UTL - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen. And welcome to the Unitil First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions].

As a reminder, this call is being recorded. to host like Mr. today's now would introduce for your conference, I Chong. David Sir, you may begin.

David Chong

thank joining Officer and me you Unitil And Vice Accounting Chief afternoon. Good for Officer Collin, Mark and quarter Meissner, President Senior financial Larry Executive Tom Chief Officer; Corporation's Chief us XXXX results. Treasurer; are Controller. With Financial today President, Chairman, and and first discuss to Brock,

information We call. about financials will other our this and results quarter first on discuss

announcing release Investors the we As Web we press mentioned a the the that posted to site including section call, information, in have our at presentation, www.unitil.com. of

We information that during will refer this to call.

under see today the of Safe Securities we as results Harbor Litigation events operating Private Before XXXX. of Reform X, statements the future on about you the future comments made can provisions or start, Act forward-looking Slide are

that involve and and most call our from Report XX-K predicted. other Statements uncertainties Commission. Forward-looking furnished made differ on have with, to, Exchange recent together documents statements cautionary or results and considered materially Securities this could the in filed inherently Form our to information be contained and with those cause on Annual risks we actual other should statements

we speak the said, assume Forward-looking today, With Tom. over duty of only them. statements to I’ll to update as call no turn and that now

Tom Meissner

David. Thanks, And thanks everyone today. for joining

Bob XXX the years. greater to financial pursue than strategic in enabled succeeding S&P just minute to record to market and that us a returns goals and of be endeavors the take CEO tell I over results last indices utility the and to honored begin the same five achieve both want we how I did Before am I presentation, of many you plan as Unitil. total

very performance today's to We XX I'm the will in presentation to also about Slide X company where as a am And the share for income on has going where per begin the over today I we of instilled XXXX. company. the are with years. net as last from $X.X future, and our which continued same XXXX. growth, optimistic look we announced is This oriented culture colder we share of Bob an results, the customer that on $X.XX or $XX.X of quarter of quarter first quarter regulatory first pleased or We're first the per successful our benefited agenda. $X.XX winter increase weather over million million carry

generating Turning X, to highlighted customers. record while Slide recent some a number our serving currently accomplishments. of we've significant record of We're earnings,

on operational to the In our addition focus superior we ensure electricity natural performance and safe to reliable to delivery customers strong continue of that financial results, expect. gas

continue future We growth distribution expanding on exceptional service our our support and to will system to upgrading customers. delivering while to focus

X. XX% can customers Slide providing being reliable We're being being services. and with to our their they We rate our Customers trust. needs exceeding customers' satisfied remain of pleased service our responsive expectations. a committed Turning that particularly very to company us report higher and to

operational customer last was transformed our new capabilities. of Our communications at has summer, fully the system, state-of-the-art information which end

demanded us that environment. with of broad over to interfaces a digital are customers Our interface and in now social are able suite today's

Finally, party we third the organizations, by such focus for our on on Cross. communities Red have our customers been and recognized as our

a we being We are with committed to responsible partner the communities serve. corporate

many Slide leading our on industry practices Moving we in implement X, to operations.

modernized, Utility receive aging New replacing of which ahead gas and those and on we our we well in our currently continue programs to peers. for systems. system Unitil's areas. safety is safety best-in-class and response recognition Our are upgrading are natural natural We England standards our high maintain efforts gas is distribution focused gas emergency and distribution XX%

is will by X% strategy our programs. growth due on Slide customer in that vegetation average This On to decrease presents industry management interruption part focused seen we've since and multi-fascinated the remain decreased reliability X facilitate our emergency electric side, into duration management well our XXXX. leading we future. and annually the

growth we the side opportunities. On to extensive the have gas of business, continue

we of customer which existing low customer penetration along for low potential thousands XX% of mains, relatively conversions. our have First, cost provides

We expanding gas years. to approximately been the also projects distribution miles that with system have extension actively added past and five upgrading XXX over new of our mains

of program currently towns entire Our expansion highly have X,XXX where in We two around the targeted into Sanford area on which such potential of Maine, represent successful. customers. to a be cities build-out we Saco continues and projects market focus

bare progress In terms programs. and cast of on infrastructure replacement iron we continue make replacement our to steel and safety,

in program in year, Hampshire completed New Our that resulting last system was state. XXX% modernized

Maine is a scheduled program years. and little anticipated XXXX, with replacement Massachusetts is over be program to little by XX our in infrastructure Our out completion further completed

All have and state. in mechanisms each been track of regulators, our by the these have established programs supported recovery and we capital

Turning the electric to the there the electric side to trends industry modernize of grid. We the are in business. believe significant

grid investment, is Massachusetts support initiatives in XX alone. year Our you the Massachusetts Hampshire $XX To current distribution the of million the planned modernization investments of both in scope new preliminary New this regulators idea electric and give system. for an spending

comparably New still plan over to is Massachusetts. over Hampshire million under the the next years, development, be XX While if could it $XX sized

reliable to both the grid. our in we with a We and providing electric in proceedings be states more continue to forward look modern active participants in customers

financial call over Now, the for to Mark quarter. I'll Collin who will turn results the discuss our

Mark Collin

will XX% Gas compared and in XX% to Therm to Total gas and weather XX, XXXX. which same Cuts review service XX, natural of or there ended in for Tom. was million, to colder the XXXX financial customer and to had heating the were the lower affected in to rate same the a degree Based days period of positive in on sales X.X% of $X.XX Tax data $X.X which Jobs offset in on tax marginal gas higher XXXX. heating first million contributed were X% in the the quarter impact $X.X the of XXXX, to months positively XXXX. of of reduction turn account of in EPS. ended three three days period by margin of Good XXXX, to million Act partially few million million weather gas Please distribution in Company's compared quarter same $X.X the period first of the degree a results in income months XXXX the relatively resulted X. the $X.X Natural sales sales I EPS. growth rate collected more revenue XXXX for March flat increase compared gas by the a margin increased natural March under corporate areas, normal, first XXXX, an was quarter to $XX.X the Slide everyone. in afternoon quarter. the first Thanks, natural Compared

of number served gas the in has Finally, by months. X,XXX increased customers approximately the last total customers XX

ended Electric in compared a as the in the number to Next electric on three was positively the of the revenue reduction XXX XXXX, $XX.X sales $X.X in XXXX. serve margin $X.X was quarter months. was XX months XXXX customer under act. increase rate sales million. March Slide period as weather XX, compared well X.X% quarter million year resulting electric for million and the first account partially of tax million up same income the in in $X.X rates prior $X.X by Electric million, corporate distribution lower by offset of of for of XX. sales were growth first up last customer of or to Again, higher X.X% an and Electric colder over affected margin to tax the the XXXX in by

maintenance and ended offset service and levels and $X.X local three expense property offset Net reflects to The utility same $X.X the point and XX, O&M first year-to-date. effect of debt. short-term increase higher Turning months was of bad XX, in long-term partially an lower in net primarily service. ended and unchanged amortization benefit increased debt, costs, expenses expense of than months March quarter. reflecting XXXX, March and expenses accounting major this Slide three by of that million compared expense amortization million by plant interest of compensation other of of of the costs. months assets to on took information outlined the ended reflecting liabilities, on interest have we and software decreased changes in March regulatory million taxes in costs higher and Operation assets operating the on XX, utility also in increased $X.X XXXX, higher and million. the essentially reflecting higher like $X.X expenses three deferred utility million, out two $X.X levels interest system lower I plant XXXX and to income expense taxes, amortization Taxes, XXXX, lower the three storm would change Depreciation major costs debt higher $X.X million XX, in XXXX. in variances period months

number we historical XXXX, and adopted both costs outside were income are requires line our current other the statement, now First, These of income reflected of XXX-XX periods. costs income. ASU of which reflected of the the quarter in in presentation expense certain first net the operating and pension

affected of that only expense. where what is an reduction we This parties, in period. as recognized in are standard operating were non-regulated revenue ASU payers the call business energy This adopted we a Second, channel current brokering agreements, current accounting change third previously those period. for the revenue-sharing number or the payments XXXX-XX, to by requires from Usource presentation partners made presented for which revenues our recognized as Usource, classification

for million accounting of $X.X attributable the $X.X that is variance quarter change. So the million this to

customers’ a rate the on March $X.X benefit $X.X items Lastly, XX, to by for income ended are three of taxes decreased in $X.X previously million earnings, tax from the not higher lower book included that tax months reflecting current XXXX, tax pretax million related million rates. and

state to we to compared due normalized. on to in I on in for our out tax XXXX. each statutory a consolidated March these months earned a last trailing equity XX%, provides tax remainder weather total rate. combined benefit. jurisdictions. a rate lower earned XX, little XX XX% a Slide of and of results point effective federal state XX rate return actual of statutory our In forward, rate XX% effective combined to ended to that expect months a on XXXX, of not a the the Looking basis return federal this Unitil XXXX, maintain closer tax are regulatory rate X.X% tax return and our and over expect to XX equity we book that’s of to

is customers service environment a our have We supportive reasonable cost. regulatory and investments to initiatives reliable of that provide with and a safe growth constructive at

nearly have regulated utilities. We our tax or subsidiaries. summary trackers chart also legislation recent established of of of provides the utility plans our a federal all impact across each long-term The on

$X.X $X.X recently service for and gas Maine and rate base two $X.X of a into the includes the million increase will January Act that also our tracker if depreciation million effect uncontested. which ongoing I'll test increase million X, for decrease of natural effect provided last case to proceedings settlement to of the for annually. increase settlement the March $X.X adjusted division for net our the act agreement, cost The is case we stepped $X.X of test $X.X XXXX. the filed million, million also million in with which approved, tax for reduction decrease tax to million of adjusted The related Tax incorporated lower a out year for the In Importantly, a division, year reconciled of rate for of entered capital We settlement act. X, related million X, net expense provide the gas $X.X cost service effective be will XXXX. May point XXXX. we year, completed increase $X.X also

shown year. of of tracker as we've For our for capital rate well the act the remainder this as jurisdiction, impact adjustments, tax

the summary coordinate I'll will this the turn questions. Thank performance to call operator Now, you. over concludes our our for financial of the who period.

Operator

[Operator comes first with Bank of from Julien question Instructions] Our America. Dumoulin-Smith

open. Your line is now

Julien Dumoulin-Smith

to modernization terms about see true But capital? with start the in So there of What's how Hampshire I flowing first XX delay impact the into the over suppose you about it New to just on then you starting you the secondarily think grid years. $XX as million you up? Can equivalent that talked when the stuff. timelines do and see of and that the of CapEx talk some process we ultimately about

Mark Collin

get are waiting New virtually following currently we're order the and deadline we there's a we sit the point, at But we although, think already that hard identical imminently the we, so up that. so begin order essentially an to the waiting on likely within bid that in Hampshire, plan, we for the I process an for quarter Massachusetts, we'll New to investments no commission we In second Once very the order, Hampshire. for on and of In the of going process to this expect out types that make. intend firming report process they're be still from to expect stakeholder similar. resulted Massachusetts, have

the we investments customer going get substations. be putting together system in And larger soon larger base, as it distribution just on order New then As the of and that our Hampshire. commensurately to be because is plan we'll

Julien Dumoulin-Smith

And expectations that like given May think XXXX about timeframe? perhaps especially the late about Is the frame a and on Energy, just in overall respect basis. following for rate results that annual up it, you something returns or just as that with does forthcoming here sub? trailing seasonal Unitil on more here is what on of equity the there the seen How to seems increase the

Mark Collin

We improvement in does performance. not seen decoupled, increases. improvement we sales. the a benefit seen that, a Hampshire result uptick that in from in economy an the It's I of New some we've in think have some as so seen sales electric division have and that's it And

systems of go we're the our of level to of up with keep allows forward, one us we it the aspects expenditures is As capital important making. tracker

So we said depreciation, capital this you also from while May to year, as in tracker more base more and more cetera. of going a rate bringing investment, we're et to are still increase, benefit

which continued it earn is be think of around where think So our overall, to may we're of on allowed periods Energy, on we But I have I able expect be that's return an Unitil over-performance. basis, and continue overall -- rate overall we to at our to will return.

Julien Dumoulin-Smith

probably Obviously, the conversely Fitchburg And What's to things then there a of there side the by for back things. improvement expectation can you the and rate case? come timing on code. X% are zip

Mark Collin

utilities file is gas five in every every legislation There electric requires Massachusetts years, utilities XX to that years.

do can some that from in was Fitchburg to We're event, XXXX, interpret a would year arguably going any we'll we required. or based -- so be be as with Our to the that earlier, year you it five There there. But timeframe XXXX would was interpretation last test a perspective be sometime on is in legislation. XXXX. we legislation, needed. test trying year XXXX in all following year just just felt evaluation be that If that be that may test still

those years On the XX, the longer recently and will mechanisms schedule new a the the I gas or little on as dependent is on side, that Julian, as implemented upon said earnings we be XX it's particular cases, see of that there slide gas. In there. both track you

those then as to time to manage earnings do as without to to a and we expenses to in, overall in manage some need Pittsburgh, the we've I’ll bring will rate help so the the try often. to last And expected the expect without off, our have expenses related rate of falling other for just returns cost over filing. We storm maintain is about lower this because And before. that which goal talked longer in help And cases returns quite do period trackers also areas contribute that amortization a for those our division. come up to again try need mention

Julien Dumoulin-Smith

only be sufficient in are mean trackers it's because would out XXXX an would for uplift to But out I anticipate pending here, only delay the because be filing clear here? that the be that you of

Mark Collin

base the both rate to amortization no of there’s going the rates longer they're basically. term the management because Yes, third term to they they're out annualization that -- the they're I these storm. costs, and out trackers own fact But in adjustments going storm our in or are related as cost indicated no

Operator

Kim question next with comes Our Capital from Insoo RBC Markets.

Your line open. is now

Insoo Kim

one-time more this of could see is mentioned more you of was that quarter In those some in bit you elaborate quarter this items, quarter. of for future just book the we that terms of the benefit million tax And just tax or little items a could that items a $X.X on this year?

Tom Meissner

the we've impact, this the the being of quarterly as of ADIT a essentially was terms $X.X done year. of recognized discussed, In that is revaluation impact that -- this EPS million

a amount lower impact being can into or be income. softer expect there year, the might quarter, the So XXXX. quarters, the every it recognized the little you albeit in over an ratably quarters But will our follow bit

So for just tax it would is to clearly. We -- million that whole next that’s will our more Insoo where an as our lays staying lower be range. over rate whole pretty pretty said we’ll good that the reflected. expect the impact the be state topic I more And XX-Q it the XX a our got in a and a in on comments on quarters less around and think be the and will but for out probably period impact federal income Page XX%, on my combined of are hopefully, that $X.X year, year, that write-up we that I XX% effective year return of

Insoo Kim

in your this And gas the than in terms businesses? was of And then somewhat year-over-year level historic the higher electric growth, the customer from growth customer what benefit customer growth quarter? the impact and was of

Tom Meissner

been we of do do looks quarterly might trailing pretty and to it like that in to and X,XXX If consistently that seen range XX gas of uptick. No, year. a been fairly the I we’re able X,XXX think impact have a see basis a customers business is that. grow little And we anything, what more and month that’s able we’ve the as we’ve consistently optimistic about

and serve tend to and economy on particularly commercial on seeing because that sector. that follow of we’re going development in the of residential if the range, that will electric. higher Looking amount And the forward on end the on both we in areas improving and that of be better the not

in as trailing Although, same the again, again, to customers forward, on pipeline don't a bit. grown, that think and see see and last electric fluctuate our been high there. to reasons that we But good robustness gas of period lot looking customer even unserved expect gas for more, XXX XXX-XXX we certain fairly I obvious expect our think the sitting I optimistic we’re little little gas; attracting. growth a the as But will in that or we have still between we’ve we’re and periods has

Insoo Kim

on, Granite note, And me are know on out and Do the you whether be rates impact see impact unfair. then impact guys? potential material from as a FERC reform Based rates unjustified what is or and you there could on any rate the side finally you State. tax State, the investigating a Granite scenario put are of that where more just a bit any for minor or

Tom Meissner

We us process, much middle Hampshire best a have to rate northern case, we in it in doing in helped time in address Maine which you it if tax place New the were like on, best do. and and the of the clearly that can that's ideally rate a the act to both cases do

much that. Granite a tax items a with don't year itself all to what Granite. up. ready act, were file we’re the in the that, the because get the requiring address can impact of But of rate settlement have in of lieu we to and case expect us lined we've been and able this we to call a parties to on there to comeback do for You material act discussions, work provision And Similarly the settlement Granite. last our middle they with getting

Operator

thank may for great you This Ladies today’s am a the disconnect. you further showing in and have conclude [Operator Everyone Instructions] now participation questions. conference. I does day. your and gentlemen, no program

David Chong	Director of Finance, Subsidiary Treasurer
Tom Meissner	Chairman, President and Chief Executive Officer
Mark Collin	Senior Vice President, Chief Financial Officer and Treasurer
Larry Brock	Chief Accounting Officer and Controller
Julien Dumoulin-Smith	Bank of America
Insoo Kim	RBC Capital Markets

Unitil (UTL) 26 Apr 182018 Q1 Earnings call transcript