The York Water Company (YORW): BCG Matrix [Dec-2025 Updated]

You're looking at The York Water Company (YORW) through the lens of the Boston Consulting Group Matrix, and the picture for late 2025 is a classic utility story with a growth twist. We've mapped their core business-the reliable, 200+ year dividend-paying water service-firmly in the Cash Cow quadrant, generating predictable operating revenue of over $58.016 million in the first nine months of the year. However, the real action is in the Stars, driven by a $145 million capital investment plan and strategic wastewater buys, while risks like a 15.4% surge in interest expense and regulatory lag on the pending rate case keep the Question Marks active. Let's break down exactly where YORW needs to invest its capital for growth and where its aging assets might be dragging performance down.

Background of The York Water Company (YORW)

You're looking at The York Water Company (YORW), and honestly, it's a unique piece of American infrastructure history. This company is the oldest investor-owned water utility in the United States, having operated continuously since way back in 1816. That's a track record few public companies can touch. It serves a defined, franchised territory covering portions of 57 municipalities across four counties in south-central Pennsylvania, primarily York, Adams, and Franklin Counties.

The core business is straightforward: providing water and wastewater services to a growing customer base. Revenue generation is heavily supported by the Distribution System Improvement Charge (DSIC), which is a mechanism allowed by the Pennsylvania Public Utility Commission to recover costs for replacing aging infrastructure without a full rate case filing. For instance, in the third quarter of 2025, revenue growth was explicitly tied to both customer base expansion and these DSIC revenues.

Let's look at the numbers coming out of the 2025 fiscal year, based on the Q3 report released in November 2025. For the three months ended September 30, 2025, The York Water Company posted operating revenues of $20,361,000, which was an increase of $646,000 over the same period in 2024. Net income for that quarter actually improved, hitting $6,201,000, a jump of 5.8% year-over-year, with Basic and Diluted Earnings per share reaching $0.43.

However, the year-to-date picture tells a slightly different story, which you definitely need to factor in. For the first nine months of 2025, operating revenues were $58,016,000, up $1,923,000 from the prior year. But net income for that nine-month period was $14,891,000, a decrease of $292,000 compared to the first nine months of 2024, pushing the nine-month EPS down to $1.03. This dip happened because higher operation and maintenance expenses, depreciation, and interest on debt more than offset the revenue gains and lower income taxes.

The company is definitely putting capital to work to maintain service quality. During the first nine months of 2025, The York Water Company invested $37.1 million in capital projects, including main extensions and a major upgrade to its enterprise software system. They estimate they will spend an additional $10.0 million before the year closes, excluding any acquisitions. Also note that back in May 2025, they filed a significant rate increase request with the PUC, seeking a 28.9% increase for water rates and a 44.5% increase for wastewater rates, with a decision anticipated in early 2026.

To summarize the key revenue drivers and operational context as of late 2025:

• Water utility service revenue from residential customers for the nine months was $32,219 (in thousands, based on reported figures).
• Commercial and industrial water utility service revenue for the same nine-month period was $15,742 (in thousands).
• The average number of water customers grew to 73,684 as of the Q3 report.
• The company is actively replacing up to 400 lead customer-owned service lines annually.

The York Water Company (YORW) - BCG Matrix: Stars

The York Water Company (YORW) exhibits characteristics of a Star quadrant business unit through its aggressive, high-investment growth strategies in a regulated, yet expanding, market.

Infrastructure Rate Base Expansion

The foundation of this Star positioning is the commitment to expanding the regulated asset base through significant capital deployment. The York Water Company filed a rate adjustment request with the Pennsylvania Public Utility Commission on May 30, 2025, which is based on a $145 million capital investment plan for water and wastewater systems through February 2027. This investment is intended to fund the replacement of aging water mains, upgrades to treatment facilities, and compliance with regulatory standards. This $145 million figure represents the capital underpinning the growth narrative. The company is asking for a $24.2 million increase in annual revenues to support these investments. If approved, the typical residential customer would see an additional monthly cost of $14.16 for water and $35.85 for wastewater services. The last rate increase before this filing was in 2022. The proposed rate increase could take effect as early as August 1, 2025, or be delayed until March 2026.

Distribution System Improvement Charge (DSIC)

The Distribution System Improvement Charge (DSIC) provides a mechanism for immediate revenue recovery related to infrastructure replacement, acting as a high-growth revenue stream independent of a full rate case. Increased revenues in the first half of 2025 were attributed to customer base expansion and the DSIC. For the second quarter of 2025, operating revenues increased by $449,000 compared to the same period last year, with the DSIC being a primary driver. For the first nine months of 2025, operating revenues reached $58.016 million, an increase of $1.923 million from the previous year, also driven by the DSIC. The company invested $22.2 million in capital projects during the first six months of 2025, and forecasted an additional $23.8 million investment for the remainder of 2025 for infrastructure improvements.

Wastewater Consolidation Strategy

The targeted acquisition of smaller systems solidifies market share in high-potential territories. On September 16, 2025, The York Water Company reached an agreement to acquire the wastewater system assets within the Pine Run Retirement Community, which is expected to add 141 wastewater customers upon full community build-out. This follows the December 2024 acquisition of the water supply system for the same community, which added nearly 140 residential water customers. In 2024, customer growth from acquisitions resulted in wastewater customers increasing by 522, from 5,999 to 6,521. For the nine months ended September 30, 2025, wastewater customers increased by 530, from 6,585 to 7,115.

Regulated Earnings Growth

The market expects The York Water Company to sustain strong earnings growth relative to the broader utility sector, positioning its current operations as a Star. Analysts project earnings to grow 6.99% next year, moving from $1.43 per share to $1.53 per share. The forecasted annual earnings for the fiscal year ending December 31, 2026, is $1.59 per share. For the first nine months of 2025, Basic and Diluted Earnings Per Share (EPS) was $1.03, a decrease of $0.03 from the previous year. The third quarter of 2025 EPS was $0.43, beating the consensus estimate of $0.38 by $0.05. The fiscal year 2024 EPS was $1.42.

Here's a quick look at key 2025 financial metrics through Q3:

The company's growth drivers are clearly centered on investment and consolidation, which require significant cash support, characteristic of a Star:

• Capital Investment Plan Target: $145 million through February 2027.
• Requested Annual Revenue Increase: $24.2 million.
• Projected Annual EPS Growth: 6.99% for next year.
• Wastewater Customer Addition (Pine Run): 141 customers.
• Capital Expenditures (Nine Months Ended Sept 30, 2025): $37,102 (in thousands).

The York Water Company (YORW) - BCG Matrix: Cash Cows

You're analyzing The York Water Company (YORW) as a classic Cash Cow-a business unit with a high market share in a mature, regulated industry that reliably converts operational success into shareholder returns. This is the engine room of the company, requiring minimal growth investment but generating substantial, predictable cash flow.

Core Regulated Water Utility Service: The foundation of The York Water Company's cash cow status is its essential service: impounding, purifying, and distributing water. This operation is geographically entrenched, serving 57 municipalities across south-central Pennsylvania. This regulatory moat ensures a high market share in a non-discretionary service, which is the definition of a low-growth, high-share position.

Uninterrupted Dividend Record: The stability here is unparalleled; The York Water Company confirmed its 620th consecutive dividend in November 2025. This unbroken streak, spanning over 209 years, is a direct statistical confirmation of consistent cash generation that exceeds operational needs. The Board declared a quarterly dividend of $0.2280 per share, marking the 29th consecutive year of dividend increases, reflecting a 4% hike.

The cash flow supports the entire corporate structure, from debt servicing to funding necessary infrastructure upgrades, which are critical for maintaining the asset base without needing aggressive market expansion spending. Here's a look at the financial results underpinning this stability for the first nine months of 2025.

Residential Water Revenue: This segment represents the most stable component of the top line. For the nine months ended September 30, 2025, Residential Water Revenue totaled $32.219 million. This predictable stream is the bedrock upon which the company bases its dividend policy.

Predictable Operating Revenue: Overall operating revenues for the first nine months of 2025 reached $58.016 million, showing resilience and minimal cyclicality, even as net income dipped slightly to $14.891 million due to higher operating expenses and interest costs. The growth in revenue, up $1.923 million year-over-year for the nine-month period, was driven by customer base growth and revenues from the Distribution System Improvement Charge (DSIC), which funds infrastructure replacement.

The York Water Company is actively reinvesting to maintain efficiency, which is the correct strategy for a Cash Cow. You can see this commitment in the capital spending:

• Capital projects invested year-to-date (first nine months 2025): $37.1 million.
• Estimated additional investment planned for the remainder of 2025: $10.0 million.

The company is milking the gains while using a portion of that cash to support the infrastructure that keeps the cash flowing reliably. That's how you manage a market leader in a slow-growth sector.

The York Water Company (YORW) - BCG Matrix: Dogs

Dogs, are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Aging Water Infrastructure: The older, less efficient assets that require constant, high-cost maintenance and replacement, driving up operation and maintenance expenses.

The York Water Company filed for a rate increase based on $145 million in capital investments through February 2027, with a focus on replacing aging water mains and upgrading treatment facilities. During the first nine months of 2025, the Company invested $37.1 million in capital projects, with an estimated additional $10.0 million planned for 2025 for mains, software upgrades, and routine infrastructure work. The Distribution System Improvement Charge (DSIC) is the mechanism used to recover qualifying infrastructure replacement costs from customers. If the requested rate increase is granted, the typical residential customer would see an additional monthly cost of $14.16 for water service and $35.85 for wastewater service. In 2024, the Company replaced approximately 50,200 feet of water main.

Declining Per Capita Water Consumption: A long-term trend of lower individual water use, which acts as a drag on organic volumetric growth.

Per capita water consumption in the fourth quarter of 2024 was down 0.8% compared to the fourth quarter of 2023. As of December 31, 2023, the average daily consumption was approximately 21.8 million gallons. The York Water Company pursues acquisitions to help offset potential declines in per capita water consumption.

Non-Core, Small-Scale Assets: Very small, isolated systems acquired that may have high integration costs and low economies of scale before full consolidation.

The York Water Company acquired the water supply system serving the Pine Run Retirement Community earlier in 2025 and reached an agreement on September 16, 2025, to acquire the wastewater system assets there. The full build-out of this community is expected to add 141 wastewater customers to the Adams County base. In 2024, the Company acquired six systems and hundreds of new customers. Capital expenditures for acquisitions in 2024 included $783 thousand for water and wastewater systems.

Increased Interest Expense: The rising cost of debt, which surged 15.4% in the first nine months of 2025, offsetting revenue gains and pressuring net income.

The pressure from debt servicing is a clear headwind against revenue growth. Here's the quick math on the interest expense trend:

The increase in 2024 interest expense was primarily due to an increase in long-term debt outstanding and higher interest rates upon issuance of the 5.67% Senior Notes. The average debt outstanding under the line of credit was $16,316 thousand in 2023 and $10,087 thousand in 2024.

The York Water Company (YORW) - BCG Matrix: Question Marks

You're looking at the high-risk, high-reward plays in The York Water Company's portfolio, the Question Marks. These are areas demanding cash now, hoping to capture significant future market share in growing segments. For The York Water Company, these are regulatory-dependent revenue boosts and necessary, non-revenue-generating infrastructure overhauls.

The primary Question Mark centers on the regulatory approval for new rates. The York Water Company filed an application with the Pennsylvania Public Utility Commission (PUC) on May 30, 2025, seeking a $24.2 million increase in annual revenues. This request is tied to $145 million in capital investments planned through February 2027. The uncertainty lies in the PUC's timeline; while the company sought an effective date of August 1, 2025, the PUC suspended and began investigating the proposals on July 10, 2025, with a final decision due by March 1, 2026. This regulatory lag creates a 7-month variance in when that potential revenue stream materializes.

Here's the quick math on the potential revenue impact if the full request is granted:

The regulatory lag risk is defintely a cash flow concern. If the March 1, 2026, decision date holds, the company foregoes the full revenue from the $24.2 million request for a significant portion of the 2025 fiscal year, consuming cash without the corresponding return.

Another significant cash consumer is the Enterprise Software System Upgrade. This is a non-revenue-generating investment that supports future efficiency and compliance, but it drains capital now. As of Q3 2025, The York Water Company had invested $37.1 million year-to-date in capital expenditures, which included the software upgrades, with an additional ~$10.0 million planned for the rest of 2025. For context, the first half of 2025 saw $22.2 million allocated to capital projects, including these upgrades.

The company is actively trying to grow its footprint through small acquisitions, which fit the Question Mark profile as they require upfront capital integration before scale is achieved. These are low-market-share additions in growing service areas:

• The agreement to acquire the 141-customer Pine Run wastewater system in Adams County, pending PUC approval.
• The earlier acquisition of the MESCO, Inc. wastewater assets, which added approximately 180 residential wastewater customers in Monaghan Township.

These small additions, while strategic for consolidation, require immediate capital outlay for integration and infrastructure enhancement, consuming cash while their revenue contribution is still relatively small compared to the overall business base, which serves over 212,000 people in 57 communities. Finance: draft 13-week cash view by Friday.