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yorw:ServiceLine yorw:Municipality

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 2025

OR

☐ | 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 001-34245
THE YORK WATER CO MPANY
(Exact name of registrant as specified in its charter)

Pennsylvania | 23-1242500
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
130 East Market Street, York, Pennsylvania | 17401
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code (717) 845-3601
Securities registered pursuant to Section 12(b) of the Act:

Common Stock, No par value | YORW | The Nasdaq Global Select Market
(Title of Class) | (Trading Symbol) | (Name of Each Exchange on Which Registered)

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such 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,” “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 Exchange Act).

☐ Yes | ⌧ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock, No par value | 14,421,177 Shares outstanding as of August 12, 2025

TABLE OF CONTENTS

PART I | Financial Information |
Item 1. | Financial Statements | 3
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 24
Item 4. | Controls and Procedures | 24
PART II | Other Information |
Item 5. | Other Information | 25
Item 6. | Exhibits | 26
Signatures | 27

Page 2

THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION

Item 1. | Financial Statements.

Balance Sheets (Unaudited)
(In thousands of dollars, except per share amounts)

|  | Jun. 30, 2025 |  |  | Dec. 31, 2024 |
ASSETS |  |  |  |  |  |
UTILITY PLANT, at original cost |  | $ | 687,929 |  |  | $ | 664,927 |
Plant acquisition adjustments |  |  | (9,800 | ) |  |  | (9,838 | )
Accumulated depreciation |  |  | (129,414 | ) |  |  | (124,082 | )
Net utility plant |  |  | 548,715 |  |  |  | 531,007 |
OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $555 in 2025 and $536 in 2024 |  |  | 1,518 |  |  |  | 1,534 |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 1 |  |  |  | 1 |
Accounts receivable, net of reserves of $1,610 in 2025 and $1,610 in 2024 |  |  | 7,484 |  |  |  | 7,249 |
Unbilled revenues |  |  | 3,493 |  |  |  | 3,604 |
Recoverable income taxes |  |  | 824 |  |  |  | 587 |
Materials and supplies inventories, at cost |  |  | 3,448 |  |  |  | 3,413 |
Prepaid expenses |  |  | 1,921 |  |  |  | 1,597 |
Total current assets |  |  | 17,171 |  |  |  | 16,451 |
OTHER LONG-TERM ASSETS: |  |  |  |  |  |  |  |
Prepaid pension cost |  |  | 25,293 |  |  |  | 25,009 |
Note receivable |  |  | 255 |  |  |  | 255 |
Deferred regulatory assets |  |  | 55,475 |  |  |  | 54,061 |
Other assets |  |  | 5,304 |  |  |  | 5,156 |
Total other long-term assets |  |  | 86,327 |  |  |  | 84,481 |
Total Assets |  | $ | 653,731 |  |  | $ | 633,473 |

The accompanying notes are an integral part of these statements.
Table of Contents
Page 3

THE YORK WATER COMPANY
Balance Sheets (Unaudited)
(In thousands of dollars, except per share amounts)

|  | Jun. 30, 2025 |  |  | Dec. 31, 2024 |
STOCKHOLDERS’ EQUITY AND LIABILITIES |  |  |  |  |  |
COMMON STOCKHOLDERS’ EQUITY: |  |  |  |  |  |
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 14,420,319 shares in 2025 and 14,386,282 shares in 2024 |  | $ | 139,071 |  |  | $ | 138,089 |
Retained earnings |  |  | 95,480 |  |  |  | 93,103 |
Total common stockholders’ equity |  |  | 234,551 |  |  |  | 231,192 |
PREFERRED STOCK, authorized 500,000 shares, no shares issued |  |  | – |  |  |  | – |
LONG-TERM DEBT |  |  | 218,056 |  |  |  | 205,561 |
COMMITMENTS |  |  | – |  |  |  | – |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Current portion of long-term debt |  |  | 330 |  |  |  | – |
Accounts payable |  |  | 8,517 |  |  |  | 9,525 |
Dividends payable |  |  | 2,897 |  |  |  | 2,892 |
Accrued compensation and benefits |  |  | 1,708 |  |  |  | 1,806 |
Accrued interest |  |  | 2,483 |  |  |  | 2,490 |
Deferred regulatory liabilities |  |  | 858 |  |  |  | 864 |
Other accrued expenses |  |  | 446 |  |  |  | 712 |
Total current liabilities |  |  | 17,239 |  |  |  | 18,289 |
DEFERRED CREDITS: |  |  |  |  |  |  |  |
Customers’ advances for construction |  |  | 21,812 |  |  |  | 20,546 |
Deferred income taxes |  |  | 63,743 |  |  |  | 61,157 |
Deferred employee benefits |  |  | 3,541 |  |  |  | 3,526 |
Deferred regulatory liabilities |  |  | 43,924 |  |  |  | 43,947 |
Other deferred credits |  |  | 525 |  |  |  | 386 |
Total deferred credits |  |  | 133,545 |  |  |  | 129,562 |
Contributions in aid of construction |  |  | 50,340 |  |  |  | 48,869 |
Total Stockholders’ Equity and Liabilities |  | $ | 653,731 |  |  | $ | 633,473 |

The accompanying notes are an integral part of these statements.
Table of Contents
Page 4

THE YORK WATER COMPANY
Statements of Income (Unaudited)
(In thousands of dollars, except per share amounts)

|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
OPERATING REVENUES: |  | $ | 19,199 |  |  | $ | 18,750 |  |  | $ | 37,655 |  |  | $ | 36,378 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operation and maintenance |  |  | 4,823 |  |  |  | 4,862 |  |  |  | 10,034 |  |  |  | 9,674 |
Administrative and general |  |  | 3,338 |  |  |  | 3,157 |  |  |  | 6,261 |  |  |  | 6,231 |
Depreciation and amortization |  |  | 3,506 |  |  |  | 3,267 |  |  |  | 7,070 |  |  |  | 6,350 |
Taxes other than income taxes |  |  | 446 |  |  |  | 402 |  |  |  | 921 |  |  |  | 846 |
|  |  | 12,113 |  |  |  | 11,688 |  |  |  | 24,286 |  |  |  | 23,101 |
Operating income |  |  | 7,086 |  |  |  | 7,062 |  |  |  | 13,369 |  |  |  | 13,277 |
OTHER INCOME (EXPENSES): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest on debt |  |  | (2,521 | ) |  |  | (2,183 | ) |  |  | (4,940 | ) |  |  | (4,306 | )
Allowance for funds used during construction |  |  | 191 |  |  |  | 347 |  |  |  | 376 |  |  |  | 1,481 |
Other pension costs |  |  | 132 |  |  |  | 436 |  |  |  | 265 |  |  |  | 206 |
Other income (expenses), net |  |  | (203 | ) |  |  | (148 | ) |  |  | (275 | ) |  |  | (215 | )
|  |  | (2,401 | ) |  |  | (1,548 | ) |  |  | (4,574 | ) |  |  | (2,834 | )
Income before income taxes |  |  | 4,685 |  |  |  | 5,514 |  |  |  | 8,795 |  |  |  | 10,443 |
Income tax expense (benefit) |  |  | (367 | ) |  |  | 521 |  |  |  | 105 |  |  |  | 1,123 |
Net Income |  | $ | 5,052 |  |  | $ | 4,993 |  |  | $ | 8,690 |  |  | $ | 9,320 |
Basic Earnings Per Share |  | $ | 0.35 |  |  | $ | 0.35 |  |  | $ | 0.60 |  |  | $ | 0.65 |
Diluted Earnings Per Share |  | $ | 0.35 |  |  | $ | 0.35 |  |  | $ | 0.60 |  |  | $ | 0.65 |

The accompanying notes are an integral part of these statements.
Table of Contents
Page 5

THE YORK WATER COMPANY
Statements of Common Stockholders’ Equity (Unaudited)
(In thousands of dollars, except per share amounts)
For the Periods Ended June 30, 2025 and 2024

|  | Common Stock Shares |  |  | Common Stock Amount |  |  | Retained Earnings |  |  | Total |
Balance, March 31, 2025 |  |  | 14,399,650 |  |  | $ | 138,556 |  |  | $ | 93,587 |  |  | $ | 232,143 |
Net income |  |  | – |  |  |  | – |  |  |  | 5,052 |  |  |  | 5,052 |
Cash dividends declared, $0.2192 per share |  |  | – |  |  |  | – |  |  |  | (3,159 | ) |  |  | (3,159 | )
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans |  |  | 13,412 |  |  |  | 417 |  |  |  | – |  |  |  | 417 |
Stock-based compensation |  |  | 7,257 |  |  |  | 98 |  |  |  | – |  |  |  | 98 |
Balance, June 30, 2025 |  |  | 14,420,319 |  |  | $ | 139,071 |  |  | $ | 95,480 |  |  | $ | 234,551 |
Balance, December 31, 2024 |  |  | 14,386,282 |  |  | $ | 138,089 |  |  | $ | 93,103 |  |  | $ | 231,192 |
Net income |  |  | – |  |  |  | – |  |  |  | 8,690 |  |  |  | 8,690 |
Cash dividends declared, $0.4384 per share |  |  | – |  |  |  | – |  |  |  | (6,313 | ) |  |  | (6,313 | )
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans |  |  | 25,797 |  |  |  | 812 |  |  |  | – |  |  |  | 812 |
Stock-based compensation |  |  | 8,240 |  |  |  | 170 |  |  |  | – |  |  |  | 170 |
Balance, June 30, 2025 |  |  | 14,420,319 |  |  | $ | 139,071 |  |  | $ | 95,480 |  |  | $ | 234,551 |

|  | Common Stock Shares |  |  | Common Stock Amount |  |  | Retained Earnings |  |  | Total |
Balance, March 31, 2024 |  |  | 14,343,500 |  |  | $ | 136,622 |  |  | $ | 86,309 |  |  | $ | 222,931 |
Net income |  |  | – |  |  |  | – |  |  |  | 4,993 |  |  |  | 4,993 |
Cash dividends declared, $0.2108 per share |  |  | – |  |  |  | – |  |  |  | (3,025 | ) |  |  | (3,025 | )
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans |  |  | 11,855 |  |  |  | 419 |  |  |  | – |  |  |  | 419 |
Stock-based compensation |  |  | 5,870 |  |  |  | 97 |  |  |  | – |  |  |  | 97 |
Balance, June 30, 2024 |  |  | 14,361,225 |  |  | $ | 137,138 |  |  | $ | 88,277 |  |  | $ | 225,415 |
Balance, December 31, 2023 |  |  | 14,332,245 |  |  | $ | 136,174 |  |  | $ | 85,004 |  |  | $ | 221,178 |
Net income |  |  | – |  |  |  | – |  |  |  | 9,320 |  |  |  | 9,320 |
Cash dividends declared, $0.4216 per share |  |  | – |  |  |  | – |  |  |  | (6,047 | ) |  |  | (6,047 | )
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans |  |  | 23,623 |  |  |  | 824 |  |  |  | – |  |  |  | 824 |
Stock-based compensation |  |  | 5,357 |  |  |  | 140 |  |  |  | – |  |  |  | 140 |
Balance, June 30, 2024 |  |  | 14,361,225 |  |  | $ | 137,138 |  |  | $ | 88,277 |  |  | $ | 225,415 |

The accompanying notes are an integral part of these statements.
Table of Contents
Page 6

THE YORK WATER COMPANY
Statements of Cash Flows (Unaudited)
(In thousands of dollars, except per share amounts)

|  | Six Months Ended June 30 |
|  | 2025 |  |  | 2024 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |
Net income |  | $ | 8,690 |  |  | $ | 9,320 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 7,070 |  |  |  | 6,350 |
Stock-based compensation |  |  | 170 |  |  |  | 140 |
Increase (decrease) in deferred income taxes |  |  | (155 | ) |  |  | 220 |
Other |  |  | 244 |  |  |  | (73 | )
Changes in assets and liabilities: |  |  |  |  |  |  |  |
Increase in accounts receivable and unbilled revenues |  |  | (440 | ) |  |  | (557 | )
(Increase) decrease in recoverable income taxes |  |  | (237 | ) |  |  | 332 |
Increase in materials and supplies inventories, prepaid expenses, prepaid pension cost, deferred regulatory and other assets |  |  | (3,319 | ) |  |  | (5,316 | )
Increase in accounts payable, accrued compensation and benefits, other accrued expenses, deferred employee benefits, deferred regulatory liabilities, and other deferred credits |  |  | 1,587 |  |  |  | 1,444 |
Increase (decrease) in accrued interest and taxes |  |  | (7 | ) |  |  | 981 |
Net cash provided by operating activities |  |  | 13,603 |  |  |  | 12,841 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Utility plant additions, including debt portion of allowance for funds used during construction of $210 in 2025 and $827 in 2024 |  |  | (22,182 | ) |  |  | (20,867 | )
Acquisitions of water and wastewater systems |  |  | – |  |  |  | (52 | )
Net cash used in investing activities |  |  | (22,182 | ) |  |  | (20,919 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Customers’ advances for construction and contributions in aid of construction |  |  | 2,984 |  |  |  | 1,928 |
Repayments of customer advances |  |  | (247 | ) |  |  | (262 | )
Proceeds of long-term debt issues |  |  | 26,423 |  |  |  | 56,565 |
Debt issuance costs |  |  | – |  |  |  | (167 | )
Repayments of long-term debt |  |  | (13,692 | ) |  |  | (45,377 | )
Changes in cash overdraft position |  |  | (1,393 | ) |  |  | 607 |
Issuance of common stock |  |  | 812 |  |  |  | 824 |
Dividends paid |  |  | (6,308 | ) |  |  | (6,040 | )
Net cash provided by financing activities |  |  | 8,579 |  |  |  | 8,078 |
Net change in cash and cash equivalents |  |  | – |  |  |  | – |
Cash and cash equivalents at beginning of period |  |  | 1 |  |  |  | 1 |
Cash and cash equivalents at end of period |  | $ | 1 |  |  | $ | 1 |
Supplemental disclosures of cash flow information: |  |  |  |  |  |  |  |
Cash paid during the period for: |  |  |  |  |  |  |  |
Interest, net of amounts capitalized |  | $ | 4,588 |  |  | $ | 2,744 |
Income taxes |  |  | 470 |  |  |  | 300 |
Supplemental disclosure of non-cash investing and financing activities: |  |  |  |  |  |  |  |
Accounts payable includes $5,016 in 2025 and $7,771 in 2024 for the construction of utility plant. |  |  |  |  |  |  |  |

The accompanying notes are an integral part of these statements.
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THE YORK WATER COMPANY
Notes to Interim Financial Statements
(In thousands of dollars, except per share amounts)
1. Basis of Presentation
The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of results for such periods. Because the financial statements cover an interim period, they do not include all disclosures and notes normally provided in annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
2. Accounts Receivable and Unbilled Revenue
Accounts receivable are summarized in the following table:

|  | As of |  |  | As of |  |  |  |
|  | Jun. 30, 2025 |  |  | Dec. 31, 2024 |  |  | Change |
Accounts receivable – customers |  | $ | 8,725 |  |  | $ | 8,392 |  |  | $ | 333 |
Other receivables |  |  | 369 |  |  |  | 467 |  |  |  | (98 | )
|  |  | 9,094 |  |  |  | 8,859 |  |  |  | 235 |
Less: allowance for doubtful accounts |  |  | (1,610 | ) |  |  | (1,610 | ) |  |  | – |
Accounts receivable, net |  | $ | 7,484 |  |  | $ | 7,249 |  |  | $ | 235 |
Unbilled revenue |  | $ | 3,493 |  |  | $ | 3,604 |  |  | $ | (111 | )

Differences in timing of revenue recognition, billings, and cash collections result in receivables. Generally, billing occurs subsequent to revenue recognition, resulting in unbilled revenue on the balance sheet. The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported. Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet. The changes in accounts receivable – customers and in unbilled revenue were primarily due to the normal timing difference between performance and the customer’s payments.
3. Common Stock and Earnings Per Share
Net income of $5,052 and $4,993 for the three months ended June 30, 2025 and 2024, respectively, and $8,690 and $9,320 for the six months ended June 30, 2025 and 2024, respectively, is used to calculate both basic and diluted earnings per share. Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares. The dilutive effect of employee stock-based compensation is included in the computation of diluted earnings per share and is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.
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The following table summarizes the shares used in computing basic and diluted earnings per share:

|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Weighted average common shares, basic |  |  | 14,396,648 |  |  |  | 14,340,575 |  |  |  | 14,388,712 |  |  |  | 14,332,727 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee stock-based compensation |  |  | – |  |  |  | 257 |  |  |  | – |  |  |  | 214 |
Weighted average common shares, diluted |  |  | 14,396,648 |  |  |  | 14,340,832 |  |  |  | 14,388,712 |  |  |  | 14,332,941 |

On March 11, 2013, the Board of Directors, or the Board, authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company’s common stock from time to time. The stock repurchase program has no specific end date and the Company may repurchase shares in the open market or through privately negotiated transactions. The Company may suspend or discontinue the repurchase program at any time. No shares were repurchased during the three or six months ended June 30, 2025 and 2024. As of June 30, 2025, 618,004 shares remain authorized for repurchase.
4. Debt
For the six months ended June 30, 2025, the Company did not enter into any new long-term debt arrangements or modify its outstanding long-term debt, which is summarized in the table below.

|  | As of Jun. 30, 2025 |  |  | As of Dec. 31, 2024 |
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 |  | $ | 12,000 |  |  | $ | 12,000 |
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036 |  |  | 10,500 |  |  |  | 10,500 |
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038 |  |  | 14,870 |  |  |  | 14,870 |
3.23% Senior Notes, due 2040 |  |  | 15,000 |  |  |  | 15,000 |
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 – 2045 |  |  | 10,000 |  |  |  | 10,000 |
4.54% Senior Notes, due 2049 |  |  | 20,000 |  |  |  | 20,000 |
3.24% Senior Notes, due 2050 |  |  | 30,000 |  |  |  | 30,000 |
5.50% Senior Notes, due 2053 |  |  | 40,000 |  |  |  | 40,000 |
5.67% Senior Notes, due 2054 |  |  | 40,000 |  |  |  | 40,000 |
Committed Line of Credit, due September 2026 |  |  | 28,539 |  |  |  | 15,808 |
Total long-term debt |  |  | 220,909 |  |  |  | 208,178 |
Less discount on issuance of long-term debt |  |  | (130 | ) |  |  | (136 | )
Less unamortized debt issuance costs |  |  | (2,393 | ) |  |  | (2,481 | )
Less current maturities |  |  | (330 | ) |  |  | – |
Long-term portion |  | $ | 218,056 |  |  | $ | 205,561 |

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5. Interest Rate Swap Agreement
The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. The Company utilizes an interest rate swap agreement to effectively convert the Company’s $12,000 variable-rate debt issue to a fixed rate. Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period. The notional amount on which the interest payments are based ($12,000) is not exchanged. The interest rate swap provides that the Company pays the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000. In exchange, the counterparty pays the Company a variable interest rate based on 59% of the daily simple Secured Overnight Financing Rate plus a spread adjustment of 11.448 basis points on the notional amount. The intent is for the variable rate received from the swap counterparty to approximate the variable rate the Company pays to bondholders on its variable rate debt issue, resulting in a fixed rate being paid to the swap counterparty and reducing the Company’s interest rate risk. The Company’s net payment rate on the swap averaged 0.54% and (0.04)% for the three months ended June 30, 2025 and 2024, respectively, and 0.53% and (0.04)% for the six months ended June 30, 2025 and 2024, respectively.
The interest rate swap agreement is classified as a financial derivative used for non-trading activities. The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. In accordance with the standards, the interest rate swap is recorded on the balance sheet in other deferred credits at fair value (see Note 6).
The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap. These unrealized gains and losses are recorded as a regulatory asset or regulatory liability. Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur. Swap settlements are recorded in the income statement with the hedged item as interest expense. Swap settlements resulted in the reclassification from regulatory assets to interest expense of $16 and $(1) for the three months ended June 30, 2025 and 2024, respectively, and $32 and $(2) for the six months ended June 30, 2025 and 2024, respectively. The overall swap result was a (gain) loss of $55 and $(62) for the three months ended June 30, 2025 and 2024, respectively, and $169 and $(237) for the six months ended June 30, 2025 and 2024, respectively. The Company expects to reclassify $101 before tax from regulatory assets to interest expense as a result of swap settlements over the next 12 months.
The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor’s. If the Company’s rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position. On July 30, 2025, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity. The Company’s interest rate swap was in a liability position as of June 30, 2025. If a violation due to credit rating, or some other default provision, were triggered on June 30, 2025, the Company would have been required to pay the counterparty approximately $535.
The interest rate swap will expire on October 1, 2029. Other than the interest rate swap, the Company has no other derivative instruments.
6. Fair Value of Financial Instruments
The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.
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The Company has recorded its interest rate swap liability at fair value in accordance with the standards. The liability is recorded under the caption “Other deferred credits” on the balance sheet. The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Description |  | June 30, 2025 |  | Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap |  | $525 |  | $525

Fair values are measured as the present value of all expected future cash flows based on the swap yield curve as of the date of the valuation. These inputs to this calculation are deemed to be Level 2 inputs. The balance sheet carrying value reflects the Company’s credit quality as of June 30, 2025. The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of June 30, 2025. The use of the Company’s credit quality resulted in a reduction in the swap liability of $10 as of June 30, 2024. The fair value of the swap reflecting the Company’s credit quality as of December 31, 2024 is shown in the table below.

Description |  | December 31, 2024 |  | Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap |  | $386 |  | $386

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented. The Company’s total long-term debt, with a carrying value of $220,909 at June 30, 2025, and $208,178 at December 31, 2024, had an estimated fair value of approximately $197,000 and $189,000, respectively. The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile. These inputs to this calculation are deemed to be Level 2 inputs. The Company recognized its credit rating in determining the yield curve and did not factor in third-party credit enhancements including the letter of credit on the 2008 Pennsylvania Economic Development Financing Authority Series A issue.
Customers’ advances for construction and note receivable had carrying values at June 30, 2025 of $21,812 and $255, respectively. At December 31, 2024, customers’ advances for construction and note receivable had carrying values of $20,546 and $255, respectively. The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.
7. Commitments
The Company was granted approval by the Pennsylvania Public Utility Commission, or 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 $2,018 and $1,961 through June 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.
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8. Revenue
The following table shows the Company’s revenues disaggregated by service and customer type.

|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Water utility service: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 10,626 |  |  | $ | 10,422 |  |  | $ | 20,876 |  |  | $ | 20,266 |
Commercial and industrial |  |  | 5,214 |  |  |  | 5,109 |  |  |  | 10,150 |  |  |  | 9,765 |
Fire protection |  |  | 1,214 |  |  |  | 1,123 |  |  |  | 2,404 |  |  |  | 2,204 |
Wastewater utility service: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 1,614 |  |  |  | 1,502 |  |  |  | 3,196 |  |  |  | 2,976 |
Commercial and industrial |  |  | 349 |  |  |  | 352 |  |  |  | 694 |  |  |  | 668 |
Billing and revenue collection services |  |  | 17 |  |  |  | 122 |  |  |  | 43 |  |  |  | 252 |
Collection services |  |  | 30 |  |  |  | – |  |  |  | 33 |  |  |  | 3 |
Other revenue |  |  | 19 |  |  |  | 6 |  |  |  | 29 |  |  |  | 16 |
Total Revenue from Contracts with Customers |  |  | 19,083 |  |  |  | 18,636 |  |  |  | 37,425 |  |  |  | 36,150 |
Rents from regulated property |  |  | 116 |  |  |  | 114 |  |  |  | 230 |  |  |  | 228 |
Total Operating Revenue |  | $ | 19,199 |  |  | $ | 18,750 |  |  | $ | 37,655 |  |  | $ | 36,378 |

Utility Service
The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers. The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available. There is no variable consideration and no free service, special rates, or subnormal charges to any customer. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer. The Company uses an output method to recognize the utility service revenue over time. The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter. Each customer is invoiced every month and the invoice is due within twenty days. The utility service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period. A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period. The methodology is standardized and consistently applied to reduce bias and the need for judgment.
Billing and Revenue Collection Service
The Company provides billing and revenue collection service as distinct performance obligations to two municipalities within the service territory of the Company. The municipalities provide service to their residents and the Company acts as the billing and revenue collection agent for the municipalities. The transaction price is a fixed amount per bill prepared as established in the contract. There is no variable consideration. Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations. The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bear all of the risk of non-collection at that time. Each municipality is invoiced when the bills are complete and the invoice is due within thirty days. The billing and revenue collection service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.
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Collection Service
The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company. The municipalities provide wastewater service to their residents. If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents. When the resident is no longer delinquent, the Company will restore water service to the premises. The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract. There is no variable consideration. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service. Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days. The collection service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period. A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.
Service Line Protection Plan
The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate. The transaction price is detailed in the plan’s terms and conditions and made publicly available. There is no variable consideration. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform. The Company uses an output method to recognize the service line protection revenue over time. The stand-ready obligation is recognized through the passage of time. A customer has a choice to prepay for an entire year or to pay in advance each month. The service line protection plan has no returns or extended warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.
9. Rate Matters
From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests. The most recent rate request was filed by the Company on May 30, 2025 and seeks an annual increase in water rates of $20,312, which would represent a 28.9% increase, and an annual increase in wastewater rates of $3,858, which would represent a 44.5% increase. The request is currently under review by the PPUC and other interested parties. Any rate increase approved by the PPUC will be effective no later than March 1, 2026. There can be no assurance that the PPUC will grant the Company’s rate increase in the amount requested, if at all.
The PPUC permits water utilities to collect a distribution system improvement charge, or DSIC. The DSIC allows the Company to add a charge to customers’ bills for qualified replacement costs of certain infrastructure without submitting a rate filing. This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period. The DSIC is capped at 5% of base rates and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility’s earnings exceed a regulatory benchmark. The Company’s earnings are currently below the regulatory benchmark, thus allowing the Company to collect DSIC. The DSIC provided revenues of $531 and $34 for the three months ended June 30, 2025 and 2024, respectively, and $917 and $34 for the six months ended June 30, 2025 and 2024, respectively.
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10. Pensions
Components of Net Periodic Pension Cost

|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Service cost |  | $ | 132 |  |  | $ | 158 |  |  | $ | 265 |  |  | $ | 317 |
Interest cost |  |  | 496 |  |  |  | 465 |  |  |  | 991 |  |  |  | 928 |
Expected return on plan assets |  |  | (767 | ) |  |  | (792 | ) |  |  | (1,534 | ) |  |  | (1,583 | )
Amortization of prior service cost |  |  | (3 | ) |  |  | (3 | ) |  |  | (6 | ) |  |  | (6 | )
Rate-regulated adjustment |  |  | 142 |  |  |  | (106) |  |  |  | 284 |  |  |  | 455 |
Net periodic pension cost |  | $ | – |  |  | $ | (278) |  |  | $ | – |  |  | $ | 111 |

Pension service cost is recorded in operating expenses. All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).
Employer Contributions
The Company previously disclosed in its financial statements for the year ended December 31, 2024 that it did not expect to contribute to its pension plans in 2025. For the six months ended June 30, 2025, no contributions have been made. The Company does not expect to contribute any amounts in the final two quarters of 2025.
11. Stock-Based Compensation
The Company has a Long-Term Incentive Plan, or LTIP. The LTIP was approved by the Company’s shareholders to provide the incentive of long-term stock-based awards to officers, directors, and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants. The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 10,000. Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares. The LTIP will be administered by the Compensation and Human Capital Committee of the Board, or the full Board, provided that the full Board will administer the LTIP as it relates to awards to non-employee directors of the Company. The LTIP was originally effective on July 1, 2016 (“2016 LTIP”), and was amended, restated, and renamed the 2025 LTIP effective on May 6, 2025 (“2025 LTIP”). The Company filed a registration statement with the Securities and Exchange Commission on May 6, 2025 covering the offering of stock under the 2025 LTIP. The registration statement added 150,000 shares to the unissued shares from the 2016 LTIP, which may be issued under the 2025 LTIP over ten years.
On November 25, 2024, the Board awarded stock to an officer effective January 1, 2025. This stock award vested immediately.
On May 5, 2025, the Board awarded stock to non-employee directors effective May 5, 2025. This stock award vested immediately. On May 5, 2025, the Compensation and Human Capital Committee awarded restricted stock to officers and key employees effective May 5, 2025. The stock award vests ratably over three years beginning May 5, 2025.
The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends, subject to vesting restrictions, and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period. As a result, the awards are included in common shares outstanding on the balance sheet. Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the requisite service period.
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The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2025.

|  | Number of Shares |  |  | Grant Date Weighted Average Fair Value
Nonvested at beginning of the period |  | 8,117 |  |  | $38.62
Granted |  | 8,240 |  |  | $34.36
Vested |  | (6,690 | ) |  | $36.98
Forfeited |  | – |  |  | $–
Nonvested at end of the period |  | 9,667 |  |  | $36.12

For the three months ended June 30, 2025 and 2024, the statement of income includes $98 and $97 of stock-based compensation, respectively, and related recognized tax benefits of $26 and $27, respectively. For the six months ended June 30, 2025 and 2024, the statement of income includes $170 and $140 of stock-based compensation, respectively, and related recognized tax benefits of $46 and $39, respectively. Total stock-based compensation related to nonvested awards not yet recognized is $349 at June 30, 2025 which will be recognized over the remaining three year vesting period.
12. Income Taxes
Under the Internal Revenue Service tangible property regulations, or TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable. It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.
The Company’s effective tax rate was (7.8)% and 9.4% for the three months ended June 30, 2025 and 2024, respectively, and 1.2% and 10.8% for the six months ended June 30, 2025 and 2024, respectively. The effective tax rate will vary depending on income before income taxes and the level of eligible asset improvements expensed for tax purposes under TPR each period.
On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law. The Company is currently reviewing the provisions of the OBBBA but does not expect the impact to be material as most of the provisions applicable to the Company from the Tax Cuts and Jobs Act of 2017 were not changed in the OBBBA and new provisions do not apply to the Company.
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. (In thousands of dollars, except per share amounts)

Forward-looking Statements
Certain statements contained in this report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Words such as “may,” “should,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “objective” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include certain information relating to the Company’s business strategy and future prospects; including, but not limited to:

• | the amount and timing of rate changes and other regulatory matters including the recovery of costs recorded as regulatory assets;
• | expected profitability and results of operations;
• | trends;
• | goals, priorities and plans for, and cost of, growth and expansion;
• | strategic initiatives;
• | availability of water supply;
• | water usage by customers; and
• | the ability to pay dividends on common stock and the rate of those dividends.

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:

• | changes in weather or climate, including drought conditions or extended periods of heavy precipitation;
• | natural disasters, including pandemics and the effectiveness of the Company’s pandemic plans;
• | levels of rate relief granted;
• | the level of commercial and industrial business activity within the Company’s service territory;
• | construction of new housing within the Company’s service territory and increases in population;
• | changes in government policies or regulations, including the tax code;
• | the ability to obtain permits for expansion projects;
• | material changes in demand from customers, including the impact of conservation efforts which may impact the demand of customers for water;
• | changes in economic and business conditions, including interest rates;
• | loss of customers;
• | changes in, or unanticipated, capital requirements;
• | the impact of acquisitions;
• | changes in accounting pronouncements;
• | changes in the Company’s credit rating or the market price of its common stock; and
• | the ability to obtain financing.

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General Information
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.
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, 2025, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 23.6 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.
The Company’s water business is somewhat dependent on weather conditions, particularly the amount and timing of precipitation. Revenues are particularly vulnerable to weather conditions in the summer months. Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping golf courses and sports fields irrigated. Conversely, prolonged periods of dry weather could lead to drought restrictions from governmental authorities. Despite the Company’s adequate water supply, customers may be required to cut back water usage under such drought restrictions which would negatively impact revenues. The Company has addressed some of this vulnerability by instituting minimum customer charges which are intended to cover fixed costs of operations under all likely weather conditions.
The Company’s business does not require large amounts of working capital and is not dependent on any single customer or a very few customers for a material portion of its business. Increases in revenues are generally dependent on the Company’s ability to obtain rate increases from the PPUC in a timely manner and in adequate amounts and to increase volumes of water sold through increased consumption and increases in the number of customers served. The Company continuously looks for water and wastewater acquisition and expansion opportunities both within and outside its current service territory as well as additional opportunities to enter into bulk water contracts with municipalities and other entities to supply water.
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.
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Results of Operations
Three Months Ended June 30, 2025 Compared
With Three Months Ended June 30, 2024
Net income for the second quarter of 2025 was $5,052, an increase of $59, or 1.2%, from net income of $4,993 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 lower allowance for funds used during construction.
Operating revenues for the second quarter of 2025 increased $449, or 2.4%, from $18,750 for the three months ended June 30, 2024 to $19,199 for the corresponding 2025 period. The primary reason for the increase was growth in the customer base and increased revenues from the distribution system improvement charge, or DSIC, allowed by the PPUC of $497. The DSIC allows the Company to add a charge to customers’ water bills for qualified replacement costs of certain infrastructure without submitting a rate filing. The average number of water customers served in 2025 increased as compared to 2024 by 1,155 customers, from 72,304 to 73,459 customers. The average number of wastewater customers served in 2025 increased as compared to 2024 by 518 customers, from 6,499 to 7,017 customers, primarily due to acquisitions. Total per capita consumption for 2025 was approximately 2.8% lower than the same period of last year.
Operating expenses for the second quarter of 2025 increased $425, or 3.6%, from $11,688 for the second quarter of 2024 to $12,113 for the corresponding 2025 period. The increase was primarily due to higher expenses of approximately $272 for insurance, $239 for depreciation and amortization, $155 for wages and benefits, and $114 for water treatment. Other operating expenses increased by a net of $180. The increase was partially offset by reduced expenses of $234 for distribution system maintenance, $198 for the provision for uncollectible accounts, and $103 for wastewater treatment.
Interest on debt for the second quarter of 2025 increased $338, or 15.5%, from $2,183 for the second quarter of 2024 to $2,521 for the corresponding 2025 period. The increase was primarily due to higher interest rates. The average debt outstanding under the line of credit was $25,762 for the second quarter of 2025 and $712 for the second quarter of 2024. The weighted average interest rate on the line of credit was 5.49% for the quarter ended June 30, 2025 and 4.50% for the quarter ended June 30, 2024.
Allowance for funds used during construction decreased $156, from $347 in the second quarter of 2024 to $191 in the corresponding 2025 period due to a lower volume of eligible construction.
Other income (expenses), net for the second quarter of 2025 reflects increased expenses of $55 as compared to the same period of 2024. The increase was primarily due to higher retirement expenses of approximately $52. Other expenses increased by a net of $3.
Income tax expense for the second quarter of 2025 decreased $888 as compared to the same period of 2024 due to higher deductions for the Internal Revenue Service, or IRS, tangible property regulations, or TPR. The Company’s effective tax rate was (7.8)% for the second quarter of 2025 and 9.4% for the second quarter of 2024.
Six Months Ended June 30, 2025 Compared
With Six Months Ended June 30, 2024
Net income for the first six months of 2025 was $8,690, a decrease of $630, or 6.8%, from net income of $9,320 for the same period of 2024. The primary contributing factors to the decrease were higher operating expenses, higher interest on debt, and lower allowance for funds used during construction, which were partially offset by higher operating revenues and lower income taxes.
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Operating revenues for the first six months of 2025 increased $1,277, or 3.5%, from $36,378 for the six months ended June 30, 2024 to $37,655 for the corresponding 2025 period. The increase was primarily due to growth in the customer base and revenues from the DSIC of $883. The average number of water customers served in 2025 increased as compared to 2024 by 1,196 customers, from 72,126 to 73,322 customers. The average number of wastewater customers served in 2025 increased as compared to 2024 by 438 customers, from 6,427 to 6,865 customers, primarily due to acquisitions. Total per capita consumption for 2025 was the same as last year. For the remainder of the year, the Company expects revenues to show a modest increase due to the DSIC, 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.
Operating expenses for the first six months of 2025 increased $1,185, or 5.1%, from $23,101 for the first six months of 2024 to $24,286 for the corresponding 2025 period. The increase was primarily due to higher expenses of approximately $720 for depreciation and amortization, $220 for wages and benefits, $190 for water treatment, $81 for insurance, and $81 for purchased power. Other operating expenses increased by a net of $302. The increase was partially offset by reduced expenses of $172 for the provision for uncollectible accounts, $128 for distribution system maintenance, and $109 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.
Interest on debt for the first six months of 2025 increased $634, or 14.7%, from $4,306 for the first six months of 2024 to $4,940 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 $22,481 for the first six months of 2025 and $10,794 for the first six months of 2024. The weighted average interest rate on the line of credit was 5.49% for the six months ended June 30, 2025 and 4.29% for the six months ended June 30, 2024. Interest expense for the remainder of the year is expected to increase due to the increase in long-term debt outstanding.
Allowance for funds used during construction decreased $1,105, from $1,481 in the first six months of 2024 to $376 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 being similar in the second half of the year to the first half of the year.
Other income (expenses), net for the first six months of 2025 reflects increased expenses of $60 as compared to the same period of 2024. The increase was primarily due to higher retirement expenses of approximately $63, which were partially offset by higher earnings on life insurance policies of approximately $12. Other expenses increased by a net of $9. 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.
Income tax expense for the first six months of 2025 decreased $1,018 as compared to the same period of 2025 due to higher deductions for the IRS TPR. The Company’s effective tax rate was 1.2% for the first six months of 2025 and 10.8% for the first six 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 six months, increasing the effective tax rate.
Rate Matters
See Note 9 to the financial statements included herein for a discussion of rate matters.
Effective July 1, 2025, the Company’s tariff included a DSIC on revenues of 3.90%.
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Acquisitions and Growth
On June 13, 2025, the Company signed an agreement to purchase the wastewater collection and treatment assets of Pine Run Retirement Community in Hamilton Township, Adams County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the first half of 2026 at which time the Company will add approximately 100 wastewater customers.
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 half of 2025 at which time the Company will add approximately 140 water customers.
On June 27, 2024, the Company signed an agreement to purchase the wastewater collection and treatment assets of CMV Sewage Co., Inc. in Chanceford Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2025 at which time the Company will add approximately 280 wastewater customers.
On February 7, 2024, the Company signed an agreement to purchase the wastewater collection assets of Margaretta Mobile Home Park in Lower Windsor Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2025 at which time the Company will add approximately 65 wastewater customers.
In total, these acquisitions are expected to be immaterial to Company results. The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any potential declines in per capita water consumption and to grow its business.
Capital Expenditures
For the three months ended June 30, 2025, the Company invested $22,182 in construction expenditures for 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.
The Company anticipates construction expenditures for the remainder of 2025 of approximately $23,800 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, 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 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.
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Liquidity and Capital Resources
Cash
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, 2025, the Company borrowed $28,539 on its line of credit and incurred a cash overdraft on its cash management account of $1,035. 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.
Accounts Receivable
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, 2025, slightly higher revenue levels as compared to the three months ended December 31, 2024, 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.
Internally-generated Funds
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 2025, the Company generated $13,603 internally from operations as compared to the $12,841 it generated during the first six 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.
Common Stock
Common stockholders’ equity as a percent of the total capitalization was 51.5% as of June 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.
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.
Credit Line
Historically, the Company has borrowed under its line of credit before refinancing with long-term debt or equity capital. As of June 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 $28,539 in borrowings under its line of credit as of June 30, 2025. The interest rate on the line of credit borrowing as of June 30, 2025 was 5.49%. The Company expects to extend the maturity for this line of credit into 2027 under similar terms and conditions.
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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.
Long-term Debt
The Company’s loan agreements contain various covenants and restrictions. Management believes it is currently in compliance with all of these restrictions. See Note 6 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these restrictions.
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 48.5% as of June 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.
Income Taxes, Deferred Income Taxes and Uncertain Tax Positions
Under the IRS TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable. It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions. The Company expects to continue to expense these asset improvements in the future.
The Company’s effective tax rate will largely be determined by income before income taxes and the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of TPR.
On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law. The Company is currently reviewing the provisions of the OBBBA but does not expect the impact to be material as most of the provisions applicable to the Company from the Tax Cuts and Jobs Act of 2017 were not changed in the OBBBA and new provisions do not apply to the Company.
The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the Tax Cuts and Jobs Act of 2017 and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction and deferred compensation plans. The Company does not believe a valuation allowance is required due to the expected generation of future taxable income during the periods in which those temporary differences become deductible.
The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense. The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR.
The Company has determined there are no uncertain tax positions that require recognition as of June 30, 2025.
Credit Rating
On July 30, 2025, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity. The Company’s ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, which it has been successful in obtaining, its ability to fund capital expenditures in a balanced manner using both debt and equity and its ability to generate cash flow. The Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.
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Physical and Cyber Security
The Company maintains security measures at its facilities, and collaborates with federal, state, and local authorities and industry trade associations regarding information on possible threats and security measures for water and wastewater utility operations. The costs incurred are expected to be recoverable in water and wastewater rates and are not expected to have a material impact on its business, financial condition, or results of operations.
The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage, and pumping facilities. In addition, the Company relies on these systems to track utility assets and to manage maintenance and construction projects, materials and supplies, and human resource functions. The information technology systems may be vulnerable to damage or interruption from cyber security attacks or other cyber-related events, including, but not limited to, power loss, computer systems failures, internet, telecommunications or data network failures, physical and electronic loss of data, computer viruses, intentional security breaches, hacking, denial of service actions, misappropriation of data, and similar events. In some cases, administration of certain functions may be outsourced to third-party service providers that could also be targets of cyber security attacks. A loss of these systems, or major problems with the operation of these systems, could harm the business, financial condition, and results of operations of the Company through the loss or compromise of customer, financial, employee, or operational data, disruption of billing, collections or normal field service activities, disruption of electronic monitoring and control of operational systems, and delays in financial reporting and other normal management functions.
Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on the Company’s compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.
The Company has implemented processes, procedures, and controls to prevent or limit the effect of these possible events and maintains insurance to help defray costs associated with cyber security attacks. The Company has not experienced a material impact on business or operations from these attacks. Although the Company does not believe its systems are at a materially greater risk of cyber security attacks than other similar organizations and despite the implementation of robust security measures, the Company cannot provide assurance that the insurance will fully cover the costs of a cyber security event, and its robust security measures do not guarantee that reputation and financial results will not be adversely affected by such an incident.
Environmental Matters
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 $2,018 and $1,961 through June 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.
Drought
On June 9, 2025, Pennsylvania state officials returned Adams, York, and Lancaster Counties to normal status and on July 2, 2025, Pennsylvania state officials returned Franklin County to normal status. Measures taken during a drought could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions.
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Critical Accounting Estimates
The methods, estimates, and judgments the Company used in applying its accounting policies have a significant impact on the results reported in its financial statements. The Company’s accounting policies require management to make subjective judgments because of the need to make estimates of matters that are inherently uncertain. The Company’s most critical accounting estimates include regulatory assets and liabilities, revenue recognition, accounting for its pension plans, and income taxes. There has been no significant change in accounting estimates or the method of estimation during the quarter ended June 30, 2025.
Off-Balance Sheet Arrangements
The Company does not use off-balance sheet transactions, arrangements or obligations that may have a material current or future effect on financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses. The Company does not use securitization of receivables or unconsolidated entities. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 5 to the financial statements included herein. The Company does not engage in trading or other risk management activities, does not use other derivative financial instruments for any purpose, has no material lease obligations, no guarantees and does not have material transactions involving related parties.

Item 3. | Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. | Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the Company’s President and Chief Executive Officer along with the Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report are effective such that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION

Item 5. | Other Information.

During the quarter ended June 30, 2025, no director or officer of the Company, nor the Company itself, adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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Item 6. | Exhibits.

Exhibit No. |  | Description
3 |  | Amended and Restated Articles of Incorporation. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 4, 2010.
3.1 |  | Amended and Restated By-Laws. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2012.
10.1 |  | Form of Amended and Restated Change in Control Agreement made as of August 1, 2022 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached schedule.
31.1 |  | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
31.2 |  | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
32.1 |  | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 |  | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH |  | Inline XBRL Taxonomy Extension Schema.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase.
104 |  | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| THE YORK WATER COMPANY
| /s/ Joseph T. Hand
Date: August 12, 2025 | Joseph T. Hand Principal Executive Officer
| /s/ Matthew E. Poff
Date: August 12, 2025 | Matthew E. Poff Principal Financial and Accounting Officer

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