Electric and gas utility provider, Unitil Corporation (UTL) reported fourth-quarter 2014 earnings of 69 cents per share, edging past the Zacks Consensus Estimate by 1 cent. Quarterly earnings however declined 8.0% year over year due to increased utility operating costs.
Earnings of $1.79 per share for 2014 also surpassed the Zacks Consensus Estimate by 1 cent. 2014 earnings escalated 14% from 2013.
Revenue Update
In the fourth quarter, Unitil Corporation posted total operating revenues of $119.8 million. Quarterly revenues outpaced the Zacks Consensus Estimate by nearly 7% and also climbed 9.1% year over year. The upside came from a 13.5% rise in the company’s Electric segment sales and a 6% rise in the company’s Gas segment revenues.
In 2014, operating revenues were $425.8 million, up 16.1% from $366.9 million in 2013.
Quarterly Operational Highlights
Operation and maintenance expenses increased 6.3% and depreciation, amortization, taxes & other expenses climbed 13.2% in the quarter compared with the prior-year period.
Total electricity sales were up 1.3% year over year to 392.2 million kilowatt-hours due to a rise in commercial/industrial consumption. Residential consumption dropped marginally.
Total gas sales decreased 1.7% in fourth quarter to 52.8 million therm from 53.7 million therm a year ago. The decline was primarily due to a fall in commercial/industrial gas sales, offset to an extent by a rise in residential sales.
Financial Update
Unitil Corporation’s cash and cash equivalents as of Dec 31, 2014, were $8.4 million compared with $9.4 million as of Dec 31, 2013.
Long-term debt (less current portion) increased to $328.9 million as of Dec 31, 2014 from $284.8 million as of Dec 31, 2013.
During 2014, cash from operating activities was $84.0 million as against $96.3 million in the previous year.
The company invested $92.6 million in 2014 for Property, Plant and Equipment additions, higher than $89.5 million incurred during 2013.
Dividend Update
Unitil Corporation increased the quarterly dividend to 35 cents per share from 34.5 cents disbursed earlier. On an annualized basis, the dividend rate now stands at $1.40 per share compared with $1.38 per share earlier, an increase of 1.4%.
Peer Comparison
American Electric Power Company Inc. (AEP) reported fourth-quarter 2014 operating earnings of 48 cents per share, missing the Zacks Consensus Estimate of 52 cents by 7.7%.
NextEra Energy, Inc. (NEE) announced fourth-quarter 2014 adjusted earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.04 by just a cent.
Our Take
Hampton, NH-based Unitil Corporation reported impressive results with its earnings and revenues surpassing the Estimates for the quarter as well as the full year. Apart from higher sales, another factor that aided the company’s financials was the recently approved favorable rate case at its electric and natural gas segments.
A 5.9% increase in heating degree days in 2014 compared with 2013 and a boost in the customer count played a favorable role.
Moving forward, the utility expects to spend a total of $98 million in 2015 on growth projects including $58 million on gas projects and another $31 million on electric related projects. These investments will further help the company to replace aging infrastructure, invest in complementary growth prospects and provide reliable services to its customers.
Zacks Rank
Unitil Corporation currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Huaneng Power International, Inc. (HNP), presently sporting a Zacks Rank #1 (Strong Buy).
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