RGC Resources(RGCO) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q1 2026 was $4.8 million or $0.47 per share, down from $5.3 million or $0.51 per share in the same quarter last year [6] - Gas margins increased nominally, while lower interest expenses were noted due to Fed rate cuts, but these were offset by higher costs in personnel, IT, property taxes, and depreciation [6][7] - Total capital expenditures for Q1 2026 were $5.6 million, flat compared to the same period last year [5] Business Line Data and Key Metrics Changes - New main miles installed in Q1 2026 were 0.6, down from 1.1 in Q1 2025, while new service connections remained stable at 196 compared to 197 last year [4] - Residential gas usage increased by 8%, while commercial volumes rose due to an 11% increase in heating degree days compared to Q1 last year [5] Market Data and Key Metrics Changes - The recent cold snap, referred to as Winter Storm Fern, resulted in heating degree days being 53% colder than normal, with 680 heating degree days recorded versus a normal of 445 [11] - Natural gas prices spiked significantly during the cold snap, multiplying by a factor of approximately 10 on certain days [12] Company Strategy and Development Direction - The company is focused on enhancing safety and reliability for customers through continued investment in infrastructure, as evidenced by the increase in service renewals through the SAVE program by 80% [4] - The company is actively monitoring legislative changes in Virginia, which are not currently aimed at limiting natural gas usage, and is engaged with local lawmakers [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the local economy, despite a potential plant closure of a major industrial customer later in 2026 [10] - The company anticipates a weaker second quarter due to weather-related construction delays, with approximately 17% of working days lost [16] - Earnings per share forecast remains unchanged at $1.27-$1.35, influenced by the ongoing rate case and economic variables [17] Other Important Information - The company filed an expedited rate case seeking approximately $4.3 million in incremental annual revenue, with interim rates effective from January 1, 2026 [14] - An estimated undercollection of $8 million-$10 million in gas costs related to Winter Storm Fern is expected, which will be addressed with the commission [13] Q&A Session Summary - No questions were raised during the Q&A session, and the management thanked participants for their time and expressed anticipation for the next earnings call in May [18]