Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2019 Unitil Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Todd Diggins, Director of Finance. Thank you. Please go ahead sir.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's fourth 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 fourth 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 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 turn the call over to Chairman, President and CEO, Tom.

Thank you, Todd, and thanks everyone for joining us today. We're happy to report that 2019 was another great year for the company. We're going to begin today on slide four, where today we announced net income of $11.4 million or $0.77 per share for the fourth quarter of 2019 which was an increase of $0.4 million or $0.03 per share over the fourth quarter of the prior year. For the year, net income was $44.2 million or $2.97 per share, which was an increase of $11.2 million or $0.74 per share compared to 2018. Excluding the Q1 divestiture of our unregulated energy brokering business, Usource, net income was $34.4 million or $2.31 per share, an increase of $1.4 million or $0.08 per share compared to 2018. This increase was largely a result of our continued growth in customer base. Turning to slide five, 2019 was the seventh consecutive year of increasing earnings per share EPS growth has averaged 7.1% annually since 2012, driven by strong margin growth averaging 5.4% each year over the same time period. Our sales margins continue to grow as the company expands its distribution system to serve new customers and execute on its regulatory strategy. Our investments and system expansion in infrastructure modernization resulted in a 7.2% increase in net plant compared to prior year. This increase was funded in part by the proceeds from the sale of Usource. On slide six, we've provided some operational highlights for the year. We're proud of the success we had operationally in 2019. It was our best year ever for electric reliability with performance ranking in the top quartile of the industry. This continues our improving trend over the last 10 years. In fact, over the past five years, our customers have experienced about 35% reduction in annual…

Thanks Tom. Good afternoon, everyone. I'd like to begin by reviewing our gas and electric sales activity. Beginning on slide nine, our 2019 gas margin is $122.2 million which is an increase of $5.3 million over 2018. This increase was due to higher natural gas distribution rates of $5.6 million and $0.9 million as a result of higher therm sales, reflecting customer growth, and increased average consumption by both residential and C&I customers. This increase is partially offset by the absence of a $1.2 million non-recurring adjustment in connection with to a rate case which occurred in the second quarter of 2018. Natural gas therm sales increased 0.4% compared to 2018. Given the milder winter -- milder winter weather in 2019, the company estimates that weather normalized gas their firm sales excluding decoupled sales were up 4.2% year-over-year. The increase in gas therm sales was largely driven by customer growth and strong commercial and industrial usage. We are currently serving 1,152 or 1.4% more gas customers than at the same time in 2018. I'd like to point out that weather normal unit sales growth is currently outpacing our customer growth rate, and the company partly attributes this to non-heating residential customers transitioning to natural gas as the heating source. Additionally, we see strong C&I usage that correlates to the robust economies within our service area. Next on slide 10 for the year, electric sales margins are $91.9 million which is flat to 2018. Electric sales margins were positively affected by higher electric distribution rates of $1.6 million, but fully offset as a result of lower kilowatt hour sales. Total electric kilowatt hour sales decreased 4.8% compared to 2018. The milder summer weather compared to 2018 had a significant impact on sales, and when normalizing this weather in both 2018 and…

Great. Thank you, Christine. On Slide 16, we’ve summarized our current five-year investment plan. We expect to invest over $680 million in our gas and electric systems over the next five years, which is an increase of over 25% compared to the previous five years. This investment will continue to fund gas infrastructure modernization, gas system expansion and electric grid modernization. It's worth noting that this outlook does not including any incremental spending for grid modernization in New Hampshire, electric vehicle charging infrastructure or gas supply peaking projects. Slide 17 highlights our forecast for rate base growth over the same time period. We expect to continue our historical rate base growth of 7.5% to 8.5% over the next five years. This growth could be accelerated if significant projects materialize, such as the grid modernization in New Hampshire, electric vehicle infrastructure or gas supply peaking projects. We do not expect our five-year investment plan to materially alter the investment mix between gas and electric operations. With two-thirds of investment directed toward the gas distribution system. Under the current plan, we expect gas rate base to grow slightly faster than electric. On Slide 18, we provide detail on the funding sources for our investment program. The primary source of funding will be internally generated cash flow, which is expected to fund approximately 64% of our five-year investment program. The Company has strategically reduced its payout ratio over the past several years and is well positioned to reinvest earnings and reduced external financing requirements. The remaining 36% will consist of external financing through a combination of long-term debt and equity. About 6% of the investment program will be funded by common equity, which includes shares issued under the company's dividend reinvestment and 401(k) programs. Additional common equity offerings will be needed from time-to-time to maintain a balanced capital structure and support our investment-grade credit metrics. Finally, on slide 19, this week we announced that we are increasing our annual dividend by an additional $0.02 to $1.50 per share. This is the sixth consecutive year that we have increased our common dividend, even as we have significantly lowered our payout ratio. In 2019 we achieved the upper end of our targeted dividend payout ratio range of 55% to 65%. As a result, the Board may consider gradually accelerating growth in the dividend beginning next year, even as our payout ratio continues to decline, we will continue to strategically analyze our dividend policy subject to EPS growth and financing needs. And with that, thank you for attending today's call. I will now turn the call over to the operator, who will coordinate questions from the audience.

Thank you. [Operator Instructions] And our first question comes from Shelby Tucker from RBC Capital Markets.

Sorry, can you hear me?

Yes. Good afternoon.

Okay. Okay, great. How you are doing. Just had a question about the financing that you did on the fourth quarter, you mentioned you’ve made some in equity contribution to the utilities. Where do your equity ratio stand now for Fitchburg and North Northern Utilities, Maine?

52.8%.

For Northern Maine.

For Northern Maine, yes. And 52.6% for Fitchburg.

Got it, okay. So, you actually year therefore relative to where you filed?

Correct.

And then as I look at the five-year CapEx program. Can you remind me kind of how much is -- kind of known and measurable in the plan versus items that still need to be sought by the -- for regulatory recovery?

When you say regulatory recovery, do you mean approved by regulators before we can spend it?

Right. So, I'm trying to get a sense of it, especially in the latter part of the years. Are these items that are, have been fully identified or is there, and if so, is there upside to that plan or are there elements there that may not be -- have not been fully identified yet?

The plant itself is pretty well fully identified and as we indicated, we did not include in the plan, items such as grid modernization and New Hampshire, which at this point we don’0t really know the magnitude of the program or when we're going to get an order. So, I would assume that the plan that we identified in our presentation, is a pretty solid plan and if additional things our approved by regulators that would represent upside to that plan.

Okay, great. Okay, thank you.

Thank you.

Thank you. And our next question comes from Julien Dumoulin-Smith from Bank of America. Your line is now open.

Thank you. Good afternoon. It’s Alex Morgan calling in for Julien.

Yes. Good afternoon, Alex.

Thanks so much for taking my question. I only have one and it’s largely about O&M, how should we be thinking about any potential additional cost savings going forward now without Usource?

I would think that O&M will be roughly in line with inflation going forward.

We did isolate out the impact of Usource in the presentation and indicated what the O&M growth would have been at Usource not been reflected.

Okay, thank you so much.

Thank you. [Operator Instructions] And our next question comes from Michael Gaugler from Janney Montgomery Scott. Your line is now open.

Good afternoon, everyone.

Good afternoon, Mike.

Just one question as well. Looking at that new long-term natural gas capacity agreement you signed. How does -- how does that factor into your thinking in terms of any potential peaking projects that were under consideration. Does it push those farther off into the future. Or does it make sense to look more toward peaking?

We definitely are looking at peaking and our peaking needs, that is something that came out of our IRP and we do have the Maine Commission and the New Hampshire commissions understands that there is a need to look to see if there is any cheaper alternatives for our peak area. Right now, we are served by Repsol. So, that would be in addition and we're looking at lots of different either internal or external solutions for that peaking need going forward.

Okay, thanks. That's all I had.

Great. Thank you.

Thank you. And I am showing no further questions. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.