Unitil(UTL) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements Unaudited consolidated financial statements for H1 2025 show stable net income, a $1.64 billion Net Utility Plant, and increased operating cash flow Consolidated Statements of Earnings For H1 2025, operating revenues slightly decreased, operating income rose to $59.5 million, and net income remained flat at $31.5 million Consolidated Earnings Summary (Unaudited) | Financial Metric (Millions, except EPS) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $273.4 | $274.4 | | Operating Income | $59.5 | $56.6 | | Net Income | $31.5 | $31.5 | | Earnings Per Share (Diluted) | $1.94 | $1.96 | Consolidated Balance Sheets Total assets increased to $1.89 billion as of June 30, 2025, driven by a $104.8 million rise in Net Utility Plant, with liabilities and equity also growing Key Balance Sheet Items (Millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,892.7 | $1,794.5 | | Net Utility Plant | $1,644.4 | $1,539.6 | | Total Liabilities | $724.1 | $643.6 | | Short-Term Debt | $171.4 | $105.8 | | Long-Term Debt, Less Current Portion | $635.8 | $638.4 | | Total Stockholders' Equity | $532.8 | $512.5 | Consolidated Statements of Cash Flows For H1 2025, operating cash flow increased to $94.3 million, investing cash outflow rose to $144.2 million due to acquisitions, and financing provided $52.1 million Cash Flow Summary (Millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $94.3 | $76.5 | | Cash Used in Investing Activities | ($144.2) | ($56.9) | | Cash Provided by (Used In) Financing Activities | $52.1 | ($23.3) | | Net Increase (Decrease) in Cash | $2.2 | ($3.7) | Notes to Consolidated Financial Statements The notes detail significant accounting policies, recent acquisitions like Bangor Natural Gas, and financing activities, including an increased credit facility and a new ATM equity program - On January 31, 2025, the Company acquired Bangor Natural Gas Company for $71.4 million, adding approximately 8,500 gas customers and recognizing $1.6 million in goodwill[144][145] - The company entered into agreements to acquire Maine Natural Gas Company for $86.0 million and three Aquarion Water Companies for an enterprise value of approximately $100.0 million, both pending regulatory approval[148][149] - In January 2025, the company amended its credit facility, increasing the borrowing limit from $200 million to $275 million and extending the term to September 2028[67][164] - On June 3, 2025, the company launched a $50 million at-the-market (ATM) equity offering program, raising net proceeds of $1.4 million as of June 30, 2025[78][189][190] Item 2. Management's Discussion and Analysis (MD&A) of Financial Condition and Results of Operations Adjusted Net Income for H1 2025 increased to $33.1 million, driven by rate and customer growth, offset by higher O&M, depreciation, and interest expenses, with liquidity enhanced by new financing Overview Unitil Corporation is a public utility distributing electricity and natural gas to approximately 109,400 electric customers and 97,600 gas customers, with a Net Utility Plant of $1.64 billion - The company's distribution utilities serve approximately 109,400 electric customers and 97,600 gas customers, which includes 8,500 customers from the recent acquisition of Bangor Natural Gas Company[14] - As of June 30, 2025, Unitil's investment in Net Utility Plant was $1,644.4 million[19] Results of Operations For H1 2025, GAAP Net Income was flat at $31.5 million, while Adjusted Net Income rose to $33.1 million, driven by gas margin growth, partially offset by increased O&M, depreciation, and interest expenses GAAP to Adjusted Net Income Reconciliation (Millions, except per share data) | Period | GAAP Net Income | Transaction Costs | Adjusted Net Income | GAAP EPS | Adjusted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | Q2 2025 | $4.0 | $0.7 | $4.7 | $0.25 | $0.29 | | Q2 2024 | $4.3 | $0.0 | $4.3 | $0.27 | $0.27 | | H1 2025 | $31.5 | $1.6 | $33.1 | $1.94 | $2.03 | | H1 2024 | $31.5 | $0.0 | $31.5 | $1.96 | $1.96 | Adjusted Gross Margin by Segment (Millions) | Segment | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Electric Adjusted Gross Margin | $53.3 | $52.0 | +$1.3 | +2.5% | | Gas Adjusted Gross Margin | $108.1 | $92.3 | +$15.8 | +17.1% | - Operation and Maintenance (O&M) expenses for H1 2025 increased by $7.1 million, which included $1.7 million from Bangor O&M and $2.2 million in acquisition transaction costs[39] - Depreciation and Amortization expense for H1 2025 increased by $7.4 million, reflecting higher depreciation rates, increased utility plant in service, and $1.3 million related to the Bangor acquisition[40] LIQUIDITY, COMMITMENTS, AND CAPITAL REQUIREMENTS The company funds capital through internal cash, borrowings, and offerings, having upsized its credit facility to $275 million and initiated a $50 million ATM equity program for funding flexibility - The company increased its revolving Credit Facility limit from $200 million to $275 million and extended the term to September 29, 2028[67] Revolving Credit Facility Status (Millions) | Date | Limit | Outstanding | Available | | :--- | :--- | :--- | :--- | | June 30, 2025 | $275.0 | $171.4 | $103.6 | | December 31, 2024 | $200.0 | $105.8 | $94.2 | - A new at-the-market (ATM) equity program was established in June 2025, allowing for the sale of up to $50 million in common stock As of June 30, 2025, $1.4 million in net proceeds had been raised, with $48.5 million remaining available[78] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk, affecting borrowing costs, and limited commodity price risk due to regulatory pass-through mechanisms - A 1% change in interest rates on an average of $25 million in short-term debt would result in an approximate annual interest expense change of $250,000[85] - Commodity price risk is limited because regulatory mechanisms allow for the full collection of electric and gas supply costs from customers on a pass-through basis[86] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, 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 the end of the period covered by this report[277] - No material changes were made to the company's internal control over financial reporting during the second quarter of 2025[278] Part II. Other Information Item 1. Legal Proceedings The company is involved in various legal and administrative proceedings, but management does not expect a material effect on its financial position - The company states that ongoing legal proceedings are not expected to have a material impact on its financial position, operating results, or cash flows[252][279] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported for the quarter ended June 30, 2025[280] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the fiscal period ended June 30, 2025, the company did not have any sales of unregistered equity securities and did not make any purchases of its own equity securities - The company reported no sales of unregistered equity securities or issuer purchases of its equity securities for the quarter[281][282] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including agreements for acquisitions, financing activities, officer certifications, and the earnings press release - Key exhibits filed include the Purchase and Sale Agreement for the Aquarion Water Company acquisition, Note Purchase Agreements for Bangor Natural Gas Company, and the Distribution Agreement for the at-the-market equity program[286]