UTL - Earnings call transcript Q1 2022

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Operator

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. the begin may you conference. Sir,

Todd Diggins

thank Good discuss joining to for Corporation's morning, first and Unitil quarter us results. you XXXX financial

Speaking Financial Officer be will Treasurer. Chief Bob call Chairman, and Senior the Hevert, Chief and and Executive Tom President, Vice President Officer; on Meissner, today

discuss will other this call. information We on and financial

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

We call. to will that this refer during information

today made harbor about operating to Private Slide comments Moving statements XXXX. safe the events or the Securities of forward-looking provisions future are Act X, results the Litigation under Reform of

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

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

Tom Meissner

over net period good $XX.X same Slide XXXX. first strong and and the income morning, for results us. on announced with or of of X, of $X.XX million Todd, Thanks, we begin Thanks of XXXX X.X% earnings quarter going today, the joining I'm everyone. where to for

above our X% share upper growth long-term the maintain earnings be end growth earnings to we per X% expected that of of to ahead, range. Looking with near-term in guidance

to customer remains We superior all-time deliver at continue satisfaction an and to customers service high.

of high on and that we safety excellence reliability. ensures Our provide operational levels focus

opportunities long-term we on of reiterate to our I'd base to expect and refreshed like the our call, fourth the investment detail investment in X.X%. to provide plan and later investment quickly growth continue rate more we strong that quarter On call. will outlook Bob X.X% see

sustainability to long-term success. we our view essential as Finally,

our to at reduce are natural working the In gas Hampshire, supply gas to supply we options. introduce to gas renewable up has XXX-FN, which way our addition provide this integrating company-wide greenhouse commitment House also In to through New is to portfolio. ways supply emissions, renewable One would to passed Bill do its looking Representatives. by into X% way a of our is and Senate Senate path from sources of procure low-carbon the

to now Slide Moving X.

on, -- led touched has focus our to is on continuous just our I exceptional focus improvement on results. As continuous

of first months Our this continues through And we outstanding. pace to on results electric reliability achieve the to in X a fact, our best year, are be ever.

response Gas the prevention. among outstanding also the the Our recognized response and best in gas emergency is our for Association and has emergency action us and industry, American

and is For is row, of XXth for in nationally. satisfaction ranked utility Northeast Unitil second top-ranked the the a customer out in utilities XXX the year

expansion to style Row provide both residential hundreds encouraging of such recently billion $X.X each a in fortunate Across development. to The construction Maine, Rock The city construction, each area in to acres. is developments Naval other. themed Kittery, further under and surrounding enhance Hampshire, growth buildings. and the of in has that construction will with growth robust elements $X billion both Maine, These currently billion growth the There appeal New large in reflected bulk campus of which see in our are and and commercial in named live. Maine was Village project will development mixed-use community spanning about provide and supporting called, commercial also Salem, Boston Portsmouth north The thousands the is company including number which second style building nation occurring to plant with service create to that investment of Slide approximately in considerable phase, multiyear planned. residents in are construction construction which investments recently which underway and development. opportunities. Downs new best are which harmonize will to Maine of support business developments $X.X campus feature continue in jobs serve or date these, to potential and there continue In We're as long-term customer regions, Tuscan customers employment now was which was designed Projects experiencing development of the growth similar We will economic Maine project, Portland, in already planned over Turning permits largest the our This Seacoast being $X.X Hampshire We and communities. development drive billion issued. adding Shipyard underway the the in see X. areas, awarded the opportunities. which New service the another owners. residential, is area's and X of

Amazon of new our hundreds service in and jobs. Lastly, Center Massachusetts development new area, will Distribution create economic a spur

represent say in these see to we a few I growth areas. service projects that just our long-term opportunities think the it's that are safe

We that are for years looking come. growth supporting forward to to many

X. to Slide now Turning

gas new to drivers play see our we out additional natural growth from for construction, continue division. Aside

fuel gas the for customer As price alternatives. the and environmental and on-the-main more XX%, I've penetration natural of past, cleaner come. affordable offer to heating to we gas expect of Natural years New both advantages significantly Maine a discussed With low-cost Hampshire, to fuel approximately predominant in in continues the is home drive and for oil. conversions

be electric it continues quarter that, whether With pass heating heat days. now on output fuel. economic the results. of homes source the heat the detail combination with in coldest provide their to gas, not will adoption who generally England or encourages company the to air Bob, Natural most the adequate to heat it's over electric while sufficient I'll the pumps most source provide sole first Finally, greater pumps, New to on is winter

Bob Hevert

Tom, everyone. X. you, morning, and Thank on begin Slide I good will

this increased Net the announced principally for first earnings expenses. Tom X%, $X.X higher period of As in higher sales million or $X.XX. That margins, same by the to which quarter morning, just by the noted, per income compared of offset of share result we partially operating increase, growth quarter per is $X.XX over XXXX. represents year-over-year share

customer quarter, million to to or unit represents year-over-year, in Turning with quarter Slide growth. Customers over Electric commercial X.X%. period XXXX. the by reflecting Overall, for customer an XXX of $X.X and sales XXXX, of classes. million industrial The growth first increased increase margin same X. distribution commercial margin both rates was the of X.X% X.X% and increasing the $XX.X compared in higher electric increase gross and increased the X.X% residential adjusted or sales

prior the winter to combined Turning weather bridge Degree million comparable margins $X.X On to Slide X.X% first XX. the an earnings the of quarter the to year, weather. basis, On $XX the a colder but effect in or compared Gas than XX, comparing customer reflects from for an of adjusted XXXX quarter million $X.X XXXX. generally increase first of was gross $X.X we normal. in million results higher of Slide to colder quarter, was somewhat increase gas in growth provide million rates and The Day margin XXXX.

Taxes weather. colder on costs. first short-term million by partly by rates, winter due higher liabilities, fees, and Other largely and of levels rates $X.X taxes. adjusted operating customer interest of by million, mentioned, offset million by net interest increased increased utility due expenses benefit and million, increased other than plant service. regulatory borrowings. utility million, million, amortization lower to quarter debt payroll and labor distribution professional and income Depreciation due $X.X $X.X As higher $X.X levels higher lower assets offset margin as higher decreased retirement growth to XXXX gross reflecting higher increased by higher Interest long-term costs. due by taxes maintenance to higher lower decreased and $X.X costs interest of to Operating primarily partially combined expense of income primarily largely a a $X.X result levels on and by

Lastly, as a earnings. million pretax of $X.X by taxes higher result increased income

to well. Both progressing cases Slide the XX. New Hampshire now Unitil are Turning rate Energy and Northern

that recall in in agreement filed late may February, a You comprehensive settlement case. we Unitil Energy the

commission's awaiting We that the decision are in docket.

company As plans include with a multiyear would structures retain revenue both the to enable associated revenue customer decoupling reminder, rate growth. that and filings

system company's totals also and with our recent system, our potential The proposal distribution the noted, annual consistent supporting electric long-run growth, the base are of vehicle enable forecast. utilization. order becoming There and XX mix our safety and of between investment initiatives On will time-of-use is continues over to investment our and financing These and and the system remains enhance our anticipate upside years. outlook about adoption next promote will rate in million pleased the to strong We approving with Slide highly Hampshire. with New X the order the as investments investment $XXX Tom ensure reliability be XX, the modernization X-year experience. provides range overall, portfolio. in grid But X.X%, capital X.X% our gas rate balanced customer electric we plan to Slide increasingly advance the the assets. growth structure

less plan will dividends by cash the be remainder a X/X of financed from roughly investment We combination with equity. expect debt flow operations of by funded and our

us dividend financing We to of XX% payout enabling reduce will earnings to target continue XX%, to requirements. ratio external and a reinvest

to again our in reflects confidence execute Lastly, XX. which turning strategic our our quarterly our I'd Slide recently ability dividend, increased to like to note plan. on

time over further ratio growth decline. Tom. I over And turn payout to evaluate will our it that, accelerating with will back our dividend We continues to as

Tom Meissner

on Ending Bob. Thanks, XX. Slide

With us, is where we're with of accomplished behind XXXX have quarter what heading. we pleased the and the first company

long-term our the We to improve continue to and believe continue sustainable our will the shareholders. company's our forward We plan, strengthen company and create we execute value future for prospects. to look long-term

that, with Todd. it to turn So I'll back

Todd Diggins

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

Operator

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

Julien Dumoulin-Smith

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

Tom Meissner

later the be In terms bill certain and opportunities year, might on currently of some possible current evaluating progress both on we that might depending developing depending timing have we're the it's when internally. updates in that

and externally, So unless bit not going we to we're to little ability confidence in have conservative that execute. we're our telegraph a anything

Bob Hevert

Bob. is this Kody,

quick as Just a follow-up.

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

Julien Dumoulin-Smith

Right.

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

Tom Meissner

impacts this of first to see inflationary might be probably of impacts part Kody, and to reflected be in the significant capital think going the much impacts, terms greatest in are this future but budget, years. in To I the not we so the is Sure. year, they're going Tom. our question,

as in lengthening increases materials well times as the cost significant of lead equipment. seeing are on We and that equipment

not energy address realistically, and I about budget. costs So the yet O&M Bob the the impacts. budget. impacts be let will bill customer think seeing the impact capital biggest part I'll We're on

Bob Hevert

Bob again. It's Kody.

the where service default in of is we energy objective terms of we provide signals. may costs, that provide default the you market that states service, serve, to recall In

the our and been procure been to plans So been the while somewhat what high, it expecting impacts approved. it's to commissions rate And role line had is with and supply in provide our have those really have been customers. default

the electric in Massachusetts, the department too attorney rates with work somewhat and side. general in recall mitigate with that may we increased the commodity And we default Hampshire costs about the and have side, You of did New to the effect in contracts in gas our effectively Maine, winter, hedged we simply on throughout the natural place. have that of through we XX% the fixed on

cost through the not solutions really either throughout the side. gas O&M through were expenses. would strategies regulatory those O&M onetime the quarter or one On effect. increase with the So for associated just increases, saw natural first I we first thing, hedging expenses, the on we year quarter in address extrapolate from we what able saw of to the rest was

our We at to O&M all control. continue that cost are focus we looking areas be of sure on

comfortable control we O&M be that to -- to we're able we're forward. So expenses will going able

On the capital Hampshire investments costs to effects. cases would the side, allow which including fortunate both that now inflationary adjustments, us right New recover have have because we're step of we incremental in capital

as might able to in of recover be would cost will the of that, Now costs, increased the incurred result capital similar prudently to of capital investments. nonetheless, inflation. And we see we we Tom there enable those our caps trackers recover be capital again, jurisdictions, us all have expenses. as that on a noted, But

the So on do mechanisms place see coming those inflation to recover while capital we of we do in costs. us the side, perhaps effect help have

Julien Dumoulin-Smith

super in it it before sneak here last pass helpful. off. I And That's one, Understood. can just if one I

low assumption X% especially healthy, growth sort the in has EPS sales the that remind gas on of what been in growth weather-normalized CAGR? has quarter, growth embedded increasing side, you a customer to us Just long-term first sales year-over-year. X% can X.X% In

Bob Hevert

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

Operator

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

You now disconnect. may

Unitil (UTL) 3 May 222022 Q1 Earnings call transcript