RGC Resources(US:RGCO)2024-08-09 20:24Financial Data and Key Metrics Changes - Third quarter operating income decreased by $240,000 or 13% to $1.6 million compared to the third quarter of 2023 due to higher costs not being offset by new revenues [10] - Net income for the third quarter was $160,000, down from $690,000 in the same quarter a year ago, with EPS at $0.02 per diluted share compared to $0.07 per diluted share last year [11] - Year-to-date net income was $11.6 million or $1.15 per diluted share, compared to $10.3 million or $1.04 per diluted share in fiscal '23 [12] Business Line Data and Key Metrics Changes - Delivered gas volumes for the quarter were 6% lower compared to the third quarter of last year, attributed to warmer weather affecting residential and commercial volumes [8] - Main extensions and renewals for the first nine months of fiscal 2024 totaled 4.6 miles, with 478 new services connected and 319 services renewed, indicating growth in the rate base and customer base [8] Market Data and Key Metrics Changes - The company is experiencing cost pressures, particularly for personnel and professional costs, impacting overall financial performance [10] - Interest expense increased by $145,000 compared to the same quarter a year ago due to a higher interest rate environment affecting floating rate debt [11] Company Strategy and Development Direction - The company is focused on growth strategies in regulated utility customer growth and infrastructure renewal, with capital investment plans holding firm at $21.7 million for the fiscal year [15] - The operational phase of the Mountain Valley Pipeline (MVP) is expected to spur economic development in the region, with ongoing efforts to connect new customers [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the performance trend continuing into the end of the fiscal year, with EPS guidance for the full fiscal year maintained at $1.12 to $1.16 per share [16] - The company is managing expenses in the face of inflationary pressures and anticipates favorable interest rate trends in 2025 [18] Other Important Information - The company filed for an increase in base rates seeking an annual increase of $4.3 million or approximately 5% in total revenues, with a hearing set for November 7 [13] - The Mountain Valley Pipeline is now operational, with cash flows expected to start in 2025, marking a transition from construction to operational earnings [19] Q&A Session Summary Question: Inquiry about customer connection in Franklin County - The first customer connection is approximately 1,500 feet from the gas station within the Summit View Business Park, with plans for a ribbon-cutting ceremony [21] Question: Level of inquiries since gas is flowing - Inquiries from economic development prospects remain steady, with a change in tone now that the Mountain Valley is operational, providing certainty for potential customers [22] Question: Negative weather impact on earnings for '24 - The company has weather normalization in place, which allows adjustments back to normal weather, indicating no significant negative earnings impact from the warmer winter [24][25]