What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-07 · 97 added, 77 removed, 685 unchanged (20% of the section changed)

3 unchanged sentences

(In thousands)

June 30, 2024

September 30, 2024

December 31, 2023

48 unchanged sentences

(In thousands, except per share amounts)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Operating revenues

23 unchanged sentences

(In thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

42 unchanged sentences

(In thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

NET INCREASE IN CASH AND CASH EQUIVALENTS

2 unchanged sentences

Supplemental Disclosures of Cash Flow Information

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Non-cash Investing and Financing Activity:

28 unchanged sentences

Balance as of June 30, 2023

Cash dividends declared

Issuance of common stock

Dividend reinvestment plan

Employee stock options and awards (4)

Employee Retirement Plan (3)

Balance as of September 30, 2023

Common Shares Outstanding Class A Non-Voting (1) (3) (4)

17 unchanged sentences

Balance as of June 30, 2024

At June 30, 2024 and June 30, 2023 , Class A Stock had 15,000,000 shares authorized.

Cash dividends declared

Issuance of common stock

Dividend reinvestment plan

Employee stock options and awards (4)

Employee Retirement Plan (3)

Balance as of September 30, 2024

At September 30, 2024 and September 30, 2023 , Class A Stock had 15,000,000 shares authorized.

For the same periods, shares issued, inclusive of treasury shares, were 9,445,316 and 9,424,518 , respectively.

At June 30, 2024 and June 30, 2023 , Class B Stock had 1,040,000 shares authorized and 881,452 shares issued.

At September 30, 2024 and September 30, 2023 , Class B Stock had 1,040,000 shares authorized and 881,452 shares issued.

Artesian Resources Corporation registered 200,000 shares of Class A Stock, subsequently adjusted for stock splits, available for purchase through the Company’s 401(k) retirement plan.

Under the Equity Compensation Plan, effective December 9, 2015, or the 2015 Plan, Artesian Resources Corporation authorized up to 331,500 shares of Class A Stock for issuance of grants in the form of stock options, stock units, dividend equivalents and other stock-based awards, subject to adjustment in certain circumstances as discussed in the 2015 Plan.

Includes stock compensation expense for June 30, 2024 , and June 30, 2023 .

See Note 8 - Stock Compensation Plans.

Includes stock compensation expense for September 30, 2024 , and September 30, 2023 , See Note 8 - Stock Compensation Plans.

See notes to the condensed consolidated financial statements

5 unchanged sentences

Artesian Water Company, Inc., or Artesian Water, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware.

In addition, Artesian Water provides services to other water utilities, including operations and billing functions, and has contract operation agreements with private, municipal and state water providers.

In addition, Artesian Water provides services to other water utilities, including operations, and has contract operation agreements with private, municipal and state water providers.

Artesian Water also provides water for public and private fire protection to customers in our service territories.

3 unchanged sentences

TESI was incorporated in 2004.

Artesian Wastewater and TESI are regulated entities that own wastewater collection and treatment infrastructure and provide wastewater services to customers in Sussex County, Delaware as a regulated public wastewater service company.

MARYLAND REGULATED UTILITY SUBSIDIARIES

27 unchanged sentences

The condensed consolidated financial statements include the accounts of Artesian Resources Corporation and its wholly owned subsidiaries, including its principal operating company, Artesian Water.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments (unless otherwise noted) necessary to present fairly the Company’s balance sheet position as of June 30, 2024 , the results of its operations for the three and six -month periods ended June 30, 2024 and June 30, 2023 , its cash flows for the six -month periods ended June 30, 2024 and June 30, 2023 and the changes in stockholders’ equity for the three and six -month periods ended June 30, 2024 and June 30, 2023 .

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments (unless otherwise noted) necessary to present fairly the Company’s balance sheet position as of September 30, 2024 , the results of its operations for the three and nine -month periods ended September 30, 2024 and September 30, 2023 , its cash flows for the nine -month periods ended September 30, 2024 and September 30, 2023 and the changes in stockholders’ equity for the three and nine -month periods ended September 30, 2024 and September 30, 2023 .

The December 31 , 2023 Condensed Consolidated Balance Sheet was derived from the Company’s December 31 , 2023 audited consolidated financial statements but does not include all disclosures and notes normally provided in annual financial statements.

24 unchanged sentences

June 12, 2024

September 30,

December 31, 2023

17 unchanged sentences

For financial reporting purposes, depreciation is recorded using the straight-line method at rates based on estimated economic useful lives, which range from 5 to 85 years.

Composite depreciation rates for water utility plant were 1.92 % and 2.13 % for June 30, 2024 and December 31, 2023, respectively.

Composite depreciation rates for water utility plant were 1.92 % and 2.13 % for September 30, 2024 and December 31, 2023, respectively.

In a rate order issued by the DEPSC, the Company was directed effective June 12, 2024, to begin using revised depreciation rates for utility plant in Artesian Water, which are based on the estimated useful life years noted in the table above.

Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by Contributions in Aid of Construction, or CIAC, and Advances for Construction, or Advances, respectively.

This reduction in depreciation expense is also applied to outstanding CIAC and Advances.

Other deferred assets are amortized using the straight-line method over applicable lives, which range from 20 to 24 years.

Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by Contributions in Aid of Construction, or CIAC, and Advances for Construction, or Advances.

This reduction in depreciation expense is also netted against outstanding CIAC and Advances on the Condensed Consolidated Balance Sheet.

Certain other deferred assets are amortized using the straight-line method over applicable lives, which range from 20 to 24 years.

NOTE 3 – REVENUE RECOGNITION

28 unchanged sentences

Artesian generates fixed-fee revenue for water and wastewater services provided to customers once a customer requests service in our territory.

Our wastewater territory is located in Sussex County, Delaware.

We recognize revenue from these services on a ratable basis over time as the customer simultaneously receives and consumes all the benefits of the Company remaining ready to provide them water and wastewater service.

2 unchanged sentences

For contract services billed in advance, we record deferred revenue (contract liability) and accounts receivable for any amounts for which we have a right to invoice but for which services have not been provided.

This deferred revenue is netted with unbilled operating revenue on the Condensed Consolidated Balance Sheet.

This deferred revenue is netted against unbilled operating revenue on the Condensed Consolidated Balance Sheet.

Artesian generates service charges primarily from non-payment fees, such as water shut-off and reconnection fees and finance charges.

33 unchanged sentences

These services are invoiced at the end of every month based on incurred costs to date.

As of June 30, 2024, there is no associated contract asset or liability.

As of September 30, 2024, there is no associated contract asset or liability.

There is no provision for expected credit loss or bad debt expense associated with this revenue.

11 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in thousands)

16 unchanged sentences

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

4 unchanged sentences

Total Deferred Revenue

For the six months ended June 30, 2024, the Company recognized revenue of $ 1.3 million from amounts that were included in Deferred Revenue – Tariff at the beginning of the year and revenue of $ 0.4 million from amounts that were included in Deferred Revenue – Non- Tariff at the beginning of the year.

For the nine months ended September 30, 2024, the Company recognized revenue of $ 1.3 million from amounts that were included in Deferred Revenue – Tariff at the beginning of the year and revenue of $ 0.4 million from amounts that were included in Deferred Revenue – Non- Tariff at the beginning of the year.

The changes in Contract Assets and Deferred Revenue are primarily due to normal timing differences between our performance and customer payments.

Remaining Performance Obligations

As of June 30, 2024 and December 31, 2023, Deferred Revenue – Tariff is recorded net of contract assets within Unbilled operating revenues and represents our remaining performance obligations for our fixed fee water and wastewater services, all of which are expected to be satisfied and associated revenue recognized in the next three months .

As of June 30, 2024 and December 31, 2023, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months , approximately five years and one year , respectively.

As of September 30, 2024 and December 31, 2023, Deferred Revenue – Tariff is recorded net of contract assets within Unbilled operating revenues and represents our remaining performance obligations for our fixed fee water and wastewater services, all of which are expected to be satisfied and associated revenue recognized in the next three months .

As of September 30, 2024 and December 31, 2023, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months , approximately five years and one year , respectively.

NOTE 4 – ACCOUNTS RECEIVABLE

1 unchanged sentence

As set forth in a settlement agreement, Artesian Water will receive reimbursements from the Delaware Sand and Gravel Remedial Trust, or Trust, for Artesian Water’s past capital and operating costs, totaling approximately $ 10.0 million, related to the treatment costs associated with the release of contaminants from the Delaware Sand & Gravel Landfill Superfund Site, or Site, in groundwater that Artesian Water uses for public potable water supply.

Two installments for approximately $ 2.5 million each were paid in August 2022 and July 2023.

The remaining $ 5.0 million is payable in two equal installments, one of which was paid in July 2024 and the final payment is due no later than July 2025.

Three installments for approximately $ 2.5 million each were paid in August 2022, July 2023 and July 2024.

The final $ 2.5 million installment payment is due no later than July 2025.

In addition, the Trust shall reimburse Artesian Water for documented reasonable and necessary capital and operating costs after July 1, 2021 that Artesian Water incurs to treat contaminants of concern and of emerging concern.

3 unchanged sentences

The following table summarizes the changes in the Company’s accounts receivable balance:

September 30,

(in thousands)

21 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Minimum rentals

2 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2024

June 30, 2023

Nine Months Ended

September 30, 2024

September 30, 2023

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

except lease term and discount rate)

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

Operating leases

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2024 are as follows:

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2024 are as follows:

(in thousands)

3 unchanged sentences

Total lease liabilities recognized

As of June 30, 2024, we have not entered into operating or finance leases that will commence at a future date.

As of September 30, 2024, we have not entered into operating or finance leases that will commence at a future date.

N OTE 6 – FAIR VALUE OF FINANC IAL INSTRUMENTS

4 unchanged sentences

Long-term Financial Liabilities

As of June 30, 2024 and December 31, 2023, all of the Company’s outstanding lo ng-term debt interest rates were a fixed-rate.

As of September 30, 2024 and December 31, 2023, all of the Company’s outstanding lo ng-term debt interest rates were a fixed-rate.

The fair value of the Company’s long-term debt is determined by discounting their future cash flows using current market interest rates on similar instruments with comparable maturities consistent with FASB ASC 825.

4 unchanged sentences

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

14 unchanged sentences

For the full year 2023, the Company accrued approximately $ 12,000 in penalties and interest related to positions taken on the 2022 corporate income tax return.

For the six months ended June 30, 2024, the Company has accrued approximately $ 9,000 in penalties and interest related to positions taken on the 2022 corporate income tax return.

For the nine months ended September 30, 2024, the Company has accrued approximately $ 13,000 in penalties and interest related to positions taken on the 2022 corporate income tax return.

The Company remains subject to examination by federal and state authorities for the tax years 2021 through 2023 .

15 unchanged sentences

These restricted stock awards were fully vested and released one year after the grant date.

Compensation expense, for the three and six months ended June 30, 2024 of approximately $ 57,000 and $ 125,000 , respectively, was recorded for restricted stock awards issued in May 2023 and May 2024.

Compensation expense, for the three and six months ended June 30, 2023 of approximately $ 60,000 and $ 116,000 , respectively, was recorded for restricted stock awards issued in May 2022 and May 2023.

Compensation expense, for the three and nine months ended September 30, 2024 of approximately $ 46,700 and $ 172,000 , respectively, was recorded for restricted stock awards issued in May 2023 and May 2024.

Compensation expense, for the three and nine months ended September 30, 2023 of approximately $ 69,000 and $ 185,000 , respectively, was recorded for restricted stock awards issued in May 2022 and May 2023.

Costs were determined based on the fair value on the dates of the awards and those costs were charged to income over the service periods associated with the awards.

There was no stock compensation cost capitalized as part of an asset.

The following summary reflects changes in the shares of Class A Stock underlying options and restricted stock awards for the six months ended June 30, 2024:

The following summary reflects changes in the shares of Class A Stock underlying options and restricted stock awards for the nine months ended September 30, 2024:

Restricted Awards

5 unchanged sentences

Expired/cancelled

Outstanding at June 30, 2024

Exercisable/vested at June 30, 2024

There were no options exercised during the six months ended June 30, 2024.

There were no unvested option shares outstanding under the 2015 Plan during the six months ended June 30, 2024 .

As of June 30, 2024, there were no unrecognized expenses related to non-vested option shares granted under the 2015 Plan.

As of June 30, 2024, there was $ 157,000 total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2015 Plan.

Outstanding at September 30, 2024

Exercisable/vested at September 30, 2024

There were no options exercised during the nine months ended September 30, 2024.

There were no unvested option shares outstanding under the 2015 Plan during the nine months ended September 30, 2024 .

As of September 30, 2024, there were no unrecognized expenses related to non-vested option shares granted under the 2015 Plan.

As of September 30, 2024, there was $ 110,000 total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2015 Plan.

The cost will be recognized over 0.60 years, the remaining vesting period for the restricted stock awards.

1 unchanged sentence

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide regulated water utility service to customers within their established service territory in all three counties of Delaware and in portions of Maryland and Pennsylvania, pursuant to rates filed with and approved by the DEPSC, the MDPSC and the PAPUC.

As of June 30, 2024, Artesian Water was serving approximately 96,600 customers, Artesian Water Maryland was serving approximately 2,600 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

As of September 30, 2024 Artesian Water was serving approximately 97,000 customers, Artesian Water Maryland was serving approximately 2,700 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

Artesian Wastewater and TESI provide regulated wastewater utility service to customers within their established service territory in Sussex County, Delaware pursuant to rates filed with and approved by the DEPSC.

As of June 30, 2024, Artesian Wastewater and TESI were serving approximately 8,300 customers combined, including one large industrial customer.

As of September 30, 2024, Artesian Wastewater and TESI were serving approximately 8,500 customers combined, including one large industrial customer.

NOTE 10 – OTHER DEFERRED ASSETS

The investment in CoBank, ACB, or CoBank, which is a cooperative bank, is related to certain outstanding First Mortgage Bonds and is a required investment in the bank based on the underlying long-term debt agreements.

The settlement agreement receivable is related to the long-term portion of reimbursements due in 2025 as further discussed in Note 4 - Accounts Receivable.

The settlement agreement receivable is related to the long-term portion of reimbursements as further discussed in Note 4 - Accounts Receivable.

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

31 unchanged sentences

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

16 unchanged sentences

The annual amortization currently authorized by the DEPSC could be adjusted in future rate applications.

Deferred settlement refunds consist of reimbursements from the Delaware Sand and Gravel Remedial Trust for Artesian Water’s past capital and operating costs, totaling approximately $ 10.0 million, related to the treatment costs associated with the release of contaminants from the Delaware Sand & Gravel Landfill Superfund Site in groundwater that Artesian Water uses for public potable water supply, pursuant to the Settlement Agreement.

Two installments for approximately $ 2.5 million each were paid in August 2022 and July 2023.

The remaining $ 5.0 million is payable in two equal installments, one of which was paid in July 2024 and the final payment is due no later than July 2025.

Deferred settlement refunds consist of reimbursements from the Trust for Artesian Water’s past capital and operating costs, totaling approximately $ 10.0 million, related to the treatment costs associated with the release of contaminants from the Site in groundwater that Artesian Water uses for public potable water supply, pursuant to the Settlement Agreement.

Three installments for approximately $ 2.5 million each were paid in August 2022, July 2023 and July 2024.

The final $ 2.5 million installment payment is due no later than July 2025.

Artesian Water received approval from the DEPSC in October 2022 to refund to its customers these reimbursements for past capital and operating costs.

The refund for the reimbursements will be applied to current and future customer bills in annual installments.

The first two refunds occurred in October 2022 and August 2023.

Future customer refunds will occur no later than August 2024 and August 2025.

The first three refunds occurred in October 2022, August 2023 and August 2024.

The final customer refund will occur no later than August 2025.

The amount of the credit will be calculated by dividing the amount of the reimbursement by the number of eligible customers.

9 unchanged sentences

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

40 unchanged sentences

Eligible Plant Improvements – Installed Ending Date

On June 12, 2024, the DEPSC approved Artesian Water’s application to implement a DSIC rate of 0.34 %, effective July 1, 2024.

On June 12, 2024, the DEPSC approved Artesian Water’s application to implement a DSIC rate of 0.34 %, effective July 1, 2024, which is subject to periodic audit by the DEPSC.

Effective January 1, 2021, Artesian Water was permitted to recover specific investments made in infrastructure through the assessment of a 7.50 % DSIC.

The January 1, 2021 DSIC rate was reset to zero when the temporary base rate increase was placed into effect on November 28, 2023.

The July 1, 2024 DSIC is subject to periodic audit by the DEPSC.

For the three and six months ended June 30, 2024, DSIC revenue was zero .

For the three and six months ended June 30, 2023, we earned approximately $ 1.3 million and $ 2.5 million in DSIC revenue.

For both the three and nine months ended September 30, 2024, we earned approximately $ 0.1 million in DSIC revenue.

For the three and nine months ended September 30, 2023, we earned approximately $ 1.4 million and $ 3.9 million in DSIC revenue.

NOTE 14 – NET INCOME PER COMMON SHARE AND EQUITY PER COMMON SHARE

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

(in thousands)

2 unchanged sentences

Weighted average common shares outstanding during the period for diluted computation

For the three and six months ended June 30, 2024 and 2023, no shares of restricted stock awards were excluded from the calculations of diluted net income per share.

For the three and nine months ended September 30, 2024 and 2023, no shares of restricted stock awards were excluded from the calculations of diluted net income per share.

The Company has 15,000,000 authorized shares of Class A Non-Voting Stock and 1,040,000 authorized shares of Class B Stock.

As of June 30, 2024, 9,414,094 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding.

As of June 30, 2023 , 9,393,344 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding.

As of September 30, 2024, 9,416,339 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding.

As of September 30, 2023 , 9,395,541 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding.

The par value for both classes is $ 1.00 per share.

Equity per common share was $ 22.78 and $ 23.00 at June 30, 2024 and December 31, 2023 , respectively.

These amounts were computed by dividing common stockholders' equity by the number of weighted average shares of common stock outstanding on June 30, 2024 and December 31, 2023 , respectively.

Equity per common share was $ 23.15 and $ 23.00 at September 30, 2024 and December 31, 2023 , respectively.

These amounts were computed by dividing common stockholders’ equity by the number of weighted average shares of common stock outstanding on September 30, 2024 and December 31, 2023 , respectively.

NOTE 15 – COMMON STOCK OFFERING

19 unchanged sentences

The Tyco Settlement is not yet effective.

The deadline for eligible claimants to submit requests for exclusion from the settlement is September 23, 2024.

The deadline for eligible claimants to submit requests for exclusion from the settlement was September 23, 2024;

Artesian Resources’ subsidiaries have elected to remain in the settlement class.

The amount of any recovery, if any, by Artesian Resources’ subsidiaries is uncertain.

1 unchanged sentence

The BASF Settlement is not yet effective.

The deadline for eligible claimants to submit requests for exclusion from the settlement is October 15, 2024.

The deadline for eligible claimants to submit requests for exclusion from the settlement was October 15, 2024;

Artesian Resources’ subsidiaries have elected to remain in the settlement class.

The amount of any recovery, if any, by Artesian Resources’ subsidiaries is uncertain.

15 unchanged sentences

The measurement of depreciation, interest, and capital expenditures are predominately related to our Regulated Utility segment.

These amounts in our non-utility business are negligible and account for approximately less than 1% of condensed consolidated amounts as of June 30, 2024 and June 30, 2023.

These amounts in our non-utility business are negligible and account for approximately less than 1% of condensed consolidated amounts as of September 30, 2024 and September 30, 2023.

(in thousands)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Regulated Utility

10 unchanged sentences

Consolidated Income Taxes

September 30,

Regulated Utility

18 unchanged sentences

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 1. Financial Statements