Middlesex Water Company PFD 7%

What they do

Middlesex Water Company, incorporated in 1897, operates regulated water and wastewater utility systems primarily in New Jersey and Delaware, with the Middlesex System in New Jersey, Tidewater Utilities in Delaware, and smaller Pinelands water and wastewater systems in Burlington County, New Jersey. It also operates water and wastewater systems under contract for municipal and private clients through Utility Service Affiliates, Inc. and Utility Service Affiliates (Perth Amboy) Inc., including a ten-year Perth Amboy agreement expiring December 2028. Regulated subsidiaries are subject to state public utility commission rate and service-quality oversight, while USA, USA-PA and White Marsh are unregulated as to rates.

Revenue drivers

• Middlesex System — Provides water to about 61,000 retail customers in eastern Middlesex County, New Jersey, plus wholesale contracts with the City of Rahway, Edison and Marlboro townships, Highland Park borough and the Old Bridge Municipal Utilities Authority; produced approximately 67% of 2025 consolidated operating revenues.
• Tidewater System — Tidewater and its wholly-owned subsidiary Southern Shores provide water to about 65,000 retail customers in over 485 Delaware communities across New Castle, Kent and Sussex counties; produced approximately 25% of 2025 consolidated operating revenues.
• Pinelands Water and Pinelands Wastewater — Serve about 2,500 residential customers each in Burlington County, New Jersey, with Pinelands Wastewater also serving one municipal wastewater system; each produced approximately 1% of 2025 consolidated operating revenues.
• Non-regulated contract operations — USA, USA-PA and White Marsh operate water and wastewater systems under contract for municipal and private clients; these are not regulated public utilities as to rates and service quality.

Recent performance

For the second quarter ended June 30, 2026, Middlesex reported net income of $14.8 million and diluted EPS of $0.79, compared with net income of $10.8 million and diluted EPS of $0.60 in the same quarter of 2025. Second quarter operating revenues were $56.4 million, up $7.0 million, with the Middlesex System up $5.3 million on increased wholesale demand, customer consumption and base rate increases, and Tidewater up $1.7 million on consumption, customer growth and rate increases. Second quarter operating expenses were $38.1 million versus $35.4 million, with operations and maintenance up $2.3 million on higher credit loss reserves and employee-related costs. For the six months ended June 30, 2026, net income was $25.4 million, up $5.1 million, diluted EPS was $1.36 versus $1.13, and operating revenues were $105.1 million, up approximately $11.4 million.

Strategy

Management says it continues to invest in critical infrastructure to increase long-term reliability, growth and value under its MWC 2030 Vision. The company invested approximately $53 million in water and wastewater utility infrastructure during the first half of 2026, about 42% of its planned $126 million full-year 2026 investment. The company also grows through selective and sustainable expansion, including regulated rate increases and customer growth. It declared a third quarter 2026 cash dividend of $0.36 per common share, payable September 1, 2026, and states it has paid cash dividends each year since 1912 and increased them for 53 consecutive years.

Risks

• Water supply availability — Drought and overuse of underground aquifers may limit ground or surface water availability, and freezing weather can cause water main breakage and distribution interruptions.
• Contamination — Water sources or distribution systems may become contaminated by naturally-occurring or man-made compounds, potentially forcing service interruptions, remediation costs and private litigation.
• Regulatory rate decisions — Actions by government regulators, including decisions on rate increase requests, directly affect the company's revenues and recovery of costs recorded as regulatory assets.
• Weather and demand variability — Governmental drought restrictions, heightened rainfall, or cooler-than-normal warm months can reduce customer demand for water services and adversely affect revenue and earnings.

Outlook

Management points to strong second quarter 2026 earnings driven in part by increased wholesale customer demand and favorable weather, and plans continued infrastructure investment under its MWC 2030 Vision. The company's stated 2026 annual infrastructure investment plan is $126 million, of which approximately $53 million was invested in the first half. It also continues a long-standing dividend record, having paid cash dividends each year since 1912 and increased them for 53 consecutive years, with a third quarter 2026 dividend of $0.36 per share declared.