Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider
of water and wastewater services, and related services, on the
Delmarva Peninsula, today announced year-to-date and second quarter
results for 2019. Net income for the first six months of 2019
remained consistent compared to the same period in 2018, at $7.4
million. Diluted earnings per share was $0.79 for the six
months ended June 30, 2019, compared to $0.80 for the six months
ended June 30, 2018.
Revenues totaled $40.0 million for the six
months ended June 30, 2019, $0.9 million, or 2.3%, more than
revenues recorded for the same six month period in 2018. Water
sales revenue increased $0.6 million, or 1.8%, for the six months
ended June 30, 2019 compared to the same period a year ago, due to
customer growth and an increase in consumption and Distribution
System Improvement Charge (“DSIC”) revenue. Effective January
1, 2019, the DSIC rate increased from 4.71% to 5.55%, resulting in
an increase of $0.2 million in DSIC revenue for the six months
ended June 30, 2019 compared to the same six month period in
2018. Approximately $3.8 million was refunded to customers
during the second quarter of 2019 related to the impact of the Tax
Cut and Jobs Act (“TCJA”) and the subsequent reduced tariff rates
approved by the Delaware Public Service Commission (“DEPSC”) on
January 31, 2019. The refund amount was previously held in
reserve and was not included in water sales revenue or net
income.
Other utility operating revenue increased $0.2
million, or 8.9%, for the six months ended June 30, 2019 compared
to the same period in 2018 primarily due to an increase in
wastewater revenue from customer growth.
Non-utility operating revenue increased $0.1
million, or 3.8%, for the six months ended June 30, 2019 compared
to the same period in 2018, due to an increase in Service Line
Protection Plans (“SLP Plans”) revenue that covers the cost of
material and labor required to repair or replace participants’
leaking water service lines, clogged sewer lines and internal
plumbing.
Operating expenses, excluding depreciation and
income taxes, increased $0.6 million, or 2.6%, for the six months
ended June 30, 2019, compared to the same period in 2018.
Utility operating expenses increased $0.2 million, or 1.4%, for the
six months ended June 30, 2019 compared to the six months ended
June 30, 2018, primarily due to an increase in payroll and benefit
costs, partially offset by a decrease in maintenance costs.
Non-utility operating expenses increased approximately $0.2
million, or 15.9%, primarily due to an increase in payroll and
benefit costs and in plumbing services related to the SLP
Plans. Property and other taxes increased $0.1 million, or
4.3%, due to an increase in utility plant subject to taxation. In
addition, payroll taxes increased.
Depreciation and amortization expense increased
$0.3 million, or 6.4%, 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
$0.4 million, or 13.7%, primarily due to the amortization of the
deferred tax regulatory liability related to the reduction in the
federal corporate income tax rate by the TCJA.
Allowance for funds used during construction
(“AFUDC”) increased $0.2 million as a result of higher long-term
construction activity subject to AFUDC for the six months ended
June 30, 2019 compared to the same period in 2018.
Miscellaneous income decreased $0.2 million, primarily due to a
decrease in the amount of the annual patronage refund paid by
CoBank, ACB. The annual patronage refund rate was reduced in
2019 to 0.80% from 1.00% of the average line of credit and loan
volume outstanding.
Interest expense increased $0.5 million, or
15.7%, primarily due to long-term debt interest associated with the
$7.5 million wastewater loan issued in August 2018 and the $4.5
million wastewater loan issued in December 2018. In addition,
short-term debt interest increased due to an increase in the amount
borrowed under lines of credit and an increase in the interest
rate.
“Artesian continues to make significant
investments in infrastructure. We recently completed upgrades
and improvements to a large treatment facility that produces over 2
million gallons of potable water a day. In addition, we are
completing a million gallon elevated storage tank in an area of our
integrated system experiencing continued new home construction.
These investments allow us to assure our valued customers are
reliably provided high quality water,” said Dian C. Taylor, Chair,
President and CEO.
Second Quarter Results
Net income for the second quarter of 2019 was
$3.8 million, compared to $3.9 million for the second quarter of
2018. Diluted earnings per share was $0.41 for the second
quarter of 2019, compared to $0.42 for the same period in
2018.
Revenues totaled $20.7 million for the three
months ended June 30, 2019, $0.4 million, or 2.0%, more than
revenues for the three months ended June 30, 2018. Water sales
revenue increased $0.3 million, or 1.8%, for the three months ended
June 30, 2019 from the corresponding period in 2018, due to
customer growth and an increase in consumption and DSIC
revenue. Effective January 1, 2019, the DSIC rate increased
from 4.71% to 5.55%, resulting in an increase of $0.1 million in
DSIC revenue for the three months ended June 30, 2019 compared to
the three months ended June 30, 2018.
Other utility operating revenue increased
approximately $0.1 million, or 6.0%, for the three months ended
June 30, 2019 compared to the three months ended June 30,
2018. The increase is primarily due to an increase in
wastewater revenue from customer growth.
Operating expenses, excluding depreciation and
income taxes, increased $0.4 million, or 3.6%, for the three months
ended June 30, 2019, compared to the same period in 2018.
Utility operating expenses increased $0.2 million, or 2.3%, for the
three months ended June 30, 2019 compared to the three months ended
June 30, 2018, primarily due to an increase in payroll and benefit
costs, partially offset by a decrease in maintenance costs.
Non-utility operating expenses increased approximately $0.1
million, or 16.2%, primarily due to an increase in payroll and
benefit costs and in plumbing services related to the SLP
Plans. Property and other taxes increased $0.1 million, or
5.9%, due to an increase in utility plant subject to taxation.
Depreciation and amortization expense increased
$0.2 million, or 7.2%, 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 15.3%, primarily due to the amortization of the
deferred tax regulatory liability related to the reduction in the
federal corporate income tax rate by the TCJA.
Interest expense increased $0.2 million, or
16.6%, primarily due to long-term debt interest associated with the
$7.5 million wastewater loan issued in August 2018 and the $4.5
million wastewater loan issued in December 2018. In addition,
short-term debt interest increased due to an increase in the amount
borrowed under lines of credit and an increase in the interest
rate.
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
1,311 miles of main to over 300,000 people.
Contact:Nicki TaylorInvestor
Relations(302) 453-6900ntaylor@artesianwater.com
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, |
|
|
2019 |
|
|
|
2018 |
|
|
2019 |
|
|
2018 |
Operating
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Water sales |
$ |
18,192 |
|
|
$ |
17,869 |
|
$ |
35,125 |
|
$ |
34,514 |
Other utility operating revenue |
|
1,150 |
|
|
|
1,085 |
|
|
2,270 |
|
|
2,084 |
Non-utility operating revenue |
|
1,310 |
|
|
|
1,284 |
|
|
2,642 |
|
|
2,546 |
|
|
20,652 |
|
|
|
20,238 |
|
|
40,037 |
|
|
39,144 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Utility operating expenses |
|
9,249 |
|
|
|
9,038 |
|
|
18,370 |
|
|
18,121 |
Non-utility operating expenses |
|
779 |
|
|
|
671 |
|
|
1,546 |
|
|
1,334 |
Depreciation and amortization |
|
2,724 |
|
|
|
2,541 |
|
|
5,438 |
|
|
5,109 |
State and federal income taxes |
|
1,325 |
|
|
|
1,564 |
|
|
2,504 |
|
|
2,903 |
Property and other taxes |
|
1,255 |
|
|
|
1,185 |
|
|
2,575 |
|
|
2,468 |
|
|
15,332 |
|
|
|
14,999 |
|
|
30,433 |
|
|
29,935 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
5,320 |
|
|
|
5,239 |
|
|
9,604 |
|
|
9,209 |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for funds used during construction |
|
266 |
|
|
|
180 |
|
|
492 |
|
|
268 |
Miscellaneous |
|
(58 |
) |
|
|
8 |
|
|
742 |
|
|
927 |
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Interest
Charges |
|
5,528 |
|
|
|
5,427 |
|
|
10,838 |
|
|
10,404 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Charges |
|
1,750 |
|
|
|
1,501 |
|
|
3,470 |
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
3,778 |
|
|
$ |
3,926 |
|
$ |
7,368 |
|
$ |
7,404 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Basic |
|
9,276 |
|
|
|
9,237 |
|
|
9,267 |
|
|
9,230 |
Net Income per Common Share - Basic |
$ |
0.41 |
|
|
$ |
0.43 |
|
$ |
0.80 |
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Diluted |
|
9,324 |
|
|
|
9,293 |
|
|
9,319 |
|
|
9,287 |
Net Income per Common Share - Diluted |
$ |
0.41 |
|
|
$ |
0.42 |
|
$ |
0.79 |
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Artesian Resources Corporation |
Condensed Consolidated Balance Sheet |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
2019 |
|
2018 |
Assets |
|
|
|
|
|
Utility Plant, at original cost less accumulated depreciation |
$ |
512,153 |
|
$ |
498,678 |
Current Assets |
|
10,713 |
|
|
16,118 |
Regulatory and Other Assets |
|
15,637 |
|
|
15,034 |
|
$ |
538,503 |
|
$ |
529,830 |
|
|
|
|
|
|
Capitalization and
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
154,503 |
|
$ |
153,251 |
Long Term Debt, Net of Current Portion |
|
114,982 |
|
|
115,862 |
Current Liabilities |
|
43,749 |
|
|
37,731 |
Net Advances for Construction |
|
6,093 |
|
|
6,596 |
Contributions in Aid of Construction |
|
142,238 |
|
|
138,015 |
Other Liabilities |
|
76,938 |
|
|
78,375 |
|
$ |
538,503 |
|
$ |
529,830 |
|
|
|
|
|
|
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