Q4 2023 RGC Resources Inc Earnings Call
Speaker 1: Good morning. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources, Inc.
Good morning, Tommy Oliver Senior Vice President regulatory and external affairs for RTC Resources, Inc.
Speaker 1: Thank you for joining us this morning as we discuss RGC resources, 2023, quarter, fourth quarter, and full year results. I am joined this morning by Paul Nester, President and CEO of RGC Resource, and Tim Mulbaney, our interim chief financial officer and treasure. Before we get started, I wanna review a few administrative items.
Thank you for joining us this morning, as we discuss our Juicy resources 2023 quarter fourth quarter and full year results I'm joined this morning by Paul Nester, President and CEO of RTC resource.
Tim Mulvaney, our interim Chief financial Officer and Treasurer.
We get started I wanted to review a few administrative items.
Speaker 1: First, we have muted all lines and ask that all participants remain muted.
First we have made it all lines and ask that all participants remain muted.
Speaker 1: Second, the link to today's presentation is available on the investor and financial information page of our website at www.rgcresources.com. And lastly, at the conclusion of the presentation in our remarks, we will take questions.
Second the link to today's presentation is available on the Investor and financial information page of our website at Www Dot RBC resources Dot com.
And lastly at the conclusion of the presentation in our remarks, we will take questions.
Speaker 1: So slide one, this presentation contains forecasts and projections. Slide one has information about risks and uncertainty, including forward-looking statements that should be understood in the context of our public violence. The agenda is
Slide one this presentation contains forecasts and projections slide one is information about risks and uncertainty including forward looking statements that should be understood in the context of our public filings.
The agenda is on slide two.
Speaker 1: We will review our quarterly and annual operational and financial results and discuss the outlook for fiscal 2024 with time allotted for questions at the end.
We will review, our quarterly and annual operational and financial results and discuss the outlook for fiscal 2024 with time allotted for questions at the end.
Speaker 1: So turning to slide three, our main extensions for the year totaled four miles, and we added over 550 new customers. Another outstanding year of customer growth and our seventh straight year of adding at least 550 new customers.
Turning to slide three our main extensions for the year totaled four miles and we added over 550, new customers another outstanding year of customer growth and our seventh straight year of adding at least 550 new customers.
Speaker 1: But also like to highlight the work we have done with the runoff redevelopment and housing authority. Since 2022, we have helped the housing authority modernize the natural gas facilities within three of its apartment comp.
Also like to highlight the work we have done with the <unk> redevelopment that housing authority.
2022, we have helped the housing authority modernize the natural gas facilities Witten within three of its apartment complexes. After the authority renewed these facilities run our gas assumed ownership and operational control.
Speaker 1: After the authority renewed these facilities, Toronto gas assumed ownership and operational control. Not only did this add to our customer count in rate base, it provided the residents within those communities a new, safer and more reliable gas system. The housing authority intends to renew two additional properties in the coming year.
Not only did this add to our customer count in rate base and provided the residents within those communities, our new safer and more reliable gas system.
Housing authority intends to renew two additional properties in the coming years.
Speaker 1: On the rights out of the graph, our total customer count represents a steady increase in the total customers in 2020. The customer count for 2021 and 2022 were impacted by the state mandated service this an action moratorium that occurred during parts of 2020 and 2021.
On the right side of the graph, our total customer count represents a steady increase in the total customer since 2020, the customer count for 2021, and 2022 were impacted by the state mandated service disconnection moratorium that occurred during parts of 2020 in 2021.
Speaker 1: At the end of fiscal 2023, our customer count was 62,740 customers. This figure doesn't really reflect true customer growth as some customers disconnect service during the spring and reconnect once cold weather sets in. To that end, our active customer count is on December 1st with 63,599.
At the end of fiscal 2023, our customer count was 62740 customers. This figure doesn't really reflect true customer growth as some customers disconnect service during the spring and reconnect once cold weather sets in to that end, our active customer count as of December one.
With 63599.
Speaker 1: Transition over to slide four, 2023 was a busy year on the regulatory front. As we've badge with the
Transition over to slide four 2023 was a busy year on the regulatory front.
As we've discussed in prior earnings call. We received approval from the State Corporation Commission in January to rate based on R&D facility.
Speaker 1: We received approval from the State Corporation Commission in January to rate base an RNG facility. This facility became operational and we began billing customers in March of this year.
<unk> became operational and we began billing customers in March of this year. We also fall for a new five year plan to save plan was approved by the Commission in August. The plan included a 50 million dollar spending caps over the life of the plan with $8 five 5 million allowed for fiscal 2024.
Speaker 1: We also file for a new five year state plan. The state plan was approved by the Commission and I.
Speaker 1: The plan included a $50 million spending cap over the life of the plan with $8.55 million allowed for fiscal 2024. We began billing the new save rate October 1st, 2023.
We began billing the new save rate October one 2023.
Speaker 1: During the pasture, we also had a rate case working its way to the SEC. We did reach a settlement with the SEC staff in September , in which we agreed to a revenue requirement increase of $7.45 million. The hearing examiner assigned to the case issued his report November , accepting the stipulated revenue requirement and essentially all other terms in the conditions of the stipulation. We expect a final order from the commission in the next 30 to 60 days.
During the past year, we also had a rate case working its way through the SEC. We did reach a settlement with the FTC staff in September, which we agreed to a revenue requirement increase of seven four of $5 million. The hearing examiner assigned to the case issued his report November accepting the stipulated revenue requirement and.
All other terms of the additions of the stipulation we expect a final order from the commission in the next 30 to 60 days.
Speaker 1: Lastly, we received an extension of our certificate to serve Bringsland County. The original certificate issued in February of 2020, I'm sorry, 2019 contained a five-year sunset provision which would have avoided our certificate had we not begun serving customers within that five-year window. The commission extended the sunset provision for three years or the February of 2027.
Lastly, we received an extension of our certificate to serve Franklin County, The original certificate issued in February of 2020, I'm. Sorry, 2019 contains a five year sunset provision, which would've pointed our certificates had we not begun serving customers within that five year window The commission.
That the sunset provision for three years or to February of 2027.
Speaker 1: Slide 5 shows our delivered gas body in which we're higher compared to last year, a preventive carbon dioxide if we measure our carbon dioxide thickness from fiting consumption, as well as comparing pig and ETF smoking.
Slide five shows our delivered gas volumes, which were higher compared to last year attributable to higher industrial usage.
Speaker 1: Slide six shows for the fiscal year gas volumes were down slightly. Reservential and commercial volumes were down the result of fewer heating degree days, offset by a small year-over-year industrial utilization increase.
Slide six shows for the fiscal year of gas volumes were down slightly residential and commercial volumes were down as a result of fewer heating degree days offset by a small year over year industrial utilization increase.
We're on slide seven.
Speaker 1: We executed our 2023 Renault Gas Capital Investment Plan with over $25 million of investment utility plants, which is down nominally from a year ago. A significant part of our investment for the year related to the orangey facility I discussed earlier. And it's worth noting that this capital is fully embedded in our current rates as a result of the rate case and the orangey rider.
We executed our 2023 runner gas capital investment plan with over $25 million of investment utility plant, which is down nominally from a year ago.
A significant part of our investment for the year related to the Orange facility discussed earlier and it's worth noting that this capital is fully embedded in our current rates as a result of the rate case and the Orangey rider.
Speaker 1: I'm not going to turn it over to Tim Mulvaney or interim CFO and Treasurer who will discuss our financial resolve. Tim? Thank you, Tommy.
I'm now going to turn it over to Tim Mulvaney, our interim CFO and treasurer, who will discuss our financial results.
Thank you Tommy.
We are on slide eight now.
Speaker 2: For the fourth quarter, operating income increased to 190,000 or 64% to 745,000 compared to the fourth quarter of 2022.
For the fourth quarter operating income increased 290000, or 64% to 745000 compared to the fourth quarter of 2022.
Speaker 2: The increase was primarily driven by interim base rates implemented on January 1st.
The increase was primarily driven by interim base rates implemented on January one.
Speaker 2: Interest expense up to 142,000 continues to be pressured due to the higher interest rate environment, which is impacting our floating rate debt, supporting the investment in the mountain valley pipeline.
Interest expense up 242000 continued it continues to be pressured due to the higher interest rate environment, which is impacting our floating rate debt supporting the investment in the mountain Valley pipeline.
Speaker 2: Our net income for the quarter was just over 1 million compared to an $11 million loss due to a $15 million pre-tax impairment taken on our investment in MVP in the fourth quarter last year.
Our net income for the quarter was just over $1 million compared to an $11 million loss due to a $15 million pretax impairment taken on our investment in MVP in the fourth quarter last year.
Speaker 2: The fourth quarter of this year included 1.5 million of non-CASH AF UDC pre-tax, which resulted from our investment in the MVP resuming construction.
The fourth quarter of this year included $1 5 million of noncash AAF UDC pre tax which resulted from our investment in the MVP resuming construction.
Moving on to slide nine.
Speaker 2: To aid in the comparison of our fiscal year results, excluding impairments recorded on our MVP investment in 2022, we have represented our financial results for the quarter and the year on an underlying basis on slide 9.
To aid in the comparison of our fiscal year results. Excluding impairments recorded on our MVP investment in 2022, we have represented our financial results for the quarter and the year on an underlying basis on slide nine.
Speaker 2: I will now turn the presentation over to Paul Nestor, RGC Resources President and CEO , for an outlook on 2024. Paul? Thank you.
I will now turn the presentation over to Paul Nester, RG, <unk> Resources', President and CEO for an outlook on 2024.
Speaker 3: Thank you, Tim and good morning. We are on slide 10. We're going to take a few minutes and review the 2024 Renault gas capital spending forecast. We're also going to
Thank you Tom and good morning, we are on slide 10.
Take a few minutes and review the 2020 for Renault gas capital spending forecast will also go into.
Speaker 3: I'll try to provide an update on the non-violent pipeline and then we'll share our initial guidance for our 2024 earnings per share.
I tried to provide an update on that pipeline and then we'll share our initial guidance for our 2024 earnings per share.
Speaker 3: Moving on to slide 11, we're projecting a total spend on utility plant for fiscal year 2024 of approximately 21 million dollars. This is down from the 2023 capital spending primarily due to the 4.1 million dollars we invested in the RNG facility in 2020.
Moving on to slide 11, we are projecting a total spend on utility plant for fiscal year 2024 of approximately 21.
<unk>.
This is down from the 2023 capital spending primarily due to the $4 $1 million, we invested in the R&D facility in 2023, but this is a resumption of more.
Speaker 3: But this is a resumption of a more normal level of annual capital spending in the utility. I would like to take one minute and just come in on the customer growth numbers that Tommy shared with us a few moments ago. I mean, in particular, 63,000...
Normal level of annual capital spending and the utility I would like to take one minute and just comment on the customer growth numbers that Tom shared with US a few models together and in particular the.
63000.
Speaker 3: 500 customers that is certainly an all time high for our company and I want to certainly think our customer experience and our operations personnel for
500 customers that is certainly an all time high for our company.
Certainly, thank our customer experience and our operations personnel for.
Speaker 3: getting well over 1,500 customers turned on since October 1st for a small company like ours. It's a noteworthy achievement due to a lot of dedication and hard work by many folks. So thank you. Moving on.
Getting well over 500 customers turned on since October one for a small company.
Like ours is a noteworthy achievement due to a lot of dedication and hard work by many folks. So thank you.
Moving onto slide 12.
Speaker 3: Many of you may have seen the Aquatrans 8K that was filed last week where they provided an update on some of the statistics related to Mountain Valley construction. It's a good update. We'll try to interpret a little bit of that for you. Some of the remaining scope work when construction resumed this summer
Many of you may have seen the <unk> 8-K that was filed last week, where they provided an update on.
Some of the statistics related to mountain Valley construction its a good update.
We will try to interpret a little bit of that for you of the remaining scope work when construction resumed at summer approximately 50% of the upland by 65% of the tie and 75% of the crawl pain and.
Speaker 3: approximately 50% of the upland pike, 65% of the tie-in, 75% of the crawl scene.
Speaker 3: And over for approximately 104 miles of hydrostatic testing have occurred. So again, the progress has been very good. We've had a nice
And over or approximately 104 miles with hydrostatic testing.
Have occurred so again the progress has been.
Very good we've had nice dry fall here, which has been conducive to construction and good good progress.
Speaker 3: dry fall here which has been conducive to construction and good progress. The total budget for the project remains $7.2 billion with projected completion in the first quarter of calendar 2024.
Total budget for the project remains $7 $2 million with projected completion in the first quarter of calendar 2024.
Speaker 3: I would like to also mention that Renau Gas has resumed construction on both our Lafayette and some of you interconnects. You may remember that Renau Gas has two caps, Alphamountain Valley to bring the much needed supply of natural gas to this region, including at the front of view business park in Franklin County, which will be Franklin County's first opportunity for natural gas. We're on track for both stations to be complete.
I would like to also mention that.
Rona of gas has resumed construction on both our Lafayette and summit view Interconnects you may remember that run our gap has two taps off the mountain valley to bring a much needed.
Supply of natural gas to this region, including at the solid New business business Park in Franklin County, which will be Franklin counties first opportunity for natural gas. We're on track for both stations to be complete commensurate with the mountain Valley construction being completed in the mountain valley flowing gas where.
Speaker 3: Commensurate with the Mountain Valley construction being completed in the Mountain Valley flowing gas. We're really excited to finally
Really excited to finally see the mountain Valley.
Speaker 3: see the mountain valley be completed. And we're really excited about having Marcello's and Utica Basin natural gas flowing into the Roanoke Valley.
<unk> completed and we're really excited about having them.
Marcellus and Utica basin natural gas flowing into the River Valley.
Speaker 3: So I mean the MVP schedule of first quarter calendar, 2024 stays on track and we believe that to be the case right now. We expect that our RGC midstream subsidiary to essentially have a break even physical 2024 from an earned standpoint.
So I mean, the MVP schedule first quarter calendar 2024 stays on track and.
We believe that to be the case right now we expect that our RG see midstream subsidiary to essentially have a breakeven physical 2024 from an earnings standpoint.
Speaker 3: Moving on to slide 13 with our earnings per share.
Moving on to slide 13, with our earnings per share Guy.
Speaker 3: guidance. Again, we had a tremendous 2023. We filed our 10K this past Friday. It provides many of the details of 2023. And again, I would just like to thank
Guidance again, we had a tremendous 2023, we filed our 10-K this past Friday. It provides many of the details.
2023, and again I would just like to thank.
Speaker 3: our customers and our employees for an outstanding year. If you are on these calls, as we went through 2023, we did not expect to hit $1.14 earnings per share, but through a lot of hard work, we were able to achieve that. Thank you.
Our customers.
Our employees for an outstanding year.
If you are on these calls as we went through 2023, we did not expect to hit $1 14 earnings per share, but a lot of hard work.
We were able to achieve that thank you.
Speaker 3: 2024. We do believe run of gas is going to have another solid year. Tim mentioned inflationary pressures and the rising interest rate environment that is
2024, we do believe Rona of gas is going to have another solid year, Tim mentioned inflationary pressures in the rising interest rate environment that is still very real and we do expect that to challenge.
Speaker 3: feel very real and we do expect that to challenge 2024 earnings in the run of gas utility.
2024 earnings and the run out of gas utility.
Speaker 3: Our range, as you can see, we think right now we can be in the $1.10 to hopefully $1.16 again with a breakeven RGC midstream. That concludes our prepared remarks. If you have questions, please unmute your line. We believe that is
Our range as you can see we think right now we can be in the $1 10.
Hopefully a $1 16 again with a breakeven RTC midstream.
That concludes our prepared remarks, if you have questions. Please on mute your line, we believe that is.
Speaker 3: Pound, pound, one. We thank, to unmute your line, pound, pound, one.
Pound one we think mute your line.
Pound pound one.
Okay.
Speaker 4: Good morning, everyone. Good morning, Michael. How are you? I'm good. How about yourself? We're very good. Thanks.
Hey, good morning, everyone.
Good morning, Michael how are you.
I am good how about yourself.
We're very good thank you.
You're getting some good weather this quarter.
Speaker 4: We've had incredible weather. It's not been great heating load weather, if you will, but it's been great construction weather. Been very dry, which again, or nearly you don't care for, but we're happy about that this year.
We are we've had incredible weather has not been great.
Heating load weather, if you will but it's been great construction weather.
Then where youre tab, which again ordinarily you don't air cooled, but we're happy about that this year.
Speaker 4: You had mentioned the Franklin County tie-in and the business part there.
Okay.
You had mentioned the.
Franklin County tie in.
And the business Park, there I think that's what we towards the last time I was down.
Just wondering.
Speaker 4: Are there any taxes or anybody waiting in Franklin County?
Are there any challenges or anybody waiting in Franklin County.
For the gas.
Speaker 3: So we can't comment on very specific opportunities from an economic development standpoint, but there is a lot of potential and excitement, Michael, and back to Tommy and Jim Shockley and our meeting this afternoon in Franklin County with some of the folks down there to discuss some of these matters. So there's a lot, again, to be excited about and probably have natural gas in that park is a wonderful opportunity.
So we can't comment on very specific opportunities from an economic development standpoint, but there is a lot of potential and excitement Michael and back.
Tommy and Jim Chocolate our meeting this afternoon in Franklin County with the.
Some of the folks down there to discuss some of these matters.
Theres a lot again to be excited about and we have natural gas in that park as well.
There's a longer haul opportunity.
Yes.
Okay.
Speaker 4: And then I would assume earnings from, we'll say cash flow from Mountain Valley.
And then I would assume earnings from <unk>.
We'll say cash flow for mountain Valley.
That'll be here is to just reduce debt.
Speaker 3: Yeah Tim, I think we talked a little bit about cash flow in the TNK. We just, I'm in on that to Michael's.
Yes, Tim I think we talked a little bit about cash flow in the 10-K would you like to comment on that Michael.
Speaker 2: So we have certain pieces of our mountain valley depth that are coming due in 2024, and we're working with thanks to...
So we have certain pieces of our mountain valley debt coming due in 2024, and we're working with banks to Rick.
Speaker 5: uh, replace that in the short term, but as the Mountain Valley, uh, pipeline does begin to flow, there is, there are provisions in the agreement that, uh, they will pass, uh, excess cash flow as we'll find in those agreements onto the company and we expect to use those. Okay.
Place that in the short term, but as the mountain Valley.
<unk> does begin to flow there is there are.
Our provisions in the agreement.
They will pass excess cash flow as defined in those agreements on to the company and we expect to use them.
Sure.
Okay and then.
Last question.
Yeah.
Speaker 4: Any idea if you had to take a guesspull
Any idea.
If you take a guess Paul.
Speaker 4: what month you could actually start seeing some of that gas flow under your own.
What month, you could actually start seeing some of that gas flow under Roanoke.
Speaker 3: Yeah, I think the public guidance from the JV, Michael is still a calendar first quarter and they haven't gotten more precise than that. As you know, in other words, there's not a month or a day at this point. And a lot of it, of course, does depend on the ability to do field construction over the coming days and weeks as we are in the winter time with some shorter days. So...
Yes, I think the public guidance from the JV Michael is still.
Calendar first quarter and they haven't gotten more precise than that as you know in other words, there is not a month or a day at this point in.
A lot of it of course, it does depend on the ability to.
The field construction over the coming days and weeks as we are in the winter time.
With some shorter day so.
Speaker 3: We are still planning and operationally planning for first quarter 2024. So hypothetically, if that were March 1st, we'll be ready. That's March 31st.
We are still planning in.
Operationally planning.
Or first quarter 2024, so.
Hypothetically if that were March 1st will be ready at that March 31.
Speaker 6: We will be ready as run of gas to receive that gas.
We will be ready is run out of gas.
We're seeing that that gas.
Okay and I was just wondering if that.
Speaker 4: Lower cost gas could be flowing in January or February .
Lower cost gas could be slowing in January or February when.
When you need it the most.
Speaker 3: Yeah, that's a great question. We're not making plans for January at this point in time. That would be wonderful. But we don't.
Yes, it's a great question.
We're not making plans for January at this point in time that would be wonderful.
But we.
Speaker 6: Don't know that that's, that's maybe physically possible.
Don't know that that that may be physically possible.
Yes.
Speaker 4: Okay, well I guess we'll wait for the next Aquatrans.
Okay, well I guess, we'll wait for the next equity <unk> 8-K.
Speaker 6: Yeah, yeah, yeah, that's not what the information on that regard, but.
Yes, yes, yes.
Hopefully the information on that regard but.
Speaker 4: Again, we can see it coming from here. That's the good news. Good. All right, gentlemen, two graphs on a great year.
We can see it coming from here that's the good news.
Okay. Good.
Alright, gentlemen, congrats on a great year really was.
Thank you Michael Thanks, Michael.
Speaker 6: Do we have any other questions from the audience? Pound, pound, wand to a mutual.
Yes.
Do we have any other question.
From the audience.
Pound pound one to mute your line.
Any other questions.
Speaker 6: We'll pause for just a few seconds in case someone would like to ask a question.
We'll pause for just a few seconds in case someone would like to ask a question.
Speaker 6: Okay, well, if there are no more questions today, this does conclude our fourth quarter in physical year 2023 earnings call. Thank you so much for joining us, and we look forward to speaking with you again, and February to review the first quarter of 2024. We certainly wish you and family the Merry Christmas and a Happy New Year. Thank you.
Okay, well if there are no more questions. Today. This does conclude our fourth quarter and fiscal year 2023 earnings call.
Thank you so much for joining us and we look forward to.
With you again in February to review the first quarter of 2024, we certainly wish you and your family the Merry Christmas and a happy new year.
You.
Okay.
Okay.
Okay.