YORK WATER CO

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 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.

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 June 30, 2026, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 23.2 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

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.

Current wording

Net income for the first six months of 2026 was $12,429, an increase of $3,739, or 43.0%, from net income of $8,690 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.

Previous 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.

Current wording

Operating revenues for the first six months of 2026 increased $5,934, or 15.8%, from $37,655 for the six months ended June 30, 2025 to $43,589 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 938 customers, from 73,322 to 74,260 customers. The average number of wastewater customers served in 2026 increased as compared to 2025 by 631 customers, from 6,865 to 7,496 customers, primarily due to acquisitions. The increased revenues were partially offset by a $638 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 2.5% 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, drought warnings or restrictions, weather patterns, and economic conditions could impact results.

Previous 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.

Current wording

Operating expenses for the first six months of 2026 increased $3,142, or 12.9%, from $24,286 for the first six months of 2025 to $27,428 for the corresponding 2026 period. The increase was primarily due to higher expenses of approximately $927 for distribution system maintenance, $708 for wages and benefits, $339 for purchased power, $299 for wastewater treatment, $252 for insurance, $247 for the provision for uncollectible accounts, and $243 for depreciation and amortization. Other operating expenses increased by a net of $127. 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 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.

Current wording

Interest on debt for the first six months of 2026 increased $57, or 1.2%, from $4,940 for the first six months of 2025 to $4,997 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 short-term borrowings and line of credit was $27,922 for the first six months of 2026 and $22,481 for the first six months of 2025. The weighted average interest rate on the line of credit was 4.40% for the six months ended June 30, 2026 and 5.49% for the six months ended June 30, 2025. Interest expense for the remainder of the year is expected to decrease due to the repayment of the term loan and line of credit upon the completion of the underwritten common stock offering in April 2026.

Previous 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.

Current wording

Allowance for funds used during construction increased $230, from $376 in the first six months of 2025 to $606 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 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.

Current wording

Other income (expenses), net for the first six months of 2026 reflects increased expenses of $5 as compared to the same period of 2025. Higher charitable contributions of approximately $20 were offset by higher earnings on life insurance policies of approximately $15. 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 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.

Current wording

Income tax expense for the first six months of 2026 decreased $784 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 (5.8)% for the first six months of 2026 and 1.2% for the first six months of 2025. 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 six months, increasing the effective tax rate

Previous wording

On January 24, 2025, the Company signed an agreement to purchase the water assets of Eagle View Manufactured Housing Community in Berwick Township, Adams County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second quarter of 2026 at which time the Company will add approximately 140 water customers.

Current wording

On January 24, 2025, the Company signed an agreement to purchase the water assets of Eagle View Manufactured Housing Community in Berwick Township, Adams County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth quarter of 2026 at which time the Company will add approximately 140 water customers.

Previous 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.

Current wording

For the six months ended June 30, 2026, the Company invested $21,102 in construction expendituresfor main extensions, wastewater treatment plant construction, 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 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.

Current wording

The Company anticipates construction expenditures for the remainder of 2026 of approximately $26,800 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 and 2027, 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 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.

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 June 30, 2026, the Company had no borrowings on its line of credit and had a cash balance of $555. Upon completion of the underwritten common stock offering in April 2026, the Company repaid its line of credit and generated a cash balance. The Company expects the cash balance to be fully utilized in 2026, after whichthe 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 accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts. In the three months ended March 31, 2026, slightly higher revenue levels as compared to the three months ended December 31, 2025, resulted in a slight increase in accounts receivable – customers. A reserve is maintained at a level considered adequate to provide for expected credit losses. Expected credit losses are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts including inactive accounts with outstanding balances, the aging of balances in payment agreements, adverse situations that may affect a customer’s ability to pay, economic conditions, and other relevant factors applied to the current aging of receivables. Customer accounts are written off when collection efforts have been exhausted. If the status of the evaluated factors deteriorate, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.

Current wording

The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts. In the three months ended June 30, 2026, higher revenue levels as compared to the three months ended December 31, 2025, resulted in an increase in accounts receivable – customers. A reserve is maintained at a level considered adequate to provide for expected credit losses. Expected credit losses are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts including inactive accounts with outstanding balances, the aging of balances in payment agreements, adverse situations that may affect a customer’s ability to pay, economic conditions, and other relevant factors applied to the current aging of receivables. Customer accounts are written off when collection efforts have been exhausted. If the status of the evaluated factors deteriorate, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.

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 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.

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 six months of 2026, the Company generated $17,241 internally from operations as compared to the $13,603 it generated during the first six months of 2025. The increase was primarily due to higher net income.

Previous wording

On April 17, 2026, the Company closed an underwritten public offering of 1,521,739 shares of its common stock, with an offering price of $28.50 per share. On April 22, 2026, the Company closed on the full exercise of the underwriters’ option to purchase an additional 228,261 shares of its common stock at the same price. Huntington Capital Markets acted as sole book-running manager and Seaport Global Securities acted as co-manager for the offering. The Company received net proceeds in the offering, after deducting offering expenses and underwriters’ discounts and commissions, of approximately $47,700. The net proceeds were used to repay the Company’s short-term borrowings under its term loan and borrowings under its line of credit agreement incurred to fund capital expenditures and acquisitions, and for general corporate purposes.

Current wording

On April 17, 2026, the Company closed an underwritten public offering of 1,521,739 shares of its common stock, with an offering price of $28.50 per share. On April 22, 2026, the Company closed on the full exercise of the underwriters’ option to purchase an additional 228,261 shares of its common stock at the same price. Huntington Capital Markets acted as sole book-running manager and Seaport Global Securities acted as co-manager for the offering. The Company received net proceeds in the offering, after deducting offering expenses and underwriters’ discounts and commissions, of $47,634. The net proceeds were used to repay the Company’s short-term borrowings under its term loan and borrowings under its line of credit agreement incurred to fund capital expenditures and acquisitions, and for general corporate purposes.

Previous 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.

Current wording

Common stockholders’ equity as a percent of the total capitalization was 60.5% as of June 30, 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. 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.

Previous 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.

Current wording

Historically, the Company has borrowed under its line of credit before refinancing with long-term debt or equity capital. As of June 30, 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 no borrowings under its line of credit as of June 30, 2026. Upon completion of the underwritten common stock offering in April 2026, the Company 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 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 and 2027.

Previous wording

As of March 31, 2026, the Company maintained a $10,000 unsecured, committed term loan. Interest is payable monthly at an interest rate of SOFR plus 1.35% as established on the first day of each calendar month. The interest rate on the term loan was 5.02% as of March 31, 2026. Upon completion of the underwritten common stock offering in April 2026, the Company repaid this term loan.

Current wording

The Company maintained a $10,000 unsecured, committed term loan. Interest was payable monthly at an interest rate of SOFR plus 1.35% as established on the first day of each calendar month. Upon completion of the underwritten common stock offering in April 2026, the Company repaid this term loan.

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 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.

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 39.5% as of June 30, 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 repaid its line of credit, decreasing long-term debt as a percentage of total capitalization. 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.

Previous 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.

Current wording

As of June 29, 2026, Pennsylvania state officials maintained a drought watch for 11 counties in Pennsylvania, including York and Adams Counties within the Company’s service territory, and a drought warning for 8 counties in Pennsylvania, including Franklin and Lancaster 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.