Ladies and gentlemen, thank you for standing by. Welcome to the Q4 2020 Unitil Earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like introduce your today's conference call, Mr. Todd Diggins. You may begin, sir.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's Fourth quarter 2020 Financial Results. Speaking on the call today will be Tom Meissner, Chairman, President and Chief Executive Officer; and Bob Hevert, Senior Vice President, Chief Financial Officer and Treasurer. We will discuss financial and other information 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. 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. This presentation contains non-GAAP measures. The accompanying supplemental information more fully describes these non-GAAP measures and includes a reconciliation to the nearest GAAP measure. The Company believes these non-GAAP measures are useful in evaluating its performance. And with that, I will now turn the call over to Chairman, President and CEO, Tom Meissner.

Thanks, Todd. Good afternoon, everyone. I'm going to begin on Slide 4 where today we announced net income of 13.6 million, or $0.90 per share for the fourth quarter of 2020. This represents an increase of 2.2 million or $0.13 per share compared to 2019. For the fiscal year ended December 31, 2020, net income was 32.2 million or $2.15 per share. By any measure 2020 proved to be a challenging year for our company, our customers and our shareholders. The year began with historically warm winter weather which negatively impacted sales margins and earnings. The winter was then followed by the worst worldwide health emergency in over a century. The COVID-19 pandemic led to both financial and operational headwinds for the remainder of 2020. However, faced with these challenges, we stay true to our mission and continue to provide safe and reliable service for our customers and communities. Over the course of the year, we successfully responded to several storm events, and achieved record results for safety and customer satisfaction, all while executing on our strategic priorities. In addition, we effectively executed on our investment plan, moved forward with grid modernization and advanced our ESG profile. We also carried out our regulatory strategy as we finalize rate cases for a natural gas division in Maine, both Gas and Electric divisions in Massachusetts as well as Granite State, our FERC regulated gas transmission company. As we head into 2021, Unitil is well positioned to move forward stronger than ever. With that, I will now pass it over to Bob to provide further detail on our 2020 results.

Thank you, Tom, and good afternoon, everyone. I will begin on Slide 5. As Tom noted, we announced fourth quarter earnings per share of $0.90 and fiscal year 2020 earnings per share of $2.15. As a reminder in the first quarter of 2019, Unitil recognized the one-time net gain of $9.8 million or $0.66 per share, on the divestiture of Usource, which had provided non-regulated energy services. Adjusting for the divestiture gain net income for the year is down $2.2 million or $0.16 per share compared to 2019. That decrease primarily was due to warmer than normal winter weather and the COVID-19 pandemic. Turning to Slide 6, I will discuss our sales margin. For the fiscal year ended December 31, 2020, electric gross margin was $92.9 million, an increase of $1 million compared to 2019. The increase in electric margin reflected higher rates of $1.4 million, together with customer growth warmer summer weather of about $0.4 million. Those gains were partially offset by $0.8 million, reflecting the combined net effect of lower commercial and industrial sales and higher residential sales associated with the COVID-19 pandemic. Total kilowatt hour sales were unchanged relative to 2019. Residential sales increased 6.5%, primarily reflecting the COVID environment and warmer summer weather. C&I sales decreased 4.5%, reflecting lower usage due to the COVID-19 pandemic. Moving to Slide 7. For the fiscal year ended December 2020, gross margin was $122.6 million, an increase of $0.4 million year-over-year. The increase was driven principally by higher rates of $5.1 million and customer growth of $1.8 million. These increases were partially offset by warmer winter weather of $4.4 million, and an estimated effect of $2.1 million due to lower commercial and industrial usage associated with the COVID-19 pandemic. Relative to 2019, natural gas therm sales decreased by 7.5%, the…

Great. Thanks, Bob. Turning now to Slide 13. Despite the challenges facing Unitil in 2020, we continue to demonstrate the Company's strength in day-to-day operations. In particular, we were able to provide mutual aid support to other utilities to record eight times in 2020. After tropical storm Isaias, we restored power to all of our customers within a 24-hour period, an example of our efficient restoration practices. As a result of these efforts, we again received the EEI Mutual Assistance award, our third time accepting this award in the last four years. Moving on to Slide 14. In addition to electric and gas operational excellence, our customer service targets were exceeded. I am pleased to share that our customer satisfaction is at an all-time high, with 93% of our customers satisfied with the service we provide. In terms of customer satisfaction, we were the number one rated utility in the Northeast and the second rated utility in the entire Eastern United States. Our employee pride and engagement are also at an all-time high, with 90% of employees reporting that they are proud to work for Unitil. We believe these excellent rules go hand-in-hand and reflect our commitment to our central values of respect, integrity, stewardship and excellence. On Slide 15, we are also pleased with our gas emergency response as well as our safety metrics in 2020. Once again, Unitil was selected as a leading practice company by the American Gas Association recognizing our superior emergency response and preparedness. In 2020, we insured public safety by responding to emergencies faster on average than in 2019. And in fact, 2020 was our best response time in company history. Also supporting the safety of our gas system is continued infrastructure replacement and modernization, which is now over 94% complete. Turning to Slide…

Great. Thanks, Tom. Thank you for attending today's call. I will now turn the call back over to the operator who questions.

[Operator Instructions] Our first question comes from Michael Gaugler with Janney Montgomery.

I have two quick questions. First, I know you stated on COVID, the negative impacts there, $0.09 for the year. Just wondering, if that's what you're expecting for 2021?

This is Bob Hevert. As we look forward into 2021, we look at COVID in the context of how we are projecting use going forward. We think there will be a continuing COVID effect, although we expect that effect to moderate over time. As with most people, we see the likelihood of vaccinations taking hold to be meaningful. So, we do consider a continuing effect of COVID through 2021, although we don't think it will be as pervasive as long-lasting as it had been in 2020.

And then I take on the other item that you called out in terms of having a negative impact on the results, and that's the weather. Just wondering, how that's tracking thus far in Q1 versus your expectations?

It's Bob Hevert again. So far through January, we know the first half of January was somewhat warmer than normal. We have considered that, although the last week, the temperature turned in our favor a little bit. So, we'll have to see how January shakes out. But for the balance of the year, we're generally looking toward normal weather.

And it looks like some cold weather coming in. So should give you a little bit of a benefit here real soon.

That's right.

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

A quick question on the competitive position of natural gas versus fuel oil. Have you done any analysis of what impact natural gas blending would have on your position comparing to few oil?

So, this is Bob Hevert again. Let me take that from the perspective of how we're looking at sort of renewable natural gas in our supply portfolio. Is that where you're heading?

Yes.

Okay. Sure. So as Tom mentioned, we do have a collaborative process going on right now in New Hampshire, looking at how we might integrate renewable sources of natural gas in the supply portfolio from a lease cost, integrated resource planning perspective. You may recall that last quarter we noted that we had issued a request for expressions of interest as well for different sources of renewable natural gas. The purpose of that was to help us understand what might be available and how we might think through the cost and availability of those supplies. So we are looking at that issue really throughout all our jurisdictions. We are considering both legislative and regulatory strategies in each of our jurisdictions as well. Now you mentioned Maine, as you probably know, Maine in the New Hampshire have the highest saturation of oil heating in the country. So we're very keen on being sure that we can maintain our advantage. We think that natural gas is very helpful from an environmental perspective, simply due to the high saturation of oil in those two states. But it will become even more environmentally attractive as we're able to blend in, as we learn more about how we might be able to blend in lower carbon sources of renewable natural gas.

Great. And then just a follow-up there. Do you know if the fuel oil industry is facing its own headwinds, regulatory or legislative headwinds? Any additional costs that are being put on that industry?

I think -- this is Tom, Shelby. I think what we're seeing is that the fuel oil companies are coming up with their own strategies to use biofuels in response to many of the same pressures that the natural gas utilities are facing. So, I think the real question is how much of that is really available and feasible and what the cost impact will be on their supply. But they are responding in much the same way, trying to develop strategies to head to greener supplies for oil, similar to what we are pursuing.

And I'm not showing any further questions at this time. So, this does conclude today's presentation. You may now disconnect, and have a wonderful day.