UTL - Earnings call transcript Q2 2020

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Operator

Good afternoon, everyone, and welcome to the Unitil Corporation Second Quarter 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] And as a reminder, this conference call is being recorded. I would now like to turn the conference over to your host for today, Mr. Diggins. Todd

Todd Diggins

Treasurer, Chief thank XXXX us today Financial Financial Meissner, President and Corporation’s discuss are Officer for Brock, Chairman, Quarter Larry Hurstak, Second is as President, Results. President, was Bob recently and will and you Senior Treasurer; afternoon, Vice and Vice President, and further Controller; Relations. Hevert. External to joining Todd detail Black, XX, Also Unitil Tom Bob Customer Financial Senior Dan Good Vice effective Officer discuss in and Chief Affairs we Senior Officer; in July Chief Executive With attendance today momentarily. me appointed

information this will financial We second quarter about call. and results on other discuss our

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

that are the X, results We Securities of XXXX. during will comments or statements future provisions Reform refer Act the forward-looking future Harbor under about made to On this Safe of operating call. Slide events Litigation information today Private the

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

will Chairman, and assume update includes in no Forward-looking are and believes describes company statements call CEO, This to Tom these non-GAAP over fully evaluating we to supplemental measures. contains measures President to as reconciliation GAAP duty the The these and only a the its accompanying I non-GAAP performance. more turn nearest useful information speak today, of presentation Meissner. now The them. non-GAAP measures. measures

Tom Meissner

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

over years was of Bob Hevert, Before Senior introduce XX we in regulatory matters expert and brings recently industry Financial finance Officer Treasurer. I’d and proceedings to who Slide like Chief moving Bob testified as over and start, corporate XXX President, an in appointed X, to experience Vice has witness.

just on recent success has and where testified Regulation words. broad recently our Bob cost of Bob witness Practice Bob industry Rates, I’d give We we as equity was Area case in most and of great proven few will with Maine. in shareholders. of in fact, ScottMadden as point, each In this to to the rate of the to behalf record operate, and states its be previously experience of believe including Partner a Bob’s Leader the company track like Planning. say that value and of At opportunity the his Unitil

Bob Hevert

excellence, the everyone. for a to matters good which Unitil customers helping have very Thank commitment employees, and with long-term am and both you, I team, time, many on its all the the I join company’s of advance I and forward strategies. to benefit sure look proven Unitil I excited and to I’m company’s that became Tom, be to a shareholders. worked familiar years. culture, afternoon, its with to variety during And have of

Tom Meissner

we’re Well, board, you happy Bob. have on to

for I’d appointment by as as down Bob approximately with or his his of share as unfavorably will July estimates The X, CFO. of ongoing on on share where at time per working income his move mentioned With Bob. to $X.XX announced the commitment company $X.X Larry million XXXX. CFO decrease Brock XXXX, the compared continue to income pandemic per become Todd during $X.X Slide that, I’ll share. to Bob’s $X.X a closely on today, now which of or million like will COVID-XX Vice thank point, As net for and leadership or earlier, ensure company working Larry step XX we per with closely quarter President, to will tomorrow, million that with effective or transition. smooth Senior $X.XX impacted second $X.XX to net a Larry

income $XX.X or XXXX, totaled $X.XX million During per share. the first of half net

in share recognized was of per to XXXX. $X.XX weather a in The share. million by reflecting company the per first gain, $X.X reminder, non-regulated to income the winter on due net winter in earnings in or Adjusting affected of quarter is Usource. net QX, XXXX, in weather company’s approximately year-to-date million million by net a divestiture $X.X the As or subsidiary, which the XXXX, or the $X.XX decrease warmer gain business warmer-than-normal of compared $X.XX unfavorably its primarily EPS $X.X divestiture onetime income for down

X. Turning pandemic to response. to company’s recap last to COVID-XX I’d like the Slide Similar quarter,

highest to execute preventive priority and emergency, safety the implemented of In the our currently during our to enacted limited and operating in to order response home are office plan. of its customers response The to is this most we we’ve crisis Our be which under employees. reopening continues possible. unprecedented continuing measures work plan opening from our COVID-XX time, in and phase when company employees proactive a also phased

our as the continue and travel hygiene, measures addition, virus. safety COVID and limitations employees as Employees In being we the through customers other to the of emergency. company to routinely require the service provide of our well social to safe tested Operationally, protect spread prevent has continued to customers’ ensure the distancing COVID-XX entering masks, our employees. and both are and homes reliable

has to thankful cases are among to no seamlessly continuity, our recommended active We while other adapted COVID-XX standards distancing and We employees. transitioned our operational work-from-home appropriate. social there quickly ensuring guidelines where are that and workforce

plans some and of being states of have country COVID-XX and being reopening this are X, experienced parts to our back impacted company On remains acceleration rate to adapt many service, continuing consequently, Our pandemic. to COVID-XX in prepared the customer while extraordinary the to serve in update Unfortunately, have as challenge new the and exceptional how in customers are of an order whole we communities. a provide an rolled by provide risen our employees the cases places. Slide

However, the counts as cautiously areas spread slowed optimistic at COVID-XX of that measures also have in across percentage new positive service COVID-XX considerably stabilized to average. lower the our tests have case we New England, successfully appear have territories social tracing, our in masks, of distancing The rates other national remain testing, off. leveled and than the

the in COVID-XX reopening orders operate. relaxed have moderately cases where of a of we the As number new been phased slowed, have as emergency plan part states

past slide, many investment service projects including major also that which summarized our As QX. to areas, in proceed On restaurants and development began personal of our again reopening customer the plan. contribute outlined discussed have our should expanding X, would retail, this the on that five-year we most I during services, businesses, to Slide note base. continue in we’ve

the to results I to change our not in turn to million not pandemic. we is greater our a the have I anticipate the $XX as as more now current plans result than of the discuss On that, capital revised in same in in do fact, We previously X, stated, half comparison of dividend that to any pandemic. reaffirm COVID-XX With our I’ll investment over wanted simply financial first as Larry to call spending a period through XXXX, our higher And result detail. the policy Slide XXXX. of

Larry Brock

a $X.X gas Slide Good In XX. from emergency discussion of gross of that lower Tom. begin the and industrial $X.X by commercial usage. $XX.X estimate our XXXX. million, due was gas everyone. the million Thanks, unfavorably sales XXXX, second margin decrease We I’ll the afternoon, impacted and on COVID-XX million quarter to margin margin

by XX.X% gas the of gas compared same impacted gas weather summer sales early ongoing higher compared period unfavorably in These as emergency warmer usage as X.X% in million that total, In to the The Natural X.X% in would have decline was the customer quarter. the $X.X residential residential quarter. X.X% down excluding a the the lower gas early the in weather. usage to XXXX. distribution basis, units the due excluding that warm second sales in company compared decoupled sales were down therm estimates weather-normalized On and to the and year. sales, XXXX. partially and addition, and decoupled offset well sales, been X.X% were COVID-XX the $X.X up Commercial sales, C&I therm company were rates the sales margin quarter. decreased growth In down in to million reflects down primarily due by to industrial XXXX in XXXX summer C&I quarter were estimates in quarter X.X% decreases prior weather-normalized sales

to Moving XX. Slide

million, our gross the due million weather primarily gas historically first estimates customer was company last quarter to earnings sales from offset $XX.X XXXX decrease margin million partially six margin decrease was was I during of weather, XXXX. of the The of by in first warm winter The the driven growth. $X.X a by XXXX, our months lower $X.X quarter’s that that year-to-date warmer by discussed call. For

COVID-XX unfavorably by sales attribute the the Through six natural therm that first weather XXXX emergency the impacted in partially historically sales, winter decline quarter X.X% weather-normalized estimate million in of volume XXXX. by first gas XXXX, We natural of million offset also margin usage. due C&I were distribution to gas lower higher rates variances $X.X These the $X.X months We decreased gas the gas of estimates sales, warm down that year-over-year. X.X% the therm ongoing compared decoupled company emergency. and to The were COVID-XX XXXX. excluding in to sales

at serving currently the X.X% more time note in our would customer XXXX, customers that I X,XXX growing same Finally, base. gas than are illustrating or we

Commercial sales, sales ongoing residential increased stay-at-home early COVID-XX and period. the warmer C&I and and warmer down during total, air partially that sales, down use the decoupled was quarter. the been to sales industrial margins XXXX, quarter. summer in residential usage excluding $XX.X company flat early electric kilowatt early C&I Electric the primarily Next, XX.X% up The gross basis, weather, million. X.X%. sales would electric due period normal to the the summer excluding were to of negatively margin XXXX. company sales on sales, in offset reflects warmer sales in quarter conditioning weather. million discuss second by the and electric decline to the $X.X units to in sales in customer summer were by In due of decreased million, X.X% electric COVID-XX same quarter growth higher the million electric period impacted Slide a ongoing is million, second net of $X.X of Total XXXX to usage that rates, due In a usage lower pandemic margin to weather-normalized by XX.X% higher down the The up higher sales increased customers the in residential the of XX, margin. estimates our usage C&I On compared X.X% $X.X distribution residential were XXXX. and were XX.X% estimates have emergency which we $X.X by and electric hour lower offset due partially COVID-XX decoupled kilowatt electric emergency orders hour was

Moving to Slide XX.

first For and margin the customer summer is electric In six million, sales higher period, higher warmer the months flat were distribution to growth weather. electric was our $XX.X by XXXX, million electric than $X.X XXXX margins to gross due early of XXXX. rates, again which

served purposes. offset and warmer the than fact impacted to by home was residential which at electric the usage differences number the were the margin positive of early the excluding were weather increased XXX winter hour customers weather, that ongoing of that orders. prior by first weather year. warmer and or the attribute XXXX, X.X% as compared of usual emergency sales, principally down as time in customers company heating We to warmer slide, the $X.X last compared in Through estimates these has during electricity This average the negatively people by X.X% the to COVID-XX impacted COVID-XX electric period. result sales C&I usage to summer customers to lower of million, for million. stay-at-home of mentioned being ongoing electric However, the due COVID-XX months adversely more the offset quarter The first of by a by impacts temperatures $X.X electric decoupled I X.X% in six the spent normal XXXX. kilowatt decreased sales winter and increased also sales, kilowatt sales decline emergency partially The

discuss XX, on impact Slide we’ll on Next, emergency. the Unitil of the financial COVID-XX

the We company. closely of the health emergency and monitoring COVID-XX its on are impacts the financial

$X.XX As the impacted were estimated have as Tom XXXX. result of share by of quarter earlier, COVID-XX emergency, per that a mentioned earnings negatively we in second the

the the combined sales margin XXXX. COVID-XX electric discussed, on just second was we gas the million As in from emergency of impact quarter $X.X

Overall, the costs debt health lower is other bad to lower in the options are point activity, potential utility However, the incur levels service primarily XXXX to moratorium by bad which recover ongoing provisions higher to the was down O&M debt emergency remaining bad tracked partially COVID-XX million facility related and activity, supplies, decrease not and operating million, to alter higher COVID-XX this compared higher lower of the net mentioned regulatory million by costs to is emergency. to the requests is customer of company XXXX. cleaning, levels also groups the I to identified the quarter in company due for disconnections, expense. the margin, respond has of with like order mechanisms quarters the earnings. to the of and gauge net sensitivities PPE COVID-XX second was through We’ll to is million result the margin related $X.X higher quarter call, from pandemic-related primarily purchasing somewhat COVID-XX and translate O&M debt, impact company’s the stakeholders could the our emergency. and COVID-XX help related third the company that usage expects claims to financial expenses on be as between approximately impacts of employee that The XX% due offset out O&M by to the mechanisms to other XXXX, closely regulators I’d to lower in a to exploring intention we develop and sales tracking regulators fourth process. working as provided $X.X of to lower the period. to supply-related In expenses Due company all working costs, insurance expenses. the emergency. utility Also, write-off benefit impact of and which arrears, $X.X about recovered of has related The historically local in to of does the was and staffing no incurred last approximately the $X.X second our offset reconciling the reporting on company to potential be of

capital priced and Turning second for long-term programs close in other was existing successfully $XX purposes. maturing used private million balance debt, the the priced investment-grade at In to fund our three. corporate to sheet. competitive we the company to transaction market. the be anticipate The general and and of through the debt quarter, refinance placement quarter The will debt investment rates,

proceeds $XXX of has plans. the existing liquidity – debt, of facility, has the company’s recently a growth credit limit the With which ample company priced borrowing to million, the our and recently execute

XXXX Moving on of earnings have expenses. Usource this to Form to to ended period XX-Q related the from the provided Slide the I’d the XX. we reconciliation and We as that XXXX a in revenues provided impact we like XX. provide was In is an different earnings of XXXX bridge isolate the note June slightly statement XX-Q analysis results and comparing divestiture six-month supplemental that for presentation, morning. to the this the layout

million, lower largely period compared XXXX margin maintenance Core maintenance benefit higher and year-to-date the $X.X of This driven Depreciation million in net storm expenses $X.X by operation is discussed, million decreased due bad decrease employee primarily partially to debt as warmer well and of than service winter weather. offset As service. retirement to as offset higher same expense borrowings. increased $X.X gross lower and professional lower costs on XXXX $X.X XXXX. benefit levels million utility higher costs. is the by expenses flat, million. non-recurring of higher $X.X by fees reflecting expense million, Other well of $X.X due a by of other higher Interest million. abatement reflecting income Taxes to taxes levels lower of short-term on in than increased $X.X long-term million, $X.X realized – by a interest tax higher plant reflecting on expense interest higher was as amortization and plant net debt, in in interest $X.X by million, XXXX was as

$X.X to Next, the impact divestiture the realized million, XXXX. addition and gain expenses was we’ve $XX.X Usource of the $X.X This in million, is the on of net XXXX. isolated after-tax of operations Usource includes in which revenues full in through which realized million,

pretax earnings income period. taxes decreased lower the in reflecting million, $X.X Lastly,

analysis of XXXX. case our million $XX.X rate we’ll net to of bridge this income XXXX earnings for begin XXXX first the six So our year. On the discussion $XX.X reconcile net of to months XX, activity Slide million our shows the changes of in

for starting $X.X million. rate $X.X will gas and our base X, X, November to revenue March in of million of majority award As taxes, point related the to with Hampshire Massachusetts required distribution company a and excess to The file year New decoupling to fund, has rate last the half next pass $X.X rate in XXXX their result distribution help to XXXX, test base propose UES planning to reserve expense retirement lower of we allows have changes of filing case which increase In expect but The We XXXX. the began will $X.X of that removal of mitigate approving quarter, years. out base which case Over of as XXXX. as the been distribution revenue related pass a and was in Northern million, distribution we lower the we be included the revenue from collecting back provided revenue a to XX, the the be award major the will settlement and electric concluded. of Hampshire XXXX, retirement approved a the from The during of In filed to two new cases settlement XXXX. a summary volatility of effective are a rate or was implementation the storm both first result of lower expenses while lower order in Maine income was XXXX electric removal we XXXX, taxes expenses rates. Slide million March depreciation an for announced rates by the on The by gas total $X.X back UES PUC $X And I’d this lower of Maine settlement allows settlement until electric deferred significant defer have become in PUC, from settlement over of have rates. of XXXX. million later. million million of be on increase costs deferred $X.X relief. costs income We The rate phased increase distribution a to base related awarded excess Massachusetts the New also received over Massachusetts, an future of storms.

I we capital for As million the $X.X amounts costs awards depreciation precedent long-term expenses the have case XX, the would Fitchburg slide, trackers lower retirement and been trackers plans negative distribution for Also, Fitchburg mechanisms mentioned rates. across removal all higher of base transfer have of into the combined for the from On last reflect of tracker rates. if the a utility our amortization or cost rate and Slide not base collections subsidiaries. rate and from

who in you turn call. will Finally, The months’ XX last questions the after quarter for total actual the each X.X%. on thank of normalizing months. weather will that, in return of X.X% a the audience. earned jurisdictions. coordinate a company consolidated call the the of And estimates would return winter with equity on I first that the attending been XX on Unitil, weather consolidated we today’s basis, from Slide last equity XXXX, over operator the provide return XX, in to on regulatory on now warm our equity have the

Operator

RBC Tucker And of Markets. line the question Shelby open. now Shelby, is Instructions] line first comes your [Operator from of Capital

Shelby Tucker

prices team, was you either from crude question Thank looking your to welcome forward. to I – or oil rate? persistent quick Any of from Good about forward A Bob, territory afternoon. with going had really in fuel the working in I the the switching mean, switching the gas. you. to lower COVID-XX lower crude cost price impact

Tom Meissner

this Tom. Hi, is Shelby,

which customer customers For the for shifting this growth. out have be organic is during oil to growth our strong year-over-year, continues emphasized I from most primarily to driven But part, that not would time. marketing by we point gas

have of large as come we So continue that planned. including one projects that a New a Hampshire is large proceeded to in lot through, Salem,

driven expect really to don’t although impact we it customer more be an see to opposed numbers switching. So year-over-year, by organic will as our growth on

Shelby Tucker

of commercial And slowdown industrial, more mostly crisis? then Does from – in indications answer, of taking but most COVID-XX growth the are is a there a bit coming that I’m or commercial. any the guessing given

Tom Meissner

We And properties, a of have fact, hotels emergency. development throughout not in continuing any seen we’ve this indication mixed-use seen construction slowdown. commercial and

Shelby Tucker

much. Great. Thank so you

Tom Meissner

Yes, thank you.

Operator

are no further there And questions Presenters, time. Instructions] at may [Operator you this continue.

Todd Diggins

And you you I that everyone, joining. Thank for everyone have in a day. great have Thanks. the interest Unitil. appreciate

Operator

presenters participated. call. so you Thank much to to conference concludes who and our everyone This today’s

disconnect. now may a You great day. Have

Unitil (UTL) 1 Aug 202020 Q2 Earnings call transcript