Unitil(UTL) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For fiscal year 2021, the company reported net income of $36.1 million and earnings per share of$ 2.35, reflecting an increase of $0.20 per share or 9.3% compared to 2020 [6][10] - The adjusted gross margin for electric operations was$ 97.4 million, an increase of $4.5 million or 4.8% from fiscal year 2020, driven by higher rates and customer growth [11] - The adjusted gross margin for gas operations was$ 133.1 million, an increase of $10.5 million or 8.6% compared to fiscal year 2020, attributed to higher rates and customer growth [12] Business Line Data and Key Metrics Changes - Electric adjusted gross margin increased due to a 3.5% rise in commercial and industrial unit sales, reflecting improving economic conditions [11] - Gas adjusted gross margin growth was supported by$ 9.4 million from higher rates and customer growth, along with $1.1 million from colder winter weather [12] Market Data and Key Metrics Changes - The company expects over 80% of its customers to be served under decoupled rate mechanisms by year-end, minimizing revenue fluctuations due to weather and business cycles [5] - The company operates in areas with significant economic development, particularly in New Hampshire and Maine, which have high dependency on fuel oil for home heating [19] Company Strategy and Development Direction - The company is focused on electrification opportunities, particularly expanding EV infrastructure and exploring solar energy projects [27] - The long-term rate-based growth is anticipated to be between 6.5% to 8.5%, with a balanced investment mix between gas and electric operations [16][17] - Sustainability is embedded in the company's business strategy, with a commitment to reducing emissions and enhancing customer experience [8][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategic and financial plans, highlighting strong customer growth and operational excellence [23] - The company is well-positioned for future growth, with a robust investment plan aimed at ensuring safety and reliability of the distribution system [16][23] Other Important Information - The company declared a quarterly dividend of$ 0.39 per share, reflecting confidence in its financial performance and ability to execute on strategic plans [18] - The five-year investment plan totals approximately $755 million, focusing on safety, reliability, and grid modernization initiatives [16] Q&A Session Summary Question: Can you provide details on potential strategic projects around advanced energy systems? - The company is focused on electrification opportunities, particularly expanding EV infrastructure and exploring solar energy projects [27] Question: What was the nature of the agreement in the UES settlement? - The settlement agreement is comprehensive in scope, covering various issues included in the filing, but specifics cannot be disclosed until it is filed [28] Question: What are the assumptions for electric and gas growth within the EPS growth rate? - The EPS growth rate is based on rate-based growth and anticipated investments, with an uptick in customer conversions to natural gas observed [30] Question: What resources are available for renewable natural gas within your territories? - The company has access to diverse feedstocks such as dairy, food waste, and biomass for renewable natural gas projects [34] Question: How much of Maine and New Hampshire is reachable through your natural gas pipes? - Currently, the penetration in Northern New Hampshire is around 60%, with opportunities for further customer conversions in existing service areas [35] Question: How is the CapEx trend expected to change between gas and electric investments? - As gas pipe replacement projects conclude, the company anticipates a shift in CapEx towards electric investments, reflecting more opportunities in electrification [36]