Good day, ladies and gentlemen, and welcome to the Unitil Q1 2016 earnings conference call. [Operator Instructions] I'd now like to introduce your host for today's conference Mr. David Chong, Director of Finance. Sir, please go ahead.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's first quarter 2016 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 first quarter on this call. As we mentioned in the press release announcing the call, we have posted that information including a presentation to the Investors section of our website at www.unitil.com. We'll 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 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 company's actual results could differ materially. Those risks and uncertainties include 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, 2015. 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'll now turn the call over to Bob.

Thanks, David. I'll begin by discussing the highlights of our past quarter. Beginning on Slide 5 of the presentation. Today we announced net income of $10.9 million or $0.78 per share for the first quarter of 2016, a decrease of $2.7 million or $0.20 per share over the first quarter of 2015. This decrease in earnings for the first three months of 2016 was driven by lower natural gas and electric sales and margins, reflecting significantly warmer winter weather compared to the same period last year. As Mark will discuss later, we estimate that weather impacted our earnings per share negatively by $0.25 in the first quarter. Turning to Slide 6. The graph shows that our financial results have increased over the past three years, while maintaining a strong rate of return on our utility investments. Our financial results go hand-in-hand with our strong operating performance. We have met or exceeded all service quality metrics for safety, reliability and customer service, and our customers have seen an almost 50% reduction in outages since 2010. The continuing investment of both our gas and electric utility distribution systems and the successful execution of our regulatory strategy, and our attention to customer service is providing a platform for sustained growth. Moving on to Slide 7. Our utility rate base continues to grow, as we had new customers and improved both the gas and electric distribution systems. Over the past four years, our combined gas and electric rate base has grown at an annual rate of 7%, driven by customer additions and our infrastructure replacement and improvement programs. On the gas side of our business, our rate base has doubled and our gas segment profit has nearly quadrupled since acquiring our New Hampshire and Maine gas business. Looking forward, we believe we have ample…

Thanks, Bob. I will begin by discussing the weather impact on our gas and electric sales margin for the first quarter shown on Slide 11. This winter, including the key heating months of January and February of 2016, was one of the warmest on record throughout New England. In contrast, last winter was one of the coldest on record in New England. The combination of these two winters, extreme cold last year and extreme warm this year create a accumulative estimated impact to earnings per share of $0.25 year-over-year due to the lower gas and electric margins. Now turning to Slide 12. Natural gas margin was $35.9 million in the quarter, a decrease of $2.9 million or 7.5% compared to the first quarter of 2015. Gas sales margin was negatively impacted by lower therm unit sales due to the warmer weather, partially offset by the positive impacts of higher natural gas distribution rates and the growth in the number of customers. There were 23% less heating degree days in the first quarter of 2016 compared to 2015, which we estimate negatively impacted earnings per share by about $0.22, due to the lower gas margins. Excluding the effect of the weather on sales, weather normalized gas therm sales were up 2% in the first quarter of 2016 compared to the same period in '15. This weather normalized growth was led by a quarter-over-quarter increase in estimated gas terms sales of 7.4% to large commercial and industrial customers. Slide 13 highlights our electric business sales and margin. Electric sales margin was $20.1 million in the first quarter of 2016, a decrease of $1.1 million or 5.2% compared to the same period in 2015. As on the gas side, electric sales margin decreases reflect the impact of weather, albeit electric sales are clearly…

[Operator Instructions] Our first question comes from the line of Peter Wernau with Wernau Asset Management.

I had a quick question. We look at the business as sort of the underlying growth of volume versus the weather impacts. It's nice that we had a nice and warm season, but if this doesn't really impact our investment thesis, one thing I was hoping that you might provide some color on. I noticed you showed the compounded annual growth rate of the gas business and we've been modeling that. Is there a comparable metric for electric?

In terms of the growth rate, as you said, if you get away from the volumetric kilowatt-hour sales the one thing that the weather doesn't impact is our customer growth or our investment growth. And relative to our customer growth on the electric side of the business, we have been then continued to add customers on that side. It's a little slower than gas. It doesn't have the same high growth rate we're seeing on gas primarily, because electric is just about served everywhere, so it grows along with households. We're growing about 0.5% a year in terms of customers. On the investment side, we've also continued to have investment in rate base on electric. And that's intended to grow between 3% and 4% per year in terms of our rate base. So in contrast, the gas business is growing more in the 8% to 10% range whereas the electric is down in the 3% to 4% range on rate base. But they're both growing and they're both continuing to contribute. And as I indicated earlier, our planned rate case for our largest electric division here in New Hampshire, we'll be filling that next week. And we hope that that will get us on a path, so that we can earn our authorized rate of return on that division and make sure these investments are returning for us.

I mean just from an anecdotal point of view, the amount of actual and planned construction both in Maine and the seacoast area of New Hemisphere is really robust and growing. So hopefully that will contribute to the growth rate in the gas as well as the electric business.

Our next question comes from the line of Insoo Kim with RBC Capital Markets.

First of all, in terms of weather for 4Q '15, which was, I guess last quarter, how much of the EPS was impacted by weather compared to normal?

In the fourth quarter?

In the previous quarter and the fourth quarter of last year?

I've got to make sure I understand the periods of comparing. This last quarter compared to the same quarter, a year ago?

No, just versus normal, I'm just trying to see --?

Versus normal, we're down about $0.09. $0.09 in EPS due to versus what normal weather would have been.

But that's for the first quarter, just this past quarter, right?

Yes.

What about further quarter before that on the fourth quarter?

Fourth quarter, I'd have to check that. I don't have the fourth quarter normalized results in front of me, right now.

Because, I mean, obviously the first and the fourth quarter being the largest quarters and with the [ph] 20s year-over-year decline in the first quarter, I'm just trying to have a base level of earnings to compare for the fourth quarter that's going to be coming up in a few quarters, so I guess I'll check with that offline.

Okay.

In terms of the gas penetration rates, do you still see given where the oil prices are, the gas sales to grow at a lower end of that 46% range that you guys were talking about on weather normalize basis?

As I was telling you before, again, it's early in the year, so it's still early, but we're about 25%, 30% ahead in terms of gross meter adds over the last year. So the oil price obviously has had some impact, but anecdotal evidence, for example, on in Saco, Maine, there is an industrial park there with 36 businesses, every one of them has indicated their interest into converting to natural gas. So to be conservative, I'd say on the low side, but we have hopes that it might be better than that.

And from a commission standpoint. Have there been conversations recently or in the past about whether decoupling mechanism that, and whether they're interested in or you may be interested in implementing something like that in the future, to mitigate some of this follow-through the Maine earnings?

As you know, in our Massachusetts jurisdictions, our subsidiary in Massachusetts, we do have both decoupling on the electric and the gas side of the business. And that is complemented by, on the gas side we have a cost tracker for cast iron replacement. And we've requested a capital tracker for electric as well. In New Hampshire, there is a lot of activity now, particularly around energy efficiency program planning and such and the decoupling concept has come up as a potential rate making concept to help encourage or support increased energy efficiencies spanning and basically make the utility indifferent to lost sales from that. One partial decoupling mechanism that is getting a lot of discussion now as a lost base revenue calculation that essentially decouples the energy sales losses due to energy efficiency from the utilities revenue, that's got a lot of attention. And then, in Maine, where we have the gas business up there, the biggest thing that we moved towards is more of a rate design. It allows us to recover a larger percentage of our delivery cost based on fixed charges or charges that are not subject to weather or are not as volatile to weather. In fact, even this quarter, it was dampened by fact that we've been able to move our rates towards higher fixed charges and so that the approach there has generally been to move towards higher fixed charges. We haven't had much discussion around decoupling, but it wouldn't surprise me if that comes back up. End of Q&A

Thank you. And that concludes today's question-and-answer session. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.