MIDDLESEX WATER CO

Note 1 –Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Utility Service Affiliates, Inc. (USA), and Utility Service Affiliates (Perth Amboy) Inc. (USA-PA). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), previously subsidiaries of Middlesex, were merged into Middlesex effective April 1, 2026 (for further information, see Note 2, Rates and Regulatory Matters). The financial statements for Middlesex and its wholly-owned subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the 2025 Annual Report on Form 10-K (the 2025 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to fairly state the Company’s financial position as of September 30, 2026, the results of operations for the three and nine month periods ended September 30, 2026 and 2025 and cash flows for the nine month periods ended September 30, 2026 and 2025. Information included in the Condensed Consolidated Balance Sheet as of December 31, 2025, has been derived from the Company’s December 31, 2025 audited financial statements included in the 2025 Form 10-K.

Recent Accounting Guidance

The recently issued accounting standards that have not yet been adopted or recently adopted by the Company as of September 30, 2026 are as follows:

Note 2 –Rates and Regulatory Matters

Middlesex Rate Matters

In February 2026, the New Jersey Board of Public Utilities (NJBPU) approved the settlement agreement in our general base rate application between Middlesex and Pinelands, NJBPU Staff and the New Jersey Division of Rate Counsel, with new rates effective February 23, 2026. The NJBPU order approved an increase in our annual operating revenues by $14.5 million based on an authorized return on common equity of 9.6% and a common equity ratio of 54.25%. Included in the settlement agreement, Middlesex and Pinelands customers received a one-time bill credit in the first quarter of 2026 totaling $3.3 million for the overcollection of New Jersey Gross Receipts Taxes. In addition, beginning in late February 2026, Middlesex customers are receiving a $3.3 million credit over 12 months from the proceeds of a multi-district litigation (MDL) settlement agreement between Middlesex and manufacturers of Perfluoroalkyl Substances (PFAS) (for further information on the MDL settlement, see MDL Settlement below).

In February 2026, the NJBPU approved the joint petition filed by Middlesex and Pinelands for a Resiliency and Environmental System Improvement Charge (RESIC) Foundational Filing for thethree-year period ending October 2028. The program allows for the recovery of certain costs of investments that further maintain, enhance, or improve the resiliency, health, safety, or environmental protection for Middlesex and Pinelands customers or broader public health. RESIC activities include compliance with requirements to address existing and emerging chemical elements and compounds, treatment media and related equipment, installation of new plant or equipment, or replacement of existing plant or equipment. Under the RESIC program, Middlesex and Pinelands submit semi-annual surcharge filings to the NJBPU for qualifying capital investments completed everysix months to be recovered up to $3.6 million or 2.5% of total annual revenues included in their February 2026 base rate increase. In September 2026, Middlesex filed a petition with the NJBPU requesting $0.8 million of additional annual revenues.

In February 2026, the NJBPU approved the joint petition filed by Middlesex and Pinelands Water for a Distribution System Improvement Charge (DSIC) Foundational Filing for thethree-year period ending October 2028. DSIC programs allow for the recovery of investments in qualifying capital improvements to a public utility's water distribution system between rate cases. Under the DSIC program, Middlesex and Pinelands Water submit semi-annual surcharge filings to the NJBPU for qualifying capital investments completed everysix months to be recovered up to $7.1 million or 5% of total annual revenues included in their February 2026 base rate increase. In September 2026, Middlesex filed a petition with the NJBPU requesting $1.7 million of additional annual revenues.

In January 2026, the NJBPU approved the joint petition filed by Middlesex, Pinelands Water and Pinelands Wastewater to consolidate thethree entities into Middlesex through a corporate reorganization. The merger of Pinelands Water and Pinelands Wastewater into Middlesex is expected to deliver operational efficiencies and enhanced benefits for customers across multiple areas. The merger has been finalized and was effective on April 1, 2026.

In November 2025, the NJBPU approved a Middlesex DSIC rate, effective December 1, 2025 that resulted in $0.9 million of annual revenues, which was in addition to the existing $2.3 million of annual revenues from previous DSIC filings. Middlesex's DSIC rate reset to zero in connection with Middlesex's February 2026 base rate increase.

The NJBPU-approved Middlesex Lead Service Line Replacement (LSLR) Plan continues and costs of $0.4 million incurred between January 2025 through June 2025 were recovered between September 2025 and February 2026. Costs of $0.3 million incurred between July 2025 through December 2025 were recovered between March 2026 and August 2026. Costs of $0.5 million incurred between January 2026 through June 2026 are expected to be recovered between September 2026 and February 2027. The LSLR surcharge is required to be reset every six months over the life of the LSLR Plan. Costs for replacing Company-owned lead service lines are recoverable through traditional rate making in connection with general rate case filings.

Tidewater Rate Matters

In June 2026, the Delaware Public Service Commission (DEPSC) approved a Tidewater DSIC rate, effective July 1, 2026, which is expected to result in approximately $0.6 million of semi-annual revenues between July 2026 to December 2026. The previous DEPSC-approved Tidewater DSIC rate resulted in approximately $0.3 million of revenues between January 2026 and June 2026.

In February 2026, the DEPSC approved the March 2026 refund of $1.1 million to Tidewater customers resulting from the proceeds of the MDL settlement agreement between Tidewater and manufacturers of PFAS. In September 2026, Tidewater issued a refund of $0.5 million to its customers resulting from additional proceeds of the MDL settlement agreement. For further information, refer to the MDL Settlement below.

In January 2026, Tidewater completed the acquisition of the water utility assets of Pinewood Acres, LLC, as approved by the DEPSC, for $0.2 million. Pinewood Acres serves approximately 350 customers in Kent County, Delaware.

In July 2025, the DEPSC approved the settlement agreement in our general base rate application between Tidewater, DEPSC Staff and the Delaware Division of the Public Advocate, with new rates effective July 3, 2025. The DEPSC order approved an increase in our annual operating revenues by $5.5 million based on an authorized return on common equity of 9.5% and a common equity ratio of 53.5%.

MDL Settlement

Multiple Company utility subsidiaries are parties to the aforementioned MDL lawsuit against manufacturers of certain PFAS for damages, contribution and reimbursement of costs incurred and continuing to be incurred to address the presence of such PFAS in public water supply systems owned and operated by these utility subsidiaries and throughout their service areas. Settlements with several defendants in the MDL have received final approval by the MDL court. The Company began receiving settlement payments in 2025, which will continue through 2026 and beyond. Through September 30, 2026, the Company has received $9.6 million of settlement payments, $6.0 million of which the Company expects to share with customers in the future (for further information on 2026 customer refunds related to the MDL settlement, see Middlesex Rate Matters and Tidewater Rate Matters above).

Southern Shores Rate Matters

Southern Shores provides water service to a 2,200 unit condominium community in Sussex County, Delaware under a DEPSC-approved agreement expiring December 31, 2029. Under the agreement, rates are increased annually by the lesser of the regional Consumer Price Index or 3%. Additionally, when there are unanticipated capital expenditures or regulatory related changes in operating expenses that exceed certain annual thresholds, rates are increased. Effective January 1, 2025, Southern Shores rates were increased $0.1 million or 6.51%. Effective January 1, 2026, Southern Shores rates were increased $0.1 million or 4.89%.

Note 3 –Capitalization

Sales of shares of common stock and issuance of long-term debt are part of the Company’s comprehensive financing plan to fund its multi-year utility plant infrastructure investment program.

Common Stock

During the nine months ended September 30, 2026 and 2025, there were 12,199 common shares (approximately $0.7 million) and 12,522 common shares (approximately $0.7 million), respectively, issued under the Middlesex Water Company Investment Plan.

In May 2025, Middlesex entered into an At-the-Market (ATM) Equity Offering Sales Agreement (Equity Sales Agreement) with BofA Securities, Inc., Robert W. Baird & Co. Incorporated and Janney Montgomery Scott LLC (Janney), pursuant to which Middlesex may offer and sell shares of its common stock, no par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $110.0 million. As of February 20, 2026, the Equity Sales Agreement was amended, replacing Janney with Huntington Securities, Inc. as a sales agent. The Company intends to use the net proceeds from these sales, after deducting commissions and offering expenses, to fund our capital expenditures, to purchase and maintain plant equipment, as well as for other general corporate purposes. For the three and nine months ended September 30, 2026, Middlesex issued and sold a total of 253,537 and 518,564 shares of common stock respectively, at a weighted average price of $58.32 and $55.90 per share, respectively, and received $14.6 million and $28.6 million in net proceeds, respectively, under the Equity Sales Agreement. As of September 30, 2026, the Company had $51.0 million of aggregate gross sales remaining under the Equity Sales Agreement.

Long-term Debt

Subject to regulatory approval, the Company periodically issues long-term debt to fund its investments in utility plant. To the extent possible and fiscally prudent, the Company finances qualifying capital projects under State Revolving Fund

(SRF) loan programs in New Jersey and Delaware. These government programs provide financing at interest rates typically below rates available in the broader financial markets.

In June 2026, Middlesex closed on a $17.8 million SRF construction loan. The proceeds will be used to fund the replacement of lead service lines under Middlesex's LSLR Plan. Middlesex has drawn down $0.2 million as of September 30, 2026 and the funding requisitions are expected to occur through December 2027.

In June 2026, Tidewater entered into a term loan agreement with CoBank, ACB (CoBank) and borrowed $25.0 million at an interest rate of 6.72%. The loan matures in 2048. Proceeds from the loan were used to repay Tidewater’s outstanding short-term borrowings and for other general corporate purposes.

In February 2026, Pinelands Water and Pinelands Wastewater repaid in full $3.7 million and $3.4 million, respectively, of their amortizing secured notes. The interest rates on both of these notes were 6.17% with due dates in 2043.

In September 2024, Tidewater closed on a $2.2 million Delaware SRF loan with a 0.0% interest rate with a maturity date in 2044. This loan is for costs associated with Tidewater’s obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines throughout Tidewater’s service area. Tidewater has drawn down $1.8 million as of September 30, 2026 and expects that the requisitions will continue through 2027.

In May 2024, December 2025 and October 2026, Tidewater closed onfour Delaware SRF loans totaling $13.9 million, all at interest rates of 2.0% with maturity dates between 2045 through 2047. These loans are for the construction, relocation, improvement, and/or interconnection of transmission mains and construction of a water treatment facility. Tidewater has drawn down $2.1 million on these loans as of September 30, 2026. Each project has its own construction timetable with the last spending set to occur in 2030.

In December 2025, Southern Shores closed on a $0.4 million Delaware SRF loan with a 0.0% interest rate with a maturity date in 2045. This loan is for costs associated with Southern Shores' obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines in its service area. Southern Shores has drawn down $0.2 million as of September 30, 2026, and does not expect any further draws.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of certain First Mortgage Bonds (FMBs) issued by Middlesex is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of the FMBs in the table below are classified as Level 2 measurements. The carrying amount and fair value of the FMBs were as follows:

It was not practicable to estimate the fair value on the outstanding long-term debt for which there is no quoted market price and there is not an active trading market. The carrying amount of these instruments was $276.0 million and $259.5 million at September 30, 2026 and December 31, 2025, respectively. Advances for construction have carrying amounts of $27.4 million and $25.5 million at September 30, 2026 and December 31, 2025, respectively. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

Substantially all of the utility plant of the Company is subject to the lien of its mortgage, which includes debt service and capital ratio covenants. The Company is in compliance with all of its mortgage covenants and restrictions.

Note 4 –Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of the Convertible Preferred Stock $7.00 Series.

Note 5 –Business Segment Data

The Company’s Chief Operating Decision Maker (CODM) consists of the Company’s Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. The CODM evaluates segment performance and profitability using net income. This metric provides a clear, consistent basis for analyzing the financial results of each segment and supports decision-making regarding the allocation of resources.

Resource allocation to the Company’s regulated and non-regulated segments begins with the annual budgeting process, which establishes initial funding and resource levels for each segment. The budget incorporates key financial and operational inputs, including anticipated revenues, expenses, capital and financing requirements, aligning with the Company’s strategic objectives and regulatory obligations. The CODM reviews budget-to-actual variances on a monthly, quarterly and year-to-date basis and makes interim decisions to reallocate resources among segments as needed, ensuring a timely and effective response to changing conditions. For the regulated segment, the CODM uses this assessment to determine whether the segment is achieving its regulatory authorized rate of return.

The segments follow the same accounting policies as described in Note 1 – Organization, Summary of Significant Accounting Policies and Recent Developments of the 2025 Form 10-K. Segment profit or loss is based on Net Income. Expenses used to determine operating income before taxes are charged directly to each segment or are allocated based on the applicable cost allocation factors. Assets allocated to each segment are based upon specific identification of such assets provided by Company records. The effects of all intra-segment and/or intercompany transactions are eliminated in the consolidated financial statements.

The Company has identifiedtwo reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey and Delaware and includes Middlesex, Tidewater and Southern Shores. This segment also includes a regulated wastewater system in New Jersey. The Company is subject to regulations as to its rates, services and other matters by the states of New Jersey and Delaware with respect to utility service within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware and includes USA, USA-PA, and White Marsh.

Note 6 –Short-term Borrowings

The Company maintains lines of credit aggregating $180.0 million.

In February 2026, the Company amended its line of credit with PNC Bank. Under the terms of the amendment, the expiration date was extended to January 31, 2029 and the maximum borrowing amount was increased to $100 million.

In May 2026, Tidewater amended its line of credit with CoBank. Under the terms of the amendment, the expiration date was extended to May 20, 2029.

In July 2026, the Company amended its line of credit with Bank of America. Under the terms of the amendment, the expiration date was extended to July 31, 2027.

The maturity dates for the Notes Payable as of September 30, 2026 are all three months or less and are extendable at the discretion of the Company.

The interest rates are set for borrowings under the Bank of America and PNC Bank lines of credit using the Secured Overnight Financing Rate (SOFR) plus a credit spread. The interest rate for borrowings under the CoBank line of credit is set weekly using CoBank’s internal cost of funds index that is similar to the SOFR plus a credit spread. There is no requirement for a compensating balance under any of the established lines of credit.

The weighted average interest rate on the outstanding borrowings at September 30, 2026 under these credit lines is 5.07%.

The weighted average daily amounts of borrowings outstanding under these credit lines and the weighted average interest rates on those amounts were as follows:

Note 7 –Commitments and Contingent Liabilities

Water Supply – Middlesex's agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water expires November 30, 2048. NJWSA provides for an average purchase of 27.0 million gallons a day (mgd) with a peak up to 47.0 mgd. Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated NJBPU-regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2031, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional purchases if needed.

Tidewater contracts with the City of Dover in Delaware to purchase treated water of up to 75.0 million gallons annually.

Purchased water costs are shown below:

Construction – In connection with the Company’s planned capital expenditures, the Company has entered into several contractual construction agreements that in total obligate it to expend an estimated $68.9 million in the future. The actual amount and timing of capital expenditures is dependent on the need for replacement of existing infrastructure, customer growth, residential new home construction and sales, project scheduling, supply chain and continued refinement of project scope and costs.

Contingencies – Based on our operations in the heavily-regulated water and wastewater industries, the Company is routinely involved in disputes, claims, lawsuits and other regulatory and legal matters, including responsibility for fines and penalties relative to regulatory compliance. At this time, Management does not believe the final resolution of any such matters, whether asserted or unasserted, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. In addition, the Company maintains business insurance coverage that may mitigate the effect of any current or future loss contingencies.

Change in Control Agreements – The Company has Change in Control Agreements with its executive officers that provide compensation and benefits in the event of termination of employment under certain conditions in connection with a change in control of the Company.

Note 8 –Employee Benefit Plans

Pension Benefits

The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but can participate in a defined contribution profit sharing plan that provides an annual contribution at the discretion of the Company, based upon a percentage of the participants’ annual paid compensation. For each of the three-month periods ended September 30, 2026 and 2025, the Company didnot make cash contributions to the Pension Plan. The Company doesnot expect to make any Pension Plan cash contributions over the remainder of the current year.

Other Benefits

The Company’s Other Benefits Plan covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For each of the three-month periods ended September 30, 2026 and 2025, the Company didnot make cash contributions to its Other Benefits Plan. The Company doesnot expect to make any Other Benefits Plan cash contributions over the remainder of the current year.

The following tables set forth information relating to the Company’s periodic costs (benefit) for its employee retirement benefit plans:

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

Note 9 –Revenue Recognition from Contracts with Customers

The Company’s revenues are primarily generated from regulated tariff-based water and wastewater utility services and non-regulated operation and maintenance contracts for services on water and wastewater systems owned by others. Revenue from contracts with customers is recognized when control of a promised good or service is transferred to customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services.

The Company’s regulated revenue results from tariff-based water and wastewater services to residential, industrial, commercial, fire-protection and wholesale customers. Residential customers are billed monthly or quarterly while most industrial, commercial, fire-protection and wholesale customers are billed monthly. Payments by customers are due between 15 and 30 days after the invoice date. Revenue is recognized as the water and wastewater services are delivered to customers which includes an accrual of unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing factors such as historical customer data and regional weather indicators. Unearned Revenues and Advance Service Fees include fixed service charge billings in advance to Tidewater customers recognized as service is provided to the customer.

Non-regulated service contract revenues consist of base service fees, as well as fees for additional billable services provided to customers. Fees are billed monthly and are due within 30 days after the invoice date. The Company considers the amounts billed to represent the value of these services provided to customers. These contracts expire at various times through 2032 and contain remaining performance obligations for which the Company expects to recognize revenue in the future. These contracts also contain termination provisions.

Substantially all of the amounts included in operating revenues and accounts receivable are from contracts with customers.

The Company’s contracts do not contain any significant financing components.

The Company’s operating revenues are comprised of the following:

Note 10 –Income Taxes

The statutory Federal tax rate is 21.0% for each of the three and nine months ended September 30, 2026 and 2025. For states with a corporate net income tax, the state corporate net income tax rates range from 8.7% to 9.0% for each of the three and nine months ended September 30, 2026 and 2025. The Company’s effective tax rate was 12.0% and 11.3% for three and nine months ended September 30, 2026 respectively, compared to 9.3% and 10.5% for the same periods, respectively, in 2025. The Company evaluates and updates the annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Income Taxes for the three and nine months ended September 30, 2026 increased by $1.0 million and $1.5 million, respectively, from the same periods in 2025, primarily due to higher pre-tax income partially offset by higher flow-through benefit from increased estimated annual deductions on repair expenditures on tangible property in Middlesex.

Note 11 -Supplemental Cash Flows Information

The cash flow impact of Tangible Property Repairs is reflected in Provision for Deferred Income Taxes and Investment Tax Credits in the Condensed Consolidated Statements of Cash Flows.