Ban on service cut-offs affected the bottom line
Artesian Resources Corporation reported higher earnings in the second quarter and first half of 2020.
Net income for the first six months ended June 30 was $8.6 million, a $1.3 million, or a 17.3 percent, increase compared to net income recorded during the first six months of 2019. Artesian is based south of Newark.
The publicly-traded company remains under the operating control of the founding families of Artesian.
Revenues totaled $41.7 million for the six months ended June 30, 2020, $1.6 million, or four percent higher than revenues recorded for the same six month period in 2019. Water sales revenue increased 4.8 percent to $36.8 million for the six months ended June 30, 2020 from $35.1 million for the same period in 2019, primarily due to an increase in residential consumption revenue and an increase in the number of customers served.
The increase is partially offset by a decrease in non-residential consumption revenue.
Other utility operating revenue increased 2.9 percent to $2.3 million for the six months ended June 30, from the same period in 2019, primarily as a result of increases in wastewater revenue from customer growth. This increase is partially offset by a decrease in utility service and finance charges, related to state-mandated prohibitions on late fees and service disconnections, due to the Covid-19 crisis.
Utility operating expenses increased $0.2 million, or 1.2%, primarily due to an increase in bad debt expense related to state-mandated prohibitions on late fees and service disconnections for non-payment as well as an increase in payroll and employee benefits costs.
This increase is partially offset by a decrease in general administration expenses related to reduced in person group activity costs, meetings, training and conferences, as well as a decrease in consulting services. “We remain diligent in controlling our discretionary expenses as we continue to provide essential utility services during the pandemic,” said Dian C. Taylor, CEO.
“Artesian’s investments in two recent acquisitions highlight the success of our public-private partnerships throughout the Delmarva Peninsula and our continued focus on strategic growth,” said Taylor.
Artesian completed the purchase of water system operating assets from the Town of Frankford in April serving a population of nearly 1,000 in Sussex County, Delaware. The total purchase price was $3.6 million.
Artesian completed the purchase of water system operating assets from the City of Delaware City on August 3, 2020, which services a population of over 2,000 in New Castle County, Delaware. The total purchase price was $2.1 million.
In the past three years, Artesian has now completed seven acquisitions, including the prior acquisitions of the water systems of the Slaughter Beach Water Company, High Point, Cantwell, Odessa and Fort DuPont.
Artesian invested $20.6 million in the first six months of 2020, compared to $18.2 million from the same period a year ago, in water and wastewater infrastructure projects including installation of transmission and distribution facilities, replacement of aging mains, rehabilitation of treatment facilities, and redevelopment of wells and pumping equipment.
Net income for the second quarter of 2020 was $4.6 million, a 20.9 percent increase compared to $3.8 million for the second quarter of 2019.
Revenues totaled $21.8 million for the three months ended June 30, 2020, up 5.3 percent, for the three months ended June 30, 2019.