Artesian Resources Corporation Reports 4th Quarter and 2013 Year End Earnings

NEWARK, Del., March 12, 2014 (GLOBE NEWSWIRE) -- Artesian Resources Corporation (Nasdaq:ARTNA) (Artesian), a leading provider of water, wastewater services and related services on the Delmarva Peninsula, today announced revenue and income for 2013. Revenues were $69.1 million, down 2.1% from $70.6 million in 2012. Net income declined 15.7% to $8.3 million, compared to $9.8 million from last year. Diluted net income per common share was down 16.8% at $0.94 compared to $1.13. Lower water sales revenue as a result of a wet spring and summer drove the decline in revenues. Increased legal costs of $0.5 million associated with the litigation against the Chester Water Authority also contributed to the decline in net income and earnings per share.

"Although the very wet weather pattern this past spring and summer reduced our revenues, we remained focused on providing superior service to our customers," said Dian C. Taylor, Chair, President & CEO. "We invested $21.2 million in 2013 for infrastructure and other improvements to replace aging water mains, enhance existing treatment facilities, rehabilitate pumping equipment and upgrade our computer software system to ensure continued top quality service for our customers."

Water sales revenues declined 2.8%, to $61.8 million in 2013 from $63.6 million in 2012. The decrease in water sales resulted from the wet weather through the spring and summer, which included a record rainfall of 12.5 inches in June that broke a 118 year old state record and the fifth wettest summer since records began in 1895. The decrease in water sales revenue was partially offset by approximately $1.1 million in revenue from the Distribution System Improvement Charge (DSIC) in effect in 2013. Ms. Taylor noted that "the Distribution System Improvement Charge is a critical mechanism that has allowed Artesian to make significant investments in water distribution system infrastructure that ensure continued reliable service to its customers."

Non-utility revenue was $4.0 million, up from $3.8 million in 2012, a 4.9% increase. The increase was the result of the growth in revenues generated by Artesian's water and wastewater Service Line Protection Plans, which continue to be popular with customers. 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.

Operating expenses, excluding income taxes and depreciation, increased by 1.5% to $40.8 million in 2013 as compared to $40.2 million in 2012, of which $0.5 million of the increase was legal costs associated with the litigation against Chester Water Authority in regard to the proper determination of the rate the authority charges for water purchased from them under contract. Property tax expense also increased $0.2 million as a result of increases in tax rates charged by public school districts and an increase in utility plant subject to such taxes. These increases were partially offset by a $0.2 million decrease in payroll and benefit costs. The ratio of operating expenses, excluding depreciation and income taxes, to total revenues was 59.0% for 2013 compared to 56.9% for 2012.

Depreciation and amortization expense increased by $0.3 million, or 4.0%, due to continued investment in utility plant, providing supply, treatment and distribution of water. Income tax expense decreased by $1.0 million as a result of decreased profitability compared to a year ago.

For the three months ended December 31, 2013, revenues were $16.9 million, a decrease of 0.3% from $17.0 million for the same period in 2012 as a result of decreased water sales. In addition, increased payroll and related benefit expenses contributed to net income declining 11.5% to $1.5 million for the three months ended December 31, 2013 compared to $1.7 million for the same period in 2012. Diluted net income per common share declined 15.0% to $0.17 for the three months ended December 31, 2013 compared to $0.20 for the same period in 2012.

Artesian highlights in 2013 include the following:

  • Completed eleven water main renewal projects replacing nearly 6 miles of main ranging in age from 48 to 64 years old, and at the same time replacing 328 water services and 20 fire hydrants.
  • Installed 2.5 miles of 12 inch water main in southern New Castle County to complete the integration of systems in the area, enhancing water supply reliability and fire protection capabilities.
  • Extended water mains from our Delaware water system into the Town of Chesapeake City, Maryland making Artesian the sole water supplier for the Town and surrounding areas.
  • Began a three phase project to install nearly 2 miles of 16 inch water main and a 1,800 gallon per minute booster station in northern New Castle County to ensure supply reliability in the Christiana Mall area of northern New Castle County as new commercial building activity in the area is completed.
  • Undertook the complete rehabilitation of the 1950's era Castle Hills 1.3 million gallon per day water treatment plant in northern New Castle County, which is scheduled to be completed in May 2014.
  • Replaced 4 wells originally installed in the 1950's and 1960's to improve their production efficiency.
  • Completed the transition to a new Customer Care & Billing software system that allows our customer service representative to more easily access customer account information, shortening the time needed to respond to customer inquiries.
  • Have now enrolled more than 14,000 customers, about 17% of our base, in our free and secure e-billing service that enables our customers to conveniently view, print and pay their bills on-line.
  • Offer a one-hour service appointment window for customers in northern New Castle County, Delaware.

About Artesian Resources

Artesian Resources Corporation operates as the 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 investor-owned public water utility on the Delmarva Peninsula and has been providing water service since 1905. Artesian supplies 7.3 billion gallons of water per year through 1,182 miles of water main to about 300,000 people.

Artesian Resources Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2013 2012 2013 2012
Operating Revenues
Water sales $14,845 $15,010 $61,846 $63,607
Other utility operating revenue 1,033 1,003 3,253 3,169
Non-utility operating revenue 1,015 939 3,974 3,787
16,893 16,952 69,073 70,563
Operating Expenses
Utility operating expenses 8,893 8,725 34,509 34,117
Non-utility operating expenses 524 538 2,121 2,100
Depreciation and amortization 2,086 2,050 8,251 7,930
State and federal income taxes 1,047 1,180 5,588 6,616
Property and other taxes 1,066 980 4,120 3,945
13,616 13,473 54,589 54,708
Operating Income 3,277 3,479 14,484 15,855
Allowance for funds used during construction 80 70 324 323
Miscellaneous (46) (35) 548 713
Income Before Interest Charges 3,311 3,514 15,356 16,891
Interest Charges 1,764 1,766 7,055 7,045
Net Income $1,547 $1,748 $8,301 $9,846
Weighted Average Common Shares Outstanding - Basic 8,818 8,705 8,774 8,666
Net Income per Common Share - Basic $ 0.18 $ 0.20 $ 0.95 $ 1.14
Weighted Average Common Shares Outstanding - Diluted 8,878 8,773 8,836 8,717
Net Income per Common Share - Diluted $ 0.17 $ 0.20 $ 0.94 $ 1.13
Artesian Resources Corporation
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
December 31, December 31,
2013 2012
Assets
Utility Plant, at original cost less accumulated depreciation $378,960 $366,563
Current Assets 13,823 13,480
Regulatory and Other Assets 11,618 11,671
$404,401 $391,714
Capitalization and Liabilities
Stockholders' Equity $121,836 $118,180
Long Term Debt, Net of Current Portion 105,510 106,257
Current Liabilities 25,563 24,939
Net Advances for Construction 11,427 13,023
Contributions in Aid of Construction 88,434 81,348
Other Liabilities 51,631 47,967
$404,401 $391,714

CONTACT: Nicholle Taylor Investor Relations - Artesian Resources Corporation (302) 453-6900 ntaylor@artesianwater.comSource:Artesian Resources Corporation