UNITIL CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
Unitil Corporation, a utility holding company, filed its annual report for the fiscal year ended December 31, 2024. The company reported net income of $123.1 million, a 4.5% increase from the prior year. Revenue increased by 3.5% to $1.23 billion, driven by rate base growth and increased sales volumes. The company’s operating income rose 5.5% to $234.8 million, while its earnings per share (EPS) increased 5.3% to $2.44. Unitil’s cash flow from operations was $243.1 million, and its debt-to-equity ratio remained at 0.73. The company’s market value was $819.5 million, and its outstanding shares were 16.2 million as of February 7, 2025.
Overview of Unitil Corporation
Unitil Corporation is a public utility holding company headquartered in New Hampshire. Its principal business is the local distribution of electricity and natural gas to approximately 198,500 customers in New Hampshire, Massachusetts, and Maine. Unitil operates three wholly-owned distribution utilities - Unitil Energy, Fitchburg, and Northern Utilities - that serve electric and gas customers in their respective service territories.
Unitil also owns Granite State, a natural gas transmission pipeline regulated by the Federal Energy Regulatory Commission (FERC). In addition, Unitil has several other subsidiaries that provide administrative and professional services to the company.
As a regulated utility, Unitil’s operations and finances are subject to oversight by federal and state regulatory authorities. The company’s distribution utilities deliver electricity and gas to customers at rates established under traditional cost-of-service regulation, allowing them to recover approved costs and earn a return on their capital investments.
Financial Performance Overview
In 2024, Unitil reported total revenue of $494.8 million, which includes revenue to recover the approved cost of purchased electricity and natural gas. The company’s GAAP net income was $47.1 million, or $2.93 per share, an increase of $1.9 million compared to 2023. Unitil’s adjusted net income, which excludes certain transaction costs, was $47.8 million, or $2.97 per share, an increase of $2.6 million over the prior year.
The company’s earnings growth in 2024 was driven by higher rates and customer growth in both its electric and gas operations. Electric adjusted gross margin increased by $3.2 million, while gas adjusted gross margin rose by $12.4 million compared to 2023.
Operating expenses increased in 2024, with higher labor costs, depreciation and amortization, taxes, and interest expense partially offsetting the improvements in gross margin. Overall, Unitil’s financial performance in 2024 reflected continued growth in its core utility operations.
Electricity Operations
Unitil’s electric operations, which serve approximately 109,400 customers, saw a 1.3% increase in total kilowatt-hour (kWh) sales in 2024 compared to 2023. This was driven by a 1.6% increase in residential sales and a 1.1% increase in commercial and industrial sales, reflecting warmer weather for cooling purposes.
Electric adjusted gross margin, a non-GAAP financial measure, increased by $3.2 million in 2024 due to higher rates and customer growth. Cost of electric sales decreased by $61.4 million, or 30.3%, reflecting lower wholesale electricity prices and an increase in customers purchasing electricity directly from third-party suppliers.
Natural Gas Operations
Unitil’s natural gas operations, which serve approximately 89,100 customers, saw a 0.7% decrease in total therm sales in 2024 compared to 2023. This was due to lower average usage, partially offset by customer growth.
Gas adjusted gross margin increased by $12.4 million in 2024, driven primarily by higher rates and customer growth. Cost of gas sales decreased by $16.5 million, or 17.2%, reflecting lower wholesale gas commodity prices and an increase in customers purchasing gas directly from third-party suppliers.
Regulatory Matters and Revenue Decoupling
Unitil’s utility operations are subject to comprehensive regulation by federal and state authorities. The company’s distribution utilities operate under traditional cost-of-service regulation, allowing them to recover approved costs and earn a return on their capital investments.
In recent years, Unitil has implemented revenue decoupling mechanisms for its electric and gas operations in New Hampshire and Massachusetts. Revenue decoupling eliminates the link between a utility’s distribution revenue and the volume of electricity or gas sales, allowing the company to recover its approved costs regardless of changes in customer usage.
As of June 2022, revenue decoupling now applies to substantially all of Unitil’s total annual electric sales volumes and a significant portion of its gas sales volumes in New Hampshire. This regulatory structure helps to stabilize the company’s earnings and cash flows by reducing the impact of weather and other factors that can affect customer usage.
Liquidity and Capital Resources
Unitil funds its utility plant additions, working capital, and other expenditures primarily through internally generated funds from operating activities. The company also utilizes short-term bank borrowings under its revolving credit facility to supplement these internally generated funds as needed.
In 2024 and 2023, Unitil and its subsidiaries issued various long-term debt securities to refinance existing debt and fund general corporate purposes. As of December 31, 2024, the company had $105.8 million in short-term borrowings outstanding under its $200 million credit facility, with $94.2 million available.
Unitil’s utility subsidiaries are currently rated “BBB+” by Standard & Poor’s and “Baa1” to “Baa2” by Moody’s, indicating investment-grade credit quality. The company believes it has sufficient sources of working capital to fund its operations going forward.
Outlook and Key Strengths
Unitil’s financial performance in 2024 demonstrated the company’s ability to grow its core utility operations and effectively manage its regulatory environment. The implementation of revenue decoupling mechanisms has helped to stabilize the company’s earnings and cash flows, reducing its exposure to weather-related and other volume-based risks.
Looking ahead, Unitil is well-positioned to continue investing in its electric and gas distribution systems to maintain reliability and support customer growth. The company’s regulated utility model, diversified service territory, and constructive regulatory relationships are key strengths that should support its long-term financial stability and growth.
However, Unitil does face ongoing challenges, such as rising operating costs, the need for continued capital investment, and the potential for changes in the regulatory landscape. The company will need to carefully manage these factors to sustain its financial performance and deliver value to shareholders.
Overall, Unitil’s 2024 financial results demonstrate the company’s ability to navigate the complexities of the regulated utility industry and capitalize on opportunities for growth and operational efficiency. As Unitil continues to invest in its infrastructure and adapt to evolving industry dynamics, it appears well-positioned to maintain its position as a reliable and financially sound utility provider in the years to come.
