Artesian Resources Corporation Reports Year-to-Date and Third Quarter 2021 Results

NEWARK, Del., Nov. 03, 2021 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced third quarter and year-to-date results for 2021.

• Increased common stock dividend by 2.5% as announced on September 22, 2021, marking a 4% increase this year
• Invested $29.7 million year-to-date in water and wastewater infrastructure
• Entered into an agreement to acquire Tidewater Environmental Services, Inc., a regulated wastewater company, which will more than double the number of wastewater customers served in Delaware
  

Year-to-Date Results

Net income was $13.8 million, a $0.1 million, or 0.5%, increase compared to net income recorded during the nine months ended September 30, 2020. Diluted net income per share remained the same at $1.46 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Revenues totaled $68.3 million, an increase of $1.9 million, or 2.9%. Water sales revenue increased $1.0 million, or 1.7%, primarily due to an increase in fixed fee revenue related to customer growth and an increase in non-residential consumption revenue. Other utility operating revenue increased $0.4 million, or 9.1%, primarily due to an increase in wastewater revenue related to customer growth, offset by a decrease in industrial wastewater service revenue resulting from adjustments related to the amounts recorded for the minimum required volume of wastewater under contract, pursuant to a settlement agreement. In addition, service and finance charges increased, related to executive orders that were issued by state governmental agencies in 2020 requiring utility companies to prohibit late fees and service disconnections for non-payment that since have been lifted. Non-utility operating revenue increased 12.7% to $4.3 million, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure for a third party and 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.

“The results demonstrate Artesian’s ability to steadily grow our business through the consistent and successful execution of long-term strategies,” said Dian C. Taylor, Chair, President and CEO. “We entered into an agreement in August for an acquisition of Tidewater Environmental Services, Inc. that supports the continued expansion of our wastewater business in Sussex County, Delaware, which was approved by the Delaware Public Service Commission on October 27th. Our Sussex Regional Recharge Facility has been accepting treated industrial process wastewater from Allen Harim since June, initiating our long-term mutually beneficial arrangement protecting the environment. We also continue to invest in both our water and wastewater infrastructure to meet the demand of new home construction in growing communities,” said Taylor.

Operating expenses, excluding depreciation and income taxes, increased $1.2 million, or 3.5%, primarily related to increases in utility and non-utility operating expenses and an increase in property and other taxes. The increases in utility operating expenses are mainly the result of increases in water and wastewater treatment facilities and equipment maintenance costs, purchased water costs, and payroll and benefits costs, partially offset by a decrease in bad debt reserve related to non-payment of water customer receivable balances resulting from the COVID-19 pandemic. Non-utility operating expenses increased 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.

Property and other taxes increased $0.1 million, or 2.8%, primarily due to an increase in utility plant subject to taxation. 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 8.2%, 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 $0.3 million, primarily due to an increase in patronage from CoBank, ACB as a result of a higher average loan balance outstanding.

Allowance for funds used during construction, or AFUDC, decreased $0.2 million as a result of lower long-term construction activity subject to AFUDC.

Capital Expenditures

Artesian invested approximately $29.7 million in the first nine months of 2021 to enhance and expand our water and wastewater infrastructure systems and to continue our on-going effort to ensure high quality reliable service to customers. These investments in water and wastewater infrastructure include the installation of transmission and distribution facilities, replacement of aging mains, rehabilitation of treatment facilities, and redevelopment of wells and pumping equipment. These investments also include the construction of a water treatment plant and installation of an interconnection, located in the fast growing area of Sussex County, Delaware. The Company remains on track to continue this level of investments in our water and wastewater infrastructure systems through 2021.

Third Quarter Results

Revenues totaled $25.0 million, an increase of $0.3 million, or 1.0%. Water sales revenue decreased $0.1 million, or 0.4%, primarily due to a decrease in residential consumption revenue, partially offset by an increase in fixed fee revenue related to customer growth. Other utility operating revenue increased $0.2 million, or 7.9%, primarily due to an increase in wastewater revenue related to customer growth, offset by a decrease in industrial wastewater service revenue resulting from the timing of revenue related to the minimum required volume of wastewater under contract. Non-utility operating revenue increased 13.0% to $1.5 million, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure for a third party and an increase in Service Line Protection Plan revenue.

Operating expenses, excluding depreciation and income taxes, increased $0.1 million, or 0.7%, primarily related to an overall net increase in utility and non-utility operating expenses. The increases in utility operating expenses are mainly the result of an increase in repair and maintenance costs, primarily related to increases in water and wastewater treatment facilities and equipment maintenance costs. This increase is mostly offset by a decrease in payroll and benefits costs, related to a decrease in variable compensation, partially offset by an increase in the number of employees and annual wage increases. In addition, the bad debt reserve decreased, related to non-payment of water customer receivable balances resulting from the COVID-19 pandemic. Non-utility operating expenses increased 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.

Depreciation and amortization expense increased $0.1 million, or 4.7%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.

About Artesian Resources
Artesian 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 8.3 billion gallons of water per year through 1,368 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, our growth strategy, our expectations regarding the closing of our transaction to acquire a regulated wastewater company, including expectations regarding infrastructure investments, acquisition agreements and the 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