York Water's Revenue Up, Net Income Dips Amidst Rising Debt

TL;DR

**YORW's revenue growth is overshadowed by rising debt and a slight earnings dip, making it a hold for now as interest costs bite.**

AI Summary

YORK WATER CO (YORW) reported a mixed financial performance for the nine months ended September 30, 2025. Operating revenues increased to $58.016 million, up from $56.093 million in the prior year period, representing a 3.4% increase. However, net income slightly decreased to $14.891 million from $15.183 million, a 1.9% decline. Basic earnings per share also saw a minor dip to $1.03 from $1.06. The company significantly increased its utility plant additions to $37.102 million in 2025 from $32.993 million in 2024, indicating continued infrastructure investment. Long-term debt rose to $226.993 million as of September 30, 2025, from $205.561 million at December 31, 2024, partly due to new debt issues totaling $43.712 million. The company renewed its committed line of credit, extending its maturity to September 2027. An interest rate swap agreement, used to manage interest rate risk on $12 million of variable-rate debt, resulted in a loss of $170 thousand for the nine months ended September 30, 2025, compared to a gain of $15 thousand in the prior year. The company's credit rating was affirmed at A- with a stable outlook by Standard & Poor's on July 30, 2025.

Why It Matters

For investors, YORK WATER CO's increased operating revenue signals healthy demand for its services, a positive for a utility stock. However, the slight decline in net income and EPS, coupled with a notable increase in long-term debt to $226.993 million, suggests potential margin pressures and higher financing costs, which could impact future profitability and dividend growth. The company's continued investment in utility plant additions, totaling $37.102 million, is crucial for maintaining service quality and expanding capacity, benefiting customers and ensuring long-term competitive positioning in the regulated utility sector. The stable A- credit rating from Standard & Poor's provides a solid foundation for future financing, but rising interest expenses bear watching.

Risk Assessment

Risk Level: medium — The company's long-term debt increased significantly to $226.993 million as of September 30, 2025, from $205.561 million at December 31, 2024. This rise in debt, combined with an increase in interest on debt to $7.555 million for the nine months ended September 30, 2025, from $6.549 million in the prior year, indicates higher financing costs that could pressure future earnings. Additionally, the interest rate swap agreement, designed to manage risk, resulted in a $170 thousand loss for the nine months ended September 30, 2025, highlighting potential volatility in financial instruments.

Analyst Insight

Investors should monitor YORK WATER CO's upcoming earnings calls for management's strategy on debt reduction and interest expense management. While the utility's revenue growth is positive, the increasing debt load and associated interest costs warrant caution. Consider holding existing positions but deferring new investments until there's clearer evidence of improved net income growth relative to rising expenses.

Financial Highlights

debt To Equity

0.95

revenue

$58.016M

operating Margin

N/A

total Assets

$667.064M

total Debt

$226.993M

net Income

$14.891M

eps

$1.03

gross Margin

N/A

cash Position

$1M

revenue Growth

+3.4%

Key Numbers

• $58.016M — Operating Revenues (Increased from $56.093M in 2024 for nine months ended Sep 30, 2025)
• $14.891M — Net Income (Decreased from $15.183M in 2024 for nine months ended Sep 30, 2025)
• $1.03 — Basic Earnings Per Share (Decreased from $1.06 in 2024 for nine months ended Sep 30, 2025)
• $226.993M — Long-Term Debt (Increased from $205.561M at Dec 31, 2024)
• $37.102M — Utility Plant Additions (Increased from $32.993M in 2024 for nine months ended Sep 30, 2025)
• $7.555M — Interest on Debt (Increased from $6.549M in 2024 for nine months ended Sep 30, 2025)
• 14,433,475 — Common Shares Outstanding (As of Sep 30, 2025, up from 14,386,282 at Dec 31, 2024)
• $170K — Interest Rate Swap Loss (For nine months ended Sep 30, 2025, compared to $15K gain in 2024)

Key Players & Entities

• YORK WATER CO (company) — registrant
• Standard & Poor's (company) — credit rating agency
• Nasdaq Global Select Market (regulator) — exchange where YORW is listed
• $58.016 million (dollar_amount) — operating revenues for nine months ended Sep 30, 2025
• $14.891 million (dollar_amount) — net income for nine months ended Sep 30, 2025
• $226.993 million (dollar_amount) — long-term debt as of Sep 30, 2025
• $37.102 million (dollar_amount) — utility plant additions for nine months ended Sep 30, 2025
• A- (other) — credit rating affirmed by Standard & Poor's
• $12,000 (dollar_amount) — notional amount of variable-rate debt covered by interest rate swap
• $170 (dollar_amount) — loss from interest rate swap for nine months ended Sep 30, 2025 (in thousands)

FAQ

Risk Factors

• Interest Rate Risk on Variable Debt [medium — financial]: The company utilizes an interest rate swap agreement to manage interest rate risk on $12 million of variable-rate debt. For the nine months ended September 30, 2025, this resulted in a loss of $170 thousand, a significant shift from a $15 thousand gain in the prior year period. This highlights the volatility associated with hedging strategies and the potential impact on earnings.
• Infrastructure Investment and Capital Expenditures [medium — operational]: YORW significantly increased utility plant additions to $37.102 million for the nine months ended September 30, 2025, up from $32.993 million in the prior year. While this indicates a commitment to maintaining and upgrading infrastructure, it also requires substantial capital, contributing to the rise in long-term debt.
• Increasing Long-Term Debt Levels [medium — financial]: Long-term debt increased to $226.993 million as of September 30, 2025, from $205.561 million at December 31, 2024. This rise, partly due to new debt issues totaling $43.712 million, increases financial leverage and interest expense, which rose to $7.555 million from $6.549 million.
• Deferred Regulatory Assets and Liabilities [low — regulatory]: The company maintains significant balances in deferred regulatory assets ($57.442 million) and deferred regulatory liabilities ($43.912 million). Changes in regulatory environments or accounting treatments for these items could impact future earnings and financial reporting.

Industry Context

The water utility sector is characterized by stable demand, significant capital intensity, and heavy regulation. Companies like YORW focus on maintaining and upgrading aging infrastructure to ensure reliable service and meet environmental standards. Growth is often driven by population increases and acquisitions, while profitability is influenced by rate-setting decisions by regulatory bodies.

Regulatory Implications

YORW operates under strict regulatory oversight, which impacts its ability to set rates and recover costs. The company's significant balances of deferred regulatory assets and liabilities highlight its reliance on regulatory approvals for future revenue recognition and cost recovery. Changes in regulatory policy or rate-setting decisions could materially affect financial performance.

What Investors Should Do

1. Monitor interest rate sensitivity and hedging effectiveness.
2. Evaluate the impact of increased capital expenditures on debt levels and future returns.
3. Assess the stability of regulatory frameworks and their impact on rate increases.

Key Dates

• 2025-07-30: Standard & Poor's affirmed YORW's credit rating at A- with a stable outlook. — Indicates continued financial strength and stability, providing confidence to investors and lenders.
• 2027-09-30: Renewal of committed line of credit with maturity extended to September 2027. — Ensures continued access to liquidity and financial flexibility for operational needs and capital investments.

Glossary

Utility Plant

The physical assets used by a utility company to provide services, such as water mains, treatment plants, and distribution systems. (Represents the core operational assets of YORW, with significant ongoing investment shown by additions of $37.102 million.)

Deferred Regulatory Assets

Costs that have been incurred by a regulated company but are expected to be recovered from customers in the future through rates approved by regulators. (A significant balance of $57.442 million indicates future revenue potential tied to regulatory approvals.)

Deferred Regulatory Liabilities

Amounts collected from customers that are expected to be refunded or credited in the future, or regulatory-approved amounts not yet recognized as revenue. (A balance of $43.912 million represents potential future obligations or revenue adjustments.)

Interest Rate Swap

A financial derivative contract where two parties exchange interest rate payments, typically to hedge against interest rate fluctuations. (YORW uses this to manage risk on variable-rate debt, but it resulted in a $170K loss in the period.)

Net Utility Plant

The original cost of utility plant assets minus accumulated depreciation. (Represents the depreciated value of YORW's core infrastructure, valued at $559.380 million.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, YORW reported a 3.4% increase in operating revenues to $58.016 million, compared to the prior year. However, net income saw a slight decrease of 1.9% to $14.891 million, and basic EPS dipped to $1.03 from $1.06. The company significantly increased its investment in utility plant additions by $4.109 million year-over-year, contributing to a rise in long-term debt by $21.432 million. Interest expenses also increased by $1.006 million, partly due to higher debt levels and a negative swing in interest rate swap results.

Filing Documents

• form10q.htm (10-Q) — 874KB
• exhibit311.htm (EX-31.1) — 12KB
• exhibit312.htm (EX-31.2) — 13KB
• exhibit321.htm (EX-32.1) — 7KB
• exhibit322.htm (EX-32.2) — 7KB
• image01.jpg (GRAPHIC) — 4KB
• 0000108985-25-000093.txt ( ) — 4494KB
• yorw-20250930.xsd (EX-101.SCH) — 35KB
• yorw-20250930_cal.xml (EX-101.CAL) — 57KB
• yorw-20250930_def.xml (EX-101.DEF) — 126KB
• yorw-20250930_lab.xml (EX-101.LAB) — 500KB
• yorw-20250930_pre.xml (EX-101.PRE) — 268KB
• form10q_htm.xml (XML) — 582KB

Financial Statements

Financial Statements 3 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 24 Item 4.

Controls and Procedures

Controls and Procedures 24 PART II Other Information Item 5. Other Information 25 Item 6. Exhibits 26

Signatures

Signatures 27 Page 2 THE YORK WATER COMPANY

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements. Balance Sheets (Unaudited) (In thousands of dollars, except per share amounts) Sep. 30, 2025 Dec. 31, 2024 ASSETS UTILITY PLANT, at original cost $ 701,167 $ 664,927 Plant acquisition adjustments ( 9,781 ) ( 9,838 ) Accumulated depreciation ( 132,006 ) ( 124,082 ) Net utility plant 559,380 531,007 OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $ 564 in 2025 and $ 536 in 2024 1,509 1,534 CURRENT ASSETS: Cash and cash equivalents 1 1 Accounts receivable, net of reserves of $ 1,610 in 2025 and $ 1,610 in 2024 7,536 7,249 Unbilled revenues 3,744 3,604 Recoverable income taxes 1,053 587 Materials and supplies inventories, at cost 3,118 3,413 Prepaid expenses 2,207 1,597 Total current assets 17,659 16,451 OTHER LONG-TERM ASSETS: Prepaid pension cost 25,436 25,009 Note receivable 255 255 Deferred regulatory assets 57,442 54,061 Other assets 5,383 5,156 Total other long-term assets 88,516 84,481 Total Assets $ 667,064 $ 633,473 The accompanying notes are an integral part of these statements. Table of Contents Page 3 THE YORK WATER COMPANY Balance Sheets (Unaudited) (In thousands of dollars, except per share amounts) Sep. 30, 2025 Dec. 31, 2024 STOCKHOLDERS' EQUITY AND LIABILITIES COMMON STOCKHOLDERS' EQUITY: Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 14,433,475 shares in 2025 and 14,386,282 shares in 2024 $ 139,502 $ 138,089 Retained earnings 98,519 93,103 Total common stockholders' equity 238,021 231,192 PREFERRED STOCK, authorized 500,000 shares, no shares issued – – LONG-TERM DEBT 226,993 205,561 COMMITMENTS – – CURRENT LIABILITIES: Current portion of long-term debt 330 – Accounts payable 7,475 9,525 Dividends payable 2,911 2,892 Accrued compensation and benefits 1,909 1,806 Accrued interest 1,320 2,490 Deferred regul

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