The York Water Co (YORW, Financial) released its 8-K filing on August 2, 2024, detailing its financial performance for the second quarter and the first six months of 2024. The York Water Co is an investor-owned water utility company in the United States, primarily engaged in impounding, purifying, and distributing water. The company also owns and operates three wastewater collection systems and two wastewater treatment systems within its franchised territory, covering more than 54 municipalities within York County, Pennsylvania.
Performance Overview
For the second quarter of 2024, The York Water Co reported operating revenues of $18.75 million, slightly below the analyst estimate of $19.00 million. This represents a decrease of $17,000 compared to the same period in 2023. Net income for the quarter was $4.993 million, a significant decline of $1.531 million from the previous year. Basic and diluted earnings per share (EPS) stood at $0.35, down $0.10 from the second quarter of 2023.
The decrease in net income was primarily due to higher operation and maintenance expenses, increased depreciation, higher interest on debt, and lower allowance for funds used during construction (AFUDC). These factors were partially offset by lower pension costs. AFUDC represents the cost of debt and equity funds used to finance plant construction.
Six-Month Financial Highlights
For the first six months of 2024, The York Water Co reported operating revenues of $36.378 million, an increase of $2.21 million compared to the same period in 2023. However, net income for the six-month period decreased by $857,000 to $9.32 million. Basic and diluted EPS for the six-month period were $0.65, down $0.06 from the same period last year.
The increase in revenues was primarily driven by a rate increase effective March 1, 2023, and growth in the customer base. However, these gains were offset by higher operation and maintenance expenses, increased depreciation, and higher interest on debt. The company also benefited from lower pension costs during this period.
Capital Investments and Future Plans
During the first six months of 2024, The York Water Co invested $20.9 million in capital projects, including armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, and various infrastructure improvements. The company plans to invest an additional $21.3 million in 2024, excluding acquisitions, to ensure a safe, adequate, and reliable supply of drinking water and proper handling and disposal of wastewater for its growing customer base.
| Period Ended June 30 | Quarter | Six Months | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Operating Revenues ($000's) | 18,750 | 18,767 | 36,378 | 34,168 |
| Net Income ($000's) | 4,993 | 6,524 | 9,320 | 10,177 |
| Basic and Diluted EPS ($) | 0.35 | 0.45 | 0.65 | 0.71 |
| Dividends Declared Per Common Share ($) | 0.2108 | 0.2027 | 0.4216 | 0.4054 |
Analysis and Insights
The York Water Co's performance in the second quarter and the first half of 2024 highlights the challenges faced by utility companies in managing operational costs while maintaining infrastructure. The decline in net income despite increased revenues underscores the impact of rising operational and maintenance expenses, depreciation, and interest costs.
However, the company's ongoing investments in capital projects and infrastructure improvements are crucial for ensuring long-term sustainability and service reliability. These investments are expected to support the company's growth and enhance its ability to meet regulatory standards and customer expectations.
Overall, while The York Water Co's financial performance in the second quarter fell short of analyst estimates, its strategic investments and focus on infrastructure improvements position it well for future growth and stability in the regulated utilities sector.
Explore the complete 8-K earnings release (here) from The York Water Co for further details.
