Unitil Q1 2025 slides: Acquisitions to accelerate growth as earnings rise

Unitil Corporation (NYSE:UTL) reported modest earnings growth for the first quarter of 2025 while unveiling an aggressive acquisition strategy aimed at diversifying its utility portfolio and accelerating its long-term growth trajectory, according to the company’s Q1 financial results presentation released on May 7, 2025.

Executive Summary

Unitil reported net income of $27.5 million ($1.69 per share) for Q1 2025, representing a slight increase of $0.3 million compared to the same period in 2024. Adjusted net income showed more substantial growth at $28.4 million ($1.74 per share), up $1.2 million from the previous year.

The company’s presentation highlighted a series of strategic acquisitions that management believes will accelerate growth beyond its organic targets. These include the completed acquisition of Bangor Natural Gas in January 2025, the announced acquisition of Maine Natural Gas in April 2025, and the newly announced acquisition of three water utilities (Aquarion Water in Massachusetts and New Hampshire, and Abenaki Water in New Hampshire).

As shown in the following financial summary slide, these strategic moves are expected to support earnings growth toward the upper end of Unitil’s long-term guidance range:

Quarterly Performance Highlights

Unitil’s first quarter results showed modest improvement over the prior year, with adjusted earnings per share increasing from $1.69 to $1.74. The company’s electric operations showed positive momentum with adjusted gross margin increasing by 1.5%, weather-normalized unit sales growing by 3.2%, and customer count rising by 0.9%.

The company noted that 100% of electric customers are now on decoupled rate plans, which helps stabilize revenue despite weather fluctuations. Commercial and industrial sales showed particular strength, increasing by 2.5% on a weather-normalized basis.

The following slide details the volume and margin performance for the quarter:

Strategic Acquisitions

The centerpiece of Unitil’s presentation was its acquisition strategy, particularly its expansion into the Maine natural gas market and diversification into water utilities. The company completed the acquisition of Bangor Natural Gas (BNG) in January 2025 for approximately $71 million and announced the acquisition of Maine Natural Gas (MNG) in April 2025 for approximately $86 million.

These gas utility acquisitions will add approximately 15,000 new natural gas customers in attractive service territories with projected annual customer growth of 4%-5%. The company cited the significant price advantage of natural gas ($17 per MMBtu) compared to fuel oil ($26 per MMBtu) and propane ($40 per MMBtu) as a driver for continued customer conversions.

The following slide details the Maine gas acquisitions and their strategic fit:

In a significant move to diversify its utility portfolio, Unitil announced on May 6, 2025, the acquisition of Aquarion Water’s Massachusetts and New Hampshire operations, along with Abenaki Water in New Hampshire. The $100 million enterprise value transaction (including $30 million in debt assumption) will add approximately 23,000 water customers to Unitil’s service base.

The water utility acquisition details are illustrated in this transaction overview:

The strategic rationale for the water utility expansion centers on complementary utility operations that add scale and diversification to support long-term growth. Management emphasized that the water systems were acquired at an attractive valuation and operate under constructive regulatory frameworks.

Growth Outlook

Unitil projects that these acquisitions will significantly accelerate its rate base growth from its previous guidance of 6.5%-8.5% to approximately 10% CAGR through 2029. The company maintains its long-term EPS growth guidance of 5%-7% but notes that the acquisitions are expected to push results toward the upper end of this range.

The acquisitions are projected to be earnings neutral in the near term but become accretive after new distribution rates take effect. The company’s total shareholder return target remains at 8.0%-10.0%.

As shown in the following growth profile slide, the acquisitions are expected to increase Unitil’s rate base from approximately $1 billion in 2024 to around $1.6 billion by 2029:

Financial Position

Unitil emphasized that its financing plan for the acquisitions will maintain its investment grade credit ratings. The company reported strong credit metrics with FFO/Debt at 17.9%, compared to a peer average of 15.9%, and expects to maintain this ratio between 17%-19% going forward.

The company increased its credit facility borrowing limit to $275 million in January 2025 and stated it has committed financing for all announced transactions. Long-term capital investments will be financed primarily through cash flow from operations (67%), with the remainder coming from debt (20%) and equity (13%).

The following slide details the company’s credit metrics and financing approach:

Market Context

Unitil’s stock closed at $59.77 on May 6, 2025, with a 52-week range of $48.94 to $63.52. In premarket trading following the presentation release, the stock was down 2.51% to $58.27 on light volume, suggesting some investor caution about the ambitious acquisition strategy.

The acquisitions represent a significant expansion for Unitil, which had a market capitalization of approximately $925 million prior to these announcements. The company’s P/E ratio of 19.69 is relatively high compared to its near-term earnings growth, indicating that investors have been pricing in expectations for accelerated growth.

Forward Outlook

Unitil’s presentation reinforces its commitment to long-term growth through both organic investment and strategic acquisitions. The company’s diversification into water utilities represents a new direction that management believes will provide complementary growth opportunities while maintaining its regulated utility business model.

The acquisition strategy aligns with industry trends toward consolidation in the fragmented water utility sector and expansion of natural gas distribution in regions currently reliant on more expensive heating fuels. If successfully executed, these acquisitions could position Unitil for stronger growth than it could achieve through its existing operations alone.

Investors will be watching closely to see if the company can successfully integrate these acquisitions while maintaining its strong credit metrics and delivering on its accelerated growth projections.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.