Good day, ladies and gentlemen. And welcome to the Q4 2018 Unitil Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Todd Diggins, Director of Finance. Sir, please begin.

Good afternoon and thank you for joining us to discuss Unitil Corporation’s fourth quarter 2018 financial results. With me today are Tom Meissner, Chairman, President and Chief Executive Officer; Mark Collin, Senior Vice President, Chief Financial Officer and Treasurer; Christine Vaughan, Senior Vice President of Financial and Regulatory Services; Larry Brock, Chief Accounting Officer and Controller; and Todd Black, Senior Vice President, External Affairs and Customer Relations. We will discuss financial and other information about our fourth quarter and year-to-date results 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 will refer to that information during this call. Before we start, as you can see on slide two, the comments made today about future operating results or future events are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from those predicted. Statements made on this call should be considered together with cautionary statements and other information contained in our most recent annual report on Form 10-K and other documents we have filed with or furnished to, the Securities and Exchange Commission. Forward-looking statements speak only as of today and we assume no duty to update them. With that said, I will now turn the call over to Tom.

Thank you, Todd, and thanks everyone for joining us. Before I go over the results for the year I want to take a moment to thank Mark Collin for his dedication and service to our company over the past 30 years. Earlier this month Mark formerly announced his retirement effective May 1, 2019. Mark’s leadership has helped transform Unitil into the successful company that it is today and while Mark will be greatly missed, I am pleased that he is joining the Board, where he will continue to contribute to the success of our company. At the same time, I am pleased to introduce the newest member of our executive team and planned successor to Mark as Chief Financial Officer and Treasurer, Christine Vaughan. Christine recently served as Vice President, Rates and Regulatory and Treasurer for Eversource Energy in Massachusetts, where she had been since 2004. In order to assure a smooth transition in this important role, Christine and Mark will work closely together over the next two months. We are all excited to have Christine joining our team and we wish Mark all the best in his retirement. Now I will turn to our 2018 results beginning on slide four. Today, we announced net income of $33 million or $2.23 per share for 2018. This represents an increase of $4 million or $0.17 per share compared to 2017. We had another solid year in 2018 as earnings per share increased over 8%. This increase in earnings was driven by higher sales margins reflecting customer growth, favorable impacts of weather and new distribution rates. Turning to slide five. We have highlighted some of our recent successes. We are currently generating record earnings and in the past five years have outpaced both the broader market and our utility peers. In addition…

Thanks, Tom. Good afternoon, everyone. As Tom illustrated, we had another great year in 2018 as the company experienced significant earnings growth and operating achievements. If we turn to slide 10, natural gas sales margin increased $7.2 million compared to 2017. Gas sales margin in 2018 was positively affected by higher natural gas distribution rates of $7.1 million, which was partially offset by the reduction in rates of $3.7 million due to the recognition of lower corporate income tax rate of 21% under the new tax law. In addition, gas margin in 2018 reflects the positive effect of colder winter weather and customer growth on sales volume of $3.8 million. As a reminder, the reduction in revenues related to the tax law changes also reflects a correspondingly lower and offsetting provision for income taxes in the period. Natural gas therm sales increased 8.1% in 2018 compared to 2017. The increase in gas therm sales in the company’s service areas was driven by customer growth and colder winter weather in 2018. Based on weather data collected in the company’s natural gas service areas, there were 12% more heating degree days in 2018 compared to the prior year. As of December 31, 2018, the number of natural gas customers served has increased by 1,450 over last year. Next, on slide 11, electric sales margin increased -- decreased $0.3 million compared to 2017. Electric sales margin in 2018 was positively affected by higher electric distribution rates of $2.9 million, partially offset by the reduction in rates of $2.6 million in the year due to the recognition of lower corporate income tax rate of 21% under the new tax law. Electric sales margin in the current period was also positively affected by warmer than average summer temperatures and customer growth of $0.8 million. These…

[Operator Instructions] And our first question comes from the line of Shelby Tucker. Your line is now open.

Great. Good afternoon. Congratulations on a great quarter, great, sorry, great year, I should say. A question about the dividend, with the $2.23 you delivered this year and the about 1.4% increase that you announced yesterday, you are now around 65% payout ratio. I am wondering what your thoughts are about dividend policy, now that you are more or less in line with your utility peers?

Given our investment program and the impact on cash flow from the TCJA last year, we are currently targeting a payout ratio in a range of 55% to 65% now and I think we will consider raises to the dividend when we are solidly in that range.

Yeah. Great. Thanks, Tom. And then maybe a question for, Mark, the -- actually, sorry, no for Tom, for the team, your -- if I think through your rate case strategy going forward, you are now in a unusual time where you don’t have any live rate cases. How should we be thinking about where you need to define rate cases over the next two years?

Yeah. I think, Shelby, as we explained, we have kind of an ongoing rate case pattern through our trackers and rate plan. So that we do have the ability to continue to adjust our rates through more streamlined proceedings before the commission and those are very valuable to us. Outside of that what we do look at is basically where each of the entities are on their earnings profile and make projections in terms of their cost structure and such, and then we will file rate cases if rate relief is determined to be needed. I think the best thing is to look at the ROE chart that we provide and the information in the presentation and you can see some of the things we are looking at and considering as we look forward, and we haven’t filed any general base rate case at this time, but there is still time to do it this year and we will certainly be looking at that and whether it’s advisable or not.

Got it. And then a question that I have for you, Mark, I don’t recall hearing if you provided what your number would have been this year normalized for weather?

It’s about of $0.10 -- weather is about a $0.10 impact.

Got it. Okay.

A favorable impact, yeah, both the summer…

Got it. Okay.

… and some winter, yeah.

Okay. Great. That’s all the questions I have. Thank you very much.

Yeah. Thanks, Shelby.

Yeah.

[Operator Instructions] I am not showing any further questions at this time. Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.