NEWARK, Del., Nov. 04, 2020 (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 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
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.
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.
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.
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 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 1,331 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, 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.
|Artesian Resources Corporation|
|Condensed Consolidated Statement of Operations|
|(In thousands, except per share amounts)|
|Three months ended||Nine months ended|
|September 30,||September 30,|
|Other utility operating revenue||2,080||1,245||4,416||3,515|
|Non-utility operating revenue||1,295||1,202||3,796||3,844|
|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|
|Allowance for funds used during construction||155||566||917||1,058|
|Income Before Interest Charges||6,971||6,223||19,393||17,061|
|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||$||1.27|
|Artesian Resources Corporation|
|Condensed Consolidated Balance Sheet|
|September 30,||December 31,|
|Utility Plant, at original cost less accumulated depreciation||$||553,387||$||530,721|
|Regulatory and Other Assets||16,192||15,440|
|Capitalization and Liabilities|
|Long Term Debt, Net of Current Portion||142,651||144,156|
|Advances for Construction||4,774||5,421|
|Contributions in Aid of Construction||157,386||149,479|