UNTC Files its Q1 ’24 10-Q

May 18, 2024

Filed its 10-Q this week. Key takeaways are as follows. 1) My initial 2024 free cash flow estimate for 2024 was $64MM. In the quarter, UNTC generated ~$17MM of free cash flow or ~$68MM on an annualized basis. UNTC is paying a $1.25 quarterly dividend which works out to $48MM of cash. As such, I would expect UNTC to pay another special dividend at year end of ~$20MM ($2.08 per share). 2) UNTC has no energy hedges in place. In the current quarter, realized natural gas prices were $1.79/Mcf. The current price of natural gas is $2.30/Mcf. Futures prices indicate natural gas in the $3 to $4 range in 2025 through 2027. If these prices are realizes, it is going to be a tailwind. Further, if natural gas prices spike and UNTC is able to lock in a hedge at an attractive price, it would provide a large windfall profit. 3) UNTC is currently trading at $37/share which works out to a 5.5x price to FCF multiple and 4.5 EV/FCF multiple. This looks attractive to me. I’m content to continue to hold the stock and collect regular and special dividends.