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Edited Transcript of UTL.N earnings conference call or presentation 29-Oct-20 6:00pm GMT

·26 min read

Q3 2020 Unitil Corp Earnings Call HAMPTON Jan 8, 2021 (Thomson StreetEvents) -- Edited Transcript of Unitil Corp earnings conference call or presentation Thursday, October 29, 2020 at 6:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Robert B. Hevert Unitil Corporation - Senior VP, CFO & Treasurer * Thomas P. Meissner Unitil Corporation - Chairman, President & CEO * Todd R. Diggins Unitil Corporation - IR Officer ================================================================================ Conference Call Participants ================================================================================ * Harris Newell Pollans BofA Merrill Lynch, Research Division - Research Associate * Shelby Gardner Tucker RBC Capital Markets, Research Division - MD & Senior Equity Research Analyst * Wayne J. Archambo Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Unitil Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Mr. Todd Diggins, you may begin, sir. -------------------------------------------------------------------------------- Todd R. Diggins, Unitil Corporation - IR Officer [2] -------------------------------------------------------------------------------- Good afternoon, and thank you for joining us to discuss Unitil Corporation's third quarter 2020 financial results. Speaking on the call today will be Tom Meissner, Chairman, President and Chief Executive Officer; Bob Hevert, Senior Vice President, Chief Financial Officer and Treasurer. We will discuss financial and other information about our third quarter results on this call. As we mentioned in the press release announcing the call, we have posted that information, including your presentation to the Investors section of our website at www.unitil.com. We will refer to that information during this call. On Slide 2, the comments made today about future operating results or future events are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from those predicted. Statements made on this call should be considered together with cautionary statements and other information contained in our most recent annual report on Form 10-K and other documents we have filed with or furnished to the Securities and Exchange Commission. Forward-looking statements speak only as of today and we assume no duty to update them. This presentation contains non-GAAP measures. The accompanying supplemental information more fully describes these non-GAAP measures and includes a reconciliation to the nearest GAAP measure. The company believes these non-GAAP measures are useful in evaluating its performance. Turning to Slide 4. We provide an outline for topics to be covered in today's call. Tom will begin the business and strategy update, and Bob will cover our financial and regulatory update, and then Tom will wrap things up with a quick summary before we turn the call over to the operator for questions. And with that, I will now turn the call over to Chairman, President and CEO, Tom Meissner. -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [3] -------------------------------------------------------------------------------- Thank you, Todd. Good afternoon, everyone. Beginning on Slide 5. Today, we announced net income of $0.3 million or $0.02 per share for the third quarter of 2020. The company estimates that the ongoing COVID-19 pandemic unfavorably impacted third quarter net income by approximately $0.01 per share. Through the first 3 quarters of 2020, net income is $18.6 million or $1.25 per share. For comparison purposes, recall that in the first quarter of 2019, the company recognized a onetime net gain of $9.8 million, or $0.66 per share, on the company's divestiture of its nonregulated business subsidiary, Usource. Adjusting for this onetime gain, net income is down about $4.4 million or $0.29 per share compared to 2019. The year-to-date decrease in earnings is primarily due to the warmer than normal winter weather in Q1, which unfavorably affected net income by approximately $3.1 million or $0.20 per share. In addition to the warmer winter weather, we estimate that net income has been unfavorably impacted by approximately $0.04 per share due to the COVID-19 pandemic. Turning to Slide 6. And similar to last quarter, I'd like to recap the company's response to the COVID-19 pandemic. Our highest priority continues to be the safety of our customers and of our employees. In response to the ongoing pandemic, we implemented our crisis response plan to help execute preventive and proactive measures during which are during this unprecedented time and have also enacted a phased reopening plan. The company is currently in its limited reopening phase and is still requiring all office employees to work remotely wherever possible. The company also employed a large number of field workers to construct and maintain its energy infrastructure. These workers have adopted new policies and personal protective equipment to ensure the health and well-being of themselves and of our customers. Operationally, the company has continued to provide safe and reliable service throughout the pandemic. Employees entering customers' homes are being routinely tested to ensure the safety of both our customers and our employees. We are thankful that at this point, there are no active COVID-19 cases among our employees. We quickly adapted to social distancing and other recommended guidelines while ensuring operational continuity and our workforce has seamlessly transitioned to work from home where appropriate. Our employees have return to this extraordinary challenge while continuing to provide exceptional customer service. In fact, after tropical storm Isaias, we were able to restore power to all of our customers within a 24-hour period. An example of our best-in-class storm restoration system and our ability to adapt in order to serve our communities safely and reliably. We've also been able to provide mutual aid to support other utilities in the region and their restoration efforts 7 times this year. I would also briefly point out that the states where we operate are managing the pandemic relatively well in comparison to other regions of the country. The positive test rates in each of our states rank in the lowest 10 of all 50 states. And less than half of the national average. On Slide 7, we're pleased to announce that our 2020 corporate sustainability and responsibility report was recently issued on October 22. This report expands on the inaugural corporate responsibility report released last year and outlines our vision for sustainability and explains how our business strategies will align with the environmental, social and economic expectations of our customers and communities. This report also -- the reports to be published in the future will also define our objectives and strategies and report on key metrics to track our progress and illustrate the benefits to stakeholders. Sustainability is central to our mission and vision, the interactive report can be found on our website at unitil.com. Turning to Slide 8. Our sustainability goals primarily fall under 3 categories. First, we are focused on advancing the grid. The need to reduce carbon emissions has driven a fundamental transformation within the energy sector, as customers adopt new technologies and as clean renewable energy resources are increasingly distributed across the electricity delivery system, the fundamental architecture of the electric grid must advance. We are actively investing in 5 key areas that will support our objective of advancing the electric grid and transforming the customer experience. This includes advanced metering, grid intelligence, distributed energy, customer services and innovative rate design. These initiatives will provide customers with greater control and visibility into their energy use, enabling and will enable distributed energy resources, access to the system and advance the system security, safety and reliability. The company also believes that natural gas remains key to a sustainable future as a cleaner and more affordable option for our customers. We estimate that the impact over the last 10 years from our customers choosing natural gas rather than home heating oil has had the impact of taking roughly 60,000 cars off the road. Nearly 2/3 of main households still rely on fuel oil as their primary energy source for home heating, a larger proportion than in any other state in the United States. In New Hampshire, more than 2/5 of households rely on fuel oil, the second highest proportion of the nation behind Maine. This unusually high penetration of fuel oil presents significant opportunities to reduce emissions through continued customer conversions to natural gas. As we continue to expand the availability of natural gas to more customers, we also will continue to replace outdated infrastructure and modernize our gas system. As a result, we decreased our fugitive emissions from natural gas distribution by 47 metric tons over the last 2 years, lowering our total generation of fugitive greenhouse gas emissions by 9% in 2019 when compared to 2017. We also continue to look for opportunities to add renewable natural gas to our supply portfolio. In Q3 of this year, we issued a request for expressions of interest to several parties to identify sources of existing or planned RNG resources. We will continue to evaluate the viability of adding RNG into our supply. Another area central to sustainability is creating a sustainable future through our people. Finding and retaining quality, highly motivated employees is critical to our sustainability over the long term. We are also committed to providing a safe and healthy working environment to our employees and our contractors and the public. In fact, our safety metrics place us in the top 1/3 of our industry peers and have continued to improve over time. Not only is it important to keep employees safe in the field, but also to ensure that they are respected in the workplace. At Unitil, we strive to be an employer of choice for everyone regardless of race, religion, color, gender or sexual orientation by maintaining and accepting, respectful and nondiscriminatory workplace where people are encouraged to bring their unique perspectives to the table. We believe the framework we've established from employee relations has been successful as backed by a recent employee survey where 90% of our employees report being proud to work for Unitil. Our goal is to be the most technologically advanced utility in the region or the utility of the future. Our vision and mission have grounded us during this historically uncertain time and will guide us to a clean and sustainable energy future as we provide energy for life. Turning to Slide 9. As I mentioned on last quarter's call, our investment forecast still has not changed as a result of the COVID pandemic. In fact, compared to the prior year, we have increased our capital investment by more than 20%. We anticipate continuing to realize strong rate base growth, given our broad investment opportunities and advancing the grid and supporting and modernizing our gas distribution infrastructure. To provide one example where we are facilitating the integration of distributed energy resources and overall system efficiency. We are installing a 2-megawatt utility-scale battery storage system in our Massachusetts service area. This energy storage system has the ability to serve over 1,300 homes for over 2 hours and is designed to reduce peak loading on the substation equipment. This project has a capacity representing over 2% of our system peak in Massachusetts and offers a solution to advanced grid operations control cost variability and aid in the overall system reliability as we support renewable energy solutions. With that, I'll now turn it over to Bob. -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [4] -------------------------------------------------------------------------------- Thank you, Tom, and good afternoon, everyone. I'll begin with the sales and margin discussion on Slide 10. Year-to-date 2020, our electric gross margin was $70 million, a decrease of $0.6 million compared to 2019. The decrease in electric margin reflects lower C&I demand sales related to the economic slowdown caused by the COVID-19 pandemic. Lower average usage per customer associated with energy efficiency and warmer winter weather. We estimate the COVID-19 pandemic unfavorably affected electric margin by approximately $0.7 million. Through the first 9 months of 2020, total electric kilowatt hour sales increased 1.2% relative to 2019. Residential sales increased 8.2% primarily reflecting stay at home orders and continuing remote work, along with warmer summer weather relative to the prior year. C&I sales decreased 3.6%, reflecting lower usage due to the COVID-19 pandemic. Moving to Slide 11. For the first 9 months of 2020, our gross gas margin was $83.3 million, a decrease of $2.2 million over 2019. That decrease was driven principally by the historically warm winter weather in the first quarter, which we have discussed in the past. The company estimates that year-to-date gas margin was lower by $3.2 million due to warmer weather. We also estimate that the COVID-19 pandemic unfavorably affected gas margin by $1.3 million due to lower commercial and industrial usage. Those unfavorable variances were partially offset by higher distribution rates and customer growth of $2.3 million. Through the first 9 months of 2020 natural gas therm sales decreased 7.1% compared to 2019. We attribute the decline in gas sales to the historically warm winter weather and the COVID-19 pandemic. The company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 1.9% year-over-year. I also note, we currently are serving 2.9% more gas customers than in the same time in 2019, illustrating our growing customer base. Moving on to Slide 12, we provide an earnings bridge analysis comparing 2020 results to 2019 for the 9 months period ending September 30. As we've provided in the past, this layout is slightly different than the Form 10-Q as we isolate the effect of the Usource divestiture and related revenues and expenses. In the supplemental presentation, we have provided a reconciliation to the statement of earnings provided in the 10-Q. As I noted, 2020 year-to-date gross margin -- excuse me, gross sales margin is lower than 2019 by $2.8 million. Core operation and maintenance expenses decreased by $0.9 million compared to the same period in 2019. This decrease primarily is due to lower employee benefit costs of $1.2 million as well as lower maintenance expense of $0.3 million, partially offset by higher bad debt expense of $0.4 million and higher professional fees of $0.2 million. Depreciation and amortization was higher by $1.7 million, reflecting higher levels of utility plant and service. Taxes other than income taxes increased by $0.9 million, reflecting property taxes associated with higher levels of net plant and service and a nonrecurring tax abatement realized in 2019 of $0.6 million, that increase was partially offset by $0.6 million of payroll credits realized in the third quarter associated with the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act. Interest expense decreased by $0.2 million, reflecting lower interest rates on short-term debt. Other expense increased by $0.4 million due to higher retirement benefit costs. Next, we've isolated the full Usource effect of $10.3 million, which was realized in 2019. This includes the after-tax gain on the divestiture of $9.8 million and $0.5 million, reflecting the net of revenues and expenses realized through Usource operations in 2019. Lastly, income taxes decreased $0.8 million, reflecting lower pretax earnings in the period. Next, on Slide 13, we summarize the effect of the COVID-19 pandemic. We are closely monitoring the pandemic and any potential effect on the company's financial health. As Tom mentioned earlier, we estimate that the COVID-19 pandemic affected earnings per share by $0.01 in the quarter, bringing the year-to-date effect to $0.04 per share. The combined effect on gas and electric sales margin was $0.8 million in the third quarter of 2020 and $2 million year-to-date. The company has been able to largely offset the decline in revenue with lower expenses. Although O&M expenses in the third quarter were minimal. Year-to-date O&M expenses have been favorable by $0.7 million. That favorable variance was driven principally by lower health insurance claims, slightly offset by higher pandemic costs related to PPE supplies and cleaning expenses. As noted earlier, the company was able to lower taxes other than income taxes by $0.6 million by recognizing payroll tax credits associated with the CARES Act. To help stakeholders gauge the potential effect of COVID-19 pandemic on sales margin, the company has provided sensitivities between usage and margin for the fourth quarter of 2020. More detailed information about the status of late fee suspension, shut off moratoriums can be found in the appendix of the supplemental presentation. Now turning to Slide 14. In the third quarter, we received proceeds of $95 million of long-term debt. The debt was placed at our regulated subsidiaries and carries an average interest rate of 3.72% with a 20-year tenor. The proceeds were used to refinance existing short-term debt and to better match the long-term nature of our utility plant assets. As a result of the financing, we have liquidity of about $161 million, enabling the company to continue executing on our long-term plan. On Slide 15, we are pleased to announce that our gas transmission pipeline, Granite State Gas, recently filed an uncontested rate settlement with the FERC providing for an annual revenue increase of $1.3 million, with rates to become effective in the fourth quarter of this year. We reached that settlement with the New Hampshire and Maine state regulators and agencies. The settlement includes a 3-year capital tracking mechanism that will accelerate cost recovery for investments made after the test year. The settlement illustrates our healthy and productive relationship with state agencies and regulators. Turning to Slide 16. Our regulatory outlook in 2021 includes the planned filing of base rate cases in New Hampshire for both Unitil Energy, our electric distribution utility, and Northern Utilities, our natural gas utility. We plan to file decoupling mechanisms in both cases. If those mechanisms are approved, the percentage of our decoupled sales to total sales would increase from approximately 25% to 75%, and over 80% of our meters would be under decoupled rate structures. I'll now turn it back to Tom. -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [5] -------------------------------------------------------------------------------- Great. Turning to Slide 17. We believe that our long-term capital investment goals remain intact with ample investment opportunities in modernizing and expanding our utility system. We believe we are well positioned to continue executing our growth strategies, while pursuing our sustainability goals, all while maintaining excellent service to customers throughout these unprecedented times. Lastly, we expect to provide any updates to our capital spending plan during our Q4 earnings call. -------------------------------------------------------------------------------- Todd R. Diggins, Unitil Corporation - IR Officer [6] -------------------------------------------------------------------------------- Great. Thanks, Tom. And with that, thank you for attending today's call. I will now turn the call over to the operator, who will coordinate questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Harry Pollans with Bank of America. (Operator Instructions) It appears we do not have any further questions in queue. Our next question comes from Shelby Tucker with RBC Capital Markets. -------------------------------------------------------------------------------- Shelby Gardner Tucker, RBC Capital Markets, Research Division - MD & Senior Equity Research Analyst [2] -------------------------------------------------------------------------------- A quick question about your results. Your electric volumes were up, gross margins were down for the quarter. I was wondering if some of that could -- might have also come from decoupling. So if you could maybe just go through the government mechanism, how it works, particularly between residential and C&I? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [3] -------------------------------------------------------------------------------- Shelby, this is Bob Hevert. And yes, we do attribute a portion of that to decoupling the fact that the volumes are up in margins, not the decoupling mechanism is -- does what it's intended to do, of course, which is to ensure that revenues are not affected by volumes. It is a full revenue per customer type structure. So we were not surprised to see this type of result. When we looked at the units and then we looked at margin. But you're right, we do attribute a portion of the disconnects between margins and volumes to decoupling. -------------------------------------------------------------------------------- Shelby Gardner Tucker, RBC Capital Markets, Research Division - MD & Senior Equity Research Analyst [4] -------------------------------------------------------------------------------- And is there a separate treatment between residential and C&I? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [5] -------------------------------------------------------------------------------- No, there's not. We would attribute effectively the same -- excuse me, the same effect to both. -------------------------------------------------------------------------------- Shelby Gardner Tucker, RBC Capital Markets, Research Division - MD & Senior Equity Research Analyst [6] -------------------------------------------------------------------------------- Okay. Because actually, your overall volumes were -- if you take the 2 together, we're up. And now we have thought that the gross margin would have been somewhat up to mirror that? I guess... -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [7] -------------------------------------------------------------------------------- We -- well, we -- correct. And partially, that was due to decoupling, partially, it was due to the result -- excuse me, to a decrease in demand volumes, which offset some of the increase in unit volumes. So the decrease in demand volumes, the effect of decoupling, to the some extent, the loss of fee revenues, we think, can be attributed to the difference between increase in volumes and the decrease in margins. -------------------------------------------------------------------------------- Shelby Gardner Tucker, RBC Capital Markets, Research Division - MD & Senior Equity Research Analyst [8] -------------------------------------------------------------------------------- Got it. And then as you look at decoupling in New Hampshire, would that decoupling mechanism be similar to what you have in Massachusetts? Or is it somewhat different? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [9] -------------------------------------------------------------------------------- No, we would look for it to be fundamentally the same, although we do not yet have the structure actually finalized. In principle, it would be the same. We would be looking for a revenue per customer decoupling structure, which would be sure that the revenue requirement is filed per customer would be [Medicare] So fundamentally, the same. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- Next question comes from Harry Pollans with Bank of America. -------------------------------------------------------------------------------- Harris Newell Pollans, BofA Merrill Lynch, Research Division - Research Associate [11] -------------------------------------------------------------------------------- Can you guys hear me? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [12] -------------------------------------------------------------------------------- Yes. Go ahead, Harry. -------------------------------------------------------------------------------- Harris Newell Pollans, BofA Merrill Lynch, Research Division - Research Associate [13] -------------------------------------------------------------------------------- Sorry about that. I'm not sure what happened. Yes. So just -- you guys talked about advancing the grid towards the beginning of the presentation. I was wondering if you could elaborate more on the electrification opportunities associated with that advancement of the grid and across your jurisdictions and what sort of your utilities, you think you would see the most opportunity in terms of electrification? -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [14] -------------------------------------------------------------------------------- Sure. This is Tom Meissner. In regards to the last part of your question, probably the greatest opportunity would be in New Hampshire that we're currently seeing. And in terms of the opportunity itself, we do expect to advance some proposals to help advance charging infrastructure in the state. But I think the real opportunity is going to be the long-term opportunity represented by the significant load represented in electrifying what's now fueled by gasoline. So we're currently incorporating the expected increase in demand and sales associated with electric vehicles into our forward-looking demand forecast. And over time, I would expect that's going to drive increased investment as we have to prepare for the increased load we will see on our system over time. -------------------------------------------------------------------------------- Harris Newell Pollans, BofA Merrill Lynch, Research Division - Research Associate [15] -------------------------------------------------------------------------------- Got it. That's helpful. That makes sense. And then 1 other one on similar subject, but on the gas side, you talked about an RNG, RFP that you put out. I was wondering what the size of that RFP is? And would this be incremental to your current capital program? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [16] -------------------------------------------------------------------------------- Harry, this is Bob Hevert. When we're looking at that RFP, it really is for supplies. And I -- just to be clear, it's a request for expressions of interest, so it's fairly preliminary. But what we're looking for -- yes, no, that's okay. What we're looking for here is expressions of people who may be able to provide renewable natural gas for our supply portfolio, principally in Maine to begin with. So at this point, it's not a capital issue. It's more a supply issue, but we are beginning the steps of really learning how to integrate renewable natural gas into our supply portfolio to really green the supply. -------------------------------------------------------------------------------- Harris Newell Pollans, BofA Merrill Lynch, Research Division - Research Associate [17] -------------------------------------------------------------------------------- And I guess a follow-up on that, would you be interested in potentially investing in the associated infrastructure and facilities that lend themselves to RNG, like anaerobic digesters on that front, kind of thing? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [18] -------------------------------------------------------------------------------- I mean I think we certainly would look at any investment that makes sense to us. So as we go through the process of evaluating proposals that we see pursuant to the RFEI that we set out. And as we think and learn more about it, we would always keep those options open. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- And our next question comes from Wayne Archambo with Monarch Partners. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [20] -------------------------------------------------------------------------------- Do you have any sense of any in-migration to New Hampshire or Maine, getting really more material about people leaving New York, going up to Maine, just more affordable, quality of life, blah, blah, blah, do you have any sense of that the in-migration of those 2 states? -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [21] -------------------------------------------------------------------------------- Wayne, this is Tom. To that point, yes, you're quite right. We've seen a lot of evidence of that. Over time, I think we've seen intense competition for existing residential housing inventory. There's been reports of people making above asking offer site unseen. And I can actually turn it over for a minute to our new CFO, Bob Hevert, who found himself in the position of having to find housing up here when he accepted the job here at Unitil. -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [22] -------------------------------------------------------------------------------- Yes, Wayne, it was not easy. It's a very, very robust market here there. We found ourselves competing with a fair number of people for even just apartments in the Hampton Portsmouth area. So I would agree with you, just based on my own experience, there does seem to be quite a bit of demand for housing in this area. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [23] -------------------------------------------------------------------------------- Any sense in Maine at all? -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [24] -------------------------------------------------------------------------------- Anecdotally, I think it's a similar situation in Maine to what we're seeing in New Hampshire. And a lot of it seems to be driven by people who are now working remotely during the pandemic, and are essentially getting out of the hotspot areas in the urban areas and seeking a different place to live, at least during the pandemic, we'll see how it translates over time after this pandemic is over. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [25] -------------------------------------------------------------------------------- And then looking at your stock today, and I've owned the stock for quite a few years. The XLU, which is the utility ETF is down 1% in the last year. Your stock is down 42%, pretty much where it was at the beginning of 2016. So with this massive underperformance, do you have any -- you or the Board have any inclination to initiate a buyback or anything to enhance shareholder value here? -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [26] -------------------------------------------------------------------------------- Well, clearly, our -- the underperformance of our stock is certainly something that we're all very aware of and we're focused very much on in terms of trying to return to where we were previously. I guess, I would say that fundamentally, our outlook, we see is really unchanged. So we're really looking forward in terms of our fundamental outlook our opportunities for investment, our rate base growth and opportunities to improve our earned returns. And based on that, probably a stock buyback would be something that we couldn't consider because we would not then be able to fund our investment program. So -- but we are looking at all options to try to address the uncertainty and the concern in the market that may be driving the current valuation. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [27] -------------------------------------------------------------------------------- You certainly have quite a bit of debt capacity on the balance sheet if I assume? -------------------------------------------------------------------------------- Robert B. Hevert, Unitil Corporation - Senior VP, CFO & Treasurer [28] -------------------------------------------------------------------------------- We did -- yes. We do. We'll be careful, Wayne, in terms of how we capitalize the company going forward, but I would agree, we've got some capacity. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [29] -------------------------------------------------------------------------------- And I would just think what the cost of debt being at the 60-year lows, and consolidation still continues in the industry, public service in Mexico was taken out in the last couple of weeks. And as you know, Central Vermont was acquired by the Canadian company back 7, 8 -- 6, 7 years ago. So I think you might be one of the last public utilities left in New England. So again, we got ultimately looking for value creation here and seeing your stock is where it was 4.5 years ago and significantly lagging the utility group, it's certainly -- it's certainly caused my concern as a long-term shareholder. -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [30] -------------------------------------------------------------------------------- I understand, and I think it's a cause for concern for all of us. -------------------------------------------------------------------------------- Wayne J. Archambo, Monarch Partners Asset Management, LLC - General Partner, Portfolio Manager & Equity Analyst [31] -------------------------------------------------------------------------------- Last question. Have any of you been buying stock personally? Has there been any insider buying at all of these levels? Or... -------------------------------------------------------------------------------- Thomas P. Meissner, Unitil Corporation - Chairman, President & CEO [32] -------------------------------------------------------------------------------- Not that I'm currently aware of, Wayne. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- Thank you. And I'm showing no further questions in the queue at this time. Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.