York Water Co 10-Q for FY2022 Q3

York Water Co (YORW)

10-Q 2022-11-03 For: 2022-09-30

Added on April 12, 2026

About this 10-Q

York Water Co filed this 10-Q on November 3, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $15.81M; up 9.0% from $14.5M a year earlier
Net income: $5.68M; up 18.5% from net income of $4.79M a year earlier
Diluted EPS: $0.40; up 11.1% from $0.36 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	14,276,321 Shares outstanding as of November 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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II	Other Information

Item 6.	Exhibits	28

Signatures		29

	Sep. 30, 2022			Dec. 31, 2021
ASSETS
UTILITY PLANT, at original cost	$	526,229		$	485,750
Plant acquisition adjustments		(3,586	)		(3,637	)
Accumulated depreciation		(104,816	)		(99,204	)
Net utility plant		417,827			382,909

OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $493 in 2022 and $483 in 2021		733			717

CURRENT ASSETS:
Cash and cash equivalents		1			1
Accounts receivable, net of reserves of $834 in 2022 and $855 in 2021		5,461			4,634
Unbilled revenues		3,084			2,784
Recoverable income taxes		870			894
Materials and supplies inventories, at cost		2,347			1,917
Prepaid expenses		1,557			1,032
Total current assets		13,320			11,262

OTHER LONG-TERM ASSETS:
Prepaid pension cost		17,182			14,054
Note receivable		255			255
Deferred regulatory assets		39,821			45,280
Other assets		4,517			4,376
Total other long-term assets		61,775			63,965

Total Assets	$	493,655		$	458,853

	Sep. 30, 2022		Dec. 31, 2021
STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 14,275,456 shares in 2022 and 13,112,948 shares in 2021	$	133,730	$	88,230
Retained earnings		70,846		64,392
Total common stockholders' equity		204,576		152,622

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

LONG-TERM DEBT, excluding current portion		116,788		138,869

COMMITMENTS		–		–

CURRENT LIABILITIES:
Current portion of long-term debt		7,500		7,500
Accounts payable		12,076		6,712
Dividends payable		2,523		2,293
Accrued compensation and benefits		1,585		1,575
Accrued interest		1,084		959
Deferred regulatory liabilities		588		607
Other accrued expenses		400		440
Total current liabilities		25,756		20,086

DEFERRED CREDITS:
Customers' advances for construction		15,331		12,820
Deferred income taxes		46,317		49,590
Deferred employee benefits		4,597		4,530
Deferred regulatory liabilities		37,699		36,374
Other deferred credits		717		2,086
Total deferred credits		104,661		105,400

Contributions in aid of construction		41,874		41,876

Total Stockholders' Equity and Liabilities	$	493,655	$	458,853

	Three Months Ended September 30						Nine Months Ended September 30
	2022			2021			2022			2021

OPERATING REVENUES	$	15,811		$	14,503		$	44,950		$	41,385

OPERATING EXPENSES:
Operation and maintenance		3,746			2,997			10,112			8,752
Administrative and general		2,328			2,292			7,564			7,144
Depreciation and amortization		2,572			2,223			7,545			6,595
Taxes other than income taxes		309			307			1,001			954
		8,955			7,819			26,222			23,445

Operating income		6,856			6,684			18,728			17,940

OTHER INCOME (EXPENSES):
Interest on debt		(1,204	)		(1,237	)		(3,706	)		(3,673	)
Allowance for funds used during construction		382			310			902			883
Other pension costs		(318	)		(304	)		(956	)		(911	)
Other income (expenses), net		(117	)		(34	)		(546	)		(179	)
		(1,257	)		(1,265	)		(4,306	)		(3,880	)

Income before income taxes		5,599			5,419			14,422			14,060

Income taxes		(82	)		625			(147	)		1,077

Net Income	$	5,681		$	4,794		$	14,569		$	12,983

Basic Earnings Per Share	$	0.40		$	0.36		$	1.05		$	0.99

Diluted Earnings Per Share	$	0.40		$	0.36		$	1.05		$	0.99

	Common Stock Shares			Common Stock Amount		Retained Earnings			Total

Balance, June 30, 2022		14,264,763		$	133,239	$	67,945		$	201,184
Net income		–			–		5,681			5,681
Cash dividends declared, $0.1949 per share		–			–		(2,780	)		(2,780	)
Issuance of common stock		–			–		–			–
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		11,160			441		–			441
Stock-based compensation		(467	)		50		–			50
Balance, September 30, 2022		14,275,456		$	133,730	$	70,846		$	204,576

Balance, December 31, 2021		13,112,948		$	88,230	$	64,392		$	152,622
Net income		–			–		14,569			14,569
Cash dividends declared, $0.5847 per share		–			–		(8,115	)		(8,115	)
Issuance of common stock		1,121,940			43,970		–			43,970
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		33,016			1,322		–			1,322
Stock-based compensation		7,552			208		–			208
Balance, September 30, 2022		14,275,456		$	133,730	$	70,846		$	204,576

	As of Sep. 30, 2022			As of Dec. 31, 2021			Change

Accounts receivable – customers	$	5,873		$	5,034		$	839
Other receivables		422			455			(33	)
		6,295			5,489			806
Less: allowance for doubtful accounts		(834	)		(855	)		21
Accounts receivable, net	$	5,461		$	4,634		$	827

Unbilled revenue	$	3,084		$	2,784		$	300

	As of Sep. 30, 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 2024		7,107			29,320
Total long-term debt		126,977			149,190
Less discount on issuance of long-term debt		(161	)		(169	)
Less unamortized debt issuance costs		(2,528	)		(2,652	)
Less current maturities		(7,500	)		(7,500	)
Long-term portion	$	116,788		$	138,869

Description		September 30, 2022		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$717		$717

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

	Number of Shares		Grant Date Weighted Average Fair Value

Nonvested at beginning of the period	8,804		$46.91
Granted	8,052		$38.87
Vested	(5,591	)	$42.60
Forfeited	(500	)	$44.61
Nonvested at end of the period	10,765		$43.24

•	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.

	Nine Months Ended September 30
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	14,569		$	12,983
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,545			6,595
Stock-based compensation		208			167
Increase (decrease) in deferred income taxes		(170	)		53
Other		38			46
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues		(1,431	)		745
Decrease in recoverable income taxes		24			700
(Increase) decrease in materials and supplies, prepaid expenses, prepaid pension cost, regulatory and other assets		771			(6,911	)
Increase (decrease) in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits		(4,368	)		3,989
Increase in accrued interest		125			109
Net cash provided by operating activities		17,311			18,476

CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $504 in 2022 and $493 in 2021		(34,050	)		(27,434	)
Acquisitions of water and wastewater systems		(2,826	)		–
Net cash used in investing activities		(36,876	)		(27,434	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		3,281			1,955
Repayments of customer advances		(772	)		(772	)
Proceeds of long-term debt issues		26,000			37,452
Repayments of long-term debt		(48,213	)		(28,960	)
Changes in cash overdraft position		1,862			14
Issuance of common stock		45,292			1,612
Dividends paid		(7,885	)		(7,344	)
Net cash provided by financing activities		19,565			3,957

Net change in cash, cash equivalents, and restricted cash		–			(5,001	)
Cash, cash equivalents, and restricted cash at beginning of period		1			5,002
Cash and cash equivalents at end of period	$	1		$	1

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	2,976		$	2,936
Income taxes		–			217

	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021

Weighted average common shares, basic		14,254,570		13,083,762		13,853,816		13,069,582
Effect of dilutive securities:
Employee stock-based compensation		703		563		407		347
Weighted average common shares, diluted		14,255,273		13,084,325		13,854,223		13,069,929

	Three Months Ended September 30				Nine Months Ended September 30
	2022		2021		2022		2021
Water utility service:
Residential	$	9,282	$	8,872	$	26,548	$	25,560
Commercial and industrial		4,208		3,952		11,692		10,891
Fire protection		856		827		2,528		2,428
Wastewater utility service:
Residential		976		481		2,830		1,426
Commercial and industrial		209		79		434		237
Billing and revenue collection services		149		121		363		360
Collection services		3		18		151		29
Other revenue		6		18		25		38
Total Revenue from Contracts with Customers		15,689		14,368		44,571		40,969
Rents from regulated property		122		135		379		416
Total Operating Revenue	$	15,811	$	14,503	$	44,950	$	41,385

	Three Months Ended September 30						Nine Months Ended September 30
	2022			2021			2022			2021

Service cost	$	257		$	271		$	769		$	814
Interest cost		334			302			1,002			906
Expected return on plan assets		(1,054	)		(913	)		(3,163	)		(2,739	)
Amortization of actuarial loss		–			121			–			363
Amortization of prior service cost		(4	)		(3	)		(10	)		(9	)
Rate-regulated adjustment		1,042			797			3,127			2,390
Net periodic pension expense	$	575		$	575		$	1,725		$	1,725

•	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.

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.

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

	THE YORK WATER COMPANY


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



	/s/ Matthew E. Poff
Date: November 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: November 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: November 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.