Unitil’s earnings hit by warmer winter, coronavirus
First-quarter income falls 43% on reduced gas, electricity sales
“One of the warmest winters on record in our service area” caused customers to buy less natural gas to heat their homes, said chief financial officer Larry Brock during an April 30 earnings call. There were 13.2% fewer cold days than normal, he said.
Even though the Hampton-based utility, which serves customers in New Hampshire, Maine and parts of Massachusetts had more than 1,000 new gas customers, gas revenue dropped nearly 19% to $70.2 million. The company also lost $4.8 million in electricity sales, which are less affected by the weather, but that was also because of customers’ energy savings measures.
All told, Unitil’s net income fell to $15.2 million ($1.02 a share) in the first quarter, 43% lower than the $26.6 million reported in the first quarter of 2019. Last year’s $9.8 million gain from the selloff of its Usource subsidiary explains most of that change, but the warmer weather accounted for $3.1 million of the decrease.
Weather and cutbacks due to efficiency and alternative energy may create less of impact in the future, if New Hampshire adopts “decoupling.”
The method, adopted in Massachusetts, would reward the company for other benchmarks besides sales, like increased efficiencies and better service. Until said the New Hampshire Public Utilities Commission is considering a decoupling proposal, and it intends to enact it in the next electric and gas rate cycles.
So far, the earnings impact of the virus, which really struck the economy in the last few weeks of March, was to set aside $600,000 for bad debt, since the company put a halt to disconnections. The company also created a fund to assist residential customers who suffered Covid-19 related job loss or reduced wages.
Many of the company’s employees are working from home, but that did not impact service, said CEO Tom Meissner.
But he said it could have an impact going forward, especially in commercial sales, due to so many offices closing. But that could be offset by increased residential sales as well as a decrease in the company’s own spending.
“We’ve seen reductions in healthcare expenses. Certainly, travel is down. Training is down. Other discretionary expenses are down. And we’re currently delaying hiring in large part because it’s impractical to actually conduct hiring at the moment,” Meissner said.
The company, for instance, had to delay announcing a remediation plan for contamination at a site in Rochester, NH, due to complications related to the virus, but the pandemic has not affected the company’s capital plans, according to its quarterly filing with the Securities and Exchange Commission.
The pandemic also didn’t prevent the company’s board of directors from declaring a quarterly dividend of 37.5 cents a share at its April annual meeting, which officers attended in person and shareholders attended virtually.