Q1 2022 RGC Resources Inc Earnings Call
Speaker 1: Despite the dramatic increase in customer counts as discussed by Paul, our first quarter firm volumes were negatively impacted by the 7% warmer than normal weather that the Roanoke area experienced.
Despite the dramatic increase in customer counts as discussed by Paul our first quarter firm volumes were negatively impacted by the 7% warmer than normal weather that the Roanoke Aerie experience.
Speaker 1: As shown on slide four, residential volumes declined by 8%, and commercial volumes declined by 5%, due to the much warmer December 2021.
On slide four residential volumes declined by 8% and commercial volumes declined by 5%.
Due to the much warmer December 2021, backed it with 32% lower heating degree days in that month compared to normal.
Speaker 1: In fact, it was 32% lower heating degree days in that month compared to North.
Speaker 1: Overall, industrial volumes were down primarily due to the large customer that fuel switched to natural gas in 2020. Excluding this multi-fuel customer that switched its primary fuel from natural gas to coal, industrial volumes would have increased.
Overall industrial volumes were down primarily due to the large customer that fuel switch to natural gas in 2020 exclude.
Excluding this this multi fuel customer that switched its primary fuel from natural gas to coal industrial volumes would've increased.
Speaker 1: Transition slide five, where we'll review our capital spending. Our capital spend during the first quarter of the current fiscal year is running slightly ahead of spending during the first quarter of fiscal 2021. The majority of this spending has been on customer growth and system expansion, including our continued investment in the Blue Ridge project, as Paul just mentioned.
Transitioning to slide five where we will review our capital spending our capital spend during the first quarter of the current fiscal year is running slightly ahead of spending during the first quarter of fiscal 2021. The majority of this spending has been on customer growth and system expansion, including our continued investment in the Blue Ridge.
As Paul just mentioned.
I'll also talked about our miles of main extensions and new customers. A few minutes ago. In addition to these investments we have spent approximately $1 million on a one time gas supply infrastructure project.
Speaker 1: Paul also talked about our miles of main extensions and new customers a few minutes ago. In addition to these investments, we have spent approximately $1 million on a one-time gas supply infrastructure project.
Speaker 1: Moving to slide six, where our condensed consolidated statements of income are shown, I'm going to separately review the financial results from our two operating segments. Renov gas are regulated utility, NRGC mid-street. We want to start with the first quarter result.
Moving to slide six where our condensed consolidated statements of income are shown.
Going to separately review the financial results from our two operating segments runoff gas our regulated utility <unk> midstream I want to start with the first quarter results were run on gas.
Speaker 1: Operating income for the first quarter of this 2020 really modest decline compared to the prior years quarterly results. First margins increased due to the day rider and customer growth, which is offset by higher depreciation expense and receipt of CARES Act money in quarter one of fiscal year 2021.
Operating operating income for the first quarter of fiscal 2020 to a modest decline compared to the prior year's quarterly results gross margins increased due to the save rider and customer growth, which was offset by higher depreciation expense and receipt of cares act money in quarter one of <unk>.
Fiscal year 2021.
Speaker 1: Starting to RGC midstream, midstream continue to with its significant quarterly year of a year decline in equity and earnings from the Mount Malley Park.
Turning to RBC midstream midstream continued with its significant quarterly year over year decline in equity and earnings from the Mountain Valley partnership equity and earnings declined by over $1 $2 million quarter over quarter.
Speaker 1: Equity and earnings declined by over $1.2 million quarter over quarter.
With a trailing 12 months Royal gas operating income increased by 12% year over year, which is a testament to the outstanding performance by our utility subsidiaries, Paul just discussed.
Speaker 1: For the trailing 12 months, ROGAS's operating income increased by 12% year-over-year, which is a testament to the outstanding performance by our utility subsidiary as Paul just discussed.
Speaker 1: Specifically, the increased margin is largely attributable to our SAE program revenues and customer growth, which as we discussed, added
Specifically the increased margin is largely attributable to our say program revenues and customer growth.
Which as we discussed.
<unk> added.
Speaker 1: As we discussed in an earlier slide related to our main extensions in the new customer
As we discussed in an earlier slide related to our main extensions and new customer adds.
The strong runner gas earnings were offset by year over year for $6 million decline in equity and earnings from midstream investment in the Mountain Valley pipeline, resulting in a $1 eight per share earnings on a consolidated basis compared to $1 38 for the prior 12 months.
Speaker 1: This strong run of gas earnings was offset by a year-over-year, $4.6 million decline in equity and earnings for mid-streams investment in the Man Valley pipeline, resulting in a $1.8 cents per pair earnings on a consolidated basis compared to a $1.38 for the prior 12th month.
Speaker 1: We'll now turn it back over to Paul's. We'll discuss the outlook for the remainder of the fiscal year.
I'll now turn it back over to Paul who will discuss the outlook for the remainder of the fiscal year. Thank.
Speaker 2: Thank you, Tommy. We are on slide seven, which has our agenda for the outlook.
Thank you Tommy.
On slide seven which has our agenda for the outlook.
Moving on to slide eight.
Speaker 2: with our capital spending forecast for the fiscal year. We still are at approximately $25 million this year. And as we discussed last quarter, this is the largest or will be the largest capital spend. And run out of gas is 139 year history.
With our capital spending forecast for the fiscal year, we still are at approximately $25 million. This year and as we discussed last quarter. This is the largest or will be the largest capital spend and run out of gas is 139 year history.
Speaker 2: Momentum on main extensions and new customer additions is continuing, continuing and we still expect to spend around $6 million specific to those two items in physical 2022
Momentum on main extensions and new customer additions is continuing continuing and we still expect to spend around $6 million.
Specific to those two items.
In physical 2022.
Speaker 2: We have started the loan gate station renewal that was remaining in our system that has already started. We had spending on that in the first quarter. It will be completed in the late summer.
We have started the loan <unk>.
Gates station renewal.
That was remaining in our system that has already started we had spending on that in the.
The first quarter it will be complete completed in the late summer.
Speaker 2: We already mentioned phase three of Blu-Ridge and we're preparing to start phase four, which will be another 2,300 foot main extension. Finally, Tommy mentioned the law.
We already mentioned phase III of Blue Ridge, and we're preparing to start phase four which will be another 2300 foot.
Main extension.
Finally, Tommy mentioned the large special project.
That project is on schedule and will approximate $5 million by the time. It is completed at the end of this fiscal year. We are still planning the public announcement of that project we were.
Speaker 2: That project is on schedule and will approximate $5 million by the time it's completed at the end of this fiscal year. We are still planning the public announcement of that project. We were sidetracked a little here in January with the extreme wet and cold weather and some other matters. But we hope to be able to do that in the very, very near future.
<unk> sidetrack, a little here in January with the extreme.
Wet and cold weather and some other matters, but we hope to be able to do that in the very very near future.
Speaker 2: Moving on to slide nine, the mountain valley pipeline. Most of you are aware by now the force circuits, actions to vacate and remand the Jefferson National Forest and Biological Opinion Permit.
Moving onto slide nine.
The Mountain Valley pipeline.
Most of you are aware by now is the four circuits.
Actions to vacate and remand, the Jefferson National Forest and biological opinion permits.
Speaker 2: Those actions impossible next steps are currently being considered as we disclosed in our TINQ that we filed yesterday afternoon. There's just not enough information at this time to determine changes the project cost or schedule.
Actions and possible next steps are currently.
Being considered.
As we disclosed in our 10-Q that we filed yesterday afternoon, there's just not enough information at this time to determine changes.
The project cost or schedule.
Speaker 2: From now maybe actually a moment to maybe reflect on the Mount Valley pipeline. We've got a beautiful picture in our slide deck if you haven't seen it. It's a portion of the right way that's been completed and restored. And if you're listening by phone, I encourage you to visit our website and review the slide deck and then review this picture in particular. But
Well now may be actually a moment to maybe reflect on the mountain Valley pipeline, We've got a beautiful picture in our slide deck, if you haven't seen it.
Portion of the ride away, that's been completed and restored in.
If you are listening by phone I encourage you to visit our website and review the slide deck and review this picture in particular, but.
Speaker 2: Now, RGC resources through RGC midstream became a partner in the Mountain Valley Joint Venture October 1, 2015. At that same time.
The RTC resources through our GC midstream became a partner in the Mountain Valley Joint venture October one.
2015.
At the same time <unk> gas entered into a precedent agreement to become a shipper on the mountain Valley pipeline and I think it's probably important.
Speaker 2: entered into a precedent agreement to become a shipper on the mountain valley pipeline. I think it's probably important to...
Maybe look back and discuss what was our what was our thesis back then all of those.
Speaker 2: Maybe look back and discuss what was our thesis back then, all those.
Speaker 2: years ago. I think first and foremost, the RONOPE region and Southwest Virginia were poised to grow. If we think back to 2015, our medical school and many of the things happening in our downtown area, we're really just getting started.
Years ago.
I think first and foremost the Rona of region and southwest Virginia, We're poised to grow if we think back to 2015 our medic.
Medical school and many of the things happening in our downtown area, We're really just getting started.
Speaker 2: And we made the determination that our customers both present then and in the future would require more natural gas.
And we made the determination that our customers. Both present, then and in the future would require more natural gas.
Speaker 2: Thank Tommy, we testified to this of some of the hearings in the fall. We've added well over 3000 customers since October 1, 2015.
Thanks, Tommy we testified to visit some of the hearings in the fall we've added well over 3000 customers since.
Since October one 2015.
Speaker 2: So our thoughts on this region growing economically and culturally and in any way, it's really been fabulous over the last six or seven years. It turned out to be true and our thoughts about our customer base growing also turned out to be very true.
So are our thoughts on this region growing.
Economically and culturally and in many ways, it's really been fabulous over the last six or seven years turned out to be true in our thoughts about our customer base growing.
Also turned out to be very true.
There was another part of the thesis at that time that Virginia in particular.
Speaker 2: There was another part of the thesis at that time that Virginia in particular
Really the whole eastern half of the United States.
Speaker 2: really the whole eastern half of the United States needed more natural gas and gas infrastructure. We believe that is also still true.
Needed more natural gas and gas infrastructure, we believe that it is also still true.
Speaker 2: So back then, you know, we came back to why are we here as a run-of-gas the utility and RGC resources the holding company? We're here to serve. We've been here in the run-of-valley serving since 1883.
Back then we came back to why are we here as a runner gas utility and <unk> resources, the holding company were.
We're here to serve we've been here in the road valley, serving since $18 83.
That means a lot to us.
Speaker 2: That means a lot to us, and we plan to continue to serve. We believe the Mountain Valley Pipeline was critical for us to continue that service. We still feel that way today. Nothing has changed, if anything, our desire to serve and our need to serve, as we've just demonstrated with our customer additions and our main mile extension.
We plan to continue to serve we believe the mountain Valley pipeline was critical for US to continue that service, we still feel that way today nothing has changed if anything our desire to serve and our need to serve as we've just demonstrated with our customer additions and our.
Nine mile extensions is ever increasing the average everyday person wants and demands natural gas.
Speaker 2: is ever increasing. The average everyday person wants and demands natural gas.
Speaker 2: So if you step back and maybe just think about the big picture on natural gas, I think there's four things to remember. It is the cleanest of all hydrocarbons. It's affordable.
If you step back.
And maybe just think about the big picture on natural gas I think there's four things to remember.
It is the cleanest of all hydrocarbons.
It's affordable.
It's available.
And it provides long term energy security these things have not changed either.
Speaker 2: and it provides long-term energy security. These things have not changed either.
Speaker 2: So despite the attacks on the pipeline and the attacks on the agency that permit the pipeline, some of these macro big picture items are in fact unchanged.
Despite the.
Attacks on the pipeline and the attacks on the agencies that permit the pipeline some of these macro big picture items.
Or in fact unchanged.
Let's move to slide 10.
Speaker 2: our earnings guidance. This fly depicts...
Our earnings guidance.
This slide depicts.
Speaker 2: The earnings from our two operating segments, as Tommy mentioned, the Ryder Gas Utility and RGC midstream.
The earnings from our two operating segments as Tommy mentioned, the auto gas utility and <unk> midstream.
Speaker 2: I do want to know midstreams earnings for 2022 assume a level of non-cash AFUDC that's commissarate with resumption of MVP growth construction. We have not changed that assumption from our earlier guidance as of today. Again, as we just discussed a moment ago, we do not really have enough information.
I do want to note midstream earnings for 2020 to assume.
Our level of noncash AFDC, that's commensurate with the resumption of MVP growth construction, we have not changed that assumption.
From our earlier guidance as of today.
Then as we just discussed a moment ago, we do not really have enough information.
Speaker 2: at this point in time to change that guidance would, of course, refer you to our TNQ and our disclosures about the project as well as our subsequent footnote number 15 in the financial state.
At this point in time.
To change that guidance would of course.
Refer you to our 10-Q and our disclosures about the project as well as our subsequent event footnote.
Footnote number 15 in the financial statements.
Speaker 2: So at this time, our forecast for run-of gas, the run-of gas segment 2022 Arning is unchanged as well.
So at this time our forecast.
For <unk> gas to run our gas segment 2022 earnings is on changed as well.
Okay that concludes our prepared remarks.
Speaker 3: Okay, that concludes our prepared remarks. You have any questions? Please dial pound six to unmute your line and we would be happy to entertain those. Pound six to unmute your line. All right.
Have any questions.
Please dial pound sixth on mute your line and we would be happy to entertain those pounds six to on mute your line.
Yes.
Good morning.
Hey, Mike Good morning, how are you.
Oh good yourself.
We're doing just fine thank you.
Hi.
Speaker 4: I'm looking at the guidance and I'm guessing that in terms of volumes that you're going to see through rowing up gas before the heating season.
Looking at the guidance and I'm guessing that.
In terms of volumes since you're going to see through Roanoke gas for the heating season.
Speaker 4: You're still probably thinking that those are largely unchanged so that January off that's December is that right?
Still probably thinking that those are largely unchanged.
January offsets December right.
Speaker 2: Yeah, that's a good question. No, December by heating degree day statistic was 32% warmer than normal in the volumes. Add normally low for that month. In fact, Tommy, I think we looked at our most recent 30 year history was the second warmest.
Yeah, that's a good question.
Now December by heating degree days statistic was 32% warmer than normal and the volumes.
Abnormally low.
For that month in fact, Tommy I think we looked at our most recent 30 year history. It was the second warmest.
Speaker 2: December in that 30 year history. So we were, as Tommy mentioned in the slide showed, Mike, we were all on volume, but January has been colder than normal by statistic and um
December and the 30 year history correct.
So we were as Tommy mentioned in the slide showed Mike we were off on volume, but January has been.
And colder than normal by a statistic and.
Speaker 2: We've had a few very cold days. We never approached the single digit.
We've had a few very cold days.
We never approached the single digits.
Speaker 2: of low temperatures, but we had many, many days in the mid and upper teens. What we call good or great gas days. So we're still closing the books for January , but we think we, and we know roughly what our delivered volumes are for January . They were, they were quite strong.
Of low temperatures that we had many many days.
The mid and upper teens, while we call good or great gas days.
So we're still closing the books for January but we think we.
And we know roughly what our delivered volumes are for January they were quite strong.
Speaker 2: Yeah, we believe in February's turned out to be cold so far as well. We'll see what the rest of the quarter.
Yes, we believe in February has turned out to be cold, so far as well, we'll see what the rest of the quarter.
Paul.
Okay.
Speaker 4: Then one on Mount Valley, the recent changes.
Okay, and then one on mountain Valley.
Recent changes.
Speaker 4: in terms of the court decision, if that wouldn't keep them entirely out of the field, would it, I mean, they can still go back into the field and perform some work, I'm guessing that just has to do with the Jefferson National Forest, is that correct?
In terms of the court a court decision.
So I wouldn't keep them entirely out of the field whatever I mean, they can still go back into the field and perform somewhere Im guessing that just has to do with the Jefferson National Forest is that correct.
Mike I don't know.
The exact answer to that question right now I think that still being determined based on the biological opinion.
Speaker 2: the exact answer to that question right now. I think that's still being determined based on the biological opinion.
Result, as well.
Speaker 2: Probably more to come on that from the joint venture as they know more.
Probably more to come on that from the joint venture as they know more.
Speaker 4: Okay, there you go. When would they typically be heading back into the seal?
Okay.
Yes.
When would they typically be heading back into the field.
Cool.
Yes, so it depends on the weather, we've actually been very.
Speaker 2: Yes, so it depends on the weather. You know, we've actually been very wet. We had a tremendous snow in the middle of January that is just now leaving the ground. And we had a lot of rain yesterday. So it's good old fashioned winter weather. It's not conducive to construction.
Where we had a tremendous snow in the middle of January that is just now, leaving the ground and we had a lot of rain yesterday. So it's good old fashion winter weather its not conducive to construction.
So I think.
Yes, I think a reasonable person would say they werent going to be back in the field in the next few weeks it would be a little need to be a little bit drier little little bit better where conditions.
Speaker 2: Yes, I think a reasonable person would say they weren't going to be back in the field in the next few weeks. It would need to be a little bit dry or a little bit better for conditions. Okay.
Alright.
Well, that's all I had gentlemen, thank you.
Well, thank you Mike.
Do you have any other questions you can mute your line by.
Speaker 2: If you have any other questions, you can unmute your lawn by...
Using pound six.
Down six.
Speaker 2: Well, if there are no more questions, this concludes the first quarter earnings call. Thank you for joining us.
Well if there are no more questions. This concludes the first quarter earnings call. Thank you for joining us.
We look forward to speaking with you again in may to discuss this.
Speaker 2: We look forward to speaking with you again in May to discuss the second quarter. We hope you all have a safe and wonderful day. Thank you.
Second order, we hope you all have.
Great and wonderful day. Thank you.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.