Good day ladies and gentlemen and welcome to the Q4 2012 Unitil Earnings Conference call. My name is Jason and I'll be your operator for today. At this time all participants are in a listen only mode. Later we will conduct a question and answer session. (Operator Instructions). As a reminder this conference is being recorded for replay purposes, I would now like to turn the conference over to your host for today, Mr. David Chong, Director of Finance. Please proceed, sir.

Good afternoon and thank you for joining us to discuss Unitil Corporation's fourth quarter 2012 financial results. With me today are Bob Schoenberger, Chairman, President and Chief Executive Officer, Tom Meissner, Senior Vice President, Chief Operating Officer, Mark Collin, Senior Vice President, Chief Financial Officer and Treasurer and Larry Bach, Chief Accounting Officer and Controller. We will discuss financial and other information about our fourth quarter and year end results on this call. As we mentioned in the press release announcing the call, we've posted that information including a presentation to the investor section of our website at www.unitil.com. We will refer to that information during this call. Before we start please note that comments made on this conference call may contain statements that are commonly referred to as forward looking statements, which are mainly pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements include statements regarding the company's financial condition, results of operations, outlook, expenditures and other expenses, regulatory environment and strategy, market opportunities and other plans and objectives. In some cases forward looking statements can be identified by terminology such as may, will, should, estimate, expect or belief, the negative of such terms or other comparable terminology. These forward looking statements are neither promises nor guarantees but involve risk and uncertainties and the company's actual results could differ materially. Those risks and uncertainties including those listed or referred to on slide 1 of the presentation and those detailed in the Company's filings with the Securities and Exchange Commission including the Company's Form 10-K for the year ended December 31, 2012. Forward looking statements speak only of the date they are made. The company undertakes no obligation to update any forward looking statements. That said I'll now turn the call over to Bob.

Thanks David. I'll begin by discussing the highlights of our financial performance in 2012. If you turn to slide 4 of our presentation today we announced net income of $18.1 million for 2012, an increase of $1.8 million or 11% over the $16.3 million we reported in 2011. Earnings per share were a $1.43 for 2012, compared to $1.50 per share in 2011. Earnings per share in 2012 reflect a higher number of average shares outstanding year-over-year from a $70 million common stock offering we completed in May 2012. Our 2012 results reflect the highest net income in our history. The strong annual growth reflects significant new customer additions, as well as higher natural gas and electric sales margins due to higher distribution rates from our recently completed rate cases, despite extremely mild winter weather in 2012 which was the warmest year on record. We estimate that the mild weather in 2012 negatively impacted earnings by $1.7 million or $0.14 per share compared to normal. Mark will provide some additional details on our financial results in just a few minutes. We believe that our key strategic initiatives over the past few years, including our emphasis on customer service and satisfaction, our regulatory agenda that we set base distribution rates across our operating utilities, our focus on natural gas customer growth and the expansion of our non-regulated energy brokering business have all been key contributors to our growth. We turn to slide 5; we focus on our non-regulated energy brokering subsidiary, Usource. Usource continues to execute on its strategic growth plan. Usource recorded revenues of $5.5 million in 2012, on par with 2011. Furthermore, Usource has a forward book of $8.2 million, which represents an estimate of revenues already under contract to be recognized in future periods. Usource currently manages over…

Thank Bob. I would like to pick up where Bob left off; starting on slide 11 by discussing significant growth in our gas business in terms of customer additions. Since acquiring Northern Utilities in December of 2008, we’ve added and converted nearly 6000 natural gas customers, which is an increase of about 10% over the 2008 customer base. In 2012 we added and converted over 2000 gas customers, which was up 50% from the prior year and as Bob indicated we plan to double our level of activity in 2013, with 4000 customer additions and conversions. In terms of the impact on our operations, we are essentially doubling our gas construction activity heading into 2013 from what it was just a year or two ago, which requires a proportionate increase in construction resources. We expect to add additional construction resources next year as we head into 2014 in order to ramp up to a target of 5000 customer additions per year. Slide 12 reflects the financial impacts of our growth program as well as other strategic initiatives. Our gas rate base has grown at an annual rate of 9%, driven by customer editions as well as cast iron and bare steel replacement programs across all of our gas service areas. This growth in rate base combined with recent rate cases at all three of our natural gas utility subsidiaries has led to natural gas margin growth of 12% annually. Looking forward, we expect growth in customer addition and utility plan to accelerate in the few years resulting in a doubling of our 2008 rate base by 2016. Slide 13 highlights some of the large industrial customers that we recently added or converted to natural gas in just the last few years. Some of these customers required an extension of our…

Thanks Tom. Good afternoon everyone. As Bob stated earlier, earnings increased by $1.8 million or 11% for this past year ended 31 December 2012, the highest net income in our history. Results were positively affected by higher natural gas and electric sales margins, due to higher distribution rates and new customer growth but were negatively impacted by extremely mild winter weather in 2012. We estimate that compared to normal, the mild weather in 2012 negatively impacted earnings by about $1.7 million or $0.14 per share. Now turning to slide 16, natural gas sales margins were $76.2 million in 2012, an increase of $8.3 million compared to 2011, reflecting higher distribution rates and new customer growth, but again relatively impacted by the low gas therm sales due to mild winter weather early in the year. Also gas margins in 2011 include a onetime recovery of $4.5 million in purchased gas costs that had been charged off in a prior period. Based on weather data collected in the company’s service areas, there were 16% fewer heating degree days in 2012 compared to normal, where the normalized gas therm sales in 2012 are estimated to be approximately 5% and 3% higher compared to 2011 in the fourth quarter and full year respectively. Strong growth in our weather normalized sales reflects the significant number of customer additions we're making across our gas territories. Turning to slide 17 we highlight our electric division sales and margin. Electric sales margins were $71.9 million in 2012, an increase of $4.3 million compared to 2011, reflecting higher electric distribution rates and new customer growth, but again negatively impacted by lower sales due to the mild winter weather we saw early in 2012, where the normalized electric kilo/hour sales in 2012 are estimated to be approximately the same or…

(Operator Instructions). Our first question comes from the line of Liam Burke - Jenny Capital Markets. Please proceed.

One of the gaining factors in the build-out has been crew availability and you mentioned you showed the crew sizes in one of the slides, A: have you been able to alleviate that shortage and B: how have you have been able to do it?

We were able to get crews, as long as we plan in advance and when we issued our contracts for next year, we were able to get sufficient resources for the built-out that we have planned. Where we tend to run into problems is if we discover that or determine that we’re running ahead of the forecast by say August, it becomes difficult at that time to acquire additional resources because the contractors have already committed their resources to other utilities within the region.

On the capital budget, I guess you came up with $83 million. You had a capital budget this year of roughly $70, when you are about cash flow breakeven. What are you anticipating in terms of cash needs over and above your CapEx next year?

Our operating cash flow we expect some improvement over this year. So as you pointed out, last year our operating cash flow was barely close to our total capital spending. So we expect to continue to finance most of our capital spending through operating cash flow. Any difference between that and our construction needs will be met with additional issuance of debt during the period to cover any kind of shortfall. But there is no, we don’t have any anticipated large or extraordinary cash expenditures, other than what shows up in our capital budget.

(Operator instructions). The next question comes from the line of Shelby Tucker with RBC Capital Markets. Please proceed.

Just a few questions. When you follow up on the last one about the CapEx; what do you expect your run rate to be past 2013?

Looking out, I think that it’s going to be closer to where we are this year, than we were a year prior, that given our ramp up and ramping up to -we talked about ramping up to 4000 additional gas customers this year. We are going to be ramping up to an additional 5000 the following year. We continue to expect to expect a follow through on the replacement programs on the gas side relative to cast iron replacement and bare steel replacement and then our electric reliability spending should trend similar to where we are this year. So most of our spending, we are fairly consistent with this year. The change will be of course, that we will have completed or will be completing rate cases, particularly for the gas companies in Maine and New Hampshire to help support that capital spending and as I indicated, one of the key focus of those rate cases Shelby is that we get cost trackers that give us that ability to increase our revenues on a regular basis each year to further support the capital spending. And I would just point out that on the growth side, the way that we do that growth and the way that that growth is set up is that those expenditures are pretty much self-supporting, that the revenue we get from the growth, from the new customer supports that investment and allows us to bring in more and more investment and to cover that through our operating results.

Okay and then the $8 million that was the third bucket in the CapEx program, that is still a rate base number?

Yes, it’s primarily related, as explained is related to our customer information system. There is a big project there. That’s a two year project. So we will spread that out over two years. It’s a very large project, as you can appreciate customer information system it’s at the center of just about everything we do. So that’s the two year expenditure and that area is where we have the most discretion and moving things around and we may be able, as we get out and those expenditures may come down a little bit, but I think you’ll see our gas expenditures and electrical expenditures continuing to stay about where we are planning for this year.

Okay and then on the rate cases, in most jurisdictions you have somewhere around low to mid 40% equity layer. Are you looking with these rate cases to maybe purpose a higher equity layer or is that something for a later date?

Yes, definitely that’s a key component of the rate cases. We intend to reflect our actual equity investment in our subsidiaries, and as Bob mentioned when we issued the equity here midyear of last year, we took that equity and invested it directly into the utility subsidiaries. We invested in all of them and our equity ratio was significantly higher across all our utility subsidiaries than it was in the last rate cases. So we expect to get an uptick from that.

And have you provided some details as to the level of equity you have? Well the parentage sorry, not the absolute number because I see it on the slide 19.

Yes, the percentage across the utilities is fairly close to the consolidated. So you can look at the consolidated and get a pretty, if anything they may be a tick higher, but they may be a little better. But they are right around the consolidated.

Okay and then Bob you talked about Usource growing but as we look at the numbers, they really have not shown a lot of progress over last. We had a big bump I think in 2009 or 2010 if I remember correctly but after that it’s been kind if staying a steady level. Is it because you’re building up and therefore you are incurring higher expenses than usual has you build your portfolio? How should we be thinking about the realization of that growth?

Yes. It’s a good question Shelby. If you look at year-over-year, the total revenue for Usource were flat. There were really two major reasons for that. Just as Utilities experienced a warmer weather that impacts Usource’s revenues because obviously customers use less natural gas and electricity than otherwise would be in a normally use; so that was one impact. The biggest impact during the year is we made a decision to in effect buy the sales force from a company that was exiting the marketplace in New York. That quite frankly progressed this year, but I expect that you will see a significant improvement year-over-year in 2013.

And then last question I guess for Mark, any one time items that we should be aware of and so the numbers that you have posted today?

Anything of that nature, particularly comparison year-over-year 2011-2012 comparison, I think we have done a fairly detailed job at highlighting that in both the earnings release as well as the 10-K. So there is some onetime adjustments in 2011 that you pick up on but we have nothing in 2012 of any material nature.

There are no further questions at this time. And ladies and gentleman that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.