Artesian Resources Corporation Reports Year-to-Date and Second Quarter Results for 2019

NEWARK, Del., Aug. 07, 2019 (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 second quarter results for 2019.  Net income for the first six months of 2019 remained consistent compared to the same period in 2018, at $7.4 million.  Diluted earnings per share was $0.79 for the six months ended June 30, 2019, compared to $0.80 for the six months ended June 30, 2018. 

Revenues totaled $40.0 million for the six months ended June 30, 2019, $0.9 million, or 2.3%, more than revenues recorded for the same six month period in 2018. Water sales revenue increased $0.6 million, or 1.8%, for the six months ended June 30, 2019 compared to the same period a year ago, due to customer growth and an increase in consumption and Distribution System Improvement Charge (“DSIC”) revenue.  Effective January 1, 2019, the DSIC rate increased from 4.71% to 5.55%, resulting in an increase of $0.2 million in DSIC revenue for the six months ended June 30, 2019 compared to the same six month period in 2018.  Approximately $3.8 million was refunded to customers during the second quarter of 2019 related to the impact of the Tax Cut and Jobs Act (“TCJA”) and the subsequent reduced tariff rates approved by the Delaware Public Service Commission (“DEPSC”) on January 31, 2019.  The refund amount was previously held in reserve and was not included in water sales revenue or net income.

Other utility operating revenue increased $0.2 million, or 8.9%, for the six months ended June 30, 2019 compared to the same period in 2018 primarily due to an increase in wastewater revenue from customer growth.

Non-utility operating revenue increased $0.1 million, or 3.8%, for the six months ended June 30, 2019 compared to the same period in 2018, due to an increase in Service Line Protection Plans (“SLP Plans”) revenue that covers the cost of material and labor required to repair or replace participants’ leaking water service lines, clogged sewer lines and internal plumbing.

Operating expenses, excluding depreciation and income taxes, increased $0.6 million, or 2.6%, for the six months ended June 30, 2019, compared to the same period in 2018.  Utility operating expenses increased $0.2 million, or 1.4%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, primarily due to an increase in payroll and benefit costs, partially offset by a decrease in maintenance costs.  Non-utility operating expenses increased approximately $0.2 million, or 15.9%, primarily due to an increase in payroll and benefit costs and in plumbing services related to the SLP Plans.  Property and other taxes increased $0.1 million, or 4.3%, due to an increase in utility plant subject to taxation. In addition, payroll taxes increased.

Depreciation and amortization expense increased $0.3 million, or 6.4%, 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 $0.4 million, or 13.7%, primarily due to the amortization of the deferred tax regulatory liability related to the reduction in the federal corporate income tax rate by the TCJA.

Allowance for funds used during construction (“AFUDC”) increased $0.2 million as a result of higher long-term construction activity subject to AFUDC for the six months ended June 30, 2019 compared to the same period in 2018.  Miscellaneous income decreased $0.2 million, primarily due to a decrease in the amount of the annual patronage refund paid by CoBank, ACB.  The annual patronage refund rate was reduced in 2019 to 0.80% from 1.00% of the average line of credit and loan volume outstanding.

Interest expense increased $0.5 million, or 15.7%, primarily due to long-term debt interest associated with the $7.5 million wastewater loan issued in August 2018 and the $4.5 million wastewater loan issued in December 2018.  In addition, short-term debt interest increased due to an increase in the amount borrowed under lines of credit and an increase in the interest rate.  

“Artesian continues to make significant investments in infrastructure.  We recently completed upgrades and improvements to a large treatment facility that produces over 2 million gallons of potable water a day.  In addition, we are completing a million gallon elevated storage tank in an area of our integrated system experiencing continued new home construction. These investments allow us to assure our valued customers are reliably provided high quality water,” said Dian C. Taylor, Chair, President and CEO.

Second Quarter Results

Net income for the second quarter of 2019 was $3.8 million, compared to $3.9 million for the second quarter of 2018.  Diluted earnings per share was $0.41 for the second quarter of 2019, compared to $0.42 for the same period in 2018. 

Revenues totaled $20.7 million for the three months ended June 30, 2019, $0.4 million, or 2.0%, more than revenues for the three months ended June 30, 2018. Water sales revenue increased $0.3 million, or 1.8%, for the three months ended June 30, 2019 from the corresponding period in 2018, due to customer growth and an increase in consumption and DSIC revenue.  Effective January 1, 2019, the DSIC rate increased from 4.71% to 5.55%, resulting in an increase of $0.1 million in DSIC revenue for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. 

Other utility operating revenue increased approximately $0.1 million, or 6.0%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018.  The increase is primarily due to an increase in wastewater revenue from customer growth.

Operating expenses, excluding depreciation and income taxes, increased $0.4 million, or 3.6%, for the three months ended June 30, 2019, compared to the same period in 2018.  Utility operating expenses increased $0.2 million, or 2.3%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, primarily due to an increase in payroll and benefit costs, partially offset by a decrease in maintenance costs.  Non-utility operating expenses increased approximately $0.1 million, or 16.2%, primarily due to an increase in payroll and benefit costs and in plumbing services related to the SLP Plans.  Property and other taxes increased $0.1 million, or 5.9%, due to an increase in utility plant subject to taxation.

Depreciation and amortization expense increased $0.2 million, or 7.2%, 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 15.3%, primarily due to the amortization of the deferred tax regulatory liability related to the reduction in the federal corporate income tax rate by the TCJA.

Interest expense increased $0.2 million, or 16.6%, primarily due to long-term debt interest associated with the $7.5 million wastewater loan issued in August 2018 and the $4.5 million wastewater loan issued in December 2018.  In addition, short-term debt interest increased due to an increase in the amount borrowed under lines of credit and an increase in the interest rate. 

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 1,311 miles of main to over 300,000 people.

Contact:
Nicki Taylor
Investor Relations
[phone]
[e-mail]

Artesian Resources Corporation
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
		Three months ended							Six months ended
		June 30,							June 30,
		2019				2018			2019			2018
Operating Revenues
Water sales	$	18,192			$	17,869		$	35,125		$	34,514
Other utility operating revenue		1,150				1,085			2,270			2,084
Non-utility operating revenue		1,310				1,284			2,642			2,546
		20,652				20,238			40,037			39,144
Operating Expenses
Utility operating expenses		9,249				9,038			18,370			18,121
Non-utility operating expenses		779				671			1,546			1,334
Depreciation and amortization		2,724				2,541			5,438			5,109
State and federal income taxes		1,325				1,564			2,504			2,903
Property and other taxes		1,255				1,185			2,575			2,468
		15,332				14,999			30,433			29,935
Operating Income		5,320				5,239			9,604			9,209
Allowance for funds used during construction		266				180			492			268
Miscellaneous		(58	)			8			742			927
Income Before Interest Charges		5,528				5,427			10,838			10,404
Interest Charges		1,750				1,501			3,470			3,000
Net Income	$	3,778			$	3,926		$	7,368		$	7,404
Weighted Average Common Shares Outstanding - Basic		9,276				9,237			9,267			9,230
Net Income per Common Share - Basic	$	0.41			$	0.43		$	0.80		$	0.80
Weighted Average Common Shares Outstanding - Diluted		9,324				9,293			9,319			9,287
Net Income per Common Share - Diluted	$	0.41			$	0.42		$	0.79		$	0.80

Artesian Resources Corporation
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
	June 30,			December 31,
	2019			2018
Assets
Utility Plant, at original cost less accumulated depreciation	$	512,153		$	498,678
Current Assets		10,713			16,118
Regulatory and Other Assets		15,637			15,034
	$	538,503		$	529,830
Capitalization and Liabilities
Stockholders' Equity	$	154,503		$	153,251
Long Term Debt, Net of Current Portion		114,982			115,862
Current Liabilities		43,749			37,731
Net Advances for Construction		6,093			6,596
Contributions in Aid of Construction		142,238			138,015
Other Liabilities		76,938			78,375
	$	538,503		$	529,830