NEWARK, Del., March 13, 2019 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (ARTNA), a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced earnings results for 2018. Net income increased 2.1% to $14.3 million, compared to $14.0 million in 2017. Diluted net income per common share increased 2.0% to $1.54, compared to $1.51 for 2017.
Approximately $3.3 million of water sales revenue was placed in reserve in 2018. In accordance with the Delaware Public Service Commission’s January 31, 2019 approval of a reduction in Delaware water rates, the reserved revenue is to be refunded to customers in the second quarter of 2019 to return the savings from the Tax Cuts and Jobs Act’s (“TCJA”) reduction in the corporate tax rate. The overall decrease in water sales revenue compared to the prior year arising from the reduction in water rates was partially offset by an increase in water consumption and an increase in the number of customers served of approximately 2.0%. Water sales revenue was $70.8 million in 2018, a decrease of $2.3 million, or 3.1%, from $73.1 million in 2017.
Other utility operating revenue increased 6.7% to $4.5 million in 2018 from $4.2 million in 2017 as a result of an increase in wastewater customers served in new and existing developments in Sussex County, Delaware. “The number of Delaware wastewater customers we serve grew by 16.6% in 2018 and we expect to see continued growth in our customer base in Sussex County, Delaware as a result of the strategic investments we have made in infrastructure to support residential development and the growing desirability of this area as a retirement community,” said Dian C. Taylor, Chair, President and CEO.
Non-utility revenue increased 2.5% to $5.1 million in 2018 from $5.0 million in 2017, primarily due to an increase in Service Line Protection Plans (“SLP Plans”) revenue. The SLP Plans provide coverage for all material and labor required to repair or replace participants’ leaking water service or clogged sewer lines and internal plumbing lines.
Operating expenses, excluding depreciation and income taxes, increased $0.4 million, or 0.9%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. Property and other taxes increased $0.2 million, or 5.0%, primarily due to an increase in utility plant subject to taxation. Non-utility expenses increased approximately $0.1 million, or 3.7%, primarily due to an increase in plumbing services related to the SLP Plans.
Depreciation and amortization expense increased $0.7 million, or 7.7%, for the year ended December 31, 2018 compared to the year ended December 31, 2017, 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 $2.3 million, or 31.6%, from $7.3 million in 2017 to $5.0 million in 2018, primarily due to the reduction in the federal corporate income tax rate as a result of the TCJA.
Miscellaneous income increased $0.7 million for the year ended December 31, 2018 compared to the year ended December 31, 2017, primarily due to an increase in the amount of the patronage payment from CoBank, ACB, related to the refinancing of two First Mortgage bonds in January 2017 and a one-time additional patronage payment in 2018 related to savings generated from the TCJA.
Interest expense increased $0.1 million, primarily due to an increase in borrowing under lines of credit. This increase was mostly offset by a decrease in interest charges due to a refinancing of the Series P First Mortgage bond in January 2018, reducing the interest rate from 6.58% to 4.71%.
In 2018, we invested $49.1 million, compared to $41.1 million in 2017, in infrastructure projects including installation of transmission and distribution facilities, replacement of aging mains, rehabilitation of treatment facilities, redevelopment of wells and pumping equipment and upgrades to computer, transportation and meter reading equipment as well as investments in wastewater facilities in Delaware. Our wastewater facilities investments included completing construction of an eight mile pipeline, a 90 million gallon storage lagoon and spray irrigation facilities to dispose of treated process wastewater from a new industrial customer, service for which is expected to begin in 2019. “We firmly believe that investments we have made in infrastructure deliver the dual-benefit of sustaining economic growth and improving the quality of our environment in the region, and are vital to our ability to continue to increase shareholder value,” said Taylor.
Fourth Quarter Financial Results
Financial results for the fourth quarter of 2018, specifically the reduction in water sales revenue and state and federal income taxes, reflect the revenue reserve to be refunded to customers and the implementation effect of the TCJA including one-time adjustments that impacted the comparative period of the fourth quarter of 2017. Utility and non-utility operating expenses increased primarily due to increases in payroll and repairs and maintenance expenses.
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.
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 anticipated expansion of service in Sussex County, Delaware, our investment in infrastructure projects and wastewater facilities, continued growth in the number of customers served and our ability to continue to increase shareholder value. 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||Twelve months ended|
|December 31,||December 31,|
|Other utility operating revenue||1,183||1,102||4,456||4,177|
|Non-utility operating revenue||1,314||1,256||5,126||5,000|
|Utility operating expenses||9,877||9,715||38,330||38,277|
|Non-utility operating expenses||810||691||2,879||2,777|
|Depreciation and amortization||2,666||2,530||10,288||9,555|
|State and federal income taxes||254||892||4,991||7,295|
|Property and other taxes||1,235||1,195||4,968||4,731|
|Allowance for funds used during construction||209||107||622||334|
|Income Before Interest Charges||4,650||5,267||20,530||20,160|
|Weighted Average Common Shares Outstanding - Basic||9,249||9,207||9,239||9,175|
|Net Income per Common Share - Basic||$||0.32||$||0.40||$||1.55||$||1.52|
|Weighted Average Common Shares Outstanding - Diluted||9,303||9,274||9,293||9,242|
|Net Income per Common Share - Diluted||$||0.32||$||0.40||$||1.54||$||1.51|
Artesian Resources Corporation
Condensed Consolidated Balance Sheets
|December 31,||December 31,|
|Utility Plant, at original cost less accumulated depreciation||$||498,678||$||460,502|
|Regulatory and Other Assets||15,034||15,152|
|Capitalization and Liabilities|
|Long Term Debt, Net of Current Portion||115,862||105,587|
|Net Advances for Construction||6,596||7,797|
|Contributions in Aid of Construction||138,015||128,286|