Welcome to the Unitil Q2 2016 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference call, Mr. David Chong. You may begin, sir.

Good afternoon and thank you for joining us to discuss Unitil Corporation's second 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 second 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 terminology 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. The Company's actual results could differ materially. Those risks and uncertainties include those listed or referred to on slide 2 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 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.

Thanks, David. Thank you for joining us this afternoon. I will begin by discussing the highlights of our past quarter. Beginning on slide 5 of our presentation, today we announce net income of $2.5 million or $0.18 per share for the second quarter of 2016, an increase of $0.8 million or $0.06 per share over the second quarter of 2015. For the first half of this year, we reported net income of $13.4 million and $0.96 per share, a decrease of $1.9 million or $0.14 per share compared to prior year. The increase in earnings for the second quarter of 2016 was driven by higher natural gas sales margins, reflecting a higher natural gas distribution rate and customer growth. The decrease in earnings for the first six months of 2016 reflects lower natural gas and electric sales and margins, driven by significantly warmer winter weather in 2016 compared to 2015. We estimate that weather impacted our earnings per share negatively by $0.25 year to date, primarily in the first quarter. Next, on slide 6, I want to share with you an update on the economic climate in our service areas. First, we estimate there is more than $0.5 billion of new construction in our service areas. The Portsmouth/Dover region is New Hampshire's fastest-growing area and Portland, Maine, is an incredibly vibrant city with continuous investment in both the private and public sector. All this is backed by unemployment rates that are lower than the national average in every state we serve. On slide 7, you will see that we're committed to investing in our service areas. Over the past few years, our combined investment in gas and electric rate base has grown at an annual rate of 7%. Looking forward, we believe we have ample investment opportunities that allow us…

Thanks, Bob. Good afternoon, everyone. Turning to slide 10, natural gas sales margins were lower for the first six-month period ending June 30, 2016, compared to the same period last year. As Bob indicated earlier, this past winter was extremely mild and we estimate that this warmer winter weather negatively impacted gas sales margin by approximately $0.22 per share compared to prior year and $0.12 compared to normal. However, the underlying growth profile of our gas utility operations remains intact, where you can see that the weather-normalized sales were up 2.3% year over year, driven by growth in large commercial and industrial sales of 6.4%. Now turning to slide 11, we estimate that this past winter negatively impacted electric sales margin as well by approximately $0.03 per share compared to prior year or $0.01 compared to normal. We also continue to see the effect of energy conservation measures and our customers using energy more efficiently on our New Hampshire electric division sales, where we estimate approximately $1 million of our margin was negatively impacted by energy conservation and efficiency initiatives. In addition to our recently filed base rate case in New Hampshire, we currently are in a regulatory proceeding with our New Hampshire regulators to implement a loss base revenue mechanism which will help us to offset lost energy conservation revenues in the future. Turning to slide 12, we have outlined the major expense variances year to date. Depreciation and amortization and property tax expenses are higher due to our continued growth in our investment and utility plant. This will be a continuing theme as we grow our rate base in the future. However, operation and maintenance and interests costs are lower which I will explain on the next slide. If we turn to slide 13, we're actively managing our…

[Operator Instructions]. Our first question comes from Insoo Kim with RBC Capital Markets.

Just a couple of questions from me, the first is I know you touched on the O&M savings given the weather impact this year and how you are actively trying to manage it. Is that something that we should on a year-over-year basis continue to see for the balance of the year?

Yes, we have implemented programs that should go throughout the year. We're very focused on our O&M across the Companywide and we expect to continue to see those savings in the year. Having said that, it is important to recognize that in the first quarter in particular, when we began some initiatives and some of that showed up in the second quarter, one of the O&M savings or one factor contributing to the O&M savings is the difference in weather. And that is our costs will follow the weather-related events and impacts. So in the prior year, as you know, we had one of the most extreme snow winters and very cold weather. That led to some additional cost on both the gas and business side and the electric side of the business. Things such as snow removal, repair and maintenance costs and things are higher in that type of environment. So we have captured some savings as a result of the warmer weather in the period. So we've captured that, but in addition to that, we have also implemented specific initiatives and it will show up throughout the year as we control our costs to try to make up some of the reduced revenue we saw in the first quarter in particular.

And then turning to the various initiatives, regarding the TAB program, I know Saco, Maine, is now under the construction right now, with I guess construction to be completed in a couple years or so. Where are some of the other areas that you are looking to expand the TAB program? And what level of rate base growth or level of rate base could be added through this program in the next few years?

This is Bob. We're going to have Tom Meissner give you an update on the TAB program. Tom?

Well, first of all, with regard to the TAB that we currently started, as you indicated, we're in the first year of a three-year program. And the focus this year is really extending the mains into those areas. So this year, we're installing 6 miles of a total of 9 miles of new mains in Saco. And we're currently over 60% complete with that and the mains actually should be completed by the end of August, currently slightly ahead of schedule, slightly ahead of budget. In terms of the new areas that you talked about, we're studying currently two other communities in Maine who we believe are both attractive candidates for a similar program. And if we're successful in implementing in those communities, I think it will be a program of approximately the same size as we're implementing in Saco.

And timeline for getting those two other areas proposed and approved? When could we expect that?

What we'd like to do is get a year of experience in Saco before we pursue other locations. But assuming that we're successful there, I assume we would be making filings probably next year and be in a position to implement the year after that in other areas.

[Operator Instructions]. I'm not showing any further questions at this time. I would like to turn the call back over to our hosts.

Thank you for joining us for our second quarter and we look forward to discussing with you next quarter. Thank you. Bye.