Q1 2025 RGC Resources Inc Earnings Call

First we have muted all lines and ask that all participants remain muted.

The link to today's presentation is available on the Investor and financial information page of our website at W. W. W. Dot.

RBC resources Dot com.

And lastly at the conclusion of the presentation in our remarks, we will take questions. So turning.

Turning to 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 bond.

Slide two contains our agenda.

In our presentation, we will discuss our operational and financial highlights for the first quarter of our 2025 fiscal year.

I'll then review our outlook for the rest of the 2025 fiscal year with time allotted for questions at the end.

So, let's turn to slide three.

Main extensions and the low activity in the first quarter of fiscal 2025 were strong we installed one one main miles and connected 197 new services.

This isn't this is compared to 185, new services in the first quarter of 2020 for fiscal year.

In addition, we renewed 65 services during our first quarter of 2020 fiscal year.

We believe this is evidence of our continued investment in our system to enhance safety and reliability for our customers.

Slide four shows our delivered gas volumes for the quarter total volumes were up 16% compared to the first quarter of 2024, as one transportation customer with the ability to fuel switch increased its consumption of natural gas.

Residential and small commercial volumes were up 4% as well due to these 10% increase in heating degree days compared to quarter one of fiscal 2024.

Slide five shows Capex for the first quarter of fiscal 2025 compared to 2024 total spending was $5 $7 million in the current year up eight 4% over the same period a year ago. Good weather for most of the quarter enabled strong progress on mains and services.

Speaker Change: I'll now turn it over to Tim Mulvaney, our CFO to review our financial results for the quarter Ken. Thank.

Tim Mulvaney: Thank you Tommy.

Moving to slide six we.

Tim Mulvaney: We had a good quarter with increased Roanoke gas margins due to higher rates, which went into effect. This past July overcoming lower equity earnings from our unconsolidated affiliates and higher interest expense.

Tim Mulvaney: Net income of $5 3 million or <unk> 51 per share compared to net income in the same quarter, a year ago of $5 million or <unk> 50 per share.

Tim Mulvaney: Equity and earnings of unconsolidated affiliates was 854000 pre tax.

Tim Mulvaney: Which reflects our share of Mvp's results.

Tim Mulvaney: Compared to $1 5 million in the same quarter a year ago.

Tim Mulvaney: Our share of the results in fiscal 2024 was entirely due to <unk> during the construction phase compared to the current year, which reflected the operation of the pipeline.

Tim Mulvaney: This apples to Orange comparison will persist for two more quarters.

Tim Mulvaney: As we noted on our last call. We received our first cash distribution from MVP of approximately 800000 in October we recently received our next quarterly distributions.

Tim Mulvaney: Interest expense was 143000 higher compared to the same quarter a year ago due to higher average balance on the Roanoke gas line of credit and higher interest rates on the midstream debt, which was refinanced a year ago.

Tim Mulvaney: As a final note. The current portion of our long term debt is $26 2 million at December 31 2025.

Tim Mulvaney: Primarily due to a $25 million non revolving line related to our <unk> midstream.

Tim Mulvaney: We have already initiated conversations with our lenders and others. Those conversations have been positive and we fully expect to have refinanced. This note prior to its maturity on December 31 2025.

We also fully expect to renew our Roanoke gas line of credit next month.

Tim Mulvaney: Paul will share comments regarding our expectations for 2025, including our growth capital and EPS. We will then take your questions.

Paul Nester: I will now pass the presentation to <unk> CEO, Paul Nester, Paul Thank you, Tim and good morning, everyone.

Paul Nester: Slowly wintery morning here.

Paul Nester: Southwest Virginia today.

Speaker Change: As Tim and Tom We have reviewed we had we have had an excellent first quarter and.

Speaker Change: First quarter started off very warm and back and ended very cold and continue to be called through the month.

Speaker Change: January.

We will talk about this in a minute, but we look forward to.

Speaker Change: Sharing some exciting.

Speaker Change: Volume delivery and other statistics related to the January malls in the second quarter.

Speaker Change: But again looking back on the first quarter Tommy mentioned, our large transportation customer you had incredible volume growth year over year.

That customer does have the ability to fuel switch, but it's our understanding that that customer will continue to use natural gas.

Speaker Change: In the near term certainly in the second fiscal quarter and third physical quarter.

Speaker Change: Housing growth has been.

Speaker Change: Steady and maybe even strong in the region there continue to be new.

Speaker Change: Neighborhoods, either breaking ground or moving from planning to construction stage that's going on.

Speaker Change: Continuing to allow us to have new main extension and of course ultimately have new service connections.

Speaker Change: We still are working on expanding in the Franklin County, we talked about that on the year end call. Just a couple of months ago, that's not been.

Speaker Change: Really fast due to the winter weather over the last 60 days certainly as we start to come out of winter and into the construction season, we expect to have more progress there and we will see that in our capital forecast in just a minute.

Speaker Change: Yes.

Speaker Change: Speaking of the capital forecast, we are on slide eight our total year capital spending remains at $21 $6 million, just as we announced in December.

Speaker Change: We may change some of the capital mix, if you will between the categories as we adjust.

So conditions towards the towards the end of the fiscal year, but again, we still think we're going to be in that 21, 5% to $22 million.

Speaker Change: Range for physical 2025.

Speaker Change: Moving onto slide nine.

Speaker Change: The first quarter as Tim just provided in great detail.

Speaker Change: As as we expected and we're happy about that there certainly is some economic uncertainty today.

Speaker Change: We've all been following in the popular press.

Speaker Change: With the recent change in presidential administration.

Speaker Change: Causing some of us pause on a few things and to size up what some of those named economically certainly some of the actions being taken may have an inflationary.

Speaker Change: <unk> and <unk>.

Speaker Change: Appears that the federal reserve is cautious.

Speaker Change: Our certainly has a wait and see attitude in its approach right now with regard to <unk>.

Speaker Change: Interest rates so.

Speaker Change: If you look back our think back over the last two years, we as a company have address inflationary and cost pressures through.

Speaker Change: Back to back rate cases, and Thats helped us be in a position to hopefully manage some of this potential inflationary pressure to come in fiscal 2025.

Speaker Change: Tommy maybe.

Tommy: Remind those on the call about.

Tommy: The timing of the rate cases, and how they impact fiscal 2020.

Tommy: Sure Paul but before I do that maybe give you an update on our rate case.

Tommy: Yesterday, the hearing examiner assigned to our rate case recommended the adoption of the stipulation we reached with staff back in October.

Tommy: So at the last step in the process is now, but the full commission to issue a final order.

Tommy: But as far as timing goes unlike a lot of states, Virginia user uses a forward looking test year or a rate tiers from callers in Virginia.

Tommy: Adjustments to rate base revenues expenses are forecasted into a future period.

Tommy: In our case, the stipulated revenue requirement increase of $4 $4.08 million.

Tommy: It is based on projections through June 30 of 2025. So we believe a lot of the inflationary pressure, we experienced and are continuing to experience is captured in the stipulated rates. Yes. Thank you Tommy that's really really helpful. Again, as we think about the current fiscal year.

Tommy: That were.

Tommy: Slowly approach and being halfway.

Tommy: <unk>.

Tommy: So when we look at our earnings per share forecast on slide nine to $1 18 to $1 25 range, we're still comfortable with that range at this point in time, certainly again as we come out of the second quarter and the bulk of the winter heating season, we should have.

Tommy: A finer point on EPS for the year.

Tommy: I would like to close my remarks before we take questions.

Speaker Change: Just yet again thanking our.

Tommy: Fantastic employees.

Tommy: And even our customers certainly over this.

Tommy: Historically cold event, if you will it hasnt been this cold and are part of Virginia and over 10 years, particularly in the month of January in our system performed magnificently, we didn't have a single customer outage of any kind.

Tommy: We're very very very happy about that and proud about that but it takes a lot of work and coordination and a lot of prep.

Tommy: Preparation as a matter of fact.

Tommy: Tim and Tom you talked about our capital spending as it relates to our renewal efforts to improve and modernize our system the leg of safe and reliable and that.

Tommy: That has paid off as we've been in these cold weather.

Tommy: So.

Tommy: Just continue to be encouraged about the opportunities.

Tommy: The Roanoke region again, some of the uncertainty at our national uneven global level. Those are those are real but again this area still seems to be.

Tommy: Solid and on good footing and we're excited about the growth opportunities here and how those Ken.

Tommy: Benefit our shareholders. We thank you for your interest and support that.

Tommy: That does conclude our prepared remarks.

Tommy: Have any questions. Please dial pound pound.

Tommy: On to on mute Caroline.

Pound pound.

Tommy: One.

Tommy: Well, maybe just one more second.

Tommy: Pound pound one to on mute your line.

Speaker Change: Okay, well hearing no no questions today.

Tommy: This does conclude the first quarter earnings call.

Tommy: Thank you again for taking time to join US and we certainly look forward to speaking with you in may to discuss 2022nd quarter results.

Tommy: Thank you and have a great day and be safe.