The York Water(YORW) - 2024 Q4 - Annual Report

Customer Growth and Revenue - The Company increased its number of customers from 77,893 to 79,771 during the year ended December 31, 2024, reflecting organic growth and acquisitions[40]. - Revenue for the year ended December 31, 2024, was $74,959, an increase of $3,928, or 5.5%, compared to $71,031 in 2023[42]. - Operating revenues increased in 2024 due to a rate increase effective March 1, 2023, an increase in the number of customers, and higher revenues from the distribution system improvement charge (DSIC)[93]. - Operating revenues rose to $74,959,000 in 2024, up from $71,031,000 in 2023, reflecting a growth of 5.1%[167]. - The average number of water customers served increased by 999, from 71,416 in 2023 to 72,415 in 2024, while wastewater customers increased by 522, from 5,999 to 6,521[96]. Financial Performance - The York Water Company experienced a 14.4% decrease in net income in 2024 compared to 2023, with a return on year-end common equity of 8.8%, lower than the 2023 result and the five-year historical average of 10.7%[93]. - Net income for 2024 decreased by $3,432, or 14.4%, to $20,325 compared to $23,757 in 2023, primarily due to higher operating expenses and interest on debt[95]. - Basic earnings per share decreased to $1.42 in 2024 from $1.66 in 2023, a decrease of 14.5%[167]. - Operating expenses rose by $5,418, or 13.1%, from $41,500 in 2023 to $46,918 in 2024, mainly due to higher depreciation, wages, and maintenance costs[98]. - Interest on debt increased by $1,857, or 26.4%, from $7,047 in 2023 to $8,904 in 2024, attributed to higher long-term debt and interest rates[99]. Capital Expenditures and Investments - Capital expenditures for 2024 were $48,226, with anticipated expenditures of approximately $46,000 and $48,500 for 2025 and 2026, respectively[112][113]. - The Company completed the dam armoring and spillway replacement at Lake Williams in 2023 at a total cost of approximately $40 million[38]. - The Company has a substantial deferred income tax asset primarily due to excess accumulated deferred income taxes on accelerated depreciation, with no valuation allowance required due to expected future taxable income generation[128]. - The Company has seen an increase in deferred income tax liability amounts due to accelerated depreciation deductions, which is expected to continue as significant capital expenditures are made[129]. Dividends and Shareholder Returns - The Company’s dividend payout ratios for 2024 were 60.2% relative to net income and 39.6% relative to net cash provided by operating activities, an increase from 49.3% and 36.3% in 2023, respectively[140]. - The Board declared a dividend of $0.2192 per share for January 2025, payable on April 15, 2025, with future dividends dependent on earnings and financial condition[141]. - Dividends paid increased to $12,088,000 in 2024 from $11,590,000 in 2023, an increase of 4.3%[172]. Regulatory and Compliance Matters - Capital expenditures for environmental compliance are budgeted to represent less than 15% of the expected total capital expenditures over the next five years[39]. - The Company was granted approval to modify its tariff to include the cost of replacing up to 400 lead service lines over nine years, with costs recorded as a regulatory asset[137]. - The Company estimates the cost for customer-owned lead service line replacements to be approximately $2,000, with costs recorded as a regulatory asset to be recovered in future base rates[137]. Acquisitions and Growth Opportunities - The Company is continuously seeking water and wastewater acquisition and expansion opportunities within and outside its current service territory[24]. - The Company signed agreements to acquire water and wastewater assets, expected to add approximately 485 customers upon completion in the second half of 2025[107][109][110]. - The acquisition of MESCO, Inc. on January 31, 2024, involved a purchase price of approximately $44, adding 180 wastewater customers[219]. - The acquisition of Longstown Mobile Estates on February 21, 2024, had a purchase price of approximately $8, adding 90 water customers[220]. - The acquisitions are considered immaterial to the Company's overall results[218][219][220]. Operational Metrics - The average daily availability of water was 41.1 million gallons, while average daily consumption was approximately 22.4 million gallons as of December 31, 2024[22]. - The Company owns two impounding dams with a combined capacity of approximately 2.5 billion gallons and has an average daily availability of 41.1 million gallons as of December 31, 2024[63]. - The Company operates a primary water filtration plant with a rated capacity of 39.0 million gallons per day, capable of short-term maximum supply of 42.0 million gallons per day[70]. - The Company has eleven wastewater treatment facilities with a combined permitted flow capacity of 1,222,500 gallons, supporting a projected maximum daily demand of 439,734 gallons[73]. Miscellaneous - The Company has not experienced a material impact on business or operations from cyber security attacks, although it maintains processes and insurance to mitigate potential costs[136]. - Pennsylvania state officials declared a drought watch for 33 counties, including the Company's service territory, which could impact future revenues and net income[139]. - The Company maintains cash balances exceeding federally insured limits but has not experienced significant credit risk[184]. - The reserve for doubtful accounts is based on lifetime expected credit losses and the aging of account balances, reflecting management's evaluation of credit risk[185].