Middlesex Water (MSEX 3.31%), a regulated water utility serving New Jersey and Delaware, released its second quarter 2025 results on July 31, 2025. The headline news: Middlesex Water missed Wall Street expectations on both revenue and profit (GAAP), reporting $49.3 million in GAAP revenue and $0.60 in GAAP earnings per share (EPS). Analysts had expected $51.34 million in GAAP revenue. Management highlighted regulatory progress in Delaware and ongoing investment in water infrastructure, but rising costs and weaker customer demand weighed on results. The quarter featured modest revenue and profit growth compared to last year, with GAAP operating revenues of $49.3 million and GAAP net income of $10.8 million, compared to $49.1 million and $10.5 million, respectively, for Q2 2024, but overall performance came in below forecasts.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.60 | $0.66 | $0.59 | 1.7% |
| Revenue (GAAP) | $49.3 million | $51.34 million | $49.1 million | 0.4% |
| Operating Income | $13.9 million | N/A | - | |
| Net Income | $10.8 million | $10.5 million | 2.9% | |
| Total Operating Expenses | $35.4 million | $33.8 million | 4.7% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Success Factors
Middlesex Water operates regulated water and wastewater utilities, supplying clean water and treatment services to over 500,000 people in New Jersey and Delaware. Its revenues come mainly from customer water consumption and are shaped by prices approved by state regulators.
The company’s business relies on ongoing investment in pipes, plants, and treatment technology to meet strict environmental rules. Regulatory approvals for rate increases let it recover the costs of these upgrades. Recent corporate focus includes winning favorable rate settlements, making targeted capital investments, and expanding its customer base through acquisitions and improved service reliability.
Quarter in Review: Financial Results and Operational Developments
Earnings (GAAP) landed below analyst expectations, with EPS (GAAP) was $0.60 versus an estimate of $0.655, and revenue (GAAP) of $49.3 million against an expected $51.34 million. This shortfall reflected lower customer usage caused by milder, wet weather, which reduced water demand. Year-over-year, revenue was nearly flat, rising just 0.4% (GAAP), while Net income (GAAP) decreased 4.6% for the six months ended June 30, 2025, compared to the same period in 2024.
Operating income declined 9.2% to $13.9 million compared to Q2 2024, while Total operating expenses (GAAP) climbed 4.7% to $35.4 million compared to Q2 2024. Key drivers included higher variable production costs due to weather and increased labor expenses as wage rates and staffing levels rose. Depreciation also edged upward due to higher depreciation expenses.
From a regulatory perspective, Middlesex Water secured a notable success in Delaware. The Tidewater Utilities subsidiary received approval in July 2025 for a settlement raising annual operating revenue by $5.5 million, supported by an allowable return on common equity of 9.5% approved by the Delaware Public Service Commission in July 2025. New rates become effective July 3, 2025. In June 2025, in New Jersey, the company filed for a $24.9 million base rate increase to recover nearly $100 million in infrastructure investments focused on compliance and reliability as referenced in the June 2025 joint petition by Middlesex Water Company's New Jersey regulated utilities to the New Jersey Board of Public Utilities.
Capital investment remained a strategic priority, with $51 million spent in the first half of 2025 -- representing approximately 55% of the 2025 capital plan. These expenditures target water and wastewater system upgrades, resiliency improvements, and modernizing facilities for regulatory compliance. The company also pursued expanded rights to recover capital costs through distribution system improvement surcharges, which, if approved, would raise up to $11.4 million annually, or 7.5% of its base revenues, based on the June 2025 base rate joint petition. Management stated that compliance-driven investments continued as part of its routine spending.
The company’s product portfolio consists of water delivery services and wastewater treatment solutions. These regulated offerings are designed to ensure safe, reliable water and environmental performance. Secondary to regular operations, The period saw continued customer base growth. Lower water usage during the period meant that these positive factors were partly offset, limiting overall sales growth.
Middlesex Water continued its record of consistent shareholder returns. The Board of Directors declared a quarterly cash dividend of $0.34 per share, payable September 2, 2025. This marks the 52nd consecutive year of annual dividend increases as of calendar year 2025.
Looking Ahead: Guidance and Key Watch Points
Management did not provide explicit EPS or revenue guidance for the remainder of fiscal 2025. The path forward hinges on the outcome of the pending New Jersey rate request and ongoing investment in critical infrastructure as part of the approximately $93 million capital plan for 2025.
Investors should monitor the progress of key regulatory filings, any changes in customer demand, and potential impacts from cost inflation or weather. Delays or negative outcomes in rate approvals could put further pressure on margins.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
