Good day, and thank you for standing by. Welcome to the Unitil First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Todd Diggins, Director of Finance. Sir, you may begin the conference.

Good morning, and thank you for joining us to discuss Unitil Corporation's first quarter 2022 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 this call, we have posted information including a presentation to the Investors section of our website at unitil.com. We will refer to that information during this call. Moving to Slide 2, the comments made today about future operating results or 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 can cause 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 obligation to update them. This presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance. With that, I will now turn the call over to Chairman, President and CEO, Tom Meissner.

Thanks, Todd, and good morning, everyone. Thanks for joining us. I'm going to begin on Slide 4, where today, we announced strong results for the first quarter of 2022 with net income of $21.5 million and earnings of $1.35 or 7.1% over the same period of 2021. Looking ahead, we maintain our long-term guidance of 5% to 7% growth in earnings per share with near-term earnings growth expected to be above the upper end of that range. We continue to deliver superior service to customers and customer satisfaction remains at an all-time high. Our focus on operational excellence ensures that we provide high levels of safety and reliability. On the fourth quarter call, we refreshed our investment outlook and I'd like to quickly reiterate that we continue to see strong investment opportunities and expect long-term rate base growth of 6.5% to 8.5%. Bob will provide more detail on our investment plan later in the call. Finally, we view sustainability as essential to our long-term success. In addition to our commitment to reduce company-wide greenhouse gas emissions, we are also looking at ways to introduce low-carbon supply options. One way to do this is by integrating renewable natural gas into our supply portfolio. In New Hampshire, Senate Bill 424-FN, which would provide a path to procure up to 5% of our gas supply from renewable sources has passed the Senate and is working its way through the House of Representatives. Moving now to Slide 5. As I just touched on, our focus is on continuous -- our focus on continuous improvement has led to exceptional results. Our electric reliability continues to be outstanding. And in fact, through the first 4 months of this year, we are on a pace to achieve our best results ever. Our gas emergency response is also…

Thank you, Tom, and good morning, everyone. I will begin on Slide 8. As Tom noted, this morning, we announced first quarter earnings per share of $1.35. Net income for the quarter increased by $2.6 million or $0.09 per share compared to the same period in 2021. That increase, which represents year-over-year growth of just over 7%, principally is the result of higher sales margins, partially offset by higher operating expenses. Turning to Slide 9. Electric adjusted gross margin was $24.6 million for the quarter, an increase of $0.9 million or 3.8% compared to the same period of 2021. The increase in electric margin represents higher distribution rates and customer growth. Overall, sales increased 1.4% year-over-year, with commercial and industrial unit sales increasing 2.3%. Customers increased by 551 or 1.5% over the first quarter of 2021, reflecting growth in both the residential and commercial customer classes. Turning to Slide 10. Gas adjusted gross margin was $52 million for the quarter, an increase of $4.2 million or 8.8% compared to the first quarter of 2021. The increase in gas margins reflects higher rates of $2.8 million and $1.4 million from the combined effect of customer growth in colder winter weather. On a Degree Day basis, weather in the first quarter was somewhat colder than the prior year, but generally comparable to normal. On Slide 11, we provide an earnings bridge comparing 2022 results to 2021. As mentioned, first quarter 2022 adjusted gross margin increased by a combined $5.1 million, primarily as a result of higher distribution rates, customer growth and colder winter weather. Operating and maintenance expenses increased by $1.5 million, largely due to higher labor costs and professional fees, partly offset by lower utility operating costs. Depreciation and amortization increased by $0.6 million, reflecting higher levels of utility plant and…

Thanks, Bob. Ending on Slide 16. With the first quarter of 2022 behind us, we're pleased with what we have accomplished and where the company is heading. We continue to execute our plan, strengthen the company and improve our long-term prospects. We look forward to the company's future and believe we will continue to create sustainable long-term value for our shareholders. So with that, I'll turn it back to Todd.

Great. Thanks, Tom. That wraps up the material in this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

[Operator Instructions] Our first question comes from the line of Julien Dumoulin-Smith.

So first, you've noted some incremental opportunities around advanced energy systems and clean energy solutions. How should we think about timing for an update here? I know you mentioned the RNG bill and New Hampshire, but are there any additional data points that we should be on the lookout for?

In terms of when the timing might be it's possible we might have some updates later in the year, depending both on that bill and depending on current progress evaluating certain opportunities that we're currently developing internally. So we're a little bit conservative and that we're not going to telegraph anything externally, unless we have confidence in our ability to execute.

Kody, this is Bob. Just as a quick follow-up. You may recall, we've noted in the past that when we look at RNG, we've been looking at it principally as a supply issue, but we are actively evaluating projects. And the Senate Bill 424 New Hampshire, certainly would give us the option to invest in those assets as always subject to commission approval. But we are looking at perhaps, right now, although as Tom said, we're a little bit reluctant to talk more about it until we get further along and have more confidence in the outcomes.

Right. Okay. Understood. And then just second on inflationary impacts to raw materials, labor as well as power and gas costs, just wondering if you can discuss a little bit further on what you're seeing here and measures you're taking to mitigate customer bill impacts. And also just curious if there's any lessons learned maybe from last year that you can employ this year to help out with some of those customer bill impacts.

Sure. Kody, this is Tom. To the first part of the question, in terms of the significant impacts we might see inflationary impacts, I think the greatest impacts are going to be in our capital budget, and they're probably going to be reflected not so much this year, but in future years. We are seeing significant cost increases in equipment and materials as well as the lengthening of lead times on that equipment. So realistically, I think the biggest impact will be the capital budget. We're not yet seeing impacts on the O&M budget. I'll let Bob address the part about energy costs and customer bill impacts.

Kody. It's Bob again. In terms of energy costs, you may recall that in the states that we serve, where we provide default service, the objective of default service is to provide market signals. So our role really is to procure the supply and provide it to those default customers. And while the rate impacts had been somewhat high, it's been in line with what commissions have been expecting and our plans have been approved. You may recall too that in Massachusetts, we did work with the attorney general and with the department to somewhat mitigate the effect of increased default rates on the electric side. And in New Hampshire and in Maine, on the natural gas side, we have hedged effectively throughout the winter, we fixed about 70% of our commodity costs simply through the contracts that we have in place. So we were able to address those cost increases, either through regulatory solutions or through hedging strategies on the natural gas side. On O&M expenses, just one thing, the increase we saw in the first quarter really was associated with onetime effect. I would not extrapolate what we saw from the first quarter throughout the rest of the year for O&M expenses. We are looking at all areas of O&M to be sure that we continue our focus on cost control. So we're comfortable that we're able to -- we will be able to control O&M expenses going forward. On the capital side, we're fortunate because the cases that we have right now in New Hampshire both have step adjustments, which would allow us to recover incremental costs of capital investments including inflationary effects. Now there would be caps on those investments. But nonetheless, we will be able to recover the increased capital costs, as Tom noted, that we might see as a result of inflation. And in all of our jurisdictions, we have similar capital trackers that, again, enable us to recover the cost of prudently incurred capital expenses. So while we do see perhaps the effect of inflation coming on the capital side, we do have mechanisms in place to help us recover those costs.

Understood. That's super helpful. And one last one, if I can just sneak it in here before I pass it off. Just customer growth in low growth sales growth has been healthy, especially on the gas side, a 1.8% increasing weather-normalized sales year-over-year. In the first quarter, can you remind us what sort of assumption has embedded in that long-term 5% to 7% EPS CAGR?

Yes. Kody, we're really just assuming the historical rate of growth. Tom earlier in the presentation went over some of the projects that we're seeing in the Seacoast regions of Maine and New Hampshire. But for right now, when we look at our capital investments. And when we think about our long-term 5% to 7% earnings growth, it's really based on historical customer growth. We've not added really much to that although, of course, we'll revisit things as we get more information.

[Operator Instructions] I'm seeing no -- any questions on the queue at this time. Thank you all for participating. This does conclude today's conference. You may now disconnect.