Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act 1934

Date of Report (Date of earliest event reported): April 22, 2014

 

 

UNITIL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

New Hampshire   1-8858   02-0381573

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

6 Liberty Lane West, Hampton, New Hampshire   03842-1720
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (603) 772-0775

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 7.01 Regulation FD Disclosure

At 10:30 a.m. on April 22, 2014, Unitil Corporation (the “Company”) will hold its Annual Meeting of Shareholders at its offices in Hampton, NH. Following the formal business of the meeting, the Company’s Chairman and Chief Executive Officer, Robert G. Schoenberger, plans to make a presentation to the Company’s shareholders. That presentation is attached as Exhibit 99.1 and will be available in the investor relations section of the Company’s website (www.unitil.com) subsequent to the meeting.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Number

  

Exhibit

99.1    Unitil Corporation’s presentation to shareholders at its Annual Meeting of Shareholders on April 22, 2014.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

UNITIL CORPORATION
By:  

/s/ Mark H. Collin

  Mark H. Collin
  Senior Vice President, Chief Financial Officer and Treasurer
Date:   April 22, 2014


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Unitil Corporation’s presentation to shareholders at its Annual Meeting of Shareholders on April 22, 2014.
EX-99.1
Annual Meeting of Shareholders
Presentation by
Robert G. Schoenberger
Chairman, Chief Executive Officer & President
April 22, 2014
Exhibit 99.1


1
Safe Harbor Provision
This
presentation
contains
“forward-looking
statements”
made
pursuant
to
the
safe
harbor
provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking
statements include statements regarding Unitil Corporation’s (“Unitil”) financial condition, results
of operations, capital expenditures, business strategy, regulatory strategy, market opportunities,
and other plans and objectives.  In some cases, forward-looking statements can be identified by
terminology
such
as
“may,”
“will,”
“should,”
“expects,”
“plans,”
“anticipates,”
“believes,”
“estimates,”
“predicts,”
“potential”
or “continue”, the negative of such terms, or other
comparable terminology.
These forward-looking statements are neither promises nor guarantees, but involve risks
and uncertainties that could cause the actual results to differ materially from those set forth in
the forward-looking statements. Those risks and uncertainties include: Unitil’s regulatory
environment (including regulations relating to climate change, greenhouse gas emissions and
other environmental matters); fluctuations in the supply of, demand for, and the prices of energy
commodities and transmission capacity and Unitil’s ability to recover energy commodity costs in
its rates; customers’
preferred energy sources; severe storms and Unitil’s ability to recover
storm costs in its rates; general economic conditions; variations in weather; long-term global
climate change; Unitil’s ability to retain its existing customers and attract new customers; Unitil’s
energy brokering customers’
performance and energy used under multi-year energy brokering
contracts; increased competition; integrity and security of operational and information systems;
publicity
and
reputational
risks;
and
other
risks
detailed
in
Unitil's
filings
with
the
Securities
and
Exchange
Commission,
including
those
appearing
under
the
caption
"Risk
Factors"
in
Unitil's
Annual Report on Form 10-K for the year ended December 31, 2013.
Readers should not place undue reliance on any forward looking statements, which speak
only as of the date they are made.  Unitil undertakes no obligation to update any forward-
looking statements to reflect any change in Unitil’s expectations or in events, conditions, or
circumstances
on
which
any
such
statements
may
be
based,
or
that
may
affect
the
likelihood
that actual results will differ from those set forth in the forward-looking statements.


2
Our mission is to provide energy for life—safely, reliably, cost-
effectively and responsibly—to a growing number of customers
with a high-performing workforce


3
Unitil Overview
Unitil Service Areas
Natural gas and electric utility with
operations in Maine, New Hampshire
and Massachusetts
Serving approximately 180,000 gas
and electric customers
Sales margin split evenly between
gas and electric utility operations
Regulated T&D utility business model
Growing operations and customers
Regulated rate base growth
Strong natural gas system expansion
Growing Usource contribution (non-
regulated energy brokering)
Historic dividend stability
Experienced management team


Robust business fundamentals
Favorable natural gas prices
Improving economy
Strong demand for natural gas
Gas distribution system growth
Gas expansion plan
Infrastructure replacement and upgrade
Electric rate base growth
Three base rate case filings
Maine and New Hampshire rate cases
completed
Massachusetts rate case completed by
mid-2014
Growing Usource contribution
Financial Highlights
4
Gas & Electric Sales Margin
10%
($ in millions)
Net Income
22%
($ in millions)
$9.9
$9.5
$16.3
$18.1
$21.6
$0
$5
$10
$15
$20
$25
2009
2010
2011
2012
2013
$110
$117
$136
$148
$161
$0
$40
$80
$120
$160
$200
2009
2010
2011
2012
2013


5
Stock Performance
Unitil has had a total return of 22% versus S&P 500 at 19% and Dow Jones
Utilities at 5% in the last twelve months ended March 31, 2014
Current annual dividend of $1.38 or 4.2% yield
Total Return (Last Twelve Months)
Pricing as of March 31, 2013 through March 31, 2014
-10%
0%
10%
20%
30%
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
UTL
S&P 500
Dow Jones Utility


Rate Relief Overview
6
Approximately
$37
million
of
rate
relief
achieved
through
end
of
2013
Achieved additional rate relief from gas base rate cases for Northern Maine and New
Hampshire divisions of $3.8 million and $4.6 million, respectively
Favorable cost tracker mechanisms will result in ongoing rate relief through annual step
adjustments
Fitchburg Electric rate case is pending and will be completed mid-2014
Projected Base Rate Relief
(1)
$36.8
$3.8
$4.6
$1.4
$1.5
$1.3
$9.5
$59.5
2010-2013
Total
Northern ME
Rate Case
1/1/2014
Northern NH
Rate Case
5/1/2014
Northern NH
Tracker
5/1/2014
Unitil Energy
Tracker
5/1/2014
Northern ME
Tracker
5/1/2014
Fitchburg
Electric
Rate Case
6/1/2014
Granite State
Tracker
8/1/2014
2010-2014
Projected
Total
$0.6
(1)
Reflects requested revenue requirement of $6.7 million (of which $2.1 million is related to storm recovery) and additional storm reserve fund of $2.8 million


Total capital budget of $91 million
in 2014
Expect to double gas distribution
rate base
Plan to grow gas rate base to
approximately $360 million by
2016, doubling the size of the gas
business since 2008
Capital Budget and Rate Base
7
($ in millions)
($ in millions)
Electric Rate Base
2014 Capital Budget $91 million
Gas Rate Base
3%
10%
($ in millions)
Information
Technology
$7
Gas
Distribution
Expansion
$23
Electric
Distribution
Expansion
$12
Infrastructure
Replacement
$18
Gas & Electric
Other
Requirements
$31
$0
$75
$150
$225
$300
$375
2008
2009
2010
2011
2012
2013
$0
$50
$100
$150
$200
$250
2008
2009
2010
2011
2012
2013


Retail Cost Comparison
Source: Unitil estimates
Natural gas is
currently ~50%
the cost of
retail fuel oil
Natural gas offers customers best choice of value in terms of efficiency, convenience and cost
On a retail-delivered basis, natural gas is approximately 50% the cost of retail fuel oil
Typical residential customer saves on average ~$1,500 / year with natural gas
Serving 76,000 total gas customers currently
Achieved 3.0% growth in customer base in 2013
2013 Customer Additions
8
Gas Advantage
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Annual Residential Heating Cost ($)
Gas
Fuel Oil
1.1%
3.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
New England Peer Average
Unitil


Identified more than 50,000 potential new customers who are “on-the-main”, but not
currently taking gas service
On-the-main penetration rate of under 60%
Gas customer additions significantly increasing since 2008 acquisition of Northern Utilities
Added and converted 8,200 natural gas customers, an increase of about 12% over 2008 customer
base
Therm sales of natural gas up 10.7% in 2013
Gas Growth
9
Current On-the-Main Penetration
Therm Sales
76,000
(<60%)
>50,000
(>40%)
Current Customers
On-the-Main Prospects
181.3
200.7
2012
2013
10.7%
(In millions)


Infrastructure Replacement
10
Expected to replace and upgrade ~13 miles of pipe annually through 2017
Approximately 7 miles annually thereafter (2018-2024)
New Hampshire replacement and upgrades completed by 2017
Majority of infrastructure replacement and upgrades recovered annually through capital tracker
mechanism
Portland, Maine Cast Iron System Replacement
Cast Iron / Bare Steel Miles Replaced
0
4
8
12
16
20
2010
2011
2012
2013
2014 F
2015 F
2016 F
2017 F
ME
NH
MA


Storm Resiliency
11
Making
substantial
investments
in
electric
distribution
system
to
meet
customers’
growing
needs for reliable electric energy
Since 2010, vegetation management spending has increased five-fold to over $6 million
annually
Developed industry leading storm resiliency program to help prevent power outages caused
by trees and nearby vegetation
Accomplished
by
achieving
ground
to
sky
clearance
and
removal
of
hazard
trees


Substation Projects
12
Construction of two major substations in New
Hampshire beginning in 2014
Provides capacity to meet forecasted load growth
in New Hampshire
Enhances reliability and addresses capacity
constraints at existing substations
Kingston Project
Kingston, NH (Seacoast Region)
Construction to begin 2014; in service 2016
Total cost of ~$12 million
Broken Ground Project
Concord, NH (Capital Region)
Construction to begin 2015; in service 2017
Total cost of ~$11 million


Usource
13
Competitive Energy Markets
Customers
Manages over $660 million annually in
electric and gas energy contracts in 18
states
Serves over 1,200 customers
High
customer retention rates
2013 revenue of $5.8 million
$8.3 million forward book of revenue as
of December 31, 2013
Profitable growth –
2013 net income
margin of 21%
Revenue
Connecticut
Minnesota
Delaware
New Hampshire
Florida
New Jersey
Georgia
New York
Illinois
Ohio
Indiana
Oklahoma
Maine
Pennsylvania
Maryland
Rhode Island
Massachusetts
Texas
Gas & Electric
Gas
$4.3
$4.6
$5.5
$5.5
$5.8
$0.0
$2.0
$4.0
$6.0
$8.0
2009
2010
2011
2012
2013
8%


Liquidity Profile
14
Capitalization
Long-Term Debt Maturities
($ in millions)
Entered into new credit facility effective
October 4, 2013
Increased borrowing availability from $60
million to $120 million
Five year term
Interest: Libor + 1.375%
2013 cash flow from operations up 44%
Significant liquidity available to fund
growth plans
Cash Flow From Operations
($ in millions)
($ in millions)
44%
December 31,
2013
Long-Term Debt, Less Current Portion
$284.8
Preferred Equity
0.2
                 
Common Equity
265.0
             
Long-Term Capitalization
$550.0
Current Portion Long-Term Debt
$2.5
Short-Term Debt
60.2
               
Total Capitalization
$612.7
Long-Term Debt / Long-Term Capitalization
51.8%
Total Debt / Total Capitalization
56.7%
$66.7
$96.3
$0
$30
$60
$90
$120
2012
2013
$2.5
$4.0
$17.4
$17.2
$30.1
$0
$10
$20
$30
$40
2014
2015
2016
2017
2018


15
Key Investment Highlights
Regulated local distribution utility
business model
Diversified natural gas and electric sales
Growing operations and customer base
Regulated rate base growth
Strong natural gas system expansion
Growing Usource contribution
Historic dividend stability
Experienced management team