Unitil Reports First Quarter Earnings
Unitil Corporation (NYSE: UTL) announced Net Income of $12.6 million for the first quarter of 2014, an increase of $1.8 million, or 17%, compared to the Company's results for the first quarter of 2013. Earnings Per Share was $0.91 for the first quarter of 2014, up $0.12 per share compared to 2013. The Company's earnings for the first three months of 2014 were driven by increases in natural gas and electric sales and margins.
'Unitil had an excellent first quarter, and our financial results reflect the combination of the colder winter weather in 2014 and the positive impact of steady customer growth,' said Robert G. Schoenberger, Unitil's Chairman and Chief Executive Officer. 'We believe we have all the elements in place for sustained long-term growth.'
Natural gas sales margins were $36.5 million in the first quarter of 2014, an increase of $6.0 million compared to the same period in 2013. Natural gas sales margins in the first quarter of 2014 were positively affected by higher therm unit sales, a growing customer base and recently approved distribution rates. Therm sales of natural gas increased 14.9% in the first quarter of 2014 compared to 2013, driven by the colder winter weather in the first quarter of 2014 compared to 2013. Based on weather data collected in the Company's service areas, there were 12% more Heating Degree Days in the first quarter of 2014 compared to 2013. Weather-normalized gas therm sales, excluding decoupled sales, in the first quarter of 2014 are estimated to be up 6.4% compared to 2013. As of March 31, 2014, the number of total natural gas customers served has increased by 3.1% in the last twelve months.
Electric sales margins were $19.2 million in the first quarter of 2014, an increase of $0.8 million compared to 2013, reflecting higher electric kilowatt-hour (kWh) sales and recently approved electric distribution rates. Electric kWh sales increased 5.0% in the first quarter of 2014 compared to 2013, driven by the colder winter weather in the first quarter of 2014 compared to 2013.
Usource, the Company's non-regulated energy brokering business, recorded sales margin of $1.6 million in the first quarter of 2014, an increase of $0.1 million compared to the first quarter of 2013.
Operation and Maintenance (O&M) expenses increased $1.9 million in the three months ended March 31, 2014 compared to the same period in 2013. The change in O&M expenses reflects higher compensation costs of $0.9 million, higher employee and retiree benefit costs of $0.6 million and higher utility operating costs of $0.5 million; partially offset by lower all other operating costs, net of $0.1 million.
Depreciation, Amortization, Taxes and other expenses increased $2.6 million in the three months ended March 31, 2014 compared to the same period in 2013. Depreciation expense increased $0.5 million and property taxes increased $0.8 million in the three months ended March 31, 2014 compared to the same period in 2013, due to higher levels of utility plant in service. Amortization expense increased $0.2 million in 2014 due to higher amortization of storm restoration costs. Federal and State Income Taxes increased $1.1 million for the three months ended March 31, 2014, reflecting higher pre-tax earnings in the current period.
Interest Expense, net increased $0.6 million in the three months ended March 31, 2014 compared to the same period in 2013, reflecting lower interest income on regulatory assets.
At its January 2014 and April 2014 meetings, Unitil's Board of Directors declared quarterly dividends on the Company's common stock of $0.345 per share. These quarterly dividends result in a current effective annual dividend rate of $1.38 per share continuing an unbroken record of quarterly dividend payments since trading began in Unitil's common stock.
The Company's results are expected to reflect the seasonal nature of the 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.
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