YORK WATER CO

Previous wording

The forward-looking statements in this report reflect what the Company currently anticipates will happen. What actually happens could differ materially from what it currently anticipates will happen and caution should be exercised against placing undue reliance upon such statements, which are based only on information currently available to the Company and speak only as of the date hereof. The Company does not intend to make a public announcement when forward-looking statements in this report are no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason. Important matters that may affect what will actually happen include, but are not limited to:

Current wording

The forward-looking statements in this report reflect what the Company currently anticipates will happen. What actually happens could differ materially from what it currently anticipates and you should not place undue reliance upon such statements, which are based only on information currently available to the Company and speak only as of the date hereof. The Company does not intend to make a public announcement when forward-looking statements in this report are no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason. Important matters that may affect what will actually happen include, but are not limited to:

Previous wording

The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water. The Company also owns and operates three wastewater collection systems and eleven wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 57 municipalities within four counties in south-central Pennsylvania. The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater in the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting. The Company must obtain PPUC approval before changing any practices associated with the aforementioned areas.

Current wording

The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water. The Company also owns and operates three wastewater collection systems and thirteen wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 58 municipalities within four counties in south-central Pennsylvania. The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater in the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting. The Company must obtain PPUC approval before changing any practices associated with the aforementioned areas.

Previous wording

Water service is supplied through the Company’s own distribution system. The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles. The Company has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.5 billion gallons of water. The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day. The Company obtains its water supply for its system for Franklin County from the Roxbury Dam on the Conodoguinet Creek, which has an average daily flow of approximately 26.0 million gallons from a watershed area of approximately 33 square miles. The Company has a reservoir on this system which holds up to approximately 330 million gallons of water. The Company also owns fifteen wells which are capable of providing a safe yield of approximately 923,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties. As of September 30, 2025, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 24.1 million gallons. The Company’s service territory had an estimated population of 212,000 as of December 31, 2024. Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.

Current wording

Water service is supplied through the Company’s own distribution system. The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles. The Company has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.5 billion gallons of water. The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day. The Company obtains its water supply for its system for Franklin County from the Roxbury Dam on the Conodoguinet Creek, which has an average daily flow of approximately 26.0 million gallons from a watershed area of approximately 33 square miles. The Company has a reservoir on this system which holds up to approximately 330 million gallons of water. The Company also owns fifteen wells which are capable of providing a safe yield of approximately 923,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties. As of March 31, 2026, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 23.1 million gallons. The Company’s service territory had an estimated population of 214,000 as of December 31, 2025. Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.

Previous wording

The Company has agreements with several municipalities to provide billing and collection services. The Company also has a service line protection program on a targeted basis in order to further diversify its business. Under this optional program, customers pay a fixed monthly fee, and the Company will repair or replace damaged customer service lines, as needed, subject to an annual maximum dollar amount. The Company continues to review and consider opportunities to expand both initiatives.

Current wording

The Company has agreements with several municipalities to provide billing and collection services. The Company continues to review and consider opportunities to expand this initiative to further diversify the business.

Previous wording

Net income for the third quarter of 2025 was $6,201, an increase of $338 or 5.8%, from net income of $5,863 for the same period of 2024. The primary contributing factors to the increase were higher operating revenues and lower income taxes, which were partially offset by higher operating expenses, higher interest on debt, and a lower allowance for funds used during construction.

Current wording

Net income for the first quarter of 2026 was $4,814, an increase of $1,176, or 32.3%, from net income of $3,638 for the same period of 2025. The primary contributing factors to the increase were higher operating revenues and lower income taxes, which were partially offset by higher operating expenses and higher interest on debt.

Previous wording

Operating revenues for the first nine months of 2025 increased $1,923, or 3.4%, from $56,093 for the nine months ended September 30, 2024 to $58,016 for the corresponding 2025 period. The increase was primarily due to growth in the customer base and revenues from the DSIC of $1,590. The average number of water customers served in 2025 increased as compared to 2024 by 1,165 customers, from 72,278 to 73,443 customers. The average number of wastewater customers served in 2025 increased as compared to 2024 by 469 customers, from 6,479 to 6,948 customers, primarily due to acquisitions. Total per capita consumption for 2025 was approximately 1.1% lower than the same period last year . For the remainder of the year, the Company expects revenues to show a modest increase due to the DSIC and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions, weather patterns, and economic conditions could impact results.

Current wording

Operating revenues for the first quarter of 2026 increased $1,618, or 8.8%, from $18,456 for the three months ended March 31, 2025 to $20,074 for the corresponding 2026 period. The primary reason for the increase was a rate increase effective March 1, 2026. Growth in the customer base also added to revenues. The average number of water customers served in 2026 increased as compared to 2025 by 998 customers, from 73,186 to 74,184 customers. The average number of wastewater customers served in 2026 increased as compared to 2025 by 620 customers, from 6,712 to 7,332 customers, primarily due to acquisitions. The increased revenues were partially offset by a $107 decrease from a lower distribution system improvement charge, or DSIC, allowed by the PPUC. The DSIC reset to zero on March 1, 2026 when the rate order took effect. Total per capita consumption for 2026 was approximately 2.2% lower than the same period of last year. For the remainder of the year, the Company expects revenues to increase due to the increase in rates, higher summer demand and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions, weather patterns, and economic conditions could impact results.

Previous wording

Operating expenses for the first nine months of 2025 increased $1,972, or 5.7%, from $34,761 for the first nine months of 2024 to $36,733 for the corresponding 2025 period. The increase was primarily due to higher expenses of approximately $991 for depreciation and amortization, $477 for wages and benefits, $223 for distribution system maintenance, $114 for technology upgrades, $106 for purchased power, $105 for water treatment, and $62 for insurance. Other operating expenses increased by a net of $273. The increase was partially offset by reduced expenses of $292 for the provision for uncollectible accounts and $87 for wastewater treatment. For the remainder of the year, the Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise. Weather patterns could further increase operating expenses.

Current wording

Operating expenses for the first quarter of 2026 increased $1,548, or 12.7%, from $12,173 for the first quarter of 2025 to $13,721 for the corresponding 2026 period. The increase was primarily due to higher expenses of approximately $398 for distribution system maintenance, $322 for wages and benefits, $198 for insurance, $185 for purchased power, $110 for the provision for uncollectible accounts, $95 for depreciation and amortization, $70 for technology upgrades, $52 for water treatment, and $50 for wastewater treatment. Other operating expenses increased by a net of $68. For the remainder of the year, the Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise. Weather patterns could further increase operating expenses.

Previous wording

Interest on debt for the first nine months of 2025 increased $1,006, or 15.4%, from $6,549 for the first nine months of 2024 to $7,555 for the corresponding 2025 period. The increase was primarily due to an increase in long-term debt outstanding and higher interest rates. The average debt outstanding under the line of credit was $26,137 for the first nine months of 2025 and $9,252 for the first nine months of 2024. The weighted average interest rate on the line of credit was 5.49% for the nine months ended September 30, 2025 and 5.02% for the nine months ended September 30, 2024. Interest expense for the remainder of the year is expected to increase due to the increase in long-term debt outstanding.

Current wording

Interest on debt for the first quarter of 2026 increased $296, or 12.2%, from $2,419 for the first quarter of 2025 to $2,715 for the corresponding 2026 period. The increase was primarily due to an increase in short-term and long-term debt outstanding. The average debt outstanding under the line of credit and short-term borrowings was $46,725 for the first quarter of 2026 and $19,163 for the first quarter of 2025. The weighted average interest rate on the line of credit and short-term borrowings was 4.89% for the quarter ended March 31, 2026 and 5.49% for the quarter ended March 31, 2025. Interest expense for the remainder of the year is expected to decrease after the line of credit was substantially repaid upon the completion of the underwritten common stock offering in April 2026.

Previous wording

Allowance for funds used during construction decreased $1,118, from $1,782 in the first nine months of 2024 to $594 in the corresponding 2025 period due to a lower volume of eligible construction. Allowance for funds used during construction for the remainder of the year is expected to remain consistent based on the projected amount of eligible construction.

Current wording

Allowance for funds used during construction increased $88, from $185 in the first quarter of 2025 to $273 in the corresponding 2026 period due to a higher volume of eligible construction. Allowance for funds used during construction for the remainder of the year is expected to increase based on a projected increase in the amount of eligible construction.

Previous wording

Other income (expenses), net for the first nine months of 2025 reflects increased expenses of $41 as compared to the same period of 2024. The increase was primarily due to higher retirement expenses of approximately $76, which were partially offset by higher earnings on life insurance policies of approximately $22. Other expenses increased by a net of $13. For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Current wording

Other income (expenses), net for the first quarter of 2026 was unchanged as compared to the same period of 2025. Higher charitable contributions of approximately $12 were offset by higher earnings on life insurance policies of approximately $12. For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Previous wording

Income tax expense for the first nine months of 2025 decreased $1,959 as compared to the same period of 2025 due to higher deductions for the IRS TPR. The Company’s effective tax rate was (3.3)% for the first nine months of 2025 and 8.9% for the first nine months of 2024. The Company’s effective tax rate for the remainder of 2025 will be largely determined by the level of eligible asset improvements expensed for tax purposes under IRS TPR each period. The Company expects the level to be lower in the remainder of the year than the first nine months, increasing the effective tax rate.

Current wording

Income tax expense for the first quarter of 2026 decreased $1,317 as compared to the same period of 2025 due to higher deductions for the Internal Revenue Service, or IRS, tangible property regulations, or TPR. The Company’s effective tax rate was (21.3)% for the first quarter of 2026 and 11.5% for the first quarter of 2025. The Company’s effective tax rate for the remainder of 2026 will largely be determined by the level of eligible asset improvements expensed for tax purposes under TPR. The Company expects the level to be lower in the remainder of the year than the first quarter, increasing the effective tax rate.

Previous wording

For the nine months ended September 30, 2025, the Company invested $37,102 in construction expendituresfor main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.

Current wording

For the three months ended March 31, 2026, the Company invested $9,821 in construction expendituresfor main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.

Previous wording

The Company anticipates construction expenditures for the remainder of 2025 of approximately $10,000 exclusive of any potential acquisitions not yet approved. In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions. Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2025. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2025 and 2026, to fund anticipated construction and acquisition expenditures.

Current wording

The Company anticipates construction expenditures for the remainder of 2026 of approximately $38,100 exclusive of any potential acquisitions not yet approved. In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions. Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2026. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2026, to fund anticipated construction and acquisition expenditures.

Previous wording

The Company manages its cash through a cash management account that is directly connected to its line of credit. Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement. If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees. Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit. As of September 30, 2025, the Company borrowed $37,430 on its line of credit and incurred a cash overdraft on its cash management account of $1,298. The cash management facility connected to the line of credit is expected to provide the necessary liquidity and funding for the Company’s operations, capital expenditures, and acquisitions for the foreseeable future.

Current wording

The Company manages its cash through a cash management account that is directly connected to its line of credit. Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement. If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees. Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit. As of March 31, 2026, the Company borrowed $37,401 on its line of credit and incurred a cash overdraft on its cash management account of $887. Upon completion of the underwritten common stock offering in April 2026, the Company substantially repaid its line of credit. The cash management facility connected to the line of credit is expected to provide the necessary liquidity and funding for the Company’s operations, capital expenditures, and acquisitions for the foreseeable future.

Previous wording

The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations including taxes, customers’ water usage, weather conditions, customer growth and controlled expenses. During the first nine months of 2025, the Company generated $21,432 internally from operations as compared to the $20,391 it generated during the first nine months of 2024. The increase was primarily due to increased cash receipts from customers and the timing of payments to vendors partially offset by higher interest paid.

Current wording

The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations including taxes, customers’ water usage, weather conditions, customer growth and controlled expenses. During the first three months of 2026, the Company generated $5,368 internally from operations as compared to the $6,005 it generated during the first three months of 2025. The decrease was primarily due to higher interest paid and the timing of cash receipts from customers and payments to vendors.

Previous wording

Common stockholders’ equity as a percent of the total capitalization was 50.9% as of September 30, 2025, compared with 52.6% as of December 31, 2024. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity. It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.

Current wording

Common stockholders’ equity as a percent of the total capitalization was 51.3% as of March 31, 2026, compared with 51.7% as of December 31, 2025. Based on the equity percentage falling to near fifty percent, the Company completed the underwritten common stock offering, increasing equity as a percentage of total capitalization. It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.

Previous wording

The Company has an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission, pursuant to which the Company may offer an aggregate remaining amount of up to $60,000 of its common stock or debt securities subject to market conditions at the time of any such offering.

Current wording

The Company has the ability to issue approximately $10,000 of additional shares of its common stock or debt securities remaining under an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission subject to market conditions at the time of any such offering.

Previous wording

Historically, the Company has borrowed under its line of credit before refinancing with long-term debt or equity capital. As of September 30, 2025, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of the Secured Overnight Financing Rate plus 1.17% with an unused commitment fee and an interest rate floor. The Company had $37,430 in borrowings under its line of credit as of September 30, 2025. The interest rate on the line of credit borrowing as of September 30, 2025 was 5.45%. In the third quarter of 2025, the Company renewed its committed line of credit and extended the maturity date to September 2027. No other terms or conditions of the line of credit agreement were modified.

Current wording

Historically, the Company has borrowed under its line of credit before refinancing with long-term debt or equity capital. As of March 31, 2026, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of the Secured Overnight Financing Rate plus 1.17% with an unused commitment fee and an interest rate floor. The Company had $37,401 in borrowings under its line of credit as of March 31, 2026. The interest rate on the line of credit borrowing as of March 31, 2026 was 4.84%. Upon completion of the underwritten common stock offering in April 2026, the Company substantially repaid its line of credit. The Company expects to extend the maturity for this line of credit into 2028 under similar terms and conditions.

Previous wording

The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand. There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future. If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures. Management believes the Company will have adequate capacity under its current line of credit to meet anticipated financing needs throughout 2025 and 2026.

Current wording

The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand. There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future. If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures. Management believes the Company will have adequate capacity under its current line of credit to meet anticipated financing needs throughout 2026.

Previous wording

The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 49.1% as of September 30, 2025, compared with 47.4% as of December 31, 2024. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward. A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings.

Current wording

The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 48.7% as of March 31, 2026, compared with 48.3% as of December 31, 2025. Based on the debt percentage nearly reaching fifty percent, the Company completed an underwritten common stock offering in April 2026 and substantially repaid its line of credit, decreasing long-term debt as a percentage of total capitalization. A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings.

Previous wording

The Company was granted approval by the PPUC to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the date of the agreement. The tariff modification allows the Company to replace customer-owned service lines at its own initial cost. The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period. The cost for the customer-owned lead service line replacements was approximately $2,058 and $1,961 through September 30, 2025 and December 31, 2024, respectively, and is included as a regulatory asset. Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $2,100. This estimate is subject to adjustment as more facts become available.

Current wording

The Company was granted approval by the PPUCto modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the date of the agreement. The tariff modification allowed the Company to replace customer-owned service lines at its own initial cost. The Company recorded the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period. The cost for the customer-owned lead service line replacements was approximately $2,093 and $2,087 through March 31, 2026 and December 31, 2025, respectively, and is included as a regulatory asset. The tariff modification expired on March 8, 2026. The Company has filed a Lead Service Line Replacement Plan with the PPUC and is awaiting a decision. If approved, the plan would establish the requirements for, and the associated cost recovery mechanisms related to, the future replacement of customer‑owned lead service lines.

Previous wording

On October 10, 2025, Pennsylvania state officials declared a drought watch for 29 counties in Pennsylvania, including Franklin County. The watch calls for a voluntary reduction in nonessential water use of 5 to 10 percent. The watch conditions could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions.

Current wording

As of April 27, 2026, Pennsylvania state officials maintained a drought watch for 20 counties in Pennsylvania, including York and Lancaster Counties within the Company’s service territory, and a drought warning for 5 counties in Pennsylvania, including Adams and Franklin Counties within the Company’s service territory. The watch calls for a voluntary reduction in nonessential water use of 5 to 10 percent and the warning calls for a voluntary reduction in nonessential water use of 10 to 15 percent. These measures could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions.