RGC Resources(US:RGCO)2022-12-05 14:50Financial 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]