Artesian Resources Corporation Reports First Quarter 2018 Results

NEWARK, Del., May 02, 2018 -- Artesian Resources Corporation (NASDAQ:ARTNA), a leading provider of water and wastewater services, and related services, on the Delmarva Peninsula, today announced that net income for the first quarter was $3.5 million, a $0.4 million, or 12.7%, increase compared to net income recorded during the first quarter of 2017.  Diluted net income per share increased 8.8% to $0.37 compared to $0.34 for the first quarter of 2017.

Revenues for the first quarter of 2018 were $18.9 million, a $0.3 million, or 1.5%, decrease from the $19.2 million recorded for the same three-month period of 2017.  Water sales revenue decreased $0.3 million, or 1.7%, for the first quarter of 2018, primarily due to amounts being held in reserve pending the final determination by the Delaware Public Service Commission of the potential rate relief due to customers as a result of the 2017 Tax Cuts and Jobs Act (TCJA).  This decrease is partially offset by an increase in overall customer water consumption and an increase in the number of customers served.

Excluding depreciation and income taxes, operating expenses increased $0.2 million, or 2.3%, for the three months ended March 31, 2018 compared to the same period in 2017.  The increase is primarily related to an increase in payroll and employee compensation costs, which was partially the result of a greater number of main break repairs that occurred during the unusually cold weather experienced early this year.  “The extremely cold weather this past winter was challenging, but our outstanding crews braved the conditions around the clock repairing a record 62 main breaks over a five-week period, restoring service as quickly as possible to our customers,” said Dian C. Taylor, Chair, President and CEO. 

Property and other taxes increased $0.1 million, or 7.4%, as a result of increased payroll taxes and the amount of utility plant in service subject to property tax assessments. The ratio of operating expense, excluding depreciation and income taxes, to total revenue was 58.3% for the first quarter of 2018 compared to 56.2% in the same period in 2017.

Depreciation and amortization expense increased $0.2 million, or 10.7%, for the three months ended March 31, 2018 compared to the same period in 2017 due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to wastewater customers.

Federal and state income tax expense decreased $0.8 million, or 36.1%, for the three months ended March 31, 2018 compared to the same period in 2017 primarily due to the reduction in the federal corporate income tax rate by the TCJA signed into law on December 22, 2017. 

Miscellaneous income increased $0.3 million, or 57.7%, for the three months ended March 31, 2018 compared to the same period in 2017 as a result of additional refunded patronage on First Mortgage Bonds held by CoBank, ACB.

Interest expense decreased $0.1 million, or 3.7%, for the three months ended March 31, 2018 compared to the same period in 2017, 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%, as well as the refinancing of the Series P First Mortgage Bond in January 2018, reducing the interest rate from 6.58% to 4.71%. 

“In 2017, $41.1 million was invested in water and wastewater utility plant to serve our customers, and another $9.9 million has been invested in the first quarter of 2018, 28.9% more than in the first quarter of 2017,” said Taylor. “Our significant investments in treatment facilities, pumping equipment, transmission and distribution facilities and mains enable us to continue to provide high quality reliable service to our customers,” said Taylor.

Other Highlights

• On March 29, 2018, Artesian acquired the water utility assets of the Slaughter Beach Water Company, which is located along the Delaware Bay in Sussex County, Delaware and serves 265 customers.
• In January 2018, Artesian signed an interconnection agreement with the town of North East, Maryland, which is located in the center of Cecil County’s designated growth corridor.  The agreement allows the town’s excess available water capacity to be available as a backup supply for our current and future customers in areas adjacent to the town.
• Artesian is nearing completion of an 8.5 mile wastewater transmission main from Harbeson, Delaware to its Northern Sussex Regional Water Recycling Facility and has begun construction of a 90 million gallon storage lagoon at the Facility necessary to accept approximately 1.25 million gallons a day of process wastewater from Allen Harim Foods LLC.  Once in service, the current stream discharge of the wastewater by Allen Harim will cease and the treated water will be used for spray irrigation of cropland, a much more environmentally sensitive solution.            

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:
Nicholle Taylor
Investor Relations
(302) 453-6900
[email protected]