HAMPTON, N.H., July 30, 2020 (GLOBE NEWSWIRE) -- Unitil Corporation (NYSE: UTL) (www.unitil.com) today announced Net Income of $3.1 million, or $0.21 in Earnings Per Share (EPS), for the second quarter of 2020, a decrease of $0.9 million in Net Income, or $0.06 per share, compared to the second quarter of 2019, driven by lower gas sales margins and higher operating expenses. The second quarter of 2019 included $0.6 million in property tax abatements resulting from the Company’s litigation of property valuation assessments which contributed $0.03 per share to results in 2019.

For the six months ended June 30, 2020, the Company reported Net Income of $18.3 million, or $1.23 per share, a decrease of $12.2 million, or $0.82 per share, compared to the same six month period in 2019. In the first quarter of 2019 the Company recognized a one-time net gain of $9.8 million, or $0.66 per share, on the Company’s divestiture of its non-regulated business subsidiary, Usource. The decrease in earnings for the first half of 2020 also reflects lower gas sales margins due to warmer winter weather in 2020 compared to 2019. The Company estimates that the warmer than normal winter weather negatively affected Net Income by approximately $3.1 million, or $0.20 per share, in the first half of 2020. The Company’s GAAP Gas and Electric Gross Margins were $15.5 million and $16.5 million, respectively, for the three months ended June 30, 2020 and were $50.5 million and $33.7 million, respectively for the six month period ended June 30, 2020, including the impact on margins of the COVID-19 pandemic.

“Despite the challenges posed by the ongoing COVID-19 pandemic, our employees have done an incredible job delivering exceptional service to our customers,” said Thomas P. Meissner, Jr., Unitil’s Chairman and Chief Executive Officer. “We remain focused on the health and safety of our employees, customers, and the communities we serve during these unprecedented times.”

Gas Adjusted Gross Margin (a non-GAAP measure¹) was $22.9 million and $65.3 million in the three and six months ended June 30, 2020, respectively, decreases of $0.4 million and $1.5 million, respectively, compared to the same periods in 2019. The decrease in the three month period was driven by lower therm sales of $0.8 million attributed to the economic slowdown associated with the COVID-19 pandemic and $0.2 million from the warm weather in the second quarter, partially offset by customer growth and higher rates of $0.6 million. The decrease in the six month period was driven by lower margin of $2.7 million principally due to warmer winter weather in the first quarter of 2020, partially offset by customer growth, and lower margin of $0.8 million from lower sales attributed to the economic slowdown caused by the COVID-19 pandemic. These decreases were partially offset by higher rates of $2.0 million.

Gas therm sales decreased 9.0% and 7.5% in the three and six month periods ended June 30, 2020, respectively, compared to the same periods in 2019. The decrease in gas therm sales in the Company’s service areas reflects warmer weather in the first half of 2020 compared to the same period in 2019, as well as lower sales to Commercial and Industrial (C&I) customers, primarily in the second quarter due to the economic slowdown caused by the COVID-19 pandemic, partially offset by customer growth. Based on weather data collected in the Company’s gas service areas, there were 8.4% fewer Effective Degree Days (EDD) in the first half of 2020, on average, compared to the same period in 2019 and 8.7% fewer EDD compared to normal. As of June 30, 2020, the number of gas customers served has increased by 1,731 over the previous year.

Electric Adjusted Gross Margin (a non-GAAP measure) was $22.4 million and $45.5 million in the three and six months ended June 30, 2020, respectively, on par with the same periods in 2019. Electric Adjusted Gross Margin in the second quarter of 2020 reflects higher margin of $0.2 million from warmer early summer weather and customer growth, $0.2 million from higher rates and higher margin of $0.2 million from increased residential sales due to COVID-19 pandemic stay-at-home orders, offset by lower margin of $0.6 million from lower C&I sales attributed to the economic slowdown caused by the COVID-19 pandemic. Electric Adjusted Gross Margin in the first half of 2020 was positively affected by higher rates of $0.8 million and higher margin of $0.2 million from increased residential sales due to COVID-19 pandemic stay-at-home orders, offset by lower margin of $0.6 million from lower C&I sales attributed to the economic slowdown caused by the COVID-19 pandemic and lower margin of $0.4 million from warmer winter weather and lower average usage, partially offset by warmer early summer weather and customer growth.

Total electric kilowatt-hour (kWh) sales decreased 2.0% and 0.5%, respectively, in the three and six month periods ended June 30, 2020 compared to the same periods in 2019. The decreases in kWh sales reflect lower usage by C&I customers as a result of the economic slowdown caused by COVID-19 pandemic, and the warmer winter weather in 2020 which adversely impacted the usage of electricity for heating purposes. These decreases were partially offset by an increase in sales to residential customers due to the COVID-19 pandemic stay-at-home orders, and warmer early summer weather in 2020 compared to 2019 which resulted in higher use of air conditioning. Based on weather data collected in the Company’s electric service areas, there were 134.7% more Cooling Degree Days (CDD) in the second quarter of 2020, on average, compared to the same period in 2019. As of June 30, 2020, the number of total electric customers served has increased by 755 over the last year.

Operation and Maintenance (O&M) expenses decreased $1.3 million, or 8.2%, and $1.9 million, or 5.5%, in three and six months ended June 30, 2020, respectively, compared to the same periods in 2019. The decrease in the three month period reflects lower labor costs of $1.1 million and lower all other utility operating costs, net of $0.2 million. The decrease in the six month period includes $0.4 million of lower labor and other costs attributed to Usource operations in the first quarter of 2019. The change in O&M expenses in the six month period also reflects: lower utility operating costs of $1.0 million; lower labor costs of $1.1 million; higher bad debt expense of $0.4 million, which includes a provision for the impact of the COVID-19 pandemic; and higher professional fees of $0.2 million. The lower labor costs in the six month period reflect lower employee benefit costs partially offset by higher compensation costs.

Depreciation and Amortization expense increased $1.1 million and $0.8 million in the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019. These increases reflect increased depreciation on higher levels of utility plant in service, partially offset by lower amortization.

Taxes Other Than Income Taxes increased $1.0 million and $1.1 million in the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019. These increases reflect higher local property tax rates on higher levels of utility plant in service, and the recognition of $0.6 million in property tax abatements in the second quarter of 2019.

Interest Expense, Net was essentially unchanged in the three and six months ended June 30, 2020, compared to the same periods in 2019, reflecting higher interest on long-term debt offset by lower rates on short-term debt.

Other Expense (Income), Net increased $0.1 million for the three months ended June 30, 2020 compared to the same period in 2019, reflecting higher retirement benefit costs. Other Expense (Income), Net changed from income of $10.8 million in the first six months of 2019 to expense of $2.9 million in the first six months of 2020, a net change of $13.7 million. This change primarily reflects a pre-tax gain of $13.4 million on the Company’s divestiture of Usource in the first quarter of 2019 and $0.3 million of higher retirement benefit costs in 2020.

Federal and State Income Taxes decreased $0.4 million and $3.9 million for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019, reflecting lower pre-tax earnings in the current periods.

At its January 2020, April 2020 and July 2020 meetings, the Unitil Corporation Board of Directors declared quarterly dividends on the Company’s common stock of $0.375 per share. These quarterly dividends result in a current effective annualized dividend rate of $1.50 per share, representing an unbroken record of quarterly dividend payments since trading began in Unitil’s common stock.

The Company’s earnings are seasonal and are typically higher in the first and fourth quarters when customers use natural gas for heating purposes.

About Unitil Corporation

Unitil Corporation provides energy for life by safely and reliably delivering natural gas and electricity in New England. We are committed to the communities we serve and to developing people, business practices, and technologies that lead to the delivery of dependable, more efficient energy. Unitil Corporation is a public utility holding company with operations in Maine, New Hampshire and Massachusetts. Together, Unitil’s operating utilities serve approximately 106,100 electric customers and 83,900 natural gas customers. Other subsidiaries include Usource, Unitil’s non-regulated business segment, which the Company divested in the first quarter or 2019. For more information about our people, technologies, and community involvement please visit www.unitil.com.