Middlesex(MSEX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of income, balance sheets, cash flows, capital stock and long-term debt, and common stockholders' equity, along with detailed notes explaining the basis of presentation, recent developments, regulatory matters, capitalization, earnings per share, segment data, short-term borrowings, commitments, employee benefits, revenue recognition, and income taxes Condensed Consolidated Statements of Income | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenues | $49,323 | $49,146 | $93,624 | $89,670 | | Operating Income | $13,912 | $15,315 | $25,469 | $25,180 | | Net Income | $10,778 | $10,546 | $20,258 | $21,228 | | Basic EPS | $0.60 | $0.59 | $1.13 | $1.19 | | Diluted EPS | $0.60 | $0.59 | $1.13 | $1.18 | Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $1,315,890 | $1,255,174 | | Total Common Equity | $457,783 | $445,263 | | Total Capitalization | $810,219 | $799,720 | | Total Current Liabilities | $121,482 | $82,888 | Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $32,086 | $17,879 | | Net Cash Used in Investing Activities | $(55,242) | $(28,737) | | Net Cash Provided by Financing Activities | $23,165 | $16,493 | | Cash, Cash Equivalents and Restricted Cash at End of Period | $4,235 | $8,025 | Condensed Consolidated Statements of Capital Stock and Long-Term Debt | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Common Equity | $457,783 | $445,263 | | Total Preferred Stock | $1,352 | $1,635 | | Total Long-term Debt | $351,084 | $352,822 | Condensed Consolidated Statements of Common Stockholders' Equity | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Total Common Equity | $457,783 | $432,878 | | Common Stock Shares Outstanding | 18,016 | 17,829 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide essential context and detail for the condensed consolidated financial statements, covering the company's structure, recent operational and regulatory developments, capitalization activities, earnings per share calculations, segment performance, short-term financing, contractual obligations, employee benefits, revenue recognition policies, and income tax impacts Note 1 – Basis of Presentation and Recent Developments - In April 2025, Tidewater completed the acquisition of the water utility assets of the Town of Ocean View, Delaware, for approximately $4.6 million, serving about 900 customers[22] - The USEPA finalized drinking water regulations for PFAS in April 2024, establishing lower maximum contaminant levels (MCLs) Water systems have until April 2027 for initial monitoring and April 2029 to implement solutions, with the Company having started its strategy in 2023[23][24][25] - The Company is currently evaluating the requirements of new accounting standards, ASU 2024-03 (Disaggregation of Income Statement Expenses) effective December 31, 2027, and ASU 2023-09 (Improvements to Income Tax Disclosures) effective December 31, 2025[26] Note 2 – Rate and Regulatory Matters - Middlesex and Pinelands filed a joint petition with the NJBPU in May 2025 for corporate reorganization and in June 2025 for a 19.3% ($24.9 million) increase in annual base revenues[27][28] - Joint petitions were submitted in July 2025 for a Resiliency and Environmental System Improvement Charge (RESIC) Foundational Filing (up to $3.8 million or 2.5% of revenues) and a Distribution System Improvement Charge (DSIC) Foundational Filing (up to $7.6 million or 5% of revenues)[29][30] - The NJBPU approved a Middlesex DSIC rate effective June 1, 2025, expected to generate $1.1 million in annual revenues, and a reset of the Purchased Water Adjustment Clause (PWAC) rate effective March 1, 2025, to recover $0.5 million in additional annual costs[31][32] - In July 2025, the DEPSC approved a settlement agreement for Tidewater, increasing annual operating revenues by $5.5 million and requiring a refund of approximately $1.1 million in excess deferred income taxes[34] Note 3 – Capitalization - Middlesex issued 8,130 common shares (approx. $0.4 million) under its Investment Plan during the six months ended June 30, 2025[37] - The Company entered into an At-the-Market (ATM) Equity Offering Sales Agreement in May 2025 for up to $110.0 million, issuing 63,955 shares for $3.6 million net proceeds through June 30, 2025[38] - Middlesex received NJBPU approval to borrow up to $300.0 million from the New Jersey SRF Program and other institutions through December 31, 2025, and filed a petition to borrow up to $260.0 million for 2026-2028[41][42] Fair Value of First Mortgage Bonds (FMBs) | (Thousands of Dollars) | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :--------------------- | :------------------------------ | :----------------------- | :-------------------------------- | :----------------------------- | | FMBs | $128,857 | $127,236 | $129,602 | $125,067 | Note 4 – Earnings Per Share Earnings Per Share (EPS) | EPS Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | $0.60 | $0.59 | $1.13 | $1.19 | | Diluted | $0.60 | $0.59 | $1.13 | $1.18 | Note 5 – Business Segment Data - The Company operates in two reportable segments: Regulated (water and wastewater services in New Jersey