Press release·03/26/2025 22:26:06

Artesian Resources Corporation: Delivering Reliable Water and Wastewater Services

Artesian Resources Corporation is a leading provider of water and wastewater services in the Delmarva Peninsula region. The company operates through several regulated subsidiaries, including Artesian Water, Artesian Water Maryland, and Artesian Wastewater, as well as non-utility subsidiaries like Artesian Utility.

Strong Financial Performance in 2024

In 2024, Artesian Resources reported impressive financial results. Total operating revenues increased by 9.2% to $108.0 million, driven by a 10.1% rise in water sales revenue and a 7.7% increase in other utility operating revenue. This growth was primarily due to a temporary rate increase of 14.6% implemented in November 2023, as well as an increase in overall water consumption and the number of customers served.

The company’s net income applicable to common stock also saw a significant 22.1% increase to $20.4 million. This was supported by the higher revenues, as well as a decrease in interest charges and a smaller increase in total operating expenses compared to the revenue growth.

Expanding Customer Base and Service Area

Artesian Resources has been successful in growing its customer base across its regulated water and wastewater subsidiaries. In 2024, the number of metered water customers in Delaware increased by 1.6%, while the number in Maryland grew by 2.3%. The company’s Delaware wastewater customers also saw a 6.5% increase.

The company’s strategy focuses on expanding its service area through strategic acquisitions and partnerships with local governments and developers. Artesian has completed several acquisitions in recent years, including asset purchase agreements with municipal and developer/homeowner association operated systems. This has allowed the company to capture additional service territories and establish a strong platform for further expansion.

Investing in Infrastructure Improvements

Artesian Resources recognizes the importance of investing in its water and wastewater infrastructure to maintain high-quality, reliable service for its growing customer base. The company’s planned and budgeted capital improvements over the next three years include projects for water infrastructure improvements and expansion in both Delaware and Maryland, as well as wastewater infrastructure improvements and expansion in Delaware.

In 2024, the company invested $45.9 million in capital expenditures, which included projects such as the relocation of facilities due to government mandates, the rehabilitation of aging infrastructure, the installation of new mains, and the construction of a new wastewater treatment plant. The company expects to invest approximately $46.4 million in net capital expenditures in 2025.

Regulatory Environment and Rate Adjustments

Artesian Resources’ regulated water and wastewater subsidiaries operate under the oversight of state public service commissions, which approve the company’s rates and capital investments. In 2024, the company implemented a temporary 14.6% rate increase in November 2023, which was later replaced by a final approved rate increase of approximately 15.2% in June 2024.

The regulatory environment is an important factor in the company’s financial performance, as the public service commissions generally recognize the operating and capital costs associated with infrastructure improvements and allow the company to recover these costs through customer rates. Artesian Resources has a proven track record of working constructively with regulators to ensure fair and reasonable rates for its customers.

Diversified Revenue Streams

In addition to its regulated water and wastewater operations, Artesian Resources has non-utility subsidiaries that contribute to its revenue and diversify its business. Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions, as well as offering protection plans to customers.

The company’s non-utility operating revenue increased by 1.7% in 2024, primarily due to an increase in revenue from its service line protection (SLP) plans, partially offset by a decrease in contract service revenue. The SLP plans provide a steady revenue stream unaffected by weather, as customers are billed a flat monthly or quarterly rate.

Liquidity and Capital Resources

Artesian Resources maintains a strong liquidity position to support its ongoing operations and capital investment program. In 2024, the company generated $36.8 million in cash flow from operating activities, an increase from $31.9 million in the previous year. This cash flow, along with $20.4 million in net contributions and advances from developers, was used to fund $45.9 million in capital expenditures and pay $12.2 million in dividends.

The company has access to lines of credit and long-term debt financing to support its liquidity needs and capital investment plans. As of December 31, 2024, Artesian Resources had $60 million in available lines of credit, with no outstanding balances. The company also has long-term debt agreements, including first mortgage bonds and state revolving fund loans, which it uses to finance its infrastructure investments.

Outlook and Future Opportunities

Artesian Resources is well-positioned for continued growth and success. The company’s strategic focus on expanding its water, wastewater, and service line protection services across the Delmarva Peninsula, as well as its proven ability to acquire and integrate high-growth entities, provide a strong foundation for future expansion.

The company believes that Delaware’s lower cost of living and availability of development sites, as well as the state’s lower property and income tax rates, will continue to drive increases in its customer base. Additionally, the company sees significant growth opportunities in its regulated wastewater subsidiaries, as it seeks to form strategic partnerships and relationships with developers and governmental agencies.

Overall, Artesian Resources’ solid financial performance, commitment to infrastructure investment, and strategic growth initiatives position the company well to continue delivering reliable and high-quality water and wastewater services to its customers and creating value for its shareholders.