York Water Company Reports 3rd Quarter and Nine Months Earnings

Rhea-AI Summary

York Water Company (NASDAQ:YORW) reported mixed Q3 2024 results. Operating revenues increased by $948,000 to $19.7 million, driven by Distribution System Improvement charge and customer base growth. However, net income decreased by $1.7 million to $5.9 million. EPS fell to $0.41, down $0.12 year-over-year. For the nine-month period, revenues rose by $3.2 million to $56.1 million, while net income declined by $2.6 million to $15.2 million. The company invested $33 million in capital projects and $264,000 in acquisitions, expanding its service to 57 municipalities across four counties in Pennsylvania.

Positive

• Operating revenues increased 5.1% YoY to $19.7 million in Q3
• Nine-month revenues grew 6% to $56.1 million
• Customer base expansion and geographical presence growth to 57 municipalities
• Significant infrastructure investment of $33 million in capital projects

Negative

• Q3 net income declined 22.5% to $5.9 million
• Q3 EPS decreased 22.6% to $0.41
• Nine-month net income fell 14.4% to $15.2 million
• Higher operation and maintenance expenses impacting profitability
• Increased interest on debt affecting bottom line

Insights

Financial Analyst

The Q3 2024 results reveal concerning trends for York Water Company. Despite a 5.1% revenue increase to $19.7 million, net income dropped significantly by 22.5% to $5.9 million. The decline in EPS from $0.53 to $0.41 signals substantial margin pressure.

Key concerns include rising operational costs outpacing revenue growth from DSIC charges and customer base expansion. The lower AFUDC and higher depreciation suggest heavy infrastructure investments, with $33 million deployed in capital projects year-to-date. While necessary for long-term sustainability, these investments are currently weighing on profitability.

The expansion into Lancaster County and presence across 57 municipalities indicates strategic growth, but investors should monitor the company's ability to manage costs and maintain profitability as it scales. The planned additional $9.7 million investment in 2024 may further pressure margins in the near term.

YORK, Pa., Nov. 07, 2024 (GLOBE NEWSWIRE) -- The York Water Company's (NASDAQ:YORW) President, JT Hand, announced the Company's financial results for the third quarter and the first nine months of 2024.

President Hand reported that third quarter operating revenues of $19,715,000 increased $948,000, but net income of $5,863,000 decreased $1,705,000 compared to the third quarter of 2023. Basic and Diluted Earnings per share of $0.41 for the three-month period decreased $0.12 compared to the same period last year. Increased revenues were primarily due to revenues from Distribution System Improvement charge (DSIC) and growth in the customer base. The DSIC is a Pennsylvania Public Utility Commission allowed charge that water utilities collect from customers for the replacement of aging infrastructure. The increased revenue was more than offset by higher operation and maintenance expenses, depreciation, and a lower allowance for funds used during construction (AFUDC). AFUDC is the cost of debt and equity funds used to finance plant construction. Income taxes increased due to lower deductions from the IRS tangible property regulations.

President Hand also reported that the first nine months operating revenues of $56,093,000 increased $3,158,000, but net income of $15,183,000 decreased $2,562,000 compared to the first nine months of 2023. Increased revenues were primarily due to an increase in rates effective March 1, 2023, revenues from DSIC, and growth in the customer base. The Company incurred lower pension costs. The increased revenue and lower pension costs were more than offset by higher operation and maintenance expenses, depreciation, interest on debt, and a lower AFUDC. Basic and Diluted Earnings per share of $1.06 for the nine-month period decreased $0.18 compared to the same period last year.

During the first nine months of 2024, the Company invested $33 million in capital projects for armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, as well as various replacements and improvements to infrastructure and routine items. In addition, the Company invested $264,000 in the acquisition of water and wastewater systems, including the Houston Run Community Water System. This is the Company’s second acquisition in Lancaster County and the Company now serves in 57 municipalities within four counties in south-central Pennsylvania. The Company estimates it will invest an additional $9.7 million in 2024, excluding acquisitions, for completion of armoring and replacing the spillway of the Lake Williams dam and additional main extensions, and routine improvements to its pipes, service lines, and other facilities to ensure a safe, adequate, and reliable supply of drinking water and to maintain proper handling and disposal of wastewater for the Company’s growing customer base.

	Period Ended September 30
	In 000's (except per share)
	Quarter				Nine Months
		2024		2023		2024		2023
Operating Revenues	$	19,715	$	18,767	$	56,093	$	52,935
Net Income	$	5,863	$	7,568	$	15,183	$	17,745
Average Number of Common Shares Outstanding		14,354		14,301		14,340		14,289
Basic and Diluted Earnings Per Common Share	$	0.41	$	0.53	$	1.06	$	1.24
Dividends Declared Per Common Share	$	0.2108	$	0.2027	$	0.6324	$	0.6081

This news release may contain forward-looking statements regarding the Company’s operational and financial expectations. These statements are based on currently available information and are subject to risks, uncertainties, and other events which could cause the Company’s actual results to be materially different from the results described in this statement. The Company undertakes no duty to update any forward-looking statement.

FAQ

What was York Water Company's (YORW) Q3 2024 revenue?

York Water Company reported Q3 2024 operating revenues of $19.7 million, an increase of $948,000 from the same period in 2023.

How much did YORW's earnings per share decline in Q3 2024?

YORW's earnings per share decreased by $0.12 to $0.41 in Q3 2024 compared to $0.53 in Q3 2023.

How much did York Water Company (YORW) invest in capital projects during the first nine months of 2024?

YORW invested $33 million in capital projects during the first nine months of 2024, primarily for dam improvements, wastewater treatment plant construction, and infrastructure upgrades.

What was YORW's net income for the first nine months of 2024?

York Water Company's net income for the first nine months of 2024 was $15.2 million, a decrease of $2.6 million compared to the same period in 2023.