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, 2026


☐	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 COMPANY

(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	16,228,581 Shares outstanding as of August 6, 2026

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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II	Other Information

Item 5.	Other Information	27
Item 6.	Exhibits	28

Signatures		29

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, 2026			Dec. 31, 2025

ASSETS
UTILITY PLANT, at original cost	$	735,857		$	711,121
Plant acquisition adjustments		(10,006	)		(9,761	)
Accumulated depreciation		(139,287	)		(132,934	)
Net utility plant		586,564			568,426

OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $590 in 2026 and $573 in 2025		1,491			1,500

CURRENT ASSETS:
Cash and cash equivalents		555			1
Accounts receivable, net of reserves of $1,860 in 2026 and $1,710 in 2025		8,639			8,572
Unbilled revenues		4,501			3,833
Recoverable income taxes		1,054			1,054
Materials and supplies inventories, at cost		3,243			3,361
Prepaid expenses		2,075			1,621
Total current assets		20,067			18,442

OTHER LONG-TERM ASSETS:
Prepaid pension cost		28,352			27,969
Note receivable		248			255
Deferred regulatory assets		62,140			59,297
Other assets		5,105			4,999
Total other long-term assets		95,845			92,520

Total Assets	$	703,967		$	680,888

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Balance Sheets (Unaudited)

(In thousands of dollars, except per share amounts)


		Jun. 30, 2026		Dec. 31, 2025

STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 16,227,737 shares in 2026 and 14,446,581 shares in 2025	$	188,444	$	139,952
Retained earnings		105,832		100,395
Total common stockholders' equity		294,276		240,347

PREFERRED STOCK, authorized 500,000 shares, no shares issued		-		-

LONG-TERM DEBT		189,364		221,900

COMMITMENTS		-		-

CURRENT LIABILITIES:
Short-term borrowings		-		10,000
Current portion of long-term debt		340		330
Accounts payable		9,337		8,423
Dividends payable		3,453		3,032
Accrued compensation and benefits		2,106		1,879
Accrued interest		2,483		2,490
Deferred regulatory liabilities		937		889
Other accrued expenses		504		584
Total current liabilities		19,160		27,627

DEFERRED CREDITS:
Customers' advances for construction		27,953		22,357
Deferred income taxes		71,258		67,276
Deferred employee benefits		3,586		3,546
Deferred regulatory liabilities		46,379		46,298
Other deferred credits		299		479
Total deferred credits		149,475		139,956

Contributions in aid of construction		51,692		51,058

Total Stockholders' Equity and Liabilities	$	703,967	$	680,888

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Income (Unaudited)

(In thousands of dollars, except per share amounts)


	Three Months						Six Months
	Ended June 30						Ended June 30
		2026			2025			2026			2025

OPERATING REVENUES:	$	23,515		$	19,199		$	43,589		$	37,655

OPERATING EXPENSES:
Operation and maintenance		5,953			4,823			11,946			10,034
Administrative and general		3,617			3,338			7,160			6,261
Depreciation and amortization		3,654			3,506			7,313			7,070
Taxes other than income taxes		483			446			1,009			921
		13,707			12,113			27,428			24,286

Operating income		9,808			7,086			16,161			13,369

OTHER INCOME (EXPENSES):
Interest on debt		(2,282	)		(2,521	)		(4,997	)		(4,940	)
Allowance for funds used during construction		333			191			606			376
Other pension costs		130			132			260			265
Other income (expenses), net		(208	)		(203	)		(280	)		(275	)
		(2,027	)		(2,401	)		(4,411	)		(4,574	)

Income before income taxes		7,781			4,685			11,750			8,795

Income tax expense (benefit)		166			(367	)		(679	)		105

Net Income	$	7,615		$	5,052		$	12,429		$	8,690

Basic Earnings Per Share	$	0.49		$	0.35		$	0.82		$	0.60

Diluted Earnings Per Share	$	0.49		$	0.35		$	0.82		$	0.60

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Common Stockholders' Equity (Unaudited)

(In thousands of dollars, except per share amounts)

For the Periods Ended June 30, 2026 and 2025


	Common		Common
	Stock		Stock		Retained
	Shares		Amount		Earnings			Total

Balance, March 31, 2026	14,458,449	$	140,365	$	101,915		$	242,280
Net income	-		-		7,615			7,615
Cash dividends declared, $0.2280 per share	-		-		(3,698	)		(3,698	)
Issuance of common stock	1,750,000		47,634		-			47,634
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	12,653		370		-			370
Stock-based compensation	6,635		75		-			75
Balance, June 30, 2026	16,227,737	$	188,444	$	105,832		$	294,276

Balance, December 31, 2025	14,446,581	$	139,952	$	100,395		$	240,347
Net income	-		-		12,429			12,429
Cash dividends declared, $0.4560 per share	-		-		(6,992	)		(6,992	)
Issuance of common stock	1,750,000		47,634		-			47,634
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	24,521		742		-			742
Stock-based compensation	6,635		116		-			116
Balance, June 30, 2026	16,227,737	$	188,444	$	105,832		$	294,276


	Common		Common
	Stock		Stock		Retained
	Shares		Amount		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

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Cash Flows (Unaudited)

(In thousands of dollars, except per share amounts)


	Six Months
	Ended June 30
		2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,429		$	8,690
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,313			7,070
Stock-based compensation		116			170
Decrease in deferred income taxes		(679	)		(155	)
Other		389			244
Changes in assets and liabilities:
Increase in accounts receivable and unbilled revenues		(2,596	)		(440	)
Increase in recoverable income taxes		-			(237	)
Increase in materials and supplies inventories, prepaid expenses, prepaid pension cost, deferred regulatory and other assets		(4,702	)		(3,319	)
Increase in accounts payable, accrued compensation and benefits, other accrued expenses, deferred employee benefits, deferred regulatory liabilities, and other deferred credits		4,978			1,587
Decrease in accrued interest		(7	)		(7	)
Net cash provided by operating activities		17,241			13,603

CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $339 in 2026 and $210 in 2025		(21,102	)		(22,182	)
Acquisitions of wastewater systems		(470	)		-
Decrease in note receivable		7			-
Cash received from surrender of life insurance policies		1,299			-
Net cash used in investing activities		(20,266	)		(22,182	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		6,851			2,984
Repayments of customer advances		(621	)		(247	)
Proceeds of long-term debt issues		25,290			26,423
Repayments of long-term debt		(57,910	)		(13,692	)
Repayments under short-term agreements		(10,000	)		-
Changes in cash overdraft position		(1,836	)		(1,393	)
Issuance of common stock		48,376			812
Dividends paid		(6,571	)		(6,308	)
Net cash provided by financing activities		3,579			8,579

Net change in cash and cash equivalents		554			-
Cash and cash equivalents at beginning of period		1			1
Cash and cash equivalents at end of period	$	555		$	1

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	4,698		$	4,588
Income taxes		-			470

Supplemental disclosure of non-cash investing and financing activities:
Accounts payable includes $6,386 in 2026 and $5,016 in 2025 for the construction of utility plant.

The accompanying notes are an integral part of these statements.

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, 2025.

Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

2. Acquisitions

On January 28, 2026, the Company completed the acquisition of the wastewater collection and treatment assets of CMV Sewage Co., Inc. in Chanceford Township, York County, Pennsylvania. The Company began operating the existing wastewater collection and treatment assets on February 2, 2026. The acquisition resulted in the addition of approximately 280 wastewater customers with purchase price and acquisition costs of approximately $417, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of $46 and will seek approval from the Pennsylvania Public Utility Commission, or PPUC, to amortize the acquisition adjustment over the remaining life of the acquired assets. This acquisition is immaterial to Company results.

On March 30, 2026, the Company completed the acquisition of the wastewater collection and treatment assets of Pine Run Retirement Community in Hamilton Township, Adams County, Pennsylvania. The Company began operating the existing wastewater collection and treatment assets on April 1, 2026. The acquisition resulted in the addition of approximately 100 wastewater customers with purchase price and acquisition costs of approximately $53, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of $237 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets. This acquisition is immaterial to Company results.

3. Accounts Receivable and Unbilled Revenue

Accounts receivable are summarized in the following table:


		As of			As of
		Jun. 30, 2026			Dec. 31, 2025			Change

Accounts receivable – customers	$	10,245		$	8,761		$	1,484
Life insurance receivable		-			1,299			(1,299	)
Other receivables		254			222			32
		10,499			10,282			217
Less allowance for doubtful accounts		(1,860	)		(1,710	)		(150	)
Accounts receivable, net	$	8,639		$	8,572		$	67

Unbilled revenue	$	4,501		$	3,833		$	668

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.

4. Common Stock and Earnings Per Share

Net income of $7,615 and $5,052 for the three months ended June 30, 2026 and 2025, respectively, and $12,429 and $8,690 for the six months ended June 30, 2026 and 2025, 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.

The following table summarizes the shares used in computing basic and diluted earnings per share:


	Three Months			Six Months
	Ended June 30			Ended June 30
		2026	2025		2026	2025

Weighted average common shares, basic		15,883,488	14,396,648		15,164,880	14,388,712
Effect of dilutive securities:
Employee stock-based compensation		297	-		297	-
Weighted average common shares, diluted		15,883,785	14,396,648		15,165,177	14,388,712

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

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, 2026 and 2025. As of June 30, 2026 618,004 shares remain authorized for repurchase.

5. Debt

For the six months ended June 30, 2026, 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			As of
		June 30, 2026			December 31, 2025

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		9,670			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 2027		-			32,290
Total long-term debt		192,040			224,660
Less discount on issuance of long-term debt		(118	)		(124	)
Less unamortized debt issuance costs		(2,218	)		(2,306	)
Less current maturities		(340	)		(330	)
Long-term portion	$	189,364		$	221,900

6. 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 0.96% and 0.54% for the three months ended June 30, 2026 and 2025, respectively, and 0.93% and 0.53% for the six months ended June 30, 2026 and 2025, 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 7).

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 $28 and $16 for the three months ended June 30, 2026 and 2025, respectively, and $56 and $32 for the six months ended June 30, 2026 and 2025, respectively. The overall swap result was a (gain) loss of $(78) and $55 for the three months ended June 30, 2026 and 2025, respectively, and $(125) and $169 for the six months ended June 30, 2026 and 2025, respectively. The Company expects to reclassify $92 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 June 30, 2026, 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, 2026. If a violation due to credit rating, or some other default provision, were triggered on June 30, 2026, the Company would have been required to pay the counterparty approximately $311.

The interest rate swap will expire on October 1, 2029. Other than the interest rate swap, the Company has no other derivative instruments.

7. 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.

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.



		Fair Value Measurements
		at Reporting Date Using
Description	June 30, 2026	Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$299	$299

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, 2026. 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, 2026. The use of the Company’s credit quality resulted in a reduction in the swap liability of $12 as of June 30, 2026. The fair value of the swap reflecting the Company’s credit quality as of December 31, 2025 is shown in the table below.


		Fair Value Measurements
		at Reporting Date Using
Description	December 31, 2025	Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$479	$479

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 $192,040 at June 30, 2026, and $224,660 at December 31, 2025, had an estimated fair value of approximately $169,000 and $207,000, 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, 2026 of $27,953 and $248, respectively. At December 31, 2025, customers’ advances for construction and note receivable had carrying values of $22,357 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.

8. Commitments

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 allowed the Company to replace customer-owned service lines at its own initial cost. The Company recorded 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 $2,093 and $2,087 through June 30, 2026 and December 31, 2025, respectively, and is included as a regulatory asset. The tariff modification expired on March 8, 2026. The Company has filed a Lead Service Line Replacement Plan with the PPUC and is awaiting a decision. If approved, the plan would establish the requirements for, and the associated cost recovery mechanisms related to, the future replacement of customer‑owned lead service lines.

9. Revenue Recognition

The following table shows the Company’s operating revenues disaggregated by service and customer type.


	Three Months				Six Months
	Ended June 30				Ended June 30
		2026		2025		2026		2025
Water utility service:
Residential	$	12,727	$	10,626	$	23,677	$	20,876
Commercial and industrial		6,553		5,214		11,863		10,150
Fire protection		1,371		1,214		2,664		2,404
Wastewater utility service:
Residential		2,274		1,614		4,105		3,196
Commercial and industrial		385		349		933		694
Billing and revenue collection services		20		17		39		43
Collection services		21		30		25		33
Other revenue		57		19		76		29
Total Revenue from Contracts with Customers		23,408		19,083		43,382		37,425
Rents from regulated property		107		116		207		230
Total Operating Revenue	$	23,515	$	19,199	$	43,589	$	37,655

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. The Company has a low-income bill discount program pursuant to an order by the PPUC whereby a limited number of qualified low-income water customers are not billed the fixed charge. 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.

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. The Company has suspended its service line protection plan and has partnered with a third-party vendor that provides homeowners with repair services for domestic infrastructure and related systems. Under this arrangement, the third-party vendor is solely responsible for administering the program and providing services to participating customers. The Company earns a commission based on fees received by the third-party vendor from customers referred by the Company. As of June 30, 2026, the Company had not recognized any commission revenue related to this arrangement. Commission revenue will be recognized as earned in accordance with the terms of the agreement. The Company has determined that it acts as an agent in the arrangement and therefore recognizes revenue on a net basis equal to the commission earned. Management does not expect this change in business operations to have a material impact on the Company's revenue, results of operations, or cash flows.

10. 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 sought an annual increase in water rates of $20,312 and an annual increase in wastewater rates of $3,858. Effective March 1, 2026, the PPUC authorized an increase in water rates designed to produce approximately $16,000 in additional annual revenues and an increase in wastewater rates designed to produce approximately $2,850 in additional annual revenues.

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 DSIC reset to zero when the new base rates took effect March 1, 2026. The DSIC provided revenues of $0 and $531 for the three months ended June 30, 2026 and 2025, respectively, and $279 and $917 for the six months ended June 30, 2026 and 2025, respectively.

11. Pensions

Components of Net Periodic Pension Cost


	Three Months						Six Months
	Ended June 30						Ended June 30
		2026			2025			2026			2025

Service cost	$	130		$	132		$	260		$	265
Interest cost		493			496			987			991
Expected return on plan assets		(815	)		(767	)		(1,630	)		(1,534	)
Amortization of prior service credit		-			(3	)		-			(6	)
Rate-regulated adjustment		192			142			383			284
Net periodic pension cost	$	-		$	-		$	-		$	-

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, 2025 that it did not expect to contribute to its pension plans in 2026. For the six months ended June 30, 2026, no contributions have been made. The Company does not expect to contribute any amounts in the final two quarters of 2026.

12. 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 55,786 unissued shares from the 2016 LTIP, which may be issued under the 2025 LTIP over ten years.

On May 4, 2026, the Board awarded stock to non-employee directors effective May 4, 2026. This stock award vested immediately. On May 4, 2026, the Compensation and Human Capital Committee awarded restricted stock to officers and key employees effective May 4, 2026. The stock award vests ratably over three years beginning May 4, 2026.

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.

The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2026.


				Grant Date Weighted
	Number of Shares			Average Fair Value
Nonvested at beginning of the period	9,653		$	36.11
Granted	6,804		$	29.14
Vested	(5,568	)	$	35.55
Forfeited	(169	)	$	34.58
Nonvested at end of the period	10,720		$	32.00

For the three months ended June 30, 2026 and 2025, the statement of income includes $75 and $98 of stock-based compensation, respectively, and related recognized tax benefits of $20 and $26, respectively. For the six months ended June 30, 2026 and 2025, the statement of income includes $116 and $170 of stock-based compensation, respectively, and related recognized tax benefits of $31 and $46, respectively. Total stock-based compensation related to nonvested awards not yet recognized is $343 at June 30, 2026, which will be recognized over the remaining three-year vesting period.

13. 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 2.1% and (7.8)% for the three months ended June 30, 2026 and 2025, respectively, and (5.8)% and 1.2% for the six months ended June 30, 2026 and 2025, 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.


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 our 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 and you should not place 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 response;
●	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, and the impact of government shutdowns;
●	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, including requirements relating to compliance with increasing environmental and safety regulations;
●	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.

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 thirteen wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 58 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, 2026, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 23.2 million gallons. The Company’s service territory had an estimated population of 214,000 as of December 31, 2025. Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.

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 continues to review and consider opportunities to expand this initiative to further diversify the business.

Results of Operations

Three Months Ended June 30, 2026 Compared

With Three Months Ended June 30, 2025

Net income for the second quarter of 2026 was $7,615, an increase of $2,563, or 50.7%, from net income of $5,052 for the same period of 2025. The primary contributing factors to the increase were higher operating revenues, which were partially offset by higher operating expenses and income taxes.

Operating revenues for the second quarter of 2026 increased $4,316, or 22.5%, from $19,199 for the second quarter of 2025 to $23,515 for the corresponding 2026 period. The primary reason for the increase was a rate increase effective March 1, 2026. Growth in the customer base also added to revenues. The average number of water customers served in 2026 increased as compared to 2025 by 876 customers, from 73,459 to 74,335 customers. The average number of wastewater customers served in 2026 increased as compared to 2025 by 643 customers, from 7,017 to 7,660 customers, primarily due to acquisitions. The increased revenues were partially offset by a $531 decrease from a lower distribution system improvement charge, or DSIC, allowed by the PPUC. The DSIC reset to zero on March 1, 2026 when the rate order took effect. Total per capita consumption for 2026 was approximately 2.7% lower than the same period of last year.

Operating expenses for the second quarter of 2026 increased $1,594, or 13.2%, from $12,113 for the second quarter of 2025 to $13,707 for the corresponding 2026 period. The increase was primarily due to higher expenses of approximately $529 for distribution system maintenance, $386 for wages and benefits, $249 for wastewater treatment, $154 for purchased power, $148 for depreciation and amortization, and $137 for the provision for uncollectible accounts. Other operating expenses decreased by a net of $9.

Interest on debt for the second quarter of 2026 decreased $239, or 9.5%, from $2,521 for the second quarter of 2025 to $2,282 for the corresponding 2026 period. The decrease was primarily due to a decrease in short-term and long-term debt outstanding. Upon the completion of the underwritten common stock offering in April 2026, the Company repaid its term loan and line of credit. The average debt outstanding under the short-term borrowings and line of credit was $9,326 for the second quarter of 2026 and $25,762 for the second quarter of 2025. The weighted average interest rate on the line of credit and short-term borrowings was 3.92% for the quarter ended June 30, 2026 and 5.49% for the quarter ended June 30, 2025.

Allowance for funds used during construction increased $142, from $191 in the second quarter of 2025 to $333 in the corresponding 2026 period due to a higher volume of eligible construction.

Income tax expense for the second quarter of 2026 increased $533 as compared to the same period of 2025 due to higher taxable income. The Company’s effective tax rate was 2.1% for the second quarter of 2026 and (7.8)% for the second quarter of 2025.

Six Months Ended June 30, 2026 Compared

With Six Months Ended June 30, 2025

Net income for the first six months of 2026 was $12,429, an increase of $3,739, or 43.0%, from net income of $8,690 for the same period of 2025. The primary contributing factors to the increase were higher operating revenues and lower income taxes, which were partially offset by higher operating expenses.

Operating revenues for the first six months of 2026 increased $5,934, or 15.8%, from $37,655 for the six months ended June 30, 2025 to $43,589 for the corresponding 2026 period. The primary reason for the increase was a rate increase effective March 1, 2026. Growth in the customer base also added to revenues. The average number of water customers served in 2026 increased as compared to 2025 by 938 customers, from 73,322 to 74,260 customers. The average number of wastewater customers served in 2026 increased as compared to 2025 by 631 customers, from 6,865 to 7,496 customers, primarily due to acquisitions. The increased revenues were partially offset by a $638 decrease from a lower distribution system improvement charge, or DSIC, allowed by the PPUC. The DSIC reset to zero on March 1, 2026 when the rate order took effect. Total per capita consumption for 2026 was approximately 2.5% lower than the same period of last year. For the remainder of the year, the Company expects revenues to increase due to the increase in rates, higher summer demand and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions, drought warnings or restrictions, weather patterns, and economic conditions could impact results.

Operating expenses for the first six months of 2026 increased $3,142, or 12.9%, from $24,286 for the first six months of 2025 to $27,428 for the corresponding 2026 period. The increase was primarily due to higher expenses of approximately $927 for distribution system maintenance, $708 for wages and benefits, $339 for purchased power, $299 for wastewater treatment, $252 for insurance, $247 for the provision for uncollectible accounts, and $243 for depreciation and amortization. Other operating expenses increased by a net of $127. For the remainder of the year, the Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise. Weather patterns could further increase operating expenses.

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

Allowance for funds used during construction increased $230, from $376 in the first six months of 2025 to $606 in the corresponding 2026 period due to a higher volume of eligible construction. Allowance for funds used during construction for the remainder of the year is expected to increase based on a projected increase in the amount of eligible construction.

Other income (expenses), net for the first six months of 2026 reflects increased expenses of $5 as compared to the same period of 2025. Higher charitable contributions of approximately $20 were offset by higher earnings on life insurance policies of approximately $15. For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Income tax expense for the first six months of 2026 decreased $784 as compared to the same period of 2025 due to higher deductions for the Internal Revenue Service, or IRS, tangible property regulations, or TPR. The Company’s effective tax rate was (5.8)% for the first six months of 2026 and 1.2% for the first six months of 2025. The Company’s effective tax rate for the remainder of 2025 will be largely determined by the level of eligible asset improvements expensed for tax purposes under IRS TPR each period. The Company expects the level to be lower in the remainder of the year than the first six months, increasing the effective tax rate

Rate Matters

See Note 10 to the financial statements included herein for a discussion of rate matters.

The Company does not expect to collect a DSIC or file a rate increase request in 2026.

Acquisitions and Growth

On December 23, 2025, the Company signed an agreement to purchase the water assets of Lenwood Management, LLC in Southampton Township, Franklin County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth quarter of 2026 at which time the Company will add approximately 90 water customers.

On December 11, 2025, the Company signed an agreement to purchase the water assets of Mt. Rock Manor Management, LLC in Southampton Township, Franklin County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth quarter of 2026 at which time the Company will add approximately 140 water customers.

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

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 fourth quarter of 2026 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 six months ended June 30, 2026, the Company invested $21,102 in construction expenditures for main extensions, wastewater treatment plant construction, and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.

The Company anticipates construction expenditures for the remainder of 2026 of approximately $26,800 exclusive of any potential acquisitions not yet approved. In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items. The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions. Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2026. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2026 and 2027, to fund anticipated construction and acquisition expenditures.

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

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

Common Stock

Common stockholders’ equity as a percent of the total capitalization was 60.5% as of June 30, 2026, compared with 51.7% as of December 31, 2025. Based on the equity percentage falling to near fifty percent, the Company completed the underwritten common stock offering, increasing equity as a percentage of total capitalization. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity. It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.

The Company has the ability to issue approximately $10,000 of additional shares of its common stock or debt securities remaining under an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission 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, 2026, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of the Secured Overnight Financing Rate plus 1.17% with an unused commitment fee and an interest rate floor. The Company had no borrowings under its line of credit as of June 30, 2026. Upon completion of the underwritten common stock offering in April 2026, the Company repaid its line of credit. The Company expects to extend the maturity for this line of credit into 2028 under similar terms and conditions.

The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand. There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future. If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures. Management believes the Company will have adequate capacity under its current line of credit to meet anticipated financing needs throughout 2026 and 2027.

Term Loan

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

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, 2025 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 39.5% as of June 30, 2026, compared with 48.3% as of December 31, 2025. Based on the debt percentage nearly reaching fifty percent, the Company completed an underwritten common stock offering in April 2026 and repaid its line of credit, decreasing long-term debt as a percentage of total capitalization. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward. A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings.

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.

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, 2026.

Credit Rating

On June 30, 2026, 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.

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

Labor Relations

The current union contract expired on April 30, 2026. Management and the union leadership have agreed to honor the expired contract and continue to work under its terms. Both sides are negotiating in good faith and the Company expects to reach an operationally and fiscally responsible agreement with no interruption of service.

Drought

As of June 29, 2026, Pennsylvania state officials maintained a drought watch for 11 counties in Pennsylvania, including York and Adams Counties within the Company’s service territory, and a drought warning for 8 counties in Pennsylvania, including Franklin and Lancaster Counties within the Company’s service territory. The watch calls for a voluntary reduction in nonessential water use of 5 to 10 percent and the warning calls for a voluntary reduction in nonessential water use of 10 to 15 percent. These measures could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions.

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, 2026.

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 6 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.

PART II - OTHER INFORMATION


Item 5.	Other Information.

During the quarter ended June 30, 2026, 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.


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.
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)

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 COMPAN


	/s/ Joseph T. Hand
Date: August 6, 2026	Joseph T. Hand Principal Executive Officer



	/s/ Matthew E. Poff
Date: August 6, 2026	Matthew E. Poff Principal Financial and Accounting Officer