Unitil Corporation · NYSE:UTL
Unitil — American Gas Association Financial Forum 2019
19 slides from Unitil's conference presentation, May 20, 2019
Slide 1: American Gas Association Financial Forum – May 2019
American Gas Association Financial Forum – May 2019 Thomas P. Meissner, Jr. Chairman, Chief Executive Officer and President
Slide 2: Safe Harbor Provision
SAFE HARBOR PROVISION This presentation contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Unitil Corporation’s (“Unitil”) financial condition, result
Slide 3: About Unitil
About Unitil Unitil Corporation is a public utility holding company whose mission is to provide energy for life by safely and reliably delivering natural gas and electricity in New England • Investment grade utility • Diversified Net Utility Plant of more than $1 billion - Gas 65%, Electric 35% - NH
Slide 4: Prosperous Service Areas
PROSPEROUS SERVICE AREAS Large Construction Projects • Billion dollar mixed-use development in Salem, NH underway will add as many as 1,000 new customers • Roughly 10 new hotels planned or under construction in Portland, Maine • Thousands of new housing units permitted or under construction Strong E
Slide 5: Recent Highlights
RECENT HIGHLIGHTS • Eighth consecutive year of record earnings – Net income rose 13.8% to $33.0 million – EPS rose 8.3% to $2.23/share • Focusing on Growth Opportunities – Gas franchise expansions approved to serve three new towns in New Hampshire – Ongoing expansion into two cities in Maine – Incre
Slide 6: Historical Performance
HISTORICAL PERFORMANCE Total Shareholder Return 14.5% 4.1% -4.4% 14.7% 10.7% 8.5% 14.5% 10.5% 13.1% 1-year 5-year 10-year UTL S&P 500 Utilities S&P 500 * Data as of 12/31/2018 Unitil has outperformed the broader markets and the utility industry PAGE 6
Slide 7: Operational Excellence
OPERATIONAL EXCELLENCE • Ranked #1 in New England for overall customer satisfaction • Leading gas emergency response and pipeline safety programs – Responded to >99.9% of emergency calls in less than 60 minutes – Advanced data collection to capture and integrate asset information in real time – Dyna
Slide 8: Customer Growth
CUSTOMER GROWTH Natural Gas Opportunity • Cleaner and more affordable than fuel oil • Residential customer can save ~$400 per year (23%) by converting from oil to gas • Natural gas emits 27% less carbon than #2 fuel oil when used for heating • Low on-the-main penetration rate of 62% Service Area Exp
Slide 9: Infrastructure Modernization
INFRASTRUCTURE MODERNIZATION Gas Infrastructure Replacement • Total spending remaining on infrastructure replacement programs >$150 million with strong cost recovery • Estimated completion in 2024 (ME) and 2034 (MA); NH completed 2017 • Upgrades simultaneously enhance public safety and expand capaci
Slide 10: Increasing Investment
INCREASING INVESTMENT • Total Rate Base growth of 7.6% over the past five years • Increased capital spending program to support gas growth and distribution system modernization – 20% more capital spending projected in 2019-2021 than compared to the prior three years Historical Rate Base Growth $’s i
Slide 11: Financial Strength
FINANCIAL STRENGTH • Declining payout ratio – down from 77% to 66% over the last 5 years – while also increasing the annual dividend each year – Plowing back more earnings will help fund increase in investment program • Investment grade rating – Standard & Poor’s issuer rating of BBB+ across Unitil
Slide 12: Regulatory Activity
REGULATORY ACTIVITY Notice provided to the Maine PUC of intent to file a gas base rate case for Northern Utilities (ME only) Approximate revenue deficiency of $7.0 million Final order expected in Q2 2020 Recent order from MA DPU doubles limit on annual cash recovery of gas infrastructure replacement
Slide 13: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Regulated local distribution utility business model Growing service areas and customer base Diversified natural gas and electric operations Dividend strength Experienced management team PAGE 13
Slide 14: Appendix
APPENDIX
Slide 15: Low Risk Utility in New England
LOW RISK UTILITY IN NEW ENGLAND Fast Facts (Year End 2018) • Sales Margin of $208.8 million • Net Income of $33.0 million • 188,300 customers • Total assets of $1.3 billion - NH 44%, ME 31%, MA 25% - Gas 65%, Electric 35% Fitchburg Gas & Electric Light Company - Massachusetts • Providing gas and ele
Slide 16: Expansion Opportunities
EXPANSION OPPORTUNITIES • Increased total sales margin by $6.9 million or 3.4% compared to prior year, net of tax reduction – 5-Year Gas and Electric margin CAGR of 5.3% – More than 10,000 customers added in last 5 years • NH gas franchise expansions – Received regulatory approval for three new fran
Slide 17: Recent Divestiture
RECENT DIVESTITURE • Divestiture of non-regulated energy brokering and advisory business subsidiary completed on March 1st, 2019 • Recognized after-tax net gain of $9.8 million in the first quarter of 2019 • Net proceeds will help fund investment in regulated utility subsidiaries and the increased c
Slide 18: Return on Equity
RETURN ON EQUITY Company Average Common Equity (as of 03/19) LTM ROE (as of 03/19) (1) Northern Utilities (New Hampshire) $201.5 8.2% Northern Utilities (Maine) Unitil Energy $81.8 9.9% Fitchburg (Electric) $78.1 5.1% Fitchburg (Gas) Granite State $14.2 10.7% Unitil Corporation $361.0 12.2% (1) ROE
Slide 19: Rate Relief and Capital Tracker Activity
Company Activity Dollars (in Millions) Date Effective Northern Utilities (New Hampshire) 2018 Rate Relief (Net of TCJA) Capital Tracker - 2019 $0.6 $1.4 Q1/Q2 2018 Q2 2019 Northern Utilities (Maine) 2018 Rate Relief (Net of TCJA) Capital Tracker – 2019 $1.0 $1.0 Q1/Q2 2018 Q2 2019 Unitil Energy 2018
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