What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-04 · 234 added, 328 removed, 86 unchanged (87% of the section changed)

4 unchanged sentences

or the Exchange Act and the Private Securities Litigation Reform Act of 1995.

Statements regarding specific and overall impacts of the COVID-19 global pandemic on our financial condition and results of operations, our goals, priorities, growth and

expansion plans and expectation for our water and wastewater subsidiaries and non-regulated subsidiaries, customer base growth opportunities in Delaware and Cecil County, Maryland, our belief regarding our capacity to provide water services for the

foreseeable future to our customers, our belief relating to our compliance and the cost to achieve compliance with relevant governmental regulations, our expectation of the timing of decisions by regulatory authorities, the impact of weather on our

operations and the execution of our strategic initiatives, our expectation of the timing for construction on new projects, our expectation relating to the adoption of recent accounting pronouncements, contract operations opportunities, legal

proceedings, our properties, deferred tax assets, adequacy of our available sources of financing, the expected recovery of expenses related to our long-term debt, our expectation to be in compliance with financial covenants in our debt instruments, our

ability to refinance our debt as it comes due, our ability to adjust our debt level, interest rate, maturity schedule and structure, the timing and terms of renewals of our lines of credit, plans to increase our wastewater treatment operations,

engineering services and other revenue streams less affected by weather, expected future contributions to our postretirement benefit plan, anticipated growth in our non-regulated division, the impact of recent acquisitions on our ability to expand and

foster relationships, anticipated investments in certain of our facilities and systems and the sources of funding for such investments, and the sufficiency of internally generated funds and credit facilities to provide working capital and our liquidity

needs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected.

Words such as "expects",

"anticipates", "intends", "plans", "believes", "seeks", "estimates", "projects", "forecasts", "may", "should", variations of such words and similar expressions are intended to identify such forward-looking statements.

Certain factors as discussed

under Item 1A -Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2021, and this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, such as changes in weather, changes in our contractual obligations,

changes in government policies, the timing and results of our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally, and other matters could cause results to differ materially from those in the

forward-looking statements.

While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as a representation of the Company's views as of

any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 2022

Our profitability is primarily attributable to the sale of water.

Gross water sales composed 80.7% of total operating revenues for the nine months

ended September 30, 2022.

Our profitability is also attributed to the various contract operations, water, sewer and internal SLP Plans, wastewater services and other services we provide.

Water sales are subject to seasonal fluctuations,

particularly during summer when water demand may vary with rainfall and temperature.

In the event temperatures during the typically warmer months are cooler than expected, or rainfall is greater than expected, the demand for water may decrease and

our revenues may be adversely affected.

We believe the effects of weather are short term and do not materially affect the execution of our strategic initiatives.

Our wastewater services, contract operations, SLP Plans and other services provide a

revenue stream that is not affected by changes in weather patterns.

While water sales are our primary source of revenues, we continue to seek growth opportunities to provide wastewater services in Delaware and the

surrounding areas.

We also continue to explore and develop relationships with developers and municipalities in order to increase revenues from contract water and wastewater operations, wastewater management services, and design, construction and

engineering services.

We plan to continue developing and expanding our contract operations and other services in a manner that complements our growth in water service to new customers.

Our anticipated growth in these areas is subject to changes in

residential and commercial construction, which may be affected by interest rates, inflation and general housing and economic market conditions.

We anticipate continued growth in our non-regulated division due to our water, sewer, and internal SLP

COVID-19 Pandemic

As of September 30, 2022, the Company’s financial results and business operations have not been materially

adversely affected by the coronavirus, or COVID-19, outbreak, which was declared a pandemic in March 2020.

However, we have experienced delays in procuring some materials and supplies.

While we have been successful in managing these delays, there

is no assurance that our future financial results or business operations will not be negatively affected.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

Management is actively monitoring the situation

and impacts on its operations, suppliers, industry, and workforce.

We are affected by inflation, most notably by the continually increasing costs required to maintain, improve and expand our service

The cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows.

Our ability to recover increases in investments in facilities is dependent upon future rate

increases, which are subject to approval by the applicable regulatory authority.

We can provide no assurances that any future rate increase request will be approved, and if approved, we cannot guarantee that any rate increase will be granted in a

timely manner and/or will be sufficient in amount to cover costs for which we initially sought the rate increase.

Statements regarding our goals, priorities, growth and expansion plans and expectation for our water and wastewater subsidiaries and non-regulated subsidiaries, customer

base growth opportunities in Delaware and Cecil County, Maryland, our belief regarding the timing and results of our rate requests, our belief regarding our capacity to provide water services for the foreseeable future to our customers, our belief

relating to our compliance and the cost to achieve compliance with relevant governmental regulations, our expectation of the timing of decisions by regulatory authorities, the impact of weather on our operations and the execution of our strategic

initiatives, our expectation of the timing for construction on new projects, our expectation relating to the adoption of recent accounting pronouncements, contract operations opportunities, legal proceedings, our properties, deferred tax assets,

adequacy of our available sources of financing, the expected recovery of expenses related to our long-term debt, our expectation to be in compliance with financial covenants in our debt instruments, our ability to refinance our debt as it comes due,

our ability to adjust our debt level, interest rate, maturity schedule and structure, the timing and terms of renewals of our lines of credit, plans to increase our wastewater treatment operations, engineering services and other revenue streams less

affected by weather, expected future contributions to our postretirement benefit plan, anticipated growth in our non-regulated division, the impact of recent acquisitions on our ability to expand and foster relationships, anticipated investments in

certain of our facilities and systems and the sources of funding for such investments, and the sufficiency of internally generated funds and credit facilities to provide working capital and our liquidity needs are forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected.

Words such as "expects", "anticipates", "intends", "plans", "believes",

"seeks", "estimates", "projects", "forecasts", "may", "should", variations of such words and similar expressions are intended to identify such forward-looking statements.

Certain factors as discussed under Item 1A -Risk Factors, in our Annual Report

on Form 10-K for the year ended December 31, 2022, and this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, such as changes in weather, changes in our contractual obligations, changes in government policies, the timing and results

of our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally, and other matters could cause results to differ materially from those in the forward-looking statements.

While the Company may elect to

update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as a representation of the Company's views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2023

Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business.

Our regulated utility segment

comprised 92.4% of total operating revenues for the three months ended March 31, 2023 and 93.0% for the three months ended March 31, 2022.

Water sales are subject to seasonal fluctuations, particularly during summer when water demand may vary with

rainfall and temperature.

In the event temperatures during the typically warmer months are cooler than expected, or rainfall is greater than expected, the demand for water may decrease and our revenues may be adversely affected.

We believe these

effects of weather are short term and do not materially affect the execution of our strategic initiatives.

Our wastewater services provide a revenue stream that is not affected by these changes in weather patterns.

We continue to seek growth

opportunities to provide wastewater services in Delaware and the surrounding areas.

Our profitability is also attributed to other non-utility business, such as various contract operations, water, sewer and internal SLP Plans and other

services we provide.

Our contract operations, SLP Plans and other services also provide a revenue stream that is not affected by changes in weather patterns.

We also continue to explore and develop relationships with developers and municipalities

in order to increase revenues from contract water and wastewater operations, wastewater management services, and design, construction and engineering services.

We plan to continue developing and expanding our contract operations and other services

in a manner that complements our growth in water service to new customers.

Our anticipated growth in these areas is subject to changes in residential and commercial construction, which may be affected by interest rates, inflation and general housing

and economic market conditions.

We anticipate continued growth in our non-utility subsidiaries due to our water, sewer, and internal SLP Plans.

We are affected by inflation, most notably by the continually increasing costs required to maintain, improve and expand our service capability.

cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows.

Our ability to recover increases in investments in facilities is dependent upon future rate increases, which are

subject to approval by the applicable regulatory authority.

We can provide no assurances that any future rate increase request will be approved, and if approved, we cannot guarantee that any rate increase will be granted in a timely manner and/or will

be sufficient in amount to cover costs for which we initially sought the rate increase.

The impact of inflation could adversely affect our results of operations, financial position or cash flows.

Materials and Supplies

We are highly dependent on the availability of essential materials and parts from our suppliers for expansion, construction and maintenance of our

The majority of the materials required for our water and wastewater utility business are typically under contract at fixed prices, however, supply chain issues associated with the COVID-19 pandemic resulted in price increases and delays in

procuring certain materials and equipment.

We have been successful in minimizing these delays and cost increases with thorough planning and pre-ordering, however there is no assurance that our future financial results or business operations will not

be negatively affected.

Water Division

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide

water service to residential, commercial, industrial, governmental, municipal and utility customers.

We are highly dependent on the availability of essential materials and parts from our suppliers for expansion, construction and maintenance of our services.

certain materials and equipment in 2021 and 2022.

We have been successful in minimizing these delays with thorough planning and pre-ordering.

However, there is no assurance that our future financial results or business operations will not be

negatively affected.

Regulated Water Subsidiaries

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide water service to residential, commercial, industrial, governmental, municipal

and utility customers.

Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue.

September 30, 2022, the number of metered water customers in Delaware increased approximately 3.4% compared to September 30, 2021.

The number of metered water customers in Maryland increased approximately 1.8% compared to September 30, 2021 .

The number of metered water customers in Pennsylvania remained consistent compared to September 30, 2021.

For the nine months ended September 30, 2022,

approximately 6.5 billion gallons of water were distributed in our Delaware systems and approximately 103.7 million gallons of water were distributed in our Maryland systems.

Wastewater Division

Artesian Wastewater owns wastewater collection and treatment infrastructure and began providing regulated wastewater services to customers in Delaware in

Artesian Wastewater Maryland was incorporated on June 3, 2008 and is able to provide regulated wastewater services to customers in Maryland.

currently providing these services in Maryland.

Our residential and commercial wastewater customers are billed a flat monthly fee, which contributes to providing a revenue

stream unaffected by weather.

The number of Artesian’s Delaware wastewater customers more than doubled compared to September 30, 2021, following the acquisition of Tidewater Environmental Services, Inc., or TESI .

This acquisition agreement is discussed further in the “Strategic Direction” section below.

Non-Regulated Division

Artesian Utility provides contract water and wastewater operation services to

private, municipal and governmental institutions.

Artesian Utility also offers three protection plans to customers, the WSLP Plan, the SSLP Plan, and the ISLP Plan.

As of March 31, 2023, the number of metered water customers in Delaware increased

approximately 3.2% compared to March 31, 2022.

The number of metered water customers in Maryland increased approximately 1.0% compared to March 31, 2022.

The number of metered water customers in Pennsylvania remained consistent compared to March 31,

For the three months ended March 31, 2023, approximately 1.9 billion gallons of water were distributed in our Delaware systems and approximately 22.3 million gallons of water were distributed in our Maryland systems.

Regulated Wastewater Subsidiaries

Artesian Wastewater and TESI own wastewater collection and treatment infrastructure and provide regulated wastewater services to customers in Sussex County,

Artesian Wastewater Maryland is able to provide regulated wastewater services to customers in Maryland.

It is not currently providing these services in Maryland.

Our residential and commercial wastewater customers are billed a flat monthly

fee, which contributes to providing a revenue stream unaffected by weather.

As of March 31, 2023, the number of Delaware wastewater customers increased approximately 8.3% compared to March 31, 2022.

Non-Utility Subsidiaries

Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions.

Artesian Utility also

offers three protection plans to customers, the WSLP Plan, the SSLP Plan, and the ISLP Plan.

SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather.

There has been consistent customer growth over the years.

As of September 30, 2022, the eligible

customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 3.8%, 1.4% and 13.5%, respectively, compared to September 30, 2021.

The non-utility customers enrolled in one of our three protections plans increased 2.6%.

Strategic Direction

Our strategy is to increase customer growth, revenues, earnings and dividends by expanding our water, wastewater and SLP Plan services across the

Delmarva Peninsula.

There has been

consistent customer growth over the years.

As of March 31, 2023, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 1.6%, 0.5% and 5.1%, respectively, compared to March 31, 2022.

The non-utility customers

enrolled in one of our three protections plans decreased 1.7%.

Strategic Direction and Recent Developments

Our strategy is to increase customer growth, revenues, earnings and dividends by expanding our water, wastewater and

SLP Plan services across the Delmarva Peninsula.

We remain focused on providing superior service to our customers and continuously seek ways to improve our efficiency and performance.

Our strategy has included a focus on building strategic partnerships with county governments,

municipalities and developers.

By providing water and wastewater services, we believe we are positioned as the primary resource for developers and communities throughout the Delmarva Peninsula seeking to fill both needs simultaneously.

we have a proven ability to acquire and integrate high growth, reputable entities, through which we have captured additional service territories that will serve as a base for future revenue.

We believe this experience presents a strong platform for

further expansion and that our success to date also produces positive relationships and credibility with regulators, municipalities, developers and customers in both existing and prospective service areas.

In our regulated water division, our strategy is to focus on a wide spectrum of activities, which include strategic acquisitions of existing systems,

expanding certificated service area, identifying new and dependable sources of supply, developing the wells, treatment plants and delivery systems to supply water to customers and educating customers on the wise use of water.

Our strategy includes

focused efforts to expand through strategic acquisitions and in new regions added to our Delaware service territory over the last 10 years.

We plan to expand our regulated water service area in the Cecil County designated growth corridor and to

expand our business through the design, construction, operation, management and acquisition of additional water systems.

The expansion of our exclusive franchise areas elsewhere in Maryland and the award of contracts will similarly enhance our

operations within the state.

Our strategy has included a focus on building strategic

partnerships with county governments, municipalities and developers.

By providing water and wastewater services, we believe we are positioned as the primary resource for developers and communities throughout the Delmarva Peninsula seeking to fill both

needs simultaneously.

We believe we have a proven ability to acquire and integrate high growth, reputable entities, through which we have captured additional service territories that will serve as a base for future revenue.

We believe this experience

presents a strong platform for further expansion and that our success to date also produces positive relationships and credibility with regulators, municipalities, developers and customers in both existing and prospective service areas.

In our regulated water subsidiaries, our strategy is to focus on a wide spectrum of activities, which include

strategic acquisitions of existing systems, expanding certificated service area, identifying new and dependable sources of supply, developing the wells, treatment plants and delivery systems to supply water to customers and educating customers on the

wise use of water.

Our strategy includes focused efforts to expand through strategic acquisitions and in new regions added to our Delaware service territory over the last 10 years.

We plan to expand our regulated water service area in the Cecil

County designated growth corridor and to expand our business through the design, construction, operation, management and acquisition of additional water systems.

The expansion of our exclusive franchise areas elsewhere in Maryland and the award of

contracts will similarly enhance our operations within the state.

Our ability to develop partnerships with various county governments, municipalities and developers has provided a number of opportunities.

four years, we completed seven acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.

We believe that Delaware's generally lower cost of living in the region, availability of development sites in relatively close proximity to the

Atlantic Ocean in Sussex County, and attractive financing rates for construction and mortgages have resulted, and will continue to result, in increases to our customer base.

Delaware’s lower property and income tax rate make it an attractive region

for new home development and retirement communities.

In the last four

years, we completed seven acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.

We believe that Delaware's generally lower cost of living in the region and availability of development sites in

relatively close proximity to the Atlantic Ocean in Sussex County have resulted, and will continue to result, in increases to our customer base.

Delaware’s lower property and income tax rate make it an attractive region for new home development and

retirement communities.

Substantial portions of Delaware currently are not served by a public water system, which could also assist in an increase to our customer base as systems are added.

On May 26, 2022, Artesian Water completed its purchase of substantially all of the water operating assets from

the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware, including Clayton’s exclusive franchise territory and the right to provide water service to Clayton’s existing customers, or the Clayton Water System.

total purchase price was $5.0 million, less the current payoff amount of secured debt or debt associated with the Clayton Water System.

On May 26, 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the

Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware, including Clayton’s exclusive franchise territory and the right to provide water service to Clayton’s existing customers, or the Clayton Water System.

purchase price was $5.0 million, less the current payoff amount of secured debt or debt associated with the Clayton Water System.

This transfer of Clayton’s exclusive franchise territory was approved by the DEPSC on April 20, 2022.

In our regulated wastewater division, we foresee significant growth

opportunities and will continue to seek strategic partnerships and relationships with developers and governmental agencies to complement existing agreements for the provision of wastewater service on the Delmarva Peninsula.

There are numerous

locations in Sussex County where Artesian Wastewater’s and Sussex County’s facilities are connected or integrated to allow for the movement and disposal of wastewater generated by one or the other’s system in a manner that most efficiently and cost

effectively manages wastewater transmission, treatment and disposal.

In addition, Artesian Wastewater plans to utilize our larger regional wastewater facilities to expand

service areas to new customers while transitioning our smaller treatment facilities into regional pump stations in order to gain additional efficiencies in the treatment and disposal of wastewater.

We believe this will reduce operational costs at the

smaller treatment facilities in the future because they will be converted from treatment and disposal plants to pump stations to assist with transitioning the flow of wastewater from one regional facility to another.

In addition, since closing the

transaction with TESI noted below, Artesian’s Delaware wastewater subsidiaries are the sole regional regulated wastewater utilities in Delaware, which we believe will enable us to increase efficiencies in the treatment and disposal of wastewater and

provide additional opportunities to expand our wastewater operations.

On January 14, 2022, Artesian Wastewater acquired TESI, a wholly-owned subsidiary of Middlesex Water Company, or Middlesex, that provides regulated

wastewater services in Delaware.

Artesian Wastewater purchased all of the stock of TESI from Middlesex for $6.4 million in cash and other consideration, including, forgiveness of a $2.1 million note due from Middlesex.

This acquisition more than

doubled the number of wastewater customers served by Artesian in Sussex County, Delaware and included all residents in the Town of Milton.

Artesian Wastewater began operating its Sussex Regional Recharge Facility in

late June 2021, shortly after our large industrial customer received its process wastewater treatment operating permit.

The associated customer agreement includes a required minimum wastewater flow.

Pursuant to a settlement agreement, for

the calendar year 2021 only, the minimum required volume of wastewater was prorated on a seven-month basis beginning June 1, 2021 and ending December 31, 2021.

The general need for increased capital investment in our water and wastewater systems is due to a combination of population growth, more protective

water quality standards, aging infrastructure and acquisitions.

Our planned and budgeted capital improvements over the next three years include projects for water infrastructure improvements and expansion in both Delaware and Maryland and wastewater

infrastructure improvements and expansion in Delaware.

The DEPSC and MDPSC have generally recognized the operating and capital costs associated with these improvements in setting water and wastewater rates for current customers and capacity charges

for new customers.

In our non-regulated division, we continue pursuing opportunities to expand our contract operations.

Through Artesian Utility,

we will seek to expand our contract design, engineering and construction services of water and wastewater facilities for developers, municipalities and other utilities.

We also anticipate continued growth due to our water, sewer and internal SLP

Artesian Development owns two nine-acre parcels of land, located in Sussex County, Delaware, which will allow for construction of a water treatment facility and wastewater treatment facility.

Artesian Storm Water was formed to expand

contract work related to the design, installation, maintenance and repair services associated with existing or proposed storm water management systems in Delaware and the surrounding areas.

Results of Operations – Analysis of the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021.

Operating Revenues

Revenues totaled $26.6 million for the three months ended September 30, 2022, $1.7 million, or 6.7%, more than revenues for the three months ended September

Other utility operating revenue increased approximately $0.7 million for the three months ended September 30, 2022 compared to the three months ended

September 30, 2021.

This increase is primarily due to an increase in wastewater revenue associated with residential customer growth resulting from the acquisition of TESI in January 2022 and organic residential customer growth.

Non-utility operating revenue increased approximately $0.6 million for the three months ended September 30, 2022 compared to the three months ended September

This increase is primarily due to an increase in contract service revenue mostly related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue.

Water sales revenue increased $0.4 million, or 2.0%, for the three months ended September 30, 2022 from the corresponding period in 2021, primarily due to an

increase in overall water consumption revenue and an increase in fixed fee revenue related to added customers.

We realized 81.6% and 85.4% of our total operating revenue for the three months ended September 30, 2022 and September 30, 2021,

respectively, from the sale of water.

Operating Expenses

Operating expenses, excluding depreciation and income taxes, increased $0.2

million, or 1.4%, fo r the three months ended September 30, 2022, compared to the same period in 2021.

Non-utility operating expenses increased $0.6 million, while

utility operating expenses decreased $0.5 million.

Non-utility operating expenses increased $0.6 million primarily due to an increase in costs associated with the wastewater infrastructure design and

construction contract and an increase in plumbing services related to Service Line Protection Plan repairs.

Utility operating expenses decreased $0.5 million,

or 4.2%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

The net decrease is primarily related to the following.

Purchased water costs decreased $0.8 million, related to a decrease of water purchased under a new contract, effective January 2022, in which the

minimum amount of water required to be purchased was reduced.

Repair and maintenance costs

decreased $0.2 million, primarily due to reimbursements received from the Delaware Sand and Gravel Remedial Trust for Artesian Water’s operating costs related to certain treatment costs pursuant to a settlement agreement .

Water treatment costs

increased $0.3 million , primarily related to an increase in the cost and usage of water and wastewater treatment chemicals and an increase in water treatment testing costs.

Purchased power costs increased $0.1 million, primarily due to an increase in usage related to the

additional operational costs associated with the TESI acquisition and upgraded wastewater treatment facilities, in addition to an increase in overall water operations.

Administrative costs increased $0.1 million, primarily related to an increase in outside contract services

for wastewater treatment and station maintenance associated with the TESI acquisition.

The ratio of operating expense, excluding depreciation and income taxes, to

total revenue was 50.6% for the three months ended September 30, 2022, compared to 53.2% fo r the three months ended September 30, 2021.

Depreciation and amortization expense increased $0.2 million, or 8.1%, primarily due to continued investment in utility plant providing supply,

treatment, storage and distribution of water to customers and service to our wastewater customers.

Federal and state income tax expense increased $50,000, or 2.8%, primarily due to higher pre-tax income in 2022 compared to 2021, partially offset by a

decrease related to stock options exercised.

Other Income, Net

Other income, net increased $0.2 million, primarily due to a $0.3

million increase in Allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC for the three months ended September 30, 2022 compared to the same period in 2021.

Interest Charges

Long-term debt interest increased $0.3 million, primarily related to an

increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022 .

Our net income applicable to common stock increased $1.1 million, or 21.5%.

Total operating revenues increased $1.7 million and AFUDC increased $0.3

million, partially offset by a $0.5 million increase in total operating expenses and $0.3 million increase in interest charges.

Results of Operations – Analysis of the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021.

In our regulated wastewater subsidiaries, we foresee significant growth opportunities and will continue to seek

strategic partnerships and relationships with developers and governmental agencies to complement existing agreements for the provision of wastewater service on the Delmarva Peninsula.

There are numerous locations in Sussex County where Artesian

Wastewater’s and Sussex County’s facilities are connected or integrated to allow for the movement and disposal of wastewater generated by one or the other’s system in a manner that most efficiently and cost effectively manages wastewater transmission,

treatment and disposal.

In addition, Artesian Wastewater plans to utilize our larger regional wastewater facilities to expand service areas to new customers while transitioning our smaller treatment facilities into regional pump stations in order to

gain additional efficiencies in the treatment and disposal of wastewater.

We believe this will reduce operational costs at the smaller treatment facilities in the future because they will be converted from treatment and disposal plants to pump stations

to assist with transitioning the flow of wastewater from one regional facility to another.

In addition, since closing the transaction with TESI noted below, Artesian’s Delaware wastewater subsidiaries are the sole regional regulated wastewater

utilities in Delaware, which we believe will enable us to increase efficiencies in the treatment and disposal of wastewater and provide additional opportunities to expand our wastewater operations.

On January 14, 2022, Artesian Wastewater acquired TESI, a wholly-owned subsidiary of Middlesex Water Company, or

Middlesex, that provides regulated wastewater services in Delaware.

Artesian Wastewater purchased all of the stock of TESI from Middlesex for $6.4 million in cash and other consideration, including, forgiveness of a $2.1 million note due from

This acquisition more than doubled the number of wastewater customers served by Artesian in Sussex County, Delaware and included all residents in the Town of Milton.

The general need for increased capital investment in our water and wastewater systems is due to a combination of

population growth, more protective water quality standards, aging infrastructure and acquisitions.

Our planned and budgeted capital improvements over the next three years include projects for water infrastructure improvements and expansion in both

Delaware and Maryland and wastewater infrastructure improvements and expansion in Delaware.

The DEPSC and MDPSC have generally recognized the operating and capital costs associated with these improvements in setting water and wastewater rates for

current customers and capacity charges for new customers.

In our non-utility subsidiaries, we continue pursuing opportunities to expand our contract operations.

Through Artesian Utility, we will seek to expand our

contract design, engineering and construction services of water and wastewater facilities for developers, municipalities and other utilities.

We also anticipate continued growth due to our water, sewer and internal SLP Plans.

Artesian Development

owns two nine-acre parcels of land, located in Sussex County, Delaware, which will allow for construction of a water treatment facility and wastewater treatment facility.

Artesian Storm Water was formed to expand contract work related to the design,

installation, maintenance and repair services associated with existing or proposed storm water management systems in Delaware and the surrounding areas.

Results of Operations – Analysis of the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022.

Operating Revenues

Revenues totaled $73.8 million for the nine months ended September 30, 2022, $5.7 million, or 8.4%, more than revenues for the nine months ended September

Other utility operating revenue increased approximately $3.7 million for the nine months ended September 30, 2022 compared to the nine months ended September

This increase is primarily due to an increase in wastewater revenue associated with residential customer growth resulting from the acquisition of TESI in January 2022, industrial wastewater services that started in June 2021, as well as

organic residential customer growth.

Non-utility operating revenue increased approximately $1.7 million for the nine months ended September 30, 2022 compared to the nine months ended September

This increase is primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue.

Water sales revenue increased approximately $0.4 million, or 0.6%, for the nine months ended September 30, 2022 from the corresponding period in 2021,

primarily due to an increase in fixed fee revenue related to added customers and a slight increase in overall water consumption revenue.

We realized 80.7% and 87.0% of our total operating revenue for the nine months ended September 30, 2022 and

September 30, 2021, respectively, from the sale of water.

Revenues totaled $22.5 million for the three months ended March 31, 2023, $0.3 million, or 1.4%, more than revenues for the three months ended March 31, 2022 .

Other utility operating revenue increased approximately $0.3 million, or 11.6%, for the three months ended March 31, 2023 compared to the three months ended March 31,

This increase is primarily due to an increase in wastewater revenue associated with customer growth.

Non-utility operating revenue increased approximately $0.1 million, or 9.4%, for the three months ended March 31, 2023 compared to the three months ended

March 31, 2022.

This increase is primarily due to an increase in Service Line Protection Plan revenue.

Water sales revenue decreased $0.1 million, or 0.7%, for the three months ended March 31, 2023 from the corresponding period in 2022, primarily related to a

one-time customer refund to be issued to Town of Frankford customers for a rate change retroactive to February 2022, as approved by the DEPSC in the first quarter of 2023, in accordance with the agreement for the purchase of Frankford’s water assets.

We realized 80.1% and 81.8% of our total operating revenue for the three months ended March 31, 2023 and March 31, 2022, respectively, from the sale of water.

Operating Expenses

Operating expenses, excluding depreciation and income taxes, increased $0.9

million, or 7.6%, fo r the nine months ended September 30, 2022, compared to the same period in 2021.

Non-utility operating expenses increased $1.7 million, utility

operating expenses increased $0.9 million, and property and other taxes increased $0.2 million.

Non-utility operating expenses increased $1.7 million primarily due to an increase in costs associated with the wastewater infrastructure design and

construction contract and an increase in plumbing services related to Service Line Protection Plan repairs.

million, or 7.4%, fo r the three months ended March 31, 2023, compared to the same period in 2022.

Utility operating expenses increased $0.8 million,

or 3.1%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

or 7.4%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The net increase is primarily related to the following.

Administrative costs

increased $0.6 million, primarily due to an adjustment made in June 2021 to reduce the additional bad debt reserve from 2020 associated with the COVID-19 pandemic.

In addition, outside contract services for wastewater treatment and station

maintenance associated with the TESI acquisition increased.

Repair and maintenance costs increased $0.7 million, related to an increase in maintenance costs primarily

associated with water treatment facilities and equipment, including tank painting, water treatment filter replacements, wastewater treatment and fuel.

In addition, overall maintenance costs increased related to the TESI acquisition.

increase in repair and maintenance costs is partially offset reimbursements from the Delaware Sand and Gravel Remedial Trust for Artesian Water’s operating costs related to certain treatment costs pursuant to a settlement agreement.

Payroll and employee benefit costs increased $0.5 million, primarily related to an increase in overall

compensation.

Payroll and employee benefit costs increased $0.6 million, primarily related to an increase in overall compensation, an increase in the number of

employees and an increase in medical benefit costs.

Repair and maintenance costs increased $0.2 million, primarily associated with wastewater treatment and

disposal facilities and water treatment and distribution operations along with a one-time acquisition adjustment related to TESI in 2022.

In addition, hardware and software maintenance costs and fuel costs increased.

These increases are

partially offset by a decrease in water treatment filter replacements, due to the timing of scheduled replacements.

Water treatment costs

increased $0.5 million , primarily related to an increase in the cost and usage of water and wastewater treatment chemicals and an increase water treatment testing costs.

Purchased power costs increased $0.3 million, primarily due to an increase in usage related to the

additional operational costs associated with the TESI acquisition and upgraded wastewater treatment facilities, in addition to an increase in overall water operations.

Purchased water costs decreased $1.7 million, related to a decrease of water purchased under a new

contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced.

Property and other taxes increased $0.2 million, or 5.1%, primarily due to an increase in payroll taxes, related to increased payroll related expenses and an

increase in utility plant subject to taxation.

Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.

increased $0.2 million , primarily due to an increase in the cost of chemicals as well as an increase in water treatment testing costs.

Purchased power costs increased $0.1 million due to an increase in usage in wastewater and water

Administrative costs increased $0.1 million, primarily due to a one-time acquisition adjustment related to

TESI’s allowance for doubtful accounts in 2022.

Purchased water costs decreased $0.5 million, related to a decrease of water purchased under contract, in

which the minimum amount of water required to be purchased was reduced in July 2022.

Non-utility operating expenses increased $0.1 million primarily due to an increase in plumbing services related to Service Line Protection Plan repairs.

The ratio of operating expense, excluding depreciation and income taxes, to

total revenue was 53.9% for the nine months ended September 30, 2022, compared to 54.3% fo r the nine months ended September 30, 2021.

Depreciation and amortization expense increased $0.4 million, or 4.4%, primarily due to continued investment in utility plant providing supply,

treatment, storage and distribution of water to customers and service to our wastewater customers.

Federal and state income tax expense increased $0.3 million, or 6.4%, primarily due to higher pre-tax income in 2022 compared to 2021, partially offset

by a decrease related to stock options exercised.

Other Income, Net

Other income, net increased $0.2 million, primarily due to a $0.2

million increase in AFUDC, as a result of higher long-term construction activity subject to AFUDC for the nine months ended September 30, 2022 compared to the same period in 2021.

total revenue was 61.8% for the three months ended March 31, 2023, compared to 58.3% fo r the three months ended March 31, 2022.

Depreciation and amortization expense increased $0.1 million, or 4.5%, primarily due to continued investment in utility plant providing supply, treatment,

storage and distribution of water to customers and service to our wastewater customers.

Federal and state income tax expense

decreased $0.1 million, or 7.5%, primarily due to lower pre-tax income in 2023 compared to 2022, partially offset by a decrease in 2022 income tax expense related to stock options exercised in the first quarter of 2022.

Other income increased $0.4 million, primarily due to a $0.3 million

increase in allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC for the three months ended March 31, 2023 compared to the same period in 2022.

Miscellaneous income increased

$0.1 million related to an increase in the annual patronage refund from CoBank, ACB.

The primary refund calculation for both 2023 and 2022 was based on the average loan balance outstanding.

Interest Charges

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increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022 .

Our net income applicable to common stock increased $1.9 million, or 13.8%.

Total operating revenues increased $5.7 million and AFUDC increased $0.2

million, partially offset by a $3.5 million increase in total operating expenses and $0.5 million increase in interest charges.

Short-term debt interest increased $0.2 million, primarily

related to higher interest rates.

The average short-term interest rate for the three months ended March 31, 2023 was 5.71% compared to 1.48% for the same period in 2022.

Our net income applicable to common stock decreased $0.8 million, or 17.4%.

Total operating revenues increased $0.3 million and other income increased $0.4

million, offset by a $1.0 million increase in total operating expenses and $0.5 million increase in interest charges.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sourc es of liquidity for the nine months ended September 30,

2022 were $25.1 million of cash provided by operating activities, $30.0 million principal amount from a new First Mortgage Series Bond issued in April 2022, $11.6

million in net contributions and advances from developers and $1.7 million in net proceeds from the issuance of common stock.

Cash flow from operating activities is primarily provided by our utility operations, and is impacted by the timeliness and

adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions, particularly during the summer.

A significant part of our ability to maintain and meet our financial objectives is to ensure that

our investments in utility plant and equipment are recovered in the rates charged to customers.

Our primary sourc es of liquidity for the three months ended March 31,

2023 were $10.5 million of cash provided by operating activities, $5.3 million in net contributions and advances from developers, which includes $1.8 million of grant funds from the State of Delaware, $1.1 million from the issuance of long-term debt

and $0.1 million in net proceeds from the issuance of common stock.

Cash flow from operating activities is primarily provided by our utility operations, and is impacted by the timeliness and adequacy of rate increases and changes in water consumption

as a result of year-to-year variations in weather conditions, particularly during the summer.

A significant part of our ability to maintain and meet our financial objectives is to ensure that our investments in utility plant and equipment are

recovered in the rates charged to customers.

As such, from time to time, we file rate increase requests to recover increases in operating expenses and investments in utility plant and equipment.

will continue to borrow on available lines of credit in order to satisfy current liquidity needs.

In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating

See Note 19 – Subsequent Events.

We will continue to

borrow on available lines of credit in order to satisfy current liquidity needs.

In addition, the Company has a long history of paying regular quarterly dividends as

approved by our Board of Directors using net cash from operating activities.

Investment in Plant and Systems

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Capital expenditures during

the first nine months of 2022 were $36.7 million compared to $30.4 million during the same period in 2021.

During the first nine months of 2022, we continue to focus our

investment through our rehabilitation program for transmission and distribution facilities by replacing aging or deteriorating mains, installation of new main, enhancing or improving existing treatment facilities, construction of new water storage

tanks, and replacing aging wells and pumping equipment to better serve our customers.

In May 2022, we completed the purchase of substantially all of the water operating assets from the Town of Clayton.

We also continue to invest in wastewater

projects, including the acquisition of TESI in January 2022.

Developers contributed $6.2 million of the total investment during the first nine months of 2022.

the first three months of 2023 were $16.8 million compared to $9.8 million during the same period in 2022.

During the first three months of 2023, we continued to focus our

investment through our rehabilitation program for transmission and distribution facilities by replacing aging or

deteriorating mains, installation of new mains, enhancing or improving existing treatment facilities, construction of new water storage tanks, and replacing aging wells and pumping equipment to better serve our customers.

Developers contributed $1.4

million of these total investments during the first three months of 2023.

We depend on the availability of capital for expansion, construction and maintenance.

We have several sources of liquidity to finance our investment in

utility plant and other fixed assets.

We estimate that future investments will be financed by our operations and external sources, including short-term borrowings under our revolving credit agreements discussed below.

We expect to fund our

activities for the next twelve months using our available cash balances, bank credit lines, projected cash generated from operations, state revolving fund loans and capital market financing.

We believe that internally generated funds along with

existing credit facilities will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements.

However, because part of our business strategy is to expand through strategic acquisitions, we

may seek additional debt financing or issue additional equity securities to finance future acquisitions or for other purposes.

There is no assurance that we will be able to secure funding on terms acceptable to us, or at all.

Our cash flows from

operations are primarily derived from water sales revenues and may be materially affected by changes in water sales due to weather and the timing and extent of increases in rates approved by state public service commissions.

We rely on our sources of liquidity to finance our investments in

utility plant and to meet our various payment obligations .

We estimate that future investments will be financed by our operations and external sources, including

short-term borrowings under our revolving credit agreements discussed below.

We expect to fund our activities for the next twelve months using our available cash balances, bank credit lines, projected cash generated from operations, state revolving

fund loans and capital market financing.

We believe that internally generated funds along with existing credit facilities will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements.

However, because part of our business strategy is to expand through strategic acquisitions, we may seek additional debt financing or issue additional equity securities to finance future acquisitions or for other purposes.

There is no assurance that

we will be able to secure funding on terms acceptable to us, or at all.

Our cash flows from operations are primarily derived from water sales revenues and may be materially affected by changes in water sales due to weather and the timing and extent

of increases in rates approved by state public service commissions.

Lines of Credit and Long-Term Debt

At September 30, 2022, Artesian Resources had a $40 million line of credit with

At March 31, 2023, Artesian Resources had a $40 million line of credit with

Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources.

As of September 30, 2022, there was $34.2 million of available funds under this line of credit.

The previous interest rate for borrowings under this line was

the London Interbank Offered Rate, or LIBOR, plus 1.00%.

As of March 31, 2023, there was $27.5 million of available funds under this line of credit.

The previous interest rate for borrowings under this line was the

London Interbank Offered Rate, or LIBOR, plus 1.00%.

It is expected that the LIBOR rate for USD currency will be discontinued after June 30, 2023.

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This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time.

The term of this line of credit expires on the earlier of May 21, 2023 or any date

on which Citizens demands payment.

The term of this line of credit expires on the earlier of August 18, 2023 or any

date on which Citizens demands payment.

The Company expects to renew this line of credit.

At September 30, 2022, Artesian Water had a $20 million line of credit with

CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland.

As of September 30, 2022, there was $16.4 million of available funds

under this line of credit.

At March 31, 2023, Artesian Water had a $20 million line of credit with CoBank,

ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland.

As of March 31, 2023, there was $10.9 million of available funds under this

line of credit.

The previous interest rate for borrowings under this line allowed the Company to select either LIBOR plus 1.50% or a weekly variable rate established by CoBank;

the Company historically used the weekly variable

interest rate.

In October 2022, this line of credit was amended to replace the previous interest rate options with a daily SOFR rate plus 1.45% option or a term SOFR rate

plus 1.45% option that is locked in for either one or three months.

the Company historically used the weekly variable interest rate.

In October 2022, this line of credit was amended to replace the previous interest rate options with a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option

that is locked in for either one or three months.

The term of this line of credit expires on October 29, 2023.

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transfer certain assets or change our business.

As of September 30, 2022, we were in compliance with these covenants.

As of March 31, 2023, we were in compliance with these covenants.

Long-term debt obligations reflect the maturities of certain series of our first mortgage bonds, which we intend to refinance when due if not refinanced

5 unchanged sentences

We have not experienced conditions that would result in our default under these agreements.

On April 29, 2022, Artesian Water and CoBank entered into a Bond Purchase Agreement, or the Agreement, relating to

the issue and sale by Artesian Water to CoBank of a $30 million principal amount First Mortgage Bond, Series W, or the Bond, due April 30, 2047, or the Maturity Date.

The Bond was issued pursuant to Artesian Water’s Indenture of Mortgage dated as of

July 1, 1961, as amended and supplemented by supplemental indentures, including the Twenty-Fifth Supplemental Indenture dated as of April 29, 2022, or the Supplemental Indenture, from Artesian Water to Wilmington Trust Company, as Trustee.

Supplemental Indenture is a first mortgage lien against substantially all of Artesian Water’s utility plant.

The proceeds from the sale of the Bond were used to pay down outstanding lines of credit of the Company and a loan payable to Artesian

Resources, with any additional proceeds used to fund capital investments in Artesian Water.

The Delaware Public Service Commission approved the issuance of the Bond on April 20, 2022.

The Bond carries an annual interest rate of 4.43% through but

excluding the Maturity Date.

Interest is payable on June 30th, September 30th, December 30th and March 30th in each year and on the Maturity Date, beginning June 30, 2022, until Artesian Water’s obligation with respect to the payment of principal,

premium (if any) and interest shall be discharged.

Overdue payments shall bear interest as provided in the Supplemental Indenture.

The term of the Bond also includes certain limitations on Artesian Water’s indebtedness.

On May 26, 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or

The total purchase price was $5.0 million, less the current payoff amount of secured debt or debt associated with the water operating assets.

At closing, Artesian Water paid approximately $3.4 million of the total purchase price.

remaining $1.6 million is payable in five equal annual installments on the anniversary date of the closing date.

Each annual installment is payable with interest an annual rate of 2.0%.

On August 12, 2022, Artesian Water entered into three Financing Agreements, or the Financing Agreements, with the Delaware Drinking

Water State Revolving Fund (the “Fund”), acting by and through the Delaware Department of Health & Social Services, Division of Public Health, a public agency of the state of Delaware, or the Department.

The Department makes loans to, and

acquires obligations of, eligible persons in Delaware to finance the costs of drinking water facilities in accordance with the Federal Safe Drinking Water Act using funds from the Fund.

Under the Financing Agreements, the Department has agreed to

advance to Artesian Water up to $966,000, $1,167,000 and $3,200,000 (collectively, the “Loans”) from the Fund to finance all or a portion of the costs to replace specific water transmission mains in service areas located in New Castle County,

Delaware (collectively, the “Projects”).

In accordance with the Financing Agreements, Artesian Water will from time to time request funds under the Loans as it incurs costs in connection with the Projects.

In connection with the Financing

Agreements, Artesian Water issued to the Department three General Obligation Notes dated as of August 12, 2022, or the Notes.

Under the Notes, borrowings under the Financing Agreements bear interest at a rate of 1.0% per annum and are further subject

to an administrative fee at a rate of 1.0% per annum (collectively, interest and the administrative fee are referred to herein as “Fee”).

The Fee shall be paid semiannually on each February 1 and August 1, beginning on February 1, 2023 (each, a

“Payment Date”).

The Notes will mature on February 1, 2043.

As of September 30, 2022, approximately $0.8 million was borrowed under the Loans.

In order to control purchased power cost, in August 2018 Artesian Water entered into an electric supply contract with MidAmerican

effective from September 2018 through May 2022.

In February 2021, Artesian Water entered into a new electric supply contract with MidAmerican that is effective from May 2021 to May 2025.

The asset purchase contractual obligation is related to the purchase of substantially all of the water operating

assets from the Town of Clayton, or Clayton, in May 2022, by Artesian Water.

The total purchase price was $5.0 million.

At closing, Artesian Water paid approximately $3.4 million.

The remaining $1.6 million is payable in five equal annual

installments on the anniversary date of the closing date.

Each annual installment is payable with interest at an annual rate of 2.0%.

In order to control purchased power cost, in February 2021, Artesian Water entered into an electric supply contract with MidAmerican

that is effective from May 2021 to May 2025.

The fixed rate was lowered 5.6% starting in May 2021.

August 2018, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2019 through May 2022.

In February 2022, Artesian Water Maryland entered into an electric supply agreement with

Constellation NewEnergy, Inc., effective from May 2022 through November 2025.

In January 2022, following the acquisition of Tidewater Environmental Services, Inc., TESI dba Artesian Wastewater assumed an electricity supply contract with WGL Energy

that is effective through December 2024.

Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under two

interconnection agreements with the Chester Water Authority.

One agreement, that expired on December 31, 2021, had a “take or pay” clause requiring us to purchase 3 million gallons per day.

The other agreement is effective from January 1, 2022

In February 2022, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2022 through

November 2025.

In January 2022, following the acquisition of Tidewater Environmental Services, Inc., TESI dba Artesian Wastewater assumed an electricity supply contract with WGL Energy that is effective through December 2024.

These fixed rate electric

supply contracts are for normal purchases and are not derivative instruments.

Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection agreement with the Chester Water Authority.

The agreement is effective from January 1, 2022

through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022, and now requires us to purchase a

minimum of 0.5 million gallons per day.

In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a contract rate under our interconnection agreement with the Town of North East, which expires

June 26, 2024.

In April 2021, Artesian Water entered into a 3-year agreement with Worldwide Industries Corporation effective July 1, 2021 to paint elevated water storage

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financial statements contained in this Quarterly Report on Form 10-Q .

We did not adopt any accounting policy in the first nine months of 2022 that had a material impact on our financial condition, liquidity or results of operations.

We did not adopt any accounting policy in the first three months of 2023 that had a material impact on our financial condition, liquidity or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis