NEWARK, Del., Nov. 07, 2018 (GLOBE NEWSWIRE) — 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 third quarter results for 2018. For the first nine months of 2018, net income was $11.3 million, a $1.0 million, or 10.3%, increase compared to the same period a year ago. Diluted earnings per share was $1.22 for the nine months ended September 30, 2018, an increase of 9.9% compared to $1.11 for the nine months ended September 30, 2017.
Revenues for the nine months ended September 30, 2018, totaled $61.1 million, 1.6% less than the $62.0 million in revenues recorded for the same nine month period in 2017. Water sales revenues decreased $1.2 million, or 2.3%, for the nine months ended September 30, 2018 compared to the same period a year ago, primarily due to approximately $2.2 million 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 the number of customers served and increased water consumption.
Other utility operating revenue increased $0.2 million, or 6.4%, for the nine months ended September 30, 2018 compared to the same period in 2017 primarily due to an increase in wastewater revenue from growth in the number of customers served.
Non-utility operating revenue increased approximately $0.1 million, or 1.8%, for the nine months ended September 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.
“Our focus in 2018 has been on controlling operating and maintenance expenses while we continue to develop and enhance efficiencies in our core businesses,” said Dian C. Taylor, Chair, President and CEO. Excluding depreciation and income taxes, operating expenses increased $0.1 million, or 0.2%, to $34.3 million for the nine months ended September 30, 2018, compared to $34.2 million for the same period in 2017. Utility operating expenses for the nine months ended September 30, 2018 were $28.5 million, a $0.1 million, or 0.4%, decrease from the same period a year ago, mainly the result of decreases in payroll and employee benefit expenses, as well as in purchased water expense, offset by increases in power expense and water treatment expenses. Property and other taxes increased $0.2 million, or 5.5%, due to an increase in utility plant subject to taxation.
“In addition to exercising sound financial management in our control of expenses, we have simultaneously moved ahead with making important investments in infrastructure to ensure we continue delivering safe, high-quality drinking water and reliable water and wastewater services to our current and future customers,” said Taylor. Consistent with the continued efforts to ensure high quality reliable service to customers, $35.0 million has been invested in the first nine months of 2018, a 23.7% increase compared to $28.3 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.
Depreciation and amortization expense increased $0.6 million, or 8.5%, 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 $0.8 million for the first nine 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 one-time 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 for the nine months ended September 30, 2018 compared to the same period a year ago primarily 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 $1.7 million, or 26.0%, for the nine months ended September 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.
Third Quarter Results
Net income for the third quarter of 2018 was $3.9 million and diluted net income per share was $0.42, each the same as for the third quarter of 2017.
Revenues for the third quarter of 2018 were $21.9 million, $0.4 million, or 1.9%, less than revenues recorded for the same three month period of 2017. Water sales decreased $0.6 million, or 2.9%, for the three months ended September 30, 2018 from the corresponding period in 2017, primarily due to $0.7 million 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 overall water consumption and an increase in the number of customers served.
Other utility operating revenue increased $0.2 million, or 14.8%, for the third quarter of 2018 compared to the same period in 2017 primarily due to an increase in wastewater revenue from growth in the number of customers served.
Excluding depreciation and income taxes, operating expenses increased $0.4 million, or 2.9%, to $12.3 million for the third quarter of 2018. Utility operating expenses increased $0.3 million, or 2.6%, for the three months ended September 30, 2018 compared to the same period in 2017, mainly the result of increases in payroll, employee benefit and purchased water expenses. Property and other taxes increased $0.1 million, or 7.8%, due to an increase in utility plant subject to taxation.
Depreciation and amortization expense increased $0.1 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 decreased $0.7 million, or 28.0%, for the three months ended September 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 $0.1 million for the three months ended September 30, 2018 compared to the same period a year ago due to a one-time additional patronage payment in 2018 from CoBank, ACB.
Other Highlights
- Completed installation of the protective liner for a 90 million gallon storage lagoon at the Sussex Regional Recharge Facility near Milton, Delaware, along with three 300 horsepower pumps that will draw wastewater from the lagoon and pressurize the newly constructed 12.5 miles of effluent discharge pipe for disposal in fields and wooded areas. Once in service, the current stream discharge of wastewater by Allen Harim Foods LLC will cease and the treated water will be used for spray irrigation of cropland and protected open space, a much more environmentally sensitive solution.
- Broke ground on the Island Farm Elevated Water Storage Tank, which will provide one million gallons of water storage to serve our growing northern Sussex County, Delaware water system. Artesian anticipates serving a population of 15,000 people within this regional water system. The tank is anticipated to be completed during the summer of 2019 and will increase storage capacity and improve reliability and fire protection for current and future customers.
- Invested $7.8 million in the first nine months of 2018, as part of our rehabilitation program for transmission and distribution facilities, replacing aging or deteriorating mains, and for new transmission and distribution facilities, which included 12 water main renewal projects and installation of 7.6 miles of water main in northern New Castle County, Delaware
- Increased dividends to shareholders for the 22nd consecutive year in 2018. The quarterly common stock dividend per share of $0.2423 that will be paid on November 21, 2018 to shareholders of record at the close of business on November 14, 2018 represents a 3% increase from a year ago.
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 7.9 billion gallons of water per year through 1,293 miles of water main to nearly a third of Delaware residents.
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 planned Island Farm Elevated Water Storage Tank and anticipated expansion of service in northern Sussex County, Delaware. 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 | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Operating Revenues | ||||||||||||
| Water sales | $ | 19,469 | $ | 20,045 | $ | 53,983 | $ | 55,228 | ||||
| Other utility operating revenue | 1,189 | 1,036 | 3,273 | 3,075 | ||||||||
| Non-utility operating revenue | 1,266 | 1,275 | 3,812 | 3,744 | ||||||||
| 21,924 | 22,356 | 61,068 | 62,047 | |||||||||
| Operating Expenses | ||||||||||||
| Utility operating expenses | 10,333 | 10,070 | 28,454 | 28,564 | ||||||||
| Non-utility operating expenses | 735 | 736 | 2,069 | 2,085 | ||||||||
| Depreciation and amortization | 2,513 | 2,377 | 7,623 | 7,024 | ||||||||
| State and federal income taxes | 1,834 | 2,546 | 4,737 | 6,403 | ||||||||
| Property and other taxes | 1,265 | 1,173 | 3,731 | 3,537 | ||||||||
| 16,680 | 16,902 | 46,614 | 47,613 | |||||||||
| Operating Income | 5,244 | 5,454 | 14,454 | 14,434 | ||||||||
| Allowance for funds used during construction | 146 | 83 | 413 | 229 | ||||||||
| Miscellaneous | 87 | (62 | ) | 1,014 | 230 | |||||||
| Income Before Interest Charges | 5,477 | 5,475 | 15,881 | 14,893 | ||||||||
| Interest Charges | 1,548 | 1,533 | 4,548 | 4,614 | ||||||||
| Net Income | $ | 3,929 | $ | 3,942 | $ | 11,333 | $ | 10,279 | ||||
| Weighted Average Common Shares Outstanding – Basic | 9,244 | 9,191 | 9,235 | 9,164 | ||||||||
| Net Income per Common Share – Basic | $ | 0.42 | $ | 0.43 | $ | 1.23 | $ | 1.12 | ||||
| Weighted Average Common Shares Outstanding – Diluted | 9,299 | 9,286 | 9,290 | 9,262 | ||||||||
| Net Income per Common Share – Diluted | $ | 0.42 | $ | 0.42 | $ | 1.22 | $ | 1.11 | ||||
| Artesian Resources Corporation | ||||||||||||
| Condensed Consolidated Balance Sheet | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| September 30, | December 31, | |||||||||||
| 2018 | 2017 | |||||||||||
| Assets | ||||||||||||
| Utility Plant, at original cost less | ||||||||||||
| accumulated depreciation | $ | 487,135 | $ | 460,502 | ||||||||
| Current Assets | 18,364 | 18,985 | ||||||||||
| Regulatory and Other Assets | 15,164 | 15,152 | ||||||||||
| $ | 520,663 | $ | 494,639 | |||||||||
| Capitalization and Liabilities | ||||||||||||
| Stockholders’ Equity | $ | 150,085 | $ | 146,644 | ||||||||
| Long Term Debt, Net of Current Portion | 111,826 | 105,587 | ||||||||||
| Current Liabilities | 37,174 | 28,461 | ||||||||||
| Net Advances for Construction | 7,114 | 7,797 | ||||||||||
| Contributions in Aid of Construction | 134,560 | 128,286 | ||||||||||
| Other Liabilities | 79,904 | 77,864 | ||||||||||
| $ | 520,663 | $ | 494,639 | |||||||||