ARTNA Artesian Resources Corporation

Artesian Resources Corporation (Nasdaq:ARTNA), a leading provider of water, wastewater services and related services on the Delmarva Peninsula, today announced that net income for the first six months of 2016 was $5.9 million, a $0.1 million increase compared to net income of $5.8 million recorded for the same period of 2015.  Diluted net income per share was $0.64 for the six months ended June 30, 2016 and for the six months ended June 30, 2015. 

Revenues during the first six months of 2016 were $37.8 million, a 0.9% increase from the $37.5 million in revenues recorded for the same six month period in 2015.  Water sales revenues increased $0.2 million, or 0.7%, for the six months ended June 30, 2016 compared to the same period a year ago.  The increase primarily was a result of an increase in the Distribution System Improvement Charge, or DSIC, compared to the same period a year ago, which was partially offset by a decrease in overall water consumption. 

Excluding depreciation and income taxes, operating expenses increased $0.3 million, or 1.5% to $20.8 million for the six months ended June 30, 2016, compared to $20.5 million for the same period in 2015.  Utility operating expenses for the six months ended June 30, 2016 were $17.3 million, a $0.2 million, or 0.9% increase from the same period a year ago, which is mainly the result of increases in employee payroll and benefit costs.   

Interest expense decreased 4.4% to $3.3 million for the first six months of 2016 compared to $3.5 million for the same period in 2015.  The decrease reflects the reduction in the Series S First Mortgage Bond annual interest rate from 6.73% to 4.45%, effective March 1, 2016 and a decrease in short-term debt outstanding.  “Our ability to obtain a reduction in the interest rate on $10.7 million of outstanding debt reflects our on-going efforts to reduce costs while ensuring we continue to provide superior service to our customers,” said Dian C. Taylor, Chair, President and CEO.     

Net income for the second quarter of 2016 was $3.0 million, a decrease of $0.2 million, compared to $3.2 million in net income recorded during the second quarter of 2015.  Diluted net income per share decreased to $0.33 compared to $0.36 for the second quarter of 2015. 

Revenues for the second quarter of 2016 were $19.4 million, a 0.7% decrease from the $19.5 million in revenues recorded for the same three month period of 2015.  Water sales revenues decreased $0.2 million, or 0.9%, for the three months ended June 30, 2016 compared to the same period a year ago.  This decrease primarily was a result of lower overall water consumption during the three months ended June 30, 2016 compared to the same period a year ago as a result of a much cooler and wetter weather pattern this May compared to May 2015, which was partially offset by an increase in the DSIC.  Non-utility operating revenue was $1.2 million for the three months ended June 30, 2016 and 2015, respectively.

“The year to year differences in weather during the spring often impact water use and therefore our water sales revenue.  That was certainly the case when comparing May 2016, which was the 5th wettest May in Delaware history, to May 2015, which was the 10th driest May in Delaware since recordkeeping began in 1895,” said Taylor.

Excluding depreciation and income taxes, operating expenses increased $0.3 million, or 2.8% to $10.5 million for the second quarter of 2016, compared to $10.2 million for the same period in 2015.  Utility operating expenses for the second quarter of 2016 were $8.8 million, a $0.3 million, or 3.1%, increase from the $8.5 million recorded for the same period in 2015, which is mainly the result of increases in legal, payroll and employee benefit costs.

Interest expense decreased 6.2% to $1.6 million for the second quarter of 2016, compared to $1.8 million for the same period in 2015.  The decrease reflects the reduction in the Series S First Mortgage Bond annual interest rate from 6.73% to 4.45% effective March 1, 2016 and a decrease in short-term debt outstanding. 

The Company invested $12.1 million in infrastructure improvements during the first six months of 2016 to ensure high quality and reliable service to customers.  Significant infrastructure improvements included the replacement of aging water mains, enhancement of water treatment facilities, rehabilitation of pumping equipment and the relocation of mains as mandated by state highway projects.  “Artesian continues to make the necessary investments in water infrastructure to ensure safe, reliable and quality water service to its customers,” said Taylor.

About Artesian ResourcesArtesian Resources Corporation operates as a holding company of wholly-owned subsidiaries offering water, wastewater services and related services on the Delmarva Peninsula.  Artesian Water Company, the principal subsidiary, is the oldest and largest investor-owned water utility on the Delmarva Peninsula and has been providing water service since 1905.  Artesian supplies 7.6 billion gallons of water per year through 1,218 miles of water main to approximately 301,000 people.

Artesian Resources Corporation
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
		Three months ended										Six months ended
		June 30,										June 30,
			2016					2015				2016			2015
Operating Revenues
Water sales	$		17,323			$		17,474			$	33,760		$	33,512
Other utility operating revenue			912					894				1,777			1,756
Non-utility operating revenue			1,160					1,168				2,308			2,229
			19,395					19,536				37,845			37,497
Operating Expenses
Utility operating expenses			8,766					8,501				17,312			17,162
Non-utility operating expenses			590					607				1,226			1,127
Depreciation and amortization			2,249					2,192				4,564			4,401
State and federal income taxes			2,023					2,191				3,975			3,955
Property and other taxes			1,098					1,060				2,246			2,195
			14,726					14,551				29,323			28,840
Operating Income			4,669					4,985				8,522			8,657
Allowance for funds used during construction			49					43				72			67
Miscellaneous			(31	)				(41	)			625			549
Income Before Interest Charges			4,687					4,987				9,219			9,273
Interest Charges			1,646					1,754				3,349			3,503
Net Income	$		3,041			$		3,233			$	5,870		$	5,770
Weighted Average Common Shares Outstanding - Basic			9,092					8,926				9,079			8,922
Net Income per Common Share - Basic	$		0.33			$		0.36			$	0.65		$	0.65
Weighted Average Common Shares Outstanding - Diluted			9,155					8,960				9,142			8,958
Net Income per Common Share - Diluted	$		0.33			$		0.36			$	0.64		$	0.64
Artesian Resources Corporation
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
	June 30,					December 31,
	2016					2015
Assets
Utility Plant, at original cost less
accumulated depreciation	$		413,642			$		405,606
Current Assets			13,987					14,444
Regulatory and Other Assets			11,329					11,576
	$		438,958			$		431,626
Capitalization and Liabilities
Stockholders' Equity	$		135,388			$		132,331
Long Term Debt, Net of Current Portion			102,992					103,647
Current Liabilities			17,452					22,403
Net Advances for Construction			8,608					8,752
Contributions in Aid of Construction			108,118					99,847
Other Liabilities			66,400					64,646
	$		438,958			$		431,626

Contact:
Nicki Taylor
Investor Relations
(302) 453-6900
ntaylor@artesianwater.com