Artesian Resources Corp 10-K for FY2023

Artesian Resources Corp (ARTNA)

10-K 2024-03-18 For: 2023-12-31

Added on April 06, 2026

About this 10-K

Artesian Resources Corp filed this 10-K on March 18, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $98.86M; unchanged from $98.9M a year earlier
Net income: $16.7M; down 7.2% from net income of $18M a year earlier
Diluted EPS: $1.67; down 12.1% from $1.90 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Delaware		51-0002090
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock	ARTNA	The Nasdaq Stock Market

Large Accelerated Filer □	Accelerated Filer □	Non-Accelerated Filer ☑	Smaller Reporting Company ☑
Emerging Growth Company ☐

FORWARD LOOKING STATEMENTS

PART I
Item 1. – Business
Item 1A. – Risk Factors
Item 1B. – Unresolved Staff Comments Item 1C – Cybersecurity
Item 2. – Properties
Item 3. – Legal Proceedings
Item 4. – Mine Safety Disclosures
PART II
Item 5. – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. – [Reserved]
Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. – Quantitative and Qualitative Disclosure About Market Risk
Item 8. – Financial Statements and Supplementary Data
Item 9. – Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. – Controls and Procedures
Item 9B. – Other Information Item 9C. – Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. – Directors, Executive Officers and Corporate Governance
Item 11. – Executive Compensation
Item 12. – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. – Certain Relationships and Related Transactions, and Director Independence
Item 14. – Principal Accountant Fees and Services
PART IV
Item 15. – Exhibits and Financial Statement Schedules Item 16. – Form 10-K Summary

SIGNATURES

Exhibit 21-Subsidiaries of the Company
Exhibit 23.1-Consent of BDO USA, P.C.
Exhibit 31.1-Certification of Chief Executive Officer
Exhibit 31.2-Certification of Chief Financial Officer
Exhibit 32-Certification of Chief Executive Officer and Chief Financial Officer

Utility plant comprises:
In thousands
	Estimated Useful Life (In Years)		December 31, 2023
Utility plant at original cost
Utility plant in service-Water
Intangible plant		---	$	140
Source of supply plant		45-85		29,960
Pumping and water treatment plant		8-62		130,337
Transmission and distribution plant
Mains		81		370,977
Services		39		60,818
Storage tanks		76		40,933
Meters		26		30,318
Hydrants		60		18,980
General plant		5-31		67,317

Utility plant in service-Wastewater
Intangible plant		---		116
Treatment and disposal plant		21-81		67,789
Collection mains and lift stations		81		51,539
General plant		5-31		2,478

Property held for future use		---		4,028
Construction work in progress		---		23,724
				899,454
Less – accumulated depreciation				185,170
			$	714,284

	Stock Price
	High		Low
2023
First Quarter	$	63.00	$	51.30
Second Quarter	$	58.41	$	46.37
Third Quarter	$	49.73	$	41.26
Fourth Quarter	$	44.78	$	38.76

2022
First Quarter	$	50.88	$	43.02
Second Quarter	$	50.00	$	44.08
Third Quarter	$	60.36	$	47.96
Fourth Quarter	$	59.98	$	45.44

			INDEXED RETURNS
	Base Period		Years Ending December 31
Company Name / Index	2018		2019		2020		2021		2022		2023
Artesian Resources Corporation		100		109.66		112.37		144.07		186.27		134.81
S&P 500 Index		100		131.49		155.68		200.37		164.08		207.21
Peer Group		100		134.89		155.56		192.86		165.11		141.97

Percentage of Operating Revenues
	2023			2022			2021
Water Sales
Residential		50.1	%		48.7	%		53.0	%
Commercial		17.9			17.6			19.4
Industrial		0.1			0.1			0.1
Government and Other		12.9			12.8			13.2
Other utility operating revenues		12.3			11.6			7.9
Non-utility operating revenues		6.7			9.2			6.4
Total		100.0	%		100.0	%		100.0	%

Percentage of Operating and Maintenance Expenses
	2023			2022			2021
Payroll and Associated Expenses		49.5	%		47.5	%		49.2	%
Administrative		16.9			15.3			15.7
Supply and Treatment		11.9			10.8			9.4
Purchased Power		5.7			5.2			4.8
Transmission, Distribution and Collection		4.6			4.1			2.7
Purchased Water		2.7			3.6			9.5
Non-utility Operating		8.7			13.5			8.7
Total		100.0	%		100.0	%		100.0	%

Material Cash Requirements	Payments Due by Period
In thousands	Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
First mortgage bonds (principal and interest)	$	7,902	$	15,714	$	40,610	$	204,564	$	268,790
State revolving fund loans (principal and interest)		979		2,147		2,068		10,287		15,481
Promissory note (principal and interest)		1,200		1,923		1,924		9,652		14,699
Asset purchase contractual obligation (principal and interest)		339		659		320		---		1,318
Lines of credit		---		---		---		---		---
Operating leases		35		70		64		1,429		1,598
Operating agreements		76		112		109		749		1,046
Unconditional purchase obligations		870		1,762		114		312		3,058
Tank painting contractual obligation		626		313		---		---		939
Total contractual cash obligations	$	12,027	$	22,700	$	45,209	$	226,993	$	306,929

	For the Year Ended
ASSETS	December 31, 2023		December 31, 2022
Utility plant, at original cost less accumulated depreciation	$	714,284	$	668,031
Current assets
Cash and cash equivalents		2,505		1,309
Accounts and other receivables (less provision for expected credit loss 2023 - $328; 2022 - $416)		12,830		13,511
Income tax receivable		1,799		1,632
Unbilled operating revenues		1,934		1,586
Materials and supplies		5,983		4,702
Prepaid property taxes		2,269		2,186
Prepaid expenses and other		3,297		2,878
Total current assets		30,617		27,804
Other assets
Non-utility property (less accumulated depreciation 2023 - $1,052; 2022 - $990)		3,693		3,740
Other deferred assets		8,504		10,536
Goodwill		1,939		1,939
Operating lease right of use assets		506		467
Total other assets		14,642		16,682
Regulatory assets, net		7,289		7,274
Total Assets	$	766,832	$	719,791

LIABILITIES AND STOCKHOLDERS’ EQUITY
Stockholders’ equity
Common stock	$	10,285	$	9,502
Preferred stock		—		—
Additional paid-in capital		143,369		107,142
Retained earnings		76,743		71,286
Total stockholders’ equity		230,397		187,930
Long-term debt, net of current portion		178,307		175,619
		408,704		363,549
Current liabilities
Lines of credit		—		20,174
Current portion of long-term debt		2,235		2,003
Accounts payable		9,697		10,929
Accrued expenses		3,519		4,246
Overdraft payable		9		43
Accrued interest		2,275		989
Income taxes payable		2		6
Customer and other deposits		2,983		2,489
Other		1,694		3,191
Total current liabilities	$	22,414	$	44,070

Commitments and contingencies (Note 11)		—		—

Deferred credits and other liabilities
Net advances for construction	$	2,797	$	3,686
Operating lease liabilities		503		466
Regulatory liabilities		25,676		28,721
Deferred investment tax credits		423		439
Deferred income taxes		58,381		54,552
Total deferred credits and other liabilities	$	87,780	$	87,864

Net contributions in aid of construction		247,934		224,308
Total Liabilities and Stockholders’ Equity	$	766,832	$	719,791

	For the Year Ended December 31,
	2023		2022		2021

Operating revenues
Water sales	$	80,033	$	78,318	$	77,821
Other utility operating revenue		12,195		11,506		7,195
Non-utility operating revenue		6,633		9,073		5,843
Total Operating Revenues		98,861		98,897		90,859

Operating expenses
Utility operating expenses		46,205		43,772		41,414
Non-utility operating expenses		4,428		6,850		3,942
Depreciation and amortization		13,335		12,620		11,885
Taxes
State and federal income tax expense (benefit)
Current		2,962		4,285		3,360
Deferred		3,386		1,593		2,377
Property and other taxes		6,099		5,871		5,587
Total Operating Expenses		76,415		74,991		68,565

Operating income		22,446		23,906		22,294

Other income, net
Allowance for funds used during construction (AFUDC)		2,002		1,329		823
Miscellaneous		1,407		1,265		1,302
		3,409		2,594		2,125

Income before interest charges		25,855		26,500		24,419

Interest charges		9,156		8,502		7,592

Net income applicable to common stock	$	16,699	$	17,998	$	16,827

Net income per common share:
Basic	$	1.67	$	1.90	$	1.79
Diluted	$	1.67	$	1.90	$	1.79

Weighted average common shares outstanding:
Basic		10,018		9,462		9,394
Diluted		10,022		9,481		9,426

Cash dividends per share of common stock	$	1.14	$	1.09	$	1.05

	Common Shares Outstanding Class A Non-Voting (1) (3) (4)		Common Shares Outstanding Class B Voting (2)		$1 Par Value Class A Non-Voting		$1 Par Value Class B Voting		Additional Paid-in Capital		Retained Earnings			Total

Balance as of December 31, 2020		8,475		881	$	8,475	$	881	$	103,463	$	56,606		$	169,425

Net income		—		—		—		—		—		16,827			16,827
Cash dividends declared
Common stock		—		—		—		—		—		(9,826	)		(9,826	)
Issuance of common stock
Dividend reinvestment plan		10		—		10		—		382		—			392
Employee stock options and awards(4)		38		—		38		—		790		—			828
Employee Retirement Plan(3)		9		—		9		—		354		—			363
Balance as of December 31, 2021		8,532		881	$	8,532	$	881	$	104,989	$	63,607		$	178,009

Net income		—		—		—		—		—		17,998			17,998
Cash dividends declared
Common stock		—		—		—		—		—		(10,319	)		(10,319	)
Issuance of common stock
Dividend reinvestment plan		7		—		7		—		366		—			373
Employee stock options and awards(4)		82		—		82		—		1,787		—			1,869
Employee Retirement Plan(3)		—		—		—		—		—		—			—
Balance as of December 31, 2022		8,621		881	$	8,621	$	881	$	107,142	$	71,286		$	187,930

Net income		—		—		—		—		—		16,699			16,699
Cash dividends declared
Common stock		—		—		—		—		—		(11,242	)		(11,242	)
Issuance of common stock
Public offering, net of costs		763		—		763		—		35,464		—			36,227
Dividend reinvestment plan		8		—		8		—		373		—			381
Employee stock options and awards(4)		12		—		12		—		390		—			402
Employee Retirement Plan(3)		—		—		—		—		—		—			—
Balance as of December 31, 2023		9,404		881	$	9,404	$	881	$	143,369	$	76,743		$	230,397

Utility plant comprises:
In thousands
			December 31,
	Estimated Useful Life (In Years)		2023		2022
Utility plant at original cost
Utility plant in service-Water
Intangible plant		—	$	140	$	140
Source of supply plant		45-85		29,960		25,223
Pumping and water treatment plant		8-62		130,337		116,915
Transmission and distribution plant
Mains		81		370,977		338,368
Services		39		60,818		56,396
Storage tanks		76		40,933		34,567
Meters		26		30,318		29,720
Hydrants		60		18,980		17,751
General plant		5-31		67,317		65,632

Utility plant in service-Wastewater
Intangible plant		—		116		117
Treatment and disposal plant		21-81		67,789		66,178
Collection mains & lift stations		81		51,539		49,431
General plant		5-31		2,478		1,845

Property held for future use		—		4,028		4,489
Construction work in progress		—		23,724		34,213
				899,454		840,985
Less – accumulated depreciation				185,170		172,954
			$	714,284	$	668,031

Expense	Years Amortized
Deferred contract costs and other	5
Rate case studies	5
Delaware rate proceedings	3
Maryland rate proceedings	5
Debt related costs	15 to 30 (based on term of related debt)
Deferred costs affiliated interest agreement	20
Goodwill (resulting from acquisition of Mountain Hill Water Company in 2008)	50
Deferred acquisition costs (resulting from purchase of water assets in Cecil County, Maryland in 2011 and Port Deposit, Maryland in 2010)	20
Franchise Costs (resulting from purchase of water assets in Cecil County, Maryland in 2011)	80

(in thousands)	December 31, 2023		December 31, 2022

Deferred contract costs and other	$	209	$	227
Rate case studies		136		57
Rate proceedings		385		—
Deferred income taxes		444		465
Debt related costs		4,322		4,682
Deferred costs affiliated interest agreement		1,110		1,114
Goodwill		258		266
Deferred acquisition and franchise costs		425		463
	$	7,289	$	7,274

Non-Tariff Revenue
Service line protection plans	$	5,632	$	5,020	$	4,594
Contract operations		1,046		931		884
Design and installation		181		3,315		562
Inspection fees		424		326		341
Total Non-Tariff Revenue	$	7,283	$	9,592	$	6,381

Other Operating Revenue	$	1,591	$	1,881	$	2,230

Total Operating Revenue	$	98,861	$	98,897	$	90,859

	For the Twelve Months Ended December 31,
(in thousands)
	2023		2022

Minimum rentals	$	34	$	32
Contingent rentals		—		—
	$	34	$	32

	Twelve Months Ended		Twelve Months Ended
	December 31,		December 31,
		2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	34		$	32
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	506		$	467

(in thousands, except lease term and discount rate)
	December 31, 2023			December 31, 2022

Operating Leases:
Operating lease right-of-use assets	$	506		$	467

Other current liabilities	$	9		$	2
Operating lease liabilities		503			466
Total operating lease liabilities	$	512		$	468


Weighted Average Remaining Lease Term
Operating leases	58 years			61 years
Weighted Average Discount Rate
Operating leases		5.0	%		5.0	%

	(in thousands)
	Operating Leases
Year
2024	$	35
2025		35
2026		35
2027		35
2028		29
Thereafter		1,429
Total undiscounted lease payments	$	1,598
Less effects of discounting		(1,086	)
Total lease liabilities recognized		512

Components of Income Tax Expense
In thousands	For the Year Ended December 31,
Federal income taxes	2023		2022		2021
Current	$	1,946	$	2,912	$	2,144
Deferred		1,968		930		1,601
Total federal income tax expense	$	3,914	$	3,842	$	3,745

	For the Year Ended December 31,
State income taxes	2023		2022		2021
Current	$	1,016	$	1,373	$	1,216
Deferred		1,418		663		776
Total state income tax expense	$	2,434	$	2,036	$	1,992

Reconciliation of effective tax rate:
	For the Year Ended December 31,
In thousands	2023			2023			2022			2022			2021			2021
	Amount			Percent			Amount			Percent			Amount			Percent
Reconciliation of effective tax rate
Income before federal and state income taxes	$	23,047			100.0	%	$	23,876			100.0	%	$	22,564			100.0	%

Amount computed at statutory rate		4,840			21.0	%		5,014			21.0	%		4,738			21.0	%
Reconciling items
State income tax-net of federal tax benefit		1,918			8.3	%		1,696			7.1	%		1,600			7.1	%
Regulatory liability adjustment		(449	)		(1.9	)%		(450	)		(1.9	)%		(451	)		(2.0	)%
Other		39			0.2	%		(382	)		(1.6	)%		(150	)		(0.7	)%
Total income tax expense and effective rate	$	6,348			27.6	%	$	5,878			24.6	%	$	5,737			25.4	%

	For the Year Ended December 31,
In thousands	2023			2022

Deferred tax assets related to:
State operating loss carry-forwards	$	1,037		$	922
Less: valuation allowance		(906	)		(600	)
Bad debt allowance		92			116
Stock options		47			47
Other		48			28
Total deferred tax assets	$	318		$	513

Deferred tax liabilities related to:
Property plant and equipment basis differences	$	(56,012	)	$	(52,565	)
Bond retirement costs		(982	)		(1,058	)
Property taxes		(624	)		(609	)
Other		(1,081	)		(833	)
Total deferred tax liabilities	$	(58,699	)	$	(55,065	)

Net deferred tax liability	$	(58,381	)	$	(54,552	)

Schedule of Valuation Allowance
	Balance at Beginning of Period			Additions Charged to Costs and Expenses			Deductions			Balance at End of Period
In thousands

Classification
For the Year Ended December 31, 2023 Valuation allowance for deferred tax assets		$	600		$	312		$	6		$	906
For the Year Ended December 31, 2022 Valuation allowance for deferred tax assets		$	546		$	54		$	—		$	600
For the Year Ended December 31, 2021 Valuation allowance for deferred tax assets		$	493		$	53		$	—		$	546

	For the years ended December 31,
In thousands	2023		2022
Balance at beginning of year	$	146	$	202
Additions based on tax positions related to the current year		—		146
Additions based on tax positions related to prior years		12		10
Reductions for tax positions of prior years		—		—
Lapses in statutes of limitations		—		(212	)
Balance at end of year	$	158	$	146

	2023 Shares	2023 Weighted Average Exercise Price		2022 Shares		2022 Weighted Average Exercise Price		2021 Shares		2021 Weighted Average Exercise Price
Plan options
Outstanding at beginning of year	6,750	$	21.86		83,000	$	21.65		116,347	$	20.90
Granted	—		—		—		—		—		—
Exercised	(6,750)		21.86		(76,250)		21.63		(33,347)		19.04
Expired	—		—		—		—		—		—
Outstanding at end of year	—	$	—		6,750	$	21.86		83,000	$	21.65

Options exercisable at year end	—	$	—		6,750	$	21.86		83,000	$	21.65

Options Outstanding and Exercisable
Range of Exercise Price		Shares Outstanding at December 31, 2023	Weighted Average Remaining Life	Weighted Average Exercise Price		Aggregate Intrinsic Value
$	00.00	0	0 Years	$	00.00	$	0

	2023 Shares			2023 Weighted Average Grant Date Fair Value		2022 Shares			2022 Weighted Average Grant Date Fair Value		2021 Shares			2021 Weighted Average Exercise Price
Plan RSA’s
Outstanding at beginning of year		5,000		$	45.58		5,000		$	40.11		5,000		$	35.01
Granted		5,000			54.88		5,000			45.58		5,000			40.11
Vested/Released		(5,000	)		45.58		(5,000	)		40.11		(5,000	)		35.01
Cancelled		—			—		—			—		—			—
Unvested Outstanding at end of year		5,000		$	54.88		5,000		$	45.58		5,000		$	40.11

Application Date	11/20/2020
DEPSC Approval Date	12/14/2020
Effective Date	01/01/2021
Cumulative DSIC Rate	7.50%
Net Eligible Plant Improvements – Cumulative Dollars (in millions)	$43.1
Eligible Plant Improvements – Installed Beginning Date	10/01/2014
Eligible Plant Improvements – Installed Ending Date	04/30/2019

	For the Year
	Ended December 31,
		2023		2022		2021
	(in thousands)

Weighted average common shares outstanding during the period for basic computation		$	10,018	$	9,462	$	9,394
Dilutive effect of employee stock options			4		19		32
Weighted average common shares outstanding during the period for diluted computation		$	10,022	$	9,481	$	9,426

(in thousands)
		TESI
	Utility plant	$	25,354
	Cash		280
	Goodwill		1,939
	Other assets		1,033
	Total assets		28,606
	Less: Liabilities and contributions in aid of construction (CIAC)
	Liabilities		2,808
	CIAC		22,676
	Net cash purchase price	$	3,122

In thousands
	Years Ended December 31,
	2023			2022			2021
Revenues:
Regulated Utility	$	92,228		$	89,818		$	85,016
Other (non-utility)		6,877			9,248			5,996
Inter-segment elimination		(244	)		(169	)		(153	)
Consolidated Revenues	$	98,861		$	98,897		$	90,859

Operating Income:
Regulated Utility	$	21,246		$	22,411		$	20,950
Other (non-utility)		1,200			1,495			1,344
Consolidated Operating Income	$	22,446		$	23,906		$	22,294

Income Taxes:
Regulated Utility	$	5,216		$	5,091		$	5,146
Other (non-utility)		1,132			787			591
Consolidated Income Taxes	$	6,348		$	5,878		$	5,737

Assets:
Regulated Utility	$	760,339		$	713,113
Other (non-utility)		6,493			6,678
Consolidated Assets	$	766,832		$	719,791

CHIEF EXECUTIVE OFFICER:		CHIEF FINANCIAL OFFICER:

/s/ DIAN C. TAYLOR		/s/ DAVID B. SPACHT
Dian C. Taylor		David B. Spacht