Tag Archives: director

Insiders Bullish on Certain Holdings of DLN

A look at the weighted underlying holdings of the WisdomTree LargeCap Dividend Fund ( DLN ) shows an impressive 10.5% of holdings on a weighted basis have experienced insider buying within the past six months. Microsoft Corporation (Symbol MSFT),

Unitil’s (UTL) CEO Bob Schoenberger on Q2 2015 Results – Earnings Call Transcript

Unitil Corporation (NYSE: UTL ) Q2 2015 Results Earnings Conference Call July 23, 2015, 14:00 PM ET Executives David Chong – Investor Relations Bob Schoenberger – Chairman, President and Chief Executive Officer Mark Collin – Senior Vice President, Chief Financial Officer and Treasurer Tom Meissner – Senior Vice President and Chief Operating Officer Larry Brock – Chief Accounting Officer and Controller Analysts Michael Gaugler – Janney Montgomery Scott LLC Shelby Tucker – RBC Capital Markets Operator Good day, ladies and gentlemen, and welcome to the Second Quarter 2015 Unitil Earnings Conference Call. My name is [indiscernible]; I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to the Director of Finance Mr. David Chong. Please proceed sir. David Chong Good afternoon and thank you for joining us to discuss Unitil Corporation’s second quarter 2015 financial results. With me today are Bob Schoenberger, Chairman, President, and Chief Executive Officer; Mark Collin, Senior Vice President, Chief Financial Officer, and Treasurer; Tom Meissner, Senior Vice President and Chief Operating Officer; and Larry Brock, Chief Accounting Officer and Controller. We will discuss financial and other information about our second quarter on this call. As we mentioned in the press release announcing the call, we have posted that information, including a presentation to the Investor section of our website at www.unitil.com. We will refer to that information during this call. Before we start, please note that comments made on this conference call may contain statements that are commonly referred to as forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the company’s financial condition, results of operations, capital expenditures and other expenses, regulatory environment and strategy, market opportunities, and other plans and objectives. In some cases, forward-looking statements can be identified by terminologies such as may, will, should, estimate, expect or believe the negative of such terms or other comparable terminology. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties, and the company’s actual results could differ materially. Those risks and uncertainties include those listed or referred to on Slide 1 of the presentation and those detailed in the company’s filings with the Securities and Exchange Commission, including the company’s Form 10-K for the year ended December 31, 2014. Forward-looking statements speak only as of the date they are made. The company undertakes no obligation to update any forward-looking statements. With that said, I will now turn the call over to Bob. Bob Schoenberger Thanks, David. Thanks for joining us today. If you turn to Slide 4 of our presentation, today we announced net income of $1.7 million or $0.12 per share, for the second quarter of 2015, an increase of $0.6 million or $0.04 per share compared to the second quarter of 2014. For the first half of this year, we reported net income of $15.3 million or $1.10 per share, an increase of $1.6 million or 12% and a $0.11 per share compared to prior year. 12% increase in net income for the first half of this year was Primarily driven by customer growth in higher natural gas sales. Our regulatory agenda and growing investment in our gas and electric distribution systems will continue to drive our earnings in the years ahead. Turning to Slide 5, the graph shows that our financial results have increased sharply over the past few years, with net income growing at an annual rate of 16% since 2012. Our financial results have been driven by the strong demand for natural gas in the areas we serve. Our growing investment in our gas and electric utility distribution systems and the successful execution of our regulatory strategy. As part of our regulatory strategy, in the second quarter we filed gas and electric phase rate cases for our Massachusetts Utility requesting a total of $6.8 million in rate relief. Mark will discuss these rate cases in more detail later in the presentation. Moving to Slide 6, natural gas remains a cost competitive fuel choice and offers all our customers the best choice of value efficiency and convenience of a competing fuel such as oil and propane. As a result of historical and economic factors somewhat unique to Northern New England which I’ve discussed many times in the past, we currently have a customer penetration rate of only 60% on our existing distribution system. We are working hard to change that, the relatively low customer penetration on our existing system provides us low cost opportunities to add customers along and near distribution means. Additionally, we recently filed a regulatory mechanism in Maine requesting approval to replace upfront customer contributions often required to expand into new areas with the rate surcharge mechanism for a period of time certain targeted areas. We expect that offering customers the ability to pay a rate surcharge rather than an upfront payment will help facilitate customer conversions and will help us target new areas of geographic expansion beyond our existing distribution system. Slide 7 highlights the growth we have achieved on our natural gas business. Our gas customer base grew 3% in 2014. In addition, natural gas unit sales have grown over 4% annually on a weather-normalized basis since 2012 which is right in line with our goal to grow our gas and sales between 4% to 6% annually. Moving on to Slide 8, our utility rate base continues to grow as we add new customers and improve both the gas and electric distribution systems. Over the past three years, our gas rate base has grown at an annual rate of 10%, driven by customer additions and our infrastructure replacement and improvement programs. Our electric rate base has grown 4% over the past three years. We believe that rate base will continue to grow around these levels for the foreseeable future. Finally, Slide 9 highlights our return on equity which has steadily increased over the past three years, reflecting strong customer and sales growth combined with constructive rate case results. Our regulatory strategy has helped us to achieve approximately $16 million in rate reliefs since 2010, which equates to a 50% increase in sales margin. This rate relief has enabled our earnings to match and exceed our rapid rate base growth and provides us with the opportunity to earn within our allowed rate of return. Now I’ll turn the call over to Mark to discuss our financial results and our current rate case proceedings. Mark? Mark Collin Thanks Bob. And good afternoon everyone. Turning to the next Slide, Slide 10 natural gas utility sales margins were $18.1 million and $56.9 million for the second quarter and six month periods reflecting increases of $1.8 million and $4.1 million or up 8% for the year so far compared to prior year. Natural gas sales margins was positively affected by higher therm unit sales, a growing customer base and higher distribution rates. Therm sales of natural gas increased 4% in the first six months of 2015 compared to 2014 driven by colder winter weather and new customer additions. There were 3% more heating degree days in the first six months of 2015 compared to the same period in 2014, which we estimate positively impacted earnings per share by about $0.02. Compared to normal, there were 13% more heating degree days in the first six months of 2015, which we estimated positively impacted earnings per share by about $0.09. Excluding the effect of weather on sales, weather normalized gas therm sales are estimated to be up 3% for the first half of this year compared to last year. Turning to Slide 11, this highlights our electric utility sales margin. Electric sales margins were $20.5 million and $41.7 million for the second quarter and six months period reflecting increases of $1.6 million and $3.6 million or up 9% for the year so far compared to prior year. Electric sales margins reflects higher electric base distribution rates and slightly higher sales volumes. Electric kilowatt hour sales increased slightly by 2.2% compared to the first half of 2014. Turning to Slide 12, Usource, the Company’s non-regulated energy brokering business, recorded revenues of $3.1 million for the six months period, an increase of $0.1 million compared to the same period of 2014. Operation and Maintenance expenses increased $1 million and $0.8 million for the second quarter and six months period compared to prior year. The year-to-date change in O&M expenses reflects higher compensation and benefit costs of $1.2 million and higher all other utility O&M costs, net of $0.3 million. This was partially offset by lower professional fees of $0.7 million in the current period. Depreciation and amortization increased $1.1 million and $2.3 million for the second quarter and the six months period compared to prior year for amortization cost. Taxes other than income taxes decreased $0.4 million and $0.1 million for the second quarter and the six month period compared to prior year reflecting lower local property tax expenses. Net interest expense increased $0.7 million and $1.3 million for the second quarter and six months periods reflecting higher levels of long-term debt and lower interest income on regulatory assets. Now, turning to Slide 13, we have provided an update on our financial results at the utility operating company level. The chart shows the trailing 12 months actual earned return on equity in each of our regulatory jurisdictions. Unitil on a consolidated basis earned a total return on equity of 9.6% in the last 12 months ended June 30, 2015. Also, as we have discussed in the past and as shown in the table in the right, we have long-term capital cost trackers in place to recover a significant portion of current and future capital spending, which we expect will help to maintain the level of earnings across our subsidiaries. Slide 14 highlights our recent electric and gas rate case filings in Massachusetts for our Fitchburg subsidiary. Both filings will reflect a 2014 test year a capital structure with a 53% equity ratio and a 10.25% requested return on equity. Electric division filing reflects a rate base of $57.3 million, the revenue deficiency of $3.8 million includes a multiyear rate plan for recovery of future capital additions. Gas division filing reflects the rate base of $57.5 million and our revenue efficiency of $3 million. We currently expect an order from the Massachusetts Department of Public Utilities on these rate cases in the second quarter of 2016. Lastly, Slide 15 details a settlement agreement which we recently filed the Federal Energy Regulatory Commission in June of 2015 for grant state, our Interstate Transmission Pipeline, the settlement extends a long-term rate plan currently in place and provides for an additional three years of a capital tracker mechanism to recover spending on several major projects. The first rate adjustment of $0.4 million is expected to become effective on August 1, 2015. And future rate adjustments in the range of $0.3 million to $0.4 million are expected to take place in 2016 and 2017. The settlement agreement is subject to approval from the FERC which is expected in the third quarter of 2015. Now this concludes our summary of our financial performance for the period. I will turn the call over to the operator who will coordinate questions. Thank you. Question-and-Answer Session Operator [Operator Instructions] Your first question comes from Michael Gaugler with Janney. Please proceed. Michael Gaugler Well good morning everyone. Robert Schoenberger Hi Mike. Mark Collin Hi Mike. Michael Gaugler Just one question on gas conversions, we’ve seen the price of oil come down, prices of other fuels come down as well, just wondering if you are seeing any slowdown in demand for conversions given that pullback in energy prices. Mark Collin Yeah, Mike. I think it’s more a question of timing. I myself just converted to natural gas so that gives any idea I saw the economy value of doing it. We actually still see strong growth, I would say it’s probably a little bit off we saw a couple years ago. But I think that’s temporary because people tell us, these are the customers, what they are telling us at least, they see it as a temporary phenomenon and they expect in long-term and natural gas will be a better buy than home heating oil. So we expect to see that growth continue and given our new approach to serving unserved areas, we’re getting a lot of strong support from town officials saying [indiscernible], the benefit of natural gas long term. Michael Gaugler Okay. That’s all I had. Congrats on a really nice quarter. Mark Collin Thanks Mike. Robert Schoenberger Thank you. Operator Your next question comes from Shelby Tucker with RBC Capital Markets. Please proceed. Shelby Tucker Good afternoon. Just a quick question on gas demand for the second quarter, I know with weather residential demand was down 3.4 conversions stood down 0.8. If would weather normalize, do you have a sense where the sales growth would have been for both segments. Robert Schoenberger Second quarter is a colder period, Shelby, so there is not a lot of in weather, well, plays a role is relatively minor impact on sales during the period. I think what we talked about from financial perspective; we think weather contributed about $0.02 to earnings per share in the period. Shelby Tucker Got it. Okay. Thank you. End of Q&A Operator [Operator Instructions] There are no further questions. Ladies and gentlemen, this concludes today’s call. Thank you for your participation. You may now disconnect. Have a great day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. 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Downside Protection: The Changing Methods And Mindset Of Investment Research

The analysis of intelligence shortcomings from the events of 9/11 reveals some important lessons for investment research. Trends in technology are vastly increasing the amount of information that is publicly available which is decreasing the value of “secrets”. At the same time, sharing information and “connecting the dots” is proving to be of more value in understanding the landscape. While times of low volatility can increase complacency, a primary goal of research should always be to protect against catastrophic losses. Conducting the best research is an ongoing challenge for even the most organized investment firms with the most resources. For individuals and small institutions, however, it can be frustrating and outright overwhelming. Fortunately, there is a useful analogue with the intelligence community that provides instructive lessons on how to approach the task. Certainly parallels exist. In both investment research and intelligence efforts, masses of information flooding in need to evaluated. In both efforts, information and themes need to be prioritized such that the most important receive the most attention. In both efforts, the possibilities of very significant, non-linear events also exist. One silver lining resulting from the events of 9/11 was that we also learned a lot about what not to do when conducting research – and these lessons apply to the financial crashes of 2000 and 2008. In the New York Times Magazine article, “Open-Source Spying” [here], Clive Thompson quickly identifies the paradox of U.S intelligence systems. According to the chief information officer for the office of the director of national intelligence at the time, “The 16 intelligence organizations of the U.S. are without peer. They are the best in the world.” The question he raises, however, is “Are they collectively the best?” In hindsight, they quite clearly were not. Closer inspection revealed all kinds of obstacles that emerged from the interrelationships of the various intelligence agencies and that prevented useful insights from being made. Unfortunately, “None of the agents knew about the existence of the other evidence. The report concluded that the agencies failed to ‘connect the dots’.” Further, some of the obstacles were structural: “If an analyst requested information from another agency, that request traveled through elaborate formal channels.” Worse, “In the past, each agency chose its own outside contractor to build customized software – creating proprietary systems, each of which stored data in totally different file formats.” While ideally any effort to increase knowledge ought to revolve around sharing information, in practice, the intelligence agencies kept information in silos. For those involved in investment research many of these issues will sound familiar. Individual excellence is lauded for many participants such as industry analysts and subject matter experts such as economists. While much of the information gathered by such experts may be very good, too often structures and incentives prevent the complete assimilation of insights. For one, the aggregation of narrowly focused expertise creates many “cracks” through which important information can fall. The bigger problem, however, is often cultural. When the ethos of “need to know” is more important than the mandate of “need to share”, assimilation will suffer. These are not the only costs of siloed and proprietary information though. In such a system, holders of unique knowledge also often hold the power to create a narrative around that knowledge. Not surprisingly, that narrative can be created partly or wholly out of self-interest and it can be extremely difficult to effectively challenge that narrative or to detect potential flaws. Indeed this is increasingly recognized as a problem at the highest levels of corporate decision making. As Ann Mule and Charles Elson point out in “A new kind of captured board” [ here ], having sufficient representation by independent directors with industry expertise is essential in preventing the board from being “captured” by the knowledge of management. While it became increasingly clear what didn’t work, it still wasn’t clear how best to resolve the primary challenge: “What the agencies needed was a way to take the thousands of disparate, unorganized pieces of intel they generate every day and somehow divine which are the most important.” To this end, the success of the internet in helping people find information proved a guiding insight. The hypothesis that, “the real power of the Internet comes from the boom in self-publishing: everyday people surging online to impart their thoughts and views,” further focused where improvements could be made. Whereas the boom in self-publishing has certainly opened a window to the world that didn’t exist before, the near ubiquity of smartphones and other connected devices has pushed that window even much further open. The consequences for research are quite meaningful. On one hand, “Top-secret information is becoming less useful than it used to be,” because so many people now have good access to what is going on all over the world. On the other, “more value can be generated by analysts sharing bits of ‘open source’ information – the nonclassified material in the broad world, like foreign newspapers, newsletters, and blogs.” One key lesson from the analysis is that the nexus of value for research is evolving and this has very significant implications for investors and investment committees. As technology is gradually eroding the value of “secrets,” it is also increasing the value of assimilating, curating, and synthesizing information. As a result, it is no longer sufficient to have individually excellent, but collectively deficient research sources and research organizations will need to adapt to this reality. A more dramatic lesson is that for many the entire mindset towards research will need to change. The overarching purpose of any research effort is to understand what is going on such that you can benefit from the landscape. In times of low volatility and complacency, it’s not surprising that many focus on incremental gains. As the events of 9/11 reveal all too clearly, however, the avoidance of catastrophic losses is also an important “benefit” of truly understanding one’s environment. Further, the avoidance of losses requires a constant and ongoing effort, regardless of whether those losses materialize or not. This applies to investment portfolios just as much as it does in real life. Many of the lessons from 9/11 have been learned and applied in the intelligence community; it’s not so clear the same has happened in regards to the financial crashes of 2000 and 2008. Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.