UNITIL Corporation

Good day, and thank you for standing by. Welcome to the second quarter 2024 Unitil Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Christopher Golding, Vice President of Finance and Regulatory Service. Please go ahead.

Chief Executive Officer and Dan Herstack, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today are Bob Hevert, President and Chief Administrative Officer, and Todd Diggins, Chief Accounting Officer and Controller. We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information, including a presentation to the investor section of our website at Unitil.com. We will refer to that information during this call. Moving to slide two. The comments made today about future operating results or events are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risk and uncertainties that can cause actual results to differ materially from those predicted. Statements made on this call should be considered together with cautionary statements and other information contained in our most recent annual report on Form 10-K and other documents we have filed with or furnished to the Security and Exchange Commission. Forward-looking statements speak only as of today, and we assume no obligation to update them. The presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance. With that, we'll now turn the call over to Chairman and CEO, Tom Eisner. Great, thanks, Chris.

Good afternoon, everyone, and thank you for joining us. I'm going to begin on slide three, where today we announced second quarter net income of $4.3 million, or 27 cents per share, representing an increase of 2 cents per share over the same period of 2023. Through the first half of the year, net income was $31.5 million, or $1.96 per share, representing an increase of 20 cents per share over the same period in 2023. Our results for the quarter were in line with our expectations, and we are confident that our full-year earnings will be within our long-term guidance range. Looking beyond 2024, we reaffirm our long-term earnings growth of 5 to 7 percent, supported by rate-based growth in the range of 6.5 to 8.5 percent, and a dividend payout ratio between 55 and 65 percent. We continue to execute on our regulatory agenda, capital investment plan, and cost control initiatives, and believe that our consolidated GAAP return on equity of 9.8% over the last 12 months reflects these efforts. Our regulatory agenda remains active, and we recently received an order in our Fitchburg electric and gas rate cases. We view that order as constructive, with many items approved as filed, including the company's performance-based rate plans. Dan will provide additional detail about these rate cases later on the call. As I will outline in greater detail on the next slide, we reached an agreement with Hope Utilities to purchase Bangor Natural Gas Company, a fully regulated natural gas distribution utility. We expect the transaction to close by the end of the first quarter of 2025, subject to approval by the Maine Public Utilities Commission. We view Bangalore as a natural complement to our existing operations and believe our shared commitment to affordability, safety, and outstanding service will benefit Bangalore's customers and communities. Moving now to slide four, as I've talked about in prior calls, when we evaluate potential acquisitions, we look for opportunities that meet certain criteria. These include utility operations and constructive regulatory jurisdictions, proximity to our existing service areas, opportunities in colder climates where natural gas offers a cleaner and more affordable energy choice than other fuels, transactions that are accretive over the long term, and opportunities that align with our strategic objectives. Bangor Natural Gas meets all of these criteria. Bangor Natural Gas is a fully regulated gas distribution company that owns and operates approximately 350 miles of pipeline throughout the greater Bangor area of Maine. The Bangor distribution system is relatively new and is constructed of steel and plastic mains with no cast iron or other leak-prone pipe. The company serves about 8,500 customers and has historically experienced strong customer growth with an average growth rate of roughly 5% annually over the last five years. This strong customer growth is supported by the lowest natural gas rates in Maine. In fact, based on recent fuel prices, the cost to heat a home with natural gas in the Bangor area is less than half the cost of heating a home with fuel oil and about a third the cost of heating with propane. Bangor also has an interconnection agreement in place with a renewable natural gas facility capable of delivering meaningful levels of pipeline quality natural gas, which we believe can support Maine's climate policies. The purchase price is $70.9 million, subject to customary adjustments for working capital and transaction expenses. The enterprise value represents a multiple of approximately 1.2 times estimated rate base as of year end 2023. S&P views the transaction as credit neutral, even if it is financed primarily with debt, although we expect to finance this transaction with a balanced mix of equity and debt similar to our other regulated utilities. We look forward to working with other interested parties during the pendency of the approval proceeding before the Maine Public Utilities Commission. Turning now to slide five, our capital investment plan through 2028 totals approximately $910 million with opportunities for additional investments. As one example, we previously discussed the high penetration of fuel oil and propane in Maine and the financial and environmental benefits that natural gas can bring to residential customers heating with those fuels. We see the Bangor transaction as providing additional opportunities for conversions and expansion. We also believe that further electric system modernization investments will be required to satisfy the increasing demand for electrification and customer growth, and also to enhance grid resilience and to enable smart technologies that will provide customers with information to more effectively control their energy use and costs. These requirements may provide further upside to our capital plan. Lastly, I'd like to provide an update on our utility-scale solar project here in New Site work is on schedule and is expected to be completed in the third quarter of 2024, with facility construction beginning shortly thereafter. We expect the project to be placed in service by the end of the second quarter of 2025. With that, I will now pass it over to Dan, who will provide greater detail on the second quarter results. Dan?