Middlesex Water Company | research notes

Middlesex Water Company: A Leading Provider of Water Services

Middlesex Water Company, established in 1897, is a publicly traded water utility headquartered in Iselin, New Jersey. It is the largest water company in the state and the sixth largest in the United States, serving over 1 million customers in New Jersey, Delaware, and parts of Pennsylvania.

Services

Middlesex Water provides a range of water services, including:

• Water distribution and supply: The company operates a network of water mains and treatment facilities to deliver potable water to its customers.
• Wastewater treatment: Middlesex Water owns and operates wastewater treatment plants that collect, treat, and dispose of wastewater in an environmentally responsible manner.
• Water quality monitoring: The company continuously monitors water quality to ensure compliance with regulatory standards and protect public health.

Infrastructure and Operations

Middlesex Water's infrastructure includes over 6,000 miles of water mains, 46 water treatment plants, and 21 wastewater treatment plants. The company focuses on maintaining and improving its infrastructure through continuous investments.

Sustainability

Middlesex Water is committed to sustainability and environmental stewardship. The company has implemented various programs to reduce water consumption, promote water conservation, and protect water resources. These include:

• Leak detection and repair programs
• Water conservation initiatives for customers
• Rainwater harvesting systems
• Partnerships with environmental organizations

Financial Performance

Middlesex Water has a strong financial track record, with consistent revenue growth and profitability. The company's stock has been performing well in the market, providing investors with a stable return on investment.

Customer Service

Middlesex Water places a high priority on customer satisfaction. The company has a dedicated customer service team that provides 24/7 support to its customers. It also offers online bill payment, account management, and water conservation resources to enhance customer convenience.

Community Involvement

Middlesex Water actively participates in local communities by supporting schools, non-profit organizations, and environmental initiatives. The company believes in giving back to the communities it serves and making a positive impact on society.

Conclusion

Middlesex Water Company is a leading provider of water services in the Northeast United States. With its robust infrastructure, commitment to sustainability, and excellent customer service, the company is well-positioned for continued success in the water utility industry. Middlesex Water plays a vital role in protecting public health, safeguarding water resources, and providing essential services to the communities it serves.

Business Model of Middlesex Water Company

Middlesex Water Company is a publicly traded water utility company that provides water and related services to customers in New Jersey, Massachusetts, and Delaware. The company's business model revolves around the following key components:

• Water distribution and treatment: Middlesex Water owns and operates a network of water distribution and treatment facilities, including reservoirs, wells, and water treatment plants. The company treats and distributes clean water to its customers through a system of pipes, meters, and other infrastructure.
• Wastewater collection and treatment: The company also provides wastewater collection and treatment services to a portion of its customers. It operates a network of sewer mains, pumping stations, and wastewater treatment facilities to collect and treat wastewater before discharging it into rivers or other water bodies.
• Environmental management: Middlesex Water plays an active role in environmental management and sustainability. It invests in water conservation programs, collaborates with environmental organizations, and adheres to strict environmental regulations to protect water resources.
• Infrastructure investment: The company continuously invests in upgrading and expanding its water and wastewater infrastructure to meet the growing needs of its customers and ensure reliable service.

Advantages to Competitors

Middlesex Water Company has several competitive advantages over its competitors:

• Strong regulatory environment: The water industry in the United States is heavily regulated, which limits competition and provides stability to incumbents like Middlesex Water.
• Proven track record: The company has a long and successful track record of providing reliable water and wastewater services to its customers, earning it a strong reputation in the industry.
• Efficient operations: Middlesex Water operates its systems efficiently, minimizing costs and improving profitability.
• Focus on customer satisfaction: The company prioritizes customer satisfaction through its commitment to providing high-quality water services and responsive support.
• Strategic acquisitions: Middlesex Water has expanded its service territory through strategic acquisitions, allowing it to grow its customer base and increase its market share.
• Commitment to innovation: The company invests in research and development to improve its operations, optimize water conservation, and enhance customer experience.

Outlook of Middlesex Water Company

Financial Performance and Growth

• Revenue: Middlesex Water Company (MSEX) has experienced steady revenue growth over the past several years, primarily driven by rate increases and customer growth.
• Earnings: The company's earnings per share (EPS) have also shown consistent growth, with projections indicating continued growth in the future.
• Dividend: MSEX has a strong track record of dividend payments, with annual dividend increases in recent years.

Regulatory Environment

• Rate Cases: MSEX is subject to rate regulation by state utility commissions in Massachusetts and New Jersey. The company has a history of successful rate cases, resulting in rate increases that support its financial performance.
• Infrastructure Investment: Regulatory support is essential for MSEX to invest in its water infrastructure, which is necessary for maintaining water quality and reliability.

Water Resources and Infrastructure

• Water Supply: MSEX has a diverse water supply portfolio, including surface water reservoirs, groundwater wells, and interconnections with other water utilities. The company's water sources are generally reliable and meet water quality standards.
• Treatment and Distribution: MSEX operates several water treatment plants and has an extensive distribution system that delivers water to over 100 municipalities and 150,000 customers.
• Infrastructure Investment: The company continues to invest in its infrastructure to improve water quality, reliability, and efficiency.

Operational Efficiency

• Technology Adoption: MSEX is embracing technology to improve operational efficiency and customer service. This includes smart metering, advanced analytics, and mobile app capabilities.
• Cost Control: The company is focused on controlling costs through initiatives such as procurement optimization and workforce optimization.

Environmental and Social Responsibility

• Water Conservation: MSEX promotes water conservation programs to reduce demand and preserve water resources.
• Environmental Stewardship: The company actively manages its operations to minimize environmental impacts, including protecting watersheds and enhancing water quality.
• Community Involvement: MSEX supports local communities through charitable donations, volunteerism, and educational programs.

Industry Trends and Challenges

• Aging Infrastructure: The water industry faces challenges related to aging infrastructure, which requires significant investment for repair and replacement.
• Climate Change: Increasingly frequent and severe weather events can impact water availability and infrastructure resilience.
• Water Scarcity: Some regions may experience water scarcity due to population growth, urbanization, and climate change.

Competitive Landscape

• MSEX operates in a competitive water utility market. The company's main competitors include American Water Works, Suez North America, and Veolia Water North America.
• MSEX has a strong competitive position due to its established market presence, high customer satisfaction, and focus on innovation.

Overall Outlook

The outlook for Middlesex Water Company remains positive. The company's strong financial performance, supportive regulatory environment, reliable water resources, and commitment to operational efficiency position it for continued growth and success in the water utility industry.

Similar Companies to Middlesex Water Company

American Water Works (https://amwater.com/)

• Reason for customer appeal: Largest publicly traded water and wastewater utility in the U.S., offering reliable and affordable services to millions of customers.

Aqua America (https://aquaamerica.com/)

• Reason for customer appeal: Second largest publicly traded water and wastewater utility in the U.S., known for its high-quality water treatment and customer service.

Essential Utilities (https://essential.co/)

• Reason for customer appeal: Provides water, wastewater, and natural gas services to over 5 million people in multiple states, with a focus on infrastructure investment and sustainability.

Suez Water Technologies & Solutions (https://suezwatertechnologies.com/)

• Reason for customer appeal: Global provider of water treatment and filtration solutions, offering tailored services for industrial, commercial, and municipal customers.

Veolia Water Technologies (https://www.veoliawatertechnologies.com/)

• Reason for customer appeal: Multinational water treatment company with expertise in desalination, wastewater treatment, and water reuse, providing innovative solutions for water scarcity challenges.

History of Middlesex Water Company

1897:

• Middlesex Water Company is incorporated in New Jersey by a group of investors led by Edward T. Moffett.
• The company's initial service territory includes Plainfield, Dunellen, and South Plainfield, New Jersey.

Early 20th Century:

• Middlesex Water rapidly expands its service area by acquiring numerous smaller water companies in New Jersey.
• The company also invests in new water sources and treatment facilities to meet the growing demand for water.

1955:

• Middlesex Water merges with Elizabethtown Water Company, one of the largest water utilities in New Jersey.
• The merger creates a combined water system serving over 1 million customers in multiple counties.

1970s-1980s:

• Middlesex Water continues to grow through acquisitions, including the purchase of the Jersey City Water Department in 1985.
• The company also modernizes its operations with the adoption of new technologies and automation.

1990s:

• Middlesex Water expands its operations into Delaware and Pennsylvania through the acquisition of several water utilities.
• The company also invests in water conservation programs and environmental stewardship initiatives.

2000s:

• Middlesex Water further expands its service area with acquisitions in New York and Maryland.
• The company becomes involved in wastewater treatment and recycling operations.

2010s-Present:

• Middlesex Water focuses on infrastructure upgrades, water quality improvements, and renewable energy initiatives.
• The company also explores new technologies, such as smart grids and advanced metering infrastructure.

Today, Middlesex Water Company is one of the largest water utilities in the United States, serving over 1.6 million customers in New Jersey, Delaware, Maryland, New York, and Pennsylvania. The company is committed to providing safe, reliable, and affordable water to its customers while protecting the environment.

2023

• January 10: Middlesex Water Company announces earnings for the fourth quarter and full year 2022.

2022

• October 4: Middlesex Water Company announces the acquisition of Claremont Water Service, Inc.
• August 16: Middlesex Water Company announces the acquisition of the water and wastewater assets of New Jersey American Water Company.
• January 12: Middlesex Water Company announces earnings for the fourth quarter and full year 2021.

Recent Timelines of Middlesex Water Company

• 2021: Middlesex Water Company announces a $1 billion capital investment plan over the next five years to improve infrastructure and service.
• 2020: Middlesex Water Company acquires the water and wastewater assets of SUEZ Water New Jersey.
• 2019: Middlesex Water Company acquires the water and wastewater assets of New Jersey American Water Company.
• 2018: Middlesex Water Company acquires the water and wastewater assets of Haddonfield Water Company.
• 2017: Middlesex Water Company acquires the water and wastewater assets of Jersey City Water Company.

Main Supplier

Middlesex Water Company: obtains its water supply from a variety of sources, including surface water, groundwater, and purchased water. The company's main supplier is the Massachusetts Water Resources Authority (MWRA).

MWRA. The MWRA is a public water utility that provides wholesale water and wastewater services to approximately 50 communities in the Boston metropolitan area. The MWRA's water supply comes from a variety of sources, including the Quabbin Reservoir, the Wachusett Reservoir, and the Sudbury Reservoir.

Other Suppliers

In addition to the MWRA, Middlesex Water Company also purchases water from several other suppliers, including:

• The City of Marlborough
• The Town of Hudson
• The Town of Stow
• The Town of Maynard
• The Town of Acton

Website

The MWRA's website is: https://www.mwra.com

Middlesex Water Company's Main Customers (Downstream Companies)

1. Residential Customers

• Website: Not applicable
• Percentage of revenue: 65.1% (2023)
• Description: Middlesex Water provides water and wastewater services to over 200,000 residential customers in New Jersey.

2. Commercial Customers

• Percentage of revenue: 24.1% (2023)
• Examples:
  • Businesses
  • Offices
  • Shopping centers
• Website: Not applicable

3. Industrial Customers

• Website: Not applicable
• Percentage of revenue: 6.4% (2023)
• Examples:
  • Manufacturing facilities
  • Pharmaceutical companies
  • Refineries

4. Public Authorities

• Website: Not applicable
• Percentage of revenue: 3.1% (2023)
• Examples:
  • Schools
  • Hospitals
  • Government buildings

5. Other Customers

• Website: Not applicable
• Percentage of revenue: 1.3% (2023)
• Examples:
  • Water bottlers
  • Car washes
  • Swimming pools

Key Revenue Streams of Middlesex Water Company

Middlesex Water Company (MSEX), a publicly traded water utility company operating in New Jersey and Delaware, generates revenue through two primary streams:

1. Water Distribution and Sale (98.7% of Total Revenue)

• Residential Customer Sales: The company provides water services to approximately 605,000 residential customers. Charges include base rates, usage charges, and other fees.
• Commercial and Industrial Customer Sales: Middlesex Water serves approximately 16,000 commercial and industrial customers. Tariffs are based on factors such as volume, demand, and other usage characteristics.
• Municipal and Utility Customer Sales: The company sells water to municipalities and other utilities for resale or distribution within their service areas.

2. Non-Water Services (1.3% of Total Revenue)

• Fire Protection Service: Middlesex Water provides dedicated fire hydrants and water supply for fire protection to municipalities and businesses. Fees are assessed based on the number and type of hydrants installed.
• Other Non-Water Services: The company offers additional non-water services, such as:
  • Water meter installation and maintenance
  • Plumbing and leak detection
  • Irrigation system installation and repair

Estimated Annual Revenue

Middlesex Water Company's total revenue for the fiscal year ending December 31, 2021, was approximately $470.7 million.

Breakdown by Revenue Stream:

• Water Distribution and Sale: $463.4 million
• Non-Water Services: $6.3 million

Key Partners of Middlesex Water Company

1. Veolia Water Solutions & Technologies

• Website: https://www.veoliawatertechnologies.com/
• Description: Veolia Water Solutions & Technologies is a global water management company that provides a range of services, including water treatment, desalination, and wastewater treatment. Middlesex Water Company has partnered with Veolia to provide water treatment services for several of its facilities.

2. Suez Water Technologies & Solutions

• Website: https://www.suezwatertechnologies.com/
• Description: Suez Water Technologies & Solutions is another global water management company that provides a range of water treatment and purification solutions. Middlesex Water Company has partnered with Suez to provide water treatment services for several of its facilities, including the Billerica Water Treatment Plant.

3. CDM Smith

• Website: https://www.cdmsmith.com/
• Description: CDM Smith is a global engineering and construction firm that provides a range of services, including water infrastructure design and construction. Middlesex Water Company has partnered with CDM Smith to design and construct several of its water treatment facilities, including the Lowell Water Treatment Plant.

4. Jacobs Engineering Group

• Website: https://www.jacobs.com/
• Description: Jacobs Engineering Group is a global engineering, construction, and technical services company. Middlesex Water Company has partnered with Jacobs to provide engineering and construction services for several of its water treatment facilities, including the Malden Water Treatment Plant.

5. Arcadis

• Website: https://www.arcadis.com/
• Description: Arcadis is a global design, engineering, and consulting firm that provides a range of services, including water resource management. Middlesex Water Company has partnered with Arcadis to provide water resource management services for several of its facilities, including the Weston Water Treatment Plant.

Middlesex Water Company Key Cost Structure

Production Costs

• Water purchase: Middlesex Water Company purchases a significant portion of its water from the Massachusetts Water Resources Authority (MWRA). The cost of water purchases varies depending on the amount of water purchased and the rate charged by the MWRA. The estimated annual cost of water purchases is $25 million to $30 million.
• Water treatment: Middlesex Water Company treats the water it purchases from the MWRA to remove impurities and make it safe for drinking. The cost of water treatment includes the cost of chemicals, energy, and labor. The estimated annual cost of water treatment is $10 million to $15 million.
• Distribution: Middlesex Water Company distributes the water it treats to its customers through a network of pipes and pumps. The cost of distribution includes the cost of maintaining and repairing the distribution system, as well as the cost of pumping the water to customers. The estimated annual cost of distribution is $15 million to $20 million.

Customer Service Costs

• Customer billing: Middlesex Water Company bills its customers for water usage. The cost of customer billing includes the cost of printing and mailing bills, as well as the cost of customer service representatives to answer questions and resolve complaints. The estimated annual cost of customer billing is $5 million to $10 million.
• Customer service: Middlesex Water Company provides customer service through a variety of channels, including phone, email, and social media. The cost of customer service includes the cost of customer service representatives, as well as the cost of maintaining and updating the company's customer service systems. The estimated annual cost of customer service is $5 million to $10 million.

Administrative Costs

• Salaries and benefits: Middlesex Water Company pays its employees salaries and benefits, including health insurance, retirement benefits, and paid time off. The estimated annual cost of salaries and benefits is $10 million to $15 million.
• Rent and utilities: Middlesex Water Company rents office space and pays for utilities, such as electricity, gas, and water. The estimated annual cost of rent and utilities is $2 million to $3 million.
• Insurance: Middlesex Water Company purchases insurance to protect its assets and employees from risks such as lawsuits, natural disasters, and employee injuries. The estimated annual cost of insurance is $2 million to $3 million.

Other Costs

• Depreciation: Middlesex Water Company depreciates its assets over their useful lives. The estimated annual cost of depreciation is $5 million to $10 million.
• Interest expense: Middlesex Water Company pays interest on its debt. The estimated annual cost of interest expense is $5 million to $10 million.

Estimated Annual Cost

The estimated annual cost of Middlesex Water Company's key cost structure is $65 million to $95 million.

Sales Channels

Middlesex Water Company sells its water and wastewater services through the following sales channels:

• Municipal and Industrial Contracts: Middlesex Water Company has long-term contracts with municipalities and industrial customers to provide water and wastewater services. These contracts typically specify the rates, terms, and conditions of service.
• Residential and Commercial Customers: Middlesex Water Company provides water and wastewater services to residential and commercial customers in its service areas. These customers are billed monthly for their water usage.
• Other Sales: Middlesex Water Company also generates revenue from other sales, such as the sale of water and wastewater treatment chemicals and the provision of engineering and consulting services.

Estimated Annual Sales

Middlesex Water Company's estimated annual sales for 2023 are approximately $125 million. This estimate is based on the following assumptions:

• Customer Growth: Middlesex Water Company expects to experience modest customer growth in both its municipal and residential/commercial customer segments.
• Rate Increases: Middlesex Water Company has filed for rate increases with the New Jersey Board of Public Utilities. If approved, these rate increases would generate additional revenue for the company.
• Other Sales: Middlesex Water Company expects to continue to generate revenue from other sales, such as the sale of water and wastewater treatment chemicals and the provision of engineering and consulting services.

It's important to note that these are just estimates, and actual sales may vary depending on a number of factors, such as economic conditions, weather patterns, and regulatory changes.

Customer Segments of Middlesex Water Company

Middlesex Water Company serves a diverse customer base in New Jersey and Delaware, providing water and wastewater services to residential, commercial, industrial, and municipal customers. The company's customer segments can be broadly classified into the following categories:

Residential Customers:

• Single-family homes: The largest customer segment, comprising approximately 60% of Middlesex Water's total customer base. These customers typically consume water for daily household activities, such as drinking, cooking, bathing, and gardening.
• Multi-family dwellings: Includes apartments, condominiums, and townhouses. These customers generally have lower water consumption than single-family homes due to shared amenities and smaller living spaces.
• Other residential properties: This category includes seasonal homes, vacant homes, and other non-primary residences. These customers may have variable water consumption patterns depending on occupancy and usage.

Commercial Customers:

• Retail businesses: Stores, restaurants, and other commercial establishments that use water for sanitation, food preparation, and customer service.
• Office buildings: Corporate headquarters, government offices, and other commercial spaces that consume water for office operations, restrooms, and landscaping.
• Industrial businesses: Manufacturing facilities, warehouses, and other industrial operations that require water for production processes, cooling systems, and sanitation.
• Healthcare facilities: Hospitals, clinics, and nursing homes that have high water usage for patient care, sanitation, and laundry services.

Industrial Customers:

• Pharmaceutical companies: Major pharmaceutical manufacturers in the region rely on Middlesex Water for a consistent supply of high-quality water for their production processes.
• Chemical manufacturers: Companies engaged in the production of chemicals and plastics require water for cooling, processing, and waste treatment.
• Food and beverage processors: Food and beverage manufacturers use water in various stages of their operations, including cleaning, processing, and packaging.

Municipal Customers:

• Municipalities: Middlesex Water provides water and wastewater services to several municipalities in New Jersey, including East Brunswick, Monroe Township, Old Bridge Township, and Sayreville.
• Government agencies: The company also serves local government agencies, such as schools, libraries, and other public buildings.

Estimated Annual Sales by Customer Segment:

Exact annual sales figures for each customer segment are not publicly disclosed by Middlesex Water Company. However, based on industry benchmarks and estimates, the approximate distribution of annual sales by customer segment is as follows:

• Residential Customers: 55-60%
• Commercial Customers: 25-30%
• Industrial Customers: 10-15%
• Municipal Customers: 5-10%

It is important to note that these estimates may vary from year to year depending on factors such as economic conditions, weather patterns, and changes in customer usage patterns.

Value Proposition of Middlesex Water Company

Middlesex Water Company is a provider of water and wastewater utility services in the state of New Jersey. The company's value proposition is based on its commitment to providing safe, reliable, and affordable water and wastewater services to its customers.

Key Elements of Middlesex Water's Value Proposition:

• Safe and Reliable Water: Middlesex Water has a long history of providing safe and reliable water to its customers. The company's water treatment facilities meet or exceed all state and federal drinking water standards.
• Affordable Water and Wastewater Services: Middlesex Water is committed to providing affordable water and wastewater services to its customers. The company's rates are competitive with other water utilities in the state of New Jersey.
• Excellent Customer Service: Middlesex Water is dedicated to providing excellent customer service to its customers. The company's customer service representatives are available 24 hours a day, 7 days a week to answer questions and resolve any issues that customers may have.

Benefits of Choosing Middlesex Water:

• Peace of Mind: Customers can rest assured that they are receiving safe and reliable water from Middlesex Water.
• Affordability: Customers can save money on their water and wastewater bills by choosing Middlesex Water.
• Convenience: Customers can easily manage their accounts and pay their bills online or by phone.

Call to Action:

If you are looking for a water and wastewater utility that you can trust, look no further than Middlesex Water Company. We are committed to providing our customers with safe, reliable, and affordable water and wastewater services. Contact us today to learn more about our services.

Middlesex Water Company (Middlesex) is a publicly traded water utility company that provides water and wastewater services to customers in New Jersey and Delaware. The company faces a number of risks, including:

• Regulatory risk: Middlesex is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Delaware Public Service Commission (DPSC). These regulators have the authority to set rates, approve capital projects, and enforce environmental regulations. Changes in regulatory policies could have a material impact on Middlesex's financial performance.
• Environmental risk: Middlesex's operations are subject to a number of environmental risks, including water contamination, drought, and climate change. These risks could lead to increased costs, service interruptions, and regulatory penalties.
• Infrastructure risk: Middlesex's water and wastewater infrastructure is aging and requires significant investment to maintain and upgrade. The company's ability to meet its capital investment needs will be critical to its long-term success.
• Competition risk: Middlesex faces competition from other water utilities, as well as from alternative water sources such as bottled water and rainwater harvesting. This competition could put pressure on Middlesex's rates and margins.
• Financial risk: Middlesex's financial performance is subject to a number of risks, including interest rate fluctuations, changes in the value of its investments, and the availability of financing. These risks could impact the company's ability to meet its debt obligations and fund its capital investment needs.

Overall, Middlesex Water Company is a well-established water utility with a strong track record of financial performance. However, the company faces a number of risks that could impact its future financial performance. Investors should carefully consider these risks before investing in Middlesex.