Yahoo Finance Unitil Corp (UTL) Q1 2024 Earnings Call Transcript Highlights: Strong Financial Performance ...
Net Income: $27.2 million, an increase of $3.1 million or 12% from Q1 2023.
Earnings Per Share (EPS): $1.69, up $0.18 or approximately 12% from Q1 2023.
Electric Adjusted Gross Margin: $27.1 million, up $0.4 million or 1.5% from Q1 2023.
Gas Adjusted Gross Margin: $61 million, up $6.1 million or approximately 11% from Q1 2023.
Operation and Maintenance Expenses: Increased by $0.1 million from Q1 2023.
Depreciation and Amortization: Increased by $1.3 million from Q1 2023.
Interest Expense: Increased by $0.2 million from Q1 2023.
Income Taxes: Increased by $1.1 million from Q1 2023.
Dividend Payout Ratio: Between 55% and 65%.
Long-term EPS Growth: Expected to be between 5% to 7%.
Rate Base Growth: Expected to be between 6.5% to 8.5%.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Unitil Corp reported a strong first quarter in 2024 with net income of $27.2 million, an increase of $3.1 million or approximately 12% compared to the first quarter of 2023.
The company has successfully managed operational efficiency and cost control, with only a minimal increase in operation and maintenance expenses.
Unitil Corp has been recognized for its commitment to sustainability, receiving the 2024 Climate and Energy Sustainability Award.
The Kingston, New Hampshire solar project is progressing well, with construction on schedule and expected operational start in the first half of 2025.
Unitil Corp continues to experience customer growth in both electric and gas sectors, contributing to increased adjusted gross margins.
Negative Points
Weather conditions, particularly in Maine, negatively impacted earnings by approximately $0.02 per share compared to 2023.
Despite the overall positive financial results, the company noted potential challenges ahead due to higher interest rates affecting future quarters.
Depreciation and amortization expenses increased by $1.3 million due to higher levels of utility plant and service.
Taxes other than income taxes increased by $0.4 million, driven by higher local property taxes and payroll taxes.
Interest expenses increased due to higher levels of short-term borrowings and long-term debt, although partially offset by other factors.
Q & A Highlights
Q: Can you discuss the impact of the first quarter's storm activity on your financial results and how the upcoming rate case in July might influence your performance for the rest of 2024? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: Yes, despite the storm activity, we managed well in the first quarter. Looking ahead, the Fitchburg rate case in July could positively impact our performance. However, we anticipate higher interest expenses throughout the year and a slight increase in O&M expenses, which might keep our growth within the projected 5% to 7% range.
Q: Given the strong first quarter results, is there a possibility that earnings could trend above the upper end of the 5% to 7% guidance? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: While the first quarter was strong, we foresee certain challenges such as higher interest rates and potentially higher O&M expenses later in the year. These factors should help maintain our earnings growth within the 5% to 7% guidance range.
Q: Can you provide more details on the expected outcomes of the Fitchburg electric and gas base rate proceedings? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: We expect the proceedings to conclude with orders in late June, and new base distribution rates effective from July 1. We're requesting a gross revenue increase of approximately $6.8 million for electric and $11.2 million for gas, with net increases after accounting for revenues currently collected through capital trackers.
Q: How are the recent rate cases and customer growth contributing to your financial performance? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: The rate cases, particularly in Maine, along with customer growth have significantly contributed to our financial performance. These factors have driven the increase in our adjusted gross margins for both electric and gas operations.
Q: What are your expectations for operational and maintenance costs in light of recent inflationary pressures? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: We have managed to keep O&M expenses relatively stable, with only a minimal increase in the first quarter. We aim to maintain these costs below inflation levels for the full year, although they might slightly exceed the minimal increase observed in the first quarter.
Q: How is Unitil handling the challenges posed by higher interest rates? A: Daniel Hurstak - Unitil Corp - Chief Financial Officer, Senior Vice President, Treasurer: We've navigated higher interest rates effectively in the first quarter. For the remainder of the year, we expect to see the impact of these higher rates, particularly in terms of increased interest expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
