The York Water Company 2025 Annual Report: Key Highlights for Investors

Summary: The York Water Company’s 2025 annual report provides in-depth insights into its financial performance, operational updates, risk factors, and strategic positioning. This detailed review covers all key points, including financial results, capital structure, risk management (including cybersecurity), and other factors that may materially impact shareholders and the company’s share value.

1. Financial Performance and Key Metrics

• Net Income: For 2025, net income was \$20,058,000—a decrease of \$267,000 or 1.3% compared to \$20,325,000 in 2024. The decline was primarily due to higher operating and interest expenses, as well as a lower allowance for funds used during construction. However, these were partially offset by higher operating revenues, lower income taxes, and a gain on life insurance.
• Operating Revenue: Operating revenues increased by \$2,529,000 (3.4%), from \$74,959,000 in 2024 to \$77,488,000 in 2025. This growth was driven mainly by an increase in customer numbers and higher revenues from the Distribution System Improvement Charge (DSIC).
• Return on Equity (ROE): The company’s ROE for year-end 2025 was 8.3%, which is lower than the 2024 result and below the five-year historical average of 10.3%. Management expects that recently implemented rate increases will help improve ROE in the future.
• Efficiency Ratio: The efficiency ratio (net income/revenues) stood at 25.9% for 2025, down from the five-year average of 31.0%. This was mainly due to increased operating expenses, higher interest, and lower construction allowance. Management remains confident in the company’s ability to control expenses and maintain efficiency.
• Market Value and Shares Outstanding: As of June 30, 2025, the aggregate market value of common stock held by non-affiliates was \$455,682,094. As of March 2, 2026, there were 14,448,548 shares of common stock outstanding.

2. Capital Structure and Liquidity

• Cash Management: The company utilizes a cash management account linked directly to its line of credit. Excess cash pays down outstanding borrowings; if additional funds are needed, they are automatically borrowed. As of December 31, 2025, \$32.29 million was outstanding under the line of credit.
• Equity to Total Capitalization: Common stockholders’ equity was 51.7% of total capitalization at year-end 2025, down from 52.6% a year earlier, reflecting higher debt associated with capital expenditures. The company intends to keep equity between 50% and 55% of capitalization.
• Credit Lines and Debt: A \$50 million unsecured, committed line of credit is in place, with an interest rate at SOFR + 1.17% and a maturity extended to September 2027. The interest rate on December 31, 2025, was 5.04%. A \$10 million unsecured, committed term loan was added in December 2025, with an interest rate of SOFR + 1.35% (5.18% as of December 2025) and maturing in December 2026. Total long-term debt accounted for 48.3% of capitalization at year-end 2025, slightly up from 47.4% in 2024.
• Registration Statement: York Water has a \$60 million “shelf” registration (Form S-3) for issuing common stock or debt securities, providing flexibility for future financing.

3. Risk Factors and Governance

• Cybersecurity: The company has not experienced any material cybersecurity incidents to date. It maintains robust cybersecurity measures and governance, involving the Chief Administrative Officer, General Counsel, and CIO, with regular reporting to the Board. Despite no material events so far, ongoing vigilance and investments in cybersecurity remain a priority due to the evolving threat landscape.
• Regulatory and Economic Risks: York Water’s performance is heavily influenced by regulatory actions (including rate approvals), economic conditions, interest rates, and environmental regulations. Any adverse developments in these areas could materially impact financial performance and share value.
• Operational Risks: The company identifies risks from natural disasters (including pandemics), changes in demand (including conservation), loss of customers, and the ability to obtain permits and financing for expansion.
• Tax Position: The company continues to benefit from IRS Tangible Property Regulations (TPR), allowing certain asset improvements to be expensed for tax, resulting in a lower effective tax rate and deferred tax liabilities. Changes to this treatment could impact future tax expenses and cash flows.

4. Shareholder and Market Information

• Stock Listing: York Water’s common stock is listed on the NASDAQ Global Select Market under the symbol YORW.
• Shareholder Base: As of December 31, 2025, there were approximately 1,693 shareholders of record (excluding individual securities position participants).
• Equity Compensation: Details on securities authorized for issuance under equity compensation plans are provided in Part III, Item 12 of the report.
• Share Repurchases: The company did not repurchase any of its securities during the fourth quarter of 2025.

5. Legal Proceedings and Other Disclosures

• Legal Proceedings: There are no material legal proceedings involving the company at this time.
• Mine Safety Disclosures: Not applicable to the company’s operations.
• Availability of Reports: Annual, quarterly, and current reports are available free of charge on the company’s website and through the SEC’s website.

Potential Price-Sensitive Information

• The decrease in net income and ROE may be viewed as a negative by investors, but management’s expectation that recent rate increases will help future returns could offset concerns.
• The company’s strong liquidity, flexible financing arrangements, and lack of material legal or cybersecurity incidents are positives for stability.
• Any future regulatory, tax, or interest rate changes could become material and move share value.

Conclusion

While York Water’s 2025 results showed a modest decrease in profitability and return on equity, the company remains financially stable, with manageable debt, strong liquidity, and ongoing investments in operational efficiency and risk management. The absence of material cybersecurity incidents and legal proceedings, along with proactive governance and regulatory compliance, support a stable outlook. However, investors should watch for impacts from regulatory or economic changes, particularly regarding rate approvals and interest rates.

Disclaimer: This article is a summary and interpretation of The York Water Company’s 2025 annual report for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell securities. Investors should consult the full SEC filing and seek independent financial advice before making investment decisions.

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