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UNITIL Corp Reports Operating Results (10-Q)

July 25, 2012 | About:
10qk

10qk

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UNITIL Corp (UTL) filed Quarterly Report for the period ended 2012-06-30.

Unitil Corporation has a market cap of $379.1 million; its shares were traded at around $27.35 with a P/E ratio of 22.2 and P/S ratio of 1.1. The dividend yield of Unitil Corporation stocks is 5%.

Highlight of Business Operations:

The Companys Earnings (Loss) Applicable to Common Shareholders was a net loss of ($0.4) million, or ($0.03) per share, for the second quarter of 2012, an improvement of $0.4 million, or $0.05 per share, compared to the second quarter of 2011. For the six months ended June 30, 2012, the Company reported Earnings of $8.6 million, or $0.74 per share, compared to $7.9 million, or $0.73 per share, for the same period of 2011. Results for the second quarter and year-to-date period were driven primarily by higher natural gas and electric sales margins reflecting higher rates, partially offset by lower sales volumes and increases in operating expenses.

Natural gas sales margins were $12.6 million and $39.9 million in the three and six months ended June 30, 2012, respectively, resulting in increases of $2.8 million and $5.3 million compared to the same periods in 2011. Natural gas sales margins were favorably affected by increased base rates and decoupling revenues from recently completed rate cases, and the growth in new gas customers. Partially offsetting these increases were lower gas therm sales volumes, which decreased 7.8% and 10.1% in the three and six month periods ended June 30, 2012 compared to the same periods in 2011. The decrease in gas therm sales in the Companys utility service areas reflects the effect of milder weather in the first six months of 2012 compared to 2011. Weather-normalized gas therm sales (excluding decoupled sales) in the three and six month periods ended June 30, 2012 are estimated to be 3.2% and 1.3% higher, respectively, compared to the same periods in 2011. Approximately 13% of natural gas therm sales are decoupled and changes in these sales due to the weather do not affect sales margins.

Therm Sales Total natural gas therm sales volumes decreased 7.8% and 10.1% in the three and six month periods ended June 30, 2012, respectively, compared to the same periods in 2011. Sales to residential customers decreased 18.8% and 15.8%, respectively, in the three and six months ended June 30, 2012 compared to the same periods in 2011. Sales to commercial and industrial (C&I) customers decreased 5.0% and 8.4%, respectively, in the three and six months ended June 30, 2012 compared to the same periods in 2011. The decrease in gas therm sales in the Companys utility service areas reflects the effect of milder weather in the first six months of 2012 compared to 2011. Based on weather data collected in the Companys service areas, there were 20% fewer Heating Degree Days in the first six months of 2012 compared to the same period in 2011. Weather-normalized gas therm sales (excluding decoupled sales) in the three and six month periods ended June 30, 2012 are estimated to be 3.2% and 1.3% higher, respectively, compared to the same periods in 2011. Approximately 13% of natural gas therm sales are decoupled and changes in these sales due to the weather do not affect sales margins. As discussed above, under revenue decoupling for Fitchburg, distribution revenues, which are included in sales margin, will be recognized in the Companys Consolidated Statements of Earnings from August 1, 2011 forward, on established revenue targets and will no longer be dependent on sales volumes.

Kilowatt-hour Sales Total kWh sales decreased 2.7% and 3.8% in the three and six month periods ended June 30, 2012, respectively, compared to the same periods in 2011. Sales to residential customers decreased 3.6% and 4.5%, respectively, in the three and six months ended June 30, 2012 compared to the same periods in 2011. Sales to commercial and industrial (C&I) customers decreased 2.2% and 3.3%, respectively, in the three and six months ended June 30, 2012 compared to the same periods in 2011. The decreases in kWh sales primarily reflect the effect of milder weather in the first six months of 2012 compared to 2011. As discussed above, there were 20% fewer Heating Degree Days in the first six months of 2012 compared to the same period in 2011. Weather-normalized kWh sales (excluding decoupled sales) in the three and six month periods ended June 30, 2012 are estimated to be 3.2% and 2.0% higher, respectively, compared to the same periods in 2011. Approximately 27% of total electric kWh sales are decoupled and changes in these sales do not affect sales margins. As discussed above, under revenue decoupling for Fitchburg, distribution revenues, which are included in sales margin, will be recognized in the Companys Consolidated Statements of Earnings from August 1, 2011 forward, on established revenue targets and will no longer be dependent on sales volumes.

Operation and Maintenance (O&M) O&M expense includes electric and gas utility operating costs, and the operating cost of the Companys unregulated business activities. Total O&M expenses increased $2.4 million and $3.6 million for the three and six months ended June 30, 2012, respectively, compared to the same periods in 2011. The increase in the three month period reflects higher utility operating costs of $1.4 million, higher professional fees of $0.8 million and higher employee compensation and benefit costs of $0.2 million. The increase in O&M expenses in the first six months of 2012 compared to the same period in 2011 reflects lower O&M expenses recorded in the first quarter of 2011 due to the receipt of a $1.0 million insurance payment. Other changes in O&M expenses in the six month period include higher utility operating costs of $1.2 million, higher employee compensation and benefit costs of $0.9 million, and higher professional fees of $0.5 million. Utility operating costs in the three and six months ended June 30, 2012 include approximately $1.2 million and $1.5 million, respectively, of spending on vegetation management and electric reliability enhancement programs. These costs are recovered through cost tracker rate mechanisms that result in corresponding increases in revenue.

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