The York Water Co (YORW, Financial) released its 8-K filing on November 7, 2024, detailing its financial performance for the third quarter and the first nine months of the year. As an investor-owned water utility company, The York Water Co is responsible for impounding, purifying, and distributing water across more than 54 municipalities within York County, Pennsylvania. The company also operates wastewater collection and treatment systems.
Financial Performance Overview
In the third quarter of 2024, The York Water Co reported operating revenues of $19.715 million, which, although an increase of $948,000 from the previous year, fell short of the analyst estimate of $20 million. Net income for the quarter decreased by $1.705 million to $5.863 million compared to the same period in 2023. This decline in net income was attributed to higher operational and maintenance expenses, increased depreciation, and a lower allowance for funds used during construction (AFUDC).
Key Financial Metrics and Challenges
The company's basic and diluted earnings per share for the third quarter were $0.41, a decrease of $0.12 from the previous year. Despite the revenue growth driven by the Distribution System Improvement Charge (DSIC) and an expanding customer base, these gains were offset by rising costs and reduced tax deductions under IRS tangible property regulations.
For the first nine months of 2024, operating revenues reached $56.093 million, up by $3.158 million from the previous year. However, net income decreased by $2.562 million to $15.183 million. The company faced similar challenges as in the third quarter, with increased expenses and lower AFUDC impacting profitability.
Investment and Expansion Efforts
During the first nine months, The York Water Co invested $33 million in capital projects, including infrastructure improvements and the acquisition of water and wastewater systems. Notably, the company expanded its service area to 57 municipalities across four counties in south-central Pennsylvania. An additional $9.7 million is expected to be invested by the end of 2024 to further enhance infrastructure and ensure reliable water supply and wastewater management.
Financial Summary Table
| Period Ended September 30 | Quarter | Nine Months | |||
|---|---|---|---|---|---|
| In 000's (except per share) | 2024 | 2023 | 2024 | 2023 | |
| Operating Revenues | $19,715 | $18,767 | $56,093 | $52,935 | |
| Net Income | $5,863 | $7,568 | $15,183 | $17,745 | |
| Basic and Diluted Earnings Per Common Share | $0.41 | $0.53 | $1.06 | $1.24 | |
| Dividends Declared Per Common Share | $0.2108 | $0.2027 | $0.6324 | $0.6081 |
Analysis and Industry Context
The York Water Co's financial results highlight the challenges faced by utility companies in balancing revenue growth with rising operational costs. The company's strategic investments in infrastructure and expansion into new territories are crucial for long-term sustainability and service reliability. However, the increased expenses and lower tax benefits pose significant challenges that need to be addressed to improve profitability.
Overall, The York Water Co's performance underscores the importance of efficient cost management and strategic investments in maintaining its competitive edge in the regulated utilities sector. As the company continues to expand its customer base and enhance its infrastructure, these efforts are expected to contribute positively to its future financial performance.
Explore the complete 8-K earnings release (here) from The York Water Co for further details.
