Earnings Labs

Unitil Corporation (UTL)

Q3 2015 Earnings Call· Thu, Oct 22, 2015

$52.91

+1.11%

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Transcript

Operator

Operator

Good day, everyone. And welcome to the Third Quarter 2015 Unitil Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Finance Director, David Chong.

David Chong

Analyst

Good afternoon. And thank you for joining us to discuss Unitil Corporation’s third quarter 2015 financial results. With me today are Bob Schoenberger, Chairman, President, and Chief Executive Officer; Mark Collin, Senior Vice President, Chief Financial Officer, and Treasurer; Tom Meissner, Senior Vice President and Chief Operating Officer; and Larry Brock, Chief Accounting Officer and Controller. We will discuss financial and other information about our third quarter on this call. As we mentioned in the press release announcing the call, we have 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 made 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, capital 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 terminologies such as may, will, should, estimate, expect or believe the negative of such terms or other comparable terminology. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties, and the company’s actual results could differ materially. Those risks and uncertainties include those listed to -- listed or referred to on slide one 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, 2014. Forward-looking statements speak only as of the date they are made. The company undertakes no obligation to update any forward-looking statements. With that said, I will now turn the call over to Bob.

Bob Schoenberger

Analyst

Thanks, Dave. Thank you for everyone for joining us today. I will begin by discussing the highlights of our past quarter. If you turn to slide four of our presentation, today we announced net income of $1.7 million or $0.12 per share for the third quarter of 2015, an increase of $0.1 million or $0.01 per share, compared for the third quarter of 2014. For the first nine months of this year, we reported net income of $17 million or a $1.22 per share, an increase of $1.7 million or 11% and $0.12 per share, compared to prior year. We continue to produce sustained and predictable growth in earnings per share and net income. We are strengthening our distribution infrastructure and expanding our natural gas utility business, which combined with our ongoing regulatory agenda is driving consistent growth for the company. Turning to slide five, the graph shows that our financial results have increased sharply over the past few years with net income growing at an annual rate of 15% since 2012. Our financial results have been driven by the strong demand for natural gas in the areas we serve, our growing investment in our gas and electric utility distribution systems and the successful execution of our regulatory strategy. On slide six, as we have discussed in the past, we currently have a customer penetration rate of only 60% on our existing distribution system as a result of historical and economic factors, somewhat unique to northern New England. The relatively low customer penetration on our existing system provides us with low-cost opportunities to add customers along or near our distribution base. This customer growth has contributed significantly to our operating results. In the third quarter, we experienced over 6% unit sales growth in Northern. To further enhance our expansion opportunities,…

Mark Collin

Analyst

Thanks, Bob and good afternoon, everyone. Let’s start on slide nine and take a look at our natural gas utility sales margin. Natural sales utility sales margins were $16.2 million and $73.1 million for the third quarter and the nine months periods, reflecting increases of $1 million and $5.1 million, or up 8% for the year so far compared to prior year. The increases in the third quarter and the nine months period reflect higher natural gas distribution rates and higher unit sales volumes. For the nine months ended September 30, 2015, gas therm sales increase 4% compared to the same period in 2014 and excluding decoupled gas sales, were up 6% in the quarter. The increase in gas therm sales year-do-date in the company’s utility service territories was driven by the colder winter weather in the first quarter 2015 compared to 2014, coupled with strong growth in a number of customers. There were 3% more Heating Degree Days in first nine months of 2015, compared to the same period in 2014, which we estimate positively impacted earnings per share by about $0.02. Compared to normal, there were 13% more heating degree days in the nine months of 2015, which we estimate positively impacted earnings per share by about $0.09. Excluding the effect of weather on sales, estimated weather normalized gas therm sales were up 3% for the nine months of this year, compared to last year. Now turning to slide 10, we highlight our electric utility sales margin. Electric sales margins were $22.2 million and $63.9 million for the third quarter and the nine month periods, reflecting a decrease of $0.4 million for the quarter and an increase of $3.2 million for the year, or up 5% for the year so far compared to prior year. For the third…

Operator

Operator

[Operator Instruction] There are no questions. Do you have any closing remarks? : :