On July 31, 2024, Middlesex Water Co (MSEX, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. Middlesex Water Co owns and operates regulated water utility and wastewater systems in the U.S., primarily in New Jersey, Delaware, and Pennsylvania. The company operates through two segments: Regulated and Non-Regulated, with the majority of revenue derived from the Regulated segment and residential customers.
Quarterly Performance and Challenges
For the second quarter of 2024, Middlesex Water Co reported diluted earnings per share (EPS) of $0.59, which fell short of the analyst estimate of $0.64. However, the company achieved a quarterly revenue of $49.1 million, closely aligning with the estimated $49.40 million. This represents a significant increase from the $42.8 million reported in the same period last year.
Net income for the quarter rose to $10.5 million, a 6.5% increase from the same period in 2023. The revenue growth was primarily driven by a base rate increase approved by the New Jersey Board of Public Utilities (NJBPU) effective March 1, 2024, and increased billings from commercial and industrial customers. Additionally, customer growth and higher demand in the Delaware system contributed to the revenue increase.
Financial Achievements and Industry Significance
The company's operating revenues for the first half of 2024 were $89.7 million, an $8.7 million increase over the same period in 2023. This growth underscores the importance of regulatory approvals and customer demand in driving revenue for regulated utilities. The NJBPU-approved base rate increase and the recovery of previously incurred costs for water treatment facilities were significant contributors to this performance.
Operation and maintenance expenses for the second quarter increased by $0.6 million compared to the same period in 2023. This rise was attributed to enhanced water treatment processes, increased labor costs, compliance costs for lead service line inventory, and professional support services.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Operating Revenues | $49.1M | $42.8M | $89.7M | $81.0M |
| Operating Expenses | $33.8M | $32.1M | $64.5M | $62.8M |
| Net Income | $10.5M | $9.9M | $21.2M | $15.8M |
| Diluted EPS | $0.59 | $0.55 | $1.18 | $0.88 |
Analysis and Commentary
Despite missing the EPS estimate, Middlesex Water Co's revenue growth and net income increase highlight the company's resilience and effective management of regulatory changes. The approved rate increases and strategic investments in infrastructure, such as the enhanced water treatment process, are crucial for maintaining service quality and compliance with federal regulations.
"We continue to focus on solidifying our growth and succession planning strategies, meeting customer demand for high-quality water service, and investing in our drinking water infrastructure through our RENEW and Water for Tomorrow® programs in New Jersey to ensure compliance with new federal drinking water regulations," said Middlesex President and Chief Executive Officer Nadine Leslie.
Looking ahead, the company's planned rate case filing in Delaware and ongoing infrastructure investments are expected to support continued growth and regulatory compliance. The declaration of a quarterly cash dividend of $0.325 per common share, payable on September 3, 2024, further underscores Middlesex Water Co's commitment to delivering value to its shareholders.
Explore the complete 8-K earnings release (here) from Middlesex Water Co for further details.
