Unitil(UTL) - 2025 Q1 - Quarterly Report

Part I. Financial Information Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Unitil Corporation's Q1 2025 net income was $27.5 million, or $1.69 per share, nearly flat compared to Q1 2024; adjusted net income, excluding acquisition costs, was $28.4 million, an increase of $1.2 million year-over-year, primarily driven by a $9.9 million increase in Gas Adjusted Gross Margin due to higher rates, customer growth, and colder weather, partially offset by higher expenses Overview Unitil Corporation is a public utility holding company focused on the local distribution of electricity and gas in New Hampshire, Massachusetts, and Maine, serving approximately 109,400 electric and 97,600 gas customers, with earnings primarily derived from its $1.62 billion investment in Net Utility Plant - Unitil is a public utility holding company whose principal business is the local distribution of electricity and gas in New Hampshire, Massachusetts, and Maine[14][15] - The company serves approximately 109,400 electric customers and 97,600 gas customers. The gas customer count includes 8,500 from the recent acquisition of Bangor Natural Gas Company[15] - As of March 31, 2025, Unitil's investment in Net Utility Plant was $1,618.9 million[17] Results of Operations For Q1 2025, GAAP Net Income was $27.5 million ($1.69/share), a slight increase from $27.2 million ($1.69/share) in Q1 2024, with Adjusted Net Income at $28.4 million ($1.74/share), driven by a $9.9 million rise in Gas Adjusted Gross Margin offset by higher O&M, Depreciation, and Net Interest Expense Q1 2025 vs Q1 2024 Earnings Summary | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net Income | $27.5 million | $27.2 million | | GAAP EPS | $1.69 | $1.69 | | Adjusted Net Income | $28.4 million | $27.2 million | | Adjusted EPS | $1.74 | $1.69 | - Gas Adjusted Gross Margin increased by $9.9 million (16.2%) to $70.9 million in Q1 2025, driven by higher rates and customer growth ($7.7M) and colder weather ($2.2M). The Bangor acquisition contributed $2.9 million to this margin[39][51] - Electric Adjusted Gross Margin increased by $0.4 million (1.5%) to $27.5 million in Q1 2025, reflecting higher rates and customer growth[38][47] - O&M expenses increased by $4.4 million, reflecting higher utility operating costs ($1.6M), labor costs ($1.5M), and professional fees ($1.3M). This includes $0.7M in Bangor O&M and $1.2M in acquisition transaction costs[40][57] - Depreciation and Amortization expense rose by $3.7 million due to higher depreciation rates from recent rate cases and increased utility plant in service[41][58] Net Interest Expense Breakdown (in millions) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Interest Expense | | | | | Long-term Debt | $8.1 | $6.3 | $1.8 | | Short-term Debt | $1.4 | $2.8 | ($1.4) | | Regulatory Liabilities | $1.2 | $0.2 | $1.0 | | Interest (Income) | | | | | AFUDC and Other | ($0.7) | ($1.1) | $0.4 | | Total Interest Expense, Net | $9.1 | $7.3 | $1.8 | Liquidity, Commitments, and Capital Requirements Unitil funds operations through internally generated cash and short-term borrowings, with its revolving credit facility increased to $275 million and extended to September 2028, maintaining investment-grade credit ratings while issuing $135 million in new long-term notes in August 2024 - In January 2025, the company increased its revolving Credit Facility limit from $200 million to $275 million and extended the term to September 29, 2028[66] Revolving Credit Facility Status ($ millions) | Date | Limit | Outstanding | Available | | :--- | :--- | :--- | :--- | | Mar 31, 2025 | $275.0 | $172.9 | $102.1 | | Dec 31, 2024 | $200.0 | $105.8 | $94.2 | - The company's credit ratings are 'BBB+' from S&P and 'Baa1'/'Baa2' from Moody's for its utility subsidiaries[71] - In August 2024, Unitil and its subsidiaries issued a total of $135 million in new long-term notes and bonds with maturities ranging from 2034 to 2054[69][70] Financial Statements (Unaudited) The unaudited financial statements for Q1 2025 show total operating revenues of $170.8 million and net income of $27.5 million, with total assets growing to $1,890.7 million primarily due to increased Net Utility Plant, and cash provided by operating activities at $52.1 million, while investing activities used $103.8 million, largely for property additions and the Bangor Natural Gas acquisition Consolidated Statements of Earnings For the three months ended March 31, 2025, Unitil reported total operating revenues of $170.8 million, a decrease from $178.7 million in the prior-year period, mainly due to lower cost of sales pass-throughs, resulting in operating income of $46.2 million and net income of $27.5 million, with basic and diluted EPS remaining flat at $1.69 Consolidated Earnings (Three Months Ended March 31, in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $170.8 | $178.7 | | Total Operating Expenses | $124.6 | $134.5 | | Operating Income | $46.2 | $44.2 | | Income Before Income Taxes | $37.0 | $36.6 | | Net Income | $27.5 | $27.2 | | EPS – Basic and Diluted | $1.69 | $1.69 | Consolidated Balance Sheets As of March 31, 2025, Unitil's total assets increased to $1,890.7 million from $1,794.5 million at year-end 2024, driven by a rise in Net Utility Plant to $1,618.9 million, while total liabilities increased to $719.4 million due to a $67.1 million increase in short-term debt, and total common stock equity rose to $533.9 million Consolidated Balance Sheet Highlights (in millions) | Account | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,890.7 | $1,794.5 | | Net Utility Plant | $1,618.9 | $1,539.6 | | Total Liabilities | $719.4 | $643.6 | | Short-Term Debt | $172.9 | $105.8 | | Long-Term Debt, Net | $637.2 | $638.4 | | Total Common Stock Equity | $533.9 | $512.3 | Consolidated Statements of Cash Flows For the first three months of 2025, cash provided by operating activities significantly increased to $52.1 million, while cash used in investing activities was $103.8 million, primarily for property additions and the $71.2 million acquisition of Bangor Natural Gas, with financing activities providing $55.6 million, resulting in a net cash increase of $3.9 million Cash Flow Summary (Three Months Ended March 31, in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $52.1 | $26.6 | | Cash Used in Investing Activities | ($103.8) | ($20.2) | | Cash Provided by (Used In) Financing Activities | $55.6 | ($6.6) | | Net Increase (Decrease) in Cash | $3.9 | ($0.2) | - The acquisition of Bangor Natural Gas, net of cash acquired, resulted in a cash outflow of $71.2 million[94] Notes to Consolidated Financial Statements The notes detail significant accounting policies, recent acquisitions including Bangor Natural Gas for $71.2 million and an agreement to acquire Maine Natural Gas for $86.0 million, ongoing rate cases and regulatory filings across service territories, and environmental liabilities of $7.8 million for MGP site remediation - On January 31, 2025, the Company acquired Bangor Natural Gas Company for $71.2 million, adding approximately 8,500 gas customers in central Maine[141] - On March 31, 2025, the Company entered an agreement to acquire Maine Natural Gas Company from Avangrid for $86.0 million in cash, pending regulatory approval[145] - On May 1, 2025, Unitil Energy filed for an $18.5 million increase in electric distribution base rates in New Hampshire[190] - Fitchburg is implementing a multi-year Grid Modernization Plan with a budget of $11.2 million for Advanced Metering Infrastructure (AMI) through 2025 and is developing an Electric Sector Modernization Plan (ESMP) to accommodate DERs and electrification[201][211] - Total environmental obligations were $7.8 million as of March 31, 2025, primarily for the remediation of former manufactured gas plant (MGP) sites[247] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk primarily through its variable-rate short-term debt, where a 1% change in interest rates would alter annual interest expense by approximately $250,000 for every $25 million of short-term debt outstanding, while commodity price risk is limited due to regulatory pass-through mechanisms - A 1% change in interest rates on an average short-term debt balance of $25 million would result in an approximate $250,000 change in annual interest expense[80] - The average interest rate on short-term borrowings was 5.6% for the three months ended March 31, 2025, down from 6.7% in the same period of 2024[80] - Commodity price risk is limited because the company's regulatory framework allows for full collection of electric and gas supply costs from customers on a pass-through basis[81] Controls and Procedures As of March 31, 2025, the company's management concluded that its disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[258] - No material changes were made to the Company's internal control over financial reporting during the first quarter of 2025[259] Part II. Other Information Legal Proceedings The company is involved in various legal and administrative proceedings that arise in the ordinary course of business, which management believes will not have a material effect on its financial position - The Company is involved in ordinary course legal proceedings and claims, which management does not expect to have a material effect on its financial position[260] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred[261] Unregistered Sales of Equity Securities and Use of Proceeds For the fiscal period ended March 31, 2025, the company did not conduct any sales of unregistered equity securities nor did it make any purchases of its own equity securities - There were no sales of unregistered equity securities or issuer purchases of equity securities during the quarter ended March 31, 2025[262][263] Other Information On May 6, 2025, the company issued a press release announcing its Q1 2025 financial results, and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - A press release announcing Q1 2025 earnings was issued on May 6, 2025[264] - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[265] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements related to acquisitions and financing, CEO/CFO/CAO certifications as required by the Sarbanes-Oxley Act, the earnings press release, and interactive data files (XBRL) - Exhibits filed include the Stock Purchase Agreement for Maine Natural Gas, amendments to the Credit Agreement, CEO/CFO/CAO certifications, and the Q1 2025 earnings press release[267][268]