Group 1 - The York Water Company (NASDAQ:YORW) is recognized as one of the Best Dividend Stocks and is included in the Dividend Champions List [1][2] - The company operates in the utility sector, providing water and wastewater services in Pennsylvania, specifically in 57 municipalities across four counties [2][3] - The nature of the utility business creates a monopoly effect, leading to predictable cash flow and reduced competition concerns [3] Group 2 - The York Water Company has a long-standing history of dividend payments, having paid uninterrupted dividends since 1816, making it the oldest continuously paying dividend stock in the US [4] - The company has increased its dividend payout for 28 consecutive years, with the current quarterly dividend at $0.2192 per share, resulting in a yield of approximately 2.9% as of October 2 [4]

Core Insights - The article discusses the best dividend stocks for a dividend champions list, focusing on companies that have consistently increased their dividends for 25 years or more [2][5]. Dividend Champions Overview - Dividend champions are distinguished from dividend aristocrats by not needing to be part of the S&P Index, but they share a commitment to increasing dividend payouts [2]. - The ability to grow dividends through challenging times, such as the pandemic, highlights the resilience of these companies [3]. Market Trends - There is a growing interest in dividend stocks among younger investors, particularly Gen Z, who are seeking financial independence and early retirement [4]. - Income-focused ETFs have gained significant traction, capturing about one in every six dollars flowing into equity ETFs, with the sector reaching approximately $750 billion by 2025 [5]. Methodology for Stock Selection - The selection process involved analyzing over 150 dividend champions and identifying those with the highest dividend yields as of October 2 [7]. Company Highlights - **The York Water Company (NASDAQ:YORW)**: - Offers a dividend yield of 2.91% and has paid dividends since 1816, increasing payouts for 28 consecutive years [9][12]. - Operates in a monopoly-like environment, providing stable cash flow due to the high costs of establishing utility services [11]. - **The Southern Company (NYSE:SO)**: - Provides a dividend yield of 3.15% and has a strong reputation in nuclear energy, overseeing eight reactors [13][15]. - Has a record of 24 years of consecutive dividend increases and has paid dividends without interruption for 78 years [15]. - **Stepan Company (NYSE:SCL)**: - Offers a dividend yield of 3.16% and has increased its dividend for 57 straight years [16][19]. - Reported an 8% increase in adjusted EBITDA to $51.4 million in the second quarter, with strong growth in its Polymers and NCT product lines [17][18].

Core Insights - The article discusses the author's journey in dividend growth investing and the establishment of a blog that documents this journey towards financial independence [1]. Group 1 - The author has been investing since September 2017 and has a long-standing interest in dividend investing since 2009 [1]. - The blog "Kody's Dividends" serves as a platform for sharing insights and experiences related to dividend growth investing [1]. - The author expresses gratitude for the blog's role in connecting with the Seeking Alpha community as an analyst [1].

Group 1 - The article discusses the author's journey in dividend growth investing and the establishment of a blog to document this journey [1] - The author has been investing since September 2017 and has a long-standing interest in dividend investing since 2009 [1] - The blog serves as a platform for sharing insights on dividend growth stocks and growth stocks, contributing to the author's engagement with the Seeking Alpha community [1] Group 2 - The article does not provide any specific company or industry analysis, focusing instead on the author's personal investment journey [1][2]

Industry Overview - The Zacks Utility - Water Supply industry includes companies that provide drinking water and wastewater services to various customers, including industrial, commercial, residential, and military bases [1] - Water utilities are essential for maintaining healthy living conditions by ensuring a constant supply of clean water and reliable sewer services [2] Infrastructure and Investment Needs - Water utility operators manage approximately 2.2 million miles of aging pipelines and require significant investments for maintenance and expansion, estimated at $1.25 trillion over the next 20 years according to the U.S. Environmental Protection Agency [3] - Recent interest rate cuts by the Federal Reserve, reducing benchmark rates to 4-4.25%, are expected to benefit capital-intensive utility operators by lowering capital servicing expenses [4] Company Comparisons - A comparative analysis was conducted on California Water Service Group (CWT) and The York Water Company (YORW), both currently rated Zacks Rank 2 (Buy) [5] - CWT's 2025 earnings estimate is $2.39 per share on revenues of $1 billion, reflecting a year-over-year decrease of 26.5% in earnings and a 3.3% decline in revenues [6] - YORW's 2025 earnings estimate is $1.35 per share on revenues of $78 million, indicating a 4.9% decline in earnings but a 4.1% growth in revenues [6] Financial Metrics - CWT has a debt-to-capital ratio of 48.11% and YORW has 48.22%, both below the industry average of 50.04% [7] - The times interest earned ratio for CWT is 2.9 and for YORW is 3.1, indicating both companies have sufficient financial flexibility to meet near-term interest obligations [8] Dividend and Performance - CWT's current dividend yield is 2.63% and YORW's is 2.82%, both higher than the Zacks S&P 500 composite average of 1.1% [9] - CWT shares have increased by 0.4% quarter-to-date, while YORW shares have decreased by 1.6%, compared to the industry's overall gain of 0.9% [10][12] Earnings Surprise and Historical Performance - CWT has delivered an average earnings surprise of 51.6% over the last four quarters, while YORW has experienced a negative earnings surprise of 5.22% [11] Conclusion - Both CWT and YORW are suitable choices for investment, focusing on water and wastewater services with potential for expansion. However, CWT is preferred due to better debt management and price performance compared to YORW [14]

Group 1 - The article discusses the investment potential of Northwest Natural (NWN), highlighting its growing water utility subsidiary as a key area of opportunity [1] - The author expresses a bullish outlook on Northwest Natural, suggesting that the market may be undervaluing the company's prospects [1] - The investment group led by Ian Bezek offers various features including market analysis, trade alerts, and direct access to the author for members [1] Group 2 - Ian Bezek has a background as a hedge fund analyst and has extensive experience conducting research in Latin American markets [2] - The focus of the analysis includes high-quality compounders and growth stocks available at reasonable prices in both the US and developed markets [2]

Core Insights - The article highlights the significance of dividend stocks in long-term investing, emphasizing that they have historically outperformed non-dividend stocks and provided stability during market fluctuations [2][3][5]. Company Insights - York Water has paid a continuous dividend since 1816, making it the longest-running dividend-paying public company in the U.S., surpassing other notable companies like Stanley Black & Decker by 60 years [12]. - The company operates as a water and wastewater utility, servicing 57 municipalities in South-Central Pennsylvania, which contributes to its low trading volume and limited public awareness [11]. - York Water's business model benefits from predictable operating cash flow due to its monopoly status in its service areas, allowing for stable revenue projections [13][15]. - The company has a strong track record of securing rate increases from the Pennsylvania Public Utility Commission, with a recent request that could increase annual revenue by $24.2 million, or 32% [16]. Industry Insights - Approximately 80% of S&P 500 companies pay dividends, but only 56 qualify as Dividend Kings, having increased their payouts for at least 50 years [7][8]. - The rarity of companies like York Water, which have paid dividends for over a century, positions them as unique investment opportunities within the broader dividend stock market [9]. - York Water's current valuation is historically low, trading at less than 20 times forward-year earnings, which is a 33% discount compared to its average over the past five years, combined with a 2.8% dividend yield [17].

Industry Overview - The Zacks Utility - Water Supply industry provides essential drinking water and wastewater services across the U.S., managing nearly 2.2 million miles of aging pipelines [3] - The industry is capital-intensive, benefiting from lower interest rates that reduce financing costs for infrastructure investments [3][5] Current Trends - The U.S. water industry is fragmented with over 50,000 community water systems, leading to inefficiencies; consolidation through mergers and acquisitions is necessary for improving service quality [4] - Aging infrastructure is a significant concern, with the American Society of Civil Engineers estimating a need for $1.25 trillion in investments over the next 20 years [6] Financial Performance - The Zacks Utility Water Supply industry has underperformed compared to the S&P 500 and the broader utility sector, gaining only 5% over the past 12 months compared to the sector's 9% and the S&P 500's 15.4% [10] - The industry is currently trading at a trailing 12-month EV/EBITDA of 10.55X, significantly lower than the S&P 500's 17.7X and the sector's 15.15X [13] Company Highlights - California Water Service Group plans to invest $2.06 billion from 2025 to 2027 to strengthen its infrastructure [19] - Global Water Resources focuses on Total Water Management, optimizing the use of recycled water, with a long-term earnings growth rate pegged at 15% [23][24] - The York Water Company plans to invest $94.5 million from 2025 to 2026 and has seen a 1.5% increase in the Zacks Consensus Estimate for 2025 earnings per share [27][28]

Core Viewpoint - York Water (YORW) reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, with a year-over-year comparison showing no change in earnings [1][2] Financial Performance - The company achieved revenues of $19.2 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.05%, compared to $18.75 million in the same quarter last year [2] - Over the last four quarters, York Water has exceeded consensus EPS estimates only once [2] Stock Performance - York Water shares have declined approximately 5.5% since the beginning of the year, while the S&P 500 has gained 8.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.41 on revenues of $21 million, and for the current fiscal year, it is $1.33 on revenues of $78 million [7] - The trend of estimate revisions for York Water was mixed prior to the earnings release, which may change following the recent report [6] Industry Context - The Utility - Water Supply industry, to which York Water belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) Details the filing of The York Water Company's Form 10-Q, including registrant information and key company identifiers [Registrant Information](index=1&type=section&id=Registrant%20Information) The York Water Company filed its Form 10-Q for Q2 2025, identifying as a non-accelerated, smaller reporting company with 14.4 million shares outstanding - The York Water Company (**YORW**) filed its Form 10-Q for the quarter ended **June 30, 2025**[2](index=2&type=chunk) - The company is a **non-accelerated filer** and a **smaller reporting company**[5](index=5&type=chunk) Registrant Details | Metric | Value | | :-------------------------------- | :-------------------- | | Commission File Number | 001-34245 | | Trading Symbol | YORW | | Exchange | The Nasdaq Global Select Market | | Common Stock Outstanding (as of Aug 12, 2025) | 14,421,177 Shares | [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20Financial%20Information) Presents the unaudited interim financial statements and management's discussion and analysis of financial condition and operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Includes unaudited interim financial statements: Balance Sheets, Income, Equity, and Cash Flows, with accompanying notes for Q2 2025 [Balance Sheets (Unaudited)](index=3&type=section&id=Balance%20Sheets%20(Unaudited)) Total assets and stockholders' equity increased from December 2024 to June 2025, driven by net utility plant and long-term debt Balance Sheet Summary (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Total Assets | $653,731 | $633,473 | +$20,258 | | Net utility plant | $548,715 | $531,007 | +$17,708 | | Total common stockholders' equity | $234,551 | $231,192 | +$3,359 | | Long-term debt | $218,056 | $205,561 | +$12,495 | | Total Stockholders' Equity and Liabilities | $653,731 | $633,473 | +$20,258 | [Statements of Income (Unaudited)](index=5&type=section&id=Statements%20of%20Income%20(Unaudited)) Net income slightly increased for Q2 2025 but decreased for H1 2025, influenced by revenues, interest, and tax expense Income Statement Summary (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | YoY Change | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Operating Revenues | $19,199 | $18,750 | +2.4% | $37,655 | $36,378 | +3.5% | | Operating Expenses | $12,113 | $11,688 | +3.6% | $24,286 | $23,101 | +5.1% | | Operating Income | $7,086 | $7,062 | +0.3% | $13,369 | $13,277 | +0.7% | | Interest on debt | $(2,521) | $(2,183) | +15.5% | $(4,940) | $(4,306) | +14.7% | | Income before income taxes | $4,685 | $5,514 | -15.1% | $8,795 | $10,443 | -15.8% | | Income tax expense (benefit) | $(367) | $521 | -170.4% | $105 | $1,123 | -90.7% | | Net Income | $5,052 | $4,993 | +1.2% | $8,690 | $9,320 | -6.8% | | Basic Earnings Per Share | $0.35 | $0.35 | 0.0% | $0.60 | $0.65 | -7.7% | [Statements of Common Stockholders' Equity (Unaudited)](index=6&type=section&id=Statements%20of%20Common%20Stockholders'%20Equity%20(Unaudited)) Common stockholders' equity grew from December 2024 to June 2025, driven by net income and stock issuance, offset by dividends Common Stockholders' Equity (in thousands) | Metric (in thousands) | Balance, Dec 31, 2024 | Net Income | Cash Dividends Declared | Issuance of Common Stock | Stock-based Compensation | Balance, Jun 30, 2025 | | :-------------------- | :-------------------- | :--------- | :---------------------- | :----------------------- | :----------------------- | :-------------------- | | Common Stock Amount | $138,089 | – | – | $812 | $170 | $139,071 | | Retained Earnings | $93,103 | $8,690 | $(6,313) | – | – | $95,480 | | Total | $231,192 | $8,690 | $(6,313) | $812 | $170 | $234,551 | [Statements of Cash Flows (Unaudited)](index=7&type=section&id=Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow increased for H1 2025, investing cash use rose, and financing cash provided more, mainly from debt issues Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :--------- | | Net cash provided by operating activities | $13,603 | $12,841 | +$762 | | Net cash used in investing activities | $(22,182) | $(20,919) | -$(1,263) | | Net cash provided by financing activities | $8,579 | $8,078 | +$501 | | Net change in cash and cash equivalents | $0 | $0 | $0 | - Utility plant additions, including debt portion of allowance for funds used during construction, were **$22,182 thousand** in 2025, up from **$20,867 thousand** in 2024[23](index=23&type=chunk) - Proceeds from long-term debt issues were **$26,423 thousand** in 2025, compared to **$56,565 thousand** in 2024[23](index=23&type=chunk) [Notes to Interim Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Financial%20Statements) Provides detailed context for interim financial statements, covering accounting policies, debt, derivatives, revenue, rates, pensions, and taxes [1. Basis of Presentation](index=8&type=section&id=1.%20Basis%20of%20Presentation) Interim financial statements are unaudited, include normal accruals, and should be read with the 2024 10-K; interim results are not indicative of the full year - Interim financial statements are **unaudited** and reflect normal recurring accruals[25](index=25&type=chunk) - Results for the interim period are **not indicative** of full-year performance[26](index=26&type=chunk) [2. Accounts Receivable and Unbilled Revenue](index=8&type=section&id=2.%20Accounts%20Receivable%20and%20Unbilled%20Revenue) Net accounts receivable increased to **$7,484 thousand** by June 2025, primarily due to normal timing differences in customer payments Accounts Receivable and Unbilled Revenue (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Accounts receivable – customers | $8,725 | $8,392 | +$333 | | Other receivables | $369 | $467 | -$(98) | | Less: allowance for doubtful accounts | $(1,610) | $(1,610) | $0 | | Accounts receivable, net | $7,484 | $7,249 | +$235 | | Unbilled revenue | $3,493 | $3,604 | -$(111) | - Changes in accounts receivable and unbilled revenue are primarily due to **normal timing differences** between service provision and customer payments[27](index=27&type=chunk) [3. Common Stock and Earnings Per Share](index=8&type=section&id=3.%20Common%20Stock%20and%20Earnings%20Per%20Share) EPS calculations use weighted average shares; no shares were repurchased, with **618,004 shares** remaining authorized for repurchase Weighted Average Common Shares | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Weighted average common shares, basic | 14,396,648 | 14,340,575 | 14,388,712 | 14,332,727 | | Weighted average common shares, diluted | 14,396,648 | 14,340,832 | 14,388,712 | 14,332,941 | - **No shares** were repurchased during the three or six months ended June 30, 2025 and 2024[30](index=30&type=chunk) - As of June 30, 2025, **618,004 shares** remain authorized for repurchase under the program[30](index=30&type=chunk) [4. Debt](index=9&type=section&id=4.%20Debt) Long-term debt increased to **$218,056 thousand** by June 2025, mainly from line of credit borrowings, with no new long-term debt arrangements Debt Summary (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Committed Line of Credit, due September 2026 | $28,539 | $15,808 | +$12,731 | | Total long-term debt | $220,909 | $208,178 | +$12,731 | | Long-term portion | $218,056 | $205,561 | +$12,495 | - The Company **did not enter** into any new long-term debt arrangements or modify its outstanding long-term debt for the six months ended June 30, 2025[31](index=31&type=chunk) [5. Interest Rate Swap Agreement](index=10&type=section&id=5.%20Interest%20Rate%20Swap%20Agreement) An interest rate swap converts **$12,000 thousand** variable-rate debt to a **3.16%** fixed rate, recorded as a **$535 thousand** regulatory liability expiring in 2029 - The Company uses an interest rate swap to convert **$12,000 thousand** variable-rate debt to a fixed rate of **3.16%**[33](index=33&type=chunk) - The swap is recorded at fair value as a **regulatory liability**, deferring unrealized gains and losses[34](index=34&type=chunk)[35](index=35&type=chunk) - The swap was in a liability position of approximately **$535 thousand** as of June 30, 2025, and expires **October 1, 2029**[36](index=36&type=chunk)[37](index=37&type=chunk) [6. Fair Value of Financial Instruments](index=10&type=section&id=6.%20Fair%20Value%20of%20Financial%20Instruments) Interest rate swap liability was **$525 thousand** at fair value (Level 2 inputs); long-term debt's estimated fair value was **$197,000 thousand** versus **$220,909 thousand** carrying value Fair Value of Financial Instruments (in thousands) | Description | Jun. 30, 2025 (Fair Value) | Dec. 31, 2024 (Fair Value) | | :---------- | :------------------------- | :------------------------- | | Interest Rate Swap | $525 | $386 | | Long-term Debt (Carrying Value) | $220,909 | $208,178 | | Long-term Debt (Estimated Fair Value) | ~$197,000 | ~$189,000 | - Fair values are measured using **Level 2 inputs**, such as discounted cash flow techniques incorporating market interest yield curves[41](index=41&type=chunk)[42](index=42&type=chunk) [7. Commitments](index=11&type=section&id=7.%20Commitments) PPUC approved replacing **400 lead service lines** annually; **$2,018 thousand** incurred by June 2025, recorded as a regulatory asset for recovery - PPUC approved tariff modification to replace up to **400 lead customer-owned service lines** annually over nine years[44](index=44&type=chunk) - Costs are recorded as a **regulatory asset** to be recovered in future base rates over a four-year period[44](index=44&type=chunk) Lead Service Line Replacement Costs (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------- | :------------ | :------------ | | Cost for lead service line replacements | $2,018 | $1,961 | | Estimated total cost | $2,100 | N/A | [8. Revenue](index=12&type=section&id=8.%20Revenue) Total operating revenue increased to **$19,199 thousand** for Q2 2025 and **$37,655 thousand** for H1 2025, mainly from utility services Revenue by Source (in thousands) | Revenue Source (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :---------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Water utility service | $17,054 | $16,654 | $33,430 | $32,235 | | Wastewater utility service | $1,963 | $1,854 | $3,890 | $3,644 | | Billing and revenue collection services | $17 | $122 | $43 | $252 | | Collection services | $30 | $0 | $33 | $3 | | Other revenue | $19 | $6 | $29 | $16 | | Total Revenue from Contracts with Customers | $19,083 | $18,636 | $37,425 | $36,150 | | Rents from regulated property | $116 | $114 | $230 | $228 | | Total Operating Revenue | $19,199 | $18,750 | $37,655 | $36,378 | - Utility service revenue is recognized **over time** using an output method, based on fixed charges and per-unit rates[48](index=48&type=chunk) - Billing and revenue collection services, and collection services, are satisfied **at a point in time** when bills are sent or services are completed[49](index=49&type=chunk)[51](index=51&type=chunk) [9. Rate Matters](index=13&type=section&id=9.%20Rate%20Matters) A rate increase request was filed for **28.9%** water and **44.5%** wastewater rates, effective by March 2026; DSIC revenue significantly increased - Filed a rate increase request on **May 30, 2025**, seeking a **28.9%** increase in water rates and a **44.5%** increase in wastewater rates[53](index=53&type=chunk) - Any approved rate increase will be effective no later than **March 1, 2026**[53](index=53&type=chunk) DSIC Revenue (in thousands) | DSIC Revenue (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | DSIC provided revenues | $531 | $34 | $917 | $34 | [10. Pensions](index=14&type=section&id=10.%20Pensions) Net periodic pension cost was **zero** for H1 2025, with no employer contributions made or expected for the remainder of 2025 Net Periodic Pension Cost (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net periodic pension cost | $0 | $(278) | $0 | $111 | - **No employer contributions** were made to pension plans for the six months ended June 30, 2025, and none are expected for the rest of 2025[57](index=57&type=chunk) [11. Stock-Based Compensation](index=14&type=section&id=11.%20Stock-Based%20Compensation) The 2025 LTIP added **150,000 shares**; stock-based compensation was **$170 thousand** for H1 2025, with **$349 thousand** unrecognized - The 2025 LTIP was amended to add **150,000 shares** for awards over ten years[58](index=58&type=chunk) Stock-Based Compensation (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Stock-based compensation | $98 | $97 | $170 | $140 | | Related recognized tax benefits | $26 | $27 | $46 | $39 | - Total unrecognized stock-based compensation for nonvested awards is **$349 thousand** as of June 30, 2025, to be recognized over three years[63](index=63&type=chunk) [12. Income Taxes](index=15&type=section&id=12.%20Income%20Taxes) Effective tax rate was **(7.8)%** for Q2 and **1.2%** for H1 2025, significantly lower due to IRS TPR deductions; OBBBA is not expected to materially impact Effective Tax Rate | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :----- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Effective tax rate | (7.8)% | 9.4% | 1.2% | 10.8% | - The reduction in effective tax rate is due to deductions for asset improvements under **IRS tangible property regulations (TPR)**[64](index=64&type=chunk)[65](index=65&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed **July 4, 2025**, is **not expected to materially impact** the Company[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, liquidity, and capital resources, including forward-looking statements, acquisitions, and capital expenditures [Forward-looking Statements](index=16&type=section&id=Forward-looking%20Statements) Forward-looking statements on strategy, prospects, and growth are subject to material differences due to weather, rate relief, and economic conditions - **Forward-looking statements** cover business strategy, future prospects, profitability, growth, and regulatory matters[68](index=68&type=chunk) - Actual results may **differ materially** due to factors like rate changes, weather, natural disasters, economic conditions, and changes in government policies[69](index=69&type=chunk)[70](index=70&type=chunk) [General Information](index=17&type=section&id=General%20Information) The York Water Company provides water and wastewater services across 57 PA municipalities, regulated by PPUC, with growth driven by rates, customers, and acquisitions - Primary business is **water impoundment, purification, and distribution**, along with **wastewater collection and treatment**[71](index=71&type=chunk) - Operates in **57 municipalities** across four counties in south-central Pennsylvania, regulated by the **PPUC**[71](index=71&type=chunk) - Water business is **vulnerable to weather conditions**, especially in summer, but minimum customer charges mitigate some fixed cost risks[73](index=73&type=chunk) - **Growth strategies** include timely rate increases, increased water volumes, customer growth, and water/wastewater system acquisitions[74](index=74&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Q2 2025 net income increased **1.2%** YoY, while H1 2025 net income decreased **6.8%**, influenced by revenues, expenses, and interest Results of Operations Summary (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | YoY Change | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Net Income | $5,052 | $4,993 | +1.2% | $8,690 | $9,320 | -6.8% | | Operating Revenues | $19,199 | $18,750 | +2.4% | $37,655 | $36,378 | +3.5% | | Operating Expenses | $12,113 | $11,688 | +3.6% | $24,286 | $23,101 | +5.1% | | Interest on debt | $(2,521) | $(2,183) | +15.5% | $(4,940) | $(4,306) | +14.7% | | Income tax expense (benefit) | $(367) | $521 | -170.4% | $105 | $1,123 | -90.7% | - Operating revenue increases were primarily due to customer base growth and increased DSIC revenues (**$497 thousand** for Q2, **$883 thousand** for H1)[78](index=78&type=chunk)[84](index=84&type=chunk) - **Operating expense increases** were driven by higher depreciation and amortization, wages and benefits, water treatment, and insurance costs[79](index=79&type=chunk)[85](index=85&type=chunk) [Rate Matters](index=19&type=section&id=Rate%20Matters_MD%26A) Effective July 1, 2025, the tariff includes a **3.90%** DSIC on revenues, allowing recovery of infrastructure replacement costs - Effective **July 1, 2025**, the Company's tariff includes a DSIC on revenues of **3.90%**[90](index=90&type=chunk) [Acquisitions and Growth](index=20&type=section&id=Acquisitions%20and%20Growth) Agreements for four wastewater and water system acquisitions are expected to add **485 customers** by early 2026, supporting growth - Signed agreements to acquire wastewater and water assets from Pine Run Retirement Community (**100 wastewater customers**, H1 2026 close), Eagle View Manufactured Housing Community (**140 water customers**, H2 2025 close), CMV Sewage Co., Inc. (**280 wastewater customers**, H2 2025 close), and Margaretta Mobile Home Park (**65 wastewater customers**, H2 2025 close)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - These acquisitions are expected to be **immaterial** to Company results but support growth and offset consumption declines[96](index=96&type=chunk) [Capital Expenditures](index=20&type=section&id=Capital%20Expenditures) Invested **$22,182 thousand** in Q2 2025 construction expenditures; **$23,800 thousand** anticipated for H2 2025, funded by internal funds and credit - Invested **$22,182 thousand** in construction expenditures for Q2 2025, including main extensions, software upgrades, and infrastructure improvements[97](index=97&type=chunk) - Anticipates approximately **$23,800 thousand** in construction expenditures for the remainder of 2025[98](index=98&type=chunk) - Funding sources include internally-generated funds, line of credit, stock purchase plans, and customer advances/contributions (**5-10%** of funding)[98](index=98&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is managed via a credit line; internally-generated funds increased, and capitalization ratios for equity (**51.5%**) and debt (**48.5%**) are within target ranges - Cash management account linked to line of credit provides liquidity; **$28,539 thousand** borrowed on line of credit as of June 30, 2025[100](index=100&type=chunk)[105](index=105&type=chunk) - Internally-generated funds from operations increased to **$13,603 thousand** for the first six months of 2025, up from **$12,841 thousand** in 2024[102](index=102&type=chunk) Capitalization Ratios | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Common stockholders' equity as % of total capitalization | 51.5% | 52.6% | | Long-term debt as % of total capitalization | 48.5% | 47.4% | - The Company expects to extend the maturity of its **$50,000 thousand** committed line of credit into 2027[105](index=105&type=chunk) [Cash](index=21&type=section&id=Cash) Cash management account linked to credit line provides liquidity; **$28,539 thousand** borrowed on credit line with a **$1,035 thousand** cash overdraft as of June 2025 - Cash management account is **directly connected** to the line of credit for automatic cash management[100](index=100&type=chunk) - As of June 30, 2025, the Company had **$28,539 thousand** borrowed on its line of credit and a cash overdraft of **$1,035 thousand**[100](index=100&type=chunk) [Accounts Receivable](index=21&type=section&id=Accounts%20Receivable_MD%26A) Accounts receivable align with revenue and payment timeliness; a reserve for doubtful accounts is maintained based on historical and forecasted factors - Accounts receivable balance follows revenue changes and is affected by payment timeliness and **reserve for doubtful accounts**[101](index=101&type=chunk) - Reserve for doubtful accounts is based on **historical write-offs, current conditions, and reasonable forecasts**[101](index=101&type=chunk) [Internally-generated Funds](index=21&type=section&id=Internally-generated%20Funds) Internally-generated funds increased to **$13,603 thousand** for H1 2025, influenced by rate relief, water usage, customer growth, and expenses - **Internally-generated funds** are influenced by rate relief, regulations, water usage, customer growth, and expenses[102](index=102&type=chunk) Internally-generated Funds (in thousands) | Metric (in thousands) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :---------------------------- | :---------------------------- | :--------- | | Internally-generated funds from operations | $13,603 | $12,841 | +$762 | [Common Stock](index=21&type=section&id=Common%20Stock_MD%26A) Common stockholders' equity was **51.5%** of total capitalization, within the **50-55%** target range, with future financing expected from long-term debt Common Stockholders' Equity as % of Total Capitalization | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Common stockholders' equity as % of total capitalization | 51.5% | 52.6% | - The Company targets equity between **50%** and **55%** of total capitalization[103](index=103&type=chunk) - An effective 'shelf' Registration Statement on Form S-3 allows for offering up to **$60,000 thousand** of common stock or debt securities[104](index=104&type=chunk) [Credit Line](index=21&type=section&id=Credit%20Line) Maintains a **$50,000 thousand** unsecured credit line, with **$28,539 thousand** borrowed at **5.49%**; maturity expected to extend to 2027 - Maintains a **$50,000 thousand** unsecured line of credit, with **$28,539 thousand** borrowed as of June 30, 2025[105](index=105&type=chunk) - Interest rate on the line of credit borrowing was **5.49%** as of June 30, 2025[105](index=105&type=chunk) - Expects to extend the line of credit maturity into **2027** and believes adequate capacity exists through **2026**[105](index=105&type=chunk)[107](index=107&type=chunk) [Long-term Debt](index=22&type=section&id=Long-term%20Debt_MD%26A) Long-term debt as a percentage of total capitalization increased to **48.5%**, targeting a **45-50%** ratio acceptable to the PPUC Long-term Debt as % of Total Capitalization | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Total long-term debt as % of total capitalization | 48.5% | 47.4% | - The Company aims for a debt to total capitalization ratio between **45%** and **50%**[109](index=109&type=chunk) [Income Taxes, Deferred Income Taxes and Uncertain Tax Positions](index=22&type=section&id=Income%20Taxes%2C%20Deferred%20Income%20Taxes%20and%20Uncertain%20Tax%20Positions) IRS TPR deductions reduce the effective tax rate, increasing deferred tax liabilities; the rate is expected to rise in H2 2025, with no material OBBBA impact or uncertain tax positions - Ongoing deduction of asset improvements under **IRS TPR** reduces effective tax rate and increases deferred tax liabilities and regulatory assets[110](index=110&type=chunk) - Effective tax rate for the remainder of 2025 is **expected to increase** due to a lower level of eligible asset improvements expensed[111](index=111&type=chunk)[89](index=89&type=chunk) - **No uncertain tax positions** require recognition as of June 30, 2025[115](index=115&type=chunk) [Credit Rating](index=22&type=section&id=Credit%20Rating) S&P affirmed the Company's credit rating at **A-** with a **stable outlook** on **July 30, 2025**, contingent on rate relief and cash flow - Standard & Poor's affirmed credit rating at **A-** with a **stable outlook** and adequate liquidity on **July 30, 2025**[116](index=116&type=chunk) - Credit rating maintenance relies on **adequate rate relief, balanced capital expenditure funding, and strong cash flow**[116](index=116&type=chunk) [Physical and Cyber Security](index=23&type=section&id=Physical%20and%20Cyber%20Security) The Company maintains physical and cyber security measures, with costs recoverable; IT reliance creates cyber risk despite robust controls and insurance - Maintains security measures at facilities and collaborates with authorities on threats; costs are **expected to be recoverable** in rates[118](index=118&type=chunk) - Relies on IT systems for customer service, billing, accounting, and operational monitoring, making it **vulnerable to cyber security attacks**[119](index=119&type=chunk) - Implemented processes, procedures, and controls, and maintains insurance, but **cannot guarantee** full coverage or prevention of adverse effects from cyber incidents[121](index=121&type=chunk) [Environmental Matters](index=23&type=section&id=Environmental%20Matters) PPUC approved replacing **400 lead service lines** annually; **$2,018 thousand** incurred by June 2025, recorded as a regulatory asset for recovery - PPUC approved tariff modification to replace up to **400 lead customer-owned service lines** annually over nine years[122](index=122&type=chunk) - Costs are recorded as a **regulatory asset** to be recovered in future base rates over a four-year period[122](index=122&type=chunk) Lead Service Line Replacement Costs (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------- | :------------ | :------------ | | Cost for lead service line replacements | $2,018 | $1,961 | | Estimated total cost | $2,100 | N/A | [Drought](index=23&type=section&id=Drought) Adams, York, Lancaster, and Franklin Counties returned to normal drought status in June and July 2025, with no current restrictions - Adams, York, and Lancaster Counties returned to **normal drought status** on **June 9, 2025**[123](index=123&type=chunk) - Franklin County returned to **normal drought status** on **July 2, 2025**[123](index=123&type=chunk) - Drought measures could **impact future revenues, operating expenses, and net income** depending on severity and length[123](index=123&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include regulatory assets, revenue, pensions, and income taxes, with no significant changes during Q2 2025 - **Critical accounting estimates** include regulatory assets and liabilities, revenue recognition, pension plans, and income taxes[125](index=125&type=chunk) - **No significant changes** in accounting estimates or methods occurred during the quarter ended June 30, 2025[125](index=125&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company does not use off-balance sheet arrangements, securitization, or unconsolidated entities, with an interest rate swap as its only derivative - The Company **does not use** off-balance sheet transactions, securitization of receivables, or unconsolidated entities[126](index=126&type=chunk) - The **only derivative financial instrument** used is an interest rate swap agreement for risk management, as discussed in Note 5[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Item 3, Quantitative and Qualitative Disclosures About Market Risk, is stated as **not applicable** by the Company - The Company states that Item 3, Quantitative and Qualitative Disclosures About Market Risk, is **not applicable**[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were **effective** as of June 30, 2025, with no material changes in internal control - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** as of June 30, 2025[128](index=128&type=chunk) - **No material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[129](index=129&type=chunk) [PART II - OTHER INFORMATION](index=25&type=section&id=PART%20II%20Other%20Information) Presents other information not covered in Part I, including trading arrangements, exhibits, and official signatures [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company or its officers/directors in Q2 2025 - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by the Company, its directors, or officers during the quarter ended June 30, 2025[132](index=132&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and Inline XBRL documents - Exhibits include **Amended and Restated Articles of Incorporation and By-Laws, Change in Control Agreement, CEO and CFO certifications** (pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350), and **Inline XBRL documents**[135](index=135&type=chunk) [Signatures](index=27&type=section&id=Signatures) The report was signed by Joseph T. Hand, Principal Executive Officer, and Matthew E. Poff, Principal Financial and Accounting Officer, on August 12, 2025 - The report was signed by **Joseph T. Hand**, Principal Executive Officer, and **Matthew E. Poff**, Principal Financial and Accounting Officer, on **August 12, 2025**[139](index=139&type=chunk)