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MSEX Middlesex Water

Filed: 30 Oct 20, 4:17pm


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 September 30, 2020

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 October 29, 2020: Common Stock, No Par Value: 17,469,410 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

24

Item 4.Controls and Procedures

24

PART II.OTHER INFORMATION

Item 1.Legal Proceedings

25

Item 1A.Risk Factors

25

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.Defaults upon Senior Securities

25

Item 4.Mine Safety Disclosures

25

Item 5.Other Information

25

Item 6.Exhibits

25

SIGNATURES

26

 

 

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

 

Operating Revenues

$

39,920

$

37,769

$

106,965

$

101,859

 

Operating Expenses:

Operations and Maintenance

17,949

17,669

52,761

50,569

Depreciation

4,721

4,246

13,798

12,415

Other Taxes

4,073

3,871

11,318

10,913

 

Total Operating Expenses

26,743

25,786

77,877

73,897

 

Operating Income

13,177

11,983

29,088

27,962

 

Other Income (Expense):

Allowance for Funds Used During Construction

953

871

2,871

2,030

Other Income (Expense), net

444

(4

)

1,164

(142

)

 

Total Other Income, net

1,397

867

4,035

1,888

 

Interest Charges

1,906

1,996

5,521

4,984

 

Income before Income Taxes

12,668

10,854

27,602

24,866

 

Income Taxes

(69

)

(265

)

(2,516

)

(952

)

 

Net Income

12,737

11,119

30,118

25,818

 

Preferred Stock Dividend Requirements

30

30

90

102

 

Earnings Applicable to Common Stock

$

12,707

$

11,089

$

30,028

$

25,716

 

Earnings per share of Common Stock:

Basic

$

0.73

$

0.67

$

1.72

$

1.56

Diluted

$

0.72

$

0.66

$

1.71

$

1.55

 

Average Number of Common Shares Outstanding:

Basic

17,466

16,610

17,455

16,520

Diluted

17,581

16,757

17,570

16,673

See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

September 30,

December 31,

ASSETS

2020

2019

UTILITY PLANT:

Water Production

$

165,010

$

160,870

Transmission and Distribution

625,746

556,517

General

83,606

83,043

Construction Work in Progress

73,340

75,520

TOTAL

947,702

875,950

Less Accumulated Depreciation

181,661

170,220

UTILITY PLANT - NET

766,041

705,730

 

CURRENT ASSETS:

Cash and Cash Equivalents

5,346

2,230

Accounts Receivable, net

15,567

11,908

Unbilled Revenues

8,823

7,183

Materials and Supplies (at average cost)

4,762

5,445

Prepayments

3,369

2,367

TOTAL CURRENT ASSETS

37,867

29,133

 

AND OTHER ASSETS:

Operating Lease Right of Use Asset

5,390

5,944

Preliminary Survey and Investigation Charges

3,307

2,054

Regulatory Assets

112,176

110,479

Restricted Cash

22,841

44,269

Non-utility Assets - Net

10,845

10,370

Other

1,367

1,899

TOTAL DEFERRED CHARGES AND OTHER ASSETS

155,926

175,015

TOTAL ASSETS

$

959,834

$

909,878

 

CAPITALIZATION AND LIABILITIES

CAPITALIZATION:

Common Stock, No Par Value

$

216,866

215,125

Retained Earnings

125,240

108,667

TOTAL COMMON EQUITY

342,106

323,792

Preferred Stock

2,084

2,084

Long-term Debt

234,489

230,777

TOTAL CAPITALIZATION

578,679

556,653

 

CURRENT

Current Portion of Long-term Debt

7,239

7,178

LIABILITIES:

Notes Payable

36,500

20,000

Accounts Payable

24,860

23,306

Accrued Taxes

10,642

7,635

Accrued Interest

1,937

2,031

Unearned Revenues and Advanced Service Fees

1,311

1,211

Other

2,865

3,620

TOTAL CURRENT LIABILITIES

85,354

64,981

 

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

 

DEFERRED CREDITS

Customer Advances for Construction

25,100

23,905

AND OTHER LIABILITIES:

Lease Obligations

5,214

5,732

Accumulated Deferred Income Taxes

58,970

54,408

Employee Benefit Plans

33,310

34,671

Regulatory Liabilities

62,979

69,152

Other

2,432

2,546

TOTAL DEFERRED CREDITS AND OTHER LIABILITIES

188,005

190,414

 

CONTRIBUTIONS IN AID OF CONSTRUCTION

107,796

97,830

TOTAL CAPITALIZATION AND LIABILITIES

$

959,834

$

909,878

See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended September 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income

$

30,118

$

25,818

Adjustments to Reconcile Net Income to

Net Cash Provided by Operating Activities:

Depreciation and Amortization

15,595

12,858

Provision for Deferred Income Taxes and Investment Tax Credits

(10,991

)

(8,379

)

Equity Portion of Allowance for Funds Used During Construction (AFUDC)

(1,789

)

(1,330

)

Cash Surrender Value of Life Insurance

(166

)

(187

)

Stock Compensation Expense

820

409

Changes in Assets and Liabilities:

Accounts Receivable

(3,659

)

(1,645

)

Unbilled Revenues

(1,640

)

(2,124

)

Materials & Supplies

683

252

Prepayments

(1,002

)

(933

)

Accounts Payable

1,554

853

Accrued Taxes

3,007

(2,098

)

Accrued Interest

(94

)

(490

)

Employee Benefit Plans

1,234

(640

)

Unearned Revenue & Advanced Service Fees

100

12

Other Assets and Liabilities

3,520

 

972

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

37,290

23,348

CASH FLOWS FROM INVESTING ACTIVITIES:

Utility Plant Expenditures, Including AFUDC of $1,082 in 2020, $700 in 2019

(70,785

)

(61,220

)

 

NET CASH USED IN INVESTING ACTIVITIES

(70,785

)

(61,220

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Redemption of Long-term Debt

(6,391

)

(6,315

)

Proceeds from Issuance of Long-term Debt

10,319

82,446

Net Short-term Bank Borrowings

16,500

10,000

Deferred Debt Issuance Expense

(41

)

(754

)

Common Stock Issuance Expense

(37

)

(22

)

Proceeds from Issuance of Common Stock

921

12,449

Payment of Common Dividends

(13,418

)

(11,893

)

Payment of Preferred Dividends

(90

)

(102

)

Construction Advances and Contributions-Net

7,420

3,480

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

15,183

89,289

NET CHANGES IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(18,312

)

(51,417

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

46,499

5,661

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

28,187

$

57,078

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:

Utility Plant received as Construction Advances and Contributions

$

3,747

$

5,375

Long term Debt Deobligation

$

-

$

130

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash Paid During the Year for:

Interest

$

5,834

$

5,929

Interest Capitalized

$

1,082

$

700

Income Taxes

$

1,783

$

6,752

See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT

(Unaudited)

(In thousands)

September 30,

December 31,

2020

2019

Common Stock, No Par Value

Shares Authorized - 40,000

Shares Outstanding - 2020 - 17,469; 2019 - 17,434

$

216,866

$

215,125

 

Retained Earnings

125,240

108,667

TOTAL COMMON EQUITY

$

342,106

$

323,792

 

Cumulative Preferred Stock, No Par Value:

Shares Authorized - 120

Shares Outstanding - 2020 - 20: 2019 - 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:

8.05%, Amortizing Secured Note, due December 20, 2021

$

415

$

643

6.25%, Amortizing Secured Note, due May 19, 2028

3,220

3,535

6.44%, Amortizing Secured Note, due August 25, 2030

2,777

2,987

6.46%, Amortizing Secured Note, due September 19, 2031

3,057

3,267

4.22%, State Revolving Trust Note, due December 31, 2022

147

175

3.60%, State Revolving Trust Note, due May 1, 2025

1,288

1,405

3.30% State Revolving Trust Note, due March 1, 2026

266

309

3.49%, State Revolving Trust Note, due January 25, 2027

307

349

4.03%, State Revolving Trust Note, due December 1, 2026

419

446

4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021

4

60

0.00%, State Revolving Fund Bond, due August 1, 2021

11

50

3.64%, State Revolving Trust Note, due July 1, 2028

203

214

3.64%, State Revolving Trust Note, due January 1, 2028

66

69

3.45%, State Revolving Trust Note, due August 1, 2031

793

851

6.59%, Amortizing Secured Note, due April 20, 2029

2,994

3,255

7.05%, Amortizing Secured Note, due January 20, 2030

2,333

2,521

5.69%, Amortizing Secured Note, due January 20, 2030

4,786

5,171

4.45%, Amortizing Secured Note, due April 20, 2040

8,617

8,946

4.47%, Amortizing Secured Note, due April 20, 2040

3,197

3,320

3.75%, State Revolving Trust Note, due July 1, 2031

1,765

1,829

2.00%, State Revolving Trust Note, due February 1, 2036

960

1,013

2.00%, State Revolving Trust Note, due November 1, 2038

1,579

1,309

3.75%, State Revolving Trust Note, due November 30, 2030

919

955

0.00% Construction Loans

50,536

40,467

First Mortgage Bonds:

0.00%, Series BB, due August 1, 2021

119

241

4.00% to 5.00%, Series CC, due August 1, 2021

164

331

0.00%, Series EE, due August 1, 2023

1,036

1,456

3.00% to 5.50%, Series FF, due August 1, 2024

1,870

2,440

0.00%, Series GG, due August 1, 2026

542

632

4.00% to 5.00%, Series HH, due August 1, 2026

620

710

0.00%, Series II, due August 1, 2024

338

429

3.40% to 5.00%, Series JJ, due August 1, 2027

500

588

0.00%, Series KK, due August 1, 2028

719

807

5.00% to 5.50%, Series LL, due August 1, 2028

846

928

0.00%, Series MM, due August 1, 2030

937

1,037

3.00% to 4.375%, Series NN, due August 1, 2030

1,105

1,190

0.00%, Series OO, due August 1, 2031

1,655

1,806

2.00% to 5.00%, Series PP, due August 1, 2031

600

660

5.00%, Series QQ, due October 1, 2023

9,915

9,915

3.80%, Series RR, due October 1, 2038

22,500

22,500

4.25%, Series SS, due October 1, 2047

23,000

23,000

0.00%, Series TT, due August 1, 2032

1,806

1,957

3.00% to 3.25%, Series UU, due August 1, 2032

705

755

0.00%, Series VV, due August 1, 2033

1,861

2,004

3.00% to 5.00%, Series WW, due August 1, 2033

715

755

0.00%, Series XX, due August 1, 2047

10,247

10,627

3.00% to 5.00%, Series YY, due August 1, 2047

3,710

3,785

0.00%, Series 2018A, due August 1, 2047

6,247

6,678

3.00% to 5.00%, Series 2018B, due August 1, 2047

2,210

2,320

4.00%, Series 2019A, due August 1, 2059

32,500

32,500

5.00%, Series 2019B, due August 1, 2059

21,200

21,200

SUBTOTAL LONG-TERM DEBT

238,326

234,397

Add: Premium on Issuance of Long-term Debt

7,766

8,064

Less: Unamortized Debt Expense

(4,364

)

(4,506

)

Less: Current Portion of Long-term Debt

(7,239

)

(7,178

)

TOTAL LONG-TERM DEBT

$

234,489

$

230,777

See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)

Common

Common

Stock

Stock

Retained

Shares

Amount

Earnings

Total

 

For the Three Months Ended September 30, 2019

Balance at July 1, 2019

16,554

$

165,138

$

98,146

$

263,284

Net Income

11,119

11,119

Dividend Reinvestment & Common Stock Purchase Plan

92

5,368

5,368

Restricted Stock Award, Net - Employees

1

172

172

Shares Forefeited

(18

)

(466

)

(466

)

Conversion of $8.00 Convertible Preferred Stock

41

350

350

Cash Dividends on Common Stock ($0.2400 per share)

(3,987

)

(3,987

)

Cash Dividends on Preferred Stock

(30

)

(30

)

Common Stock Expenses

(15

)

(15

)

Balance at September 30, 2019

16,670

$

170,562

$

105,233

$

275,795

 

For the Nine Months Ended September, 2019

Balance at January 1, 2019

16,403

$

157,354

$

91,433

$

248,787

Net Income

25,818

25,818

Dividend Reinvestment & Common Stock Purchase Plan

222

12,449

12,449

Restricted Stock Award, Net - Employees

18

679

679

Stock Award - Board Of Directors

4

196

196

Shares Forefeited

(18

)

(466

)

(466

)

Conversion of $8.00 Convertible Preferred Stock

41

350

350

Cash Dividends on Common Stock ($0.7200 per share)

(11,893

)

(11,893

)

Cash Dividends on Preferred Stock

(102

)

(102

)

Common Stock Expenses

(23

)

(23

)

Balance at September 30, 2019

16,670

$

170,562

$

105,233

$

275,795

 

For the Three Months Ended September 30, 2020

Balance at July 1, 2020

17,464

$

216,365

$

117,008

$

333,373

Net Income

12,737

12,737

Dividend Reinvestment & Common Stock Purchase Plan

5

313

313

Restricted Stock Award - Net - Employees

188

188

Cash Dividends on Common Stock ($0.2563 per share)

(4,475

)

(4,475

)

Cash Dividends on Preferred Stock

(30

)

(30

)

Balance at September 30, 2020

17,469

 

 

$

216,866

 

$

125,240

 

$

342,106

 

For the Nine Months Ended September 30, 2020

Balance at January 1, 2020

17,434

$

215,125

$

108,667

$

323,792

Net Income

30,118

30,118

Dividend Reinvestment & Common Stock Purchase Plan

14

921

921

Restricted Stock Award - Net - Employees

17

575

575

Restricted Stock Award - Board Of Directors

4

245

245

Cash Dividends on Common Stock ($0.7688 per share)

(13,418

)

(13,418

)

Cash Dividends on Preferred Stock

(90

)

(90

)

Common Stock Expenses

(37

)

(37

)

Balance at September 30, 2020

17,469

$

216,866

$

125,240

$

342,106

See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy) Inc. (USA-PA), and Twin Lakes Utilities, Inc. (Twin Lakes). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly-owned subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the 2019 Annual Report on Form 10-K (the 2019 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to present fairly the financial position as of September 30, 2020, the results of operations for the three month and nine month periods ended September 30, 2020 and 2019 and cash flows for the nine month periods ended September 30, 2020 and 2019. Information included in the Condensed Consolidated Balance Sheet as of December 31, 2019, has been derived from the Company’s audited financial statements for the year ended December 31, 2019 included in the 2019 Form 10-K.

Recent Developments

Novel Coronavirus (COVID-19) - On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact on changing economic conditions due to COVID-19 is uncertain and could affect the Company’s results of operations, financial condition and liquidity in the future. While the Company’s operations and capital construction program have not been significantly disrupted to date from COVID-19, we are unable to assess with certainty the impact that COVID-19 will have on our business, our customers and our vendors prospectively, due to numerous uncertainties, including the severity of the pandemic, the duration of the outbreak and actions which could potentially be taken by governmental and/or regulatory authorities.

The New Jersey Board of Public Utilities (NJBPU) and the Delaware Public Service Commission (DEPSC) have allowed for potential future recovery of COVID-19 related incremental costs through customer rates by the regulated utilities under their respective jurisdictions. Neither jurisdiction has yet to establish a timetable or definitive method for formally providing for cost recovery. We will continue to monitor the COVID-19 situation and evaluate its impact on the Company’s business, results of operations, financial condition and liquidity.

Contract Operations – In May 2020, USA, through a competitive bidding process, was awarded a ten-year, $8.3 million contract to operate and maintain the Borough of Highland Park, New Jersey’s water and wastewater systems. The contract commenced July 1, 2020.

Recently Adopted Accounting Guidance

Credit Losses on Financial Instruments - The Financial Accounting Standards Board issued guidance on the measurement of credit losses on financial instruments, including trade receivables, which requires expected credit losses to be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. The new guidance became effective January 1, 2020. For the Company, this applies primarily to accounts receivable and unbilled revenue balances. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Expected credit losses on accounts receivable and unbilled revenues are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts. Customer accounts are written off when collection efforts have been exhausted.

There are no other new adopted or proposed accounting guidance that the Company is aware of that could have a material impact on the Company’s financial statements.

Note 2 Rate and Regulatory Matters

Middlesex – In March 2020, the NJBPU approved Middlesex’s petition to reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional costs of $0.6 million for the purchase of treated water from a non-affiliated water utility regulated by the NJBPU. The new PWAC rate became effective on April 4, 2020. A PWAC is a rate mechanism that allows for recovery of increased purchased water costs between base rate case filings. It is reset to zero once those increased costs are included in base rates.

Tidewater - Effective July 1, 2020, Tidewater increased its DEPSC-approved Distribution System Improvement Charge (DSIC) rate, which is expected to generate revenue of approximately $0.5 million annually. A DSIC is a rate-mechanism that allows water utilities to recover investments in, and generate a return on, qualifying capital improvements made between base rate proceedings.

Southern Shores - Effective January 1, 2020, the DEPSC approved the renewal of a multi-year agreement for water service to a 2,200 unit condominium community in Sussex County, Delaware. Under the agreement, current rates will remain in effect until December 31, 2024, but should there be unanticipated capital expenditures or regulatory related changes in operating expenses exceeding certain thresholds during this time period, rates are permitted to be adjusted to reflect such cost changes. Thereafter, rate increases, if any, cannot exceed the lesser of the regional Consumer Price Index or 3%. The new agreement expires on December 31, 2029.

Twin Lakes - In March 2020, the Pennsylvania Public Utilities Commission (PAPUC) approved a $0.1 million increase in annualized base rates for Twin Lakes. In July 2019, Twin Lakes had filed a petition with the PAPUC seeking permission to increase annualized base rates by approximately $0.2 million, necessitated by capital infrastructure investments and increased operations and maintenance costs. The new rates became effective April 19, 2020.

COVID-19 - The NJBPU and the DEPSC have allowed for potential future recovery in customer rates of additional costs related to COVID-19 (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments).

Note 3 – Capitalization

Common Stock - During the nine months ended September 30, 2020 and 2019, there were 14,223 common shares (approximately $0.9 million) and 221,558 common shares ($12.4 million), respectively, issued under the Middlesex Water Company Investment Plan (the Investment Plan). In January 2019, the Company had activated a limited share purchase discount feature of the Investment Plan. A 5% discount was available until August 2019, when the 0.2 million share purchase limit was reached and the discount feature terminated.

Long-term Debt - Subject to regulatory approval, the Company periodically issues long-term debt to fund its investments in utility plant. To the extent possible, the Company finances qualifying capital projects under State Revolving Fund (SRF) loan programs in New Jersey and Delaware. These government programs provide financing at interest rates that are typically below rates available in the broader financial markets. A portion of the borrowings under the New Jersey SRF is interest-free. Under the New Jersey SRF program, borrowers first enter into a construction loan agreement with the New Jersey Infrastructure Bank (NJIB) at a below market interest rate. The interest rate on the Company’s current construction loan borrowings is zero percent (0%). When construction on the qualifying project is substantially complete, NJIB will coordinate the conversion of the construction loan into a long-term securitized loan with a portion of the principal balance having a stated interest rate of zero percent (0%) and a portion of the principal balance at a market interest rate at the time of closing using the credit rating of the State of New Jersey. The term of the long-term loans currently offered through the NJIB is up to thirty years.

The NJIB generally schedules its long-term debt financings in May and November. Middlesex currently has two projects that are in the construction loan phase of the New Jersey SRF program as follows:

1)

In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the construction of a large-diameter transmission pipeline from the Carl J. Olsen water treatment plant in Edison, New Jersey and interconnect with our distribution system. Middlesex closed on a $43.5 million NJIB interest-free construction loan in August 2018. Through September 30, 2020, Middlesex has drawn a total of $41.9 million and expects to continue to draw down on this construction loan through the fourth quarter of 2020.

2)

In March 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the 2018 RENEW Program, which is an ongoing initiative to eliminate unlined water distribution mains in the Middlesex system. Middlesex closed on an $8.7 million NJIB construction loan in September 2018 and completed withdrawal of the proceeds in October 2019.

The Company expects that the large-diameter transmission pipeline and the 2018 RENEW construction loans will be included in the NJIB May 2021 long-term debt financing program.

In September 2018, the NJIB announced changes to the SRF program for project funding priority ranking, the proportions of interest free loans and market interest rate loans and overall loan limits on interest free loan balances to investor-owned water utilities. These changes affect SRF projects for which the construction loan closes after September 2018. Under the amended regulations, the principal balance having a stated interest rate of zero percent (0%) is 25% of the loan balance with the remaining 75% having a market based interest rate. This is limited to the first $10.0 million of the loan. Loan amounts above $10.0 million do not participate in the 0% rate program, but do participate at the market based interest rate. As a result of all these changes, the Company’s future capital funding plan does not include participating in the NJIB SRF program unless the terms are further amended to become more favorable to the Company.

In August 2019, Middlesex priced and closed on a New Jersey Economic Development Authority (NJEDA) debt financing transaction of $53.7 million by issuing First Mortgage Bonds (FMB) designated as Series 2019A ($32.5 million at coupon interest rate of 4.0%) and Series 2019B ($21.2 million at coupon interest rate of 5.0%). The proceeds, including an issuance premium of $7.1 million, are being used to finance several projects under the Water For Tomorrow capital program initiated by the Company to upgrade and replace aging water utility infrastructure. The total proceeds of $60.8 million, initially recorded as Restricted Cash on the balance sheet, are held in escrow by a bond trustee and are drawn down by requisition for the qualifying projects. Through September 30, 2020, Middlesex has drawn a total of $38.1 million and currently expects to draw the remaining $22.7 million of proceeds, currently included in Restricted Cash, through the second quarter of 2021.

In May 2020, Middlesex received approval from the NJBPU to borrow up to $100 million, in one or more private placement transactions to help fund Middlesex’s multi-year capital construction program. Middlesex expects to close on a $40.0 million loan on or about November 18, 2020. Middlesex will issue a FMB with a payment maturity date of November 2050 at an interest rate of 2.90%.

In March 2018, the DEPSC approved Tidewater’s request to borrow up to $0.9 million under the Delaware SRF program to fund the replacement of an entire water distribution system of a small Delaware community. Tidewater closed on the SRF loan in May 2018. In April 2019, Tidewater received approval from the DEPSC to increase the borrowing to $1.7 million based on revised project cost estimates. Tidewater closed on the additional SRF loan in October 2019 and completed withdrawal of the proceeds in April 2020.

Fair Value of Financial Instruments - The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of FMBs and SRF Bonds (collectively, the Bonds) issued by Middlesex is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of notes payable and the Bonds in the table below are classified as Level 2 measurements. The carrying amount and fair value of the Bonds were as follows:

(In Thousands)

September 30, 2020

December 31, 2019

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value

Bonds

$147,681

$158,579

$151,361

$160,772

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note”, “State Revolving Trust Note” and “Construction Loans” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was $90.9 million and $83.0 million at September 30, 2020 and December 31, 2019, respectively. Customer advances for construction have carrying amounts of $25.1 million and $23.9 million as of September 30, 2020 and December 31, 2019, respectively. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

Note 4 – Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of the Convertible Preferred Stock $7.00 Series in 2020 and the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 Series in 2019.

(In Thousands Except per Share Amounts)

Three Months Ended September 30,

2020

2019

Basic:

Income

Shares

Income

Shares

Net Income

$

12,737

17,466

$

11,119

16,610

Preferred Dividend

(30

)

(30

)

Earnings Applicable to Common Stock

$

12,707

17,466

$

11,089

16,610

 

Basic EPS

$

0.73

$

0.67

 

Diluted:

Earnings Applicable to Common Stock

$

12,707

17,466

$

11,089

16,610

$7.00 Series Preferred Dividend

17

115

17

115

$8.00 Series Preferred Dividend

32

Adjusted Earnings Applicable to Common Stock

$

12,724

17,581

$

11,106

16,757

 

Diluted EPS

$

0.72

$

0.66

(In Thousands Except per Share Amounts)

Nine Months Ended September 30,

2020

2019

Basic:

Income

Shares

Income

Shares

Net Income

$

30,118

17,455

$

25,818

16,520

Preferred Dividend

(90

)

(102

)

Earnings Applicable to Common Stock

$

30,028

17,455

$

25,716

16,520

 

Basic EPS

$

1.72

$

1.56

 

Diluted:

Earnings Applicable to Common Stock

$

30,028

17,455

$

25,716

16,520

$7.00 Series Preferred Dividend

50

115

50

115

$8.00 Series Preferred Dividend

12

38

Adjusted Earnings Applicable to Common Stock

$

30,078

17,570

$

25,778

16,673

 

Diluted EPS

$

1.71

$

1.55

Note 5 – Business Segment Data

The Company has identified 2 reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Company is subject to regulations as to its rates, services and other matters by New Jersey, Delaware and Pennsylvania with respect to utility services within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Inter-segment transactions relating to operational costs are treated as pass-through expenses. Finance charges on inter-segment loan activities are based on interest rates that are below what would normally be charged by a third party lender.

(In Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

Operations by Segments:

2020

2019

2020

2019

Revenues:

Regulated

$

37,040

$

35,000

$

98,266

$

93,342

Non – Regulated

3,204

3,020

9,345

9,032

Inter-segment Elimination

(324

)

(251

)

(646

)

(515

)

Consolidated Revenues

$

39,920

$

37,769

$

106,965

$

101,859

 

Operating Income:

Regulated

$

12,119

$

11,001

$

26,598

$

24,937

Non – Regulated

1,058

982

2,490

3,025

Consolidated Operating Income

$

13,177

$

11,983

$

29,088

$

27,962

 

Net Income:

Regulated

$

11,993

$

10,409

$

28,364

$

23,700

Non – Regulated

744

710

1,754

2,118

Consolidated Net Income

$

12,737

$

11,119

$

30,118

$

25,818

 

Capital Expenditures:

Regulated

$

25,266

$

25,437

$

70,398

$

60,998

Non – Regulated

101

85

387

222

Total Capital Expenditures

$

25,367

$

25,522

$

70,785

$

61,220

As of

As of

September 30,

December 31,

2020

2019

Assets:

Regulated

$

959,494

$

910,081

Non – Regulated

10,104

9,686

Inter-segment Elimination

(9,764

)

(9,889

)

Consolidated Assets

$

959,834

$

909,878

Note 6 – Short-term Borrowings

The Company maintains lines of credit aggregating $140.0 million.

(Millions)

As of September 30, 2020

Line of Credit

Renewal Date

Outstanding

Available

Maximum

Credit Type

Bank of America

$

2.0

$

58.0

$

60.0

Uncommitted

December 17, 2020

PNC Bank

27.0

41.0

68.0

Committed

January 31, 2022

CoBank

7.5

4.5

12.0

Committed

November 30, 2023

$

36.5

$

103.5

$

140.0

The interest rates for borrowings under the lines of credit are set using the London InterBank Offered Rate (LIBOR) and adding a credit spread, which varies by financial institution. There is no requirement for a compensating balance under any of the established lines of credit. The Bank of America line of credit is renewed on an annual basis prior to its expiration.

The weighted average interest rate on the outstanding borrowings at September 30, 2020 under these credit lines is 1.18%.

The weighted average daily amounts of borrowings outstanding under the Company’s credit lines and the weighted average interest rates on those amounts were as follows:

(In Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Average Daily Amounts Outstanding

$

35,576

$

58,259

$

31,372

$

56,881

Weighted Average Interest Rates

1.24

%

3.26

%

1.63

%

3.45

%

The maturity dates for the $36.5 million of borrowings outstanding as of September 30, 2020 are in October 2020 through December 2020 and are renewable at the discretion of the Company.

Note 7 – Commitments and Contingent Liabilities

Water Supply - Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023, which provides for an average purchase of 27.0 million gallons a day (mgd). Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated NJBPU-regulated water utility for the purchase of treated water. This agreement, which expires February 28, 2026, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional purchases if needed.

Tidewater contracts with the City of Dover, Delaware to purchase 15.0 million gallons of treated water annually.

Purchased water costs are shown below:

(In Thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Treated

$

933

$

818

$

2,657

$

2,415

Untreated

878

878

2,530

2,521

Total Costs

$

1,811

$

1,696

$

5,187

$

4,936

Guarantees - As part of an agreement with the County of Monmouth, New Jersey (County), Middlesex serves as guarantor of the performance of Applied Water Management, Inc. (AWM), an unaffiliated wastewater treatment contractor and partner, to operate a County-owned leachate pretreatment facility at the Monmouth County Reclamation Center in Tinton Falls, New Jersey. The performance guaranty is effective through 2029 unless another guarantor, acceptable to the County, replaces Middlesex before such date. In addition, Middlesex may provide operational support to the facility, as needed. AWM and its parent company, Natural Systems Utilities (NSU), serve as guarantor to Middlesex with respect to the performance of AWM and have indemnified Middlesex against any claims that may arise under the Middlesex guaranty to the County.

If requested to perform under the guaranty to the County and, if AWM and NSU, as guarantor to Middlesex, do not fulfill their obligations to indemnify Middlesex against any claims that may arise under the Middlesex guaranty to the County, Middlesex would potentially be required to fulfill the remaining operational commitment of AWM. The liability and asset for the guaranty are included in Other Non-Current Liabilities and Other Non-Current Assets on the balance sheet and are approximately $1.3 million and $1.4 million as of September 30, 2020 and December 31, 2019, respectively.

In November 2019, Middlesex was notified that the County terminated its Agreement with AWM. AWM had initiated legal action against the County in the Superior Court of New Jersey, Monmouth County that in part contests the County’s exercise of this termination. The County filed a counter-claim against NSU and has brought Middlesex into the suit as a third-party defendant. We continue to monitor this litigation; however, given the cancellation of the underlying operating contract by the County, we do not anticipate the ultimate outcome will have a material impact on the Company’s results of operations or financial condition.

Leases - The Company determines if a contractual arrangement meets the criteria to be characterized as a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

The Company has entered into an operating lease of office space for administrative purposes, expiring in 2030. The Company has not entered into any financing leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such, the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining the present value of lease payments.

Given the impact of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and were $0.2 million for each of the three months ended September 30, 2020 and 2019, respectively, and $0.6 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively.

Information related to operating lease ROU assets and lease liabilities is as follows:

(In Millions)

As of September 30, 2020

As of December 31, 2019

ROU Asset at Lease Inception

$

7.3

$

7.3

Accumulated Amortization

(1.9

)

(1.4

)

Current ROU Asset

$

5.4

$

5.9

The Company’s future minimum operating lease commitments are as follows:

(In Millions)

September 30, 2020

2020

$

0.2

2021

0.8

2022

0.8

2023

0.8

2024

0.8

Thereafter

4.4

Total Lease Payments

$

7.8

Imputed Interest

(1.8

)

Present Value of Lease Payments

6.0

Less Current Portion*

(0.8

)

Non-Current Lease Liability

$

5.2

 

*Included in Other Current Liabilities

Construction - The Company has forecasted to spend approximately $113 million for its construction program in 2020. The Company has entered into several construction contracts that, in the aggregate, obligate expenditure of an estimated $41 million in the future. The timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain projects and could be impacted if the effects of the COVID-19 pandemic continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments).

Contingencies - Based on our operations in the heavily-regulated water and wastewater industries, the Company is routinely involved in disputes, claims, lawsuits and other regulatory and legal matters, including responsibility for fines and penalties relative to regulatory compliance. At this time, Management does not believe the final resolution of any such matters, whether asserted or unasserted, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. In addition, the Company maintains business insurance coverage that may mitigate the effect of any current or future loss contingencies.

Change in Control Agreements - The Company has Change in Control Agreements with certain of its officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.

Note 8 – Employee Benefit Plans

Pension Benefits - The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but do participate in a defined contribution plan that provides for a potential annual contribution in an amount that is at the discretion of the Company. In order to be eligible for a contribution, the participant must be employed by the Company on December 31st of the year to which the contribution relates. For the three and nine month periods ended September 30, 2020, the Company did not make any Pension Plan cash contributions. For the three and nine month periods ended September 30, 2019, the Company made Pension Plan cash contributions of $1.3 million and $2.3 million, respectively. The Company expects to make Pension Plan cash contributions of approximately $3.0 million over the remainder of the current year. The Company also maintains an unfunded supplemental retirement benefit plan for certain active and retired Company officers and currently pays $0.4 million in annual benefits to the retired participants.

Other Postretirement Benefits - The Company’s retirement plan other than pensions (Other Benefits Plan) covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For the three month period ended September 30, 2020, the Company did not make any Other Benefits Plan cash contributions. For the nine month period ended September 30, 2020, the Company made Other Benefits Plan cash contributions of $0.3 million. For the three and nine month periods ended September 30, 2019, the Company made Other Benefits Plan cash contributions of $0.2 million and $0.6 million, respectively. The Company does not expect to make any additional Other Benefits Plan cash contributions over the remainder of the current year.

The following tables set forth information relating to the Company’s periodic costs for its employee retirement benefit plans:

(In Thousands)

Pension Benefits

Other Benefits

Three Months Ended September 30,

2020

2019

2020

2019

Service Cost

$

609

$

543

$

248

$

210

Interest Cost

775

857

425

496

Expected Return on Assets

(1,409

)

(1,173

)

(721

)

(613

)

Amortization of Unrecognized Losses

515

404

338

330

Net Periodic Benefit Cost*

$

490

$

631

$

290

$

423

(In Thousands)

Pension Benefits

Other Benefits

Nine Months Ended September 30,

2020

2019

2020

2019

Service Cost

$

1,826

$

1,628

$

745

$

630

Interest Cost

2,324

2,570

1,274

1,488

Expected Return on Assets

(4,226

)

(3,520

)

(2,163

)

(1,838

)

Amortization of Unrecognized Losses

1,544

1,213

1,014

989

Net Periodic Benefit Cost*

$

1,468

$

1,891

$

870

$

1,269

*Service cost is included in Operations and Maintenance expense on Consolidated Statements of Income; all other amounts are included in Other Income/Expense, net.

Note 9 – Revenue Recognition from Contracts with Customers

The Company’s revenues are primarily generated from regulated tariff-based sales of water and wastewater services to residential, industrial, commercial, fire protection and wholesale customers, as well as non-regulated operation and maintenance contracts for services on water and wastewater systems owned by others. Revenue from contracts with customers is recognized when control of a promised good or service is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.

The Company’s residential customers are billed quarterly while most of the Company’s industrial, commercial, fire-protection and wholesale customers are billed monthly. Payments by customers are due between 15 and 30 days after the invoice date. The Company recognizes revenue as the water and wastewater services are delivered to customers and records unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing factors such as historical customer data, regional weather indicators and general economic conditions in its service territories. Unearned Revenues and Advance Service Fees include fixed service charge billings in advance of service provided to Tidewater customers and are recognized as service is provided.

Non-regulated service contract revenues consist of base service fees, as well as fees for additional billable services provided to customers, are billed monthly and are due within 30 days after the invoice date. The Company considers the amounts billed to represent the value of these services provided to customers. These contracts expire at various times through June 2030 and thus contain remaining performance obligations for which the Company expects to recognize revenue in the future. These contracts also contain termination provisions.

Substantially all operating revenues and accounts receivable are from contracts with customers. The Company records an allowance for doubtful accounts based on historical write-offs combined with an evaluation of current economic conditions within its service territories.

The Company’s contracts do not contain any significant financing components.

The Company’s operating revenues are comprised of the following:

(In Thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Regulated Tariff Sales

Residential

$

22,340

$

20,693

$

58,475

$

54,453

Commercial

4,660

4,487

11,678

11,539

Industrial

2,629

2,723

6,885

7,242

Fire Protection

3,129

3,100

9,235

9,211

Wholesale

4,028

3,813

11,553

10,582

Non-Regulated Contract Operations

3,100

2,919

9,034

8,729

Total Revenue from Contracts with Customers

$

39,886

$

37,735

$

106,860

$

101,756

Other Regulated Revenues

255

184

441

315

Other Non-Regulated Revenues

104

101

311

303

Inter-segment Elimination

(325

)

(251

)

(647

)

(515

)

Total Revenue

$

39,920

$

37,769

$

106,965

$

101,859

Note 10 – Income Taxes

As part of its 2014 Federal income tax return, the Company adopted the final Internal Revenue Service (IRS) tangible property regulations and changed its accounting method for the tax treatment of expenditures that qualified as deductible repairs. The adoption resulted in a net reduction of $17.6 million in taxes previously remitted to the IRS, for which the Company has already sought and received the tax refunds. A reserve provision against refunded taxes of $2.3 million was recorded in 2015 at the time of filing its change in accounting method based on a possible challenge by the IRS during an audit examination. The Company’s 2014 federal income tax return was subsequently selected for examination by the IRS. In 2018, the Company increased its income tax reserve provision to $4.1 million. During the first quarter of 2019, the Company agreed to certain modifications of its accounting method for expenditures that qualify as deductible repairs and the IRS concluded its audit of the Company’s 2014 federal income tax return. The modifications also impacted the Company’s filed 2015, 2016 and 2017 federal income tax returns. In 2019, the Company paid $2.7 million in connection with the conclusion and closing of the 2014-2017 tax return audits and $0.1 million in interest in connection with the conclusion and closing of the 2014 and 2015 tax return audits. As of September 30, 2020, the Company has reduced its income tax reserve provision and interest expense liability to $0.5 million and $0.2 million, respectively.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Middlesex Water Company (Middlesex or the Company) included elsewhere herein and with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Forward-Looking Statements

Certain statements contained in this periodic report and in the documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The Company intends that these statements be covered by the safe harbors created under those laws. They include, but are not limited to statements as to:

-

expected financial condition, performance, prospects and earnings of the Company;

-

strategic plans for growth;

-

the amount and timing of rate increases and other regulatory matters, including the recovery of certain costs recorded as regulatory assets;

-

the Company’s expected liquidity needs during the upcoming fiscal year and beyond and the sources and availability of funds to meet its liquidity needs;

-

expected customer rates, consumption volumes, service fees, revenues, margins, expenses and operating results;

-

financial projections;

-

the expected amount of cash contributions to fund the Company’s retirement benefit plans, anticipated discount rates and rates of return on plan assets;

-

the ability of the Company to pay dividends;

-

the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;

-

the safety and reliability of the Company’s equipment, facilities and operations;

-

the Company’s plans to renew municipal franchises and consents in the territories it serves;

-

trends; and

-

the availability and quality of our water supply.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from anticipated results and outcomes include, but are not limited to:

-

effects of general economic conditions;

-

increases in competition for growth in non-franchised markets to be potentially served by the Company;

-

ability of the Company to adequately control selected operating expenses which are necessary to maintain safe and proper utility services, and which may be beyond the Company’s control;

-

availability of adequate supplies of water;

-

actions taken by government regulators, including decisions on rate increase requests;

-

new or modified water quality standards;

-

weather variations and other natural phenomena impacting utility operations;

-

financial and operating risks associated with acquisitions and, or privatizations;

-

acts of war or terrorism;

-

changes in the pace of housing development;

-

availability and cost of capital resources;

-

impact of the Novel Coronavirus (COVID-19) or other pandemic; and

-

other factors discussed elsewhere in this quarterly report.

Many of these factors are beyond the Company’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which only speak to the Company’s understanding as of the date of this report. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

For an additional discussion of factors that may affect the Company’s business and results of operations, see Item 1A. - Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Overview

Middlesex has operated as a water utility in New Jersey since 1897, in Delaware through our wholly-owned subsidiary, Tidewater Utilities, Inc. (Tidewater), since 1992 and in Pennsylvania through our wholly-owned subsidiary, Twin Lakes Utilities, Inc. (Twin Lakes), since 2009. We are in the business of collecting, treating and distributing water for domestic, commercial, municipal, industrial and fire protection purposes. We also operate two New Jersey municipal water and wastewater systems under contract and provide regulated wastewater services in New Jersey and Delaware through four of our other subsidiaries. We are regulated as to rates charged to customers for water and wastewater services, as to the quality of water service we provide and as to certain other matters in New Jersey, Delaware and Pennsylvania. Only our Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy), Inc. (USA-PA) and White Marsh Environmental Services, Inc. (White Marsh) subsidiaries are not regulated utilities.

Our New Jersey water utility system (the Middlesex System) provides water services to approximately 61,000 retail customers, primarily in central New Jersey. The Middlesex System also provides water service under contract to municipalities in central New Jersey with a total population of over 0.2 million. Our Bayview subsidiary provides water services in Downe Township, New Jersey. Our other New Jersey subsidiaries, Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), provide water and wastewater services to approximately 2,500 customers in Southampton Township, New Jersey.

Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC (Southern Shores), provide water services to approximately 51,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately 1,800 customers in Delaware and Maryland through various operations and maintenance contracts.

Our Tidewater Environmental Services, Inc. (TESI) subsidiary provides wastewater services to approximately 3,800 residential retail customers in Sussex Counties, Delaware.

USA-PA operates the water and wastewater systems for the City of Perth Amboy, New Jersey (Perth Amboy) under a 10-year operations and maintenance contract expiring in 2028. In addition to performing day-to day operations, USA-PA is also responsible for emergency responses and management of capital projects funded by Perth Amboy. USA-PA does not manage the billing, collections and customer service functions of Perth Amboy.

USA operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system under a ten-year operations and maintenance contract expiring in 2022. In addition to performing day to day operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon. Under a marketing agreement with HomeServe USA (HomeServe), USA offers residential customers in New Jersey and Delaware a menu of water and wastewater related home maintenance programs. HomeServe is a leading national provider of such home maintenance service programs. USA receives a service fee for the billing, cash collection and other administrative matters associated with HomeServe’s service contracts. Beginning July 1, 2020, USA began operating the Borough of Highland Park, New Jersey’s water and wastewater systems. USA also provides unregulated water and wastewater services under contract with several other New Jersey municipalities.

Our Pennsylvania subsidiary, Twin Lakes, provides water services to approximately 120 retail customers in the Township of Shohola, Pike County, Pennsylvania.

Recent Developments

COVID-19 - On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact on changing economic conditions due to COVID-19 is uncertain and could affect the Company’s results of operations, financial condition and liquidity in the future. While the Company’s operations and capital construction program have not been significantly disrupted to-date from COVID-19, we are unable to assess with certainty the impact that COVID-19 will have on our business, our customers and our vendors prospectively, due to numerous uncertainties, including the severity of the pandemic, the duration of the outbreak and actions which could potentially be taken by governmental and/or regulatory authorities.

The New Jersey Board of Public Utilities (NJBPU) and the Delaware Public Service Commission have allowed for potential future recovery of COVID-19 related incremental costs through customer rates by the regulated utilities under their respective jurisdictions. Neither jurisdiction has yet to establish a timetable or definitive method for formally providing for cost recovery. We will continue to monitor the COVID-19 situation and evaluate its impact on the Company’s business, results of operations, financial condition and liquidity.

Contract Operations – In May 2020, USA, through a competitive bidding process, was awarded a ten-year, $8.3 million contract to operate and maintain the Borough of Highland Park, New Jersey’s (Highland Park) water and wastewater systems. The contract commenced July 1, 2020.

Capital Construction Program - The Company’s multi-year capital construction program encompasses numerous projects designed to upgrade and replace utility infrastructure as well as enhance the integrity and reliability of assets to better serve the current and future generations of water and wastewater customers. The Company plans to invest approximately $113 million in 2020 in connection with this plan for projects that include, but are not limited to:

Among other enhancements in overall reliability of service and redundancy, implementing an enhanced treatment process using ozone as the primary disinfectant at the Company’s largest water treatment plant in Edison, New Jersey, to mitigate the formation of disinfection by-products which can develop from the present chlorine-based disinfection process;

Enhanced treatment processes at the Company’s primary wellfield in South Plainfield, New Jersey to comply with recently promulgated, more stringent water quality regulations with respect to Perfluoroalkyl substances (PFAS) and integrate surge mitigation along with revisions to corrosion control and chlorination;

Replacement of approximately six miles of water mains including service lines, valves, fire hydrants and meters in the Township of Edison and the City of South Amboy, New Jersey;

Construction of a new replacement wastewater treatment plant to serve our customers in the Town of Milton, Delaware;

Relocation of water meters from inside customers’ premises to exterior meter pits to allow more timely access by crews in emergencies, enhance customer safety and convenience and reduce non-revenue water; and

Additional standby emergency power generation.

The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects and may be significantly impacted if the effects of COVID-19 continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments).

Twin Lakes Base Rate Increase - In March 2020, the Pennsylvania Public Utilities Commission (PAPUC) approved a $0.1 million increase in annualized base rates for Twin Lakes. In July 2019, Twin Lakes had filed a petition with the PAPUC seeking permission to increase annualized base rates by approximately $0.2 million, necessitated by capital infrastructure investments and increased operations and maintenance costs. The new rates became effective April 19, 2020.

Middlesex Private Placement – In May 2020, Middlesex received approval from the NJBPU to borrow up to $100.0 million, in one or more private placement transactions to help fund Middlesex’s multi-year capital construction program. Middlesex expects to close on a $40.0 million loan on or about November 18, 2020. Middlesex will issue a First Mortgage Bond with a payment maturity date of November 2050 at an interest rate of 2.90%.

Outlook

Normally, our ability to increase operating income and net income is based significantly on four factors: weather, adequate and timely rate relief, effective cost management and customer growth (which are evident in comparison discussions in the Results of Operations section below). As operating costs have increased in 2020 in a variety of categories, we continue to implement plans to further streamline operations and further reduce, and mitigate increases in, operating costs. Changes in customer water usage habits, as well as increases in capital expenditures and operating costs, are significant factors in determining the timing and extent of rate increase requests. An additional factor that is expected to affect our outlook over the remainder of 2020 is the impact of COVID-19 on the general economy and the resulting impact on our customers. For example, while many commercial business operations have closed or curtailed operations as a result of the State of Emergency Orders (SEOs) issued by the Governors of the respective states in which we operate, resulting in lower water demand for that class of customer, usage by residential customers has increased due in part to SEOs and remote working arrangements (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments). In addition, our customer collection efforts have been suspended based on SEOs. Those same SEOs have declared utility construction projects to be essential and therefore, are allowed to continue subject to nationally-established COVID-19 safety precautions.

Organic residential customer growth for 2020 is expected to be consistent with that experienced in recent years.

Our strategy for profitable growth is focused on the following key areas:

Invest in projects, products and services that complement our core water and wastewater competencies;

Timely and adequate recovery of infrastructure investments and other costs to maintain service quality;

Prudent acquisitions of investor and municipally-owned water and wastewater utilities; and

Operation of municipal and industrial water and wastewater systems on a contract basis which meet our risk/reward profile.

Operating Results by Segment

The discussion of the Company’s operating results is on a consolidated basis and includes significant factors by subsidiary. The Company has two operating segments, Regulated and Non-Regulated. The operations of the Regulated segment are subject to regulations promulgated by state public utility commissions as to rates and level of service. Rates and level of service in the Non-Regulated segment are subject to the terms of individually-negotiated and executed contracts with municipal, industrial and other clients. Both segments are subject to federal and state environmental, water and wastewater quality and other associated legal and regulatory requirements.

The segments in the tables included below consist of the following companies: Regulated-Middlesex, Tidewater, Pinelands, Southern Shores, TESI and Twin Lakes; Non-Regulated-USA, USA-PA, and White Marsh.

Results of Operations – Three Months Ended September 30, 2020

(In Thousands)

Three Months Ended September 30,

2020

2019

Regulated

Non- Regulated

Total

Regulated

Non- Regulated

Total

Revenues

$

36,820

$

3,100

$

39,920

$

34,850

$

2,919

$

37,769

Operations and maintenance expenses

16,027

1,922

17,949

15,859

1,810

17,669

Depreciation expense

4,668

53

4,721

4,182

64

4,246

Other taxes

4,006

67

4,073

3,808

63

3,871

Operating income

12,119

1,058

13,177

11,001

982

11,983

 

Other income, net

1,361

36

1,397

824

43

867

Interest expense

1,901

5

1,906

1,996

-

1,996

Income taxes

(414

)

345

(69

)

(580

)

315

(265

)

Net income

$

11,993

$

744

$

12,737

$

10,409

$

710

$

11,119

Operating Revenues

Operating revenues for the three months ended September 30, 2020 increased $2.2 million from the same period in 2019 due to the following factors:

Middlesex System revenues increased $1.4 million due to increased customer water consumption;

Tidewater System revenues increased $0.4 million due to additional customers;

Pinelands revenues increased $0.1 million due to the base rate increase that went into effect in November 2019;

Non-regulated revenues increased $0.2 million due to USA’s new contract to operate and maintain the Highland Park’s water and wastewater systems (for further information, see discussion under Recent Developments-Contract Operations) and increased supplemental services under existing contracts; and

All other revenue categories increased $0.1 million.

Operation and Maintenance Expense

Operation and maintenance expenses for the three months ended September 30, 2020 increased $0.3 million from the same period in 2019 due to the following factors:

Variable production costs increased $0.5 million due to higher customer water consumption and higher treatment costs due to weather-impacted changes in raw water quality;

Retirement benefit plan expenses increased $0.4 million primarily due to higher actuarially-determined retirement benefit plan service expense;

Bad debt expense increased $0.1 million due to expected increases in future write-offs due to COVID-19;

Information technology costs increased $0.1 million due to higher managed service and licensing costs;

Labor costs decreased $1.0 million due to payments made in 2019 to retiring employees partially offset by current year wage increases overall averaging approximately 3%; and

All other operation and maintenance expense categories increased $0.2 million.

Depreciation

Depreciation expense for the three months ended September 30, 2020 increased $0.5 million from the same period in 2019 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the three months ended September 30, 2020 increased $0.2 million from the same period in 2019 primarily due to higher revenue related taxes on increased revenues in our Middlesex system.

Other Income, net

Other Income, net for the three months ended September 30, 2020 increased $0.5 million from the same period in 2019 primarily due to higher Allowance for Funds Used During Construction resulting from a higher level of capital projects in progress and lower actuarially-determined postretirement benefit plan non-service expense.

Interest Expense

Interest expense for the three months ended September 30, 2020 decreased $0.1 million from the same period in 2019 due to an overall lower level of debt outstanding and lower average interest rates.

Income Taxes

The benefit from income taxes for the three months ended September 30, 2020 was $0.2 million lower than for the same period in 2019, primarily due to higher pre-tax operating income.

Net Income and Earnings Per Share

Net income for the three months ended September 30, 2020 increased $1.6 million as compared with the same period in 2019. Basic earnings per share were $0.73 and $0.67 for the three months ended September 30, 2020 and 2019, respectively. Diluted earnings per share were $0.72 and $0.66 for the three months ended September 30, 2020 and 2019, respectively.

Results of Operations – Nine Months Ended September 30, 2020

(In Thousands)

Nine Months Ended September 30,

2020

2019

Regulated

Non- Regulated

Total

Regulated

Non- Regulated

Total

Revenues

$

97,931

$

9,034

$

106,965

$

93,130

$

8,729

$

101,859

Operations and maintenance expenses

46,567

6,194

52,761

45,233

5,336

50,569

Depreciation expense

13,646

152

13,798

12,229

186

12,415

Other taxes

11,120

198

11,318

10,731

182

10,913

Operating income

26,598

2,490

29,088

24,937

3,025

27,962

 

Other income, net

3,941

94

4,035

1,835

53

1,888

Interest expense

5,510

11

5,521

4,984

-

4,984

Income taxes

(3,335

)

819

(2,516

)

(1,912

)

960

(952

)

Net income

$

28,364

1,754

30,118

$

23,700

$

2,118

$

25,818

Operating Revenues

Operating revenues for the nine months ended September 30, 2020 increased $5.1 million from the same period in 2019 due to the following factors:

Middlesex System revenues increased $2.5 million due to increased customer water consumption;

Tidewater System revenues increased $1.8 million due to additional customers;

Pinelands revenues increased $0.4 million due to the base rate increase that went into effect in November 2019;

Non-regulated revenues increased $0.3 million due to USA’s new contract to operate and maintain the Highland Park’s water and wastewater systems (for further information, see discussion under Recent Developments-Contract Operations) and increased supplemental services under existing contracts; and

All other revenue categories increased $0.1 million.

Operation and Maintenance Expense

Operation and maintenance expenses for the nine months ended September 30, 2020 increased $2.2 million from the same period in 2019 due to the following factors:

Variable production costs increased $1.3 million due to higher customer water consumption and higher treatment costs due to weather-impacted changes in raw water quality;

Retirement benefit plan expenses increased $0.8 million primarily due to higher actuarially-determined retirement benefit plan service expense;

Bad debt expense increased $0.2 million due to expected increases in future write-offs due to COVID-19;

Labor costs decreased $0.5 million due to payments made in 2019 to retiring employees partially offset by additional employees required for regulatory and other operational needs, and current year wage increases overall averaging approximately 3%; and

All other operation and maintenance expense categories increased $0.4 million.

Depreciation

Depreciation expense for the nine months ended September 30, 2020 increased $1.4 million from the same period in 2019 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the nine months ended September 30, 2020 increased $0.4 million from the same period in 2019 primarily due to higher revenue related taxes on increased revenues in our Middlesex system.

Other Income, net

Other Income, net for the nine months ended September 30, 2020 increased $2.1 million from the same period in 2019 primarily due to higher Allowance for Funds Used During Construction resulting from a higher level of capital projects in progress and lower actuarially-determined postretirement benefit plan non-service expense.

Interest Expense

Interest expense for the nine months ended September 30, 2020 increased $0.5 million from the same period in 2019 due to higher average long-term debt outstanding partially offset by lower average short-term debt outstanding and lower average interest rates.

Income Taxes

The benefit from income taxes for the nine months ended September 30, 2020 increased overall by $1.6 million from the same period in 2019, primarily due to the regulatory accounting treatment of tax benefits associated with the adoption of Internal Revenue Service tangible property regulations, which was approved in Middlesex’s 2018 New Jersey base rate case decision.

Net Income and Earnings Per Share

Net income for the nine months ended September 30, 2020 increased $4.3 million as compared with the same period in 2019. Basic earnings per share were $1.72 and $1.56 for the nine months ended September 30, 2020 and 2019, respectively. Diluted earnings per share were $1.71 and $1.55 for the nine months ended September 30, 2020 and 2019, respectively.

Liquidity and Capital Resources

Operating Cash Flows

Cash flows from operations are largely based on four factors: weather, adequate and timely rate increases, effective cost management and growth. The effect of those factors on net income is discussed in “Results of Operations.”

For the nine months ended September 30, 2020, cash flows from operating activities increased $13.9 million to $37.3 million. The increase in cash flows from operating activities primarily resulted from reduced income tax payments, reduced employee benefit plan contributions and higher net income.

Investing Cash Flows

For the nine months ended September 30, 2020, cash flows used in investing activities increased $9.6 million to $70.8 million. The increase in cash flows used in investing activities resulted from increased utility plant expenditures.

For further discussion on the Company’s future capital expenditures and expected funding sources, see “Capital Expenditures and Commitments” below.

Financing Cash Flows

For the nine months ended September 30, 2020, cash flows from financing activities decreased $74.1 million to $15.2 million. The decrease in cash flows provided by financing activities is due to lower proceeds from the issuance of long-term debt and common stock under the Middlesex Water Company Investment Plan (the Investment Plan) partially offset by the net increase in short-term funding.

Capital Expenditures and Commitments

To fund our capital program, we use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the Investment Plan and proceeds from sales offerings to the public of our common stock. See below for a more detailed discussion regarding the funding of our capital program.

The capital investment program for 2020 is currently estimated to be approximately $113 million. Through September 30, 2020, we have expended $71 million and expect to incur approximately $42 million for capital projects for the remainder of 2020.

We currently project we will expend approximately $179 million for capital projects in 2021 and 2022. The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects. The timing of capital expenditures could be impacted if the effects of COVID-19 continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see the Recent Developments section of Note 1 of the Notes to the Unaudited Condensed Consolidated Financial Statements).

To fund our capital program for the remainder of 2020, we plan on utilizing:

Internally generated funds;

Short-term borrowings, as needed, through $140 million of lines of credit established with three financial institutions. As of September 30, 2020, there was $103.5 million of available credit under these lines (for further discussion on Company lines of credit, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements);

Proceeds from the New Jersey State Revolving Fund (SRF). SRF programs provide low cost financing for projects that meet certain water quality and system improvement benchmarks;

Proceeds from the August 2019 issuance and sale of First Mortgage Bonds through the New Jersey Economic Development Authority;

Proceeds from the Investment Plan; and

Proceeds from the sale and issuance of debt securities in a private placement offering (for further information, see discussion under Recent Developments-Middlesex Private Placement).

In order to fully fund the ongoing large investment program in our utility plant infrastructure and maintain a balanced capital structure consistent with the basis on which customers’ rates are established for a regulated water utility, Middlesex may offer for sale additional shares of its common stock. The amount, the timing and the method of sale of the common stock is dependent on the timing of the construction expenditures, the level of additional debt financing and financial market conditions. As approved by the NJBPU, the Company is authorized to issue and sell up to 0.7 million shares of its common stock in one or more transactions through December 31, 2022.

Recent Accounting Pronouncements – See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements and guidance.

Item 3.Quantitative and Qualitative Disclosures of Market Risk

We are exposed to market risk associated with changes in interest rates and commodity prices. The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, short-term debt. The Company’s interest rate risk related to existing fixed rate, long-term debt is not material due to the term of the majority of our First Mortgage Bonds, which have final maturity dates ranging from 2021 to 2059. Over the next twelve months, approximately $7.2 million of the current portion of existing long-term debt instruments will mature. Applying a hypothetical change in the rate of interest charged by 10% on those borrowings, would not have a material effect on our earnings.

Our risks associated with commodity price increases for chemicals, electricity and other commodities are reduced through contractual arrangements and the ability to recover price increases through rates. Non-performance by these commodity suppliers could have a material adverse impact on our results of operations, financial position and cash flows.

We are exposed to credit risk for both our Regulated and Non-Regulated business segments. Our Regulated operations serve residential, commercial, industrial and municipal customers while our Non-Regulated operations engage in business activities with developers, government entities and other customers. Our primary credit risk is exposure to customer default on contractual obligations and the associated loss that may be incurred due to the non-payment of customer accounts receivable balances. Our credit risk is managed through established credit and collection policies which are in compliance with applicable regulatory requirements and involve monitoring of customer exposure and the use of credit risk mitigation measures such as letters of credit or prepayment arrangements. Our credit portfolio is diversified with no significant customer or industry concentrations. In addition, our Regulated businesses are generally able to recover all prudently incurred costs including uncollectible customer accounts receivable expenses and collection costs through rates.

The Company's retirement benefit plan assets are subject to fluctuating market prices of debt and equity securities. Changes to the Company's retirement benefit plan asset values can impact the Company's retirement benefit plan expense, funded status and future minimum funding requirements. Our risk is mitigated by our ability to recover retirement benefit plan costs through rates for regulated utility services charged to our customers.

Item 4.Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities and Exchange Act of 1934 (the Exchange Act), an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was conducted by the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosure.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

None.

Item 1A.Risk Factors

The following risk factor is provided to update the risk factors previously disclosed under the heading “Risk Factors” set forth in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The Novel Coronavirus (COVID-19) pandemic and the attempt to contain it may harm our business, results of operations, financial condition and liquidity.

On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact that COVID-19 will have on the Company, our customers and our vendors prospectively depends on numerous uncertainties, including the severity of the pandemic, the duration of the outbreak, and actions which could potentially be taken by governmental and/or regulatory authorities’ and could have an adverse effect on the Company’s business, results of operations, financial condition, and liquidity.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

Item 6.

Exhibits

 

10.33(d)

Amendment, dated September 21, 2020, to the Uncommitted Line of Credit between the Company, Tidewater Utilities, Inc., White Marsh Environmental Systems, Inc., Pinelands Water Company, Pinelands Wastewater Company, Utility Service Affiliates, Inc., Utility Service Affiliates (Perth Amboy) Inc., Tidewater Environmental Services, Inc., and Bank of America, N.A.,

 

10.34

Fourth Amendment to Promissory Note and Supplement, dated as of August 19, 2020, between Tidewater Utilities, Inc. and CoBank, ACB,

 

31.1

Section 302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

 

31.2

Section 302 Certification by A. Bruce O’Connor pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

 

32.1

Section 906 Certification by Dennis W. Doll pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.2

Section 906 Certification by A. Bruce O’Connor pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

101.INS

XBRL Instance Document

 

101.SCH

XBRL Schema Document

 

101.CAL

XBRL Calculation Linkbase Document

 

101.LAB

XBRL Labels Linkbase Document

 

101.PRE

XBRL Presentation Linkbase Document

 

101.DEF

XBRL Definition Linkbase Document

 

104

Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MIDDLESEX WATER COMPANY

 

By:

/s/ A. Bruce O’Connor    

A. Bruce O’Connor

Senior Vice President, Treasurer and

Chief Financial Officer

(Principal Accounting Officer)

Date: October 30, 2020

26