What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-08 · 162 added, 223 removed, 559 unchanged (41% of the section changed)

3 unchanged sentences

(In thousands)

September 30, 2024

March 31, 2025

December 31, 2024

48 unchanged sentences

(In thousands, except per share amounts)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Operating revenues

10 unchanged sentences

Operating income

Other income, net

Allowance for funds used during construction (AFUDC)

Miscellaneous (expense) income

Miscellaneous income

Income before interest charges

1 unchanged sentence

Net income applicable to common stock

Income per common share:

Net income per common share:

Weighted average common shares outstanding:

4 unchanged sentences

(In thousands)

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

AFUDC, equity portion

Changes in assets and liabilities:

Changes in assets and liabilities, net of acquisitions:

Accounts and other receivables

11 unchanged sentences

Accrued interest

Customer deposits and other

Customer deposits and other, net

NET CASH PROVIDED BY OPERATING ACTIVITIES

10 unchanged sentences

Net proceeds from issuance of common stock

Equity issuance costs

Issuance of long–term debt

5 unchanged sentences

(In thousands)

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

NET INCREASE IN CASH AND CASH EQUIVALENTS

2 unchanged sentences

Supplemental Disclosures of Cash Flow Information

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

Non-cash Investing and Financing Activity:

21 unchanged sentences

Balance as of March 31, 2024

Cash dividends declared

Issuance of common stock

Public offering, net of costs

Dividend reinvestment plan

Employee stock options and awards (4)

Employee Retirement Plan (3)

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)

11 unchanged sentences

Balance as of March 31, 2025

Cash dividends declared

Issuance of common stock

Dividend reinvestment plan

Employee stock options and awards (4)

Employee Retirement Plan (3)

Balance as of June 30, 2024

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.

At March 31, 2025 , and March 31, 2024 , Class A Stock had 15,000,000 shares authorized.

For the same periods, shares issued, inclusive of treasury shares, were 9,450,519 and 9,435,785 , respectively.

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

At March 31, 2025 , and March 31, 2024 , 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 September 30, 2024 , and September 30, 2023 , See Note 8 - Stock Compensation Plans.

Includes stock compensation expense for March 31, 2025 and March 31, 2024 , See Note 8 - Stock Compensation Plans.

See notes to the condensed consolidated financial statements.

7 unchanged sentences

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

Artesian Wastewater Management, Inc., or Artesian Wastewater, began providing wastewater services in July 2005.

Artesian Wastewater operates as the parent holding company of Tidewater Environmental Services, Inc.

Artesian Wastewater Management, Inc., or Artesian Wastewater, operates as the parent holding company of Tidewater Environmental Services, Inc.

dba Artesian Wastewater, or TESI.

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 companies.

MARYLAND REGULATED UTILITY SUBSIDIARIES

Artesian Water Maryland, Inc., or Artesian Water Maryland, began operations in August 2007.

Artesian Water Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland.

Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, was incorporated on June 3, 2008 and is authorized and able to provide regulated wastewater services to customers in the State of Maryland.

Artesian Water Maryland, Inc., or Artesian Water Maryland, distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland.

Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, is authorized and able to provide regulated wastewater services to customers in the State of Maryland.

It is currently not providing these services.

PENNSYLVANIA REGULATED UTILITY SUBSIDIARY

Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, began operations in 2002.

It provides water service to a residential community in Chester County, Pennsylvania.

Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, provides water service to a residential community in Chester County, Pennsylvania.

OTHER NON-UTILITY SUBSIDIARIES

17 unchanged sentences

Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information provided not misleading.

Accordingly, these condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes in the Company’s annual report on Form 10-K for fiscal year 2023 as filed with the SEC on March 18, 2024.

Accordingly, these condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes thereto in the Company's annual report on Form 10-K for fiscal year 2024 as filed with the SEC on March 26, 2025.

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 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 .

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 March 31, 2025 , the results of its operations for the three -month periods ended March 31, 2025 and March 31, 2024 , its cash flows for the three -month periods ended March 31, 2025 and March 31, 2024 and the changes in stockholders’ equity for the three -month periods ended March 31, 2025 and March 31, 2024 .

The December 31 , 2024 Condensed Consolidated Balance Sheet was derived from the Company’s December 31 , 2024 audited consolidated financial statements but does not include all disclosures and notes normally provided in annual financial statements.

7 unchanged sentences

The accounting records of Artesian Water Maryland, and Artesian Wastewater Maryland, are maintained in accordance with the uniform system of accounts as prescribed by the Maryland Public Service Commission, or the MDPSC.

All these subsidiaries follow the provisions of Financial Accounting Standards Board, or FASB, ASC Topic 980, which provides guidance for companies in regulated industries.

All these subsidiaries follow the provisions of Accounting Standards Codification, or ASC, 980, Regulated Operations, which provides guidance for companies in regulated industries.

These regulated subsidiaries account for the majority of our operating revenue.

1 unchanged sentence

Use of Estimates

The condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the U.S., which require management to make certain estimates and assumptions regarding the reported amounts of assets and liabilities including unbilled revenues, credit losses and reserves for bad debt, regulatory asset recovery, lease agreements, goodwill and contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from management's estimates.

Management makes certain estimates and assumptions regarding unbilled revenues, accounting for income taxes, credit losses and reserves for bad debt, lease agreements, goodwill and contingent assets and liabilities at the date of the condensed consolidated financial statements.

Utility Plant

Utility plant is stated at original cost.

Cost includes direct labor, materials, AFUDC (see description below) and indirect charges for such capitalized items as transportation, supervision, pension, medical, and other fringe benefits related to employees engaged in construction activities.

When depreciable units of utility plant are retired, the historical costs of plant retired is charged to accumulated depreciation.

Any cost associated with retirement, less any salvage value or proceeds received, is charged to the regulated retirement liability.

Maintenance, repairs, and replacement of minor items of utility plant are charged to expense as incurred.

Allowance for Funds Used during Construction, or AFUDC, is a non-cash credit to income with a corresponding charge to utility plant that represents the cost of borrowed funds and a return on equity funds devoted to plant under construction.

Utility plant comprises :

Estimated Useful Life

June 12, 2024

September 30,

December 31, 2023

Utility plant at original cost

Utility plant in service-Water

Intangible plant

Source of supply plant

Pumping and water treatment plant

Transmission and distribution plant

Storage tanks

General plant

Utility plant in service-Wastewater

Intangible plant

Treatment and disposal plant

Collection mains & lift stations

General plant

Property held for future use

Construction work in progress

Less – accumulated depreciation

All additions to utility plant are recorded at cost.

Business combinations pursuant to ASC 805, Business Combinations, may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency.

Depreciation and Amortization

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 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.

Composite depreciation rates for water utility plant were 1.93 % and 1.93 % for March 31, 2025 and December 31, 2024, respectively.

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.

3 unchanged sentences

Artesian’s operating revenues are primarily derived from contract services based upon regulated tariff rates approved by the DEPSC, the MDPSC, and the PAPUC.

Regulated tariff contract service revenues consist of water consumption, industrial wastewater services, fixed fees for water and wastewater services including customer and fire protection fees, service charges and Distribution System Improvement Charges, or DSIC, billed to customers at rates outlined in our tariffs that represent stand-alone selling prices.

Our non-tariff contract revenues, which are primarily non-utility revenues, are derived from SLP Plan fees, water and wastewater contract operations, design and installation contract services, and wastewater inspection fees.

Other regulated operating revenue are derived from developer guarantee contributions for wastewater and rental income for antenna agreements, which are not considered in the scope of Accounting Standards Codification 606, Revenue from Contracts with Customers.

Other regulated operating revenue is primarily derived from developer guarantee contributions for wastewater and rental income for antenna agreements, which are not considered in the scope of ASC 606, Revenue from Contracts with Customers.

Tariff Contract Revenues

4 unchanged sentences

the previous year’s consumption in the same period, the previous billing period’s consumption, or averaging.

While actual usage for individual customers may differ materially from the estimate based on management judgments described above, we believe the overall total estimate of consumption and revenue for the fiscal period will not differ materially from actual billed consumption.

While actual usage for individual customers may differ from the estimate based on management judgments described above, we believe the overall total estimate of consumption and revenue for the fiscal period will not differ materially from actual billed consumption.

The majority of our water customers are billed for water consumed on a monthly basis, while the remaining customers are billed on a quarterly basis.

12 unchanged sentences

the previous year’s volume in the same period, the previous billing period’s volume, or averaging.

While actual usage for individual customers may differ materially from the estimate based on management judgments described above, we believe the overall total estimate of volume and revenue for the fiscal period will not differ materially from actual billed consumption.

While actual usage for individual customers may differ from the estimate based on management judgments described above, we believe the overall total estimate of volume and revenue for the fiscal period will not differ materially from actual billed consumption.

The majority of these wastewater customers are billed for the volume of water transferred on a quarterly basis.

7 unchanged sentences

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

These fees are billed and recognized as revenue at the point in time when our tariffs indicate the Company has the right to payment such as days past due have been reached or shut-offs and reconnections have been performed.

These fees are billed and recognized as revenue at the point in time when our tariff indicates the Company has the right to payment such as days past due have been reached or shut-offs and reconnections have been performed.

There is no contract asset or liability associated with these fees.

31 unchanged sentences

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

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

As of March 31, 2025, there is no associated contract asset or liability.

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

10 unchanged sentences

all revenues are generated within a similar geographical location:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

(in thousands)

Three months ended March 31, 2025

Three months ended March 31, 2024

Tariff Revenue

15 unchanged sentences

(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Total Deferred Revenue

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.

For the three months ended March 31, 2025, the Company recognized revenue of $ 1.4 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 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.

As of March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024, 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 four years and one year , respectively.

NOTE 4 – ACCOUNTS RECEIVABLE

8 unchanged sentences

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

September 30,

(in thousands)

4 unchanged sentences

Developer receivable

Miscellaneous receivable

Miscellaneous accounts receivable

provision for expected credit loss

3 unchanged sentences

Our leases have remaining lease terms of 3 years to 72 years, some of which include options to automatically extend the leases for up to 66 years and are included as part of the lease liability and right -of- use assets as we expect to exercise the options.

Payments made under operating leases are recognized in the condensed consolidated statement of operations on a straight-line basis over the period of the lease.

The annual lease payments for the land operating leases increase each year either by the most recent increase in the Consumer Price Index or by 3 %, as applicable based on the lease agreements.

Periodically, the annual lease payment for one operating land lease is determined based on the fair market value of the applicable parcel of land.

One of the leases for land was terminated in its entirety effective October 10, 2024.

The remaining lease liability and right-of-use asset for the terminated lease was removed in the fourth quarter of 2024.

The difference between the carrying amounts of the right-of-use asset and the lease liability was recorded in the income statement.

Payments made under operating leases are recognized in the consolidated statement of operations on a straight-line basis over the period of the lease.

The annual lease payment for the remaining land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land.

None of the operating leases contain contingent rent provisions.

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended

March 31, 2025

March 31, 2024

Minimum rentals

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30, 2024

September 30, 2023

Three Months Ended

March 31, 2025

March 31, 2024

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

5 unchanged sentences

except lease term and discount rate)

September 30, 2024

March 31, 2025

December 31, 2024

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 September 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 March 31, 2025 are as follows:

(in thousands)

3 unchanged sentences

Total lease liabilities recognized

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

As of March 31, 2025, 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 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.

As of March 31, 2025 and December 31, 2024, all of the Company’s outstanding long-term debt interest rates were a fixed rate.

Under the fair value hierarchy, the fair value of the long-term debt in the table below is classified as Level 2 measurements.

3 unchanged sentences

(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

NOTE 7 – INCOME TAXES

Deferred income taxes are provided in accordance with FASB ASC Topic 740 on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the condensed consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse.

Deferred income taxes are provided in accordance with ASC 740, Income Taxes, on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the condensed consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse.

The Company’s rate regulated subsidiaries recognize regulatory liabilities, to the extent considered in ratemaking, for deferred taxes provided in excess of the current statutory tax rate and regulatory assets for deferred taxes provided at rates less than the current statutory rate.

Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties.

Under FASB ASC Topic 740, an uncertain tax position represents our expected treatment of a tax position taken, or planned to be taken in the future, that has not been reflected in measuring income tax expense for financial reporting purposes.

Under ASC 740, Income Taxes, an uncertain tax position represents our expected treatment of a tax position taken, or planned to be taken in the future, that has not been reflected in measuring income tax expense for financial reporting purposes.

The Company establishes reserves for uncertain tax positions based upon management's judgment as to the sustainability of these positions.

2 unchanged sentences

However, to the extent the final tax outcome of these matters is different than the estimates recorded, the Company would then adjust its tax reserves or unrecognized tax benefits in the period that this information becomes known.

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 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 has elected to recognize accrued interest (net of related tax benefits) and penalties related to uncertain tax positions as a component of its income tax expense.

For the full year 2024, the Company accrued approximately $ 17 thousand in penalties and interest related to positions taken on the 2022 corporate income tax return.

For the three months ended March 31, 2025, the Company has accrued approximately $ 4 thousand 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 2024 .

9 unchanged sentences

Non-employee directors of the Company are also eligible to receive grants under the 2015 Plan.

On May 6, 2024, 5,000 shares of Class A Common Stock, or Class A Stock, were granted as restricted stock awards.

On May 6, 2024, 5,000 shares of Class A Non-Voting Common Stock, or Class A Stock, were granted as restricted stock awards.

The fair value per share was $ 37.07 , the closing price of the Class A Stock as recorded on the Nasdaq Global Select Market on May 6, 2024.

These restricted stock awards will be fully vested and released one year after the grant date and, prior to their vesting date, are subject to forfeiture in the event of the recipient’s termination of service.

On May 9, 2023, 5,000 shares of Class A Common Stock, or Class A Stock, were granted as restricted stock awards.

The fair value per share was $ 54.88 , the closing price of the Class A Stock as recorded on the Nasdaq Global Select Market on May 9, 2023.

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

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.

Compensation expense of approximately $ 46 thousand, related to the May 2024 issue of restricted stock awards, was recorded for three months ended March 31, 2025.

Compensation expense of approximately $ 68 thousand was recorded for three months ended March 31, 2024 for restricted stock awards issued in 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 nine months ended September 30, 2024:

The following summary reflects changes in the shares of Class A Stock underlying options and restricted stock awards for the three months ended March 31, 2025:

Restricted Awards

Outstanding Restricted

Option Shares

Weighted Average Exercise Price

Weighted Average Remaining Life (Yrs.)

Aggregate Intrinsic Value (in thousands)

Outstanding Restricted Stock Awards

Weighted Average

Restricted stock awards

Outstanding at January 1, 2024

Plan options/restricted stock awards

Outstanding at Janaury 1, 2025

Exercised/vested and released

Expired/cancelled

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.

Outstanding at March 31, 2025

Exercisable/vested at March 31, 2025

There were no options exercised during the three months ended March 31, 2025.

There were no unvested option shares outstanding under the 2015 Plan during the three months ended March 31, 2025 .

As of March 31, 2025, there were no unrecognized expenses related to non-vested option shares granted under the 2015 Plan.

As of March 31, 2025, there was approximately $ 18 thousand total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2015 Plan.

The cost will be recognized over 0.10 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 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.

As of March 31, 2025 Artesian Water was serving approximately 97,700 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 September 30, 2024, Artesian Wastewater and TESI were serving approximately 8,500 customers combined, including one large industrial customer.

As of March 31, 2025, Artesian Wastewater and TESI were serving approximately 8,700 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 as further discussed in Note 4 - Accounts Receivable.

(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

Investment in CoBank

Settlement agreement receivable-long term

Other deferred assets

N OTE 11 – REGULATORY ASSETS

The FASB ASC Topic 980 stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency.

The ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency.

Certain expenses are recoverable through rates charged to our customers, without a return on investment, and are deferred and amortized during future periods using various methods as permitted by the DEPSC, MDPSC, and PAPUC.

4 unchanged sentences

Affiliated interest agreement deferred costs relate to the regulatory and administrative costs resulting from efforts necessary to secure water allocations in Artesian Water Pennsylvania’s territory for the provision of service to the surrounding area and interconnection to Artesian Water Pennsylvania’s affiliate regulated water utility Artesian Water.

These costs were specifically included for cost recovery pursuant to an Affiliated Interest Agreement between Artesian Water and Artesian Water Pennsylvania and were approved for recovery by the PAPUC and were reclassified from deferred costs to a regulatory asset in 2022.

Amortization of these deferred costs began in the fourth quarter of 2023.

1 unchanged sentence

Deferred acquisition costs represent the closing cost associated with the acquisitions.

Costs of $ 3.7 million were reclassified from net utility plant and $ 0.1 million were reclassified from contributions in aid of construction, which will be recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Unrecovered reserve for depreciation of $ 4.1 million is the result of the implementation of a change in depreciation methods for certain general plant assets that will be recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Costs of $ 3.7 million were reclassified from net utility plant and $ 0.1 million were reclassified from contributions in aid of construction, which are being amortized over the periods noted in the table below and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Unrecovered reserve for depreciation of $ 4.3 million was the result of the implementation of a change in depreciation methods for certain general plant assets that are being amortized over five years and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Amortization of these deferred costs began in the third quarter of 2024.

Regulatory expenses amortized on a straight-line basis are noted below:

13 unchanged sentences

(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

10 unchanged sentences

NOTE 12 – REGULATORY LIABILITIES

FASB ASC Topic 980 stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency.

ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency.

Certain obligations are deferred and/or amortized as determined by the DEPSC, MDPSC, and PAPUC.

7 unchanged sentences

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 refund for the reimbursements is applied to current and future customer bills in annual installments.

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

1 unchanged sentence

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

Beginning in 2022, Artesian Water began recording 2022 and future recovery of capital expenditures as Contributions in Aid of Construction and began recording expense recovery as an offset to operations and maintenance expense, with the intention that those recoveries will be available for inclusion and consideration in any future rate applications.

Beginning in 2022, Artesian Water began recording recovery of capital expenditures as Contributions in Aid of Construction and began recording expense recovery as an offset to operations and maintenance expense, with the intention that those recoveries will be available for inclusion and consideration in any future rate applications.

Pursuant to the enactment of the Tax Cuts and Jobs Act, or TCJA, on December 22, 2017, the Company adjusted its existing deferred income tax balances to reflect the decrease in the corporate income tax rate from 34 % to 21 % (see Note 7 – Income Taxes ) resulting in a decrease in the net deferred income tax liability of $ 24.3 million, of which $ 22.8 million was reclassified to a regulatory liability related to Artesian Water and Artesian Water Maryland.

The regulatory liability amount is subject to certain Internal Revenue Service normalization rules that require the benefits to customers be spread over the remaining useful life of the underlying assets giving rise to the associated deferred income taxes.

The regulatory liability amount is subject to certain Internal Revenue Service, or IRS, normalization rules that require the benefits to customers be spread over the remaining useful life of the underlying assets giving rise to the associated deferred income taxes.

On January 31, 2019, the DEPSC approved Artesian Water to amortize the regulatory liability amount of $ 22.2 million over a period of 49.5 years beginning February 1, 2018, subject to audit at a later date.

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(in thousands)

September 30, 2024

March 31, 2025

December 31, 2024

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Revised depreciation rates for utility plant and revised amortization rates for certain regulatory assets and liabilities were also approved effective June 12, 2024.

On April 4, 2025, Artesian Water filed a request with the DEPSC to implement new rates to meet a requested increase in revenue of 12.41 %, or approximately $ 10.8 million, on an annualized basis.

The actual effective increase is less than 12.41 % since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 1.66 % DSIC.

Since the DSIC rate is set to zero when temporary rates are placed into effect, customers would experience an incremental increase of 10.75 %, the net of the overall 12.41 % increase less the DSIC rate of 1.66 % currently in effect, if the requested increase is granted in full by the DEPSC.

The new proposed rates are designed to support Artesian Water’s ongoing capital improvement program and to cover increased costs of operations, including chemicals and electricity for water treatment, water quality regulation compliance, taxes, labor and benefits.

In accordance with applicable Delaware law, Artesian Water is permitted to place into effect temporary rates of up to 15 % of gross water sales, or $ 2.5 million, whichever is lower, on an annual basis, 60 days after the application is filed, subject to refund, until permanent rates are determined by the DEPSC.

Artesian Water has petitioned the DEPSC to implement a temporary incremental increase in rates of 1.22 % effective June 3, 2025, providing approximately $ 1.2 million in additional annual revenue.

Other Proceedings

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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, 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.

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.

On December 18, 2024, the DEPSC approved Artesian Water’s application to implement a DSIC rate of 1.66 %, effective January 1, 2025.

Effective July 1, 2024, Artesian Water was permitted to recover specific investments made in infrastructure through the assessment of a 0.34 % DSIC.

The January 1, 2025 and July 1, 2024 DSIC rates are subject to periodic audit by the DEPSC.

For the three months ended March 31, 2025, we earned approximately $ 0.3 million in DSIC revenue.

For the three months ended March 31, 2024, we did not report any earnings in DSIC revenue.

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

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The following table summarizes the shares used in computing basic and diluted net income per share:

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

For the Three Months Ended March 31,

(in thousands)

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Weighted average common shares outstanding during the period for diluted computation

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.

For the three months ended March 31, 2025 and 2024, no shares of restricted stock awards were excluded from the calculations of diluted net income per share.

For the three months ended March 31, 2025 and 2024, no stock options 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 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.

As of March 31, 2025, 9,421,542 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding.

As of March 31, 2024 , 9,406,808 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 $ 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

On May 23, 2023, the Company completed the sale of 695,650 shares of its Class A Stock, par value $ 1.00 per share, at a price to the public of $ 50 per share.

The net proceeds to the Company from the offering, after deducting the underwriting discounts and commissions and other offering costs, were approximately $ 33.0 million.

The Company also granted the underwriter a 30 -day option to purchase up to an additional 104,348 shares of Class A Stock at the public offering price, less the underwriting discount .

On June 16, 2023, the underwriter exercised its over-allotment option, to purchase 67,689 shares of Class A Stock at the public offering price.

The net proceeds to the Company resulting from the exercise of the over-allotment option, after deducting the underwriting discounts and commissions and other offering costs, were approximately $ 3.2 million.

All of the shares of Class A Stock sold in the offering were offered by the Company.

The proceeds from both the initial offering and the over-allotment option were used to repay short-term borrowings, including borrowings incurred under our lines of credit with Citizens Bank and CoBank, incurred primarily to finance capital expenditures, including investment in utility plant and equipment, and other general corporate purposes.

Equity per common share was $ 23.46 and $ 23.24 at March 31, 2025 and December 31, 2024 , respectively.

These amounts were computed by dividing common stockholders’ equity by the number of weighted average shares of common stock outstanding on March 31, 2025 and December 31, 2024 , respectively.

NOTE 15 – LEGAL PROCEEDINGS

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However, we cannot ensure that we will prevail in any litigation and, regardless of the outcome, may incur significant litigation expense and may have significant diversion of management attention.

Several of the water systems of Artesian Resources’ subsidiaries are claimants in two multi-district litigation, or MDL, class action settlements designed to resolve claims for per - and polyfluoroalkyl substances, or PFAS, contamination in Public Water Systems’ Drinking Water, as those terms are defined in the respective Agreements (the “Settlements”), which are with two groups of settling defendants on behalf of:

Several of the water systems of Artesian Resources’ subsidiaries are claimants in four multi-district litigation, or MDL, class action settlements designed to resolve claims for per - and polyfluoroalkyl substances, or PFAS, contamination in Public Water Systems’ Drinking Water, as those terms are defined in the respective Agreements (the “Settlements”), which are with four groups of settling defendants on behalf of:

(1) the 3M company (“3M”);

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(collectively, “DuPont”);

Phase One Public Water System Settlement Claims Forms have been submitted on behalf of Artesian Resources’ eligible systems in each of the Settlements.

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

Several of the water systems of Artesian Resources’ subsidiaries are eligible claimants in the MDL class action settlement designed to resolve claims for PFAS contamination in Public Water Systems’ Drinking Water, as those terms are defined in the settlement agreement of settling defendants Tyco Fire Products LP and Chemguard, Inc.

(the “Tyco Settlement”).

The Tyco Settlement is not yet effective.

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.

Several of the water systems of Artesian Resources’ subsidiaries may be eligible claimants in the MDL class action settlement designed to resolve claims for PFAS contamination in Public Water Systems’ Drinking Water, as those terms are defined in the settlement agreement of settling defendant BASF Corporation (the “BASF Settlement”).

The BASF Settlement is not yet effective.

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.

(3) Tyco Fire Products LP and Chemguard, Inc;

and (4) BASF Corporation.

Claims Forms have been submitted on behalf of Artesian Resources’ eligible systems in each of the Settlements.

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

NOTE 16 – BUSINESS SEGMENT INFORMATION

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The Company is subject to regulations as to its rates, services, and other matters by the states of Delaware, Maryland and Pennsylvania with respect to utility service within these states.

The Company also operates other non-utility businesses, primarily comprised of:

Service Line Protection Plan services for water, sewer and internal plumbing;

design, construction and engineering services;

and contract services for the operation and maintenance of water and wastewater systems in Delaware and Maryland.

These non-utility businesses do not individually or in the aggregate meet the criteria for disclosure of a reportable segment in accordance with generally accepted accounting principles and are collectively presented throughout this Quarterly Report on Form 10-Q within “Other” or “Non-utility”, which is consistent with how management assesses the results of these businesses.

The Chief Operating Decision Maker, or CODM, is the Executive Committee led by the Chief Executive Officer and includes the Chief Financial Officer.

The CODM uses operating income as its measure of profit to assess the performance of each segment.

This profit measure excludes the financing component and allows management to focus on controllable expenses, to allocate resources during the annual budgeting process and to monitor budget versus actual results on a monthly basis.

The accounting policies of the operating segments are the same as those described in Note 2 – Basis of Presentation.

The Regulated Utility segment includes inter-segment costs related to leased office space provided by one non-utility business, calculated on the lower of cost or market method, which are eliminated to reconcile to the Condensed Consolidated Statements of Operations.

The Regulated Utility segment also allocates certain corporate costs to the non-utility businesses.

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 September 30, 2024 and September 30, 2023.

(in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Regulated Utility

Other (non-utility)

These amounts in our non-utility business are negligible and account for approximately less than 1% of condensed consolidated amounts as of March 31, 2025 and March 31, 2024.

Three Months Ended March 31,

Regulated Utility Revenues

Reconciliation of revenue

Other revenues

Inter-segment elimination

Consolidated revenues

Operating Income:

Regulated Utility

Other (non-utility)

Payroll and Benefits (c)

Supply and Delivery (d)

Administrative (e)

Depreciation and Amortization

Property and other taxes

Regulated Utility Operating Income

Reconciliation of operating income

Consolidated operating income

Income Taxes:

Regulated Utility

Other (non-utility)

Consolidated Income Taxes

September 30,

Regulated Utility

Other (non-utility)

March 31, 2025

March 31, 2024

Regulated Utility Assets

Reconciliation of assets

Consolidated assets

(a) Other revenues and other profit:

– Revenue and profit from segments below the quantitative thresholds are attributable to four non-utility businesses of the Company

– These businesses are primarily comprised of:

Service Line Protection Plan services for water, sewer and internal plumbing;

design, construction and engineering services;

contract services for the operation and maintenance of water and wastewater systems in Delaware and Maryland;

and leased space to the Regulated Utility Segment

– These non-utility businesses do not individually or in the aggregate meet the quantitative thresholds for determining reportable segments

– Certain corporate costs have been allocated from the regulated utility segment to the non-utility businesses and are included in the other profit amounts shown

(b) Significant expense categories:

– The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM

– Inter-segment expenses related to leased space provided by one non-utility business, calculated on the lower of cost or market method, are included in the amounts shown

– This category does not include amounts capitalized on the Condensed Consolidated Balance Sheet

(d) Supply and Delivery:

– This category includes purchased power, purchased water, chemicals, infrastructure maintenance and repair costs, and wastewater disposal fees

(e) Administration expense:

– This category includes computer systems maintenance and subscription fees, audit and legal fees, insurance, customer billing, and other general and administrative expenses

NOTE 17 – IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued amended guidance for improvements to reportable segment disclosures.

The amendments in this update require the Company to disclose significant segment expenses that are regularly provided to the chief operating decision makers, or CODMs, and are included within each reported measure of segment operating results.

The standard also requires the Company to disclose the total amount of any other items included in segment operating results which were not deemed to be significant expenses for separate disclosure, along with a qualitative description of the composition of these other items.

In addition, the standard also requires disclosure of the CODM’s, title and position, as well as detail on how the CODM uses the reported measure of segment operating results to evaluate segment performance and allocate resources.

The standard also aligns interim segment reporting disclosure requirements with annual segment reporting disclosure requirements.

The Company will adopt the standard effective with our December 31, 2024 year end reporting, and the standard will be effective for interim reporting periods in fiscal years beginning after December 15, 2024, with early adoption permitted.

The standard requires retrospective application to all prior periods presented.

While the standard requires additional disclosures related to the Company’s reportable segments, management does not expect the standard to have an impact on the Company’s results of operations or cash flows due to the adoption of this guidance.

In December 2023, FASB issued amended guidance on Income Taxes:

In December 2023, the Financial Accounting Standards Board, or FASB issued amended guidance on Income Taxes:

Improvements to Income Tax.

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While the standard will require additional disclosures related to the Company’s income taxes, management does not expect the adoption of this guidance to have an impact on the Company’s results of operations or cash flows.

In November 2024, FASB issued amended guidance which requires disaggregated disclosure of income statement expenses for public business entities.

The guidance does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

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