Good day, and thank you for standing by. Welcome to the Q4 2023 Earnings -- Unitil Earnings Conference 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] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Todd Diggins, Chief Accounting Officer. Please go ahead.

Good morning, and thank you for joining us to discuss Unitil Corporation's fiscal year 2023 results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer; and Dan Hurstak, Senior Vice President, Chief Financial Officer, and Treasurer. Also with us today is Bob Hevert, President and Chief Administrative Officer; and Chris Goulding, Vice President of Finance and Regulatory. We will discuss financial and other information on this call. As we mentioned in the press release announcing today's 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 [financial] (ph) -- 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 and CEO, Tom Meissner.

Great. Thanks, Todd. Good morning, and thanks, everyone, for joining us today. Beginning on Slide 4, today we announced another strong year of results with net income of $45.2 million, or $2.82 per share, representing an increase of $0.23 per share, or 8.9%, over 2022. This increase was once again above our long-term guidance of 5% to 7%, which we are reaffirming today. We also fully earned our authorized returns on a consolidated basis with return on equity of 9.5%. As we closed the books on 2023, I'm pleased to report that we had another successful year and delivered outstanding results across every facet of our business, both financially and operationally, while advancing the strategies that will provide long-term sustainable growth. I'm going to pass it over to Dan, who will take us through the details of our fiscal year results before I wrap up with a recap of our financial and operational achievements, and our commitment to deliver consistent, sustainable shareholder value. Dan?

Thank you, Tom. Good morning, everyone. I'll begin on Slide 5. As Tom mentioned, we announced fiscal year 2023 net income of $45.2 million, or $2.82 per share. Net income increased $3.8 million or $0.23 per share compared to the same period in 2022. This earnings growth was supported by higher distribution rates and customer growth, partially offset by higher operating expenses. Turning to Slide 6, I will discuss our electric and gas adjusted gross margins. Beginning with electric operations, for the 12 months ended December 31, 2023, electric adjusted gross margin was $104.1 million, an increase of $5.3 million, or 5.4%, compared to the corresponding period in 2022. This increase primarily reflects higher distribution rates in customer growth. Electric unit sales were down for both residential and commercial industrial classes as a result of differences in actual weather compared to normal weather and lower average usage, partially offset by customer growth. The company's electric distribution revenues are substantially decoupled, which eliminates the dependency of distribution revenue on the volume of electricity sales. For the year ended December 31, 2023, we estimate that revenue decoupling supported electric margin by approximately $0.13. We continue to expect future electric customer growth to be consistent with the historical annual growth trend of approximately 0.5%. Moving to gas operations. For the 12 months ended December 31, 2023, gas adjusted gross margin was $154.5 million, an increase of $10.6 million, or 7.4%, compared to fiscal year 2022. This increase primarily reflects higher distribution rates, in large part due to the higher rates resulting from the Northern Maine rate case which took effect earlier than expected. As we discussed during the second quarter call, new rates for the Northern Maine rate case were originally expected in the first quarter of 2024. However, as discussed on the…

Great. Thanks, Dan. Moving on to Slide 13. Providing safe and reliable service is something that we take great pride in, and operationally, we remain a top-tier utility. In 2023, we once again surpassed our benchmark performance levels for both electric reliability and gas emergency response time. Our customers seem to appreciate these results, and for the fourth consecutive year, we were the top-ranked utility in the Northeast region for customer satisfaction, and third out of 23 utilities in the Eastern US. We are proud of these results and the tireless dedication of our employees. We will continue to deliver the high standard of excellence that our customers and other stakeholders expect of us. Moving now to Slide 14. As I mentioned earlier, we are reaffirming our long-term guidance of 5% to 7% growth in earnings per share. We expect increases in operating and maintenance expenses to be equal to or less than broader inflationary increases, reflecting our continued focus on cost control and our ability to manage the business. On this slide, we have also provided an approximate distribution of our expected quarterly results, reflecting the seasonality of our earnings. Turning now to Slide 15, I would like to recap some of our achievements over the past decade. Looking first at earnings, net income has more than doubled, and on a per-share basis, we have grown at 6% annually, corresponding to the mid-point of our long-term guidance. Our rate base has also more than doubled over ten years, growing at just over 8% annually, consistent with our long-term range. Over the past 10 years, we brought our payout ratio down from 88% in 2013 to 57% in 2023, enabling us to reinvest earnings to support our investment program. We accomplished this while increasing the dividend 17% from 2013 to…

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

Certainly. [Operator Instructions] And our first question will be coming from Vanishree of Infosys. Your line is open. Again, our first question will be coming from Vanishree of Infosys. Your line is open. [Operator Instructions] And our next question will be coming from Shelby Tucker of RBC CM. Shelby, your line is open.

Good morning. How are you doing?

Hey, Shelby.

A quick question on natural gas in Massachusetts. There's been some policy movement towards maybe potentially phasing out natural gas as a heating source. Trying to get a sense of where that policy stands. And also, given the move we've seen across the nation of maybe embracing natural gas a bit more, given some of reliability issues, any chance that the policy that we're looking at in Massachusetts could evolve over time? Thank you.

Hi, Shelby. This is Tom. I'll start, and others can jump in. But, the Department of Public Utilities did issue an order in the proceeding that was referred to as Future of Gas. And I think it is correct to say that over time, they envision phasing out natural gas and phase of electrification. One of the things I'll mention that we've tried to be clear about is, we feel we're well positioned in Massachusetts because of the high overlap between our electric and gas customers. Somewhere around 90% of our gas customers also have us for electric. So, from that standpoint, we're well positioned. In terms of the policy, I think it's going to be slow to evolve. And realistically, we don't see that shift to full electrification occurring very quickly. And we still have concerns about affordability and other aspects of that, that we think are going to be a headwind to trying to move to electricity for heating of our customers. So, I'll let others jump in, in terms of responding to the question.

Hey, Shelby. This is Bob Hevert. Hope you can hear me. There are probably one or two other points to be made. The first is that the commission -- excuse me, the department made clear that they really have no interest in looking at the value of existing assets. So, we have no concern whatsoever as to the value of the existing infrastructure. Looking forward, the department also noted that they don't necessarily have a preferred path to decarbonization. They understand that there are multiple paths available and want to keep those options open, although, as Tom said, there are portions of the order that specifically do look to electrification. To that end, one of the things we must do under the order is an Electrification Demonstration Project, a pilot. And so, we're actively looking at a portion of our system that would be amenable to that type of study. And we think that by looking at the study, given the fact that we do have such broad overlap between gas and electric operations, and given that in Massachusetts, we've gone a long way in terms of replacing leak-prone pipe, we think that this will be a very good pilot program to really understand the full costs of electrification versus decarbonized gas, for example, and using the existing system for that purpose. So, we do think that the order does have some options in it to help us really explore the most cost-effective way to decarbonize in keeping with the Commonwealth policy objectives.

Great. Thanks, Bob. Thanks, Tom.

[Operator Instructions] And I'm showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.