York Water Co 10-Q for FY2022 Q1

York Water Co (YORW)

10-Q 2022-05-03 For: 2022-03-31

Added on April 12, 2026

About this 10-Q

York Water Co filed this 10-Q on May 3, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $14.24M; up 8.9% from $13.08M a year earlier
Net income: $3.86M; up 4.2% from net income of $3.71M a year earlier
Diluted EPS: $0.29; up 3.6% from $0.28 a year earlier

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Pennsylvania	23-1242500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

130 East Market Street, York, Pennsylvania	17401
(Address of principal executive offices)	(Zip Code)

Common Stock, No par value	YORW	The Nasdaq Global Select Market
(Title of Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Large accelerated filer ☐	Accelerated filer ☐		Non-accelerated filer ⌧

Smaller reporting company ☒		Emerging growth company ☐

☐ Yes		⌧ No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common stock, No par value	14,246,394 Shares outstanding as of May 3, 2022

PART I	Financial Information

Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II	Other Information

Item 6.	Exhibits	26

Signatures		27

	Mar. 31, 2022			Dec. 31, 2021
ASSETS
UTILITY PLANT, at original cost	$	494,500		$	485,750
Plant acquisition adjustments		(3,620	)		(3,637	)
Accumulated depreciation		(101,000	)		(99,204	)
Net utility plant		389,880			382,909

OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $489 in 2022 and $483 in 2021		717			717

CURRENT ASSETS:
Cash and cash equivalents		1			1
Accounts receivable, net of reserves of $852 in 2022 and $855 in 2021		4,434			4,634
Unbilled revenues		3,044			2,784
Recoverable income taxes		895			894
Materials and supplies inventories, at cost		2,107			1,917
Prepaid expenses		1,513			1,032
Total current assets		11,994			11,262

OTHER LONG-TERM ASSETS:
Prepaid pension cost		15,097			14,054
Note receivable		255			255
Deferred regulatory assets		46,308			45,280
Other assets		4,661			4,376
Total other long-term assets		66,321			63,965

Total Assets	$	468,912		$	458,853

	Mar. 31, 2022		Dec. 31, 2021
STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 13,123,619 shares in 2022 and 13,112,948 shares in 2021	$	88,725	$	88,230
Retained earnings		65,695		64,392
Total common stockholders' equity		154,420		152,622

PREFERRED STOCK, authorized 500,000 shares, no shares issued		–		–

LONG-TERM DEBT, excluding current portion		143,999		138,869

COMMITMENTS		–		–

CURRENT LIABILITIES:
Current portion of long-term debt		7,500		7,500
Accounts payable		7,580		6,712
Dividends payable		2,298		2,293
Accrued compensation and benefits		1,506		1,575
Accrued interest		1,071		959
Deferred regulatory liabilities		605		607
Other accrued expenses		536		440
Total current liabilities		21,096		20,086

DEFERRED CREDITS:
Customers' advances for construction		13,161		12,820
Deferred income taxes		51,133		49,590
Deferred employee benefits		4,557		4,530
Deferred regulatory liabilities		37,172		36,374
Other deferred credits		1,500		2,086
Total deferred credits		107,523		105,400

Contributions in aid of construction		41,874		41,876

Total Stockholders' Equity and Liabilities	$	468,912	$	458,853

	Three Months Ended March 31
	2022			2021

OPERATING REVENUES	$	14,240		$	13,081

OPERATING EXPENSES:
Operation and maintenance		3,451			2,806
Administrative and general		2,657			2,411
Depreciation and amortization		2,480			2,174
Taxes other than income taxes		354			336
		8,942			7,727

Operating income		5,298			5,354

OTHER INCOME (EXPENSES):
Interest on debt		(1,297	)		(1,214	)
Allowance for funds used during construction		295			262
Other pension costs		(319	)		(304	)
Other income (expenses), net		(349	)		(101	)
		(1,670	)		(1,357	)

Income before income taxes		3,628			3,997

Income tax (benefit) expense		(231	)		292

Net Income	$	3,859		$	3,705

Basic Earnings Per Share	$	0.29		$	0.28

Diluted Earnings Per Share	$	0.29		$	0.28

	Common Stock Shares		Common Stock Amount		Retained Earnings			Total

Balance, December 31, 2021		13,112,948	$	88,230	$	64,392		$	152,622
Net income		–		–		3,859			3,859
Cash dividends declared, $0.1949 per share		–		–		(2,556	)		(2,556	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		10,671		450		–			450
Stock-based compensation		–		45		–			45
Balance, March 31, 2022		13,123,619	$	88,725	$	65,695		$	154,420

	As of Mar. 31, 2022			As of Dec. 31, 2021			Change

Accounts receivable – customers	$	4,829		$	5,034		$	(205	)
Other receivables		457			455			2
		5,286			5,489			(203	)
Less: allowance for doubtful accounts		(852	)		(855	)		3
Accounts receivable, net	$	4,434		$	4,634		$	(200	)

Unbilled revenue	$	3,044		$	2,784		$	260

	As of Mar. 31, 2022			As of Dec. 31, 2021

8.43% Senior Notes, Series D, due 2022	$	7,500		$	7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029		12,000			12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036		10,500			10,500
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038		14,870			14,870
3.23% Senior Notes, due 2040		15,000			15,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045		10,000			10,000
4.54% Senior Notes, due 2049		20,000			20,000
3.24% Senior Notes, due 2050		30,000			30,000
Committed Line of Credit, due September 2023		34,406			29,320
Total long-term debt		154,276			149,190
Less discount on issuance of long-term debt		(167	)		(169	)
Less unamortized debt issuance costs		(2,610	)		(2,652	)
Less current maturities		(7,500	)		(7,500	)
Long-term portion	$	143,999		$	138,869

Description		March 31, 2022		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$1,500		$1,500

Description		December 31, 2021		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$2,086		$2,086

•	the amount and timing of rate changes and other regulatory matters including the recovery of costs recorded as regulatory assets;
•	expected profitability and results of operations;
•	trends;
•	goals, priorities and plans for, and cost of, growth and expansion;
•	strategic initiatives;
•	availability of water supply;
•	water usage by customers; and
•	the ability to pay dividends on common stock and the rate of those dividends.

•	changes in weather, including drought conditions or extended periods of heavy rainfall;
•	natural disasters, including pandemics such as the current outbreak of the novel strain of coronavirus known as “COVID-19” and the effectiveness of the Company’s pandemic plans;
•	levels of rate relief granted;
•	the level of commercial and industrial business activity within the Company's service territory;
•	construction of new housing within the Company's service territory and increases in population;
•	changes in government policies or regulations, including the tax code;
•	the ability to obtain permits for expansion projects;
•	material changes in demand from customers, including the impact of conservation efforts which may reduce the demand of customers for water;
•	changes in economic and business conditions, including interest rates;
•	loss of customers;
•	changes in, or unanticipated, capital requirements;
•	the impact of acquisitions;
•	changes in accounting pronouncements;
•	changes in the Company’s credit rating or the market price of its common stock; and
•	the ability to obtain financing.

	Three Months Ended March 31
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,859		$	3,705
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,480			2,174
Stock-based compensation		45			28
Decrease in deferred income taxes		(230	)		(108	)
Other		15			29
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues		(161	)		1,038
(Increase) decrease in recoverable income taxes		(1	)		139
Increase in materials and supplies, prepaid expenses, prepaid pension cost, regulatory and other assets		(3,242	)		(2,201	)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits		2,456			1,684
Increase in accrued interest		112			109
Net cash provided by operating activities		5,333			6,597

CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $165 in 2022 and $146 in 2021		(7,504	)		(7,431	)
Net cash used in investing activities		(7,504	)		(7,431	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		676			792
Repayments of customer advances		(337	)		(137	)
Proceeds of long-term debt issues		13,375			11,648
Repayments of long-term debt		(8,289	)		(13,178	)
Changes in cash overdraft position		(1,153	)		(1,263	)
Issuance of common stock		450			473
Dividends paid		(2,551	)		(2,448	)
Net cash provided by (used in) financing activities		2,171			(4,113	)

Net change in cash, cash equivalent, and restricted cash		–			(4,947	)
Cash, cash equivalents, and restricted cash at beginning of period		1			5,002
Cash and cash equivalents at end of period	$	1		$	55

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	964		$	912
Income taxes		–			–

	Three Months Ended March 31
	2022		2021

Weighted average common shares, basic		13,105,674		13,055,871
Effect of dilutive securities:
Employee stock-based compensation		2,756		2,690
Weighted average common shares, diluted		13,108,430		13,058,561

	Three Months Ended March 31
	2022		2021
Water utility service:
Residential	$	8,447	$	8,145
Commercial and industrial		3,588		3,310
Fire protection		836		806
Wastewater utility service:
Residential		929		471
Commercial and industrial		109		79
Billing and revenue collection services		130		119
Collection services		59		–
Other revenue		14		10
Total Revenue from Contracts with Customers		14,112		12,940
Rents from regulated property		128		141
Total Operating Revenue	$	14,240	$	13,081

	Three Months Ended March 31
	2022			2021

Service cost	$	256		$	271
Interest cost		334			302
Expected return on plan assets		(1,055	)		(913	)
Amortization of actuarial loss		–			121
Amortization of prior service cost		(3	)		(3	)
Rate-regulated adjustment		1,043			797
Net periodic pension expense	$	575		$	575

Exhibit No.		Description

3		Amended and Restated Articles of Incorporation. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 4, 2010.

3.1		Amended and Restated By-Laws. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2012.

31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase.

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	THE YORK WATER COMPANY


	/s/ Joseph T. Hand
Date: May 3, 2022	Joseph T. Hand Principal Executive Officer



	/s/ Matthew E. Poff
Date: May 3, 2022	Matthew E. Poff Principal Financial and Accounting Officer

I, Joseph T. Hand, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of The York Water Company;
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 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 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 function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which 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 3, 2022	/s/ Joseph T. Hand
	Joseph T. Hand
	President and CEO

I, Matthew E. Poff, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of The York Water Company;
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 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 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 function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which 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 3, 2022	/s/ Matthew E. Poff
	Matthew E. Poff
	Chief Financial Officer

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.