWARK, Del., March 13, 2024 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced earnings results for the fourth quarter and year ended December 31, 2023.
Year End Results
Net income was $16.7 million, a $1.3 million, or 7.2%, decrease compared to net income recorded during the twelve months ended December 31, 2022. Diluted net income per share decreased to $1.67, compared to $1.90 for the same period in 2022.
Revenues totaled $98.9 million for both the year ended December 31, 2023 and December 31, 2022, respectively:
Water sales revenue increased $1.7 million, or 2.2%, primarily related to a temporary net rate increase of 7.50% of gross water sales placed into effect on November 28, 2023, as permitted under Delaware law, until permanent rates are determined by the Delaware Public Service Commission, or DEPSC, and an increase in overall water consumption. In addition, fixed fee revenue increased as a result of additional customers.
Other utility operating revenue increased approximately $0.7 million, or 6.0%. This increase is primarily due to an increase in wastewater revenue associated with customer growth and an increase in fee revenue related to inspection, service and finance charges.
Non-utility operating revenue decreased approximately $2.4 million, or 26.9%. This decrease is primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure now nearing completion, partially offset by an increase in Service Line Protection Plan, or SLP Plan, revenue.
Operating expenses, excluding depreciation and amortization and income taxes, increased $0.2 million, or 0.4%.
Utility operating expenses increased $2.4 million, or 5.6%, primarily the result of increases in employee benefits and payroll costs, computer system maintenance costs, and supply and treatment costs for our water and wastewater systems. 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 decreased $2.4 million, or 35.4%, primarily due to a decrease in costs associated with a wastewater infrastructure design and construction contract.
Property and other taxes increased $0.2 million, or 3.9%, primarily due to an increase in utility plant subject to taxation and an increase in payroll taxes, related to increased payroll related expenses. Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.
Depreciation and amortization expense increased $0.7 million, or 5.7%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
Federal and state income tax expense increased $0.5 million, or 8.0%, primarily due to adjustments related to the application of state net operating loss valuation allowances and stock options exercised in 2022, partially offset by lower pre-tax income in 2023 compared to 2022.
Other income increased $0.8 million, primarily due to a $0.7 million increase in allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC. Miscellaneous income increased $0.1 million primarily related to an increase in the annual patronage refund from CoBank, ACB. The primary refund calculation for both 2023 and 2022 was based on the average loan balance outstanding.
Long-term debt interest increased $0.5 million, primarily related to an increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022. Short-term debt interest increased $0.1 million, primarily related to higher interest rates.
"In April 2023 we filed a request for an increase in water rates in our Delaware operations. We requested a $16.7 million increase in annual revenue, which is necessary to recover increased operating costs and significant investments made to ensure water quality and resiliency, including upgrades of our treatment equipment and facilities, new elevated water storage, replacement of aging water mains, and investments in information technology. We began charging temporary rates on November 28, 2023, as permitted by the Delaware Public Service Commission, while the full request is under examination. We are now beginning to see recovery of some of these investments and increased expenses," said Dian C. Taylor, CEO.
Fourth Quarter Results
Net income was $3.5 million for the three months ended December 31, 2023, a $1.2 million, or 49.7%, increase compared to net income recorded during the three months ended December 31, 2022. Diluted net income per share increased to $0.34 compared to $0.24 for the same period in 2022.
Revenues totaled $24.5 million, a decrease of $0.6 million, or 2.3%, compared to revenues recorded for the same period in 2022.
Water sales revenue increased $1.0 million, or 5.3%, primarily related to a temporary net rate increase of 7.50% of gross water sales placed into effect on November 28, 2023, as permitted under Delaware law, until permanent rates are determined by the DEPSC, and an increase in overall water consumption. In addition, fixed fee revenue increased as a result of additional customers.
Other utility operating revenue decreased approximately $0.1 million, or 3.5%, primarily due to decreased operating subsidies from developers and the timing of industrial wastewater revenue, partially offset by an increase in wastewater revenue associated with additional customers served.
Non-utility operating revenue decreased approximately $1.5 million, or 46.1%, primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure now nearing completion, partially offset by an increase in SLP Plan revenue.
Operating expenses, excluding depreciation and amortization and income taxes, decreased $2.3 million, or 13.9%.
Utility operating expenses decreased $1.1 million, or 8.3%, primarily the result of an overall decrease in payroll and employee benefits costs and water treatment costs.
Non-utility operating expenses decreased $1.3 million, or 54.8%, primarily due to a decrease in costs associated with a wastewater infrastructure design and construction contract.
Property and other taxes increased $0.1 million, or 4.6%, primarily due to an increase in utility plant subject to taxation and an increase in payroll taxes, related to increased payroll related expenses. Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.
Depreciation and amortization expense increased $0.2 million, or 5.6%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water customers and service to our wastewater customers.
Federal and state income tax expense increased $0.3 million, or 32.4%, primarily due to higher pre-tax income in 2023 compared to 2022.
Other income decreased $0.2 million, primarily due to a $0.1 million decrease in AFUDC, as a result of lower long-term construction activity subject to AFUDC.
Capital Expenditures
As part of Artesian's ongoing effort to ensure high-quality reliable service to customers, $62.2 million was invested in water and wastewater infrastructure projects during 2023 compared to $48.5 million for the same period in 2022. We invested in our rehabilitation program for transmission and distribution facilities by replacing aging or deteriorating mains, installation of new mains, enhancing or improving existing treatment facilities, construction of new water storage tanks, and replacing aging wells and pumping equipment to better serve our customers. We also continue to invest in wastewater treatment and distribution facilities.
"In 2023 we invested over $62 million in capital improvements. These investments in utility plant not only ensure that we provide high quality and reliable water and wastewater services to our customers, but allow us to meet growth demands in our expanding franchise area. Additionally, we continue to make investments proactively to treat for PFAS in drinking water in anticipation of the EPA's release of a more stringent regulation, staying ahead of the upcoming equipment supply needs of other utilities," said Nicki Taylor, President of Artesian Water Company.
About Artesian Resources
Artesian Resources Corporation operates as a holding company of wholly-owned subsidiaries offering water and wastewater services, and a number of other related core business services, on the Delmarva Peninsula. Artesian Water Company, the principal subsidiary, is the oldest and largest regulated water utility on the Delmarva Peninsula and has been providing water service since 1905. Artesian Water Company supplies 8.7 billion gallons of water per year through 1,470 miles of main to over a third of Delawareans.
Forward Looking Statements
This release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, recovery of investments in water utility plant and increased operating costs in rates charged to customers as presented in our current filing before the Delaware Public Service Commission, expectations regarding the cost, timing and recovery in customer rates of infrastructure investments and increased operational costs, our expectations in 2024, our ability to continue to provide high-quality and reliable water and wastewater service to customers and meet increased demands, and our growth strategy and continued growth in our business and the number of customers served. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: changes in weather, changes in our contractual obligations, changes in government policies, the timing and results of our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally and other matters discussed in our filings with the Securities and Exchange Commission. While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as representation of the Company's views as of any date subsequent to the date of this release.
Contact:
Nicki Taylor
Investor Relations
(302) 453-6900
ntaylor@artesianwater.com
| Artesian Resources Corporation | ||||||||||||||
| Condensed Consolidated Statement of Operations | ||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| Operating Revenues | ||||||||||||||
| Water sales | $ | 19,739 | $ | 18,751 | $ | 80,033 | $ | 78,318 | ||||||
| Other utility operating revenue | 3,112 | 3,226 | 12,195 | 11,506 | ||||||||||
| Non-utility operating revenue | 1,694 | 3,140 | 6,633 | 9,073 | ||||||||||
| 24,545 | 25,117 | 98,861 | 98,897 | |||||||||||
| Operating Expenses | ||||||||||||||
| Utility operating expenses | 11,717 | 12,778 | 46,205 | 43,772 | ||||||||||
| Non-utility operating expenses | 1,099 | 2,432 | 4,428 | 6,850 | ||||||||||
| Depreciation and amortization | 3,453 | 3,270 | 13,335 | 12,620 | ||||||||||
| State and federal income taxes | 1,192 | 900 | 6,348 | 5,878 | ||||||||||
| Property and other taxes | 1,570 | 1,499 | 6,099 | 5,871 | ||||||||||
| 19,031 | 20,879 | 76,415 | 74,991 | |||||||||||
| Operating Income | 5,514 | 4,238 | 22,446 | 23,906 | ||||||||||
| Allowance for funds used during construction | 309 | 431 | 2,002 | 1,329 | ||||||||||
| Miscellaneous | (148 | ) | (47 | ) | 1,407 | 1,265 | ||||||||
| Income Before Interest Charges | 5,675 | 4,622 | 25,855 | 26,500 | ||||||||||
| Interest Charges | 2,195 | 2,297 | 9,156 | 8,502 | ||||||||||
| Net Income | $ | 3,480 | $ | 2,325 | $ | 16,699 | $ | 17,998 | ||||||
| Weighted Average Common Shares Outstanding - Basic | 10,281 | 9,497 | 10,018 | 9,462 | ||||||||||
| Net Income per Common Share - Basic | $ | 0.34 | $ | 0.24 | $ | 1.67 | $ | 1.90 | ||||||
| Weighted Average Common Shares Outstanding - Diluted | 10,284 | 9,505 | 10,022 | 9,481 | ||||||||||
| Net Income per Common Share - Diluted | $ | 0.34 | $ | 0.24 | $ | 1.67 | $ | 1.90 | ||||||
| Artesian Resources Corporation | ||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||
| (In thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 31, | December 31, | |||||||||||||
| 2023 | 2022 | |||||||||||||
| Assets | ||||||||||||||
| Utility Plant, at original cost less | ||||||||||||||
| accumulated depreciation | $ | 714,284 | $ | 668,031 | ||||||||||
| Current Assets | 30,617 | 27,804 | ||||||||||||
| Regulatory and Other Assets | 21,931 | 23,956 | ||||||||||||
| $ | 766,832 | $ | 719,791 | |||||||||||
| Capitalization and Liabilities | ||||||||||||||
| Stockholders' Equity | $ | 230,397 | $ | 187,930 | ||||||||||
| Long Term Debt, Net of Current Portion | 178,307 | 175,619 | ||||||||||||
| Current Liabilities | 22,414 | 44,070 | ||||||||||||
| Net Advances for Construction | 2,797 | 3,686 | ||||||||||||
| Contributions in Aid of Construction | 247,934 | 224,308 | ||||||||||||
| Other Liabilities | 84,983 | 84,178 | ||||||||||||
| $ | 766,832 | $ | 719,791 | |||||||||||
