Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider
of water and wastewater services, and related services, on the
Delmarva Peninsula, today announced that net income for the second
quarter of 2018 was $3.9 million, an increase of $0.7 million, or
20.8%, compared to the second quarter of 2017. Diluted net
income per common share increased 20.0% to $0.42 compared to $0.35
for the second quarter of 2017.
“We are pleased to report continued growth and
economic vitality, reflected in our financial results for 2018,”
said Dian C. Taylor, Chair, President and CEO. “Access to reliable
water and wastewater infrastructure and quality service is a key
driver of economic development. We continue to be
enthusiastic about the pace of new business development
opportunities and demand for our expertise occurring throughout our
franchise areas, particularly in Sussex County, Delaware and Cecil
County, Maryland,” said Taylor.
Revenues for the second quarter of 2018 were
$20.2 million, $0.3 million, or 1.3%, less than the $20.5 million
in revenues recorded for the same three month period of 2017.
Water sales decreased $0.4 million, or 2.1%, for the three months
ended June 30, 2018 compared to the same period a year ago,
primarily due to amounts being held in reserve pending the final
determination of the potential rate relief due to customers as a
result of the Tax Cuts and Jobs Act of 2017 (“TCJA”). This decrease
is partially offset by an increase in overall water consumption and
an increase of approximately 1,800 in the number of customers
served.
Excluding depreciation and income taxes,
operating expenses decreased $0.5 million, or 4.6%, to $10.9
million for the second quarter of 2018. Utility operating
expenses decreased $0.5 million, or 5.7%, for the three months
ended June 30, 2018 compared to the same period in 2017, mainly the
result of decreases in payroll, employee benefit and purchased
water expenses. Depreciation and amortization expense increased
$0.2 million, or 9.1%, 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 decreased
$0.2 million, or 11.3%, for the three months ended June 30, 2018
compared to the same period a year ago primarily due to the
reduction in federal corporate income tax rate by the TCJA signed
into law on December 22, 2017.
Miscellaneous income increased $0.3 million for
the three months ended June 30, 2018 compared to the same period a
year ago due to a pledge made in 2017 to a non-profit entity in
Delaware organized to support the state’s economic development
efforts.
Year to Date Results
Through the first six months of 2018, net income
was $7.4 million, a $1.1 million, or 16.8%, increase compared to
the same period a year ago. Diluted net income per common
share was $0.80 for the six months ended June 30, 2018, an increase
of 15.9% compared to $0.69 for the six months ended June 30,
2017.
Revenues during the first six months of 2018
were $39.1 million, $0.6 million, or 1.4%, less than the $39.7
million in revenues recorded for the same six month period in 2017.
Water sales revenues decreased $0.7 million, or 1.9%, for the
six months ended June 30, 2018 compared to the same period a year
ago, primarily due to amounts being held in reserve pending the
final determination of the potential rate relief due to customers
as a result of the TCJA. This decrease is partially offset by
an increase in revenues from customer growth and an increase in
overall water consumption.
Non-utility operating revenue increased
approximately $0.1 million, or 3.1%, for the six months ended June
30, 2018 compared to the same period in 2017. The increase is
primarily due to an increase in Service Line Protection Plan
revenue that covers the cost of materials and labor to repair or
replace participants’ leaking water services or clogged sewer
lines.
Excluding depreciation and income taxes,
operating expenses decreased $0.3 million, or 1.3%, to $21.9
million for the six months ended June 30, 2018, compared to $22.2
million for the same period in 2017. Utility operating
expenses for the six months ended June 30, 2018 were $18.1 million,
a $0.4 million, or 2.0%, decrease from the same period a year ago,
mainly the result of decreases in payroll, employee benefit and
purchased water expenses. Depreciation and amortization
expense increased $0.5 million, or 9.9%, primarily due to continued
investment in utility plant providing supply, treatment, storage
and distribution of water to customers and service to our
wastewater customers.
Miscellaneous income increased $0.6 million for
the first six months of 2018 compared to the same period a year ago
as a result of additional refunded patronage in 2018 on First
Mortgage Bonds held by CoBank, ACB and a pledge made in 2017 to a
non-profit entity in Delaware organized to support the state’s
economic development efforts.
Interest expense decreased $0.1 million, or
2.6%, to $3.0 million for the first six months of 2018 due to the
refinancing of the Series P First Mortgage bond in January 2018,
reducing the interest rate from 6.58% to 4.71%.
Federal and state income tax expense decreased
$1.0 million, or 24.7%, for the six months ended June 30, 2018
compared to the same period a year ago, primarily due to the
reduction in the Federal corporate income tax rate by the TCJA
signed into law on December 22, 2017.
Consistent with the continued effort to ensure
high quality reliable service to customers, $23.0 million has been
invested in the first six months of 2018, a 34.1% increase,
compared to $17.1 million from the same period a year ago, in water
and wastewater infrastructure projects including installation of
transmission and distribution facilities, replacement of aging
mains, rehabilitation of treatment facilities, and redevelopment of
wells and pumping equipment.
Other Highlights
- Completed installation of an 8.5 mile wastewater transmission
main from Harbeson, Delaware to our Northern Sussex Regional Water
Recharge Facility and we are nearing completion on the installation
of the liner for the 90 million gallon storage lagoon. Once
installed, the lagoon will be capable of accepting approximately
1.25 million gallons per day of process wastewater from Allen Harim
Foods LLC (“Allen Harim”). Once in service, the current
stream discharge of the wastewater by Allen Harim will cease and
treated water will be used for spray irrigation of cropland, a much
more environmentally sensitive solution.
- Entered into water service agreements for two warehouse
facilities totaling 1.5 million square feet to be constructed in
the Principio Business Park in Cecil County, Maryland, further
indication of the continued economic development interest in Cecil
County.
- Increased dividends to shareholders for the 22nd consecutive
year in May 2018. The 1.5% increase raised the quarterly
common stock dividend per share to $0.2387.
About Artesian
ResourcesArtesian Resources Corporation operates as a
holding company of wholly-owned subsidiaries offering water and
wastewater services, and related 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 supplies 7.9 billion gallons of water per year through
1,293 miles of water main to nearly a third of Delaware
residents.
Contact:Nicki TaylorInvestor
Relations(302) 453-6900ntaylor@artesianwater.com
Artesian Resources Corporation |
|
Condensed Consolidated Statement of Operations |
|
(In thousands, except per share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2018 |
|
2017 |
|
|
2018 |
|
|
2017 |
|
Operating
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Water
sales |
$ |
17,869 |
|
$ |
18,248 |
|
|
$ |
34,514 |
|
$ |
35,183 |
|
Other
utility operating revenue |
|
1,085 |
|
|
1,020 |
|
|
|
2,084 |
|
|
2,039 |
|
Non-utility operating revenue |
|
1,284 |
|
|
1,234 |
|
|
|
2,546 |
|
|
2,469 |
|
|
|
20,238 |
|
|
20,502 |
|
|
|
39,144 |
|
|
39,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Utility
operating expenses |
|
9,038 |
|
|
9,588 |
|
|
|
18,121 |
|
|
18,494 |
|
Non-utility operating expenses |
|
671 |
|
|
662 |
|
|
|
1,334 |
|
|
1,349 |
|
Depreciation and amortization |
|
2,541 |
|
|
2,329 |
|
|
|
5,109 |
|
|
4,648 |
|
State and
federal income taxes |
|
1,564 |
|
|
1,763 |
|
|
|
2,903 |
|
|
3,857 |
|
Property
and other taxes |
|
1,185 |
|
|
1,170 |
|
|
|
2,468 |
|
|
2,364 |
|
|
|
14,999 |
|
|
15,512 |
|
|
|
29,935 |
|
|
30,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
5,239 |
|
|
4,990 |
|
|
|
9,209 |
|
|
8,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for funds used during construction |
|
180 |
|
|
76 |
|
|
|
268 |
|
|
146 |
|
Miscellaneous |
|
8 |
|
|
(290 |
) |
|
|
927 |
|
|
293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Interest Charges |
|
5,427 |
|
|
4,776 |
|
|
|
10,404 |
|
|
9,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Charges |
|
1,501 |
|
|
1,525 |
|
|
|
3,000 |
|
|
3,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
3,926 |
|
$ |
3,251 |
|
|
$ |
7,404 |
|
$ |
6,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding - Basic |
|
9,237 |
|
|
9,163 |
|
|
|
9,230 |
|
|
9,149 |
|
Net
Income per Common Share - Basic |
$ |
0.43 |
|
$ |
0.35 |
|
|
$ |
0.80 |
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding - Diluted |
|
9,293 |
|
|
9,235 |
|
|
|
9,287 |
|
|
9,220 |
|
Net
Income per Common Share - Diluted |
$ |
0.42 |
|
$ |
0.35 |
|
|
$ |
0.80 |
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Artesian Resources Corporation |
|
Condensed Consolidated Balance Sheet |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility
Plant, at original cost less accumulated depreciation |
$ |
477,699 |
|
$ |
460,502 |
|
|
|
|
|
|
|
|
Current
Assets |
|
16,040 |
|
|
18,985 |
|
|
|
|
|
|
|
|
Regulatory and Other Assets |
|
15,246 |
|
|
15,152 |
|
|
|
|
|
|
|
|
|
$ |
508,985 |
|
$ |
494,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization
and Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
148,177 |
|
$ |
146,644 |
|
|
|
|
|
|
|
|
Long Term
Debt, Net of Current Portion |
|
104,904 |
|
|
105,587 |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
39,332 |
|
|
28,461 |
|
|
|
|
|
|
|
|
Net
Advances for Construction |
|
7,433 |
|
|
7,797 |
|
|
|
|
|
|
|
|
Contributions in Aid of Construction |
|
131,811 |
|
|
128,286 |
|
|
|
|
|
|
|
|
Other
Liabilities |
|
77,328 |
|
|
77,864 |
|
|
|
|
|
|
|
|
|
$ |
508,985 |
|
$ |
494,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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