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DATE

Monday, Aug. 3, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

  • Vice President of Finance and Regulatory - Christopher Goulding.
  • Chairman and Chief Executive Officer - Tom Meissner.
  • Senior Vice President, Chief Financial Officer and Treasurer - Daniel Hustak.
  • President and Chief Administrative Officer - Bob Hevert.
  • Chief Accounting Officer and Controller - Todd Diggins.

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TAKEAWAYS

  • Adjusted Net Income -- $5.2 million ($0.29 per share) for the second quarter and $39 million ($2.17 per share) for the first half of 2026, reflecting higher distribution rates and the inclusion of Maine Natural Gas results.
  • 2026 Earnings Guidance -- EPS range of $3.20 to $3.36, representing a $3.28 midpoint, which management reaffirmed based on strong first-half performance.
  • Electric Adjusted Gross Margin -- $61.2 million for the first half of 2026, representing a 14.8% increase driven by new permanent rates in New Hampshire and performance-based adjustments in Massachusetts.
  • Gas Adjusted Gross Margin -- $122.7 million for the first half of 2026, rising 13.5% due to the $8.7 million contribution from Maine Natural Gas and $1.4 million from colder winter weather.
  • Aquarion New Hampshire Acquisition -- $55.8 million purchase price for two water utilities, including the assumption of $13.7 million in long-term debt, which management expects to be earnings neutral in 2026.
  • Capital Investment Plan -- $1.2 billion through 2030, a 24% increase over the previous five-year plan to support infrastructure growth in gas and water segments.
  • Rate Base -- 14.9% increase to $200 million compared to the prior year, driven by infrastructure investments and the addition of Maine and New Hampshire utility assets.
  • New Hampshire Electric Rate Award -- $13 million in permanent annual revenue, which took effect May 1, 2026, following the completion of the subsidiary's rate case.
  • Northern Utilities New Hampshire Filing -- $9.8 million permanent rate request, with $5.5 million in temporary rates currently in effect while the multiyear rate plan is under review.
  • Northern Utilities Maine Filing -- $10.4 million revenue increase request filed on June 1, 2026, utilizing a historical test year to minimize earnings attrition.
  • Natural Gas Customer Additions -- 6,600 new customers compared to the same period in 2025, with the majority resulting from the acquisition of Maine Natural Gas.
  • New Hampshire AMI Investment -- $30 million total project cost, with 21,000 of 80,000 meters replaced to date and full completion targeted for 2027.
  • O&M Expenses -- $3.3 million increase for the first half of the year, primarily reflecting $2.7 million in new operating costs from Maine Natural Gas.
  • Equity Financing -- $11 million raised through the ATM program in the second quarter, leaving $37.5 million in available capacity for future funding needs.
  • FFO-to-Debt Ratio -- 17.2% as adjusted by S&P, remaining within the company's long-term target and above credit rating downgrade thresholds.
  • Long-Term Growth Target -- 5% to 7% earnings growth range reaffirmed, supported by a projected 6.5% to 8.5% rate base growth rate.
  • Holding Company Senior Notes -- $60 million in notes priced in June 2026, with proceeds earmarked to repay existing debt and support general corporate purposes.
  • Customer Inquiry Growth -- 50% year-over-year increase in inbound calls regarding natural gas conversions, driven by the price advantage over fuel oil.
  • Massachusetts AMI Project -- $10 million total cost for 31,000 meters, which is now fully complete and currently being recovered through distribution rates.
  • Customer Conversion Backlog -- 1,500 new customers under contract or in construction, reflecting sustained demand for natural gas in the Maine and New Hampshire regions.

SUMMARY

Unitil Corporation (UTL -1.45%) focused the call on the expansion of its regulated utility portfolio and the execution of its multiyear infrastructure investment plan. Management highlighted the closing of the Aquarion water acquisition in New Hampshire as a strategic entry into the water utility sector and signaled interest in further regional expansion. The company emphasized the sustained price advantage of natural gas over heating oil in its service territories, which is driving an increase in service inquiries and conversions. Additionally, the company reported progress on regulatory rate cases and the deployment of advanced metering technology to modernize the grid.

  • CEO Meissner reported that customer satisfaction is "the best among Northeast utilities and within the top quartile nationally," citing a 90% satisfaction rate.
  • Management noted a nonbinding letter of intent to purchase the Massachusetts Aquarion Company, though the transaction remains "pending satisfaction of certain conditions, including the successful resolution of a base rate case proceeding."
  • Meissner described the New Hampshire AMI project as incorporating "state-of-the-art smart meters that can provide near real-time information to customers and enable improved decision-making in grid optimization."
  • The company stated that 2/3 of Maine homes use expensive alternative fuels like oil or propane, which Meissner indicated offers a "compelling opportunity for customers to lower their energy costs while also helping states achieve their climate goals."
  • CFO Hustak indicated that excluding the impact of the Maine Natural Gas acquisition, O&M expenses rose 1%, a level he described as being "well below the increase in inflation over the same period."
  • Management entered a five-year operating and transition services agreement with the Aquarion Water Authority to facilitate the integration of the New Hampshire water utilities.

INDUSTRY GLOSSARY

  • AMI (Advanced Metering Infrastructure): An integrated system of smart meters and communication networks that enables two-way communication between utilities and customers.
  • Decoupled Rates: A regulatory mechanism that separates a utility's fixed cost recovery from the amount of energy sold, removing the incentive to increase sales for profit.
  • FFO-to-Debt: Funds From Operations divided by total debt, a credit metric used by rating agencies to evaluate a company's ability to pay off debt from its operational earnings.
  • Rate Base: The value of property on which a utility is permitted to earn a specified rate of return as established by regulatory authorities.
  • Step Adjustment: A regulatory mechanism allowing a utility to adjust rates periodically to recover the costs of specific completed capital investments without a full rate case.

Full Conference Call Transcript

Operator: Good day and thank you for standing by. Welcome to the Q2 2026 Unitil Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Chris Goulding, Vice President of Finance and Regulatory. Please go ahead.

Christopher Goulding: Good afternoon, and thank you for joining us to discuss Unitil Corporation's second quarter 2026 financial results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer, and Dan Hustak, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today are Bob Hevert, President and Chief Administrative Officer; and Todd Diggins, Chief Accounting Officer and Controller. We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information, including a presentation, to the Investor section of our website at unitil.com. We will refer to that information during this call.

Moving to Slide 2, some of the statements made during this call may be forward-looking. These statements are based on management's current expectation and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. We undertake no obligation to update or revise any of these statements. Additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconcile to GAAP measures is contained within our news release, the slides we posted for this call, and in our most recent Form 10-Q and 10-K. I will now turn the call over to Chairman and CEO, Tom Meissner.

Tom Meissner: Great. Thanks, Chris. Good afternoon, everyone, and thanks for joining us today. Beginning on Slide 3, I'm pleased to report outstanding performance through the first half of the year, both operationally and financially. Yesterday, we announced another strong quarter with adjusted net income of $5.2 million, or $0.29 per share. For the first half of the year, adjusted net income was $39 million, or $2.17 per share, an increase of $0.14, or nearly 7% compared to the first 6 months of 2025. We are fully earning our authorized returns on a trailing 12-month basis with a GAAP return on equity of 9.6%.

Given the strong results for the first half of the year, we are reaffirming our 2026 earnings guidance of $3.20 to $3.36 per share, with a midpoint of $3.28. We are also reaffirming our long-term earnings guidance of 5% to 7%. We have several positive business updates to share this quarter. As I'll cover in more detail on the following slide, the acquisition of the Aquarion Water Company of New Hampshire and Abenaki Water Company successfully closed on June 30. We're excited to add these 2 companies to our portfolio of regulated distribution utilities. Our regulatory agenda remains active, and I'm pleased to report that the 2 Northern Utilities rate cases in Maine and New Hampshire are progressing as expected.

Dan will provide additional details about these rate cases later during the call. We pride ourselves on consistently delivering high-quality, reliable service to our customers, and recent customer survey results show that our customers continue to be highly satisfied with our service. Overall customer satisfaction remains high at 90%, which is slightly better than last year. Our overall customer satisfaction is the best among Northeast utilities and within the top quartile nationally. I'd also like to provide an update on our Advanced Metering Infrastructure, or AMI, project that will replace all of our electric meters. This new metering system incorporates state-of-the-art smart meters that can provide near real-time information to customers and enable improved decision-making in grid optimization.

The rollout in Massachusetts was completed last year with 31,000 meters replaced at a total cost of approximately $10 million, which is currently being recovered in rates. In New Hampshire, we have already replaced 21,000 meters and expect to complete the remaining 59,000 meters by the end of 2027. Total cost for this project in New Hampshire is expected to be approximately $30 million, with a portion of that amount included in the company's next step adjustment. We believe this project will help us deliver the advanced functionality and level of service that our customers expect.

Turning now to Slide 4, the acquisition of the 2 Aquarion New Hampshire water utilities closed on June 30 for a total purchase price of $55.8 million. This includes the assumption of $13.7 million of long-term debt. We purchased these companies at an attractive valuation, and this acquisition will strengthen our regulated utility portfolio. We entered into a 5-year operating and transition services agreement with the Aquarion Water Authority to ensure a seamless transition and integration. Similar to the purchase of the 2 gas companies in Maine last year, we initially financed this transaction with a holding company term loan. We anticipate the transaction will be earnings neutral in 2026 and accretive once new distribution rates take effect.

We have also entered into a non-binding letter of intent with Eversource Energy to purchase the Massachusetts Aquarion Company, pending satisfaction of certain conditions, including the successful resolution of a base rate case proceeding. We're excited to welcome Aquarion's experienced, locally managed teams to Unitil, and we remain committed to delivering the same high-quality service that all of our customers expect. Moving now to Slide 5, natural gas continues to enjoy a significant price advantage relative to competing fuels like oil and propane. Fuel oil prices have remained substantially higher than natural gas for an extended period of time. As I mentioned before, Maine has the highest percentage of homes heated with fuel oil in the nation.

Roughly 2/3 of Maine homes are heated with oil, propane, or kerosene, fuels that are much more expensive than natural gas. We believe natural gas conversions offer a compelling opportunity for customers to lower their energy costs while also helping states achieve their climate goals. Over the first half of the year, we've seen a 50% increase in customers calling to inquire about natural gas service compared to the same period last year. We currently have about 1,500 new customers under contract or in construction. In addition, we continue to see growth in adjusted margin across all of our natural gas companies compared to 2025.

As a reminder, both Maine and New Hampshire have fuel choice statutes to preserve customers' rights to select their preferred energy source, including natural gas. With that, I'll now pass it over to Dan, who will provide greater detail on our financial results.

Daniel Hurstak: Thank you, Tom, and good afternoon, everyone. I'll begin on Slide 6. As Tom mentioned, we announced second quarter 2026 adjusted net income of $5.2 million and adjusted earnings per share of $0.29. Through the first 6 months of the year, adjusted net income was approximately $39 million, or $2.17 per share, representing an increase of $5.9 million in adjusted net income, or $0.14 per share, compared to the same period in 2025. We are reporting adjusted earnings that exclude transaction costs related to our gas and water acquisitions, which we do not view as indicative of the company's ongoing costs and operations.

The results for the first half of the year were supported by the earnings contribution from Bangor Natural Gas and Maine Natural Gas, in addition to higher distribution rates and customer growth, partially offset by higher operating expenses. Turning to Slide 7, I will discuss our electric and gas adjusted gross margins. I will begin with our electric operations. For the 6 months ended June 30, 2026, electric adjusted gross margin was $61.2 million, an increase of $7.9 million, or 14.8% as compared to the same period in 2025. The increase in electric adjusted gross margin was driven by higher rates and customer growth.

Higher rates were supported by the permanent rate award for our New Hampshire electric subsidiary of $13 million, which took effect May 1, 2026. Electric margin was also supported by performance-based rate adjustments in Fitchburg. As noted during prior calls, all our electric customers are under decoupled rates, which eliminates the dependency of distribution revenue on the volume of electricity sales. Moving to gas operations, for the 6 months ended June 30, 2026, gas adjusted gross margin was $122.7 million, an increase of $14.6 million, or approximately 13.5% compared to the same period in 2025.

The increase in gas adjusted gross margin reflects the contribution from Maine Natural Gas of $8.7 million, higher rates and customer growth of $4.5 million, and colder winter weather of $1.4 million. The company added approximately 6,600 new gas customers compared to the same period in 2025, with the majority of these new customers being attributable to the acquisition of Maine Natural Gas. As of June 30, 2026, approximately 52% of the company's gas customers were under decoupled rates, with Maine representing our only non-decoupled service area. Moving to Slide 8, we provide an earnings bridge comparing the results for the first 6 months of 2026 to the same period in 2025.

As I just discussed, the combined adjusted gross margin for our electric and gas divisions increased $22.5 million and reflects the contribution of Maine Natural Gas, higher rates, colder winter weather, and customer growth. Operation and maintenance expenses increased $3.3 million due to higher utility operating costs of $2.6 million and higher labor and other costs of $1.5 million, partially offset by lower acquisition costs of $0.8 million. The increase includes $2.7 million of utility operating costs for Maine Natural Gas. Excluding Maine Natural Gas, operation and maintenance expenses increased $0.6 million, or just above 1%, compared to the first half of 2025, which is well below the increase in inflation over the same period.

The increases in depreciation and amortization expense and taxes other than income taxes primarily reflect higher levels of utility plant in service as well as the inclusion of expenses associated with Maine Natural Gas in 2026. Moving to Slide 9, as Tom noted earlier during the call, our Northern Utilities rate cases are progressing as expected in both New Hampshire and Maine. Starting with New Hampshire, on April 1, we filed for a permanent rate increase of $9.8 million, and on June 1, temporary rates of $5.5 million took effect. We have proposed a multi-year rate plan with 2 step adjustments to recover all 2026 and 2027 system investments.

The rate proposal also includes the continuation of revenue decoupling, but similar to our New Hampshire electric company, we have proposed a decoupling methodology change from a revenue per customer model to a total authorized revenue target. We are currently participating in technical sessions, and intervenor testimony is due in November. Settlement conferences are currently scheduled for early 2027, with permanent rates expected to go into effect on April 1, 2027. Turning to the Northern Utilities Maine division. We filed our rate case on June 1 for a proposed revenue increase of $10.4 million. The Maine revenue requirement is based on a historical test year with adjustments to forecast rate-based revenues and expenses through the rate-effective year.

This approach is designed to reduce earnings attrition and is consistent with the revenue requirement approved in the company's previous Maine rate case. We are currently participating in technical conferences and intervenor testimony is expected by the end of this month. We look forward to working with all stakeholders in these rate proceedings, and we'll provide additional updates on future calls. Turning to Slide 10, our current 5-year capital investment plan through 2030 totals approximately $1.2 billion, which is an increase of 24% over the previous 5-year plan. This plan includes approximately $65 million in total for Bangor Natural Gas and Maine Natural Gas and approximately $33 million for the New Hampshire Water companies.

Rate base has increased by $200 million, or 14.9%, compared to the same period in 2025, partly due to the additions of Maine Natural Gas and the New Hampshire water companies. Over the past 5 years, rate base growth has averaged 9.5%, which is above our long-term rate base growth rate range of 6.5% to 8.5%. Moving to Slide 11, we continue to prudently manage our balance sheet by maintaining a balanced mix of common equity and long-term debt to support our investment-grade credit ratings. The primary source of funding for our 5-year investment plan is cash flow from operations supplemented by long-term debt and equity.

Our financial profile remains strong and balance sheet strength continues to be a top priority. Our most recent FFO-to-debt metric, as adjusted by S&P, was 17.2%, squarely in the middle of our long-term target and well above our downgrade thresholds. During the second quarter, we issued approximately $11 million of equity under our ATM program. At the end of the second quarter, we had approximately $37.5 million of available capacity under that program. In June, we priced $60 million of holding company senior notes and expect that transaction to close in September. Proceeds from this issuance will be used to repay existing holding company debt and for general corporate purposes.

After this debt issuance, holding company debt compared to total debt will continue to be in line with rating agency expectations. I will now turn the call back over to Tom.

Tom Meissner: Thank you, Dan. Ending on Slide 13. The company's strong results through the first 6 months of the year reflects disciplined execution of our operating and strategic priorities and our longstanding commitment to delivering safe, reliable, and affordable service to our customers. The addition of the New Hampshire Water Companies marks another important milestone, expanding our regulated utility portfolio while remaining firmly focused on our existing states and jurisdictions. As we continue to grow, we remain committed to strategic execution of our plan and the delivery of exceptional value to our customers and stakeholders. With that, I'll pass the call back to Chris.

Christopher Goulding: Thanks, Tom. That wraps up the prepared material for this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

Operator: [Operator Instructions] And I show our first question comes from the line of Andrew Weisel from Scotiabank. Please go ahead.

Andrew Weisel: So my first question on Aquarion, you've talked about it being neutral to EPS, at least in the near term pending help from rate cases. I believe that comment was mostly on the assumption that you get both New Hampshire and Massachusetts, but so far only New Hampshire is closed. Does that affect the earnings accretion outlook? Obviously, it's smaller, but does that help or hurt? And am I right that the increased CapEx outlook is to reflect spending at Aquarion in New Hampshire? Any thoughts on the outlook for that business?

Daniel Hurstak: Andrew, you're correct. The amount of incremental CapEx that we referenced in the slides only relates to the New Hampshire Aquarion Companies. And just based on the New Hampshire Aquarion Companies results for the rest of the year, we would expect the earnings contribution from those companies to be neutral to consolidated EPS. That would be after we consider the effects of financing the transaction.

Andrew Weisel: Okay, great. And then how are things looking in Massachusetts? Any thought on -- any updates on where we stand, next steps, and maybe thoughts on your level of confidence?

Daniel Hurstak: Yes. I think the next steps are for -- we understand that Eversource Energy will file a rate case to address the 2 conditions in the previous approval order from the department that were unacceptable to the parties, one being a stay-out, which would obviously be addressed by the filing of a rate case. And the second would be dealing with the gain on the sale of the Hingham assets as part of that proceeding.

Andrew Weisel: Okay, and then looking forward, this has been a pretty drawn-out regulatory process. Does this change at all your risk appetite for additional acquisitions?

Tom Meissner: This is Tom. I would say no. We're still interested in further expansion of our footprint to the extent that it fits within our existing business model.

Andrew Weisel: Okay, very good. One more if I could, switching gears to natural gas conversions. Obviously, as you show in the slides there, oil prices have been staying at these higher levels probably longer than I might have expected and maybe some others. You mentioned a big increase in customer inbounds. How is that changing the conversations maybe with regulators? Obviously, you've had the political support like you mentioned. Are you maybe at a point where you might just start to think of this as more of a structural change and maybe more sustainable higher levels of earnings and growth that you might build into your budgets?

Tom Meissner: Well, I guess I'll start by saying I think the price advantage we have relative to other fuels I think that's going to stay. It's going to be sustained over the long term, even if it narrows somewhat. And therefore, we do think that natural gas provides a tremendous opportunity to address affordability, especially in Maine, where there's the greatest opportunity due to penetration of alternative fuels. I think that's already generally recognized with our regulators. And from our standpoint, we see this as an opportunity to continue to expand growth, especially in Maine.

Operator: [Operator Instructions] I'm showing no further questions in the queue at this time. This concludes our Q&A session and today's conference call. Thank you all for attending. You may all disconnect at this time.