MIDDLESEX WATER COMPANY

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________to ___________

Commission File Number 0-422

MIDDLESEX WATER COMPANY

(Exact name of registrant as specified in its charter)

New Jersey	22-1114430
(State of incorporation)	(IRS employer identification no.)

485C Route One South, Iselin, New Jersey 08830

(Address of principal executive offices, including zip code)

(732) 634-1500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	MSEX	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐
	Smaller reporting company ☐		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

The number of shares outstanding of each of the registrant's classes of common stock, as of April 29, 2022: Common Stock, No Par Value: 17,559,204 shares outstanding.

INDEX

	PAGE
PART I.FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited):	1
Condensed Consolidated Statements of Income	1
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Cash Flows	3
Condensed Consolidated Statements of Capital Stock and Long-Term Debt	4
Condensed Consolidated Statements of Common Stockholders’ Equity	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.Quantitative and Qualitative Disclosures of Market Risk	22
Item 4.Controls and Procedures	23
PART II.OTHER INFORMATION
Item 1.Legal Proceedings	24
Item 1A.Risk Factors	24
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.Defaults upon Senior Securities	24
Item 4.Mine Safety Disclosures	24
Item 5.Other Information	24
Item 6.Exhibits	24
SIGNATURES	25

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

	Three Months Ended March 31,
	2022		2021

Operating Revenues	$	36,196	$	32,541

Operating Expenses:
Operations and Maintenance		19,139		18,356
Depreciation		5,622		4,832
Other Taxes		4,144		3,719

Total Operating Expenses		28,905		26,907

Gain on Sale of Subsidiary		5,232		-

Operating Income		12,523		5,634

Other Income:
Allowance for Funds Used During Construction		377		1,263
Other Income, net		1,379		775

Total Other Income, net		1,756		2,038

Interest Charges		1,850		1,738

Income before Income Taxes		12,429		5,934

Income Taxes		329		(973	)

Net Income		12,100		6,907

Preferred Stock Dividend Requirements		30		30

Earnings Applicable to Common Stock	$	12,070	$	6,877

Earnings per share of Common Stock:
Basic	$	0.69	$	0.39
Diluted	$	0.68	$	0.39

Average Number of Common Shares Outstanding:
Basic		17,538		17,476
Diluted		17,653		17,591

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

		March 31,		December 31,
ASSETS		2022		2021
UTILITY PLANT:	Water Production	$	235,675	$	247,286
	Transmission and Distribution		692,368		697,200
	General		95,319		95,658
	Construction Work in Progress		37,455		24,947
	TOTAL		1,060,817		1,065,091
	Less Accumulated Depreciation		202,776		199,723
	UTILITY PLANT - NET		858,041		865,368

CURRENT ASSETS:	Cash and Cash Equivalents		3,294		3,533
	Accounts Receivable, net of allowance for uncollectible accounts of $2,530 and $2,574, respectively		13,480		15,311
	Unbilled Revenues		8,148		7,273
	Materials and Supplies (at average cost)		5,369		5,358
	Prepayments		2,574		2,880
	TOTAL CURRENT ASSETS		32,865		34,355

OTHER ASSETS:	Operating Lease Right of Use Asset		4,331		4,503
	Preliminary Survey and Investigation Charges		2,779		3,540
	Regulatory Assets		100,191		100,738
	Non-utility Assets - Net		11,310		11,428
	Other		67		83
	TOTAL OTHER ASSETS		118,678		120,292
	TOTAL ASSETS	$	1,009,584	$	1,020,015

CAPITALIZATION AND LIABILITIES
CAPITALIZATION:	Common Stock, No Par Value	$	225,092	$	221,919
	Retained Earnings		152,790		145,807
	TOTAL COMMON EQUITY		377,882		367,726
	Preferred Stock		2,084		2,084
	Long-term Debt		306,518		306,520
	TOTAL CAPITALIZATION		686,484		676,330

CURRENT	Current Portion of Long-term Debt		6,710		6,731
LIABILITIES:	Notes Payable		15,000		13,000
	Accounts Payable		18,059		21,125
	Accrued Taxes		14,029		8,621
	Accrued Interest		1,960		1,986
	Unearned Revenues and Advanced Service Fees		1,320		1,330
	Other		2,591		3,826
	TOTAL CURRENT LIABILITIES		59,669		56,619

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

OTHER LIABILITIES:	Customer Advances for Construction		23,006		23,529
	Lease Obligations - Operating		4,200		4,367
	Accumulated Deferred Income Taxes		72,002		69,500
	Employee Benefit Plans		10,217		11,290
	Regulatory Liabilities		46,190		49,431
	Other		1,081		1,086
	TOTAL OTHER LIABILITIES		156,696		159,203

CONTRIBUTIONS IN AID OF CONSTRUCTION			106,735		127,863
	TOTAL CAPITALIZATION AND LIABILITIES	$	1,009,584	$	1,020,015

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	12,100		$	6,907
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		6,825			6,296
Provision for Deferred Income Taxes and Investment Tax Credits		(2,137	)		(2,359	)
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(202	)		(732	)
Cash Surrender Value of Life Insurance		187			27
Stock Compensation Expense		267			203
Gain on Sale of Subsidairy		(5,232	)		-
Changes in Assets and Liabilities:
Accounts Receivable		1,831			1,860
Unbilled Revenues		(875	)		(145	)
Materials and Supplies		(11	)		(81	)
Prepayments		306			664
Accounts Payable		(3,066	)		(6,029	)
Accrued Taxes		5,408			3,887
Accrued Interest		(26	)		173
Employee Benefit Plans		(653	)		95
Unearned Revenue and Advanced Service Fees		(10	)		(18	)
Other Assets and Liabilities		(737	)		(1,306	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		13,975			9,442
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $175 in 2022, $531 in 2021		(16,631	)		(22,033	)
Proceeds from Sale of Subsidary		3,122			-
NET CASH USED IN INVESTING ACTIVITIES		(13,509	)		(22,033	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(1,228	)		(1,324	)
Proceeds from Issuance of Long-term Debt		1,250			687
Net Short-term Bank Borrowings		2,000			11,000
Deferred Debt Issuance Expense		(9	)		(2	)
Proceeds from Issuance of Common Stock		2,906			322
Payment of Common Dividends		(5,087	)		(4,762	)
Payment of Preferred Dividends		(30	)		(30	)
Construction Advances and Contributions-Net		(507	)		505

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(705	)		6,396
NET CHANGES IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(239	)		(6,195	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		3,533			10,404
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	3,294		$	4,209

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	$	2,401		$	1,169
Non-Cash Consideration for Sale of Subsidiary	$	2,100		$	-

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest	$	2,038		$	1,726
Interest Capitalized	$	175		$	531
Income Taxes	$	125		$	-

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT

(Unaudited)

(In thousands)

	March 31,			December 31,
	2022			2021
Common Stock, No Par Value
Shares Authorized - 40,000
Shares Outstanding - 2022 - 17,551; 2021 - 17,522	$	225,092		$	221,919

Retained Earnings		152,790			145,807
TOTAL COMMON EQUITY	$	377,882		$	367,726

Cumulative Preferred Stock, No Par Value:
Shares Authorized - 120
Shares Outstanding - 20
Convertible:
Shares Outstanding, $7.00 Series - 10	$	1,005		$	1,005
Nonredeemable:
Shares Outstanding, $7.00 Series - 1		79			79
Shares Outstanding, $4.75 Series - 10		1,000			1,000
TOTAL PREFERRED STOCK	$	2,084		$	2,084

Long-term Debt:
First Mortgage Bonds, 0.00% - 5.50%, due 2023 - 2059	$	203,440		$	203,892
Amortizing Secured Notes, 3.94% - 7.05%, due 2028 - 2046		46,939			47,613
State Revolving Trust Notes, 2.00% - 4.22%, due 2022 - 2041		8,658			7,510
Construction Loans, 0.00%		52,131			52,131
SUBTOTAL LONG-TERM DEBT		311,168			311,146
Add: Premium on Issuance of Long-term Debt		7,172			7,271
Less: Unamortized Debt Expense		(5,112	)		(5,166	)
Less: Current Portion of Long-term Debt		(6,710	)		(6,731	)
TOTAL LONG-TERM DEBT	$	306,518		$	306,520

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands except per share amounts)

	Common		Common
	Stock		Stock		Retained
	Shares		Amount		Earnings			Total

Balance at January 1, 2021		17,473	$	217,451	$	128,757		$	346,208
Net Income		-		-		6,907			6,907
Dividend Reinvestment & Common Stock Purchase Plan		5		322		-			322
Restricted Stock Award - Net - Employees		-		203		-			203
Cash Dividends on Common Stock ($0.2725 per share)		-		-		(4,762	)		(4,762	)
Cash Dividends on Preferred Stock		-		-		(30	)		(30	)
Balance at March 31, 2021		17,478	$	217,976	$	130,872		$	348,848

Balance at January 1, 2022		17,522	$	221,919	$	145,807		$	367,726
Net Income		-		-		12,100

SEC Form 10-Q filed by Middlesex Water Company