The York Water(YORW) - 2023 Q2 - Quarterly Report

Financial Performance - Net income for Q2 2023 was $6,524, an increase of $1,495, or 29.7%, from $5,029 in Q2 2022[78] - Net income for the first six months of 2023 was $10,177, an increase of $1,289, or 14.5%, from $8,888 in the same period of 2022[84] - Operating revenues for Q2 2023 increased by $3,868, or 26.0%, to $18,767 from $14,899 in Q2 2022, primarily due to a rate increase effective March 1, 2023[79] - Operating revenues for the first six months of 2023 increased by $5,029, or 17.3%, to $34,168 from $29,139 in the first half of 2022[85] Customer Growth - The average number of water customers served increased by 989, from 70,308 in 2022 to 71,297 in 2023, while wastewater customers increased by 406, from 5,533 to 5,939[79] - The Company signed agreements to acquire wastewater and water assets, expected to add approximately 230 and 90 customers respectively, pending regulatory approval[94][95] - The Company signed an agreement to purchase water assets of Pine Run Retirement Community, expected to add approximately 100 water customers in 2023[98] - The Company signed an agreement to purchase wastewater assets from CMV Sewage Co., expected to add approximately 280 wastewater customers in Q1 2024[99] Operating Expenses - Operating expenses for Q2 2023 rose by $1,926, or 23.1%, to $10,251 from $8,325 in Q2 2022, driven by higher depreciation, wastewater treatment, and wages[80] Debt and Financing - Interest on debt for Q2 2023 increased by $473, or 39.3%, to $1,678 from $1,205 in Q2 2022, due to higher long-term debt and interest rates[81] - As of June 30, 2023, the Company's total long-term debt as a percentage of total capitalization was 43.0%, up from 40.7% at the end of 2022[116] - The Company entered into a note purchase agreement for $40,000 in senior notes, with net proceeds of approximately $39,829 used to refinance line of credit borrowings[115] Construction and Investment - The Company invested $29,725 in construction expenditures for the six months ended June 30, 2023, funded through various sources[105] - Anticipated construction expenditures for the remainder of 2023 are approximately $30,400, primarily funded by internally-generated funds[106] - The Company generated $14,596 in internally-generated funds during the first six months of 2023, an increase from $11,013 in the same period of 2022[109] Tax and Regulatory Matters - The effective tax rate for the first six months of 2023 was 11.0%, up from (0.7)% in the same period of 2022, primarily due to higher taxable income[90] - The Company has a regulatory asset of approximately $1,589 for lead service line replacements as of June 30, 2023[126] Market Conditions - A drought watch was issued on June 15, 2023, potentially impacting future revenues and net income[128] - The Company maintains a credit rating of A- with a stable outlook as of July 26, 2023[121] - No applicable market risk disclosures were provided in the earnings call[132]