Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider
of water and wastewater services, and related services, on the
Delmarva Peninsula, today announced earnings results for the fourth
quarter and year ended December 31, 2020.
Highlights
- Increased diluted earnings per share by 11.9% to $1.79 in
2020
- Increased revenues by 5.4% in 2020 and 3.5% in the fourth
quarter
- Increased common stock dividend by 3%
- Paid quarterly dividends to shareholders for 113 consecutive
quarters and increased dividends for the 24th consecutive year
- Invested $40.0 million in 2020 in water and wastewater
infrastructure
- Acquired two municipal water
systems, adding approximately 3,000 people served in Delaware
during 2020, and marking the 6th and 7th acquisition over the past
3 years
- Completed Sussex Regional Recharge Facility, designed to accept
over 3 million gallons per day of treated wastewater in Sussex
County, Delaware
Year-End Results
Net income for the year ended December 31, 2020
was $16.8 million, a $1.9 million, or 12.7%, increase compared to
net income recorded for the same period of 2019. Diluted earnings
per share was $1.79 for the year ended December 31, 2020, an 11.9%
increase compared to $1.60 for the same period of 2019.
“Our year end results provided a strong finish
to what was a challenging year for everyone as a result of the
COVID-19 pandemic,” said Dian C. Taylor, Chair, President and CEO.
“In an uncertain economic environment, we stayed focused on the
Company’s commitment to ensure customers have safe, reliable water
service, while continuing to enhance operational efficiencies and
control costs in order to sustain resilient financial results,”
said Taylor.
Revenues totaled $88.1 million for the year
ended December 31, 2020, $4.5 million, or 5.4%, more than revenues
recorded for the same period in 2019. Water sales revenue increased
$2.9 million, or 3.9%, primarily due to an increase in residential
consumption revenue, an increase from customer growth and an
increase in Distribution System Improvement Charges (“DSIC”)
revenue, partially offset by a decrease in non-residential
consumption revenue. Other utility operating revenue increased
32.7% to $6.5 million, primarily the result of an increase in
industrial wastewater service revenue related to the minimum
required volume of wastewater under contract and an increase in
wastewater revenue from customer growth.
Operating expenses, excluding depreciation and
income taxes, increased $1.3 million, or 2.8%. The majority of the
increase is related to an increase in overall compensation and
employee benefit costs. In addition, bad debt expense increased as
a result of executive orders issued during 2020 by state
governmental agencies requiring utility companies to prohibit late
fees and service disconnections for non-payment that led to a
longer receivable cycle and the need for increased reserves for bad
debt.
Depreciation and amortization expense increased
$0.3 million, or 3.1%, 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 increased
$0.5 million, or 9.7%, primarily due to increased pre-tax income in
2020 compared to 2019.
Other income, net increased $0.1 million, or
5.8%, primarily due to an increase in miscellaneous income of $0.3
million, related 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
(“AFUDC”), decreased $0.2 million, as a result of lower long-term
construction activity subject to AFUDC.
Interest expense increased $0.6 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 was partially offset by a decrease in short-term debt
interest, primarily related to lower interest rates and short-term
borrowing levels in 2020.
Capital Expenditures
As part of Artesian’s on-going effort to ensure
high quality reliable service to customers, $40.0 million was
invested in 2020, compared to $40.7 million in 2019, 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.
Artesian continues to invest in critical
infrastructure in 2021. In Sussex County the Dagsboro Water
Treatment Plant is currently under construction, which will be
interconnected with 7 miles of main and 45 fire hydrants to the
existing South Bethany system. This will provide an additional 2.0
million gallons per day of water supply to serve the rapidly
growing beach community.
“Artesian has remained committed to investments
ensuring safe, high quality water and reliable service and
infrastructure to meet water and wastewater service needs in our
growing Sussex County service area in an environmentally sensitive
manner,” said Taylor.
Fourth Quarter Results
Net income remained the same at $3.1 million for
both the fourth quarter of 2020 and 2019. Diluted earnings per
share also remained the same at $0.33 for both the fourth quarter
of 2020 and 2019.
Revenues totaled $21.8 million for the fourth
quarter of 2020, $0.7 million, or 3.5%, more than revenues for the
same period in 2019. Water sales revenue decreased $0.1 million, or
0.5%, primarily due to a decrease in non-residential consumption
revenue. Other utility operating revenue increased approximately
$0.7 million, or 50.6%, primarily the result of an increase in
industrial wastewater service revenue related to the minimum
required volume of wastewater under contract and an increase in
wastewater revenue from customer growth. Non-utility
revenue increased $0.1 million, or 9.6%, primarily due to an
increase in contract revenue related to design fees and an increase
in Service Line Protection Plan revenue.
Operating expenses, excluding depreciation and
income taxes, increased $0.5 million, or 3.9%, primarily related to
an increase in overall compensation and employee benefit costs. In
addition, purchased water expenses increased, primarily due to the
timing of water purchased under contract.
Depreciation and amortization expense increased
$0.2 million, or 6.6%, 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 14.8%, primarily due to permanent tax
differences.
AFUDC decreased $0.1 million, or 28.1%, as a
result of lower long-term construction activity subject to
AFUDC.
Interest expense increased $0.1 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 was partially offset by a decrease in short-term debt
interest, primarily related to lower interest rates and short-term
borrowing levels in 2020.
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 8.2 billion gallons of water per year through 1,368 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, continued
growth in our business, continuing operational efficiencies and
cost controls and anticipated future investments in infrastructure.
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
Artesian Resources
Corporation |
Condensed
Consolidated Statement of Operations |
(In thousands,
except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
|
Twelve months
ended |
|
|
December 31, |
|
|
December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
Water sales |
$ |
18,299 |
|
|
$ |
18,382 |
|
|
$ |
76,476 |
|
$ |
73,609 |
Other utility operating revenue |
|
2,108 |
|
|
|
1,400 |
|
|
|
6,525 |
|
|
4,916 |
Non-utility operating revenue |
|
1,344 |
|
|
|
1,226 |
|
|
|
5,140 |
|
|
5,070 |
|
|
21,751 |
|
|
|
21,008 |
|
|
|
88,141 |
|
|
83,595 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
Utility operating expenses |
|
10,797 |
|
|
|
10,324 |
|
|
|
40,338 |
|
|
39,189 |
Non-utility operating expenses |
|
890 |
|
|
|
931 |
|
|
|
3,277 |
|
|
3,315 |
Depreciation and amortization |
|
2,863 |
|
|
|
2,686 |
|
|
|
11,143 |
|
|
10,803 |
State and federal income taxes |
|
1,004 |
|
|
|
1,179 |
|
|
|
5,684 |
|
|
5,181 |
Property and other taxes |
|
1,357 |
|
|
|
1,297 |
|
|
|
5,404 |
|
|
5,182 |
|
|
16,911 |
|
|
|
16,417 |
|
|
|
65,846 |
|
|
63,670 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
4,840 |
|
|
|
4,591 |
|
|
|
22,295 |
|
|
19,925 |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for funds used during construction |
|
253 |
|
|
|
352 |
|
|
|
1,170 |
|
|
1,410 |
Miscellaneous |
|
(51 |
) |
|
|
(55 |
) |
|
|
971 |
|
|
614 |
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Interest Charges |
|
5,042 |
|
|
|
4,888 |
|
|
|
24,436 |
|
|
21,949 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest Charges |
|
1,928 |
|
|
|
1,789 |
|
|
|
7,619 |
|
|
7,024 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
3,114 |
|
|
$ |
3,099 |
|
|
$ |
16,817 |
|
$ |
14,925 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Basic |
|
9,347 |
|
|
|
9,289 |
|
|
|
9,327 |
|
|
9,277 |
Net Income per Common Share - Basic |
$ |
0.33 |
|
|
$ |
0.33 |
|
|
$ |
1.80 |
|
$ |
1.61 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - Diluted |
|
9,388 |
|
|
|
9,337 |
|
|
|
9,369 |
|
|
9,326 |
Net Income per Common Share - Diluted |
$ |
0.33 |
|
|
$ |
0.33 |
|
|
$ |
1.79 |
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
Artesian Resources Corporation |
Condensed
Consolidated Balance Sheets |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Utility Plant, at original cost less |
|
|
|
|
|
|
|
|
|
|
|
accumulated depreciation |
$ |
559,561 |
|
|
$ |
530,721 |
|
|
|
|
|
|
|
Current Assets |
|
17,619 |
|
|
|
14,207 |
|
|
|
|
|
|
|
Regulatory and Other Assets |
|
16,038 |
|
|
|
15,440 |
|
|
|
|
|
|
|
|
$ |
593,218 |
|
|
$ |
560,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization and Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
169,426 |
|
|
$ |
160,268 |
|
|
|
|
|
|
|
Long Term Debt, Net of Current Portion |
|
142,333 |
|
|
|
144,156 |
|
|
|
|
|
|
|
Current Liabilities |
|
43,724 |
|
|
|
25,599 |
|
|
|
|
|
|
|
Net Advances for Construction |
|
4,578 |
|
|
|
5,421 |
|
|
|
|
|
|
|
Contributions in Aid of Construction |
|
160,258 |
|
|
|
149,479 |
|
|
|
|
|
|
|
Other Liabilities |
|
72,899 |
|
|
|
75,445 |
|
|
|
|
|
|
|
|
$ |
593,218 |
|
|
$ |
560,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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