Artesian Resources Corporation Reports 2018 Second Quarter and Year-to-Date Results

NEWARK, Del., Aug. 07, 2018 (GLOBE NEWSWIRE) -- Artesian Resources Corporation ARTNA, a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced that net income for the second quarter of 2018 was $3.9 million, an increase of $0.7 million, or 20.8%, compared to the second quarter of 2017.  Diluted net income per common share increased 20.0% to $0.42 compared to $0.35 for the second quarter of 2017. 

"We are pleased to report continued growth and economic vitality, reflected in our financial results for 2018," said Dian C. Taylor, Chair, President and CEO. "Access to reliable water and wastewater infrastructure and quality service is a key driver of economic development.  We continue to be enthusiastic about the pace of new business development opportunities and demand for our expertise occurring throughout our franchise areas, particularly in Sussex County, Delaware and Cecil County, Maryland," said Taylor.

Revenues for the second quarter of 2018 were $20.2 million, $0.3 million, or 1.3%, less than the $20.5 million in revenues recorded for the same three month period of 2017.  Water sales decreased $0.4 million, or 2.1%, for the three months ended June 30, 2018 compared to the same period a year ago, primarily due to amounts being held in reserve pending the final determination of the potential rate relief due to customers as a result of the Tax Cuts and Jobs Act of 2017 ("TCJA"). This decrease is partially offset by an increase in overall water consumption and an increase of approximately 1,800 in the number of customers served.

Excluding depreciation and income taxes, operating expenses decreased $0.5 million, or 4.6%, to $10.9 million for the second quarter of 2018.  Utility operating expenses decreased $0.5 million, or 5.7%, for the three months ended June 30, 2018 compared to the same period in 2017, mainly the result of decreases in payroll, employee benefit and purchased water expenses. Depreciation and amortization expense increased $0.2 million, or 9.1%, 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 decreased $0.2 million, or 11.3%, for the three months ended June 30, 2018 compared to the same period a year ago primarily due to the reduction in federal corporate income tax rate by the TCJA signed into law on December 22, 2017.

Miscellaneous income increased $0.3 million for the three months ended June 30, 2018 compared to the same period a year ago due to a pledge made in 2017 to a non-profit entity in Delaware organized to support the state's economic development efforts.

Year to Date Results

Through the first six months of 2018, net income was $7.4 million, a $1.1 million, or 16.8%, increase compared to the same period a year ago.  Diluted net income per common share was $0.80 for the six months ended June 30, 2018, an increase of 15.9% compared to $0.69 for the six months ended June 30, 2017. 

Revenues during the first six months of 2018 were $39.1 million, $0.6 million, or 1.4%, less than the $39.7 million in revenues recorded for the same six month period in 2017.  Water sales revenues decreased $0.7 million, or 1.9%, for the six months ended June 30, 2018 compared to the same period a year ago, primarily due to amounts being held in reserve pending the final determination of the potential rate relief due to customers as a result of the TCJA.  This decrease is partially offset by an increase in revenues from customer growth and an increase in overall water consumption.

Non-utility operating revenue increased approximately $0.1 million, or 3.1%, for the six months ended June 30, 2018 compared to the same period in 2017.  The increase is primarily due to an increase in Service Line Protection Plan revenue that covers the cost of materials and labor to repair or replace participants' leaking water services or clogged sewer lines.

Excluding depreciation and income taxes, operating expenses decreased $0.3 million, or 1.3%, to $21.9 million for the six months ended June 30, 2018, compared to $22.2 million for the same period in 2017.  Utility operating expenses for the six months ended June 30, 2018 were $18.1 million, a $0.4 million, or 2.0%, decrease from the same period a year ago, mainly the result of decreases in payroll, employee benefit and purchased water expenses.  Depreciation and amortization expense increased $0.5 million, or 9.9%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.

Miscellaneous income increased $0.6 million for the first six months of 2018 compared to the same period a year ago as a result of additional refunded patronage in 2018 on First Mortgage Bonds held by CoBank, ACB and a pledge made in 2017 to a non-profit entity in Delaware organized to support the state's economic development efforts.

Interest expense decreased $0.1 million, or 2.6%, to $3.0 million for the first six months of 2018 due to the refinancing of the Series P First Mortgage bond in January 2018, reducing the interest rate from 6.58% to 4.71%.

Federal and state income tax expense decreased $1.0 million, or 24.7%, for the six months ended June 30, 2018 compared to the same period a year ago, primarily due to the reduction in the Federal corporate income tax rate by the TCJA signed into law on December 22, 2017.

Consistent with the continued effort to ensure high quality reliable service to customers, $23.0 million has been invested in the first six months of 2018, a 34.1% increase, compared to $17.1 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.

Other Highlights

• Completed installation of an 8.5 mile wastewater transmission main from Harbeson, Delaware to our Northern Sussex Regional Water Recharge Facility and we are nearing completion on the installation of the liner for the 90 million gallon storage lagoon.  Once installed, the lagoon will be capable of accepting approximately 1.25 million gallons per day of process wastewater from Allen Harim Foods LLC ("Allen Harim").  Once in service, the current stream discharge of the wastewater by Allen Harim will cease and treated water will be used for spray irrigation of cropland, a much more environmentally sensitive solution.
   
• Entered into water service agreements for two warehouse facilities totaling 1.5 million square feet to be constructed in the Principio Business Park in Cecil County, Maryland, further indication of the continued economic development interest in Cecil County.
   
• Increased dividends to shareholders for the 22^nd consecutive year in May 2018.  The 1.5% increase raised the quarterly common stock dividend per share to $0.2387.

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 1,293 miles of water main to nearly a third of Delaware residents.

Contact:
Nicki Taylor
Investor Relations
(302) 453-6900
ntaylor@artesianwater.com