The York Water Company

What they do

York Water impounds, purifies and distributes drinking water through its own distribution system, and also owns and operates three wastewater collection systems and thirteen wastewater collection and treatment systems as of the latest 10-Q. It operates in portions of 58 municipalities across four counties in south-central Pennsylvania and is regulated by the Pennsylvania Public Utility Commission for water and wastewater rate setting and related practices. Supply comes largely from the Codorus Creek branches feeding Lake Williams and Lake Redman, supplemented by a Susquehanna River pipeline, the Roxbury Dam reservoir in Franklin County, and fifteen wells. As of June 30, 2026, average daily availability was 41.1 million gallons and average daily consumption was approximately 23.2 million gallons.

Revenue drivers

• Residential water service — Residential customers generated 64% of 2025 operating revenue; revenue rises with customer count and PPUC-approved rate changes.
• Commercial and industrial water service — Commercial and industrial customers accounted for 29% of 2025 operating revenue, with a diverse manufacturing base in the territory.
• Distribution System Improvement Charge (DSIC) — A PPUC-allowed surcharge for qualified infrastructure replacement added $1,986 thousand to 2025 revenue; it reset to zero when new base rates took effect March 1, 2026.
• Wastewater service and other — Wastewater systems plus fire service and other water/wastewater service income made up the remaining 7% of 2025 revenue; wastewater customers grew from 6,521 to 7,011 on average in 2025, primarily through acquisitions.

Recent performance

Second quarter 2026 operating revenues were $23,515,000, up $4,316,000 from $19,199,000 a year earlier, and net income was $7,615,000, up $2,563,000. Diluted EPS for the quarter was $0.49 versus $0.35. For the first six months of 2026, operating revenues were $43,589,000, up $5,934,000, and net income was $12,429,000, up $3,739,000, with diluted EPS of $0.82 versus $0.60. Revenue gains came primarily from rates effective March 1, 2026, partially offset by the DSIC reset to zero, plus customer base growth. First-half income taxes were lower due to higher deductions from IRS tangible property regulations.

Strategy

Management's stated focus is growing revenue through customer additions, timely and prudent infrastructure investment, and prompt rate filings, while also pursuing water and wastewater acquisitions and bulk water or billing contracts. In the first six months of 2026 the company invested $21.1 million in capital projects, including main extensions, wastewater treatment plant construction, and an enterprise software upgrade, and $470,000 for two wastewater system acquisitions (CMV Sewage Co. and Pine Run Retirement Community). It estimates an additional $26.8 million of 2026 capital investment excluding acquisitions. Cost-control efforts cited include paperless billing, expanded online services, and negotiated electric and banking costs.

Risks

• Weather and consumption variability — Revenue is particularly sensitive to summer precipitation, and prolonged dry weather can trigger drought restrictions that cut usage despite the company's adequate supply.
• Regulatory rate dependence — Revenue growth depends on obtaining PPUC rate increases in a timely manner and in adequate amounts, and on recovery of costs recorded as regulatory assets.
• Limited geographic diversity — The service territory covers portions of 58 municipalities in four south-central Pennsylvania counties, so regional economic, weather or market conditions can adversely affect revenue.
• Cost and financing pressure — 2025 results reflected higher operating expenses, higher interest on debt, and a lower allowance for funds used during construction; the company's return on year-end common equity fell to 8.3% from a five-year average of 10.3%.

Outlook

Management expects 2026 revenues to increase due to rates effective March 1, 2026 and continued customer growth from acquisitions. It estimates an additional $26.8 million of 2026 capital investment excluding acquisitions, for main extensions, an enterprise software upgrade, and routine pipe, service line and facility improvements. The company states that the recently implemented rate increase should improve its opportunity to earn a higher return on year-end common equity in the future.