ARTESIAN RESOURCES CORP (ARTNA)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered modest growth and a clean beat vs consensus: revenue $30.49M and diluted EPS $0.68, both up YoY; EPS beat S&P Global consensus by $0.02 and revenue exceeded by ~$0.5M, driven by a temporary rate increase, wastewater customer growth, and higher SLP Plan rates . EPS consensus 0.66*, revenue consensus $30.0M*; Actual EPS $0.68 , revenue $30.49M . Values retrieved from S&P Global.*
• Operating leverage improved sequentially: operating income rose to $8.62M and property taxes declined YoY on lower tax rates, partially offset by higher payroll, supply/treatment costs, and D&A tied to continued utility plant investment .
• Regulatory catalysts remain central: the Delaware temporary rate increase (effective Jun 3) aided Q3; a permanent rate case seeking +10.75% (~$9.4M annually) is pending at the DEPSC; new power contract lifts annual electricity expense by ~$0.5M, shaping forward margin trajectory .
• Capital deployment continues: $40.5M YTD capex across water/wastewater (PFAS treatment upgrades, mains, storage tanks, meter infrastructure) supports rate base growth and service reliability; Board approved a further 2% dividend hike to $0.3136/quarter (annualized $1.2544) .

What Went Well and What Went Wrong

What Went Well

• Rate and customer growth drove revenue: Q3 revenues rose 4.6% YoY to $30.5M, with water sales +3.1% on a temporary rate increase and customer additions; wastewater revenue also grew with added customers and SLP Plan revenue benefited from rate increases effective Dec 1, 2024 .
• Strategic investment and AFUDC: YTD capex reached $40.5M across core infrastructure with PFAS treatment upgrades; AFUDC increased, supporting “other income” and reflecting robust long-term construction activity; “Artesian continues to execute our strategic growth plan…” — Nicki Taylor, Chair, President & CEO .
• Lower property taxes: property and other taxes decreased by $0.4M YoY in Q3, driven by lower tax rates on utility plant, partially offset by higher plant subject to taxation .

What Went Wrong

• Cost inflation headwinds: utility operating expenses rose $1.3M (+10.8%) in Q3, including higher payroll/benefits (+$0.7M) and supply/treatment (+$0.4M), pressuring operating cost intensity despite revenue growth .
• Power cost step-up: a new 4-year electricity supply contract effective May 2025 increased rates ~25% vs prior, with ~$0.5M annualized expense headwind highlighted in Q2/Q1 disclosures, constraining margin expansion potential .
• Slight consumption decline in Q3 water: water sales growth reflected rates and customers but was partially offset by a slight decrease in consumption, limiting top-line upside .

Financial Results

Segment revenue breakdown

Margins (S&P Global)

KPIs and operating levers

Guidance Changes

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript was available despite searches; themes below reflect quarterly disclosures.

Management Commentary

• “Artesian continues to execute our strategic growth plan for water and wastewater services, expanding our customer base in a manner that strengthens operational efficiency and supports sustainable growth… operational excellence, regulatory compliance and strong financial management” — Nicki Taylor, Chair, President & CEO .
• “Our proactive work to address PFAS through targeted removal initiatives, alongside our attention to replacement of aging infrastructure, positions us to meet future regulatory standards…” — Nicki Taylor .
• “Although we are reporting strong first quarter results, the significant increase in electric supply costs… and increased costs to treat for PFAS… compel the request for rate relief” — Nicki Taylor .

Q&A Highlights

• No Q3 2025 earnings call transcript was found after search; therefore, Q&A details and any call-specific guidance clarifications are unavailable for this quarter .

Estimates Context

• Q3 2025 EPS of $0.68 beat S&P Global consensus of $0.66*; revenue of $30.49M exceeded $30.0M* consensus. Values retrieved from S&P Global.* Actuals from the company’s press release .
• Drivers vs estimates: temporary rate increase (effective Jun 3), wastewater customer growth, and SLP Plan rate increases helped revenue and EPS, partially offset by higher utility operating expenses and D&A tied to plant investment .
• External corroboration: Nasdaq reported an EPS surprise of +3.03% and revenue surprise of +1.64% for Q3 2025 .

Key Takeaways for Investors

• Artesian posted a clean beat on EPS and revenue in Q3 2025, supported by temporary rates and customer growth; sustained wastewater expansion and SLP pricing underpin revenue resilience .
• Margin trajectory remains sensitive to power cost inflation (+25% rate; +$0.5M annual expense) and rising payroll/supply/treatment costs; regulatory outcomes will be key to offsetting cost pressure .
• Rate base and asset growth continue via $40.5M YTD capex, including PFAS-related upgrades, positioning for regulatory compliance and long-term ROE stability .
• Property tax reduction provided relief in Q3; monitoring tax rate changes and plant subject to taxation remains prudent for forecasting below-the-line impacts .
• Dividend policy remains shareholder-friendly with a second 2% increase this year to $0.3136 per quarter (annualized $1.2544), signaling confidence in cash flows .
• Near-term catalyst: DEPSC permanent rate decision; outcome will influence 2026 earnings power and margin normalization amid cost headwinds .
• Trading implications: modest positive bias given estimate beats and dividend increase; watch for regulatory clarity and cost trends to sustain EPS attainment into Q4 and FY 2026 .