Unitil’s Earnings Call: Growth Amid Rising Costs

Unitil ((UTL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Unitil’s recent earnings call painted a picture of robust financial health, underscored by significant growth in adjusted net income and strategic acquisitions. However, the company also faced increased operating and interest expenses, which were notable points of discussion.

Adjusted Net Income Increase

Unitil reported an adjusted net income of $28.4 million and adjusted earnings per share of $1.74 for the first quarter of 2025. This marks an increase of $1.2 million or $0.05 per share compared to the same period in 2024, reflecting the company’s strong financial performance.

Acquisition Expansions

The company completed the acquisition of Bangor Natural Gas and announced agreements to acquire Maine Natural Gas and three water utilities. These strategic moves are aimed at supporting long-term rate base and earnings growth, indicating Unitil’s commitment to expanding its market presence.

Gas Adjusted Gross Margin Growth

Unitil’s gas adjusted gross margin reached $70.9 million for Q1 2025, an increase of $9.9 million or approximately 16.2% compared to Q1 2024. This growth was driven by higher distribution rates and an increase in customer numbers.

Electric Customer Growth

The company added approximately 970 electric customers compared to Q1 2024, contributing to a 1.5% increase in electric adjusted gross margin. This growth highlights the expanding customer base and increased demand for Unitil’s services.

Increased Operating Expenses

Operation and maintenance expenses rose by $4.4 million, reflecting higher utility operating costs, labor costs, and professional fees. This increase in expenses is a key area of focus for the company moving forward.

Higher Interest Expense

Interest expenses increased by $1.8 million, primarily due to higher levels of long-term debt and increased interest on regulatory liabilities. This rise in interest expenses is a significant factor affecting the company’s financials.

Rate Case Filing

Unitil has filed a distribution rate case with the New Hampshire Public Utilities Commission, proposing a revenue requirement increase of $18.5 million. This filing could have implications for future rates and is an important development for stakeholders to monitor.

Forward-Looking Guidance

Unitil reaffirmed its long-term guidance for earnings growth, dividend growth, and rate base growth. The company anticipates that recent acquisitions will support earnings growth towards the upper end of the 5% to 7% range over the next five years. The acquisitions are expected to add approximately 15,000 customers and contribute to a customer growth rate of 4% to 5%. Additionally, the acquisition of three water utilities is projected to accelerate rate base growth to about 10% annually through 2029.

In conclusion, Unitil’s earnings call highlighted a strong financial performance with significant growth in adjusted net income and strategic acquisitions. Despite facing increased operating and interest expenses, the company remains optimistic about its future growth prospects, supported by recent acquisitions and a focus on expanding its customer base.