Unitil Corporation ("Company") (NYSE: UTL) today announced a net loss of ($2.1) million for the second quarter of 2010, compared to earnings of $0.2 million for the second quarter of 2009. For the six months ended June 30, 2010, the Company reported net income of $4.4 million compared to $9.3 million for the same period of 2009. Results for the second quarter were driven primarily by higher depreciation and interest expense and lower gas sales margins due to warmer regional temperatures.
Earnings (loss) per common share (EPS) were ($0.19) and $0.41 for the three and six month periods ended June 30, 2010 compared with $0.03 and $1.10 for the same periods of 2009. The Company's results of operations for 2010 are not directly comparable with 2009 due to the issuance of 5.0 million common shares between December 2008 and June 2009 to complete the financing of the Company's acquisition of Northern Utilities Inc. (Northern Utilities) and Granite State Gas Transmission, Inc. (Granite), the ("Acquisition").
"2010 is an important transition year for the Company as we initiate the process of resetting rates in each of our regulatory jurisdictions," said Bob Schoenberger, Unitil's Chairman and Chief Executive Officer. "This regulatory agenda, which we expect to complete over the next twelve to eighteen months, will support our ongoing investment in the reliability and safety of our gas and electric distribution systems."
The Company filed two base rate cases in the second quarter of 2010, one for its New Hampshire electric distribution utility, Unitil Energy Systems, Inc. (Unitil Energy) and one for its natural gas pipeline subsidiary, Granite. The New Hampshire Public Utilities Commission has approved a temporary rate increase of $5.2 million on an annual basis, including recovery of 2008 ice storm costs, for Unitil Energy effective July 1, 2010. A decision from the Federal Energy Regulatory Commission on Granite's request for an increase of approximately $3 million in annual revenues is expected in January 2011. Additionally, the Company's two other distribution utilities, Fitchburg Gas and Electric Light Company and Northern Utilities, are currently preparing base rate cases and anticipate filing them with their respective regulatory commissions within the next year.
Natural gas sales margin decreased $2.4 million and $3.8 million in the three and six months ended June 30, 2010, respectively, compared to the same periods in 2009. Total natural gas therm sales were 5.1% and 6.0% lower in the three and six month periods ended June 30, 2010, respectively, compared to the same periods in 2009. Lower gas therm sales in the Company's utility service territories reflect the effect of warmer temperatures in 2010, where there were approximately 22% and 12% fewer Heating Degree Days in the three and six month periods, respectively, compared to the prior year.
Electric sales margin increased $0.4 million and $0.1 million in the three and six months ended June 30, 2010 compared to the same periods in 2009, reflecting higher electric kilowatt-hour (kWh) sales. Total kWh sales increased 5.3% and 1.5% in the three and six months ended June 30, 2010, respectively, compared to the same periods in 2009 reflecting increased sales to all customer groups.
Selected Financial Data for 2010 and 2009 is presented in the following table:
Unitil Corporation - Condensed Financial Data
---------------------------------------------
(Millions, except Per Share data)(Unaudited)
Three Months Ended June
30,
-----------------------
2010 2009 Change
- ------
Gas Therm Sales:
----------------
Residential 6.6 6.9 (4.3%)
Commercial/Industrial 27.0 28.5 (5.3%)
---- ----
Total Gas Therm Sales 33.6 35.4 (5.1%)
==== ====
Electric kWh Sales:
-------------------
Residential 148.3 141.1 5.1%
Commercial/Industrial 245.8 233.2 5.4%
-----
Total Electric kWh Sales 394.1 374.3 5.3%
===== =====
Gas Revenues $23.7 $23.4 $0.3
Purchased Gas 15.1 12.4 2.7
---- ---- ---
Gas Sales Margin 8.6 11.0 (2.4)
Electric Revenues 46.6 47.0 (0.4)
Purchased Electricity 33.4 34.2 (0.8)
---- ---- ----
Electric Sales Margin 13.2 12.8 0.4
Usource Sales Margin 1.1 1.1 ---
--- --- ---
Total Sales Margin: 22.9 24.9 (2.0)
---- ---- ----
Operation & Maintenance 11.6 12.0 (0.4)
Expenses
Depreciation,
Amortization, Taxes 8.9 9.0 (0.1)
& Other
Interest Expense, Net 4.5 3.7 0.8
Earnings (Loss)
Applicable to Common
Shareholders:
$(2.1) $0.2 $(2.3)
===== ==== =====
Earnings (Loss) Per Share $(0.19) $0.03 $(0.22)
Six Months Ended June 30,
-------------------------
2010 2009 Change
- ------
Gas Therm Sales:
----------------
Residential 24.4 26.2 (6.9%)
Commercial/Industrial 81.6 86.6 (5.8%)
---- ----
Total Gas Therm Sales 106.0 112.8 (6.0%)
===== =====
Electric kWh Sales:
-------------------
Residential 326.0 321.7 1.3%
Commercial/Industrial 483.3 475.3 1.7%
----- -----
Total Electric kWh Sales 809.3 797.0 1.5%
===== =====
Gas Revenues $84.8 $95.8 $(11.0)
Purchased Gas 54.2 61.4 (7.2)
---- ---- ----
Gas Sales Margin 30.6 34.4 (3.8)
Electric Revenues 97.4 109.1 (11.7)
Purchased Electricity 70.1 81.9 (11.8)
---- ---- -----
Electric Sales Margin 27.3 27.2 0.1
Usource Sales Margin 2.2 2.2 ---
--- --- ---
Total Sales Margin: 60.1 63.8 (3.7)
---- ---- ----
Operation & Maintenance 23.8 22.4 1.4
Expenses
Depreciation,
Amortization, Taxes 23.1 23.6 (0.5)
& Other
Interest Expense, Net 8.8 8.5 0.3
Earnings (Loss)
Applicable to Common
Shareholders: $(4.9)
=====
$4.4 $9.3
==== ====
Earnings (Loss) Per Share $0.41 $1.10 $(0.69)
O&M expenses decreased $0.4 million and increased $1.4 million for the three and six months ended June 30, 2010, respectively, compared to 2009. The changes in O&M reflect higher utility operating costs and lower professional fees. The increases in utility operating expenses reflect the full integration of Northern Utilities and Granite State into the Company's consolidated operating results.
Depreciation and Amortization expense increased $0.7 million and $1.5 million in the three and six months ended June 30, 2010, respectively, compared to the same periods in 2009 reflecting normal utility plant additions.
Interest Expense, Net increased $0.8 million and $0.3 million in the three and six month periods ended June 30, 2010, respectively, compared to the same periods in 2009. In March 2010, Unitil Energy and Northern Utilities collectively issued $40 million of long-term debt which is contributing to the higher interest expense in the three and six month periods. Furthermore, net interest expense in 2010 reflects the permanent financing of Northern Utilities and Granite State, which was completed in the second quarter of 2009.
Federal and State Income Taxes decreased by $2.5 million due to lower pre-tax income in 2010 compared to 2009.
All other items increased $0.3 million and $0.5 million in the three and six month periods ended June 30, 2010, respectively, compared to the same periods in 2009, primarily reflecting higher property and payroll taxes.
Also in the second quarter, the Unitil Corporation Board of Directors declared the regular quarterly dividend on the Company's common stock of $0.345 per share. This quarterly dividend results in a current effective annual dividend rate of $1.38 per share representing an unbroken record of quarterly dividend payments since trading began in Unitil's common stock.
Additionally, EPS in the three and six months ended June 30, 2010 reflect a higher number of average shares outstanding year over year. Between December 2008 and June 2009 the Company issued 5.0 million common shares to complete the Acquisition. As a result of the Acquisition and the issuance of new common shares, consolidated results for the Company in the current period may not be directly comparable to prior period results until such time as the Acquisition and stock issuance is fully reflected in both reporting periods. Also, the Company's results are expected to reflect the seasonal nature of the acquired natural gas businesses. Accordingly, the Company expects that results of operations will be positively affected during the first and fourth quarters, when sales of natural gas are typically higher, and negatively affected during the second and third quarters, when gas operating and maintenance expenses usually exceed sales margins in the period.
The Company will hold a quarterly conference call to discuss second quarter 2010 results on Tuesday, July 27, 2010, at 2:00 p.m. Eastern Time. This call is being webcast by Thomson Financial and can be accessed in the Investor Relations section of Unitil Corporation's website, www.unitil.com.
