Middlesex Water Announces 2023 Year End Results
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Insights
The financial results of Middlesex Water Company for the fiscal year ending December 31, 2023, reveal a mixed financial performance. The increase in consolidated operating revenues, primarily due to the base rate case increase and additional revenues through the Purchase Water Adjustment Clause rate, is a positive indicator of the company's ability to adjust pricing in response to cost pressures. However, this is tempered by a decrease in the Tidewater System revenues and only marginal increases in other areas.
Significantly, the increase in operation and maintenance expenses, driven by higher production costs and labor, has outpaced revenue growth, compressing margins. The $5.2 million gain from the sale of a subsidiary in the previous year skews the year-over-year net income comparison, resulting in a stark decrease in net income for 2023. This could potentially concern investors about the company's profitability trajectory, despite the one-time nature of the previous year's gain.
From a shareholder perspective, the decline in earnings per share (EPS) from $2.39 to $1.76 is notable. As EPS is a key metric for evaluating a company's profitability on a per-share basis, this decline could influence investor sentiment and impact the stock's performance. However, the company's long history of paying dividends, including the recent 4.0% increase, may provide some reassurance about its commitment to returning value to shareholders.
Examining Middlesex Water Company's performance within the utilities sector, the business's focus on infrastructure investment aligns with broader industry trends prioritizing water quality, reliability and regulatory compliance. This strategic emphasis is crucial for long-term sustainability and competitive positioning, particularly as environmental standards become more stringent and consumer awareness around water quality increases.
Furthermore, the settlement of litigation and the recovery of costs associated with treatment upgrades is a positive development, as it reduces legal uncertainty and potentially improves financial stability. However, the utility industry is capital-intensive and Middlesex's increased expenditures on tangible property repairs, though beneficial for tax purposes, reflect ongoing challenges in managing aging infrastructure and the associated costs.
The announcement of a new President and CEO could signal a strategic shift or continuity in corporate direction. Leadership transitions are closely monitored by the market for indications of potential changes in business strategy, operational efficiency and shareholder value creation.
The financial results of Middlesex Water Company must be contextualized within the broader economic environment. The utility sector is generally less sensitive to economic cycles due to the essential nature of its services. However, cost pressures from higher chemical prices and labor costs reflect inflationary trends that can affect operational efficiency and profitability.
The company's ability to implement rate increases, such as those seen in the Middlesex and Pinelands Systems, is indicative of a regulatory environment that allows for the pass-through of certain costs to consumers. This is critical for utilities to maintain capital for infrastructure investments without compromising financial health. Nevertheless, the rate reduction ordered by the Delaware Public Service Commission highlights the regulatory risks that can impact revenue.
While the company's dividend increase is a sign of confidence in its financial health, it must be balanced against the backdrop of declining net income. The sustainability of such dividend policies will depend on the company's ability to manage expenses and continue generating sufficient cash flow in a potentially tightening economic climate.
ISELIN, N.J., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Middlesex Water Company (“Middlesex” or the “Company”) (NASDAQ:MSEX) today announced financial results for the year ended December 31, 2023.
2023 OPERATING RESULTS
Consolidated operating revenues increased to
- A net
$4.2 million increase in our Middlesex System revenues due to the implementation of the final phase of the 2021 base rate case increase on January 1, 2023 and additional revenues through the Purchase Water Adjustment Clause rate; - A net decrease of
$0.9 million in our Tidewater System revenues related to lower customer connection fees and lower weather driven customer demand along with a Delaware Public Service Commission ordered rate reduction in September 2022; - A
$0.2 million increase in the Pinelands System in New Jersey due to the implementation of a base rate increase effective April 15, 2023; and - A
$0.3 increase in non-regulated operations revenues due to higher supplemental contract services.
Operation and maintenance expenses for the year ended December 31, 2023, increased to
Depreciation expense for the year ended December 31, 2023 increased
Middlesex recognized a
Income Taxes for the year ended December 31, 2023, decreased
As a result, net income for the year decreased
“Throughout 2023, we continued to invest in our infrastructure to ensure drinking water quality, enhance reliability and resiliency, secure our facilities, and protect consumers from lead in their service lines. We also maintained compliance with regulatory requirements with the completion of new treatment capability at our New Jersey wellfield facility,” said Middlesex Chairman, President and Chief Executive Officer Dennis W. Doll. “In addition, we settled litigation to recover costs associated with these treatment upgrades which has been reflected in the recent settlement of the Middlesex base rate case, originally filed in May 2023. Your Board of Directors increased the dividend by
QUARTERLY DIVIDEND DECLARED
As previously announced in January 2024, the Board of Directors of Middlesex Water Company declared a quarterly cash dividend of
ABOUT MIDDLESEX WATER COMPANY
Established in 1897, Middlesex Water Company serves as a trusted provider offering life-sustaining high quality water service for residential, commercial, industrial and fire protection purposes. The Company offers a full range of water, wastewater utility and related services. An investor-owned public utility, Middlesex Water is a professional services provider specializing in municipal and industrial contract operations and water and wastewater system technical operations and maintenance. The company and its subsidiaries form the Middlesex Water family of companies, which collectively serve a population of half a million people in New Jersey and Delaware. Middlesex is focused on meeting the needs of our employees, customers, and shareholders. We invest in our people, our infrastructure and the communities we serve to support reliable and resilient utility services, economic growth and quality of life. To learn more about Middlesex Water, visit https://www.middlesexwater.com
This press release contains “forward‐looking statements” within the meaning of U.S. federal securities laws reflecting the current beliefs or expectations of Middlesex Water Company “MSEX” or the “Company” regarding its future performance, its financial condition, its strategic plans and cash flows, its results of operations as well as any other statements that do not directly relate to any historical or current facts. These statements reflect the Company’s current views and information currently available. This information is based on estimates, assumptions and analysis that the Company believes, as of the date hereof, provide a reasonable basis for the information contained herein. Forward‐looking statements can generally be identified by the use of forward‐looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees.” Actual results, performance or achievements may differ materially from forward‐looking statements, and the assumptions on which forward-looking statements are based. There can be no assurance that the information contained herein is reflective of future performance, and investors are cautioned not to place undue reliance on forward‐looking statements as a predictor of future performance. Unless otherwise specified, all information contained in this press release speaks only as of the date hereof. The Company undertakes no duty to update or revise the information contained herein, whether as a result of new information, future events or otherwise.
Contact:
Bernadette Sohler, Vice President – Corporate Affairs
Middlesex Water Company
(732) 638-7549
| MIDDLESEX WATER COMPANY | ||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| (In thousands except per share amounts) | ||||||||||||||
| Years Ended December 31, | Quarters Ended December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| Operating Revenues | $ | 166,274 | $ | 162,434 | $ | 38,602 | $ | 38,823 | ||||||
| Operating Expenses: | ||||||||||||||
| Operations and Maintenance | 83,113 | 79,096 | 19,071 | 20,089 | ||||||||||
| Depreciation | 25,194 | 23,029 | 6,648 | 5,923 | ||||||||||
| Other Taxes | 18,744 | 18,208 | 4,640 | 4,665 | ||||||||||
| Total Operating Expenses | 127,051 | 120,333 | 30,359 | 30,677 | ||||||||||
| Gain on Sale of Subsidiary | - | 5,232 | - | - | ||||||||||
| Operating Income | 39,223 | 47,333 | 8,243 | 8,146 | ||||||||||
| Other Income (Expense): | ||||||||||||||
| Allowance for Funds Used During Construction | 2,433 | 2,314 | 272 | 761 | ||||||||||
| Other Income (Expense), net | 4,053 | 5,389 | 929 | 1,204 | ||||||||||
| Total Other Income, net | 6,485 | 7,703 | 1,201 | 1,965 | ||||||||||
| Interest Charges | 13,143 | 9,367 | 3,779 | 2,794 | ||||||||||
| Income before Income Taxes | 32,565 | 45,669 | 5,665 | 7,317 | ||||||||||
| Income Taxes | 1,041 | 3,240 | (102 | ) | 148 | |||||||||
| Net Income | 31,524 | 42,429 | 5,767 | 7,169 | ||||||||||
| Preferred Stock Dividend Requirements | 120 | 120 | 30 | 30 | ||||||||||
| Earnings Applicable to Common Stock | $ | 31,404 | $ | 42,309 | $ | 5,737 | $ | 7,139 | ||||||
| Earnings per share of Common Stock: | ||||||||||||||
| Basic | $ | 1.77 | $ | 2.40 | $ | 0.32 | $ | 0.40 | ||||||
| Diluted | $ | 1.76 | $ | 2.39 | $ | 0.32 | $ | 0.40 | ||||||
FAQ
What were Middlesex Water Company's operating revenues for the year ended December 31, 2023?
What factors influenced the operating revenues of Middlesex Water Company in 2023?
How did Middlesex Water Company's net income change in 2023 compared to 2022?
What was the quarterly cash dividend declared by Middlesex Water Company in January 2024?
Who is the new President and CEO of Middlesex Water Company?
