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 March 31, 2023

☐	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

(State of incorporation)

22-1114430

(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 April 28, 2023: Common Stock, No Par Value: 17,681,092 shares outstanding.

INDEX

PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements (Unaudited):

	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	17

Item 3.	Quantitative and Qualitative Disclosures of Market Risk	24

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

SIGNATURES		28

	Three Months Ended March 31,
	2023		2022

Operating Revenues	$	38,156	$	36,196

Operating Expenses:
Operations and Maintenance		20,257		19,139
Depreciation		5,986		5,622
Other Taxes		4,423		4,144

Total Operating Expenses		30,666		28,905

Gain on Sale of Subsidiary		—		5,232

Operating Income		7,490		12,523

Other Income (Expense):
Allowance for Funds Used During Construction		813		377
Other Income, net		898		1,379

Total Other Income, net		1,711		1,756

Interest Charges		2,595		1,850

Income before Income Taxes		6,606		12,429

Income Taxes		738		329

Net Income		5,868		12,100

Preferred Stock Dividend Requirements		30		30

Earnings Applicable to Common Stock	$	5,838	$	12,070

Earnings per share of Common Stock:
Basic	$	0.33	$	0.69
Diluted	$	0.33	$	0.68

Average Number of Common Shares Outstanding:
Basic		17,652		17,538
Diluted		17,767		17,653

		March 31,		December 31,
ASSETS		2023		2022
UTILITY PLANT:	Water Production	$	250,408	$	249,153
	Transmission and Distribution		740,679		735,138
	General		98,201		97,581
	Construction Work in Progress		72,629		53,570
	TOTAL		1,161,917		1,135,442
	Less Accumulated Depreciation		219,924		214,891
	UTILITY PLANT - NET		941,993		920,551

CURRENT ASSETS:	Cash and Cash Equivalents		4,862		3,828
	Accounts Receivable, net of allowance for uncollectible accounts of $2,317 and $2,326, respectively		15,526		16,018
	Unbilled Revenues		8,660		8,659
	Materials and Supplies (at average cost)		6,559		6,177
	Prepayments		3,914		2,624
	TOTAL CURRENT ASSETS		39,521		37,306

OTHER ASSETS:	Operating Lease Right of Use Asset		3,662		3,826
	Preliminary Survey and Investigation Charges		2,809		2,806
	Regulatory Assets		90,203		90,046
	Non-utility Assets - Net		11,404		11,207
	Employee Benefit Plans		9,284		8,689
	Other		39		19
	TOTAL OTHER ASSETS		117,401		116,593
	TOTAL ASSETS	$	1,098,915	$	1,074,450

CAPITALIZATION AND LIABILITIES
CAPITALIZATION:	Common Stock, No Par Value	$	235,756	$	233,054
	Retained Earnings		167,599		167,274
	TOTAL COMMON EQUITY		403,355		400,328
	Preferred Stock		2,084		2,084
	Long-term Debt		329,636		290,280
	TOTAL CAPITALIZATION		735,075		692,692

CURRENT	Current Portion of Long-term Debt		17,449		17,462
LIABILITIES:	Notes Payable		28,500		55,500
	Accounts Payable		27,623		24,847
	Accrued Taxes		15,996		12,162
	Accrued Interest		2,498		2,535
	Unearned Revenues and Advanced Service Fees		1,311		1,365
	Other		2,601		3,988
	TOTAL CURRENT LIABILITIES		95,978		117,859

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

OTHER LIABILITIES:	Customer Advances for Construction		22,297		21,382
	Lease Obligations		3,543		3,706
	Accumulated Deferred Income Taxes		79,048		77,783
	Regulatory Liabilities		47,032		46,734
	Other		837		919
	TOTAL OTHER LIABILITIES		152,757		150,524

CONTRIBUTIONS IN AID OF CONSTRUCTION			115,105		113,375
	TOTAL CAPITALIZATION AND LIABILITIES	$	1,098,915	$	1,074,450

	Common		Common
	Stock		Stock		Retained
	Shares		Amount		Earnings			Total

Balance at January 1, 2022		17,522	$	221,919	$	145,807		$	367,726
Net Income		—		—		12,100			12,100
Dividend Reinvestment & Common Stock Purchase Plan		29		2,906		—			2,906
Restricted Stock Award - Net - Employees		—		267		—			267
Cash Dividends on Common Stock ($0.2900 per share)		—		—		(5,087	)		(5,087	)
Cash Dividends on Preferred Stock		—		—		(30	)		(30	)
Balance at March 31, 2022		17,551	$	225,092	$	152,790		$	377,882

Balance at January 1, 2023		17,642	$	233,054	$	167,274		$	400,328
Net Income		—		—		5,868			5,868
Dividend Reinvestment & Common Stock Purchase Plan		29		2,342		—			2,342
Restricted Stock Award - Net - Employees		—		360		—			360
Cash Dividends on Common Stock ($0.3125 per share)		—		—		(5,513	)		(5,513	)
Cash Dividends on Preferred Stock		—		—		(30	)		(30	)
Balance at March 31, 2023		17,671	$	235,756	$	167,599		$	403,355

	(Thousands of Dollars)
	March 31, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
FMBs	$	146,496	$	137,983	$	147,269	$	138,756

	(In Thousands Except per Share Amounts)
	Three Months Ended March 31,
	2023					2022
Basic:	Income			Shares		Income			Shares
Net Income	$	5,868			17,652	$	12,100			17,538
Preferred Dividend		(30	)				(30	)
Earnings Applicable to Common Stock	$	5,838			17,652	$	12,070			17,538

Basic EPS	$	0.33				$	0.69

Diluted:
Earnings Applicable to Common Stock	$	5,838			17,652	$	12,070			17,538
$7.00 Series Preferred Dividend		17			115		17			115
Adjusted Earnings Applicable to Common Stock	$	5,855			17,767	$	12,087			17,653

Diluted EPS	$	0.33				$	0.68

	(In Thousands)
	Three Months Ended
	March 31,
Operations by Segments:	2023			2022
Revenues:
Regulated	$	34,953		$	33,325
Non – Regulated		3,342			3,009
Inter-segment Elimination		(139	)		(138	)
Consolidated Revenues	$	38,156		$	36,196

Operating Income:
Regulated	$	6,715		$	11,705
Non – Regulated		775			818
Consolidated Operating Income	$	7,490		$	12,523

Net Income:
Regulated	$	5,324		$	11,513
Non – Regulated		544			587
Consolidated Net Income	$	5,868		$	12,100

Capital Expenditures:
Regulated	$	24,465		$	16,585
Non – Regulated		50			46
Total Capital Expenditures	$	24,515		$	16,631

	As of			As of
	March 31, 2023			December 31, 2022
Assets:
Regulated	$	1,106,949		$	1,079,180
Non – Regulated		7,490			6,999
Inter-segment Elimination		(15,524	)		(11,729	)
Consolidated Assets	$	1,098,915		$	1,074,450

	(Millions)
	As of March 31, 2023
	Outstanding		Available		Maximum		Credit Type	Renewal Date
Bank of America	$	5.0	$	55.0	$	60.0	Uncommitted	January 25, 2024
PNC Bank		22.5	$	45.5		68.0	Committed	January 31, 2025
CoBank		1.0		11.0		12.0	Committed	November 30, 2023
	$	28.5	$	111.5	$	140.0

	(In Thousands)
	Three Months
	March 31,
	2023		2022
Average Daily Amounts Outstanding	$	54,561	$	13,444
Weighted Average Interest Rates		5.52%		1.12%

	(In Millions)
	As of
	March 31, 2023			December 31, 2022
ROU Asset at Lease Inception	$	7.3		$	7.3
Accumulated Amortization		(3.6	)		(3.5	)
Current ROU Asset	$	3.7		$	3.8

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	5,868		$	12,100
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		7,201			6,825
Provision for Deferred Income Taxes and Investment Tax Credits		(611	)		(2,137	)
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(446	)		(202	)
Cash Surrender Value of Life Insurance		(102	)		187
Stock Compensation Expense		360			267
Gain on Sale of Subsidiary		—			(5,232	)
Changes in Assets and Liabilities:
Accounts Receivable		492			1,831
Unbilled Revenues		(1	)		(875	)
Materials & Supplies		(382	)		(11	)
Prepayments		(1,290	)		306
Accounts Payable		2,776			(3,066	)
Accrued Taxes		3,834			5,408
Accrued Interest		(37	)		(26	)
Employee Benefit Plans		(477	)		(653	)
Unearned Revenue & Advanced Service Fees		(54	)		(10	)
Other Assets and Liabilities		(1,161	)		(737	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		15,970			13,975
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $367 in 2023, $175 in 2022		(24,515	)		(16,631	)
Proceeds from Sale of Subsidiary		—			3,122

NET CASH USED IN INVESTING ACTIVITIES		(24,515	)		(13,509	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(1,553	)		(1,228	)
Proceeds from Issuance of Long-term Debt		40,972			1,250
Net Short-term Bank Borrowings		(27,000	)		2,000
Deferred Debt Issuance Expense		(49	)		(9	)
Proceeds from Issuance of Common Stock		2,342			2,906
Payment of Common Dividends		(5,513	)		(5,087	)
Payment of Preferred Dividends		(30	)		(30	)
Construction Advances and Contributions-Net		410			(507	)

	March 31,			December 31,
	2023			2022
Common Stock, No Par Value
Shares Authorized - 40,000
Shares Outstanding - 2023 - 17,671; 2022 - 17,642	$	235,756		$	233,054
Retained Earnings		167,599			167,274
TOTAL COMMON EQUITY	$	403,355		$	400,328

Cumulative Preferred Stock, No Par Value:
Shares Authorized - 120
Shares Outstanding - 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:
First Mortgage Bonds, 0.00%-5.50%, due 2023-2059	$	291,496		$	252,269
Amortizing Secured Notes, 3.94%-7.05%, due 2028-2046		44,244			44,918
State Revolving Trust Notes, 2.00%-4.22%, due 2025-2038		10,063			9,200
SUBTOTAL LONG-TERM DEBT		345,803			306,387
Add: Premium on Issuance of Long-term Debt		6,776			6,873
Less: Unamortized Debt Expense		(5,494	)		(5,518	)
Less: Current Portion of Long-term Debt		(17,449	)		(17,462	)
TOTAL LONG-TERM DEBT	$	329,636		$	290,280

	(In Millions)
2023		0.6
2024		0.8
2025		0.8
2026		0.9
2027		0.9
Thereafter		1.8
Total Lease Payments	$	5.8
Imputed Interest		(1.7	)
Present Value of Lease Payments		4.1
Less Current Portion*		(0.6	)
Non-Current Lease Liability	$	3.5

*Included in Other Current Liabilities

	(In Thousands)
	Pension Benefits						Other Benefits
	Three Months Ended March 31,
	2023			2022			2023			2022

Service Cost	$	388		$	591		$	98		$	200
Interest Cost		1,067			761			402			331
Expected Return on Assets		(1,466	)		(1,760	)		(771	)		(887	)
Amortization of Unrecognized Losses		164			418			(48	)		—
Net Periodic Benefit Cost (Benefit)*	$	153		$	10		$	(319	)	$	(356	)

* Service cost is included in Operations and Maintenance expense on the consolidated statements of income; all other amounts are included in Other Income (Expense), net.

Item 6.	Exhibits
	Exhibits designated with a dagger (t) are management contracts or compensatory plans/
(t)10.12(i)	Change in Control Termination Agreement, dated as of April 28, 2023 between the Company and Robert J. Capko.
10.26(c)	Amendment to Loan Documents, dated March 17, 2023, between the Company, Pinelands Wastewater Company, Pinelands Water Company, Tidewater Utilities, Inc., Utility Service Affiliates (Perth Amboy) Inc., Utility Service Affiliates Inc. and While Marsh Environmental Systems, Inc., and PNC Bank, N.A.
10.26(d)	Amendment to Loan Documents, dated April 5, 2023, between the Company, Pinelands Wastewater Company, Pinelands Water Company, Tidewater Utilities, Inc., Utility Service Affiliates (Perth Amboy) Inc., Utility Service Affiliates Inc. and While Marsh Environmental Systems, Inc., and PNC Bank, N.A.
10.48	Bond Purchase Agreement, dated March 2, 2023, between New York Life Insurance Company and Affiliates and the Company (Series 2023A)
10.49	Financing Agreement, dated April 5, 2023, between the Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health and Social Services, Division of Public Health and Tidewater Utilities, Inc.
10.50	Financing Agreement, dated April 5, 2023, between the Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health and Social Services, Division of Public Health and Tidewater Utilities, Inc.
10.51	Financing Agreement, dated April 5, 2023, between the Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health and Social Services, Division of Public Health and Tidewater Utilities, Inc.
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

	MIDDLESEX WATER COMPANY

	By:	/s/A. Bruce O’Connor
	A. Bruce O’Connor
	Senior Vice President, Treasurer and
	Chief Financial Officer
	(Principal Financial Officer)

SEC Form 10-Q filed by Middlesex Water Company