Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unitil Corp (UTL, Financial) reported a net income of $31.5 million or $1.96 per share for the first nine months of 2024, representing an increase of $0.11 per share compared to 2023.
- The company reaffirmed its long-term earnings growth target of 5 to 7%, supported by rate-based growth of 6.5 to 8.5% and a dividend payout ratio of 55 to 65%.
- Unitil Corp (UTL) has achieved an 18% reduction in greenhouse gas emissions compared to 2019 levels, with a goal of reducing emissions by 50% by 2030 and achieving net zero by 2050.
- The company has been recognized as one of the best companies to work for in New Hampshire, highlighting its commitment to a diverse and inclusive workplace.
- Unitil Corp (UTL) is implementing advanced metering infrastructure upgrades, expected to cost $40 million over three years, which will enhance customer transparency and support clean energy transition.
Negative Points
- Unitil Corp (UTL) reported break-even results for the third quarter of 2024, indicating no profit growth for that period.
- Higher operating expenses partially offset the earnings growth from increased electric and gas margins.
- The company faces higher depreciation and amortization costs due to increased utility plant service and higher depreciation rates.
- Interest expenses increased by $1 million due to higher short-term borrowings and long-term debt levels.
- The capital spending program is heavily weighted towards gas, with a current mix of two-thirds gas and one-third electric, which may need adjustment as state policies shift towards electric investments.
Q & A Highlights
Q: Can you break down the capital spending program by asset class between electric and gas, and discuss the trend in state policies affecting these classes?
A: Thomas Meissner, CEO, noted a shift towards electric investments, especially in Massachusetts, due to grid modernization efforts. As pipeline replacement programs conclude, more capital will be directed towards electric. Daniel Hurstak, CFO, added that currently, the rate base is about two-thirds gas and one-third electric, with a trend towards more electric investment, particularly in Massachusetts.
Q: Regarding the 6.5% to 8.5% rate base growth target, will new policies increase this number, or will there be offsets to maintain it?
A: Daniel Hurstak, CFO, indicated there is potential upside to the growth target due to policies, especially in Massachusetts. Some investments in the electric sector modernization plan are included in the capital plan, but there is additional upside potential not yet accounted for, including from the Bangor Natural Gas acquisition.
Q: What is the current mix of growth versus maintenance capital in the capital plan?
A: Daniel Hurstak, CFO, stated that the current capital plan includes approximately 15% to 25% growth capital, with the remainder being maintenance capital. This reflects the ongoing shift towards more electric investments.
Q: How does the acquisition of Bangor Natural Gas fit into your capital investment strategy?
A: Thomas Meissner, CEO, mentioned that the acquisition complements their current operations in Maine and is expected to continue delivering affordable natural gas. The acquisition is not yet included in the current capital plan, indicating potential future growth opportunities.
Q: Can you provide more details on the regulatory proceedings for the Bangor Natural Gas acquisition?
A: Daniel Hurstak, CFO, explained that regulatory approval is underway with the Maine Public Utilities Commission, with deliberations scheduled for early February. The transaction is expected to close by the end of the first quarter of 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
