York Water: Navigating Q3 Earnings and Growth Opportunities

York Water Company (YORW), the nation's oldest investor-owned utility, reported mixed Q3 2024 results, with increased revenues but declining net income. The company's earnings snapshot reveals a complex interplay of growth drivers and cost pressures, offering investors a nuanced perspective on its financial performance.

**Revenue Growth and Cost Pressures**

In Q3 2024, York Water's operating revenues increased by 5.1% year-over-year (YoY) to $19.7 million, driven by a 5.1% YoY growth in Distribution System Improvement charge (DSIC) and customer base expansion. However, net income declined by 22.5% to $5.9 million, primarily due to higher operation and maintenance expenses, depreciation, and interest on debt. Earnings per share (EPS) decreased by 22.6% to $0.41, reflecting the impact of increased expenses on profitability.



For the first nine months of 2024, revenues grew by 6% to $56.1 million, while net income fell by 14.4% to $15.2 million. The company's earnings snapshot highlights the challenges it faces in balancing revenue growth with increased expenses, particularly in the areas of operation and maintenance, depreciation, and interest on debt.

**Capital Projects and Acquisitions**

York Water invested $33 million in capital projects, including armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, and various infrastructure replacements and improvements. Additionally, the company invested $264,000 in the acquisition of water and wastewater systems, expanding its service to 57 municipalities across four counties in Pennsylvania. These investments have driven revenue growth and positioned the company for future growth opportunities.



**Dividend Streak and Future Outlook**

Despite the increased expenses, York Water has maintained its longest consecutive dividend streak in the U.S., demonstrating financial resilience. The company's strong balance sheet and cash flow generation should help it continue to fund dividends and capital projects, although increased expenses may impact the pace of future investments.

As York Water looks to the future, it is addressing increased expenses through strategic cost management and infrastructure investment. The company is focusing on operational efficiency, reducing maintenance costs, and optimizing its distribution system. Additionally, York Water is investing in capital projects to ensure a reliable water supply and maintain proper wastewater handling, enhancing its long-term profitability and sustainability.

In conclusion, York Water's Q3 earnings snapshot reveals a complex interplay of growth drivers and cost pressures. While the company has experienced revenue growth, increased expenses have negatively impacted its profitability. However, York Water's commitment to capital projects and acquisitions, coupled with its dividend streak, demonstrates its potential for long-term growth and value creation. Investors should closely monitor the company's efforts to manage expenses and capitalize on growth opportunities as it navigates the evolving utility landscape.

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