NEWARK, Del., March 09, 2023 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (Nasdaq: ARTNA), a leading provider of water and wastewater services, and a number of other related core business services, on the Delmarva Peninsula, today announced earnings results for the fourth quarter and year ended December 31, 2022.
- Increased revenues by 8.8% and net income by 7.0% in 2022
- Increased annualized shareholder dividends by 4.0% in 2022
- Paid dividends to shareholders for 121 consecutive quarters and increased dividends for the 26th consecutive year
- Invested $48.5 million in 2022 in water and wastewater infrastructure
- Acquired Tidewater Environmental Services, Inc. (TESI) more than doubling the number of wastewater customers served
- Acquired the Town of Clayton's water system in Kent County, Delaware
- Completed the Dagsboro Armory Road Tank in Sussex County adding one million gallons of additional elevated water storage
- Completed rehabilitation of the booster station and installation of water mains to serve Phase 1 of the Bainbridge Development in Cecil County, Maryland
Year End Results
Net income for the year ended December 31, 2022 was $18.0 million, a $1.2 million, or 7.0%, increase compared to net income recorded for the same period of 2021. Diluted earnings per share was $1.90 for the year ended December 31, 2022, a 6.3% increase compared to $1.79 for the same period of 2021.
Revenues totaled $98.9 million for the year ended December 31, 2022, $8.0 million, or 8.8%, more than revenues recorded for the same period in 2021.
Other utility operating revenue, predominately consisting of wastewater revenues, increased $4.3 million, or 59.9%. This increase is mainly due to an increase in wastewater revenue associated with residential customer growth resulting from the acquisition of TESI in January 2022, industrial wastewater services that started in June 2021, as well as organic residential customer growth.
Non-utility operating revenue increased $3.2 million, or 55.3%, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan (SLPP) revenue.
Water sales revenue increased $0.5 million, or 0.6%, primarily due to an increase in fixed fee revenue related to added customer growth.
"We are pleased to have delivered solid financial results for 2022. Artesian remains focused on operational excellence, as well as our proactive capital investment strategy, and continues to see consistent growth in the communities we serve. Despite a year of supply constraints and increased costs, our entire management team has championed cost-effective solutions, allowing us to continue to deliver high quality water and wastewater services," said Dian C. Taylor, Chair and CEO.
Operating expenses, excluding depreciation and income taxes, increased $5.6 million, or 10.9%. Non-utility operating expenses increased $2.9 million primarily due to an increase in costs associated with a wastewater infrastructure design and construction contract and an increase in plumbing services related to SLPP repairs. Utility operating expenses increased $2.4 million, or 5.7%, primarily as the result of increases in overall costs associated with the TESI acquisition. In addition, there were increases in overall payroll costs, repairs and maintenance, administrative costs, purchased power and water treatment costs, some of which are associated with the general rise in inflation and supply chain challenges. These increases were partially offset by a decrease in purchased water costs related to a decrease of water purchased under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced.
Property and other taxes increased $0.3 million, or 5.1%, primarily due to an increase in utility plant subject to taxation.
Depreciation and amortization expense increased $0.7 million, or 6.2%, primarily due to continued investment in utility plant providing supply, treatment, storage, and distribution of water to customers and service to our wastewater customers.
Allowance for funds used during construction, or AFUDC, increased $0.5 million as a result of higher long-term construction activity subject to AFUDC.
Interest charges increased $0.9 million, primarily related to an increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022.
Continuing our efforts to expand integrated water and wastewater systems throughout the state of Delaware, in 2022, the Company completed one acquisition of a regulated wastewater company and purchased water operating assets from a municipality. The acquisition of Middlesex Water Company's wholly-owned subsidiary, TESI, in January 2022 added seven wastewater facilities, 13,000 acres of exclusive franchise territory, and more than doubled the number of wastewater customers served in Sussex County, Delaware. The acquisition of the Town of Clayton's water system in May 2022 added approximately 4,000 residents through 23 miles of main, and included a treatment station, three wells and two elevated water storage tanks. The system is now integrated with Artesian's existing regional water system in northern Kent County, Delaware marking a seamless transition for customers.
"This past year we have seen the culmination of many long-term strategic initiatives. Upon the completion of the TESI acquisition, we are now the sole regulated wastewater utility in Sussex County, Delaware. In addition to doubling our customers from the acquisition we have also seen a 15% increase in our wastewater customer base due to organic growth, Artesian is now positioned as the leader in wastewater solutions for the continued economic growth of this rapidly developing area," said Taylor.
As part of Artesian's on-going effort to ensure high quality reliable service to customers, $48.5 million was invested in 2022, compared to $40.8 million in 2021, in water and wastewater infrastructure projects including installation of transmission and distribution facilities, replacement of aging mains, installation of new mains, rehabilitation of treatment facilities, construction of new water storage tanks and treatment facilities, and redevelopment of wells and pumping equipment.
"Artesian has maintained a proactive approach to our infrastructure investment strategy throughout 2022. Our long-term initiative to increase self-sufficiency and reduce purchased water expenses was successfully completed this year as a result of our investments in increased water supply and booster capabilities," said Nicholle R. Taylor, President of Artesian Water Company. "Additionally, Artesian is currently constructing a new one-million-gallon elevated water storage tank in southern New Castle County, Delaware to meet the current and future growth needs arising from increased industrial and residential demands."
Fourth Quarter Results
Net income for the quarter ended December 31, 2022 was $2.3 million, a $0.7 million, or 24.0%, decrease compared to net income recorded for the same period of 2021. Diluted earnings per share was $0.24 for the quarter ended December 31, 2022, a 24.5% decrease compared to $0.32 for the same period of 2021.
Revenues totaled $25.1 million, an increase of $2.5 million, or 11.3%, more than revenues recorded for the same period in 2021.
Other utility operating revenue increased $0.8 million, or 35.7%, primarily due to an increase in wastewater revenue associated with residential customer growth resulting from the acquisition of TESI in January 2022 and organic residential customer growth.
Non-utility operating revenue increased $1.6 million, primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in SLPP revenue.
Water sales revenue increased $0.1 million, or 0.6%, primarily due to an increase in fixed fee revenue related to added customer growth. Artesian Water provided notice to the Delaware Public Service Commission of its intent to file a request in the second quarter of 2023 to implement new rates to support Artesian Water's ongoing capital improvement program and to cover increased costs of operations.
Operating expenses, excluding depreciation and income taxes, increased $3.0 million, or 21.8%. Utility operating expenses increased $1.7 million, or 15.0%, and non-utility operating expenses increased $1.2 million. The increase in utility operating expenses was primarily the result of $0.8 million in current period expenses of TESI, which was acquired in January 2022, the timing of employee bonuses, and an increase in administrative costs. In addition, repair and maintenance costs, purchased power and water treatment costs increased, mostly associated with the rise in general inflation and supply chain challenges. These increases were partially offset by a decrease in purchased water costs related to a decrease in the quantity of water purchased under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced. The increase in non-utility operating expenses was primarily due to an increase in costs associated with a wastewater infrastructure design and construction contract and an increase in plumbing services related to SLPP repairs.
AFUDC increased $0.3 million as a result of higher long-term construction activity subject to AFUDC.
Interest charges increased $0.4 million, primarily related to an increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022.
About Artesian Resources
Artesian Resources Corporation operates as a holding company of wholly-owned subsidiaries offering water and wastewater services, and a number of other related core business 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 8.6 billion gallons of water per year through 1,442 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, our growth strategy, acquisitions, expectations regarding infrastructure investments, recovery of investments and increased costs in rates charged to customers, and the continued growth in our business and the number of customers 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, including inflationary pressures, 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||Twelve months ended|
|December 31,||December 31,|
|Other utility operating revenue||3,226||2,377||11,506||7,195|
|Non-utility operating revenue||3,140||1,564||9,073||5,843|
|Utility operating expenses||12,778||11,108||43,772||41,414|
|Non-utility operating expenses||2,432||1,186||6,850||3,942|
|Depreciation and amortization||3,270||2,927||12,620||11,885|
|State and federal income taxes||900||1,060||5,878||5,737|
|Property and other taxes||1,499||1,426||5,871||5,587|
|Allowance for funds used during construction||431||95||1,329||823|
|Income Before Interest Charges||4,622||4,967||26,500||24,419|
|Weighted Average Common Shares Outstanding - Basic||9,497||9,410||9,462||9,394|
|Net Income per Common Share - Basic||$||0.24||$||0.33||$||1.90||$||1.79|
|Weighted Average Common Shares Outstanding - Diluted||9,505||9,441||9,481||9,426|
|Net Income per Common Share - Diluted||$||0.24||$||0.32||$||1.90||$||1.79|
|Artesian Resources Corporation|
|Condensed Consolidated Balance Sheets|
|December 31,||December 31,|
|Utility Plant, at original cost less|
|Regulatory and Other Assets||23,956||15,620|
|Capitalization and Liabilities|
|Long Term Debt, Net of Current Portion||175,619||143,259|
|Net Advances for Construction||3,686||4,295|
|Contributions in Aid of Construction||224,308||176,656|