UNITIL Corp Reports Operating Results (10-Q)

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Jul 24, 2009
UNITIL Corp (UTL, Financial) filed Quarterly Report for the period ended 2009-06-30.

Unitil Corporation is a registered public utility holding company and the parent company of the Unitil System. UNITIL Corp has a market cap of $230.3 million; its shares were traded at around $21.9 with a P/E ratio of 9.8 and P/S ratio of 0.8. The dividend yield of UNITIL Corp stocks is 6.3%.

Highlight of Business Operations:

On December 1, 2008, Unitil purchased (i) all of the outstanding capital stock of Northern Utilities from Bay State Gas Company (Bay State) and (ii) all of the outstanding capital stock of Granite State from NiSource Inc. (NiSource) pursuant to the Stock Purchase Agreement dated as of February 15, 2008 by and among NiSource, Bay State and Unitil (the Acquisitions). Bay State is a wholly owned subsidiary of NiSource. The aggregate purchase price for the Acquisitions was $160 million in cash, plus an additional working capital adjustment of $49.2 million, including approximately $30.0 million of natural gas storage inventory. To finance the Acquisitions and recapitalize Northern Utilities and Granite State, the Company issued additional equity and debt.

The Companys Earnings Applicable to Common Shareholders was $0.2 million for the second quarter of 2009, compared to earnings of $1.6 million for the second quarter of 2008. Earnings per common share (EPS) were $0.03 for the three months ended June 30, 2009 compared with $0.28 in the second quarter of 2008. For the six months ended June 30, EPS were $1.10 for 2009 compared to $0.85 for 2008, an increase of $0.25 per share, or 29%, reflecting the positive impact from the acquisitions of Northern Utilities and Granite State.

Total Operation & Maintenance (O&M) expenses increased $5.0 million and $10.7 million for the three and six months ended June 30, 2009, respectively, compared to the same period in 2008. The addition of Northern Utilities and Granite State to consolidated operating results in 2009 accounted for $4.3 million of the increase in the six month period. For the six month period, in addition to the increases due to the acquisition of Northern Utilities and Granite State, higher professional fees expense of $1.9 million, primarily related to the December ice storm discussed below, higher compensation and employee benefit expenses of $0.6 million and higher utility operating costs of $1.1 million contributed to the increase in O&M expenses. The increase in O&M expenses for the six month period also reflects higher insurance costs in 2009 compared to the same period in 2008, due to the receipt of a $2.8 million insurance settlement in 2008.

Usource, our non-regulated energy brokering business, recorded revenues of $1.1 million and $2.2 million in the three and six month periods ended June 30, 2009, respectively, increases of $0.3 million and $0.4 million over the comparable periods of 2008. Usources revenues are primarily derived from fees and charges billed to suppliers as customers take delivery of energy from these suppliers under term contracts brokered by Usource.

Between December 2008 and June 2009, the Company issued and sold 4,970,000 shares of its common stock, including its underwriters excercise of overallotment options to purchase an additional 570,000 shares, at a price of $20.00 per share in registered public offerings. The Company used net proceeds of $93.1 million from these offerings (i) to repay all amounts outstanding under the bridge credit facility that the Company used to partially finance the acquisition of Northern Utilities and Granite State which closed on December 1, 2008, and (ii) for other general corporate purposes, including capital contributions to Unitils distribution utilities and repayment of short-term debt. See Note 4. Overall, the positive results of operations and net income are reflected over a higher number of average shares outstanding year over year.

The Companys Total Capitalization increased by $185.6 million as of June 30, 2009 compared to June 30, 2008 reflecting the issuance of common shares by the Company as part of its financing of the acquisitions of Northern Utilities and Granite State (See Note 4 to the accompanying Consolidated Financial Statements) and the issuance and sale of Senior Unsecured Notes by Northern Utilities and Granite State (See Note 5 to the accompanying Consolidated Financial Statements). The Companys Total Liabilities increased $45.3 million primarily due to the acquisitions of Northern Utilities and Granite State.

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