Artesian Resources Corp. :ARTNA-US: Earnings Analysis: Q3, 2016 By the Numbers : November 23, 2016

Artesian Resources Corp. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Artesian Resources Corp. – Aqua America, Inc., Cadiz Inc., Connecticut Water Service, Inc., Middlesex Water Company, SJW Group, American States Water Company, California Water Service Group and American Water Works Company, Inc. (WTR-US, CDZI-US, CTWS-US, MSEX-US, SJW-US, AWR-US, CWT-US and AWK-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 21.83 million, Net Earnings of USD 4.36 million.
  • Gross margins widened from 43.16% to 43.83% compared to the same period last year, operating (EBITDA) margins now 49.08% from 48.55%.
  • Year-on-year change in operating cash flow of 23.46% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 21.83 19.4 18.45 18.75 20.78
Revenue Growth (%YOY) 5.06 -0.72 2.71 3.71 6.03
Earnings (mil) 4.36 3.04 2.83 1.84 3.7
Earnings Growth (%YOY) 17.87 -5.94 11.51 -14.41 11.52
Net Margin (%) 19.97 15.68 15.34 9.79 17.8
EPS 0.48 0.33 0.31 0.21 0.41
Return on Equity (%) 12.86 9.05 8.52 5.61 11.51
Return on Assets (%) 3.94 2.8 2.63 1.7 3.46

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Market Share Versus Profits

Revenues History
Earnings History

ARTNA-US‘s change in revenue this period compared to the same period last year of 5.06% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that ARTNA-US is holding onto its market share. Also, for comparison purposes, revenues changed by 12.54% and earnings by 43.37% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 43.16% to 43.83% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 48.55% to 49.08% compared to the same period last year. For comparison, gross margins were 40.16% and EBITDA margins were 46.10% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

ARTNA-US‘s change in operating cash flow of 23.46% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 37.98% to 38.68% and (2) one-time items. The company’s pretax margins are now 31.42% compared to 29.82% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Artesian Resources Corp. is a holding company, which is engaged in the water resource management. The company through its subsidiaries offers water, wastewater and other services. It is focused on a wide spectrum of activities, including identifying new and dependable sources of water supply; developing wells, treatment plants and delivery systems to get water to customers; educating customers on the wise use of water and providing responsible wastewater management to assist with recharge of the aquifers. The company distributes and sells water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers throughout the states of Delaware, Maryland and Pennsylvania. Artesian Resources was founded in 1927 and is headquartered in Newark, DE.

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