Company: MSEX
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001174947-25-001119
Chunk: 86

Company: MIDDLESEX WATER CO
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 8
Chunk 86
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ax income and higher income tax benefits associated
with increased repair expenditures on tangible property in the Middlesex System offset by the 2024 recovery of income taxes on the taxable
portion of the proceeds from a litigation agreement. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex
to recover costs, including income taxes, from the proceeds from a litigation agreement related to the PFAS treatment upgrades at Middlesex’s
Park Avenue Plant.

Liquidity and Capital Resources

Operating Cash Flows

Cash flows from operations are largely based on four
factors: weather, adequate and timely rate increases, effective cost management and customer growth. The effect of those factors on net
income is discussed in “Results of Operations.”

For the six months ended June 30, 2025, cash flows
from operating activities increased $14.2 million to $32.1 million. The increase in cash flows from operating activities primarily resulted
from the impact of Middlesex’s approved base rate increase effective March 1, 2024 and timing of vendor payments.

Investing Cash Flows

For the six months ended June 30, 2025, cash flows
used in investing activities increased $26.5 million to $55.2 million due to increased utility plant expenditures in 2025 and Tidewater’s
acquisition of the water utility assets of Ocean View.

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

Financing Cash Flows

For the six months ended June 30, 2025, cash flows
from financing activities increased $6.7 million to $23.2 million. The increase in cash flows provided by financing activities is due
to higher borrowings under the Company’s lines of credit and higher proceeds from the issuance of common stock under Middlesex’s
new At -the-Market equity offering program (for further information on Middlesex’s At -the-Market equity offering program, see below
under Capital Expenditures and Commitments).

Capital Expenditures and Commitments

To fund our capital program, we use internally generated
funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the Middlesex Water Company Investment Plan
and, when market conditions are favorable, proceeds from sales to the public of our common stock. To the extent possible and fiscally
prudent, the Company finances qualifying capital projects under State Revolving Fund (