Artesian Resources Corporation Reports First Quarter 2017 Results

NEWARK, Del., May 03, 2017 (GLOBE NEWSWIRE) -- 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 of 2017 was $3.1 million, a $0.3 million or 9.0% increase compared to net income recorded during the first quarter of 2016.  Diluted net income per share increased 9.7% to $0.34 compared to $0.31 for the first quarter of 2016.

“We are pleased to report continued strong financial results as we begin 2017,” said Dian C. Taylor, Chair, President and CEO.  “In the first quarter of 2017 we have invested $7.7 million, compared to $4.3 million during the same period a year ago, in treatment facilities, pumping equipment, transmission and distribution facilities and mains to continue to provide high quality reliable service to our growing customer base,” said Taylor.

Revenues for the first quarter of 2017 were $19.2 million, a $0.8 million, or 4.0%, increase from the $18.4 million in revenues recorded for the same three-month period of 2016.  Water sales revenue increased by $0.5 million, or 3.0%, for the first quarter of 2017.  The growth in water sales revenue was due to an increase in the number of customers served and overall consumption, in addition to the Distribution System Improvement Charge applied to customer bills.

The Distribution System Improvement Charge allows Delaware water utilities to place into effect interim rate increases for timely recovery of investments made in certain infrastructure improvements.  “The Distribution System Improvement Charge has allowed Artesian to invest $16.6 million since October 1, 2014 to replace and repair ageing infrastructure to ensure proper water quality and service reliability for our customers,” said Taylor.

Other utility operating revenues for the first quarter of 2017 were $1.0 million, a 17.9% increase from the $0.9 million recorded for the same three month period in 2016.  The increase was the result of an increase in water service charges and greater wastewater revenue related to customer growth and an increase in new development inspection fees.

Non-utility operating revenues for the first quarter of 2017 were $1.2 million, a $0.1 million or 7.6% increase from the same three month period in 2016, reflecting an increase in the number of customers enrolled in Service Line Protection Plans and an increase in contract service 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.

Excluding depreciation and income taxes, operating expenses increased $0.5 million, or 4.4%, for the three months ended March 31, 2017 compared to the same period in 2016.  The increase was primarily related to water purchased while one of the major transmission mains in our northern New Castle County, Delaware water system was being relocated as a result of state highway work, water treatment equipment maintenance costs, water treatment expenses and Service Line Protection Plan contract repairs.  The ratio of operating expense, excluding depreciation and income taxes, to total revenue was 56.2% for the first quarter of 2017 compared to 56.0% in the same period in 2016. 

Federal and state income tax expense increased $0.1 million, or 7.3%, to $2.1 million, due to higher pre-tax income for the three months ended March 31, 2017, compared to the same three month period in 2016.

Interest expense decreased $0.1 million for the three months ended March 31, 2017 compared to the same period in 2016, primarily due to the refinancing of the Series O and Series Q First Mortgage Bonds in January 2017.  The annual interest rate was reduced from 8.17% for the Series O First Mortgage Bond and 4.75% for the Series Q First Mortgage Bond to 4.24%.  The reduction in the annual interest rate on the Series S First Mortgage Bond from 6.73% to 4.45% effective March 1, 2016 also contributed to the decrease in interest expense. 

Other Highlights

• On January 27, 2017, Artesian Wastewater Management, Inc., a wholly-owned subsidiary, entered into an agreement with Allen Harim Foods, LLC located in Harbeson, Delaware to dispose of 1.5 million gallons per day of treated process wastewater by means of spray irrigation.  Construction of wastewater mains from the Allen Harim Foods plant to our facilities is underway.
   
• On February 23, 2017, an agreement was reached with the Fort DuPont Redevelopment and Preservation Corporation for the purchase of existing water assets and for the provision of potable water and fire suppression services for the planned 600 unit residential community and retail development on the 325 acre site, as well as to the existing Governor Bacon Health Center and National Guard facilities.
   
• On January 24, 2017, the Delaware Public Service Commission granted the water franchise to Artesian to serve the historic town of Odessa. 

“We are excited to partner with Allen Harim Foods, Fort DuPont Redevelopment and Preservation Corporation and the town of Odessa on each of these initiatives.  We look forward to providing our water and wastewater expertise for these projects that will contribute to the continued economic vitality of Delaware,” said Taylor.

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 7.6 billion gallons of water per year through 1,260 miles of water main to approximately 301,000 people.