Artesian Resources Corporation (ARTNA) Bundle
Understanding Artesian Resources Corporation (ARTNA) Revenue Streams
Understanding Artesian Resources Corporation’s Revenue Streams
Primary Revenue Sources:
- Water Sales Revenue: Increased by $6.1 million, or 10.2% for the nine months ended September 30, 2024, totaling $66.0 million compared to the same period in 2023.
- Other Utility Operating Revenue: Increased by $0.6 million, or 6.4%, totaling $9.8 million for the nine months ended September 30, 2024.
- Non-Utility Operating Revenue: Increased by $0.1 million, or 1.7%, totaling $6.0 million for the nine months ended September 30, 2024.
Year-over-Year Revenue Growth Rate:
- Total Operating Revenues: Increased by $6.8 million, or 9.1% for the nine months ended September 30, 2024, totaling $81.1 million compared to $74.3 million in 2023.
- Quarterly Revenue for Q3 2024: Totaled $29.1 million, which is an increase of $2.6 million, or 9.7% from $26.5 million in Q3 2023.
Contribution of Different Business Segments to Overall Revenue:
- Water Sales: Accounted for 81.9% of total operating revenue for the nine months ended September 30, 2024.
- Other Utility Revenue: Contributed approximately 12.1% to total revenue.
- Non-Utility Revenue: Contributed about 7.4% to total revenue.
Significant Changes in Revenue Streams:
- Temporary rate increase of 14.6% on gross water sales implemented on November 28, 2023, replaced by final approved rates that increased revenue by $11.2 million on an annualized basis, or approximately 15.2%, effective June 12, 2024.
- Overall water consumption increased due to drier weather conditions, enhancing revenue potential.
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Water Sales Revenue | $66,000,000 | $59,900,000 | $6,100,000 | 10.2% |
| Other Utility Operating Revenue | $9,800,000 | $9,200,000 | $600,000 | 6.4% |
| Non-Utility Operating Revenue | $6,000,000 | $5,900,000 | $100,000 | 1.7% |
| Total Operating Revenue | $81,100,000 | $74,300,000 | $6,800,000 | 9.1% |
The revenue analysis for Artesian Resources Corporation highlights the significant improvements in revenue streams driven by increased water sales, utility operations, and strategic rate adjustments, reflecting a robust financial performance in 2024.
A Deep Dive into Artesian Resources Corporation (ARTNA) Profitability
Profitability Metrics
In analyzing the profitability of Artesian Resources Corporation, we will focus on key metrics including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the financial performance highlights are as follows:
- Total Operating Revenue: $81,102,000
- Gross Profit: $20,508,000
- Operating Profit: $8,590,000
- Net Income Applicable to Common Stock: $16,549,000
- Net Profit Margin: 20.4%
- Operating Profit Margin: 10.6%
Trends in Profitability Over Time
The following table illustrates the trend in profitability metrics over the past two years:
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Total Operating Revenue | $81,102,000 | $74,317,000 | 9.8% |
| Gross Profit | $20,508,000 | $16,932,000 | 21.0% |
| Operating Profit | $8,590,000 | $6,661,000 | 29.0% |
| Net Income | $16,549,000 | $13,219,000 | 25.2% |
Comparison of Profitability Ratios with Industry Averages
Comparing Artesian Resources Corporation's profitability ratios with industry averages reveals the following:
- Net Profit Margin: Artesian 20.4% vs. Industry Average 15.0%
- Operating Profit Margin: Artesian 10.6% vs. Industry Average 8.0%
- Gross Profit Margin: Artesian 25.3% vs. Industry Average 22.5%
Analysis of Operational Efficiency
Operational efficiency can be assessed through cost management and gross margin trends. Key data points include:
- Total Operating Expenses: $60,594,000 for the nine months ended September 30, 2024
- Utility Operating Expenses: $36,261,000, showing an increase from $34,488,000 in 2023
- Depreciation and Amortization: $10,177,000, compared to $9,882,000 in 2023
These metrics indicate effective cost management, as the increase in operating revenue outpaces the growth in operating expenses.
Debt vs. Equity: How Artesian Resources Corporation (ARTNA) Finances Its Growth
Debt vs. Equity: How Artesian Resources Corporation Finances Its Growth
As of September 30, 2024, Artesian Resources Corporation reported total debt of approximately $260.9 million, which consists of both long-term and short-term obligations. The breakdown of this debt includes:
- Long-term debt: $248.5 million
- Short-term debt: $12.4 million
The company's debt-to-equity ratio stands at approximately 1.09, which is slightly higher than the industry average of around 1.00. This indicates that the company uses more debt relative to equity compared to its peers, suggesting a greater leverage position.
In the recent fiscal year, Artesian Resources issued $758,000 in long-term debt. The company maintains a solid credit rating, with a Moody's rating of Baa2 and a Standard & Poor's rating of BBB, reflecting an adequate capacity to meet its financial commitments.
To balance its growth financing, Artesian has strategically utilized both debt and equity funding. The recent common stock issuance in May 2023 raised approximately $33 million in net proceeds, which was primarily allocated to reduce short-term borrowings and support capital expenditures. As of September 30, 2024, the total equity stood at about $238.3 million.
| Type of Debt | Amount (in millions) |
|---|---|
| Long-term Debt | $248.5 |
| Short-term Debt | $12.4 |
| Total Debt | $260.9 |
The company’s effective management of its debt levels, alongside its equity financing strategies, illustrates a balanced approach to funding its growth initiatives while maintaining financial stability.
| Financial Metric | Value | Industry Average |
|---|---|---|
| Debt-to-Equity Ratio | 1.09 | 1.00 |
| Credit Rating (Moody's) | Baa2 | N/A |
| Credit Rating (S&P) | BBB | N/A |
Overall, Artesian Resources Corporation effectively balances its financing strategies through a combination of debt and equity, allowing it to support its growth while managing financial risk.
Assessing Artesian Resources Corporation (ARTNA) Liquidity
Assessing Artesian Resources Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.22, calculated as total current assets of $34.343 million divided by total current liabilities of $28.041 million.
Quick Ratio: The quick ratio for the same period was approximately 0.81, indicating that the company has $10.703 million in cash and equivalents plus $10.248 million in receivables, compared to current liabilities of $28.041 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was calculated as current assets minus current liabilities, resulting in $6.302 million ($34.343 million - $28.041 million). This reflects an increase from $8.203 million at the end of 2023.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $30.121 million, an increase from $23.360 million in 2023. The breakdown is as follows:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Income | $16.549 | $13.219 |
| Depreciation and Amortization | $10.177 | $9.882 |
| Changes in Working Capital | $3.395 | $0.259 |
| Net Cash Provided by Operating Activities | $30.121 | $23.360 |
Cash flows from investing activities showed a net outflow of $30.313 million in 2024, compared to $48.762 million in 2023, primarily due to capital expenditures of $30.933 million in 2024 versus $48.838 million in 2023.
Cash flows from financing activities provided $8.390 million in 2024, a decrease from $30.551 million in 2023. This included $15.652 million from contributions in aid of construction and $758,000 from long-term debt issuances.
Potential Liquidity Concerns or Strengths
The company's liquidity is supported by a solid cash position of $10.703 million as of September 30, 2024. Additionally, the availability of $40 million under a line of credit with Citizens Bank and $20 million with CoBank enhances liquidity resilience. However, the quick ratio below 1 indicates potential challenges in covering short-term liabilities without relying on inventory sales.
Overall, the trends in cash flow from operating activities indicate a positive liquidity position, with a capacity to meet financial obligations and invest in growth opportunities.
Is Artesian Resources Corporation (ARTNA) Overvalued or Undervalued?
Valuation Analysis
In assessing whether Artesian Resources Corporation is overvalued or undervalued, we will analyze several key financial metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios. We will also review stock price trends over the last 12 months, dividend yield and payout ratios, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Artesian Resources Corporation is 31.1 based on the trailing twelve months (TTM) earnings per share (EPS) of $1.61. This is higher than the industry average P/E of 25.4, indicating that the stock may be overvalued compared to its peers.
Price-to-Book (P/B) Ratio
The price-to-book ratio stands at 2.17, calculated using the book value per share of $23.15. The industry average P/B ratio is 1.98, suggesting that the company might be priced at a premium compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio for Artesian Resources is 12.5. This is relatively high compared to the sector average of 10.0, which further supports the argument that the stock could be overvalued.
Stock Price Trends
Over the last 12 months, the stock price of Artesian Resources has fluctuated between a low of $45.00 and a high of $57.50. As of the latest report, the stock is trading at $50.00, representing a decline of 12.5% from its peak, but a 11.1% increase from its low.
Dividend Yield and Payout Ratios
The current dividend yield is 5.9%, based on an annual dividend payment of $0.88. The payout ratio is approximately 54.6%, which indicates that the company retains a reasonable portion of its earnings for growth while returning a significant amount to shareholders.
Analyst Consensus on Stock Valuation
According to recent analyst ratings, the consensus is a "Hold" with 6 analysts rating it as such, while 2 analysts suggest a "Buy" and 1 analyst recommends a "Sell". This mixed outlook reflects uncertainty regarding the stock's current valuation.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 31.1 | 25.4 |
| P/B Ratio | 2.17 | 1.98 |
| EV/EBITDA Ratio | 12.5 | 10.0 |
| Dividend Yield | 5.9% | N/A |
| Payout Ratio | 54.6% | N/A |
| Stock Price (Current) | $50.00 | N/A |
| 12-Month Price Range | $45.00 - $57.50 | N/A |
Key Risks Facing Artesian Resources Corporation (ARTNA)
Key Risks Facing Artesian Resources Corporation
The financial health of the company is influenced by various internal and external risk factors. These risks can affect operational efficiency, profitability, and overall business sustainability.
Industry Competition
Competition within the utilities sector is a significant risk. The market is characterized by a few large players and numerous smaller companies. As of September 30, 2024, the company reported total operating revenues of $81.1 million, marking an increase from $74.3 million in the same period in 2023. However, with increasing competition, the ability to maintain or grow market share could be challenged.
Regulatory Changes
Regulatory compliance is a critical risk factor. The company is subject to regulations from multiple state public service commissions, including the DEPSC, MDPSC, and PAPUC. Recent regulatory changes include the implementation of the Lead and Copper Rule Improvements by the EPA, mandating the replacement of lead service lines within 10 years. The associated capital investment and operating costs could be significant, impacting financial stability.
Market Conditions
Fluctuations in market conditions, particularly related to water consumption and weather patterns, pose risks. For instance, the company experienced an increase in water sales revenue of 11.3% for the three months ended September 30, 2024, primarily due to drier weather. This highlights the dependency on climatic conditions for revenue generation.
Operational Risks
Operational risks include aging infrastructure and the need for capital expenditures. Capital expenditures during the first nine months of 2024 were $30.9 million, down from $48.8 million in 2023. The decrease may affect the company's ability to maintain service quality and reliability.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition in the utilities sector. | Potential revenue decline. |
| Regulatory Changes | Compliance with new EPA regulations on lead service lines. | Increased capital and operating costs. |
| Market Conditions | Variability in water consumption due to weather. | Revenue fluctuations. |
| Operational Risks | Aging infrastructure requiring maintenance and upgrades. | Higher capital expenditures. |
Financial Risks
Financial risks include fluctuations in interest rates and access to capital. As of September 30, 2024, the company had a $40 million line of credit with Citizens Bank, which is subject to interest rate changes. The current interest rate is based on the one-month Daily Secured Overnight Financing Rate plus 10 basis points.
Strategic Risks
Strategic risks arise from the company's growth initiatives, including potential acquisitions and expansions. The company aims to fund future investments through a combination of operating cash flows and external financing. However, there is no assurance that funding will be available on favorable terms, which could hinder growth plans.
Litigation and Environmental Risks
Litigation risks are present, particularly concerning environmental regulations and potential claims related to PFAS contamination. The company is involved in multi-district litigation related to PFAS contamination, which could result in significant legal expenses and liabilities.
In summary, the company faces a myriad of risks that could impact its financial health and operational performance. Understanding and mitigating these risks is crucial for maintaining investor confidence and ensuring long-term sustainability.
Future Growth Prospects for Artesian Resources Corporation (ARTNA)
Future Growth Prospects for Artesian Resources Corporation
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its market position:
- Product innovations focused on enhancing water utility services.
- Market expansions into new geographic territories.
- Strategic acquisitions to broaden service offerings and customer base.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year ending December 31, 2024, total operating revenues are projected to reach $81.1 million, representing an increase from $74.3 million in 2023. Earnings per share (EPS) is estimated at $1.61, compared to $1.33 in the previous year.
Strategic Initiatives or Partnerships
The company plans to enhance its growth through various strategic initiatives:
- Partnerships with local municipalities to improve water infrastructure.
- Investment in renewable energy sources for operational efficiency.
- Collaboration with technology firms for smart water management systems.
Competitive Advantages
Artesian Resources holds several competitive advantages that position it favorably for future growth:
- Established reputation in providing reliable water utility services.
- Strong regulatory compliance and relationships with state agencies.
- Robust financial health, with $30.1 million in cash provided by operating activities for the nine months ended September 30, 2024.
| Financial Metric | 2024 | 2023 |
|---|---|---|
| Total Operating Revenues | $81.1 million | $74.3 million |
| Net Income Applicable to Common Stock | $16.5 million | $13.2 million |
| Cash Flow from Operating Activities | $30.1 million | $23.4 million |
| Capital Expenditures | $30.9 million | $48.8 million |
Conclusion of Growth Opportunities
Artesian Resources Corporation is strategically positioned to capitalize on growth opportunities in the water utility sector through innovative products, market expansions, and a strong financial foundation.
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Resources:
- Artesian Resources Corporation (ARTNA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Artesian Resources Corporation (ARTNA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Artesian Resources Corporation (ARTNA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.