RGC Resources, Inc. (NASDAQ:RGCO) Q3 2023 Earnings Conference Call August 7, 2023 9:00 AM ET Company Participants Tommy Oliver - Senior Vice President of Regulatory and External Affairs Paul Nester - President and Chief Executive Officer Kelsie Davenport - Director of Finance Conference Call Participants Mike Gaugler - Janney Montgomery Scott Tommy Oliver Good morning. Thank you for joining us as we discuss RGC Resources' 2023 Third Quarter Results. I am Tommy Oliver, Senior Vice President of Regulatory and ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Transition Period From to Commission File Number 000-26591 RGC Resources, Inc. (Exact name of Registrant as Specified in its Charter) Virginia 54-1909697 (State or Other Ju ...

RGC Resources, Inc. (NASDAQ:RGCO) Q2 2023 Earnings Conference Call May 8, 2023 9:00 AM ET Company Participants Tommy Oliver - Senior Vice President of Regulatory and External Affairs Paul Nester - President and Chief Executive Officer Jason Field - Chief Financial Officer and Treasurer Conference Call Participants Michael Gaugler - Janney Montgomery Scott Tommy Oliver Good morning, everybody. I'm Tommy Oliver, Senior Vice President of Regulatory and External Affairs for RGC Resources, Inc. I want to thank y ...

[Cover Page](index=1&type=section&id=Cover%20Page) This section identifies the Quarterly Report (Form 10-Q) for RGC Resources, Inc. and provides key registrant details - This is a Quarterly Report (Form 10-Q) for RGC Resources, Inc. for the period ended March 31, 2023[2](index=2&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Registrant Name | RGC Resources, Inc. | | State of Incorporation | Virginia | | Commission File Number | 000-26591 | | Trading Symbol | RGCO | | Exchange | NASDAQ Global Market | | Filer Status | Non-accelerated filer, Smaller reporting company | - As of April 30, 2023, there were **9,924,848 shares** of Common Stock, $5 Par Value, outstanding[6](index=6&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section outlines the report's structure, including financial information, management's discussion, and other disclosures - The report is structured into Part I (Financial Information) and Part II (Other Information), detailing financial statements, management's discussion, market risk, controls, legal proceedings, risk factors, and exhibits[8](index=8&type=chunk)[9](index=9&type=chunk) [Glossary of Terms](index=4&type=section&id=Glossary%20of%20Terms) This section defines key acronyms and terms used throughout the report, ensuring clarity and understanding - The glossary defines key acronyms and terms used throughout the report, such as AFUDC (Allowance for Funds Used During Construction), ARP (Alternative Revenue Program), DTH (Decatherm), EPS (Earnings Per Share), MVP (Mountain Valley Pipeline), PGA (Purchased Gas Adjustment), SCC (Virginia State Corporation Commission), and WNA (Weather Normalization Adjustment)[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's comprehensive financial data, including statements and detailed accounting notes [ITEM 1. FINANCIAL STATEMENTS](index=8&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, along with detailed notes on accounting policies and specific financial items [CONDENSED CONSOLIDATED BALANCE SHEETS](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (March 31, 2023 vs. September 30, 2022) | Metric | March 31, 2023 ($) | September 30, 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Total Assets | $296,452,222 | $290,309,243 | +$6,142,979 | | Total Current Assets | $32,360,035 | $35,548,319 | -$3,188,284 | | Utility Property, net | $239,285,862 | $229,861,074 | +$9,424,788 | | Total Liabilities and Stockholders' Equity | $296,452,222 | $290,309,243 | +$6,142,979 | | Total Current Liabilities | $43,632,463 | $22,315,310 | +$21,317,153 | | Current maturities of long-term debt | $25,100,000 | $1,300,000 | +$23,800,000 | | Long-term debt, net | $112,762,045 | $135,695,289 | -$22,933,244 | | Total Stockholders' Equity | $100,278,408 | $93,090,656 | +$7,187,752 | [CONDENSED CONSOLIDATED STATEMENTS OF INCOME](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) This section details the company's revenues, expenses, and net income (loss) over specific reporting periods Condensed Consolidated Statements of Income Highlights | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Six Months Ended March 31, 2023 ($) | Six Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $38,029,657 | $29,529,683 | $71,311,992 | $52,792,763 | | Total Operating Expenses | $28,438,235 | $22,086,295 | $56,176,085 | $39,970,952 | | Operating Income | $9,591,422 | $7,443,388 | $15,135,907 | $12,821,811 | | Impairment of unconsolidated affiliates | $0 | $(39,822,213) | $0 | $(39,822,213) | | Net Income (Loss) | $6,341,886 | $(24,494,429) | $9,598,291 | $(20,909,900) | | Basic Earnings (Loss) Per Common Share | $0.64 | $(2.89) | $0.97 | $(2.48) | | Diluted Earnings (Loss) Per Common Share | $0.64 | $(2.89) | $0.97 | $(2.48) | | Dividends Declared Per Common Share | $0.1975 | $0.1950 | $0.3950 | $0.3900 | - Net income significantly improved from a loss in the prior year, primarily due to the absence of a **$39.8 million impairment charge** on unconsolidated affiliates recorded in the three and six months ended March 31, 2022[18](index=18&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=11&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section presents net income and other comprehensive income (loss) components, reflecting total non-owner changes in equity Condensed Consolidated Statements of Comprehensive Income Highlights | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Six Months Ended March 31, 2023 ($) | Six Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $6,341,886 | $(24,494,429) | $9,598,291 | $(20,909,900) | | Other comprehensive income (loss), net of tax | $(490,526) | $1,524,308 | $(659,193) | $1,875,391 | | Comprehensive Income (Loss) | $5,851,360 | $(22,970,121) | $8,939,098 | $(19,034,509) | - Other comprehensive income (loss) for the six months ended March 31, 2023, was a **loss of $(659,193)**, primarily driven by interest rate swaps[20](index=20&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) This section outlines changes in the company's equity from net income, dividends, and other comprehensive items Changes in Stockholders' Equity (Six Months Ended March 31, 2023) | Item | Amount ($) | | :--- | :--- | | Balance - September 30, 2022 | $93,090,656 | | Net Income | $9,598,291 | | Other comprehensive loss | $(659,193) | | Cash dividends declared | $(3,917,525) | | Issuance of common stock | $2,166,179 | | Balance - March 31, 2023 | $100,278,408 | - Total stockholders' equity increased by **$7,187,752** from September 30, 2022, to March 31, 2023, primarily due to net income and common stock issuance, partially offset by cash dividends and other comprehensive loss[21](index=21&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=13&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section categorizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended March 31) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,965,342 | $12,992,906 | | Net cash used in investing activities | $(14,350,139) | $(14,278,880) | | Net cash provided by (used in) financing activities | $(888,144) | $9,199,647 | | Net increase in cash and cash equivalents | $1,727,059 | $7,913,673 | | Ending Cash and Cash Equivalents | $6,625,973 | $9,431,990 | - Operating cash flows increased by **$3.97 million** YoY, while financing cash flows shifted from a **$9.2 million inflow** to an **$0.89 million outflow**, largely due to a significant equity offering in the prior year[22](index=22&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=14&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Basis of Presentation](index=14&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the company's business, the basis for financial statement preparation, and significant accounting policies - RGC Resources, Inc. is an energy services company primarily engaged in the sale and distribution of natural gas, with consolidated financial statements including Roanoke Gas, Diversified Energy, and Midstream[23](index=23&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and GAAP, with results for the three and six months ended March 31, 2023, not indicative of the full fiscal year due to the seasonal nature of the business[24](index=24&type=chunk)[25](index=25&type=chunk) - The company anticipates adopting ASU 2020-04 (Reference Rate Reform) later in fiscal 2023, which addresses the transition from LIBOR to other reference rates for financial contracts[28](index=28&type=chunk) [Note 2. Stock Issue](index=16&type=section&id=Note%202.%20Stock%20Issue) This note details common stock issuances, including an equity offering and shares issued through various plans - In March 2022, the Company issued **1,350,000 shares** of common stock in an equity offering, generating nearly **$27,000,000** in net proceeds to strengthen its balance sheet and fund infrastructure improvements[30](index=30&type=chunk) - During fiscal 2023, through March 31, 2023, **102,812 shares** of common stock were issued through the DRIP, Restricted Stock, stock option exercises, and ATM activity[31](index=31&type=chunk) [Note 3. Revenue](index=16&type=section&id=Note%203.%20Revenue) This note outlines the company's revenue recognition policies, sources, and the impact of alternative revenue programs Total Operating Revenues by Type (Six Months Ended March 31) | Revenue Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Gas utility | $71,253,744 | $52,730,874 | | Non utility | $58,248 | $61,889 | | **Total operating revenues** | **$71,311,992** | **$52,792,763** | - Roanoke Gas's revenues are primarily derived from SCC-authorized tariff rates for natural gas sales and delivery, with performance obligations satisfied over time as gas is delivered[34](index=34&type=chunk)[35](index=35&type=chunk) - Alternative Revenue Programs (ARPs), such as the Weather Normalization Adjustment (WNA), SAVE Plan, and Renewable Natural Gas (RNG) mechanisms, adjust revenues for external factors like weather variations or infrastructure replacement costs[38](index=38&type=chunk) [Note 4. Income Taxes](index=20&type=section&id=Note%204.%20Income%20Taxes) This note explains the effective tax rates, factors causing deviations from statutory rates, and ongoing tax examinations Effective Tax Rates | Period | March 31, 2023 (%) | March 31, 2022 (%) | | :--- | :--- | :--- | | Three Months Ended | 23.8% | 26.1% | | Six Months Ended | 23.6% | 26.6% | | Six Months Ended (Excluding LLC impairment) | 23.6% | 23.7% | - The effective tax rates are lower than the combined federal and state statutory rate (**25.74%**) due to additional tax deductions from the amortization of excess deferred taxes and R&D tax credits[41](index=41&type=chunk) - The IRS is currently examining the Company's 2018 and 2019 federal tax returns[43](index=43&type=chunk) [Note 5. Rates and Regulatory Matters](index=20&type=section&id=Note%205.%20Rates%20and%20Regulatory%20Matters) This note discusses regulatory filings, rate increases, and the status of the SAVE Plan and Renewable Natural Gas project - Roanoke Gas filed for an **$8.55 million** annual increase in non-gas base rates, which became interim effective on January 1, 2023, subject to refund, with final resolution expected in late 2023 or early 2024[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - A new five-year SAVE Plan and Rider application was filed on March 31, 2023, seeking recovery for an estimated **$49.5 million** in eligible infrastructure investments through September 30, 2028[49](index=49&type=chunk) - The Renewable Natural Gas (RNG) project became operational in March 2023, with SCC approval for a rate adjustment clause to recover associated costs, and billing to customers commenced on March 1, 2023[50](index=50&type=chunk) [Note 6. Other Investments](index=22&type=section&id=Note%206.%20Other%20Investments) This note details the company's equity investment in the Mountain Valley Pipeline (MVP) and related impairment considerations - Midstream holds an approximate **1% equity investment** in the Mountain Valley Pipeline (MVP) project, which continues to face legal and regulatory delays, leading to the suspension of AFUDC accruals since November 2021[53](index=53&type=chunk) - In fiscal 2022, Midstream recorded pre-tax impairment charges of **$39.8 million** and **$15.3 million** on its MVP investment due to unfavorable legal decisions and increased regulatory uncertainties[56](index=56&type=chunk)[57](index=57&type=chunk) - As of March 31, 2023, management, with a valuation specialist, determined the MVP investment was fairly stated and no further impairment was required, but acknowledged ongoing risks[59](index=59&type=chunk)[60](index=60&type=chunk) Investment in Unconsolidated Affiliates (March 31, 2023 vs. September 30, 2022) | Investment | March 31, 2023 ($) | September 30, 2022 ($) | | :--- | :--- | :--- | | MVP | $15,008,995 | $13,689,370 | | Southgate | $88,080 | $83,705 | | **Total Investment** | **$15,097,075** | **$13,773,075** | [Note 7. Derivatives and Hedging](index=26&type=section&id=Note%207.%20Derivatives%20and%20Hedging) This note describes the company's use of interest rate swaps for hedging and their fair value measurement - The Company uses five interest rate swaps to manage variable rate debt, converting it to fixed rates, which qualify as cash flow hedges with changes in fair value reported in other comprehensive income[67](index=67&type=chunk)[68](index=68&type=chunk) - On April 3, 2023, Roanoke Gas amended a **$10 million** interest rate swap to revise the floating rate from LIBOR to Term SOFR, effective April 1, 2023[69](index=69&type=chunk) Fair Value of Interest Rate Swaps (March 31, 2023 vs. September 30, 2022) | Item | March 31, 2023 ($) | September 30, 2022 ($) | | :--- | :--- | :--- | | Interest rate swaps (Assets) | $3,871,379 | $4,798,467 | | Natural gas purchases (Liabilities) | $623,009 | $1,295,225 | [Note 8. Short-Term Debt](index=28&type=section&id=Note%208.%20Short-Term%20Debt) This note provides details on the company's revolving note, its terms, and outstanding balances - On March 24, 2023, Roanoke Gas entered into a new **$25 million** unsecured Revolving Note, replacing the previous line-of-credit, which matures on March 31, 2024, with a variable interest rate based on Term SOFR plus 110 basis points[72](index=72&type=chunk) - As of March 31, 2023, the Company had no outstanding balance under the new Revolving Note[72](index=72&type=chunk) [Note 9. Long-Term Debt](index=28&type=section&id=Note%209.%20Long-Term%20Debt) This note summarizes the company's long-term debt obligations, including types of notes and compliance with covenants - On March 24, 2023, Roanoke Gas amended a **$10 million** Term Note, revising its interest rate from LIBOR to Term SOFR plus 100 basis points, effective April 1, 2023[73](index=73&type=chunk) Long-Term Debt Summary (March 31, 2023) | Entity | Type of Note | Principal Amount ($) | | :--- | :--- | :--- | | Roanoke Gas | Unsecured senior notes payable, 4.26%, due 2034 | $30,500,000 | | Roanoke Gas | Unsecured term notes payable, 3.58%, due 2027 | $8,000,000 | | Roanoke Gas | Unsecured term notes payable, 4.41%, due 2031 | $10,000,000 | | Roanoke Gas | Unsecured term notes payable, 3.60%, due 2029 | $10,000,000 | | Roanoke Gas | Unsecured term note payable, 30-day SOFR + 1.20%, due 2026 | $15,000,000 | | Roanoke Gas | Unsecured term note payable, Term SOFR + 1.00%, due 2028 | $10,000,000 | | Midstream | Unsecured term notes payable, TERM SOFR + 1.50%, due 2023 | $23,000,000 | | Midstream | Unsecured term note payable, 30-day LIBOR + 1.15%, due 2026 | $14,000,000 | | Midstream | Unsecured term note payable, 30-day LIBOR + 1.20%, due 2024 | $9,625,000 | | Midstream | Unsecured term note payable, 30-day LIBOR + 1.15%, due 2028 | $8,000,000 | | **Total Long-Term Debt** | | **$138,125,000** | | Less: Current maturities | | $(25,100,000) | | **Total Long-Term Debt, net current maturities** | | **$113,025,000** | - The Company was in compliance with all debt covenants as of March 31, 2023, and September 30, 2022[76](index=76&type=chunk) [Note 10. Other Comprehensive Income (Loss)](index=31&type=section&id=Note%2010.%20Other%20Comprehensive%20Income%20(Loss)) This note details components of other comprehensive income (loss), primarily from interest rate swaps and benefit plans Other Comprehensive Income (Loss) (Six Months Ended March 31) | Component | Before-Tax Amount (2023) ($) | Net-of-Tax Amount (2023) ($) | | :--- | :--- | :--- | | Net interest rate swaps | $(927,088) | $(688,455) | | Defined benefit plans | $39,406 | $29,262 | | **Total Other Comprehensive Loss** | **$(887,682)** | **$(659,193)** | - The accumulated other comprehensive income (loss) balance at March 31, 2023, was **$1,305,171**, reflecting a decrease from September 30, 2022, primarily due to losses from interest rate swaps[78](index=78&type=chunk) [Note 11. Commitments and Contingencies](index=32&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note outlines the company's franchise agreements and the expected benefits from the Mountain Valley Pipeline - Roanoke Gas holds exclusive franchises and Certificates of Public Convenience and Necessity (CPCNs) for natural gas distribution in its service area, with current franchise agreements expiring December 31, 2035[80](index=80&type=chunk) - The Mountain Valley Pipeline (MVP) is expected to provide Roanoke Gas with an additional delivery source, enhancing system reliability and capacity to meet future natural gas demands[81](index=81&type=chunk) [Note 12. Earnings Per Share](index=32&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per common share and their year-over-year changes Earnings Per Share (Six Months Ended March 31) | Metric | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net income (loss) | $9,598,291 | $(20,909,900) | | Weighted average common shares | 9,870,259 (shares) | 8,434,689 (shares) | | Basic EPS | $0.97 | $(2.48) | | Diluted EPS | $0.97 | $(2.48) | - Basic and diluted earnings per common share significantly improved from a loss in the prior year to positive earnings in the current period, reflecting the turnaround in net income[83](index=83&type=chunk) [Note 13. Employee Benefit Plans](index=33&type=section&id=Note%2013.%20Employee%20Benefit%20Plans) This note details net periodic pension and postretirement benefit costs and funding contributions Net Periodic Pension and Postretirement Benefit Costs (Six Months Ended March 31, 2023) | Component | Pension Cost ($) | Postretirement Benefit Cost ($) | | :--- | :--- | :--- | | Service cost | $183,270 | $22,950 | | Interest cost | $686,050 | $310,312 | | Expected return on plan assets | $(616,298) | $(232,024) | | Recognized loss | $158,362 | $0 | | **Net periodic cost (benefit)** | **$411,384** | **$101,238** | - No funding contributions were made to either the pension plan or postretirement plan for the three and six months ended March 31, 2023, and none are planned for the remainder of fiscal 2023[85](index=85&type=chunk) [Note 14. Fair Value Measurements](index=33&type=section&id=Note%2014.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and measurement techniques for financial instruments like swaps and debt Fair Value Measurements (March 31, 2023) | Item | Fair Value ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) | | :--- | :--- | :--- | :--- | :--- | | Assets: Interest rate swaps | $3,871,379 | $0 | $3,871,379 | $0 | | Liabilities: Natural gas purchases | $623,009 | $0 | $623,009 | $0 | | Liabilities not adjusted to fair value: Current maturities of long-term debt | $25,075,314 | $0 | $0 | $25,075,314 | | Liabilities not adjusted to fair value: Notes payable | $110,157,640 | $0 | $0 | $110,157,640 | - The fair value of interest rate swaps and natural gas purchases are determined using Level 2 inputs, while the fair value of long-term debt is estimated using Level 3 inputs based on discounted future cash flows and market conditions[89](index=89&type=chunk)[94](index=94&type=chunk) [Note 15. Segment Information](index=36&type=section&id=Note%2015.%20Segment%20Information) This note provides financial data broken down by the company's reportable segments: Gas Utility, Investment in Affiliates, and Parent and Other - The Company's reportable segments are Gas Utility, Investment in Affiliates (primarily MVP), and Parent and Other (unregulated activities and corporate eliminations)[99](index=99&type=chunk)[100](index=100&type=chunk) Segment Operating Revenues and Income (Six Months Ended March 31, 2023) | Segment | Operating Revenues ($) | Operating Income (Loss) ($) | | :--- | :--- | :--- | | Gas Utility | $71,253,744 | $15,194,665 | | Investment in Affiliates | $0 | $(105,451) | | Parent and Other | $58,248 | $46,693 | | **Consolidated Total** | **$71,311,992** | **$15,135,907** | Segment Total Assets (March 31, 2023) | Segment | Total Assets ($) | | :--- | :--- | | Gas Utility | $262,105,231 | | Investment in Affiliates | $16,022,382 | | Parent and Other | $18,324,609 | | **Consolidated Total** | **$296,452,222** | [Note 16. Regulatory Assets and Liabilities](index=40&type=section&id=Note%2016.%20Regulatory%20Assets%20and%20Liabilities) This note details the company's regulatory assets and liabilities, reflecting deferred costs and expected customer recoveries - The Company's regulated operations follow ASC 980, allowing deferral of costs (regulatory assets) or imposition of liabilities (regulatory liabilities) based on expected customer recovery or future cost incurrence[103](index=103&type=chunk) Regulatory Assets and Liabilities (March 31, 2023) | Category | March 31, 2023 ($) | | :--- | :--- | | Total regulatory assets | $9,179,208 | | - Accrued WNA revenues | $2,805,972 | | - Under-recovery of RNG revenues | $95,290 | | Total regulatory liabilities | $39,484,629 | | - Over-recovery of gas costs | $1,246,485 | | - Rate refund | $763,282 | | - Supplier refunds | $695,474 | - As of March 31, 2023, the Company had **$9,167,263** in regulatory assets on which it did not earn a return during the recovery period[105](index=105&type=chunk) [Note 17. Subsequent Events](index=41&type=section&id=Note%2017.%20Subsequent%20Events) This note reports on any material events occurring after the balance sheet date that impact the financial statements - No material subsequent events were identified that would have materially impacted the Company's condensed consolidated financial statements[106](index=106&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=42&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of financial performance, liquidity, and key operational drivers [Forward-Looking Statements](index=42&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements based on management's current expectations, which are subject to various risks and uncertainties that could cause actual results to differ materially[107](index=107&type=chunk) - The Company assumes no duty to update these statements unless required by applicable laws and regulations[108](index=108&type=chunk) [Overview](index=43&type=section&id=Overview) This section provides a general business description, regulatory context, and key operational developments - RGC Resources, Inc. is an energy services company primarily engaged in the regulated sale and distribution of natural gas to approximately **63,200 customers** through its Roanoke Gas subsidiary[111](index=111&type=chunk) - Midstream's investment in the Mountain Valley Pipeline (MVP) project continues to be on hold due to legal and regulatory challenges, particularly concerning water crossing permits[112](index=112&type=chunk) - Roanoke Gas implemented new non-gas base rates effective January 1, 2023, designed to provide an **$8.55 million** annual revenue increase, subject to refund pending final SCC order[114](index=114&type=chunk) - The Company utilizes various approved rate mechanisms, including SAVE Rider, Weather Normalization Adjustment (WNA), Inventory Carrying Cost (ICC), Renewable Natural Gas (RNG), and Purchased Gas Adjustment (PGA), to mitigate the impact of weather variations and commodity price volatility[116](index=116&type=chunk) WNA Accrued Revenues (Three and Six Months Ended March 31, 2023) | Period | Accrued Revenues ($) | Weather Variance from Normal (%) | | :--- | :--- | :--- | | Three Months Ended March 31, 2023 | ~$2,800,000 | 28% warmer | | Six Months Ended March 31, 2023 | ~$2,612,000 | 15% warmer | - ICC revenues increased by approximately **$118,000** (three months) and **$312,000** (six months) due to significantly higher natural gas commodity prices in storage[120](index=120&type=chunk) - The RNG facility began operation in March 2023, with costs recovered through an RNG Rider, and customer benefits include monetization of environmental credits[121](index=121&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and net income drivers - Net income increased by **$30.8 million** (three months) and **$30.5 million** (six months) compared to the prior year, primarily due to the absence of the **$39.8 million impairment charge** on unconsolidated affiliates recorded in fiscal 2022[126](index=126&type=chunk)[139](index=139&type=chunk) Operating Revenues and Delivered Volumes (Three Months Ended March 31) | Metric | 2023 ($) | 2022 ($) | Change ($) | Percentage Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $38,029,657 | $29,529,683 | +$8,499,974 | +29% | | Regulated Natural Gas | 3,448,807 (DTH) | 4,242,022 (DTH) | (793,215) (DTH) | (19)% | | Heating Degree Days (HDD) | 1,487 | 1,918 | (431) | (22)% | Operating Revenues and Delivered Volumes (Six Months Ended March 31) | Metric | 2023 ($) | 2022 ($) | Change ($) | Percentage Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $71,311,992 | $52,792,763 | +$18,519,229 | +35% | | Regulated Natural Gas | 6,757,347 (DTH) | 6,930,193 (DTH) | (172,846) (DTH) | (2)% | | Heating Degree Days (HDD) | 3,010 | 3,079 | (69) | (2)% | Gross Utility Margin (Three and Six Months Ended March 31) | Period | 2023 ($) | 2022 ($) | Change ($) | Percentage Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended | $16,715,920 | $14,575,644 | +$2,140,276 | +15% | | Six Months Ended | $29,164,534 | $26,490,894 | +$2,673,640 | +10% | - Gross utility margin increased due to higher non-gas base rates and ICC revenues, despite a decrease in delivered volumes attributed to warmer weather, which was partially normalized by the WNA mechanism[129](index=129&type=chunk)[130](index=130&type=chunk)[142](index=142&type=chunk) - Interest expense increased by **26%** (three months) and **25%** (six months) due to higher weighted-average interest rates on variable-rate debt, despite a slight decline in total daily average debt outstanding[135](index=135&type=chunk)[148](index=148&type=chunk) [Critical Accounting Policies and Estimates](index=54&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no significant changes to the company's critical accounting policies and estimates - There have been no significant changes to the critical accounting policies as reflected in the Company's Annual Report on Form 10-K for the year ended September 30, 2022[153](index=153&type=chunk) [Asset Management](index=54&type=section&id=Asset%20Management) This section describes the company's use of a third-party asset manager for optimizing gas supply and transportation - Roanoke Gas utilizes a third-party asset manager to optimize its pipeline transportation, storage rights, and gas supply, with a portion of the monthly utilization fee retained by the Company and the balance passed through to customers[154](index=154&type=chunk) - The current asset management agreement is set to end on March 31, 2025[154](index=154&type=chunk) [Equity Investment in Mountain Valley Pipeline](index=54&type=section&id=Equity%20Investment%20in%20Mountain%20Valley%20Pipeline) This section details the status of the MVP project, including legal challenges, cost increases, and management's investment re-evaluation - The Mountain Valley Pipeline (MVP) project continues to experience repeated, significant delays and cost increases due to ongoing legal challenges and regulatory setbacks, particularly from the Fourth Circuit[156](index=156&type=chunk) - The Fourth Circuit recently vacated the West Virginia Department of Environmental Protection (WVDEP) State 401 Approval on April 3, 2023, while denying challenges to the Virginia Department of Environmental Quality (VADEQ) State 401 Approval on March 29, 2023[159](index=159&type=chunk) - The LLC's managing partner expects requisite authorizations by early summer 2023, with a goal of completing the project by the end of calendar 2023 at an estimated total cost of **$6.6 billion** (excluding AFUDC), but acknowledges continued hostility and risk from the Fourth Circuit[162](index=162&type=chunk)[164](index=164&type=chunk) - Management re-evaluated its investment as of March 31, 2023, and concluded no additional impairment was required, but will continue monitoring for future circumstances that may lead to further impairments[165](index=165&type=chunk) - On May 4, 2023, Midstream agreed to limit its future capital contributions to the MVP project, which will result in a proportionate adjustment to its ownership interest[167](index=167&type=chunk) [Regulatory](index=57&type=section&id=Regulatory) This section discusses regulatory developments, including rate applications, the SAVE Plan, and the RNG project - Roanoke Gas's application for an **$8.55 million** annual increase in non-gas base rates became interim effective January 1, 2023, subject to refund, with the SAVE Plan and Rider temporarily discontinued[169](index=169&type=chunk)[170](index=170&type=chunk) - A new five-year SAVE Plan and Rider application was filed on March 31, 2023, for recovery of costs associated with estimated **$49.5 million** in SAVE eligible investments through September 30, 2028[173](index=173&type=chunk) - The Renewable Natural Gas (RNG) project became operational in March 2023, and billing to customers under the RNG rate adjustment began March 1, 2023, following SCC approval[174](index=174&type=chunk) - Roanoke Gas acquired natural gas distribution assets from a local housing authority, recognizing a pre-tax gain of approximately **$219,000** in fiscal 2022[176](index=176&type=chunk) [Capital Resources and Liquidity](index=58&type=section&id=Capital%20Resources%20and%20Liquidity) This section analyzes the company's cash flows, capital needs, and overall liquidity position - The Company's primary capital needs include funding capital projects, investment in the MVP, seasonal natural gas inventories, accounts receivables, dividend payments, and debt service[178](index=178&type=chunk) Cash Flow Summary (Six Months Ended March 31) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,965,342 | $12,992,906 | | Net cash used in investing activities | $(14,350,139) | $(14,278,880) | | Net cash provided by (used in) financing activities | $(888,144) | $9,199,647 | | **Increase in cash and cash equivalents** | **$1,727,059** | **$7,913,673** | - Net cash provided by operating activities increased by **$3.97 million** YoY, driven by declining storage gas levels and customer collections, while financing cash flows decreased significantly due to the prior year's **$27 million equity offering**[182](index=182&type=chunk)[185](index=185&type=chunk) - Midstream has **$23 million** of debt maturing in December 2023, for which management is seeking an extension or refinancing option until the MVP is placed in service[188](index=188&type=chunk) - As of March 31, 2023, Resources' long-term capitalization ratio was **42% equity** and **58% debt**[189](index=189&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=62&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that no quantitative and qualitative disclosures about market risk are applicable for this period - This item is not applicable for the current reporting period[190](index=190&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=62&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes to internal controls - The Company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[193](index=193&type=chunk) - There were no control changes during the fiscal quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[194](index=194&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional non-financial disclosures, including legal proceedings, risk factors, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=64&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section reports that there are no material legal proceedings to disclose for the company - No material legal proceedings were reported[196](index=196&type=chunk) [ITEM 1A. RISK FACTORS](index=64&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section indicates no material changes to the risk factors previously disclosed in the annual report - No material changes to the risk factors previously disclosed in Resources' Annual Report on Form 10-K for the year ended September 30, 2022[197](index=197&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=64&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and use of proceeds were reported[198](index=198&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=64&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[199](index=199&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=64&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[200](index=200&type=chunk) [ITEM 5. OTHER INFORMATION](index=64&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section discloses a subsequent event regarding Midstream's limited capital contributions to the MVP project - On May 4, 2023, Midstream agreed to limit its future capital contributions to the MVP project, leading to a proportionate adjustment in its ownership interest[201](index=201&type=chunk) [ITEM 6. EXHIBITS](index=65&type=section&id=ITEM%206.%20EXHIBITS) This section lists all supporting documents and certifications filed as exhibits with the Form 10-Q - The exhibits include various agreements (e.g., Letter Agreement, Promissory Notes, Loan Agreement, Guaranty Agreement, Swap Agreement) and certifications (e.g., Rule 13a–14(a)/15d–14(a) Certifications, Section 1350 Certifications)[203](index=203&type=chunk) [SIGNATURES](index=66&type=section&id=SIGNATURES) This section confirms the official signing and submission of the report by the authorized financial officer - The report was duly signed on May 5, 2023, by Jason A. Field, Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) of RGC Resources, Inc[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)

RGC Resources, Inc. (NASDAQ:RGCO) Q1 2023 Earnings Conference Call February 10, 2023 9:00 AM ET Company Participants Paul Nester - President, CEO & Director Jason Field - VP, CFO & Treasurer Tommy Oliver - SVP, Regulatory and External Affairs Conference Call Participants Paul Nester Good morning, and welcome to RGC Resources 2023 First Quarter Earnings Call. I am Paul Nester, President and CEO of RGC Resources. Let's review a few administrative items. [Operator Instructions]. At the conclusion of the presen ...

Form 10-Q (Mark One) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended December 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Transition Period From to Commission File Number 000-26591 RGC Resources, Inc. (Exact name of Registrant as Specified in its Charter) Virginia 54-1909697 (State or Other ...

Financial Data and Key Metrics Changes - For Q4 2022, operating income was $455,000, approximately $100,000 less than Q4 2021, while total operating income for the year was $14,916,000, which is $137,000 higher than 2021 [13][14] - Interest expense increased by approximately $466,000 due to higher debt balances and increased interest rates on variable rate debt [15] - Underlying net income for Q4 was a $75,000 net loss, while for the year it was $9,179,000, with declines attributed to limited growth in construction activity of the Mountain Valley Pipeline [17] Business Line Data and Key Metrics Changes - Delivered volumes for Q4 were up approximately 181,000 dekatherms, a 14% increase compared to Q4 2021, primarily driven by industrial customers [9] - Total delivered volumes for the year were approximately 4% higher than fiscal 2021, despite a 6% decline in heating degree days [11] - Capital expenditures for utility property totaled $25,461,000 for the fiscal year, an increase of approximately 27.5% over the prior year [18] Market Data and Key Metrics Changes - The decline in weather-related deliveries to residential customers was offset by increased industrial transportation volumes, with six of the top seven customers by volume increasing their usage over 2021 [11] - The company expects reasonable volumes from industrial customers through the winter months, although a slight decrease is anticipated compared to the previous year [39] Company Strategy and Development Direction - The company is focused on the RNG project, which is expected to add about $7.7 million to the rate base, with operational service expected in the second quarter of the fiscal year [25][23] - The company plans to continue investments in infrastructure and customer growth, with approximately $3.2 million allocated for the RNG project in fiscal 2023 [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the RNG project and its partnership with Western Virginia Water Authority, anticipating a positive impact on future revenues [28] - The company forecasts a loss in the midstream subsidiary for fiscal 2023 due to financing costs, while expecting strong results from Roanoke Gas [30] Other Important Information - The company has filed a rate case requesting an incremental revenue of about $4.4 million, with rates expected to take effect on an interim basis starting January 2023 [26] - The dividend has been slightly increased to an implied annual rate of $0.79 per share, with a payout ratio in the 85% to 95% range [32] Q&A Session Summary Question: Expected carrying costs for MVP in fiscal '23 - Management expects pretax costs to be in the $2 million to $2.2 million range for the fiscal year [37] Question: Volumes from industrial customers through winter months - Management anticipates reasonable volumes from the industrial customer, with some seasonal slowdowns expected [39] Question: Dynamic of coal and gas switching in the market - Management noted that while there was a significant switch from coal to gas in fiscal 2022, a blend of coal may be used in 2023 due to more predictable commodity prices [41]

[GLOSSARY OF TERMS](index=5&type=section&id=Glossary) The glossary defines key terms and acronyms crucial for understanding the company's operations and financial disclosures - The glossary defines key terms and acronyms used throughout the report, such as **AFUDC** (Allowance for Funds Used During Construction), **MVP** (Mountain Valley Pipeline), **SCC** (Virginia State Corporation Commission), and **WNA** (Weather Normalization Adjustment), which are crucial for understanding the company's operations and financial disclosures[12](index=12&type=chunk)[13](index=13&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Cautionary Note Regarding Forward Looking Statements](index=10&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This section advises on forward-looking statements, subject to risks detailed in 'Risk Factors', with no duty to update unless legally required - This section advises readers that the report contains forward-looking statements based on management's current expectations, which are subject to various risks and uncertainties detailed in Item 1A 'Risk Factors'[18](index=18&type=chunk) - The company explicitly states it assumes no duty to update these statements unless required by law[19](index=19&type=chunk) PART I [Item 1. Business](index=11&type=section&id=Item%201.%20Business) RGC Resources, Inc. is an energy services company primarily engaged in regulated natural gas distribution and sale, with an investment in the Mountain Valley Pipeline project - RGC Resources, Inc. was incorporated in Virginia on July 31, 1998, and its subsidiaries were reorganized into a holding company structure effective July 1, 1999[21](index=21&type=chunk) - The company is composed of three subsidiaries: Roanoke Gas (natural gas distribution), Midstream (investor in Mountain Valley Pipeline, LLC), and Diversified Energy (currently inactive)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Roanoke Gas's principal service is the distribution and sale of natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and surrounding localities, accounting for over **99% of consolidated revenues**[22](index=22&type=chunk)[25](index=25&type=chunk) Customer, Volume, Revenue, and Margin Breakdown (2022 vs. 2021) | Category | 2022 Customers | 2022 Volume | 2022 Revenue | 2022 Margin | 2021 Customers | 2021 Volume | 2021 Revenue | 2021 Margin | | :--------- | :------------- | :---------- | :----------- | :---------- | :------------- | :---------- | :----------- | :---------- | | Residential | 91.3% | 35% | 57% | 63% | 91.3% | 37% | 58% | 63% | | Commercial | 8.6% | 29% | 35% | 24% | 8.6% | 31% | 34% | 25% | | Industrial | 0.1% | 36% | 7% | 11% | 0.1% | 32% | 7% | 11% | | Other Utility | 0.0% | 0% | 1% | 2% | 0.0% | 0% | 1% | 1% | | Other Non-Utility | 0.0% | 0% | 0% | 0% | 0.0% | 0% | 0% | 0% | | **Total Percent** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | | **Total Value** | **62,001** | **10,325,336 DTH** | **$84,165,222** | **$41,640,041** | **62,623** | **9,909,529 DTH** | **$75,174,779** | **$39,969,380** | - The company operates in a regulated, monopolistic environment with exclusive franchises in its service areas, but faces competition from other energy sources like electricity, propane, coal, wind, and solar[33](index=33&type=chunk)[36](index=36&type=chunk) - As of September 30, 2022, Resources had **96 full-time employees**[41](index=41&type=chunk) - The collective bargaining agreement with the Union expired on August 1, 2022, and the Union disclaimed interest in serving as the exclusive representative[41](index=41&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces broad operational, regulatory, and financial risks, including pipeline reliance, cybersecurity, price volatility, and MVP project uncertainties - Operational risks include dependence on two interstate pipelines for **100% of natural gas supply**, potential for service disruption from system failures or catastrophic events, and vulnerability to cyber-attacks[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - Volatility in natural gas prices, supply disruptions due to disasters, inability to attract and retain skilled employees, and failure of technology systems are also significant operational risks[51](index=51&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - Regulatory risks encompass new environmental laws (especially related to climate change and greenhouse gas emissions), increased compliance and pipeline safety requirements, and the potential for delayed or unfavorable rate relief from the SCC[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - Financial risks are heavily influenced by the investment in Mountain Valley Pipeline, LLC, which incurred a total pre-tax impairment loss of **$55.1 million** in fiscal 2022 due to legal and regulatory setbacks and increased uncertainty[68](index=68&type=chunk)[69](index=69&type=chunk) - Other financial risks include access to capital, compliance with debt covenants, rising costs of healthcare and post-retirement benefits, exposure to market risks (commodity price, interest rates), and the potential negative impacts of a pandemic outbreak or general economic downturn[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[90](index=90&type=chunk) [Item 1B. Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[93](index=93&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) The company's properties include 1,168 miles of natural gas pipelines, six metering stations, and a 200,000 DTH LNG storage facility - Utility property includes approximately **1,168 miles of transmission and distribution pipeline**, representing **89% of total utility property investment**[94](index=94&type=chunk) - Roanoke Gas owns and operates six metering stations and a liquefied natural gas (LNG) storage facility capable of storing up to **200,000 DTH**[95](index=95&type=chunk) - The company's executive, accounting, business offices, and maintenance departments are located on Kimball Avenue in Roanoke, Virginia[96](index=96&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any pending legal proceedings - The Company is not known to be a party to any pending legal proceedings[96](index=96&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable[97](index=97&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) RGC Resources common stock trades on NASDAQ, with dividends determined by the Board, and equity compensation plans in place for future issuance - Resources' common stock is listed on the NASDAQ Global Market under the trading symbol **RGCO**[100](index=100&type=chunk) - As of November 18, 2022, there were **992 holders of record** of the Company's common stock[101](index=101&type=chunk) Common Stock Dividends Declared and Market Prices | Year Ending September 30, 2022 | High ($) | Low ($) | Cash Dividends Declared ($) | | :----------------------------- | :--- | :-- | :---------------------- | | First Quarter | $25.00 | $21.32 | $0.195 | | Second Quarter | $23.84 | $20.25 | $0.195 | | Third Quarter | $22.00 | $18.01 | $0.195 | | Fourth Quarter | $23.35 | $19.18 | $0.195 | | **Year Ending September 30, 2021** | | | | | First Quarter | $27.40 | $22.82 | $0.185 | | Second Quarter | $25.60 | $22.08 | $0.185 | | Third Quarter | $25.60 | $21.32 | $0.185 | | Fourth Quarter | $26.02 | $22.33 | $0.185 | Equity Compensation Plan Summary (September 30, 2022) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance | | :--------------------------------------------- | :---------------------------------------------------------------------------------------- | :-------------------------------------------------------------------------- | :----------------------------------------------------------- | | Equity compensation plans approved by security holders | 34,500 | $18.69 | 411,547 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **34,500** | **$18.69** | **411,547** | [Item 6. [Reserved]](index=30&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[102](index=102&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported a significant net loss in fiscal 2022 due to a **$55.1 million** MVP impairment, while utility operations saw increased gross margin and regulatory activity - Resources is primarily engaged in the regulated sale and distribution of natural gas to approximately **62,000 customers** through its Roanoke Gas subsidiary[103](index=103&type=chunk) - Midstream, a wholly-owned subsidiary, is a more than **1% investor** in the MVP and a less than **1% investor** in Southgate[103](index=103&type=chunk) - The company recorded a total pre-tax impairment of **$55.1 million** on its investment in the Mountain Valley Pipeline (MVP) in fiscal 2022 due to increased uncertainty regarding its completion and commercial operation, following unfavorable Fourth Circuit decisions[104](index=104&type=chunk) - Roanoke Gas's utility operations are regulated by the SCC, with rates designed to recover costs and provide a reasonable return, utilizing mechanisms like **SAVE Rider**, **WNA**, **ICC**, and **PGA** to mitigate weather volatility and gas price fluctuations[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Overview](index=31&type=section&id=Overview) The company recorded a **$55.1 million** MVP impairment in fiscal 2022, while Roanoke Gas utility operations are regulated by the SCC with various rate mechanisms - The company recorded a total pre-tax impairment of **$55.1 million** on its investment in the Mountain Valley Pipeline (MVP) in fiscal 2022 due to increased uncertainty regarding its completion and commercial operation, following unfavorable Fourth Circuit decisions[104](index=104&type=chunk) - Roanoke Gas's utility operations are regulated by the SCC, with rates designed to recover costs and provide a reasonable return, utilizing mechanisms like **SAVE Rider**, **WNA**, **ICC**, and **PGA** to mitigate weather volatility and gas price fluctuations[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) Alternative Revenue Program (ARP) Revenues (2022 vs. 2021) | ARP Mechanism | Fiscal Year 2022 Revenue ($) | Fiscal Year 2021 Revenue ($) | Change ($) | | :-------------- | :----------------------- | :----------------------- | :----- | | SAVE Rider | $3,286,000 | $2,487,000 | +$799,000 | | WNA | $1,973,000 | $1,196,000 | +$777,000 | | ICC | $657,000 | $396,000 | +$261,000 | [COVID-19](index=35&type=section&id=COVID-19) COVID-19 impacts shifted to supply chain disruptions and inflation, with most restrictions eased and commercial natural gas consumption returning to pre-pandemic levels - COVID-19 impacts shifted from quarantines to supply chain disruptions, labor shortages, and inflation, though most restrictions have eased, allowing a return to mostly normal operating conditions[115](index=115&type=chunk) - Natural gas consumption by commercial customers has largely returned to pre-pandemic levels[115](index=115&type=chunk) - Roanoke Gas expensed **$57,000** and **$217,000** in COVID-19 related deferred costs in fiscal 2022 and 2021, respectively, as earnings exceeded the authorized return on equity[114](index=114&type=chunk)[170](index=170&type=chunk) [Cyber Risk](index=35&type=section&id=Cyber%20Risk) The company actively monitors and safeguards its IT systems against constant cyber threats, with security measures and cyber insurance in place - The company faces constant cyber threats and is committed to safeguarding its information technology systems, which contain confidential customer, vendor, and employee information[117](index=117&type=chunk) - Management continuously monitors system access and has security measures in place, including a Security Incident Response Plan and cyber insurance, to mitigate financial impacts from potential cyber incidents[117](index=117&type=chunk) [Inflation and Rising Prices](index=35&type=section&id=Inflation%20and%20Rising%20Prices) Rising natural gas and non-gas expenses are managed through regulatory mechanisms, with a non-gas rate application planned to address cost recovery lags - Natural gas commodity, delivery, and storage capacity costs represent **61% of fiscal 2022 total operating expenses**, with prices increasing sharply in the fiscal third and fourth quarters[118](index=118&type=chunk) - Roanoke Gas can recover rising natural gas costs through the **PGA mechanism**, but the timing of recovery may lag during periods of rapid increases[118](index=118&type=chunk) - Inflation also affects non-gas expenses (labor, benefits, materials), which are recovered through non-gas tariff rates, leading to an inherent lag in recovery[119](index=119&type=chunk) - Management plans to file a non-gas rate application in early December 2022 to incorporate increased expense levels and additional rate base[120](index=120&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Net income decreased significantly to a **$31.7 million** net loss in fiscal 2022, primarily due to the MVP impairment, despite increased gross utility margin - Net income decreased by **$41,834,664** to a net loss of **$31,732,602** for the year ended September 30, 2022, primarily due to the impairment of the LLC investment and lower equity in earnings[121](index=121&type=chunk) - Gross utility margin, defined as utility revenues less cost of gas, is considered a more useful measure of financial performance by management[122](index=122&type=chunk) Operating Revenues and Volumes (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | Change ($) | Percentage Change (%) | | :------------------------- | :------------ | :------------ | :------------ | :---------------- | | Gas Utility Revenues | $84,035,644 | $75,045,103 | $8,990,541 | 12% | | Non Utility Revenues | $129,578 | $129,676 | $(98) | (0)% | | **Total Operating Revenues** | **$84,165,222** | **$75,174,779** | **$8,990,443** | **12%** | | Residential and Commercial Volumes (DTH) | 6,577,369 | 6,773,819 | (196,450) | (3)% | | Transportation and Interruptible Volumes (DTH) | 3,747,967 | 3,135,710 | 612,257 | 20% | | **Total Delivered Volumes (DTH)** | **10,325,336** | **9,909,529** | **415,807** | **4%** | | Heating Degree Days (HDD) | 3,398 | 3,610 | (212) | (6)% | - Total gas utility operating revenues increased by **12%** in 2022, driven by higher natural gas commodity prices, increases in SAVE and ICC revenues, and higher transportation and interruptible volumes[126](index=126&type=chunk) Gross Utility Margin Components (2022 vs. 2021) | Component | 2022 ($) | 2021 ($) | Increase (Decrease) ($) | | :-------------------- | :------------ | :------------ | :------------------ | | Customer Base Charge | $14,557,492 | $14,563,274 | $(5,782) | | SAVE Plan | $3,285,518 | $2,487,299 | $798,219 | | Volumetric | $20,901,637 | $21,188,794 | $(287,157) | | WNA | $1,972,801 | $1,196,499 | $776,302 | | ICC | $657,042 | $395,626 | $261,416 | | Other Revenues | $165,099 | $33,769 | $131,330 | | **Total Gross Utility Margin** | **$41,539,589** | **$39,865,261** | **$1,674,328** | - Operations and maintenance expense increased by **$1,012,885 (7%)** due to higher bad debt expense, corporate insurance premiums, professional and contracted services, and accelerated amortization of regulatory assets[130](index=130&type=chunk) - Equity in earnings of unconsolidated affiliate (MVP investment) decreased by **$1,594,227** as limited growth construction activities and AFUDC accruals ceased in October 2021[132](index=132&type=chunk) - The **$55,092,303 impairment** is due to two other-than-temporary write-downs of the Company's investment in the LLC during the second and fourth quarters of fiscal 2022[133](index=133&type=chunk) - Interest expense increased by **$446,044 (11%)** due to higher total debt levels and increasing interest rates on variable rate debt[135](index=135&type=chunk) - Income tax expense decreased by **$14,614,707**, resulting in a net tax benefit of **$11,410,645** in fiscal 2022, primarily due to a deferred tax benefit from the MVP impairment[138](index=138&type=chunk) Earnings Per Share and Dividends (2022 vs. 2021) | Metric | 2022 ($) | 2021 ($) | | :---------------------- | :------ | :------ | | Basic EPS | $(3.48) | $1.22 | | Diluted EPS | $(3.48) | $1.22 | | Dividends Declared per Share | $0.78 | $0.74 | [Capital Resources and Liquidity](index=41&type=section&id=Capital%20Resources%20and%20Liquidity) Capital needs for projects and MVP investment are funded by operating cash flows, credit facilities, and common stock sales, with Midstream requiring **$15-17 million** for MVP - The company's primary capital needs include funding capital projects, investment in the LLC, seasonal natural gas inventories, accounts receivables, and dividend payments[140](index=140&type=chunk) - Funding is anticipated through operating cash flows, credit availability (short-term and long-term debt), and common stock sales[140](index=140&type=chunk) Cash Flow Summary (2022 vs. 2021) | Cash Flow Category | 2022 ($) | 2021 ($) | | :----------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $15,551,676 | $11,568,108 | | Net cash used in investing activities | $(30,615,878) | $(25,849,237) | | Net cash provided by financing activities | $18,444,799 | $15,508,380 | | **Net increase in cash and cash equivalents** | **$3,380,597** | **$1,227,251** | - Operating cash flows increased by nearly **$4 million**, largely due to the recovery of prior year under-collected gas costs and receipt of supplier refunds, offset by higher natural gas storage costs[144](index=144&type=chunk) - Investing activities primarily involved **$25.5 million** in utility property expenditures for Roanoke Gas and **$5.3 million** for Midstream's investment in the LLC in fiscal 2022[146](index=146&type=chunk)[148](index=148&type=chunk) - Financing activities increased due to a **$27 million equity offering** in March 2022, with **$12 million** invested in Roanoke Gas and **$10 million** in Midstream, alongside new debt issuances[149](index=149&type=chunk) - Midstream expects to need **$15 million to $17 million** in additional capital over the next 12-24 months for MVP funding, with its **$21.9 million credit facility** maturing in December 2023[150](index=150&type=chunk) - Roanoke Gas has **$28 million available** under its line-of-credit and private shelf agreements for up to **$40 million** (expiring Dec 2022) and **$70 million** (expiring Sep 2025) in unsecured notes[151](index=151&type=chunk) [ATM Program](index=46&type=section&id=ATM%20Program) Resources issued **4,872** shares for **$112,500** under the ATM program in fiscal 2022, a significant decrease from the prior year - Resources issued **4,872 shares** of common stock for **$112,500** (net of fees) under the ATM program in fiscal 2022, a significant decrease from **142,726 shares** for **$3,400,443** in fiscal 2021[153](index=153&type=chunk) [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements as defined by Regulation S-K - The Company has no off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii)[154](index=154&type=chunk) [Equity Investment in Mountain Valley Pipeline](index=46&type=section&id=Equity%20Investment%20in%20Mountain%20Valley%20Pipeline) The MVP project faces significant delays and cost increases due to legal and regulatory setbacks, leading to a **$55.1 million** impairment in fiscal 2022 - The MVP project has faced repeated, significant delays and cost increases due to legal and regulatory setbacks, particularly Fourth Circuit rulings in January and February 2022 vacating key permits[155](index=155&type=chunk)[158](index=158&type=chunk) - The LLC is pursuing new authorizations and an updated Biological Opinion, and FERC granted an extension to complete the project through October 13, 2026[158](index=158&type=chunk)[159](index=159&type=chunk) - Management believes federal energy infrastructure permitting reform legislation specifically requiring MVP completion is the best path forward for the project[161](index=161&type=chunk) - AFUDC accruals on the MVP project and Roanoke Gas's interconnecting gate stations have been suspended due to construction delays[163](index=163&type=chunk)[164](index=164&type=chunk) - The Southgate project, an extension of MVP, also faces litigation and regulatory delays, with its Clean Water Act Section 401 certification denied and a compressor station permit denied[165](index=165&type=chunk) - Midstream recognized a total pre-tax impairment loss of **$55.1 million** on its MVP investment in fiscal 2022 due to an other-than-temporary decline in fair value, with further impairments possible[167](index=167&type=chunk) - Midstream's **$23 million non-revolving credit facility** matures in December 2023, and additional financing will be required for MVP funding[168](index=168&type=chunk) [Regulatory](index=49&type=section&id=Regulatory) Roanoke Gas received SCC approval for an updated SAVE Rider and asset acquisition, plans a non-gas rate case, and managed COVID-19 deferred costs - Roanoke Gas expensed **$57,000** and **$217,000** in COVID-19 related deferred costs in fiscal 2022 and 2021, respectively, as its earnings exceeded the authorized return on equity[170](index=170&type=chunk) - The SCC approved Roanoke Gas's SAVE application in August 2022, updating the SAVE Rider to collect approximately **$4.1 million** in annual revenues, effective October 2022[171](index=171&type=chunk) - Roanoke Gas filed an application with the SCC in August 2022 for a rate adjustment clause to recover costs associated with constructing, owning, operating, and maintaining a renewable natural gas (RNG) facility[172](index=172&type=chunk) - The SCC approved Roanoke Gas's application to acquire natural gas distribution assets from a local housing authority, resulting in a pre-tax gain of approximately **$219,000** in fiscal Q4 2022[173](index=173&type=chunk)[174](index=174&type=chunk) - The company filed notice with the SCC on September 30, 2022, to file a non-gas base rate case in early December, with rates expected to be effective January 1, 2023, on an interim basis[175](index=175&type=chunk) - AFUDC accruals on MVP interconnect construction projects ceased in January 2021 but resumed in fiscal 2022 for the RNG project, totaling **$75,154**[176](index=176&type=chunk) - The service disconnection moratorium expired on August 30, 2021, leading to historically high arrearage balances, though **CARES Act** and **ARPA funds** (**$403,000** and **$859,000**, respectively) were applied to assist customers[177](index=177&type=chunk)[178](index=178&type=chunk) [Critical Accounting Policies and Estimates](index=53&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Fair value determination for the MVP investment, regulatory accounting, revenue recognition, credit loss allowances, and pension assumptions are critical estimates - The determination of fair value for the investment in Mountain Valley Pipeline, LLC is a critical estimate, requiring significant judgment and assumptions regarding discounted cash flows and probability scenarios, which led to a **$55.1 million impairment** in fiscal 2022[181](index=181&type=chunk)[182](index=182&type=chunk) - Regulatory accounting (ASC 980) allows the company to defer costs and liabilities based on expected recovery or collection through rates, with a write-off if criteria are no longer met[183](index=183&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Revenue recognition for regulated utility sales and transportation is based on SCC-approved tariff rates, with ARPs (WNA, SAVE Plan) adjusting revenues for external factors[188](index=188&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) - The allowance for credit losses became more subjective post-COVID-19 due to the disconnection moratorium and federal financial assistance, with estimates at **$371,271** and **$242,010** as of September 30, 2022 and 2021, respectively[192](index=192&type=chunk) - Pension and postretirement benefit expenses and liabilities are based on numerous actuarial assumptions (discount rate, return on assets, compensation increases, life expectancies), with significant changes in discount rates impacting obligations[193](index=193&type=chunk)[196](index=196&type=chunk) - The company has implemented strategies to reduce pension plan risk, including a 'soft freeze' for new employees and transitioning asset allocation to a **Liability Driven Investment (LDI) approach** for **70% of assets**[197](index=197&type=chunk)[198](index=198&type=chunk) Funded Status of Pension and Postretirement Plans (September 30, 2022 vs. 2021) | Metric | Pension Plan 2022 ($) | Postretirement Plan 2022 ($) | Total 2022 ($) | Pension Plan 2021 ($) | Postretirement Plan 2021 ($) | Total 2021 ($) | | :---------------------- | :---------------- | :----------------------- | :------------ | :---------------- | :----------------------- | :------------ | | Benefit Obligation | $27,268,456 | $12,416,546 | $39,685,002 | $37,654,468 | $16,796,849 | $54,451,317 | | Fair value of assets | $28,017,797 | $12,138,119 | $40,155,916 | $38,914,107 | $15,882,342 | $54,796,449 | | **Funded status** | **$749,341** | **$(278,427)** | **$470,914** | **$1,259,639** | **$(914,507)** | **$345,132** | - The company uses derivative instruments, such as interest rate swaps, to hedge commodity and financial market risks, with changes in fair value reported in other comprehensive income for cash flow hedges[205](index=205&type=chunk)[206](index=206&type=chunk) [Recently Adopted Accounting Standards](index=59&type=section&id=Recently%20Adopted%20Accounting%20Standards) The company adopted ASU 2018-01 and ASU 2018-14, neither of which had a material effect on its financial statements - The company adopted **ASU 2018-01** (Leases: Land Easement Practical Expedient) and **ASU 2018-14** (Defined Benefit Plans Disclosure Framework), neither of which had a material effect on its consolidated financial statements[274](index=274&type=chunk)[276](index=276&type=chunk) [Recently Issued Accounting Standards](index=60&type=section&id=Recently%20Issued%20Accounting%20Standards) The FASB issued ASU 2020-04 (Reference Rate Reform) to ease accounting for LIBOR changes, with adoption anticipated in fiscal 2023 - The FASB issued **ASU 2020-04** (Reference Rate Reform) to ease the burden of accounting for reference rate changes like **LIBOR**, which is expected to cease publication in June 2023[277](index=277&type=chunk) - The company anticipates adopting this guidance in fiscal 2023, and it could significantly impact its financial position, results of operations, and cash flows when the reference rate changes for related contracts[277](index=277&type=chunk) [Reclassification](index=60&type=section&id=Reclassification) Certain prior year amounts have been reclassified to conform to current year presentations - Certain prior year amounts have been reclassified to conform to current year presentations[279](index=279&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - This item is not applicable[207](index=207&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes, with an unqualified audit opinion - The independent registered public accounting firm issued an unqualified opinion on the consolidated financial statements for the years ended September 30, 2022 and 2021[211](index=211&type=chunk) - A critical audit matter identified was the valuation of the equity method investment in Mountain Valley Pipeline, LLC, due to the significant judgment and sensitivity of fair value estimates to assumptions like discounted cash flows and probability estimates[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) [Report of Independent Registered Public Accounting Firm](index=64&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion on the financial statements, highlighting the MVP investment valuation as a critical audit matter - The independent registered public accounting firm provided an unqualified opinion on the consolidated financial statements for the years ended September 30, 2022 and 2021[211](index=211&type=chunk) - The valuation of the equity method investment in Mountain Valley Pipeline, LLC was identified as a critical audit matter due to the significant judgment required for fair value determination, particularly regarding discounted cash flows and probability estimates[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) [Consolidated Balance Sheets](index=66&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show total assets decreased by **$19.8 million** in 2022, primarily due to a **$51.1 million** reduction in the MVP investment Consolidated Balance Sheet Highlights (September 30, 2022 vs. 2021) | Asset/Liability Category | 2022 ($) | 2021 ($) | Change ($) | | :----------------------- | :------------ | :------------ | :------------ | | Total Current Assets | $35,548,319 | $25,143,855 | +$10,404,464 | | Utility Property, net | $229,861,074 | $211,649,684 | +$18,211,390 | | Investment in unconsolidated affiliates | $13,773,075 | $64,867,319 | $(51,094,244) | | Total Assets | $290,309,243 | $310,109,193 | $(19,799,950) | | Total Current Liabilities | $22,315,310 | $26,013,532 | $(3,698,222) | | Long-Term Debt, net | $135,695,289 | $133,471,427 | +$2,223,862 | | Total Stockholders' Equity | $93,090,656 | $99,701,709 | $(6,611,053) | [Consolidated Statements of Income](index=68&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income reflect a **$31.7 million** net loss in 2022, driven by a **$55.1 million** impairment of unconsolidated affiliates Consolidated Statements of Income Highlights (2022 vs. 2021) | Income Statement Item | 2022 ($) | 2021 ($) | Change ($) | | :------------------------- | :-------------- | :-------------- | :-------------- | | Total Operating Revenues | $84,165,222 | $75,174,779 | +$8,990,443 | | Total Operating Expenses | $69,248,547 | $60,396,470 | +$8,852,077 | | Operating Income | $14,916,675 | $14,778,309 | +$138,366 | | Equity in earnings of unconsolidated affiliate | $73,327 | $1,667,554 | $(1,594,227) | | Impairment of unconsolidated affiliates | $(55,092,303) | — | $(55,092,303) | | Income (Loss) Before Income Taxes | $(43,143,247) | $13,306,124 | $(56,449,371) | | Income Tax Expense (Benefit) | $(11,410,645) | $3,204,062 | $(14,614,707) | | **Net Income (Loss)** | **$(31,732,602)** | **$10,102,062** | **$(41,834,664)** | | Basic EPS | $(3.48) | $1.22 | $(4.70) | | Diluted EPS | $(3.48) | $1.22 | $(4.70) | [Consolidated Statements of Comprehensive Income (Loss)](index=69&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income shows a **$28.2 million** loss in 2022, primarily due to the net loss, partially offset by gains from interest rate swaps Consolidated Statements of Comprehensive Income (Loss) Highlights (2022 vs. 2021) | Comprehensive Income Item | 2022 ($) | 2021 ($) | Change ($) | | :------------------------ | :-------------- | :-------------- | :-------------- | | Net Income (Loss) | $(31,732,602) | $10,102,062 | $(41,834,664) | | Other comprehensive income (loss), net of tax: | | | | | Interest rate swaps | $4,451,551 | $763,003 | +$3,688,548 | | Defined benefit plans | $(951,753) | $1,149,507 | $(2,101,260) | | **Total Other Comprehensive Income, Net of Tax** | **$3,499,798** | **$1,912,510** | **+$1,587,288** | | **Comprehensive Income (Loss)** | **$(28,232,804)** | **$12,014,572** | **$(40,247,376)** | [Consolidated Statements of Stockholders' Equity](index=70&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased by **$6.6 million** in 2022, mainly due to the net loss and dividends, partially offset by common stock issuance Consolidated Statements of Stockholders' Equity Highlights (2022 vs. 2021) | Equity Component | September 30, 2022 ($) | September 30, 2021 ($) | | :--------------------------- | :----------------- | :----------------- | | Common Stock | $49,102,675 | $41,875,460 | | Capital in Excess of Par Value | $41,479,459 | $19,705,387 | | Retained Earnings | $544,158 | $39,656,296 | | Accumulated Other Comprehensive Income (Loss) | $1,964,364 | $(1,535,434) | | **Total Stockholders' Equity** | **$93,090,656** | **$99,701,709** | - Total stockholders' equity decreased by **$6,611,053** from **$99,701,709** in 2021 to **$93,090,656** in 2022, primarily due to the net loss of **$31,732,602** and cash dividends declared of **$7,379,536**, partially offset by issuance of common stock totaling **$28,912,318**[229](index=229&type=chunk) [Consolidated Statements of Cash Flows](index=71&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flows increased by nearly **$4 million** in 2022, while investing activities saw higher utility property and affiliate investments, and financing was boosted by stock issuance Consolidated Statements of Cash Flows Highlights (2022 vs. 2021) | Cash Flow Category | 2022 ($) | 2021 ($) | Change ($) | | :----------------------------- | :------------ | :------------ | :------------ | | Net cash provided by operating activities | $15,551,676 | $11,568,108 | +$3,983,568 | | Net cash used in investing activities | $(30,615,878) | $(25,849,237) | $(4,766,641) | | Net cash provided by financing activities | $18,444,799 | $15,508,380 | +$2,936,419 | | **Net increase in cash and cash equivalents** | **$3,380,597** | **$1,227,251** | **+$2,153,346** | | Ending Cash and Cash Equivalents | $4,898,914 | $1,518,317 | +$3,380,597 | - Cash flows from operating activities increased by nearly **$4 million**, primarily due to the recovery of prior year under-collected gas costs and supplier refunds, partially offset by higher gas in storage costs[144](index=144&type=chunk) - Investing activities saw increased expenditures for utility property (**$25.5 million** in 2022) and investment in unconsolidated affiliates (**$5.3 million** in 2022)[146](index=146&type=chunk)[148](index=148&type=chunk) - Financing activities were significantly boosted by **$28.9 million** in proceeds from stock issuance in 2022, enabling debt repayments and capital infusions[149](index=149&type=chunk)[231](index=231&type=chunk) [Notes to Consolidated Financial Statements](index=72&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, regulatory matters, segment information, and other financial disclosures [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=72&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting policies including consolidation, rate-regulated accounting, depreciation, AROs, fair value, and revenue recognition - The consolidated financial statements include RGC Resources, Inc. and its wholly-owned subsidiaries: Roanoke Gas (natural gas utility), Midstream (MVP investor), and Diversified Energy (inactive)[232](index=232&type=chunk) - The company's regulated operations follow **ASC 980, Regulated Operations**, allowing deferral of costs and liabilities based on expected recovery or collection through rates[234](index=234&type=chunk) Regulatory Assets and Liabilities (September 30, 2022 vs. 2021) | Category | 2022 ($) | 2021 ($) | | :----------------------- | :------------ | :------------ | | Total Regulatory Assets | $7,797,302 | $12,824,346 | | Total Regulatory Liabilities | $38,873,065 | $34,490,726 | - Utility property is stated at original cost and depreciated using composite straight-line rates, with the estimated cost of asset retirement accrued through depreciation expense as a regulatory liability[238](index=238&type=chunk)[240](index=240&type=chunk) - The company capitalizes **Allowance for Funds Used During Construction (AFUDC)** for equity and debt financing costs during construction phases of infrastructure projects, including the RNG project[242](index=242&type=chunk) - Asset Retirement Obligations (AROs) are recorded for legal obligations related to purging and capping distribution mains and services upon retirement, with revisions to estimated cash flows increasing the ARO by **$2,072,266** in 2022[243](index=243&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk) - The allowance for credit losses was estimated at **$371,271** in 2022, up from **$242,010** in 2021, reflecting the impact of COVID-19, the disconnection moratorium, and federal financial assistance[249](index=249&type=chunk)[250](index=250&type=chunk) - The company uses the asset and liability method for income taxes, recognizing deferred tax assets and liabilities for temporary differences, and revalued them in fiscal 2018 due to the corporate federal income tax rate reduction[254](index=254&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - The company uses interest rate swaps to hedge variable rate debt, which qualify as cash flow hedges, with changes in fair value reported in other comprehensive income[269](index=269&type=chunk) [2. REVENUE](index=84&type=section&id=2.%20REVENUE) This note details the company's revenue recognition policies, primarily from tariff-based natural gas sales and delivery, which fall under ASC 606 Revenue by Customer, Product, and Income Statement Classification (2022 vs. 2021) | Revenue Category (2022) | Gas Utility ($) | Non Utility ($) | Total Operating Revenues ($) | | :---------------------- | :------------ | :---------- | :----------------------- | | Residential | $46,915,892 | — | $46,915,892 | | Commercial | $28,874,522 | — | $28,874,522 | | Industrial & Transportation | $5,671,884 | — | $5,671,884 | | Other | $822,140 | $129,578 | $951,718 | | Total contracts with customers | $82,284,438 | $129,578 | $82,414,016 | | Alternative Revenue Programs | $1,751,206 | — | $1,751,206 | | **Total Operating Revenues** | **$84,035,644** | **$129,578** | **$84,165,222** | | Revenue Category (2021) | Gas Utility ($) | Non Utility ($) | Total Operating Revenues ($) | | :---------------------- | :------------ | :---------- | :----------------------- | | Residential | $43,108,790 | — | $43,108,790 | | Commercial | $25,217,030 | — | $25,217,030 | | Industrial & Transportation | $4,973,885 | — | $4,973,885 | | Other | $429,397 | $129,676 | $559,073 | | Total contracts with customers | $73,729,102 | $129,676 | $73,858,778 | | Alternative Revenue Programs | $1,316,001 | — | $1,316,001 | | **Total Operating Revenues** | **$75,045,103** | **$129,676** | **$75,174,779** | - Gas utility revenues are derived from SCC-authorized tariff rates, with performance obligations satisfied over time as natural gas is delivered or transported[282](index=282&type=chunk)[283](index=283&type=chunk) - Unbilled revenue, included in residential and commercial revenues, was **$1,585,062** in 2022 and **$1,191,227** in 2021[284](index=284&type=chunk)[287](index=287&type=chunk) - Alternative Revenue Programs (ARPs), such as the **WNA** and **SAVE Plan**, are SCC-approved mechanisms that adjust revenues for external factors or performance targets and fall outside the scope of **ASC 606**[286](index=286&type=chunk) [3. REGULATORY MATTERS](index=88&type=section&id=3.%20REGULATORY%20MATTERS) This note details recent regulatory activities and approvals impacting Roanoke Gas - Roanoke Gas expensed **$57,000** and **$217,000** in COVID-19 related deferred costs in fiscal 2022 and 2021, respectively, as earnings exceeded the authorized return on equity[290](index=290&type=chunk) - The SCC approved an updated **SAVE Rider** in August 2022, designed to collect approximately **$4.1 million** in annual revenues for infrastructure replacement, effective October 2022[291](index=291&type=chunk) - Roanoke Gas filed applications with the SCC for a rate adjustment clause for a Renewable Natural Gas (RNG) facility and to acquire natural gas distribution assets from a local housing authority, the latter resulting in a **$219,000 pre-tax gain**[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) - The company filed notice on September 30, 2022, to file a non-gas base rate case in early December, with rates expected to be effective January 1, 2023, on an interim basis[295](index=295&type=chunk) - AFUDC accruals on MVP interconnect projects were temporarily ceased in January 2021 but resumed in fiscal 2022 for the RNG project, totaling **$75,154**[296](index=296&type=chunk)[297](index=297&type=chunk) - The service disconnection moratorium expired on August 30, 2021, leading to high arrearage balances, with **ARPA funds** (**$859,000**) applied to customer accounts in early fiscal 2022[178](index=178&type=chunk)[290](index=290&type=chunk) [4. SEGMENT INFORMATION](index=90&type=section&id=4.%20SEGMENT%20INFORMATION) This note provides financial data segmented by Gas Utility, Investment in Affiliates, and Parent and Other, highlighting the **$55.1 million** MVP impairment - Operating segments are defined as Gas Utility, Investment in Affiliates, and Parent and Other, with performance assessed using operating income and equity in earnings[298](index=298&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk) Segment Information (2022 vs. 2021) | Metric (2022) | Gas Utility ($) | Investment in Affiliates ($) | Parent and Other ($) | Consolidated Total ($) | | :------------------------ | :------------ | :----------------------- | :--------------- | :----------------- | | Operating revenues | $84,035,644 | — | $129,578 | $84,165,222 | | Operating income (loss) | $15,104,946 | $(281,843) | $93,572 | $14,916,675 | | Equity in earnings | — | $73,327 | — | $73,327 | | Impairment of investments | — | $(55,092,303) | — | $(55,092,303) | | Income (loss) before taxes | $13,547,601 | $(56,784,957) | $94,109 | $(43,143,247) | | Total assets | $258,519,230 | $13,838,108 | $17,951,905 | $290,309,243 | | Gross additions to utility property | $25,461,000 | — | — | $25,461,000 | | Gross investment in affiliates | — | $5,260,863 | — | $5,260,863 | | Metric (2021) | Gas Utility ($) | Investment in Affiliates ($) | Parent and Other ($) | Consolidated Total ($) | | :------------------------ | :------------ | :----------------------- | :--------------- | :----------------- | | Operating revenues | $75,045,103 | — | $129,676 | $75,174,779 | | Operating income (loss) | $14,955,375 | $(267,391) | $90,325 | $14,778,309 | | Equity in earnings | — | $1,667,554 | — | $1,667,554 | | Income before taxes | $13,043,470 | $171,861 | $90,793 | $13,306,124 | | Total assets | $231,737,427 | $65,686,376 | $12,685,390 | $310,109,193 | | Gross additions to utility property | $19,967,567 | — | — | $19,967,567 | | Gross investment in affiliates | — | $6,028,760 | — | $6,028,760 | - The Investment in Affiliates segment recorded a significant impairment of **$(55,092,303)** in 2022, leading to a substantial loss before income taxes for that segment[302](index=302&type=chunk) [5. OTHER INVESTMENTS](index=92&type=section&id=5.%20OTHER%20INVESTMENTS) This note details Midstream's equity investment in MVP and Southgate, highlighting **$55.1 million** in impairment losses due to ongoing legal and regulatory challenges - Midstream holds an approximately **1% equity investment** in the Mountain Valley Pipeline (MVP) and a less than **1% investment** in Southgate[304](index=304&type=chunk)[306](index=306&type=chunk) - The MVP project has faced repeated legal and regulatory issues, including Fourth Circuit decisions vacating key permits in January and February 2022[304](index=304&type=chunk)[307](index=307&type=chunk) - Midstream recognized a total pre-tax impairment loss of **$55.1 million** on its MVP investment in fiscal 2022 due to an other-than-temporary decline in fair value, based on probability-weighted discounted future cash flows[308](index=308&type=chunk)[309](index=309&type=chunk) - AFUDC accruals on the MVP project were temporarily suspended from January 1, 2021, through March 31, 2021, and again from November 2021, resuming when growth construction activities restart[305](index=305&type=chunk) - There is a risk of further impairment due to continuing legal and regulatory matters, macroeconomic factors, changes in interest rates, and cost increases[311](index=311&type=chunk) Investment in Unconsolidated Affiliates (September 30, 2022 vs. 2021) | Investment Category | 2022 ($) | 2021 ($) | | :------------------ | :------------ | :------------ | | MVP | $13,689,370 | $64,462,194 | | Southgate | $83,705 | $405,125 | | **Total Investment** | **$13,773,075** | **$64,867,319** | MVP Summary Unaudited Financial Statements (2022 vs. 2021) | Income Statement Item | 2022 ($) | 2021 ($) | | :-------------------- | :------------ | :------------ | | AFUDC | $6,883,069 | $165,048,237 | | Net income | $7,030,223 | $164,659,801 | | Balance Sheet Item | 2022 ($) | 2021 ($) | | :-------------------- | :-------------- | :-------------- | | Total assets | $6,751,643,266 | $6,491,932,558 | | Capital | $6,636,581,543 | $6,291,478,531 | [6. LINE-OF-CREDIT](index=95&type=section&id=6.%20LINE-OF-CREDIT) Roanoke Gas entered a new unsecured line-of-credit for **$21-33 million** in March 2022, with no outstanding balance and compliance with all covenants - Roanoke Gas entered into a new unsecured line-of-credit agreement on March 31, 2022, with a variable interest rate based on **Daily Simple SOFR plus 1.10%**[316](index=316&type=chunk) - The total available borrowing limits range from **$21 million to $33 million**, with the agreement expiring on March 31, 2023[316](index=316&type=chunk)[318](index=318&type=chunk) - As of September 30, 2022, the company had no outstanding balance under its line-of-credit agreement[316](index=316&type=chunk)[319](index=319&type=chunk) - The credit agreement includes covenants requiring an interest coverage ratio of not less than **1.5 to 1** and a long-term debt to long-term capitalization ratio of less than **65%**[319](index=319&type=chunk) - The company was in compliance with all debt covenants as of September 30, 2022[329](index=329&type=chunk) [7. LONG-TERM DEBT](index=96&type=section&id=7.%20LONG-TERM%20DEBT) This note details the company's long-term debt, including new unsecured promissory notes, many hedged with interest rate swaps, and confirms covenant compliance - Midstream entered into an **$8 million unsecured promissory note** on November 1, 2021, with an interest rate based on **30-day LIBOR plus 115 basis points**, maturing January 1, 2028, and hedged with an interest rate swap to a fixed rate of **2.443%**[320](index=320&type=chunk) - Roanoke Gas entered into a **$10 million unsecured Delayed Draw Promissory Note** on September 24, 2021, with a variable interest rate (**30-day LIBOR plus 100 basis points**) converted to a fixed **2.49%** via an interest rate swap, maturing October 1, 2028[321](index=321&type=chunk) - Roanoke Gas also entered into a **$15 million unsecured Delayed Draw Term Note** on August 20, 2021, with a variable interest rate (**30-day SOFR Average plus 1.20%**) converted to a fixed **2.00%** via an interest rate swap, maturing August 20, 2026[322](index=322&type=chunk)[323](index=323&type=chunk) Long-Term Debt Summary (September 30, 2022 vs. 2021) | Debt Type (Roanoke Gas) | Principal 2022 ($) | Unamortized Debt Issuance Costs 2022 ($) | Principal 2021 ($) | Unamortized Debt Issuance Costs 2021 ($) | | :---------------------- | :------------- | :----------------------------------- | :------------- | :----------------------------------- | | 4.26% Senior Notes (2034) | $30,500,000 | $115,849 | $30,500,000 | $125,502 | | 3.58% Term Notes (2027) | $8,000,000 | $24,080 | $8,000,000 | $28,896 | | 4.41% Term Notes (2031) | $10,000,000 | $26,627 | $10,000,000 | $29,760 | | 3.60% Term Notes (2029) | $10,000,000 | $25,539 | $10,000,000 | $29,062 | | SOFR + 1.20% Term Note (2026) | $15,000,000 | — | — | — | | LIBOR + 1.00% Term Note (2028) | $10,000,000 | $28,674 | — | $21,545 | | Debt Type (Midstream) | | | | | | TERM SOFR + 1.50% Notes (2023) | $21,896,200 | $18,553 | $33,610,200 | $14,904 | | LIBOR + 1.15% Term Note (2026) | $14,000,000 | $9,029 | $14,000,000 | $11,437 | | LIBOR + 1.20% Term Note (2024) | $9,875,000 | $3,929 | $10,000,000 | $6,286 | | LIBOR + 1.15% Term Note (2028) | $8,000,000 | $23,631 | — | — | | **Total Notes Payable** | **$137,271,200** | **$275,911** | **$123,110,200** | **$267,670** | | Line-of-credit | — | — | $17,628,897 | — | | **Total Long-Term Debt** | **$137,271,200** | **$275,911** | **$140,739,097** | **$267,670** | - The company was in compliance with all debt covenants as of September 30, 2022 and 2021, including limits on consolidated long-term indebtedness and priority indebtedness, and an interest coverage ratio requirement[329](index=329&type=chunk) Aggregate Annual Maturities of Long-Term Debt (Years Ending September 30) | Year Ending September 30 | Maturities ($) | | :----------------------- | :------------ | | 2023 | $1,300,000 | | 2024 | $32,871,200 | | 2025 | $1,600,000 | | 2026 | $30,600,000 | | 2027 | $1,600,000 | | Thereafter | $69,300,000 | | **Total** | **$137,271,200** | [8. INCOME TAXES](index=100&type=section&id=8.%20INCOME%20TAXES) This note details income tax accounting, including deferred taxes, R&D tax credits, and an ongoing IRS examination of 2018 and 2019 federal tax returns - The company accounts for income taxes using the asset and liability method, recognizing deferred tax assets and liabilities for temporary differences[331](index=331&type=chunk) - Deferred tax assets and liabilities were revalued in fiscal 2018 due to the reduction in the corporate federal income tax rate, with excess deferred income taxes reclassified to a regulatory liability[332](index=332&type=chunk) - The company claimed federal **R&D tax credits** totaling **$3,169,656** for fiscal years 2017-2020 and **$659,920** for fiscal 2021, deferring them as regulatory liabilities and amortizing them over **20 years**[333](index=333&type=chunk) Income Tax Expense (Benefit) (2022 vs. 2021) | Income Tax Component | 2022 ($) | 2021 ($) | | :------------------- | :-------------- | :------------ | | Current income taxes | $3,018,513 | $3,097,874 | | Deferred income taxes | $(14,258,294) | $106,188 | | Amortization of R&D tax credits | $(170,864) | — | | **Total Income Tax Expense (Benefit)** | **$(11,410,645)** | **$3,204,062** | - The effective tax rate for fiscal 2022 was **26.5%**, exceeding the combined federal and state statutory rate of **25.74%** due to moving to a taxable loss position and R&D tax credit amortization[138](index=138&type=chunk) Deferred Tax Assets and Liabilities (September 30, 2022 vs. 2021) | Deferred Tax Item | 2022 ($) | 2021 ($) | | :---------------------------- | :-------------- | :------------ | | Total Gross Deferred Tax Assets | $19,566,993 | $5,521,587 | | Total Gross Deferred Tax Liabilities | $21,675,368 | $20,469,800 | | Net Deferred Tax Asset | $1,057,079 | — | | Net Deferred Tax Liability | $3,165,454 | $14,948,213 | - The IRS is currently examining the company's 2018 and 2019 federal tax returns[338](index=338&type=chunk) [9. EMPLOYEE BENEFIT PLANS](index=103&type=section&id=9.%20EMPLOYEE%20BENEFIT%20PLANS) This note details pension and postretirement plans, their funded status, actuarial assumptions, and strategies to manage risk, including an LDI approach - The company sponsors a noncontributory pension plan for employees hired before January 2017 and a postretirement plan for employees hired before January 2000[339](index=339&type=chunk)[341](index=341&type=chunk) - The funded status of defined benefit plans is recognized as an asset or liability, with changes recognized through comprehensive income and a regulatory asset established for the portion expected to be recovered through rates[342](index=342&type=chunk) Benefit Obligation, Fair Value of Plan Assets, and Funded Status (September 30, 2022 vs. 2021) | Metric | Pension Plan 2022 ($) | Postretirement Plan 2022 ($) | Pension Plan 2021 ($) | Postretirement Plan 2021 ($) | | :---------------------- | :---------------- | :----------------------- | :---------------- | :----------------------- | | Benefit obligation at end of year | $27,268,456 | $12,416,546 | $37,654,468 | $16,796,849 | | Fair value of plan assets at end of year | $28,017,797 | $12,138,119 | $38,914,107 | $15,882,342 | | **Funded status** | **$749,341** | **$(278,427)** | **$1,259,639** | **$(914,507)** | - The reduction in benefit obligations for both plans was primarily due to actuarial gains from increased discount rates (**5.15% for pension, 5.16% for postretirement in 2022**, up from ~**2.7% in 2021**)[196](index=196&type=chunk)[347](index=347&type=chunk) - The company implemented a 'soft freeze' for the pension plan in 2017 and transitioned its asset allocation to a **Liability Driven Investment (LDI) approach** for **70% of pension assets** to reduce volatility[197](index=197&type=chunk)[198](index=198&type=chunk) Net Periodic Benefit Cost Components (2022 vs. 2021) | Component | Pension Plan 2022 ($) | Pension Plan 2021 ($) | Postretirement Plan 2022 ($) | Postretirement Plan 2021 ($) | | :---------------------- | :---------------- | :---------------- | :----------------------- | :----------------------- | | Service cost | $648,289 | $734,282 | $97,802 | $140,691 | | Interest cost | $1,013,115 | $975,139 | $443,721 | $430,490 | | Expected return on plan assets | $(1,831,550) | $(2,015,743) | $(666,167) | $(596,488) | | Recognized loss | $146,402 | $502,141 | — | $154,659 | | **Net periodic benefit cost** | **$(23,744)** | **$195,819** | **$(124,644)** | **$129,352** | - The company expects no minimum funding requirements and no contributions to its pension and postretirement plans in fiscal 2023[202](index=202&type=chunk) - The Nonqualified Deferred Compensation (NQDC) Plan is an unfunded plan for senior management, with a balance of **$59,108** in 2022[358](index=358&type=chunk)[360](index=360&type=chunk) - The **401(k) Plan** includes matching contributions (**100% on first 4%, 50% on next 2%**) and discretionary contributions for employees hired after January 1, 2017, totaling **$404,722** in 2022[361](index=361&type=chunk) [10. COMMON STOCK OPTIONS](index=114&type=section&id=10.%20COMMON%20STOCK%20OPTIONS) This note describes the KESOP, granting common stock options to employees, with **34,500** outstanding options and **22,000** shares available for future grants - The **KESOP** provides common stock options to officers and certain full-time salaried employees, with **22,000 shares** available for future grants as of September 30, 2022[362](index=362&type=chunk) - Options vest over a **six-month period** and are exercisable over a **ten-year period** from the date of issuance[363](index=363&type=chunk) - The fair value of each grant is estimated using the **Black-Scholes option pricing model**, with assumptions for expected volatility, dividends, exercise term, and risk-free interest rate[364](index=364&type=chunk) Stock Option Activity (September 30, 2022 vs. 2021) | Metric | 2022 | 2021 | | :----------------------------------- | :------ | :------ | | Options outstanding, September 30 | 34,500 | 45,250 | | Weighted Average Exercise Price ($) | $18.69 | $19.34 | | Weighted-average grant date option fair value ($) | $5.39 | $5.55 | | Stock option expense ($) | $16,330 | $11,100 | [11. OTHER STOCK PLANS](index=115&type=section&id=11.%20OTHER%20STOCK%20PLANS) This note outlines DRIP, RSPD, and RSPO plans, detailing shares issued, vesting conditions, and compensation recognized for restricted stock grants - The **Dividend Reinvestment and Stock Purchase Plan (DRIP)** allows shareholders to reinvest dividends and purchase additional common stock, with **34,290 shares** issued in 2022 and **29,604** in 2021[371](index=371&type=chunk) - The **Restricted Stock Plan for Outside Directors (RSPD)** allows directors to elect to receive fees in Director Restricted Stock, which vests upon death, disability, retirement, or change in control[372](index=372&type=chunk) Director Restricted Stock Activity (2022 vs. 2021) | Metric | 2022 | 2021 | | :---------------------- | :------ | :------ | | Granted Shares | 13,538 | 11,374 | | Vested Shares | (15,855) | — | | End of year balance | 108,127 | 110,444 | | Fair market value included in compensation ($) | $291,767 | $269,200 | - The **RGC

RGC Resources, Inc. (NASDAQ:RGCO) Q3 2022 Earnings Conference Call August 11, 2022 9:00 AM ET Company Participants Paul Nester - President, CEO Jason Field - CFO Tommy Oliver - VP, RA&S Kelsie Davenport - DoF Conference Call Participants Paul Nester Good morning. I'm Paul Nester, President and CEO of RGC Resources. Thank you for joining us as we discuss RGC Resources 2022 third quarter results. Let's review a few administrative items. We have muted all lines [Operator Instructions]. The link to today's pres ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Transition Period From to Commission File Number 000-26591 RGC Resources, Inc. (Exact name of Registrant as Specified in its Charter) Virginia 54-1909697 (State or Other Juri ...