UTL - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen. And welcome to the Q4 2018 Unitil 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 be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. to Finance. call like Diggins, to now of Director would turn over the Todd I begin. please Sir,

Todd Diggins

Black, Good afternoon With you Executive fourth Tom and thank Chairman, Vaughan, and Officer; Chief Brock, quarter Unitil to and Officer Chief Meissner, Christine Vice XXXX President Senior President, Financial Affairs Senior Todd External Corporation’s Vice Financial Mark Relations. discuss Collin, Officer and financial and President, of Customer and Accounting Controller; Vice Treasurer; results. President Regulatory me Senior Larry and Services; are for today Chief joining us

We our this will year-to-date discuss call. financial quarter on and other information results fourth about and

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

during to will call. that We information this refer

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

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

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

Tom Meissner

everyone you, for us. Todd, joining Thank and thanks

dedication Eversource transform XX the be to leadership retirement formerly missed, company to I that pleased X, since newest this I Treasurer, has to the the he President, the company. company his of the Mark will Vice today In where and Rates joining is am same introduce Mark to Massachusetts, recently order Christine Before the of will the Board, Unitil next May and member executive important Financial to Christine our Vaughan. contribute successful effective he greatly for months. team to for Treasurer and XXXX. Regulatory while to want had time, where smooth Mark as success to service served I Officer I Mark continue announced Mark’s Chief into transition take successor this XXXX. our At our it is year been in that his moment for past thank assure month as am years. she go two Energy closely the pleased role, work Mark and and the a Collin over together a over Earlier and results in will over and helped Christine planned

all We our best team the to excited are his Christine all we wish retirement. in joining and have Mark

of announced four. we impacts as net of Now by million on XXXX favorable of turn share increase to had $X.XX results and increased million This margins in was or beginning XXXX. our driven year This will distribution share slide another X%. over share Today, new per or rates. sales customer weather reflecting XXXX I earnings income an per $X increase in compared higher We per $X.XX XXXX. $XX for solid to earnings represents growth,

five. Turning slide to

some successes. our of highlighted have recent We

peers. five years We both market record the utility earnings are and currently in broader and generating past our the have outpaced

gas have on delivery X.X%. customer by experienced our operational reliable superior territories, ensure six performance grew to customer our the growth highlights in we the service strong and of base service electricity. we In to safe and well continue as XXXX, financial Slide growth natural as substantial and gas future addition In opportunities. results, focus to natural

fastest owned England years. over New the past gas growing the traded natural We five in investor have been publicly utility

construction customer in the years planned growth, continue robust in opportunities Our benefit the company decade. areas economic the growth ahead. of next robust growth generate new from or for will over underway significant billion service to with This $X.X

Turning to slide seven.

company a will next prior notably than We investment look the the provided opportunities years. abundant spending three historical at have expenditures has have our program. higher and capital future and in years, three capital the In

Our capital which an XX% budget be is to increase is for XXXX to of $XXX projected compared XXXX. million,

Moving we to of our some eight. I opportunities in territories. slide investment will focus the on have service

the new expansion On in added projects of been the side we investing of since system approximately XXX XXXX. that distribution have gas have actively mains business, miles

low and over to an convert corresponding In of the significant approximately we expansion penetration relative customers advantage along oil. cost gas to a have for price customer fuel mains, low projects, to to higher of cost opportunity These provides conversions natural due savings time. relatively customer addition existing which cost thousands XX% incentivized our are to

As service we our robust highlighted to recently years customers the approval new towns for we will received Hampshire, In continue of earlier, Kingston. to as activity territories, expand development our projects area those service Atkinson also completed. are and see into translate New in which to come to

we of XXXX. communities, currently similar first up completing mains, are expect half the in those anchor reach to We additional a main receive to approval in request currently and is customers expect New pick plus for to along of customers Epping, we pending extensions those Hampshire the route

service within strong our Area have our Targeted our initial part final our footprint All Buildout or program additions. growth demand and of the new and to Maine, In expand of date target this our plan customer Saco ongoing we exceeded by TAB current areas. year to contiguous customer sustained completed for of to is

miles city. installed that We of also of completed the new in first mains Sanford and year X of the TAB downtown the almost

a customers. potential almost million represents two projects, on these of which have market approximately invested $XX X,XXX We

nine. slide to Turning

work to We natural as continue well implement gas driven related grid to initiatives replacement as policy programs, infrastructure our modernization. electric

while further years. anticipated completed state. in Massachusetts program gas Hampshire XXXX, our with gas that Maine, by our approximately to XXXX, New is in program schedule be XX infrastructure completed Our slightly is in our fully infrastructure which completion gas was infrastructure replacement In program modernized replacement on out

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

the to grid. trends modernize Turning there the in electric to electric, are industry significant

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

While Hampshire sized could we the New Plan million under to $XX still estimate it if that Massachusetts. development, is approximately be comparably

customers the a both continue will reliable to forward and participate and states in We our more more providing modern in to grid. look with proceedings

electric that Hampshire. be These expected second for spending gas XXXX, capital of rates the with made to addition first in filings trackers file I In quarter just the quarter recovery capital at utilities of in New the be will effective cost in XXXX of expects our XXXX. and to the company to mentioned, of both

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

Mark Collin

Good everyone. Thanks, Tom. afternoon,

significant to which had was under affected corporate the of great positively to operating rates tax in lower to company by rates partially million million, as $X.X distribution XX% XXXX $X.X XXXX gas sales million of reduction of income margin margin growth rate natural experienced tax earnings recognition we due of another If illustrated, the in achievements. XXXX. we Gas turn sales was higher the compared increased new the law. by offset natural in year Tom As and slide XX, gas $X.X

of weather customer and reflects million. of colder margin growth gas volume XXXX winter positive in effect the $X.X sales addition, on In

to reminder, compared tax revenues XX% X.X% also growth and increased the colder provision year. data correspondingly As heating in period. in XXXX. driven compared days changes therm sales in for sales areas law in related reflects were therm a winter in lower the the collected and XXXX in gas taxes on increase gas the areas, customer reduction to gas the offsetting degree XXXX XXXX. service to company’s service a Based income the company’s Natural there in weather by was natural prior in more weather The

of of customers served XX, gas As over X,XXX XXXX, number by has increased last the year. December natural

to and offsetting point the XXXX. the Based X.X% warmer by of degree Next, electric sales weather changes in compared Total in in slide by law. were average hour to year offset one margin temperatures was in electric kilowatt were revenue for decreased of $X.X areas, -- XXXX like reduction the a electric due than cooling Electric sales days the XX% increased XX% in in and by period. of taxes temporary electric XXXX utility. than summer recognition income growth $X.X law lower million, would I reflecting to to XXXX income sales reduction new absence by partially in company’s out increased the offset sales there affected XXXX corporate XXXX XXXX. of margin New period warmer the tax a on the adjustment also temperatures revenues positively XX, average in customer in more rates recognized million. $X.X margin also XXXX. reflects that sales summer was lower by million rates the growth $X.X in compared distribution positively the customer tax tax rate in company’s electric under of to and reconciliation year of current the the on affected Again, collected rate $X.X These Hampshire higher Electric margin to in the million service related data period provision on impacts positive current million compared

over last of number XX, year. electric customers December XXX served has of As by the increased XXXX,

deferred operating offset $X.X of adjustment XX. professional in million previously million, million costs higher of to same higher in the O&M period Turning reflects in of compared to rate in of by utility increased million the XXXX. to non-recurring by maintenance $X expense fees a quarter Operation which in costs resulted and a $X.X The second of XXXX costs labor an and lower XXXX, O&M include higher corresponding in compared million. slide XXXX, revenue. gas XXXX, was change $X The costs increase operating expenses increase utility recognize temporary offset in in partially to $X.X

cost which taxes amortized expense service other Taxes higher taxes. Interest are storm higher debt. of deferred on increased and of income reflecting and XXXX, rates higher in Depreciation storm million O&M adjustment, interest $X.X partially and expenses year. technology non-recurring XXXX plant of result amortization and utility X.X%. utility higher reflect expense and than expense higher higher areas, The this being amortization prior amortization higher levels plant XXXX information a long-term debt costs, in utility short-term operating $X.X year-over-year local over and of higher up higher in increases costs, lower or normal $X.X primarily $X.X than cost. is reflecting million increases periods. multiyear taxes in payroll net of including offset million to XXXX, on and increased major compared compared increased bad some operating levels to Excluding These was by remaining related debts in property service million

in equity $X.X Lastly, million regulatory XXXX. income million is prior last jurisdictions. each on the tax consolidated on terms the with basis -- earnings benefit across total in lower from and of X.X% current in $X.X at return lower rate tax regulatory differences taxes equity months decreased of X.X% in authorized year, our ranging $X.X tax authorized pre-tax actual XX reflecting XXXX, provides compared return XXXX which our million XX of months book/tax with a turning from on X.X% ended trailing in a temporary XXXX return XX our the on to to Slide the the income earn rate Unitil in earned line of return jurisdictions. a XX, December

results these past, the are not in discussed normalized. weather have we As

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

been cases basis. have cost XX% and our and annual In proceedings awarded revenue update to of across while third other is additional new gas trackers, growth. $X.X distribution systems as established trackers to have rate capital recoverable anticipate expenditures of related tracker appropriate. to capital an the a in extend XXXX, subsidiaries be up these electric our on nearly Historically, conservative achieve addition, cost of are customer and our long-term we programs and expansion utility through to to rate plans through prepared approximately million we In all

capitalization customer maintain a of on sustained financings. a and and earnings subsidiaries. trackers XX, long-term help relatively capital stable an update and growth plans, will provides Slide level and our across consistent to our rate Our on utility equity return

capitalization redemption our this of agreement $XX with We offering repayment The investment to used XX% X.XX% utility the balanced were through mortgage based entered and to short-term from an a level. ratings the this debt sell long-term issue November the for is and structure higher into million and Hampshire placement to private marketing bonds a of at proceeds institutional and debt that strong net first cost investors. process strive electric capital grade XX% long-term debt. of have approximately equity year, achieve of past In equity long-term a strong utility New

We years, long-term of refinance well-positioned cost plan the $XX cost to over average as higher weighted are debt long-term we to maturing by million lower of capital our refinancing over debt. next five

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

Operator

our And Shelby Tucker. line of question from Instructions] the [Operator first comes

Your line is now open.

Shelby Tucker

Congratulations with you utility now now Great. about I your A policy, are sorry, that line great, you great and Good about dividend ratio. dividend, $X.XX say. question that what great delivered increase X.X% a I on about year you quarter, or am the peers? payout afternoon. are XX% your yesterday, the this thoughts in year, announced around you with less the should more wondering are

Tom Meissner

last and ratio cash to on of when the are I dividend raises are program year, a impact and TCJA consider we a range to investment our XX% in in XX% the that think flow we currently we will the targeting range. from Given now payout solidly

Shelby Tucker

a for strategy team, the have going Great. the you define where cases think about the your Yeah. forward, I any unusual are in -- Tom. -- maybe need don’t thinking through time question And you rate now Thanks, two a Mark, to for your actually, we no should rate for, How rate you case sorry, Tom, years? if cases. where be next live then over

Tom Meissner

Yeah.

an plan. we pattern our have I of ongoing Shelby, through rate as think, we and case trackers rate explained, kind

the be commission basically do that the rate on is continue of have to ability and of valuable earnings is that cost we So terms streamlined to and do us. rates their more proceedings and through file and the those relief rate in determined cases we structure to are will adjust then such, are if before where needed. make to very look our what of each profile entities at we projections Outside their

I general but year still whether haven’t think time of will rate are not. see this considering is can at to you this case do and base forward, we in provide the the as at we look best looking filed we that we the look that and it’s at there chart thing and looking we information to certainly and time, or ROE at any be it and the is things presentation and some advisable the

Shelby Tucker

recall a I then what for weather? Got Mark, if your it. have this hearing have And don’t you number provided you, question for I been that would year normalized

Mark Collin

$X.XX It’s impact. about -- of a weather about is $X.XX

Shelby Tucker

it. Got

Okay.

Mark Collin

both yeah, impact, summer… favorable A the

Shelby Tucker

it. Got

Okay.

Mark Collin

… and some winter, yeah.

Shelby Tucker

questions all very That’s Great. Okay. have. Thank the you I much.

Tom Meissner

Yeah. Thanks, Shelby.

Mark Collin

Yeah.

Operator

[Operator am you and and conclude time. participating wonderful you a Ladies this for conference. may does day. showing I This any questions Everyone today’s in thank not have at further all program Instructions] the disconnect. gentlemen,

Todd Diggins	Director, Finance
Tom Meissner	Chairman, President and CEO
Mark Collin	Senior Vice President, Chief Financial Officer and Treasurer
Christine Vaughan	Senior Vice President, Financial and Regulatory Services
Larry Brock	Chief Accounting Officer and Controller
Todd Black	Senior Vice President, External Affairs and Customer Relations
Shelby Tucker	RBC Capital Markets

Unitil (UTL) 31 Jan 192018 Q4 Earnings call transcript