Artesian Resources Corp 10-Q for FY2023 Q1

Artesian Resources Corp (ARTNA)

10-Q 2023-05-10 For: 2023-03-31

Added on April 06, 2026

About this 10-Q

Artesian Resources Corp filed this 10-Q on May 10, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

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

Revenue: $22.5M; up 1.4% from $22.19M a year earlier
Net income: $3.71M; down 17.4% from net income of $4.48M a year earlier
Diluted EPS: $0.39; down 17.0% from $0.47 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

Part I	-	Financial Information:

Item 1	-	Financial Statements	Page(s)

		Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (unaudited)	3

		Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	5 - 6

		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)	7

		Notes to the Condensed Consolidated Financial Statements	8 - 24

Item 2	-	Management's Discussion and Analysis of Financial Condition and Results of Operations	25 - 31

Item 3	-	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4	-	Controls and Procedures	32

Part II	-	Other Information	32

Item 1	-	Legal Proceedings	32

Item 1A	-	Risk Factors	32

Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3		Defaults Upon Senior Securities	32

Item 4		Mine Safety Disclosures	32

Item 5		Other Information	32

Item 6	-	Exhibits	33
-
Signatures

ASSETS	March 31, 2023		December 31, 2022
Utility plant, at original cost (less accumulated depreciation - 2023 - $176,243; 2022 - $172,954)	$	679,714	$	668,031
Current assets
Cash and cash equivalents		115		1,309
Accounts receivable (less allowance for doubtful accounts - 2023 - $410; 2022 - $416)		10,218		13,511
Income tax receivable		737		1,632
Unbilled operating revenues		1,296		1,586
Materials and supplies		5,260		4,702
Prepaid property taxes		1,085		2,186
Prepaid expenses and other		2,898		2,878
Total current assets		21,609		27,804
Other assets
Non-utility property (less accumulated depreciation - 2023 - $1,007; 2022 - $990)		3,727		3,740
Other deferred assets		11,056		10,536
Goodwill		1,939		1,939
Operating lease right of use assets		502		467
Total other assets		17,224		16,682
Regulatory assets, net		7,239		7,274
Total Assets	$	725,786	$	719,791

LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity
Common stock	$	9,504	$	9,502
Preferred stock		—		—
Additional paid-in capital		107,290		107,143
Retained earnings		72,345		71,286
Total stockholders' equity		189,139		187,931
Long-term debt, net of current portion		176,263		175,619
		365,402		363,550
Current liabilities
Lines of credit		21,609		20,174
Current portion of long-term debt		2,090		2,003
Accounts payable		8,103		10,929
Accrued expenses		4,060		4,246
Overdraft payable		210		43
Accrued interest		1,441		989
Income taxes payable		618		6
Customer and other deposits		2,510		2,489
Other		2,899		3,190
Total current liabilities		43,540		44,069

Commitments and contingencies

Deferred credits and other liabilities
Net advances for construction		3,633		3,686
Operating lease liabilities		496		466
Regulatory liabilities		28,664		28,721
Deferred investment tax credits		435		439
Deferred income taxes		54,457		54,552
Total deferred credits and other liabilities		87,685		87,864

Net contributions in aid of construction		229,159		224,308
Total Liabilities and Stockholders’ Equity	$	725,786	$	719,791

	For the Three Months Ended March 31,
	2023		2022
Operating revenues
Water sales	$	18,016	$	18,143
Other utility operating revenue		2,817		2,525
Non-utility operating revenue		1,662		1,519
Total Operating Revenues		22,495		22,187

Operating expenses
Utility operating expenses		11,272		10,495
Non-utility operating expenses		1,085		943
Depreciation and amortization		3,224		3,085
State and federal income taxes		1,313		1,419
Property and other taxes		1,541		1,502
Total Operating Expenses		18,435		17,444

Operating income		4,060		4,743

Other income
Allowance for funds used during construction (AFUDC)		459		181
Miscellaneous income		1,603		1,446

Income before interest charges		6,122		6,370

Interest charges		2,417		1,887

Net income applicable to common stock	$	3,705	$	4,483

Income per common share:
Basic	$	0.39	$	0.48
Diluted	$	0.39	$	0.47

Weighted average common shares outstanding:
Basic		9,504		9,423
Diluted		9,510		9,455

Cash dividends per share of common stock	$	0.2784	$	0.2675

	For the Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,705		$	4,483
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,224			3,085
Deferred income taxes, net		(99	)		34
Stock compensation		56			49
AFUDC, equity portion		(288	)		(125	)

Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts		3,293			1,878
Income tax receivable		895			1,257
Unbilled operating revenues		290			(60	)
Materials and supplies		(558	)		(919	)
Income tax payable		612			244
Prepaid property taxes		1,101			1,827
Prepaid expenses and other		(20	)		333
Other deferred assets		(529	)		(499	)
Regulatory assets		6			92
Regulatory liabilities		(116	)		(109	)
Accounts payable		(874	)		(2	)
Accrued expenses		(511	)		(137	)
Accrued interest		452			422
Deposits and other		(131	)		(34	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		10,508			11,819

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (net of AFUDC, equity portion)		(16,794	)		(9,776	)
Investment in acquisitions, net of cash acquired		—			(2,842	)
Proceeds from sale of assets		53			2
NET CASH USED IN INVESTING ACTIVITIES		(16,741	)		(12,616	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under lines of credit agreements		1,435			706
Increase in overdraft payable		167			103
Net advances and contributions in aid of construction		5,259			2,764
Net proceeds from issuance of common stock		93			537
Issuance of long-term debt		1,120			—
Dividends paid		(2,646	)		(2,518	)
Deferred debt issuance costs		—			(30	)
Principal repayments of long-term debt		(389	)		(379	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		5,039			1,183

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,194	)		386

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,309			92

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	115		$	478

Non-cash Investing and Financing Activity:
Utility plant received as construction advances and contributions	$	545	$	1,878
Change in amounts included in accounts payable, accrued payables and other related to capital expenditures		(1,771)		684

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	1,965	$	1,465
Income taxes paid	$	10	$	—


Purchase price allocation of investment in acquisitions:
Utility plant	$	—	$	25,354
Cash		—		280
Goodwill		—		1,939
Other assets		—		1,033
Total assets		—		28,606
Less:
Liabilities		—		2,808
Contributions in aid of construction		—		22,676
Cash paid for acquisitions		—		3,122
Cash received from acquisitions		—		280
Net cash paid for acquisitions	$	—	$	2,842

	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, 2021		8,532		881	$	8,532	$	881	$	104,989	$	63,607		$	178,009
Net income		–		–		–		–		–		4,483			4,483
Cash dividends declared
Common stock		–		–		–		–		–		(2,518	)		(2,518	)
Issuance of common stock
Dividend reinvestment plan		2		–		2		–		87		–			89
Employee stock options and awards(4)		22		–		22		–		475		–			497
Employee Retirement Plan(3)		–		–		–		–		–		–			–
Balance as of March 31, 2022		8,556		881		8,556		881		105,551		65,572			180,560

(in thousands)	Three months ended March 31, 2023		Three months ended March 31, 2022
Tariff Revenue
Consumption charges	$	10,447	$	10,566
Fixed fees		8,038		7,778
Service charges		180		156
DSIC		1,178		1,182
Metered wastewater services		106		140
Industrial wastewater services		446		407
Total Tariff Revenue	$	20,395	$	20,229

Non-Tariff Revenue
Service line protection plans	$	1,363	$	1,222
Contract operations		244		211
Design and installation		105		123
Inspection fees		78		41
Total Non-Tariff Revenue	$	1,790	$	1,597

Other Operating Revenue	$	310	$	361

Total Operating Revenue	$	22,495	$	22,187

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

Customer accounts receivable – water	$	5,972	$	5,981
Customer accounts receivable – wastewater		483		482
Settlement agreement receivable		2,567		2,532
Miscellaneous accounts receivable		692		3,781
Developer receivable		914		1,151
		10,628		13,927
Less allowance for doubtful accounts		410		416
Net accounts receivable	$	10,218	$	13,511

	(in thousands)
	Three Months Ended			Three Months Ended
	March 31, 2023			March 31, 2022

Minimum rentals		$	2		$	7
Contingent rentals			–			–

		$	2		$	7

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

Operating Leases:
Operating lease right-of-use assets	$	502		$	467

Other current liabilities	$	8			2
Operating lease liabilities		496			466
Total operating lease liabilities	$	504		$	468


Weighted Average Remaining Lease Term
Operating leases	57 years			61 years
Weighted Average Discount Rate
Operating leases		5.0	%		5.0	%

	(in thousands)
	Operating Leases
Year
2024	$	34
2025		34
2026		34
2029		34
2030		34
Thereafter		1,405
Total undiscounted lease payments	$	1,575
Less effects of discounting		(1,071	)
Total lease liabilities recognized	$	504

	Options								Restricted Awards
	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Yrs.)		Aggregate Intrinsic Value (in thousands)		Outstanding Restricted Stock Awards		Weighted Average Grant Date FairValue
Plan options/restricted stock awards
Outstanding at January 1, 2023		6,750	$	21.86			$	248		5,000	$	45.58
Granted		—		—				—		—		—
Exercised/vested and released		—		—				—		—		—
Expired/cancelled		—		—				—		—		—
Outstanding at March 31, 2023		6,750	$	21.86		1.103	$	226		5,000	$	45.58

Exercisable/vested at March 31, 2023		6,750	$	21.86		1.103	$	226		—		—

Expense	Years Amortized
Deferred contract costs and other	5
Rate case studies	5
Delaware rate proceedings	2.5
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

Application Date	11/20/20
DEPSC Approval Date	12/14/20
Effective Date	01/01/21
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

(in thousands)
	March 31, 2023		December 31, 2022
Carrying amount	$	178,353	$	177,622
Estimated fair value	$	151,673	$	155,425

Regulatory assets, net of amortization, comprise:
	(in thousands)
	March 31, 2023		December 31, 2022

Deferred income taxes	$	460	$	465
Deferred contract costs and other		255		227
Debt related costs		4,593		4,682
Goodwill		264		266
Rate case studies		99		57
Deferred costs affiliated interest agreement		1,114		1,114
Deferred acquisition and franchise costs		454		463
	$	7,239	$	7,274

Regulatory liabilities comprise:
	(in thousands)
	March 31, 2023		December 31, 2022

Utility plant retirement cost obligation	$	47	$	-
Deferred settlement refunds		7,487		7,487
Deferred income taxes (related to TCJA)		21,130		21,234
	$	28,664	$	28,721

(in thousands)
		TESI
	Utility plant	$	25,354
	Cash		280
	Goodwill		2,983
	Other assets		1,033
	Total assets		29,650
	Less: Liabilities and contributions in aid of construction (CIAC)
	Liabilities		3,852
	CIAC		22,676
	Net cash purchase price	$	3,122

(in thousands)
	Three Months Ended March 31,
	2023			2022
Revenues:
Regulated Utility	$	20,832			20,668
Other (non-utility)		1,716			1,552
Inter-segment elimination		(53	)		(33	)
Consolidated Revenues	$	22,495			22,187

Operating Income:
Regulated Utility	$	3,705			4,338
Other (non-utility)		355			405
Consolidated Operating Income	$	4,060			4,743

Income Taxes:
Regulated Utility	$	1,066			1,243
Other (non-utility)		247			176
Consolidated Income Taxes	$	1,313			1,419

	March 31, 2023		December 31, 2022
Assets:
Regulated Utility	$	721,564	$	713,113
Other (non-utility)		4,222		6,678
Consolidated Assets	$	725,786	$	719,791

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)		1,011		1,838		1,602		7,277		11,728
Promissory note (principal and interest)		959		1,923		1,923		10,373		15,178
Asset purchase contractual obligation (principal and interest)		345		672		647		---		1,664
Lines of credit		21,609		---		---		---		21,609
Operating leases		34		68		68		1,405		1,575
Operating agreements		76		111		116		771		1,074
Unconditional purchase obligations		818		1,554		580		---		2,952
Tank painting contractual obligation		626		783		---		---		1,409
Total contractual cash obligations	$	33,380	$	22,663	$	45,546	$	224,390	$	325,979

Exhibit No.	Description

3.1	Amended and Restated By-laws of Artesian Resources Corporation incorporated by reference to Exhibit 3.1 filed with the Company’s Form 8-K filed on November 23, 2020.
3.2	Restated Certificate of Incorporation of the Company effective April 28, 2004 incorporated by reference to Exhibit 3.1 filed with the Company’s Form 10-Q for the quarterly period ended March 31, 2004.

4.1	Amended and Restated Demand Line of Credit Agreement between Artesian Resources Corporation, and Citizens Bank, N.A. dated May 20, 2022. *

31.1	Certification of Chief Executive Officer of the Registrant required by Rule 13a–14(a) under the Securities Exchange Act of 1934, as amended.*

31.2	Certification of Chief Financial Officer of the Registrant required by Rule 13a–14(a) under the Securities Exchange Act of 1934, as amended.*

32	Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350).**

101.BAL	Inline XBRL Condensed Consolidated Balance Sheets (unaudited)*
101.OPS	Inline XBRL Condensed Consolidated Statements of Operations (unaudited)*

101.CSH	Inline XBRL Condensed Consolidated Statements of Cash Flows (unaudited)*

101.NTS	Inline XBRL Notes to the Condensed Consolidated Financial Statements (unaudited)*

104	The cover page from Artesian Resources Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, formatted in Inline XBRL (contained in exhibit 101).*

Date: May 10, 2023	By:	/s/ DIAN C. TAYLOR
		Dian C. Taylor (Principal Executive Officer)

Date: May 10, 2023	By:	/s/ DAVID B. SPACHT
		David B. Spacht (Principal Financial Officer)

Exhibit 31.1
Certification of Chief Executive Officer of Artesian Resources Corporation required by Rule 13a – 14 (a) under the Securities Act of 1934, as amended

I, Dian C. Taylor, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Artesian Resources Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)		Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)		Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: May 10, 2023			/s/ DIAN C. TAYLOR
			Dian C. Taylor
			Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

Certification of Chief Financial Officer of Artesian Resources Corporation required by Rule 13a – 14 (a) under the Securities Act of 1934, as amended

I, David B. Spacht, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2023 of Artesian Resources Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)		Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)		Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date: May 10, 2023			/s/ DAVID B. SPACHT
			David B. Spacht
			Chief Financial Officer (Principal Financial Officer)

Exhibit 32


Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350


I, Dian C. Taylor, Chief Executive Officer, and David B. Spacht, Chief Financial Officer, of Artesian Resources Corporation, a Delaware corporation (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on our knowledge:

(1)	The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2023 (the " Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)), as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Report and results of operations of the Company for the period covered by the Report.




Date: May 10, 2023

CHIEF EXECUTIVE OFFICER:		CHIEF FINANCIAL OFFICER:


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



These certifications accompany the Report to which they relate, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

ATTEST:	TIDEWATER ENVIRONMENTAL SERVICES, INC.
________________________________	By: _______________________________ Dian C. Taylor Chief Executive Officer