Unitil's 2025Q2 Earnings Call: Navigating Contradictions in Dividends, Growth, and Capital Strategy

Dividend policy and earnings guidance, earnings growth and acquisitions, dividend strategy and EPS impact, equity financing for capital plan, and capital spending program by asset class are the key contradictions discussed in Unitil Corporation's latest 2025Q2 earnings call.



Financial Performance and Growth:
- Unitil Corporation reported adjusted net income of $4.7 million and adjusted earnings of $0.29 per share for the second quarter of 2025.
- Through the first 6 months of the year, adjusted net income was $33.1 million or $2.03 per share, an increase of $1.6 million or $0.07 per share compared to the same period of the prior year.
- The growth was driven by higher distribution rates, customer growth, and favorable weather conditions.

Acquisition Progress and Rate Base Growth:
- The regulatory reviews of the Maine natural gas and Aquarion Water transactions are progressing on schedule, expected to close by the end of 2025.
- The acquisitions are expected to accelerate rate base growth to approximately 10% annually through 2029, supporting earnings growth near the top end of their guidance range.
- The acquisitions are anticipated to be earnings neutral in the short term but will be earnings accretive over the long run after new distribution rates take effect.

Gas Adjusted Gross Margin and Customer Growth:
- For the 6 months ended June 30, 2025, gas adjusted gross margin was $108.1 million, an increase of $15.8 million or approximately 17.1% compared to the same period in 2024.
- The company added approximately 9,360 new gas customers, including 8,800 customers from the acquisition of Bangor Natural Gas.
- The increase in gas adjusted gross margin is due to higher rates, customer growth, and the effects of a return to normal winter weather.

Electric Revenue Decoupling and Customer Growth:
- For the 6 months ended June 30, 2025, electric adjusted gross margin was $53.3 million, an increase of $1.3 million or 2.5% compared to the same period in 2024.
- The company added approximately 730 electric customers, with 110 of those being new C&I customers.
- The increase in electric adjusted gross margin reflects higher distribution rates and customer growth, with electric distribution revenues being substantially decoupled, eliminating dependency on electricity sales volume.