What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 73 added, 37 removed, 159 unchanged (41% of the section changed)

15 unchanged sentences

- the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;

- changes in federal and state regulations;

- the safety and reliability of the Company’s equipment, facilities and operations;

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Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which only speak to the Company’s understanding as of the date of this report.

The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

The Company does not undertake any obligation to release publicly any

revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

For an additional discussion of factors that may affect the Company’s business and results of operations, see Item 1A.

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All municipal or commercial entities whose utility operations are managed by these entities, however, are subject to environmental regulation at the federal and state levels.

Our principal New Jersey water utility system (the Middlesex System) provides water services to approximately 61,000 retail customers, primarily in central New Jersey.

The Middlesex System also provides water sales under contract to municipalities in central New Jersey with a total population of over 0.2 million.

Our principal New Jersey water utility system, Middlesex, provides water services to approximately 61,000 retail customers in central New Jersey, and also provides water sales under contract to municipalities in central New Jersey with a total population of over 0.2 million.

Prior to April 1, 2026, Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands) provided water and wastewater services to approximately 2,500 customers in Southampton Township, New Jersey.

Effective April 1, 2026, Pinelands was merged into Middlesex and those customers are now served by Middlesex.

Effective April 1, 2026, Pinelands was merged into Middlesex and those customers are now served by Middlesex (Middlesex and the Pinelands are collectively referred to as the "Middlesex System").

Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC, provide water services to approximately 66,000 retail customers in New Castle, Kent and Sussex Counties, Delaware.

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The settlement payments received by the Company will ultimately be refunded to customers.

As of March 31, 2026, the Company received $6.0 million and anticipates receiving additional settlement payments during the remainder of 2026 from the defendants named above.

Through June 30, 2026, the Company received $8.1 million and anticipates receiving additional settlement payments during the remainder of 2026 from the defendants named above.

Rates and Regulatory Matters

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• A Resiliency and Environmental System Improvement Charge (RESIC) Foundational Filing, which allows for the recovery of certain costs of future Middlesex and Pinelands investments related to compliance with requirements to address existing and emerging chemical elements or compounds, installation of new plant or equipment or replacement of existing plant or equipment to further maintain, enhance, or improve resiliency, health, safety or environmental protection;

• A Distribution System Improvement System Charge (DSIC) Foundational Filing, which allows for the recovery of future Middlesex and Pinelands Water investments in qualifying capital improvements to their water distribution system.

• A Distribution System Improvement Charge (DSIC) Foundational Filing, which allows for the recovery of future Middlesex and Pinelands Water investments in qualifying capital improvements to their water distribution system.

In January 2026, the NJBPU approved the merger of Pinelands into Middlesex through a corporate reorganization, which was completed April 1, 2026.

Tidewater - In January 2026, Tidewater completed the acquisitions of the water utility assets of Pinewood Acres, LLC, as authorized by the Delaware Public Service Commission (DEPSC).

Tidewater - In June 2026, the Delaware Public Service Commission (DEPSC) approved Tidewater’s DSIC rate, effective July 1, 2026.

Tidewater is expected to recover approximately $0.6 million of semi-annual revenues from July 2026 to December 2026.

In January 2026, Tidewater completed the acquisition of the water utility assets of Pinewood Acres, LLC, as authorized by the DEPSC.

See Note 2, Rates and Regulatory Matters for more details about our rates and regulatory activity in Delaware and New Jersey.

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Water systems have five years (by April 2029) to implement solutions that reduce Regulated PFAS if monitoring shows that drinking water levels exceed these MCLs.

The USEPA has announced its plans to issue a proposed rule extending the compliance date to 2031.

The USEPA has announced its plans to issue a proposed rule allowing utilities to extend the compliance date to 2031.

Beginning in April 2029 and absent an extension by the USEPA, water systems that have Regulated PFAS in drinking water which exceeds one or more of these MCLs must take action to reduce levels of these PFAS compounds in their drinking water and must provide notification to the public of the violation.

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The segments in the tables included below are comprised of the following companies:

Regulated - Middlesex, Tidewater, Pinelands and Southern Shores;

Regulated - Middlesex, Tidewater, Pinelands (through March 31, 2026, when Pinelands was merged into Middlesex - see Note 2 – Rates and Regulatory Matters, Middlesex Rate Matters for more details) and Southern Shores;

Non-Regulated - USA, USA-PA, and White Marsh.

Results of Operations – Three Months Ended March 31, 2026

Results of Operations – Three months ended June 30, 2026

(In Thousands)

Three Months Ended September 30,

Three Months Ended June 30,

Regulated Non-

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Operating Revenues

Operating revenues for the three months ended March 31, 2026 increased $4.4 million from the same period in 2025 due to the following factors:

• Middlesex System revenues increased $3.4 million due to increased wholesale customer demand, customer consumption and base rate increases effective February 23, 2026 (see Note 2, Rates and Regulatory Matters );

• Tidewater System revenues increased $0.8 million due to customer growth, increased customer consumption and rate increases (see Note 2, Rates and Regulatory Matters );

Operating revenues for the three months ended June 30, 2026 increased $7.0 million from the same period in 2025 due to the following factors:

• Middlesex revenues increased $5.3 million due to increased wholesale demand, customer consumption and base rate increases effective February 23, 2026 (see Note 2, Rates and Regulatory Matters );

• Tidewater revenues increased $1.7 million due to increased customer consumption, customer growth and rate increases (see Note 2, Rates and Regulatory Matters ).

Operations and Maintenance Expense

Operations and Maintenance Expense for the three months ended June 30, 2026 increased $2.3 million from the same period in 2025 primarily due to increases in the allowance for credit loss reserve and employee related costs, partially offset by higher capitalizable costs.

Depreciation expense for the three months ended June 30, 2026 increased $0.1 million from the same period in 2025 due to higher average utility plant in service.

Other Taxes for the three months ended June 30, 2026 increased $0.3 million from the same period in 2025 due to higher gross receipts taxes on higher revenues in our Middlesex System.

Other Income, net

Other Income, net for the three months ended June 30, 2026 increased $0.5 million from the same period in 2025 due to higher Allowance for Funds Used During Construction from increased capital expenditures.

Interest Charges

Interest Charges for the three months ended June 30, 2026 increased $0.4 million from the same period in 2025 primarily due to higher average debt outstanding.

Income Taxes for the three months ended June 30, 2026 increased by $0.4 million from the same period in 2025, primarily due to higher pre-tax income partially offset by lower effective tax rate from the flow-through benefit of increased estimated annual deductions on repair expenditures on tangible property in the Middlesex System.

Income tax benefits from the deduction of repair expenditures on tangible property in the Middlesex System are recognized immediately as a reduction to income tax expense in accordance with a previously issued NJBPU order.

Results of Operations – Six months ended June 30, 2026

(In Thousands)

Six Months Ended June 30,

Regulated Non-

Regulated Total Regulated Non-

Regulated Total

Operating Revenues $ 98,994 $ 6,077 $ 105,071 $ 87,660 $ 5,964 $ 93,624

Operations and Maintenance Expense 43,984 4,427 48,411 40,288 3,887 44,175

Depreciation 13,649 148 13,797 13,102 128 13,230

Other Taxes 11,391 141 11,532 10,626 124 10,750

Operating Income $ 29,970 $ 1,361 $ 31,331 $ 23,644 $ 1,825 $ 25,469

Other Income, net 4,308 43 4,351 3,603 93 3,696

Interest Charges 7,231 — 7,231 6,336 — 6,336

Income Taxes 2,599 475 3,074 1,960 611 2,571

Net Income $ 24,448 $ 929 $ 25,377 $ 18,951 $ 1,307 $ 20,258

Operating Revenues

Operating revenues for the six months ended June 30, 2026 increased $11.4 million from the same period in 2025 due to the following factors:

• Middlesex revenues increased $8.8 million due to increased wholesale demand, customer consumption and base rate increases effective February 23, 2026 (see Note 2, Rates and Regulatory Matters );

• Tidewater revenues increased $2.5 million due to increased customer consumption, customer growth, and rate increases (see Note 2, Rates and Regulatory Matters );

• Non-regulated revenues increased $0.1 million, primarily due to higher supplemental contract services.

• All other operating revenue categories increased $0.1 million.

Operations and Maintenance Expense

Operations and Maintenance Expense for the three months ended March 31, 2026 increased $1.9 million from the same period in 2025 due to increased variable production costs from higher production and higher labor cost due to wage and employee headcount increases, partially offset by higher capitalizable costs.

Depreciation expense for the three months ended March 31, 2026 increased $0.5 million from the same period in 2025 due to higher average utility plant in service.

Other Taxes for the three months ended March 31, 2026 increased $0.5 million from the same period in 2025 primarily due to higher gross receipts taxes on higher revenues in our Middlesex system.

Operations and Maintenance Expense for the six months ended June 30, 2026 increased $4.2 million from the same period in 2025 primarily due to increases in allowance for credit loss reserve, employee related costs and variable production costs, partially offset by higher capitalizable costs.

Depreciation expense for the six months ended June 30, 2026 increased $0.6 million from the same period in 2025 due to higher average utility plant in service.

Other Taxes for the six months ended June 30, 2026 increased $0.8 million from the same period in 2025 due to higher gross receipts taxes on higher revenue in our Middlesex System.

Other Income, net

Other Income, net for the three months ended March 31, 2026 increased $0.2 million from the same period in 2025 due to higher Allowance for Funds Used During Construction from increased capital expenditures.

Other Income, net for the six months June 30, 2026 increased $0.7 million from the same period in 2025 due to higher Allowance for Funds Used During Construction from increased capital expenditures.

Interest Charges

Interest Charges for the three months ended March 31, 2026 increased $0.5 million from the same period in 2025 primarily due to higher average debt outstanding.

Income Taxes for the three months ended March 31, 2026 increased by $0.1 million from the same period in 2025, primarily due to higher pre-tax income.

Interest Charges for the six months ended June 30, 2026 increased $0.9 million from the same period in 2025 due to higher average debt outstanding.

Income Taxes for the six months ended June 30, 2026 increased by $0.5 million from the same period in 2025, primarily due to higher pre-tax income partially offset by lower effective tax rate from the flow-through benefit of increased estimated annual deductions on repair expenditures on tangible property in the Middlesex System.

Liquidity and Capital Resources

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The effect of those factors on net income is discussed in Results of Operations above.

For the three months ended March 31, 2026, cash flows from operating activities decreased $2.1 million to $11.7 million.

The decrease in cash flows from operating activities primarily resulted from higher vendor payments offset by the impact of Middlesex’s approved base rate increase effective February 23, 2026 and Tidewater's base rate increase effective July 3, 2025.

For the six months ended June 30, 2026, cash flows from operating activities decreased $4.0 million to $28.1 million.

The decrease in cash flows from operating activities primarily resulted from higher vendor and income tax payments offset by the impact of Middlesex’s and Tidewater's approved base rate increases effective February 2026 and July 2025, respectively.

Investing Cash Flows

For the three months ended March 31, 2026, cash flows used in investing activities increased $1.7 million to $20.6 million due to increased utility plant expenditures in 2026.

For the six months ended June 30, 2026, cash flows used in investing activities decreased $1.6 million to $53.6 million due to lower acquisition spending on water systems offset by increased utility plant expenditures.

For further discussion on the Company’s future capital expenditures and expected funding sources, see Capital Expenditures and Commitments below.

Financing Cash Flows

For the three months ended March 31, 2026, cash flows from financing activities increased $4.6 million to $8.2 million.

The increase in cash flows provided by financing activities is due to higher long-term and short-term debt borrowings and the proceeds from the issuance of common stock under Middlesex’s At-the-Market (ATM) equity offering program (for further information on Middlesex’s ATM equity offering program, see below under Capital Expenditures and Commitments) partially offset by increased redemption of long-term-debt.

For the six months ended June 30, 2026, cash flows from financing activities increased $1.3 million to $24.5 million.

The increase in cash flows provided by financing activities is due to higher long-term debt borrowings and the proceeds from the issuance of common stock under Middlesex’s At-the-Market (ATM) equity offering program (for further information on Middlesex’s ATM equity offering program, see below under Capital Expenditures and Commitments) partially offset by increased redemption of long-term-debt and lower short-term debt borrowings.

Capital Expenditures and Commitments

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These government programs provide financing at interest rates typically below rates available in the broader financial markets.

The NJBPU has approved Middlesex's petition to borrow up to $260.0 million during the period January 2026 through December 2028, in one or more negotiated transactions in the form of notes and/or first mortgage bonds through loans from the New Jersey SRF Program, the New Jersey Economic Development Authority, private placement and other financial institutions as needed.

from the New Jersey SRF Program, the New Jersey Economic Development Authority, private placement and other financial institutions as needed.

In June 2026, Middlesex closed on a $17.8 million SRF construction loan.

The proceeds will be used to fund the replacement of lead service lines under Middlesex's Lead Service Line Replacement Plan.

Funding requisitions are expected to occur through December 2027.

In June 2026, Tidewater entered into a term loan agreement with CoBank, ACB and borrowed $25.0 million at an interest rate of 6.72%.

The loan matures in 2048.

Proceeds from the loan were used to repay Tidewater’s outstanding short-term borrowings and other general corporate purposes.

In September 2024, Tidewater closed on a $2.2 million Delaware SRF loan with a 0.0% interest rate with maturity dates in 2044.

This loan is for costs associated with Tidewater’s obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines throughout Tidewater’s service area.

Tidewater has drawn down $1.8 million as of March 31, 2026 and expects that the requisitions will continue through 2026.

Tidewater has drawn down $1.8 million as of June 30, 2026 and expects that the requisitions will continue through 2026.

In May 2024, Tidewater closed on four Delaware SRF loans totaling $5.6 million, all at interest rates of 2.0% with maturity dates in 2044.

These loans are for the construction, relocation, improvement, and/or interconnection of transmission mains

and construction of a water treatment facility.

These loans are for the construction, relocation, improvement, and/or interconnection of transmission mains and construction of a water treatment facility.

In December 2025, Tidewater closed on an additional $1.0 million, 2.0% SRF loan with a maturity date of 2045 related to these projects.

Tidewater has drawn down $2.1 million on these loans as of March 31, 2026.

Tidewater has drawn down $2.1 million on these loans as of June 30, 2026.

Each project has its own construction timetable with the last spending set to occur in 2027.

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This loan is for costs associated with Southern Shore’s obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines in its service area.

Southern Shores has drawn down $0.2 million on these loans as of March 31, 2026 and does not anticipate any further draws.

Southern Shores has drawn down $0.2 million on these loans as of June 30, 2026 and does not anticipate any further draws.

In February 2026, Pinelands Water and Pinelands Wastewater repaid in full $3.7 million and $3.4 million, respectively, of their amortizing secured notes.

The interest rates and due dates on both of these notes were 6.17% and 2043, respectively.

In April 2026, Tidewater filed a petition with the DEPSC seeking approval to issue up to $25 million of long-term debt through CoBank, ACB.

Proceeds will be used to reduce Tidewater's Notes Payable and finance Tidewater's on-going capital program.

In order to fully fund the ongoing investment program in our utility plant infrastructure and maintain a balanced capital structure consistent with regulators’ expectations for a regulated water utility, Middlesex may offer for sale additional shares of its common stock.

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Incorporated, and Janney Montgomery Scott (Janney), pursuant to which Middlesex may offer and sell shares of its common stock, no par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $110.0 million.

As of February 20, 2026, the Equity Sales Agreement was amended, replacing Janney with Huntington Securities, Inc.

In February 2026, the Equity Sales Agreement was amended, replacing Janney with Huntington Securities, Inc.

as a sales agent.

The Company intends to use the net proceeds from these sales, after deducting commissions and offering expenses, to fund our capital expenditures, to purchase and maintain plant equipment, as well as for other general corporate purposes.

For the three months ended March 31, 2026, Middlesex issued and sold a total of 49,305 shares of common stock, at a weighted average price of $54.82 per share, and received $2.7 million in net proceeds, under the Equity Sales Agreement.

As of March 31, 2026, the Company has $77.3 million of aggregate gross sales remaining under the Equity Sales Agreement.

For the three and six months ended June 30, 2026, Middlesex issued and sold a total of 215,722 and 265,027 shares of common stock respectively, at a weighted average price of $53.31 and $53.59 per share respectively, and received $11.3 million and $14.0 million in net proceeds respectively, under the Equity Sales Agreement.

As of June 30, 2026, the Company had $65.8 million of aggregate gross sales remaining under the Equity Sales Agreement.

Recent Accounting Pronouncements – See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements and guidance.

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