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 2020.
- Increased diluted
earnings by per
share 15.0% to
$1.46
year-to-date and 12.5%
to $0.54
in the third quarter of
2020
- Increased revenues by 6.1%
year-to-date and 9.7% in the third quarter
- Increased common stock dividend by 3% as announced on
September 25, 2020
- Invested
$31.6
million year-to-date in water and wastewater
infrastructure
- Acquired municipal water
systems adding approximately
3,000 people served
in Delaware during 2020
Dividend Increase
Artesian announced on September 25, 2020 that
its Board of Directors approved a 3% increase in the company’s
Class A and Class B Common Stock dividend, raising the annual
dividend to $1.0284 per share. The quarterly dividend of $0.2571 is
payable on November 20, 2020 to shareholders of record at the close
of business on November 9, 2020.
Artesian Resources has now paid quarterly
dividends to its shareholders for 112 consecutive quarters and has
increased dividends for the 24th consecutive year.
Year-to-Date Results
Net income for the nine months ended September
30, 2020 was $13.7 million, a $1.9 million, or 15.9%, increase
compared to net income recorded for the same period of 2019.
Diluted earnings per share was $1.46 for the nine months ended
September 30, 2020, a 15.0% increase compared to $1.27 for the same
period of 2019.
“Artesian has remained focused on our strategic
initiatives, continuing to invest in infrastructure and
acquisitions, while remaining committed to providing consistent
returns to shareholders,” said Dian C. Taylor, Chair, President and
CEO. “Our plan execution and continued attention on improving
efficiencies of operations and cost control are key to our ability
to deliver reliable service to our customers while also producing
strong financial results,” said Taylor.
Revenues totaled $66.4 million for the nine
months ended September 30, 2020, $3.8 million, or 6.1%, more than
revenues recorded for the same period in 2019. Water sales revenue
increased $3.0 million, or 5.3%, primarily due to an increase in
residential consumption revenue, an increase in the number of
customers served, and an increase in Distribution System
Improvement Charges, or DSIC, revenue. Other utility operating
revenue increased 25.6% to $4.4 million, primarily the result of an
increase in industrial wastewater service revenue and residential
customer growth.
Utility operating expenses increased $0.7
million, or 2.3%, primarily due to an increase in bad debt expense
related to state mandated prohibitions on late fees and service
disconnections for non-payment resulting in a longer receivable
cycle and increased reserves for bad debt. In July, the State of
Delaware lifted its state mandated prohibitions on service
disconnections and late fees, with a provision requiring utilities
to offer payment arrangements to customers. The State of Maryland
and the Commonwealth of Pennsylvania lifted their state mandated
prohibitions on service disconnections and late fees effective
November.
Federal and state income tax expense increased
$0.7 million, or 16.9%, primarily due to increased pre-tax income
in 2020 compared to 2019.
Property and other taxes increased $0.2 million,
or 4.2%, primarily as a result of an increase in utility plant.
Miscellaneous income increased $0.4 million,
primarily due to an increase in patronage from CoBank as a result
of a higher average loan balance outstanding and a special
distribution in 2020.
Allowance for funds used during construction, or
AFUDC, decreased $0.1 million as a result of lower long-term
construction activity.
Interest expense increased $0.5 million,
primarily due to an increase in long-term debt interest related to
the Series V First Mortgage Bond issued on December 17, 2019. This
increase is partially offset by a decrease in short-term debt
interest, primarily related to lower interest rates and short-term
borrowing levels in 2020.
Water Utility Acquisition
Growth
Artesian acquired the water system of the Town
of Frankford in April and of Delaware City in August and is
progressing with the phased planned upgrades to these water
systems, including meter replacements and operational improvements.
These two acquisitions have added about 3,000 people served to our
Delaware water systems.
In the past three years, Artesian has completed
seven acquisitions, including the prior acquisitions of the water
systems of the Slaughter Beach Water Company, High Point, Cantwell,
Odessa and Historic Fort DuPont.
Capital Expenditures
As part of Artesian’s continued effort to ensure
high quality reliable service to customers, $31.6 million was
invested in the first nine months of 2020, compared to $27.3
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. These investments include adding solar power
generation to the Hyetts Corner Water Treatment plant, doubling our
solar footprint and generating 65,000 kilowatts annually,
representative of our focus on environmental stewardship and
enhancing efficiencies.
Third Quarter
Results
Net income for the third quarter was $5.1
million, a 13.6% increase compared to $4.5 million for the third
quarter of 2019. Diluted earnings per share was $0.54 for the third
quarter, a 12.5% increase compared to $0.48 for the same period in
2019.
Revenues totaled $24.7 million for the third
quarter, $2.2 million, or 9.7%, more than revenues for the same
period in 2019. Water sales revenue increased $1.3 million, or
6.3%, primarily due to an increase in residential consumption
revenue and an increase in the number of customers served. Other
utility operating revenue increased approximately $0.8 million, or
67.0%, primarily the result of an increase in industrial wastewater
service revenue and residential customer growth.
Non-utility revenue increased $0.1 million, or 7.7%, primarily due
to an increase in Service Line Protection Plan revenue.
Utility operating expenses increased $0.5
million, or 4.3%, primarily due to an increase in payroll and
employee benefits costs and an increase in bad debt expense related
to state mandated prohibitions on late fees and service
disconnections for non-payment resulting in a longer receivable
cycle and increased reserves for bad debt.
Federal and state income tax expense increased
$0.3 million, or 19.1%, primarily due to increased pre-tax book
income.
AFUDC decreased $0.4 million as a result of
lower long-term construction activity.
Interest expense increased $0.1 million, or
8.1%, primarily due to an increase in long-term debt interest
related to the Series V First Mortgage Bond issued on December 17,
2019. This increase is partially offset by a decrease in short-term
debt interest, primarily related to lower interest rates and
short-term borrowing levels in 2020.
COVID-19
Artesian continues to provide essential utility
services during the COVID-19 pandemic and while following social
distancing and remote work directives to protect the well-being of
its customers and employees. As COVID-19 persists, management is
actively monitoring the situation and impacts on its results of
operations, customer billing and collections, suppliers, industry,
and workforce.
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 8.3 billion gallons of water per year through 1,331 miles
of main to over a third of Delawareans.
Forward Looking StatementsThis
release contains forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 regarding,
among other things, the impacts of the COVID-19 pandemic and the
continued growth in our business and the number of customers and
population 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 TaylorInvestor
Relations(302) 453-6900ntaylor@artesianwater.com
|
|
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|
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, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Water sales |
$ |
21,362 |
|
|
$ |
20,102 |
|
|
$ |
58,178 |
|
$ |
55,227 |
|
Other utility operating revenue |
|
2,080 |
|
|
|
1,245 |
|
|
|
4,416 |
|
|
3,515 |
|
Non-utility operating revenue |
|
1,295 |
|
|
|
1,202 |
|
|
|
3,796 |
|
|
3,844 |
|
|
|
24,737 |
|
|
|
22,549 |
|
|
|
66,390 |
|
|
62,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Utility operating expenses |
|
10,947 |
|
|
|
10,495 |
|
|
|
29,541 |
|
|
28,865 |
|
Non-utility operating expenses |
|
926 |
|
|
|
838 |
|
|
|
2,387 |
|
|
2,385 |
|
Depreciation and amortization |
|
2,835 |
|
|
|
2,679 |
|
|
|
8,280 |
|
|
8,117 |
|
State and federal income taxes |
|
1,784 |
|
|
|
1,498 |
|
|
|
4,680 |
|
|
4,002 |
|
Property and other taxes |
|
1,376 |
|
|
|
1,309 |
|
|
|
4,048 |
|
|
3,884 |
|
|
|
17,868 |
|
|
|
16,819 |
|
|
|
48,936 |
|
|
47,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
6,869 |
|
|
|
5,730 |
|
|
|
17,454 |
|
|
15,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for funds used during construction |
|
155 |
|
|
|
566 |
|
|
|
917 |
|
|
1,058 |
|
Miscellaneous |
|
(53 |
) |
|
|
(73 |
) |
|
|
1,022 |
|
|
670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Interest Charges |
|
6,971 |
|
|
|
6,223 |
|
|
|
19,393 |
|
|
17,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Charges |
|
1,908 |
|
|
|
1,765 |
|
|
|
5,690 |
|
|
5,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
5,063 |
|
|
$ |
4,458 |
|
|
$ |
13,703 |
|
$ |
11,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Basic |
|
9,338 |
|
|
|
9,283 |
|
|
|
9,320 |
|
|
9,272 |
|
Net Income per Common Share - Basic |
$ |
0.54 |
|
|
$ |
0.48 |
|
|
$ |
1.47 |
|
$ |
1.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Diluted |
|
9,377 |
|
|
|
9,329 |
|
|
|
9,363 |
|
|
9,322 |
|
Net Income per Common Share - Diluted |
$ |
0.54 |
|
|
$ |
0.48 |
|
|
$ |
1.46 |
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Artesian Resources Corporation |
|
Condensed
Consolidated Balance Sheet |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Utility Plant, at original cost less accumulated depreciation |
$ |
553,387 |
|
|
$ |
530,721 |
|
|
|
|
|
|
|
|
Current Assets |
|
17,852 |
|
|
|
14,207 |
|
|
|
|
|
|
|
|
Regulatory and Other Assets |
|
16,192 |
|
|
|
15,440 |
|
|
|
|
|
|
|
|
|
$ |
587,431 |
|
|
$ |
560,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization and Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
165,854 |
|
|
$ |
160,268 |
|
|
|
|
|
|
|
|
Long Term Debt, Net of Current Portion |
|
142,651 |
|
|
|
144,156 |
|
|
|
|
|
|
|
|
Current Liabilities |
|
43,622 |
|
|
|
25,599 |
|
|
|
|
|
|
|
|
Advances for Construction |
|
4,774 |
|
|
|
5,421 |
|
|
|
|
|
|
|
|
Contributions in Aid of Construction |
|
157,386 |
|
|
|
149,479 |
|
|
|
|
|
|
|
|
Other Liabilities |
|
73,144 |
|
|
|
75,445 |
|
|
|
|
|
|
|
|
|
$ |
587,431 |
|
|
$ |
560,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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