Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Unitil Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Todd Diggins, Director of Finance. You may begin.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's third quarter 2019 financial results. With me today are Tom Meissner, Chairman, President and Chief Executive Officer; Christine Vaughan, Senior Vice President, Chief Financial Officer and Treasurer; 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 third quarter 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 2, 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 turn the call over to Tom.

Thank you, Todd, and thanks, everyone, for joining us today. I'm going to begin on Slide 4, where today, we announced net income of $2.3 million or $0.15 per share for the third quarter of 2019, which is a decrease of $0.5 million or $0.04 per share over the third quarter of 2018. The decrease in net income is primarily a result of milder summer weather this year compared to 2018. Through the first three quarters of 2019, net income is $32.8 million or $2.20 per share, which is an increase of $10.8 million or $0.71 per share compared to 2018. As a reminder, in Q1, we announced the divestiture of our unregulated energy brokerage advisory service, Usource. That sale generated a net gain of $9.8 million or $0.66 per share. The proceeds of the divestiture were invested in our regulated subsidiaries and should become accretive in 2020 when the investment is reflected in distribution rates. Usource had historically contributed between $0.02 and $0.03 per share to earnings each quarter, so please keep this in mind as we review the results today. Excluding the onetime Usource gains, our year-to-date net income is up $1 million or $0.05 per share over 2018. The increase in net income from our core utility operations is attributed to higher sales margins. Next, on Slide 5, as we have discussed before, the strong economy in our service areas is a fundamental driver of customer growth. The graphic provided on this slide illustrates the population growth occurring in our service areas, particularly along the New Hampshire and Southern Maine Sea Coast. This growth is supported by new residential and commercial construction, and we have identified $7.8 billion of planned or ongoing new construction in our service areas, which is an additional $1 billion or 15% more than we had previously identified at this time in 2018. This is an indication of the population growth and economic expansion that is occurring in our territories and that will continue to support customer growth in the years ahead. Approximately, 25% of the new construction is residential or will include a residential component. On Slide 6, we introduce the primary - the key priorities of our sustainability goals. In 2019, the company published its inaugural corporate sustainability and responsibility report. This report is designed to communicate our views on the value of sustainability to our shareholders. We define sustainability as our ability to achieve our mission and create value over the long term, and we firmly believe that financial success, environmental stewardship and social responsibility are the hallmarks of a healthy thriving business. Embedding sustainability into our business strategies is essential to achieving our long-term operational and financial goals, and we will provide updates on our corporate sustainability initiatives on an ongoing basis. Now I will turn the call over to Christine Vaughan, who will discuss our financial results for the quarter. Christine?

All right. Thanks, Tom. Good afternoon, everyone. Beginning on Slide 7, our natural gas sales margins for the third quarter of 2019 were $18.7 million, an increase of $1.1 million over 2018. Year-to-date, gas margin is $85.5 million, which is an increase of $5.1 million over 2018. The year-to-date increase was due to higher natural gas distribution rates of $4.6 million and $1.7 million as a result of higher therm sales, reflecting customer growth and increased average consumption by C&I and residential customers. This increase was partially offset by the absence of a $1.2 million nonrecurring adjustment in conjunction - in connection with a rate case that occurred in the second quarter of 2018. Natural gas therm sales have increased 2.5% year-to-date compared to 2018. This increase in gas therm sales in the company's service territory was largely driven by customer growth. Given the milder winter weather in 2019, the company estimates that weather-normalized gas therm sales, excluding decoupled sales, were up 5.5% in the first 3 quarters of '19 compared to the same period in 2018. We are currently serving 1,468 more customers or 1.8% more gas customers as than at the same time last year. And I want to point out that our weather-normalized - weather normal unit sales growth is currently outpacing our customer growth rate. The company attributes this in part to nonheating residential customers that have transitioned to natural gas as a heating source. Additionally, we see strong C&I usage that is representative of our service areas' economic strength that Tom talked to you earlier about. Next on Slide 8. I'll discuss the electric units and sales margins. Electric sales margins were $25.1 million in the third quarter, a decrease of $0.8 million compared to the same period in 2018. The decrease in electric sales…

[Operator Instructions] Our first question comes from the line of Julien Dumoulin-Smith with Bank of America. Your line is open.

This is Alex Morgan calling in for Julien. I just had one quick question. I was wondering if we could just talk a little bit more in detail about the Fitchburg gas versus electric ROE. I see that you provided the last 12 months' 6.1% blended. But I was wondering if you could break those 2 out for us.

Yes. I'll take that. So Alex, we plan on filing for the 2018 test year. In general, the electric division was earned in that test year period about 7.8% ROE. The gas division, 3.9%. That's on a - about - a combined rate base about $165 million. A little more on the gas side than the electric, about 54% on gas and 46% on electric.

Our next question comes from the line of Shelby Tucker with RBC Capital Markets.

Two questions. One for Christine, regarding the - just the last question you had. Are there any unknown assets that we should be thinking about for the Fitchburg rate case that will be added to rate base?

Gave you a pretty good estimation of the rate base, and so that would include those.

But none of those are controversial assets? That's what I'm just trying to get a sense of with.

In terms of how controversial. I think it's fairly straightforward. I'm pretty confident going forward with that.

And then, Tom, one of the topics that has been quite prevalent over the last six months has been the decarbonization and even renewable natural gas. Would you mind sharing with us kind of how you think about that topic? And how it may affect your strategies going forward?

It is a topic that we're spending a lot of time internally discussing and trying to determine our pathways forward. We do recognize that in the areas that we serve, there are policies, the primary one of which is to achieve an 80% reduction by 2050. And in order to achieve that, there's going to have to be deep carbonization throughout both the gas and electric business. The flip side of that is we see gas as being an essential fuel in the areas that we serve, especially in a cold weather climate in Maine and New Hampshire. And to date, gas is still being seen as part of the solution, not part of the problem. So I would anticipate that we're going to develop strategies where conversion to natural gas enables some of the public policy objectives in the states we serve. And I think other policy objectives such as heat pumps or electrifications are going to primarily target fuel oil, propane and other fossil fuels besides natural gas.

And one of the trends that we've seen among your larger neighbors in New England has been investing in offshore wind or those type of assets. Any opportunity for you to get involved in that - those type of investments? Or is it just too large given your balance sheet?

I think the ones to date have been too large for us to participate in. There has been talk about possibly new Hampshire pursuing similar strategies. And depending on where that goes, we would, of course, investigate and see if there's an opportunity for us. But to date, I think it's been probably too large for us to consider.

[Operator Instructions] I am showing no further questions at this time. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.