Artesian Resources Corporation Reports 4th Quarter and 2017 Year-End Earnings

NEWARK, Del., March 14, 2018 (GLOBE NEWSWIRE) — Artesian Resources Corporation (NASDAQ:ARTNA), a leading provider of water, wastewater services and related services on the Delmarva Peninsula, today announced revenue and income for 2017.  Revenues were $82.2 million, up 4.0% from $79.1 million in 2016.  Net income increased 7.9% to $14.0 million, compared to $13.0 million in 2016.  Diluted net income per common share was up 7.1% at $1.51 compared to $1.41 for 2016.

Water sales revenue increased 3.5% to $73.1 million from $70.6 million in 2016.  The increase in water sales revenue is primarily due to an increase in the Distribution System Improvement Charge (DSIC), an increase in overall water consumption and an increase in the number of customers served. 

Other utility operating revenue increased 9.5% from $3.8 million in 2016 to $4.2 million in 2017 as a result of an increase in wastewater customers served in existing and new developments in Sussex County, Delaware.  “We expect continued growth in the number of wastewater customers we serve in Sussex County, Delaware due to residential development and the desirability of this area as a retirement community,” said Dian C. Taylor, Chair, President and CEO. 

Non-utility revenue was $5.0 million up from $4.7 million in 2016, a 6.7% increase primarily due to an increase in Service Line Protection Plans revenue.  The Service Line Protection 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 $3.0 million, or 7.1% for the year ended December 31, 2017 compared to the year ended December 31, 2016.  The majority of the increase in total operating expenses is related to the increase in utility operating expenses, which increased $2.6 million, or 7.3% for the year ended December 31, 2017 compared to the year ended December 31, 2016.  The increase in overall operating expenses is primarily related to: increased payroll and employee benefit costs; repair and maintenance expenses, specifically carbon filter replacements; and maintenance of water treatment facilities and storage tanks. 

Depreciation and amortization expense increased $0.4 million, or 4.0%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.

Interest expense decreased $0.5 million primarily due to the refinancing of the Series O and Series Q First Mortgage Bonds in January 2017, reducing interest rates from 8.17% and 4.75%, respectively, to 4.24%.  Additionally, there was an interest rate change from 6.73% to 4.45% effective March 1, 2016 for the Series S First Mortgage Bond.

Federal and state income tax expense decreased $1.0 million, or 12.4%, from $8.3 million in 2016 to $7.3 million in 2017, primarily due to the federal Tax Cuts and Jobs Act of 2017.

In 2017 we invested $41.1 million to rehabilitate transmission and distribution facilities, improve existing treatment facilities, replace aging wells and pumping equipment, upgrade computer hardware and software and transportation equipment and upgrade and automate meter reading equipment.  “We firmly believe that investment in infrastructure drives economic growth, which is vital in making the Delmarva Peninsula a desirable place to live and conduct business,” said Taylor.  Investments also were made for the ongoing project to install an 8.5 mile pipeline and construct a 90 million gallon storage lagoon related to our agreement with Allen Harim LLC, a poultry processing plant in Harbeson, Delaware, to dispose of their treated process wastewater at Artesian’s facility near Milton, Delaware. “We are dedicated to protecting and preserving the environment, partnering with industries to help address their wastewater needs and while helping to keep contaminants out of our waterways,” said Taylor. 

Fourth Quarter Financial Results

Net income increased 35.9% to $3.7 million for the three months ended December 31, 2017 compared to $2.7 million for the same period in 2016.  Diluted net income per common share increased 33.3% to $0.40 for the three months ended December 31, 2017 compared to $0.30 for the same period in 2016.

For the three months ended December 31, 2017, revenues were $20.2 million, an increase of 4.0% from the $19.4 million recorded for the same period in 2016.  Water sales revenue increased 4.0% to $17.8 million for the three months ended December 31, 2017.  The increase in water sales revenue is the result of an increase in water consumption, an increase in the number of customers served and an increase in the Distribution System Improvement Charge. 

Operating expenses, excluding income taxes and depreciation, increased by 6.9% to $11.6 million for the three months ended December 31, 2017 compared to $10.9 million for the same period in 2016.  The increase in operating expenses is the result of increased payroll and employee benefit costs, and repair and maintenance expenses related to the maintenance of water treatment facilities and storage tanks.

Interest expense decreased 5.2% from $1.6 million for the three months ended December 31, 2016 to $1.5 million for the three months ended December 31, 2017 primarily due to the refinancing of the company’s Series O and Series Q First Mortgage Bonds in January 2017, reducing interest rates from 8.17% and 4.75%, respectively, to 4.24%.

Federal and state income tax expense decreased 52.0% from $1.9 million for the three months ended December 31, 2016 to $0.9 million for the three months ended December 31, 2017, primarily due to the federal Tax Cuts and Jobs Act of 2017.

Other Highlights include:

  • Renewed over 8.5 miles of water main in 16 communities in New Castle County, Delaware
  • Upgraded or replaced 8 wells to keep 3.2 million gallons a day of available water supply in service
  • Began construction of an 8.5 mile-long, 16-inch transmission main and a 90 million gallon storage lagoon to accommodate the process treated wastewater of a large food processing plant in Sussex County

About Artesian Resources

Artesian Resources Corporation operates as holding company of wholly-owned subsidiaries offering water, 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 main to approximately 301,000 people.

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     Twelve months ended  
    December 31,     December 31,  
  2017   2016   2017   2016  
Operating Revenues                        
Water sales $ 17,830     $ 17,147     $ 73,058   $ 70,587  
Other utility operating revenue   1,102       1,063       4,177     3,816  
Non-utility operating revenue   1,256       1,206       5,000     4,686  
    20,188       19,416       82,235     79,089  
                         
Operating Expenses                        
Utility operating expenses   9,714       9,053       38,277     35,658  
Non-utility operating expenses   691       678       2,777     2,602  
Depreciation and amortization   2,530       2,353       9,555     9,188  
State and federal income taxes   892       1,859       7,295     8,331  
Property and other taxes   1,195       1,120       4,731     4,491  
    15,022       15,063       62,635     60,270  
                         
Operating Income   5,166       4,353       19,600     18,819  
                         
Allowance for funds used during construction    106       62       334     222  
Miscellaneous   (5 )     (41 )     226     557  
                         
Income Before Interest Charges   5,267       4,374       20,160     19,598  
                         
Interest Charges   1,563       1,648       6,177     6,644  
                         
Net Income  $ 3,704     $ 2,726     $ 13,983   $ 12,954  
                         
Weighted Average Common Shares Outstanding – Basic   9,207       9,122       9,175     9,098  
Net Income per Common Share – Basic $ 0.40     $ 0.30     $ 1.52   $ 1.42  
                         
Weighted Average Common Shares Outstanding – Diluted   9,274       9,187       9,242     9,161  
Net Income per Common Share – Diluted $ 0.40     $ 0.30     $ 1.51   $ 1.41  
                         
Artesian Resources Corporation  
Condensed Consolidated Balance Sheet  
(In thousands)  
(Unaudited)  
                         
  December 31,   December 31,              
  2017   2016              
Assets                        
Utility Plant, at original cost less                         
accumulated depreciation $ 460,502     $ 425,502                
Current Assets   18,985       14,635                
Regulatory and Other Assets   15,152       10,839                
  $ 494,639     $ 450,976                
                         
Capitalization and Liabilities                        
                         
Stockholders’ Equity $ 146,644     $ 139,023                
Long Term Debt, Net of Current Portion   105,587       102,331                
Current Liabilities   28,461       19,328                
Net Advances for Construction   7,797       8,169                
Contributions in Aid of Construction   128,286       112,106                
Other Liabilities   77,864       70,019                
  $ 494,639     $ 450,976