- expected financial condition, performance, prospects and earnings of the

- strategic plans for growth;

- the amount and timing of rate increases and other regulatory matters, including

the recovery of certain costs recorded as regulatory assets;

- the Company's expected liquidity needs during the upcoming fiscal year and

beyond and the sources and availability of funds to meet its liquidity needs;

- expected customer rates, consumption volumes, service fees, revenues, margins,

- the expected amount of cash contributions to fund the Company's retirement

benefit plans, anticipated discount rates and rates of return on plan assets;

- the ability of the Company to pay dividends;

- the Company's compliance with environmental laws and regulations and

estimations of the materiality of any related costs;

- the safety and reliability of the Company's equipment, facilities and

- the Company's plans to renew municipal franchises and consents in the

- the availability and quality of our water supply.

- effects of general economic conditions;

- increases in competition for growth in non-franchised markets to be potentially

- ability of the Company to adequately control selected operating expenses which

are necessary to maintain safe and proper utility services, and which may be

- availability of adequate supplies of quality water;

- actions taken by government regulators, including decisions on rate increase

- new or modified water quality standards and compliance with related legal and

- weather variations and other natural phenomena impacting utility operations;

- financial and operating risks associated with acquisitions and/or

- acts of war or terrorism;

- changes in the pace of new housing development;

- availability and cost of capital resources;

- timely availability of materials and supplies for operations and critical

- impact of the Novel Coronavirus (COVID-19) pandemic; and

- other factors discussed elsewhere in this report.

fee for the billing, cash collection and other administrative functions associated with HomeServe's service contracts.

· New facility to provide an enhanced treatment process at the Company's largest

New Jersey wellfield in South Plainfield to comply with new state water quality

regulations relative to poly- and perfluoroalkyl substances, collectively

referred to as PFAS, and integrate surge protection to mitigate spikes in water

pressures along with enhancements to corrosion control and disinfection

· Replacement of approximately six miles of water mains including full main and

service line replacements, meter pit installations and fire hydrant

replacements in the Township of Woodbridge, New Jersey;

· Upgrade of our Work and Asset Management Information Technology System;

· Two new elevated water storage tanks in our Tidewater service territory; and

· Various other water main replacements and improvements.

The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects.

In November 2021, the Company was served with two PFOA-related class action lawsuits seeking restitution for medical, water replacement and other claimed related costs. These lawsuits are in the early stages of the legal process

Our strategy for profitable growth is focused on the following key areas:

· Invest in projects, products and services that complement our core water and

· Timely and adequate recovery of infrastructure investments and other costs to

· Prudent acquisitions of investor and municipally-owned water and wastewater

· Operation of municipal and industrial water and wastewater systems on a

federal and state environmental, water and wastewater quality and other associated legal and regulatory requirements.

The segments in the tables included below consist of the following companies: Regulated-Middlesex, Tidewater, Pinelands and Southern Shores; Non-Regulated-USA, USA-PA, and White Marsh.

Results of Operations - Three Months Ended June 30, 2022

Operating revenues for the three months ended June 30, 2022 increased $3.0 million from the same period in 2021 due to the following factors:

· Middlesex System revenues increased $4.4 million due to its approved base rate

· Tidewater System revenues decreased $0.1 million due to lower new customer

· The sale of our regulated Delaware wastewater subsidiary in January 2022

· Non-regulated revenues decreased $0.5 million primarily due to lower

· All other operating revenue categories decreased $0.1 million.

Operation and maintenance expenses for the three months ended June 30, 2022 increased $1.6 million from the same period in 2021 due to the following factors:

· Higher weather-related main break activity in our Middlesex system during the

winter months resulted in $0.2 million of additional non-labor costs;

· Labor costs increased by $0.5 million due to wage increases;

· Costs for employee benefits increased $0.4 million due to market fluctuations

in the cash surrender value of life insurance policies; and

· Variable production costs increased $0.4 million primarily due to

weather-driven changes in water quality and higher chemical prices; and

· All other operation and maintenance expense categories increased $0.1 million.

Other taxes for the three months ended June 30, 2022 increased $0.6 million from the same period in 2021 primarily due to higher revenue related taxes on increased revenues in our Middlesex system.

Net Income and Earnings Per Share

Results of Operations - Six Months Ended June 30, 2022

Operating revenues for the six months ended June 30, 2022 increased $6.6 million from the same period in 2021 due to the following factors:

· Middlesex System revenues increased $8.1 million due to its approved base rate

· Tidewater System revenues increased $0.6 million due to additional customers

and a one-time customer credit issued in the first quarter of 2021 partially

offset by lower demand per customer and lower new customer connection fees;

· Non-regulated revenues decreased $0.8 million due to lower supplemental

· The sale of our regulated Delaware wastewater subsidiary in January 2022

Operation and maintenance expenses for the six months ended June 30, 2022 increased $2.4 million from the same period in 2021 due to the following factors:

· Higher weather-related main break activity in our Middlesex system during the

winter months resulted in $0.4 million of additional non-labor costs and $0.2

million of overtime labor charges;

· Labor costs also increased by $0.5 million due to wage increases;

· Costs for employee benefits increased $0.6 million due to market fluctuations

in the cash surrender value of life insurance policies;

· Variable production costs increased $0.3 million primarily due to

weather-driven changes in water quality and higher chemical prices; and

· All other operation and maintenance expense categories increased $0.4 million.

Depreciation expense for the six months ended June 30, 2022 increased $1.3 million from the same period in 2021 due to a higher level of utility plant in service.

Other taxes for the six months ended June 30, 2022 increased $1.1 million from the same period in 2021 primarily due to higher revenue related taxes on increased revenues in our Middlesex system.

Middlesex recognized a $5.2 million gain on the sale of its regulated Delaware wastewater subsidiary in January 2022.

Interest charges for the six months ended June 30, 2022 increased $0.4 million from the same period in 2021 due to higher long-term and short-term debt outstanding in 2022 as compared to 2021.

Net Income and Earnings Per Share

For further discussion on the Company's future capital expenditures and expected funding sources, see "Capital Expenditures and Commitments" below.

The capital investment program for 2022 is currently estimated to be approximately $90 million. Through June 30, 2022 we have expended $39 million and expect to incur approximately $51 million for capital projects for the remainder of 2022.

scope and costs and, could be impacted if new variants of the COVID-19 pandemic arise and continue for an extended period of time.

To pay for our capital program for the remainder of 2022, we plan on utilizing some or all of the following:

· Short-term borrowings, as needed, through $140 million of lines of credit

established with three financial institutions. As of June 30, 2022, there was

$112.5 million of available credit under these lines (for further discussion on

Company lines of credit, see Note 6 - Short Term Borrowings);

· Proceeds from the Delaware State Revolving Fund (SRF). SRF programs provide low

cost financing for projects that meet certain water quality-related and system

· Proceeds from long-term borrowing arrangements; and

· Proceeds from the Investment Plan.

Recent Accounting Pronouncements - See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements and guidance.

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