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Artesian Resources Corporation Reports Year-to-Date and Second Quarter Results for 2020

NEWARK, Del., Aug. 05, 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 year-to-date and second quarter results for 2020.

  • Reports earnings per share of $0.92 year-to-date and $0.49 in the second quarter of 2020
  • Invested $20.6 million year-to-date in water and wastewater infrastructure
  • Municipal water acquisitions add approximately 3,000 people served in Delaware service area in 2020

Year-to-Date Results

Net income for the first six months ended June 30, 2020 was $8.6 million, a $1.3 million, or 17.3%, increase compared to net income recorded during the first six months of 2019.  Diluted earnings per share was $0.92 for the six months ended June 30, 2020, a 16.5% increase compared to $0.79 for the six months ended June 30, 2019.

Revenues totaled $41.7 million for the six months ended June 30, 2020, $1.6 million, or 4.0%, more than revenues recorded for the same six month period in 2019. Water sales revenue increased 4.8% to $36.8 million for the six months ended June 30, 2020 from $35.1 million for the same period in 2019, primarily due to an increase in residential consumption revenue and an increase in the number of customers served.  This increase is partially offset by a decrease in non-residential consumption revenue.  In addition, Distribution System Improvement Charges, or DSIC, revenue and fixed fee revenue increased. 

Other utility operating revenue increased 2.9% to $2.3 million for the six months ended June 30, 2020 from the same period in 2019, primarily as a result of increases in wastewater revenue from customer growth.  This increase is partially offset by a decrease in utility service and finance charges, related to state mandated prohibitions on late fees and service disconnections.

Non-utility revenue decreased $0.1 million, or 5.3%, for the six months ended June 30, 2020 compared to the same period in 2019, primarily due to a decrease in contract service revenue. This decrease is partially offset by an increase in Service Line Protection Plan revenue.

Operating expenses, excluding depreciation and income taxes, increased $0.2 million, or 1.0%, for the six months ended June 30, 2020 compared to the same period in 2019.  Utility operating expenses increased $0.2 million, or 1.2%, 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 the need for increased reserves for bad debt, as well as an increase in payroll and employee benefits costs.  This increase is partially offset by a decrease in general administration expenses related to reduced in person group activity costs, meetings, training and conferences, as well as a decrease in consulting services.  “We remain diligent in controlling our discretionary expenses as we continue to provide essential utility services during the pandemic,” said Dian C. Taylor, Chair, President & CEO.

Federal and state income tax expense increased $0.4 million, or 15.7%, for the six months ended June 30, 2020 compared to the same period in 2019, primarily due to increased pre-tax income in 2020 compared to 2019.

Miscellaneous income increased $0.3 million for the six months ended June 30, 2020 compared to the same period in 2019, 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, increased $0.3 million as a result of higher long-term construction activity subject to AFUDC for the six months ended June 30, 2020 compared to the same period in 2019. 

Interest expense increased $0.3 million during the six months ended June 30, 2020 compared to the same period in 2019, 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’s investments in two recent acquisitions highlight the success of our public-private partnerships throughout the Delmarva Peninsula and our continued focus on strategic growth,” said Taylor. 

Artesian completed the purchase of water system operating assets from the Town of Frankford in April 2020, serving a population of nearly 1,000 in Sussex County, Delaware.  The total purchase price was $3.6 million. 

Artesian completed the purchase of water system operating assets from the City of Delaware City on August 3, 2020, which services a population of over 2,000 in New Castle County, Delaware. The total purchase price was $2.1 million.

In the past three years, Artesian has now 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, $20.6 million was invested in the first six months of 2020, compared to $18.2 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. 

Second Quarter Results

Net income for the second quarter of 2020 was $4.6 million, a 20.9% increase compared to $3.8 million for the second quarter of 2019.  Diluted earnings per share was $0.49 for the second quarter of 2020, a 19.5% increase compared to $0.41 for the same period in 2019. 

Revenues totaled $21.8 million for the three months ended June 30, 2020, $1.1 million, or 5.3%, more than revenues for the three months ended June 30, 2019. Water sales revenue increased $1.2 million, or 6.8%, for the three months ended June 30, 2020 from the corresponding period in 2019, due to an increase in residential consumption revenue and an increase in the number of customers served.  This increase is partially offset by a decrease in non-residential consumption revenue.  In addition, DSIC revenue and fixed fee revenue increased.

Other utility operating revenue decreased approximately $0.1 million, or 5.7%, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019.  The decrease is primarily due to a decrease in service and finance charges, related to executive orders issued by state governmental agencies prohibiting utility companies from charging late fees and disconnecting service for non-payment.  This decrease is partially offset by an increase in wastewater revenue from customer growth.

Operating expenses, excluding depreciation and income taxes, increased $0.1 million, or 1.0%, for the three months ended June 30, 2020, compared to the same period in 2019.  Utility operating expenses increased $0.1 million, or 1.2%, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019, 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 the need for increased reserves for bad debt, as well as an increase in payroll and employee benefits costs.  This increase is partially offset by a decrease in general administration expenses primarily related to reduced in person group activity costs, such as meetings, training and conferences.

Federal and state income tax expense increased $0.2 million, or 16.0%, primarily due to increased pre-tax book income for the three months ended June 30, 2020 compared to the same period in 2019.

AFUDC increased $0.1 million as a result of higher long-term construction activity subject to AFUDC for the three months ended June 30, 2020 compared to the same period in 2019. 

Interest expense increased $0.1 million, or 7.6%, 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 is following social distancing and remote work directives to protect the well-being of its customers and employees.  The full impact of the COVID-19 outbreak continues to evolve and management is actively monitoring the situation and impacts on its results of operations, customer billing and collections, suppliers, industry, and workforce.  “Water and wastewater services are truly essential to those we serve.  Artesian, through the dedication of all of its employees, remains intently focused on our commitment to our customers for high quality, reliable and safe water and wastewater service during these challenging times,” said Taylor. 

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 300,000 people.

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.

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 Six months ended
 June 30, June 30,
 2020 2019 2020 2019
Operating Revenues           
Water sales$19,423  $18,192  $36,816 $35,125
Other utility operating revenue 1,084   1,150   2,336  2,270
Non-utility operating revenue 1,245   1,310   2,501  2,642
  21,752   20,652   41,653  40,037
            
Operating Expenses           
Utility operating expenses 9,359   9,249   18,593  18,370
Non-utility operating expenses 733   779   1,462  1,546
Depreciation and amortization 2,693   2,724   5,445  5,438
State and federal income taxes 1,537   1,325   2,896  2,504
Property and other taxes 1,306   1,255   2,672  2,575
  15,628   15,332   31,068  30,433
            
Operating Income 6,124   5,320   10,585  9,604
            
Allowance for funds used during construction 338   266   762  492
Miscellaneous (13)  (58)  1,075  742
            
Income Before Interest Charges 6,449   5,528   12,422  10,838
            
Interest Charges 1,883   1,750   3,782  3,470
            
Net Income $4,566  $3,778  $8,640 $7,368
            
Weighted Average Common Shares Outstanding - Basic 9,326   9,276   9,311  9,267
Net Income per Common Share - Basic$0.49  $0.41  $0.93 $0.80
            
Weighted Average Common Shares Outstanding - Diluted 9,367   9,324   9,357  9,319
Net Income per Common Share - Diluted$0.49  $0.41  $0.92 $0.79
            
Artesian Resources Corporation
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
            
 June 30, December 31,      
 2020 2019      
Assets           
Utility Plant, at original cost less           
accumulated depreciation$544,575  $530,721       
Current Assets 14,500   14,207       
Regulatory and Other Assets 16,824   15,440       
 $575,899  $560,368       
            
Capitalization and Liabilities           
            
Stockholders' Equity$162,910  $160,268       
Long Term Debt, Net of Current Portion 143,183   144,156       
Current Liabilities 36,473   25,599       
Advances for Construction 5,058   5,421       
Contributions in Aid of Construction 154,883   149,479       
Other Liabilities 73,392   75,445       
 $575,899  $560,368       
            



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