Unitil Corporation Stock

Good day and thank you for standing by. Welcome to the Q2 2026 Unitil Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Chris Goulding, Vice President of Finance and Regulatory. Please go ahead.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's second quarter 2026 financial results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer, and Dan Hustak, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today are Bob Hevert, President and Chief Administrative Officer; and Todd Diggins, Chief Accounting Officer and Controller.

We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information, including a presentation, to the Investor section of our website at unitil.com. We will refer to that information during this call.

Moving to Slide 2, some of the statements made during this call may be forward-looking. These statements are based on management's current expectation and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections.

We undertake no obligation to update or revise any of these statements. Additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconcile to GAAP measures is contained within our news release, the slides we posted for this call, and in our most recent Form 10-Q and 10-K.

I will now turn the call over to Chairman and CEO, Tom Meissner.

Great. Thanks, Chris. Good afternoon, everyone, and thanks for joining us today.

Beginning on Slide 3, I'm pleased to report outstanding performance through the first half of the year, both operationally and financially. Yesterday, we announced another strong quarter with adjusted net income of $5.2 million, or $0.29 per share. For the first half of the year, adjusted net income was $39 million, or $2.17 per share, an increase of $0.14, or nearly 7% compared to the first 6 months of 2025.

We are fully earning our authorized returns on a trailing 12-month basis with a GAAP return on equity of 9.6%. Given the strong results for the first half of the year, we are reaffirming our 2026 earnings guidance of $3.20 to $3.36 per share, with a midpoint of $3.28. We are also reaffirming our long-term earnings guidance of 5% to 7%. We have several positive business updates to share this quarter.

As I'll cover in more detail on the following slide, the acquisition of the Aquarion Water Company of New Hampshire and Abenaki Water Company successfully closed on June 30. We're excited to add these 2 companies to our portfolio of regulated distribution utilities. Our regulatory agenda remains active, and I'm pleased to report that the 2 Northern Utilities rate cases in Maine and New Hampshire are progressing as expected. Dan will provide additional details about these rate cases later during the call.

We pride ourselves on consistently delivering high-quality, reliable service to our customers, and recent customer survey results show that our customers continue to be highly satisfied with our service. Overall customer satisfaction remains high at 90%, which is slightly better than last year. Our overall customer satisfaction is the best among Northeast utilities and within the top quartile nationally.

I'd also like to provide an update on our Advanced Metering Infrastructure, or AMI, project that will replace all of our electric meters. This new metering system incorporates state-of-the-art smart meters that can provide near real-time information to customers and enable improved decision-making in grid optimization. The rollout in Massachusetts was completed last year with 31,000 meters replaced at a total cost of approximately $10 million, which is currently being recovered in rates.

In New Hampshire, we have already replaced 21,000 meters and expect to complete the remaining 59,000 meters by the end of 2027. Total cost for this project in New Hampshire is expected to be approximately $30 million, with a portion of that amount included in the company's next step adjustment. We believe this project will help us deliver the advanced functionality and level of service that our customers expect.

Turning now to Slide 4, the acquisition of the 2 Aquarion New Hampshire water utilities closed on June 30 for a total purchase price of $55.8 million. This includes the assumption of $13.7 million of long-term debt. We purchased these companies at an attractive valuation, and this acquisition will strengthen our regulated utility portfolio. We entered into a 5-year operating and transition services agreement with the Aquarion Water Authority to ensure a seamless transition and integration.

Similar to the purchase of the 2 gas companies in Maine last year, we initially financed this transaction with a holding company term loan. We anticipate the transaction will be earnings neutral in 2026 and accretive once new distribution rates take effect. We have also entered into a non-binding letter of intent with Eversource Energy to purchase the Massachusetts Aquarion Company, pending satisfaction of certain conditions, including the successful resolution of a base rate case proceeding. We're excited to welcome Aquarion's experienced, locally managed teams to Unitil, and we remain committed to delivering the same high-quality service that all of our customers expect.

Moving now to Slide 5, natural gas continues to enjoy a significant price advantage relative to competing fuels like oil and propane. Fuel oil prices have remained substantially higher than natural gas for an extended period of time. As I mentioned before, Maine has the highest percentage of homes heated with fuel oil in the nation. Roughly 2/3 of Maine homes are heated with oil, propane, or kerosene, fuels that are much more expensive than natural gas.

We believe natural gas conversions offer a compelling opportunity for customers to lower their energy costs while also helping states achieve their climate goals. Over the first half of the year, we've seen a 50% increase in customers calling to inquire about natural gas service compared to the same period last year. We currently have about 1,500 new customers under contract or in construction.

In addition, we continue to see growth in adjusted margin across all of our natural gas companies compared to 2025. As a reminder, both Maine and New Hampshire have fuel choice statutes to preserve customers' rights to select their preferred energy source, including natural gas.

With that, I'll now pass it over to Dan, who will provide greater detail on our financial results.

Thank you, Tom, and good afternoon, everyone. I'll begin on Slide 6. As Tom mentioned, we announced second quarter 2026 adjusted net income of $5.2 million and adjusted earnings per share of $0.29. Through the first 6 months of the year, adjusted net income was approximately $39 million, or $2.17 per share, representing an increase of $5.9 million in adjusted net income, or $0.14 per share, compared to the same period in 2025.

We are reporting adjusted earnings that exclude transaction costs related to our gas and water acquisitions, which we do not view as indicative of the company's ongoing costs and operations. The results for the first half of the year were supported by the earnings contribution from Bangor Natural Gas and Maine Natural Gas, in addition to higher distribution rates and customer growth, partially offset by higher operating expenses.

Turning to Slide 7, I will discuss our electric and gas adjusted gross margins. I will begin with our electric operations. For the 6 months ended June 30, 2026, electric adjusted gross margin was $61.2 million, an increase of $7.9 million, or 14.8% as compared to the same period in 2025. The increase in electric adjusted gross margin was driven by higher rates and customer growth. Higher rates were supported by the permanent rate award for our New Hampshire electric subsidiary of $13 million, which took effect May 1, 2026.

Electric margin was also supported by performance-based rate adjustments in Fitchburg. As noted during prior calls, all our electric customers are under decoupled rates, which eliminates the dependency of distribution revenue on the volume of electricity sales.

Moving to gas operations, for the 6 months ended June 30, 2026, gas adjusted gross margin was $122.7 million, an increase of $14.6 million, or approximately 13.5% compared to the same period in 2025.

The increase in gas adjusted gross margin reflects the contribution from Maine Natural Gas of $8.7 million, higher rates and customer growth of $4.5 million, and colder winter weather of $1.4 million. The company added approximately 6,600 new gas customers compared to the same period in 2025, with the majority of these new customers being attributable to the acquisition of Maine Natural Gas. As of June 30, 2026, approximately 52% of the company's gas customers were under decoupled rates, with Maine representing our only non-decoupled service area.

Moving to Slide 8, we provide an earnings bridge comparing the results for the first 6 months of 2026 to the same period in 2025. As I just discussed, the combined adjusted gross margin for our electric and gas divisions increased $22.5 million and reflects the contribution of Maine Natural Gas, higher rates, colder winter weather, and customer growth. Operation and maintenance expenses increased $3.3 million due to higher utility operating costs of $2.6 million and higher labor and other costs of $1.5 million, partially offset by lower acquisition costs of $0.8 million.

The increase includes $2.7 million of utility operating costs for Maine Natural Gas. Excluding Maine Natural Gas, operation and maintenance expenses increased $0.6 million, or just above 1%, compared to the first half of 2025, which is well below the increase in inflation over the same period.

The increases in depreciation and amortization expense and taxes other than income taxes primarily reflect higher levels of utility plant in service as well as the inclusion of expenses associated with Maine Natural Gas in 2026.

Moving to Slide 9, as Tom noted earlier during the call, our Northern Utilities rate cases are progressing as expected in both New Hampshire and Maine.

Starting with New Hampshire, on April 1, we filed for a permanent rate increase of $9.8 million, and on June 1, temporary rates of $5.5 million took effect. We have proposed a multi-year rate plan with 2 step adjustments to recover all 2026 and 2027 system investments. The rate proposal also includes the continuation of revenue decoupling, but similar to our New Hampshire electric company, we have proposed a decoupling methodology change from a revenue per customer model to a total authorized revenue target.

We are currently participating in technical sessions, and intervenor testimony is due in November. Settlement conferences are currently scheduled for early 2027, with permanent rates expected to go into effect on April 1, 2027.

Turning to the Northern Utilities Maine division. We filed our rate case on June 1 for a proposed revenue increase of $10.4 million. The Maine revenue requirement is based on a historical test year with adjustments to forecast rate-based revenues and expenses through the rate-effective year. This approach is designed to reduce earnings attrition and is consistent with the revenue requirement approved in the company's previous Maine rate case.

We are currently participating in technical conferences and intervenor testimony is expected by the end of this month. We look forward to working with all stakeholders in these rate proceedings, and we'll provide additional updates on future calls.

Turning to Slide 10, our current 5-year capital investment plan through 2030 totals approximately $1.2 billion, which is an increase of 24% over the previous 5-year plan. This plan includes approximately $65 million in total for Bangor Natural Gas and Maine Natural Gas and approximately $33 million for the New Hampshire Water companies. Rate base has increased by $200 million, or 14.9%, compared to the same period in 2025, partly due to the additions of Maine Natural Gas and the New Hampshire water companies. Over the past 5 years, rate base growth has averaged 9.5%, which is above our long-term rate base growth rate range of 6.5% to 8.5%.

Moving to Slide 11, we continue to prudently manage our balance sheet by maintaining a balanced mix of common equity and long-term debt to support our investment-grade credit ratings. The primary source of funding for our 5-year investment plan is cash flow from operations supplemented by long-term debt and equity. Our financial profile remains strong and balance sheet strength continues to be a top priority. Our most recent FFO-to-debt metric, as adjusted by S&P, was 17.2%, squarely in the middle of our long-term target and well above our downgrade thresholds.

During the second quarter, we issued approximately $11 million of equity under our ATM program. At the end of the second quarter, we had approximately $37.5 million of available capacity under that program. In June, we priced $60 million of holding company senior notes and expect that transaction to close in September. Proceeds from this issuance will be used to repay existing holding company debt and for general corporate purposes. After this debt issuance, holding company debt compared to total debt will continue to be in line with rating agency expectations.

I will now turn the call back over to Tom.

Thank you, Dan. Ending on Slide 13. The company's strong results through the first 6 months of the year reflects disciplined execution of our operating and strategic priorities and our longstanding commitment to delivering safe, reliable, and affordable service to our customers.

The addition of the New Hampshire Water Companies marks another important milestone, expanding our regulated utility portfolio while remaining firmly focused on our existing states and jurisdictions. As we continue to grow, we remain committed to strategic execution of our plan and the delivery of exceptional value to our customers and stakeholders.

With that, I'll pass the call back to Chris.

Thanks, Tom. That wraps up the prepared material for this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

[Operator Instructions] And I show our first question comes from the line of Andrew Weisel from Scotiabank. Please go ahead.

So my first question on Aquarion, you've talked about it being neutral to EPS, at least in the near term pending help from rate cases. I believe that comment was mostly on the assumption that you get both New Hampshire and Massachusetts, but so far only New Hampshire is closed. Does that affect the earnings accretion outlook? Obviously, it's smaller, but does that help or hurt? And am I right that the increased CapEx outlook is to reflect spending at Aquarion in New Hampshire? Any thoughts on the outlook for that business?

Andrew, you're correct. The amount of incremental CapEx that we referenced in the slides only relates to the New Hampshire Aquarion Companies. And just based on the New Hampshire Aquarion Companies results for the rest of the year, we would expect the earnings contribution from those companies to be neutral to consolidated EPS. That would be after we consider the effects of financing the transaction.

Okay, great. And then how are things looking in Massachusetts? Any thought on -- any updates on where we stand, next steps, and maybe thoughts on your level of confidence?

Yes. I think the next steps are for -- we understand that Eversource Energy will file a rate case to address the 2 conditions in the previous approval order from the department that were unacceptable to the parties, one being a stay-out, which would obviously be addressed by the filing of a rate case. And the second would be dealing with the gain on the sale of the Hingham assets as part of that proceeding.

Okay, and then looking forward, this has been a pretty drawn-out regulatory process. Does this change at all your risk appetite for additional acquisitions?

This is Tom. I would say no. We're still interested in further expansion of our footprint to the extent that it fits within our existing business model.

Okay, very good. One more if I could, switching gears to natural gas conversions. Obviously, as you show in the slides there, oil prices have been staying at these higher levels probably longer than I might have expected and maybe some others. You mentioned a big increase in customer inbounds. How is that changing the conversations maybe with regulators? Obviously, you've had the political support like you mentioned. Are you maybe at a point where you might just start to think of this as more of a structural change and maybe more sustainable higher levels of earnings and growth that you might build into your budgets?

Well, I guess I'll start by saying I think the price advantage we have relative to other fuels I think that's going to stay. It's going to be sustained over the long term, even if it narrows somewhat. And therefore, we do think that natural gas provides a tremendous opportunity to address affordability, especially in Maine, where there's the greatest opportunity due to penetration of alternative fuels. I think that's already generally recognized with our regulators. And from our standpoint, we see this as an opportunity to continue to expand growth, especially in Maine.

[Operator Instructions] I'm showing no further questions in the queue at this time. This concludes our Q&A session and today's conference call. Thank you all for attending. You may all disconnect at this time.

Good day, and thank you for standing by. Welcome to the First Quarter 2026 Unitil Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Goulding, Vice President, Finance and Regulatory. Please go ahead.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's First Quarter 2026 Financial Results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer; and Dan Hurstak, Senior Vice President, Chief Financial Officer and Treasurer.

Also with us today are Bob Hevert, President and Chief Administrative Officer; and Todd Diggins, Chief Accounting Officer and Controller. We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information, including a presentation to the Investors section of our website at unitil.com. We will refer to that information during this call.

Moving to Slide 2. The comments made today about future operating results or 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 can cause 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 obligation to update them. This presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance.

With that, I will now turn the call over to Chairman and CEO, Tom Meissner.

Great. Thanks, Chris. Good afternoon, everyone, and thanks for joining us today. I'll begin on Slide 3, where today we announced adjusted net income, excluding transaction-related costs of $33.8 million and adjusted earnings per share of $1.88 for the first quarter of 2026. This represents an increase of $0.14 per share or 8% compared to the first quarter of 2025.

We are fully earning our authorized returns on a trailing 12-month basis with a GAAP return on equity of 9.6%. We have several positive business updates to share this quarter. Integration work for our Maine gas acquisitions has proceeded as planned. Bangor Natural Gas was fully integrated last year, and the integration of Maine Natural Gas is now substantially complete with most corporate services now being provided by Unitil.

In other business, we recently received an order for our New Hampshire Electric rate case, approving the settlement agreement in its entirety. We also recently filed a rate case for Northern Utilities gas subsidiary in New Hampshire. We expect to file a gas rate case for Northern Utilities in Maine on or about June 1. Dan will provide additional details about these rate filings later during this call. Given the strong results for the first quarter, we are reaffirming our 2026 guidance range of $3.20 to $3.36 per share with a midpoint of $3.28. We are also reaffirming our long-term earnings growth of 5% to 7%.

Turning to Slide 4. We are now the largest natural gas utility in Maine, serving approximately 90% of all gas customers. The acquisitions of Bangor Natural Gas and Maine Natural Gas meaningfully increased our rate base and will be accretive to earnings over the long term. In the most recent quarter, Bangor Natural Gas contributed $5.1 million and Maine Natural Gas contributed $6.1 million to adjusted gross gas margin. Resulting in a combined $4.1 million of incremental net income before considering financing costs for Maine Natural Gas that are currently being incurred by Unitil Corporation in the short term.

As I mentioned, all integration work for Bangor Natural Gas was completed last year, and we recently completed the integration work for most corporate services for Maine Natural Gas. The success of these integration efforts was made possible by leveraging our experienced workforce and by our seasoned locally managed operational framework. We continue to realize the operating and financial benefits of these transactions, consistent with our original expectations. The next significant milestone for these companies will be to establish cost of service rates under Unitil's ownership with rate filings expected in the first half of 2027.

Turning now to Slide 5. We continue to monitor regulatory approvals in Connecticut pertaining to the sale of Aquarion from Eversource Energy to the Aquarion Water Authority. This sale received approval from the Connecticut Public Utilities Regulatory Authority on March 25. More recently, on April 30, the authority denied a petition for reconsideration, and we understand the current appeal period will now expire in mid-June, absent any additional filings in this proceeding.

The closing of this transaction between Eversource Energy and the Aquarion Water Authority must occur prior to our transaction with the Water Authority. As I've said before, the Aquarion Water companies are an ideal fit with our existing utility operations given their geographic proximity, potential for synergies and strong growth profile. We view the pending acquisition as highly complementary to our fully regulated portfolio, supporting rate base growth above the upper end of our long-term range and enabling opportunities for future growth.

Building on our successful integration of the Maine Gas acquisitions, we are well positioned to integrate these water companies following the closing of the transaction.

With that, I'll now pass it over to Dan, who will provide greater detail on our first quarter financial results.

Thank you, Tom, and good afternoon, everyone. I'll begin on Slide 6. As Tom mentioned, we announced first quarter 2026 adjusted net income of $33.8 million and adjusted earnings per share of $1.88, representing an increase of $5.4 million in adjusted net income or $0.14 per share compared to the same period in 2025. We are reporting adjusted earnings that exclude transaction costs related to our gas acquisitions and the announced water transaction, which we view as not indicative of the company's ongoing costs and operations.

Our first quarter results were supported by higher distribution rates and customer growth, partially offset by higher operating expenses. Our first quarter results also include a charge of approximately $900,000 related to the FERC transmission formula rate proceeding in the order that was issued by FERC in this proceeding on March 19, 2026.

This charge represents the refund obligation for a retroactive reduction to the return on equity for transmission assets from 10.57% to 9.57%. The company's transmission rate base, subject to this FERC decision, is approximately 0.5% of total rate base, and the company does not expect this order will have a significant effect on future earnings.

Turning to Slide 7. I will discuss our electric and gas adjusted gross margins. I will begin with our electric operations. Electric adjusted gross margin for the first quarter was $29.6 million, an increase of $2.1 million as compared to the same period in 2025. The increase reflects higher rates of $2.8 million, partially offset by the one-time reduction of FERC transmission revenue of $0.7 million for the return on equity matter that I previously mentioned.

The company also recorded approximately $200,000 of interest associated with the transmission return on equity matter, which is recorded in interest expense. As noted during prior calls, all of our electric customers are under decoupled rates, which eliminates the dependency of distribution revenue on the volume of electricity sales.

Moving to gas operations. Gas adjusted gross margin for the first quarter was $82.1 million, an increase of $11.2 million compared to the same period in 2025. The increase in gas adjusted gross margin was driven by higher rates and customer growth of $10.3 million and the favorable effects of colder winter weather in 2026 of $0.9 million. Gas adjusted gross margin for the quarter includes $6 million related to Maine Natural Gas.

The higher rates in the first quarter of 2026 were driven by inflation adjustments under our performance-based rate plan for our Fitchburg subsidiary and capital trackers. The company added approximately 7,100 new gas customers compared to the same period in 2025, including 6,400 customers from the acquisition of Maine Natural Gas. Approximately 52% of the company's gas customers are under decoupled rates with Maine representing our only non-decoupled service area.

Moving to Slide 8. We provide an earnings bridge comparing first quarter 2026 results to the same period in 2025. The combined adjusted gross margin for our electric and gas divisions increased by $13.3 million, which reflects higher rates, colder winter weather and customer growth. Operation and maintenance expenses increased $0.8 million due to higher utility operating costs of $1.1 million, partially offset by lower transaction costs of $0.3 million.

Operation and maintenance expense includes $1.3 million of utility operating costs related to Maine Natural Gas. Excluding Maine Natural Gas and transaction costs, operation and maintenance expenses for legacy operations would have decreased by $0.2 million compared to the first quarter 2025. The increases in depreciation and amortization expense and taxes other than income taxes reflect higher levels of utility plant in service as well as the inclusion of amounts related to Maine Natural Gas in 2026.

Moving to Slide 9. I'm pleased to note that last week, the New Hampshire Public Utilities Commission issued an order approving the settlement agreement in its entirety for permanent rates for our New Hampshire Electric company. The order approves a base rate increase of $13 million based on pro forma rate base as of December 31, 2024, of $289 million, which reflects a post-test year adjustment to include the Kingston Solar facility.

The authorized return on equity is 9.45% with an equity layer of 52.67% compared to the previously approved return on equity of 9.2% and equity layer of 52%. The settlement maintains revenue decoupling. However, the decoupling methodology changed from an authorized revenue per customer model to a total authorized revenue target.

As a reminder, in New Hampshire, permanent rate case awards are reconciled back to the effective date of the temporary rate award and are subject to recoupment or refund. In this case, because the permanent rate award was greater than the temporary award, the company will record approximately $1.7 million of pretax income in the second quarter.

The settlement also included a multiyear rate plan that provides for accelerated cost recovery for investments made in 2025 and 2026. The first step adjustment request, which is currently pending approval of the New Hampshire Commission includes a $3.2 million rate increase effective September 1, 2026. We believe that the constructive outcome reached in this proceeding will allow us to continue to provide the safe and reliable service our customers expect and offers the company an opportunity to earn its authorized rate of return.

Turning to Slide 10. As Tom noted at the outset of the call, we filed a base rate case in New Hampshire for our gas subsidiary, Northern Utilities on April 1, 2026. The filing requests a permanent base rate increase of $9.8 million and a temporary rate award of $6 million. I'm pleased to say that the company has reached a settlement agreement for temporary rates with the Department of Energy and the Office of Consumer Advocate that allows for a temporary rate increase of $5.5 million.

Temporary rates are expected to take effect June 1, pending commission approval, and permanent rates are expected to take effect April 1, 2027. The filing also includes the continuation of revenue decoupling, but similar to our New Hampshire Electric company, we have proposed a decoupling methodology change from a revenue per customer model to a total authorized revenue target.

We've also proposed a multiyear rate plan with 2-step adjustments to recover all 2026 and 2027 system investments. We are expecting to file a base rate case for Northern Utilities with the Maine Public Utilities Commission on or around June 1. On April 1, we filed a notice of intent in Maine, which included a rate request of approximately $7.5 million. Similar to our previous rate cases in Maine, we intend on utilizing a historical test year with adjustments to forecast rate base, revenues and expenses through the rate effective year to reduce earnings attrition. We will provide additional details regarding these proceedings on future calls.

Turning to Slide 11. As noted during our previous earnings call, our current 5-year capital investment plan through 2030 totals approximately $1.2 billion, which is an increase of $200 million or 20% compared to our previous 5-year plan. This updated investment plan includes approximately $65 million for Bangor Natural Gas and Maine Natural Gas, but does not reflect any amounts for the pending Aquarion Water acquisition.

With the addition of the 2 main gas companies, rate base increased 17% compared to the prior year and average rate base growth has been 8.1% over the past 5 years, which is near the upper end of our long-term rate base growth guidance of 6.5% to 8.5%.

Moving to Slide 12. We continue to prudently manage our balance sheet, targeting a balanced mix of common equity and long-term debt to maintain our investment-grade credit ratings. Our primary funding source for our 5-year investment plan is our stable cash flow from operations with additional funding from long-term debt and equity.

On April 30, we issued $40 million of senior notes at our Fitchburg subsidiary to repay short-term debt and for general corporate purposes. As of today, the company has approximately $160 million of capacity available on its revolving credit facility. The company also has access to equity via its ATM program, which has $48.5 million of available capacity. As a reminder, the company has committed debt financing for the pending Aquarion acquisition.

We anticipate that the ultimate funding for the pending water transaction could be satisfied by a combination of ATM proceeds and senior notes at the holding company or operating companies. We plan to maintain a level of holding company debt consistent with rating agency expectations. As we discussed last quarter, our annualized dividend for 2026 is $1.90 per share, representing an increase of 5.6% compared to 2025. Our dividend payout ratio target range remains at 55% to 65%.

Turning to Slide 13. With our strong first quarter and constructive rate case outcome for our New Hampshire Electric company, we reaffirm our 2026 earnings guidance of $3.20 to $3.36 per share with a midpoint of $3.28 per share. The midpoint of our 2026 guidance represents 6.1% growth relative to the midpoint of our 2025 guidance. We have also presented our expected 2026 quarterly earnings per share distribution, which highlights the seasonal nature of our earnings.

I will now turn the call back over to Tom.

Great. Thanks, Dan. Ending now on Slide 14, the first quarter provided a strong start to the year. Our core businesses are performing well, and we are executing on our strategic initiatives. Our value proposition remains unchanged, investing in low-risk regulated assets that generate stable cash flows while ensuring our customers are provided with top-tier utility service. We look forward to providing additional updates on our progress throughout the remainder of the year.

With that, I'll pass the call back to Chris.

Thanks, Tom. That wraps up the prepared material for this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

[Operator Instructions] And our first question comes from Andrew Weisel with Scotiabank.

This is Rebecca Gabler on for Andrew Weisel. Given the recent updates with respect to Aquarion, will the terms and conditions of the Aquarion approval have any impact on your earnings outlook?

Rebecca, are you speaking about any state in particular?

No, just in general.

So I think as Tom mentioned earlier, the transaction between Eversource Energy and the Aquarion Water Authority is a condition for our transaction to move forward. So we are keenly watching what happens in Connecticut, and we understand that the current appeal period for the PURA order goes through mid-June.

As far as the other states, if you look at the Massachusetts order that was issued earlier this year, it contained 2 conditions, one related to the sale of Hingham assets and one related to a sale period. As we said in the motion for reconsideration and clarification, the risk that those 2 matters pose to us is something that is unacceptable for us and would likely prevent us from moving forward with the Massachusetts operations as part of the transaction.

Got it. That's helpful. And then just a quick second question. Given the spike in oil prices since the conflict in Iran started, have you guys seen any changes in customer behavior, pace of conversion from oil or even the tone of conversations with regulators around customer behavior related to these issues?

Rebecca, this is Tom Meissner. I think it's too soon to see any of those trends emerge because it's been really just a short period of time. But to your point, the cost of oil has increased dramatically for home heating. And realistically, we probably enjoy almost a 2:1 price advantage right now. So we do hope to take advantage of that. And we do believe that natural gas offers a much more affordable choice for customers to heat their homes.

[Operator Instructions] I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2025 Unitil Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Christopher Golding, Vice President of Finance and Regulatory. Please go ahead.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's Fourth Quarter 2025 Financial Results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer; and Dan Hurstak, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today are Bob Hevert, President and Chief Administrative Officer; and Todd Diggins, Chief Accounting Officer and Controller.

We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information including a presentation to the Investors section of our website at unitil.com. We will refer to that information during this call.

Moving to Slide 2. The comments made today about future operating results or 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 can cause 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 obligation to update them.

This presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance.

With that, I will now turn the call over to Chairman and CEO, Tom Meissner.

Thank you, Chris, and good afternoon, everyone. Thank you for joining us today. Beginning on Slide 3, I'm pleased to report that 2025 was another successful year. Yesterday, we announced full year adjusted earnings of $53.3 million or $3.16 per share. These results represent an increase of $0.19 per share or 6.4% over our 2024 adjusted earnings per share, placing us in the upper half of our long-term earnings guidance of 5% to 7%.

We expanded our gas operations in Maine by acquiring 2 highly complementary distribution companies at attractive valuations, which will support our long-term earnings growth. We're excited to be the largest gas utility in Maine, a state with ample growth opportunities in a constructive regulatory environment. In New Hampshire, our electric rate case is on schedule, and we expect permanent rates to take effect in the second quarter of 2026.

Operationally, we achieved strong performance across key metrics, including electric reliability, gas safety and customer satisfaction. Looking ahead, we expect 2026 earnings to be in the range of $3.20 to $3.36 per share with a midpoint of $3.28 per share. At the midpoint, this is an increase of 6.1% compared to the midpoint of our 2025 guidance. Longer term, we continue to see robust investment opportunities in our electric and gas operations and reaffirm our long-term guidance for earnings, dividend and rate base growth.

Turning now to Slide 4. In 2025, we completed the acquisitions of Bangalore Natural Gas and Maine Natural Gas. These transactions added over 15,000 customers in a state with strong growth prospects and constructive regulation. In addition to being highly complementary to our legacy operations in Maine, the acquired companies will bring annual distribution revenues of approximately $29 million and planned capital investment of approximately $18 million in 2026. Historically, these companies have experienced annual customer growth in the range of 4% to 5%.

Looking forward, natural gas continues to enjoy a significant price advantage over competing fuels like fuel oil and propane. Maine has the highest percentage of homes heated with fuel oil in the nation and fully 2/3 of Maine homes are heated with oil, propane or kerosene. We believe natural gas conversions offer a compelling opportunity for customers to lower their energy costs while also helping Maine achieve its climate objectives.

As a reminder, both Maine and New Hampshire have fueled choice statutes in place to preserve customers' rights to select their preferred energy source, including natural gas. I'll also mention that we anticipate filing a base rate case for both Banglore Natural Gas and Maine Natural Gas in 2027, with final rate decisions expected in 2028.

Turning now to Slide 5. I'd like to again emphasize the affordability benefits of natural gas for home heating in the cold northern New England region where we operate. As I already mentioned, natural gas enjoys a significant price advantage over competing fuels like oil and propane.

Natural gas heating systems are also more affordable than electric heat pumps in a region where cold winters and high electricity costs by offering customers a reliable and affordable option to heat their homes. We are confident natural gas will continue to play an important role providing customers with affordable heat, while also delivering significant environmental benefits relative to other fuels.

Moving to Slide 6. As a company, we pride ourselves on delivering exceptional service to our customers and 2025 was no exception. Our electric service reliability again ranked in the top quartile of our industry peers with electric customers experiencing 16% less interruption time than our New England peers and 32% less compared to the national average.

Our gas emergency response ranked among the best in the nation, and our customer satisfaction remains strong. We achieved 87% overall customer satisfaction and earned the highest customer trust score among all Northeastern peers. While we take great pride in delivering this level of service, we remain focused on continuous improvement in delivering even higher levels of service reliability.

With that, I'll now pass it over to Dan, who will provide greater detail on our 2025 financial results.

Thank you, Tom. Good afternoon, everyone. I'll begin on Slide 7. As Tom mentioned, we announced fiscal year 2025 adjusted net income of $53.3 million and adjusted earnings per share of $3.16, representing an increase of $5.5 million in adjusted net income or $0.19 per share compared to 2024.

We are reporting adjusted earnings that exclude transaction costs related to our Maine acquisitions and the announced water transaction, which we view as not indicative of the company's ongoing costs and operations. Our 2025 results were supported by the Maine acquisitions, higher distribution rates and customer growth, partially offset by higher operating expenses and additional common shares issued in August.

Turning to Slide 8. I will discuss our electric and gas adjusted gross margins. I'll begin with our electric operations. Electric adjusted gross margin for the year was $114.6 million an increase of $7.3 million compared to 2024. The increase in electric adjusted gross margin reflects higher distribution rates in New Hampshire related to the temporary rate award of $7.8 million, which took effect in July 2025 as well as the 2025 inflation adjustment under our performance-based rates in Massachusetts.

The company added approximately 600 electric customers in 2025 compared to 2024. As noted during prior calls, substantially all of our electric customers are under decoupled rates which eliminates the dependency of distribution revenue on the volume of electricity sales.

Moving to gas operations. Gas adjusted gross margin for the year was $199.1 million an increase of $32.2 million compared to 2024. The increase in gas adjusted gross margin includes the addition of $16.6 million associated with the Bangor natural gas and Maine natural gas acquisitions. Legacy gas operations adjusted gross margin increased $15.6 million due to higher rates and customer growth and the effects of colder winter weather compared to 2024.

Contributing to higher rates was the annualized effect of the 2024 rate case awards at Fitchburg and Granite State as well as the annual inflation adjustment under performance-based rates in Fitchburg. The company added approximately 15,900 new gas customers compared to the same period in 2024 and including approximately 8,900 customers from the acquisition of Bangor Natural Gas and approximately 6,500 customers from the acquisition of Maine Natural Gas. Approximately 52% of the company's gas customers are under decoupled rates with Maine being our only non-decoupled service area.

Moving to Slide 9. We provide an earnings bridge comparing 2025 results to 2024. The combined adjusted gross margin for our electric and gas divisions increased by $39.5 million. As I just discussed, the increase in adjusted gross margin is due to the Maine gas acquisitions, higher rates, customer growth and colder winter weather.

Operation and maintenance expenses increased $14.9 million compared to the same period in 2024. The increase in operation and maintenance expenses includes higher utility operating costs of $6.1 million higher labor and other costs of $5.5 million and higher transaction costs of $3.3 million. Transaction costs are excluded from adjusted net income and adjusted earnings per share.

Operation and maintenance expense in 2025 includes $4.2 million of utility operating costs for Bangor Natural Gas and Maine Natural Gas. Excluding Bangor Natural Gas, Maine Natural Gas and transaction costs, operation and maintenance expenses increased $7.4 million compared to 2024. In 2025, certain transmission expenses were higher due to approved formula rates in our Fitchburg service area.

Depreciation and amortization increased $12.6 million, reflecting higher depreciation rates from recent base rate cases, additional depreciation associated with higher levels of utility plant in service and higher amortization of deferred costs. Depreciation and amortization expense includes $3.3 million related to Bangor Natural Gas and Maine Natural Gas in 2025.

Taxes other income taxes increased $1.4 million, reflecting higher local property taxes on higher utility plant and service primarily driven by property tax expense associated with Bangor Natural Gas and Maine Natural Gas. Interest expense increased $7.4 million, primarily reflecting higher interest on higher levels of debt related to Bangor Natural Gas and Maine Natural Gas. Other expense decreased by $1.2 million, largely due to lower retirement benefit costs. Income taxes increased $1.3 million, reflecting higher pretax earnings.

Lastly, transaction costs net of tax of $3.1 million are added back to GAAP net income to arrive at 2025 adjusted net income of $53.3 million. We believe excluding transaction costs when reviewing earnings provides a better representation of the company's ongoing financial performance.

Moving to Slide 10. As discussed on previous calls, we filed a base rate case for Unitil Energy Systems, our electric distribution company in New Hampshire on May 2, 2025. The proposed permanent rate increase is $18.5 million and our requested temporary rate increase of $7.8 million took effect July 1, 2025. We are proposing a 2-year rate adjustment plan to provide for accelerated cost recovery of 2025 and 2026 capital investments. A final rate award is expected to take effect on May 1, 2026.

As a reminder, in New Hampshire permanent rate case awards are reconciled back to the effective date of the temporary rate award and are subject to recruitment or refund. The pro forma rate base included in this filing is approximately $289 million and includes the company's Kingston Solar facility that was placed in service in June 2025. We are actively engaged in constructive settlement discussions with other parties through this proceeding.

Turning to Slide 11. We have updated our 5-year capital investment plan through 2030, which now totals approximately $1.2 billion, an increase of $200 million or 20% compared to our previous 5-year plan. This updated investment plan includes approximately $65 million for Bangor Natural Gas and Maine Natural Gas. Rate base as of December 31, 2025, was approximately $1.3 billion representing an increase of approximately $200 million compared to 2024.

Our 5-year historical rate base growth rate has averaged 8.1% which is towards the upper end of our long-term 6.5% to 8.5% rate base growth guidance range. This capital plan does not include any investments related to the announced acquisition of the Aquarion Water Companies.

Moving to Slide 12. Maintaining our strong balance sheet and investment-grade credit ratings remain top priorities, and we continue to generate low-risk cash flows while prudently managing risk. Our total capitalization consists of a balanced mix of common equity and long-term debt. Our stable cash flows and balance sheet strength support credit metrics that are well above our downgrade thresholds and higher than the average of our peers. The primary financing source for our investment plan continues to be cash flows from operations.

On January 28, our Board of Directors approved an increase to the quarterly dividend of $0.025 per share or $0.10 per share on an annual basis. This increase results in an annualized dividend for 2026 of $1.90 per share which is an increase of 5.6% compared to 2025. Looking forward, we remain committed to delivering predictable and sustainable returns while retaining the financial flexibility to fund capital investments as efficiently as possible.

Turning to Slide 13. We are announcing 2026 earnings guidance of $3.20 to $3.36 per share with a midpoint of $3.28 per share. The midpoint of our 2026 guidance represents 6.1% growth relative to the midpoint of our 2025 guidance. We have also presented our expected 2026 quarterly EPS distribution, which highlights the seasonal nature of our earnings.

I will now turn the call back over to Tom.

Thanks, Dan. Ending now on Slide 14. 2025 marked another year of strong financial performance, operational excellence and outstanding customer service. As we look ahead to 2026 and beyond, we remain confident in our ability to continue delivering value for all stakeholders. Our value proposition remains strong as we continue to invest in low-risk regulated assets that generate predictable earnings and dividend growth while delivering exceptional service to our customers.

With that, I'll pass the call back to Chris.

Thanks, Tom. That wraps up the prepared material for this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

[Operator Instructions] This concludes today's question-and-answer session and conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 Unitil Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Chris Goulding, Vice President of Finance and Regulatory. Please go ahead.

Good afternoon, and thank you for joining us to discuss Unitil Corporation's Third Quarter 2025 financial results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer; and Dan Hurstak, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today are Bob Hevert, President and Chief Administrative Officer; and Todd Diggins, Chief Accounting Officer and Controller.

We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information including a presentation to the Investors section of our website at unitil.com. We will refer to that information during this call.

The comments made today about future operating results or 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 can cause 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 obligation to update them.

This presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance.

With that, I will now turn the call over to Chairman and CEO, Tom Meissner.

Thank you, Chris. Good afternoon, everyone, and thank you for joining us today. I'm going to begin on Slide 3, where today, we announced adjusted net income, excluding transaction-related costs of $0.4 million and adjusted earnings of $0.03 per share for the third quarter of 2025. This represents an increase of $0.01 per share compared to the third quarter of 2024. Through the first 9 months of the year, adjusted net income was $33.5 million or $2.03 per share an increase of $1.4 million or $0.03 per share compared to the same period of the prior year.

During this call, I'll cover several business updates, including the successful integration of Bangor Natural Gas into our utility operations, the recent closing of our Maine Natural Gas acquisition, the status of the Aquarion Water transaction and our ongoing rate case in New Hampshire. In addition, in connection with our recent acquisitions, we recently completed a $72 million equity offering which strengthened our balance sheet and improved our credit metrics. As of September 30, our ratio of funds from operations to debt was approximately 17%. Looking ahead, we see continued strong execution of our plan and reaffirm our guidance for earnings growth, dividend growth and rate base growth.

Turning now to the 3 acquisitions on Slide 4. We're pleased to have acquired 2 highly complementary natural gas companies in Maine and have now fully integrated Bangor natural gas into our existing operations. I'm extremely proud of our employees throughout the company, including our colleagues in Bangor, whose focus and dedication led to this successful outcome. With the integration now complete, we expect to file our first distribution rate case in early 2027.

As noted earlier, we closed our acquisition of Maine Natural Gas on October 31. Having successfully integrated Bangor Natural Gas, we're confident the integration of Maine Natural Gas will also be completed efficiently and effectively. With that in mind, we currently plan to file a base rate case for Maine Natural Gas in mid-2027 somewhat after the Bangor Natural Gas filing.

With regard to the Aquarion transaction, the regulatory approval processes are progressing as planned. The New Hampshire Public Utilities Commission approved the acquisition on October 7, and we expect orders in Connecticut, Massachusetts in Maine during the fourth quarter of this year. As I've said before, with their geographic fit, potential for synergies and strong growth profiles, these companies are ideal additions to our utility operations. We look forward to providing the excellent service that our customers throughout Maine, Massachusetts and New Hampshire have come to expect.

Turning to Slide 5. As mentioned on our previous call, we expect the acquisitions to accelerate rate base growth to approximately 10% annually through 2029 supporting earnings growth in the upper half of our guidance range. Collectively, we expect the transactions to be earnings accretive once new distribution rates take effect.

Turning now to Slide 6. Next, I'd like to provide updates on 2 significant electric investments, our Utility-scale solar project in Kingston, New Hampshire and our Advanced Metering Infrastructure or AMI project. The solar facility, which on Project of the Year at the New Hampshire Energy Week is fully operational and is producing energy consistent with or above our modeled expectations. This is a first of its kind project in the state of New Hampshire and is capable of powering roughly 2,000 homes, reducing the amount of energy we would otherwise import from the regional grid. We are currently seeking recovery of this investment in our New Hampshire rate case.

Moving to our Advanced Metering upgrade. The project is progressing as planned, and the replacement in Massachusetts will be completed by year-end with our work in New Hampshire beginning next year. These meters increase the flow of actionable data to empower our customers and enable improved decision-making and grid optimization. The meter upgrades in Massachusetts and New Hampshire will require approximately $40 million of capital investment. In Massachusetts, a portion of this investment is eligible for accelerated cost recovery.

Moving on to Slide 7. We recently released our 2025 corporate sustainability report and remain on track to reduce company-wide direct greenhouse gas emissions by 50% by 2030 and to be net-zero by 2050. This pledge underscores our continued commitment to environmental stewardship sustainability and corporate responsibility. Our safety metrics are excellent. Our customers are highly satisfied with our service, and our employees are proud to work for Unitil.

One example of an operational initiative we undertook to improve efficiency and reduce emissions is leveraging fleet data using telematics to support effective and sustainable decision-making. This initiative collects and analyzes performance data, including driver behavior and fuel consumption to optimize fleet performance. We have been working diligently to improve fleet performance over the years and believe this will enable us to make beneficial changes that will improve efficiency, lower costs and support our greenhouse gas reduction goals.

With that, I'll now pass it over to Dan, who will take us through greater detail on our third quarter financial results.

Thank you, Tom. Good afternoon, everyone. I'll begin on Slide 8. As Tom mentioned, Today, we announced third quarter adjusted net income of $0.4 million and adjusted earnings per share of $0.03, representing an increase of $0.01 per share compared to the same period in the prior year. For the first 9 months of the year, adjusted net income was $33.5 million and adjusted earnings per share were $2.03, representing an increase of $1.4 million or $0.03 per share compared to the corresponding period in 2024.

Moving to Slide 9. I will discuss our electric adjusted gross margin. For the 9 months ended September 30, 2025, electric adjusted gross margin was $86.4 million, an increase of $4.7 million or 5.8% and compared to the same period in 2024. The increase in electric adjusted gross margin reflects higher distribution rates and customer growth.

The company added approximately 560 new electric customers compared to the same period in 2024, including 126 new commercial and industrial customers. As noted during prior calls, electric distribution revenues are substantially decoupled which eliminates the dependency of distribution revenue on the volume of electricity sales.

Turning to Slide 10. I will discuss our gas adjusted gross margin. For the 9 months ended September 30, 2025, gas adjusted gross margin was $134.7 million, an increase of $19.1 million or approximately 16.5% compared to the same period in 2024. The increase in gas adjusted gross margin reflects higher distribution rates, customer growth and the effects of colder winter weather in 2025. The company added approximately 9,400 new gas customers compared to the same period in 2024, including approximately 8,800 customers from the acquisition of Bangor Natural Gas. As of September 30, 2025, approximately 55% of the company's gas customers were under decoupled rates.

When excluding banger natural gas, gas adjusted gross margin was $127.3 million, an increase of $11.7 million or 10.1% compared to the corresponding period in 2024. This increase in gas adjusted gross margin, excluding Bangor, is in large part due to higher distribution rates and customer growth as well as an increase in weather-normalized sales of 2.4% for our Northern Maine division.

On Slide 11, we provide an earnings bridge comparing the results of the first 9 months of 2025 to the same period in 2024. As I just discussed, adjusted gross margin for the first 9 months of 2025 increased by $23.8 million, primarily driven by higher distribution rates, customer growth and colder winter weather. Bangor Natural Gas accounted for $7.4 million of total gas adjusted gross margin for the first 9 months of 2025.

Operation and maintenance expenses increased $8.7 million compared to the same period in 2024. This increase in operation and maintenance expenses includes $2.6 million related to Bangor Natural Gas operating expenses and $2.3 million of transaction costs. Transaction costs are excluded from adjusted net income and adjusted earnings per share.

Excluding Bangor Natural Gas and transaction costs, operation and maintenance expenses increased $3.7 million primarily reflecting higher utility operating costs and higher labor costs. In addition, certain transmission expenses were higher in 2025 based upon approved formula rates in our Fitchburg service area.

Depreciation and amortization expense increased by $10.5 million, reflecting higher depreciation rates from recent base rate cases, additional depreciation associated with higher levels of utility plant and service and higher amortization of recoverable storm costs and other deferred costs. Depreciation and amortization expense for Bangor Natural Gas was $2 million.

Taxes, other than income taxes increased $0.5 million primarily due to higher local property taxes on higher utility plant and service. Interest expense increased $5.2 million, reflecting higher levels of long-term debt and higher interest expense on regulatory liabilities, partially offset by lower interest expense on short-term borrowings. Other expense decreased by $1 million, reflecting lower retirement benefit costs. Income taxes increased $0.2 million, reflecting higher pretax earnings.

And lastly, transaction costs of $2.3 million are added back to GAAP net income to arrive at adjusted net income of $33.5 million for the 9 months ended September 30, 2025. We believe excluding transaction costs when reviewing earnings provides a better representation of the company's ongoing financial performance.

Turning to Slide 12. As discussed on previous calls, on May 2, 2025, we filed a base rate case for Unitil Energy Systems, our electric distribution company in New Hampshire. The proposed permanent rate increase is $18.5 million. Our requested temporary rate increase of $7.8 million, which was approved as filed, took effect July 1, 2025. In New Hampshire, permanent rate case awards are reconciled back to the effective date of the temporary rate award. The pro forma rate base included in this filing is $289 million and includes the company's solar facility that was placed into service in June.

Similar to previous New Hampshire rate cases, we have proposed a 2-year rate adjustment plan to provide for accelerated cost recovery of 2025 and 2026 capital investments. The deadline for discovery on the company's initial testimony is today and the deadline for intervenor testimony is set for December 11. We have been able to settle prior base rate cases in New Hampshire and settlement discussions for this proceeding are scheduled for early 2026. We expect permanent rates will take effect in the second quarter of next year.

Moving to Slide 13. Our balance sheet strength continues to be a top priority. The equity offering completed in August with net proceeds of approximately $72 million enhance the strength of our balance sheet and fulfill the equity need for the Bangor Natural Gas and Maine natural gas transactions. We have committed debt financing in place for the pending Aquarion transaction, and we expect to ultimately capitalize acquired companies in a credit-supportive manner with capital structure similar to our existing regulated subsidiaries. With our current funds from operations to debt ratio of nearly 17%, we are firmly above our downgrade thresholds in the average FFO to debt ratio of other utility companies.

Turning to Slide 14. Our capital spending for the year is consistent with expectations, and we continue to expect to fund the majority of our capital plan with operating cash flows less dividends. Our current 5-year capital plan, which now includes the 2 main gas companies and the pending Aquarion acquisition totals approximately $1.1 billion and is 19% higher than the prior 5-year plan. Consistent with prior years, we anticipate providing a full update to our investment plan during the fourth quarter earnings call.

Moving to Slide 15. We are reaffirming our 2025 earnings guidance range of $3.01 to $3.17 per share with a midpoint of $3.09 per share on an adjusted earnings basis. We expect recent acquisitions once new distribution rates take effect to support long-term earnings growth in the upper half of our earnings guidance range of 5% to 7%.

I will now turn the call back to Tom.

Thanks, Dan. Ending on Slide 16, we are on pace for yet another successful year and remain laser-focused on executing our strategic priorities. We've successfully integrated Bangor Natural Gas completed the purchase of Maine Natural Gas and have maintained the operational excellence we are known for. We're focused on sustainable growth and remain confident in our execution and our ability to provide strong shareholder returns for many years.

With that, I'll pass the call back to Chris.

Thanks, Tom. That wraps up the prepared material for this call. Thank you for attending. I will now turn the call over to the operator who will coordinate questions.

[Operator Instructions] Our first question comes from Matvey Tayts with Freedom Broker.

So my question is about -- so if you compare Slide 19 and Slide #5, so you'll see that base rate -- total base rate is $1.152 million as of 9 months 2025. And on the Slide #5, it says that 2025 forecast is $1.4 million, which looks like significantly more than we already have on the Page #19. So is it a function of M&A to be consolidated. This is my first question.

And also -- the second one is also regarding this Slide #19. So if you compare this slide to the previous one in the second quarter, so the total rate base change like just by $1 million. But at the same time, we see that like CapEx net of depreciation was like $33 million. So is it also a function of later revision by the regulator. So that's my question.

Sure. Thanks. Well, I guess, we'll take those in order. So the difference between the $1.2 million in rate base on Slide 19 and the $1.4 million of rate base on Slide 5 reflects the additional rate base for the acquired companies, Maine Natural Gas, Bangor Natural Gas and Aquarion.

The difference in CapEx versus rate base increase is a function of when capital projects are closed and placed into service and when the initial capital expenditures are paid or funded. So for a lot of the projects that we have on an annual basis, those capital expenditures will go into construction work in progress during the year, and it closed out later in the year once the assets are placed in service.

Yes. Okay. So -- but just one more additional follow-up on the first one. So this $1.4 million, it's it includes additional base rate for all 3 companies, which will be acquired, right, not for the one which will be acquired by the end of 2025. So there is also some implications for future M&As, right?

Correct. The amount here in the light blue shaded box would capture all 3 acquisitions.

[Operator Instructions] I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.