York Water Q2: Revenue up, H1 net income down as costs and interest rise

The York Water Company (NASDAQ: YORW) - Q2 / H1 2025 snapshot

Key facts & figures
* Operating revenue - Q2 2025: $19,199k (Q2 2024: $18,750k). Six months: $37,655k (2024: $36,378k).
* Net income - Q2 2025: $5,052k (+1.2% vs Q2 2024 $4,993k). Six months: $8,690k (down 6.8% vs $9,320k).
* Earnings per share - Q2 basic/diluted: $0.35; Six months: $0.60 (2024 H1: $0.65).
* Operating income - Q2: $7,086k; H1: $13,369k.
* Operating expenses - Q2: $12,113k (up 3.6% YoY); H1: $24,286k (up 5.1% YoY).
* Interest on debt - Q2: $2,521k (+15.5% YoY); H1: $4,940k (+14.7% YoY).
* Allowance for funds used during construction (AFUDC) - Q2: $191k (Q2 2024: $347k); H1: $376k (2024: $1,481k).
* DSIC revenue - Q2: $531k (Q2 2024: $34k); H1: $917k (2024: $34k). DSIC tariff included at 3.90% effective July 1, 2025.
* Customers - Avg water customers Q2 2025: 73,459 (up 1,155 vs 2024); avg wastewater Q2: 7,017 (up 518).
* Capital spending - Utility plant additions YTD: $22,182k; expected remaining 2025 construction ~ $23,800k.
* Cash & liquidity - Cash and cash equivalents: $1k; accounts receivable, net: $7,484k; unbilled revenue: $3,493k.
* Debt & capital structure - Total long-term debt carrying value: $220,909k (June 30, 2025); long-term portion $218,056k. Line of credit borrowings: $28,539k. Debt / total capitalization: 48.5%.
* Interest rate swap - Fair value liability $525k (Level 2). Swap would require ~$535k payment if a credit-rating default were triggered. S&P affirmed rating A- (stable) on July 30, 2025.
* Tax rates - Effective tax rate Q2 2025: (7.8)% (Q2 2024: 9.4%); H1 2025: 1.2% (H1 2024: 10.8%).

Positive aspects on the income statement
* Top-line growth: revenue increased YoY - Q2 +2.4%, H1 +3.5%, driven by customer growth and DSIC recoveries.
* Operating income largely stable: Q2 operating income roughly flat vs prior year ($7,086k vs $7,062k).
* Strong operating cash flow: net cash provided by operations H1 2025 $13,603k (up from $12,841k).
* Regulatory recovery tools helping revenue: DSIC materially boosted 2025 results vs 2024 (Q2 $531k vs $34k).
* Credit profile intact: S&P A- (stable) supports access to capital and keeps derivative covenant risk manageable.

Negative aspects on the income statement
* Rising costs compressing earnings: operating expenses higher - Q2 +3.6% and H1 +5.1% YoY (depreciation, wages, water treatment, insurance cited).
* Interest expense increasing: interest on debt rose materially (Q2 +15.5%, H1 +14.7%) due to higher debt levels and rates, reducing net income.
* AFUDC decline removes non‑cash benefit: AFUDC reduced sharply YoY (H1 $376k vs $1,481k), lowering other income offset.
* YTD profitability pressure: six‑month net income down 6.8% and EPS down vs prior year H1.
* Low cash on balance sheet: nominal cash ($1k) with meaningful line-of-credit usage ($28,539k) - reliance on credit facility for liquidity.

Bottom line
The York Water Company shows modest revenue growth driven by customer additions and DSIC recoveries, and operating cash flow strengthened. Offsetting that are higher operating and interest costs, a drop in AFUDC, and greater reliance on the line of credit - factors that pushed H1 net income and EPS lower year‑over‑year despite top‑line gains. The A- rating and regulatory tools (DSIC, pending rate request) are positives; rising financing costs and increased depreciation from heavy capex remain the main headwinds.

Reference
* SEC 10‑Q (period ended June 30, 2025) - financials and MD&A filed Aug 12, 2025.