RGC Resources, Inc. Reports First Quarter Earnings
- None.
- Inflationary pressures may temper future performance
- Increasing costs led to a rate application for relief
The reported increase in earnings for RGC Resources, Inc. is a positive indicator of the company's financial health. The growth in earnings per share (EPS) from $0.33 to $0.50 represents a significant year-over-year improvement. This increase is partly attributed to the company's investment in the Mountain Valley Pipeline (MVP), which contributed nearly $1.5 million in earnings. The MVP's progress is likely to have a favorable impact on the company's future cash flows and profitability, assuming it operates as expected once completed. Additionally, the improved utility margins suggest that the company has been successful in managing its operational costs relative to revenue from utility services.
However, it's important to note that the company is facing inflationary pressures, which could temper performance in upcoming quarters. The CEO's statement about filing for a rate application indicates an attempt to mitigate these pressures by passing on some costs to consumers. Investors should monitor the outcome of this rate application, as it could affect customer satisfaction and demand. Furthermore, utility margins, being a non-GAAP measure, may not be directly comparable to other companies' financials and investors should review these figures in conjunction with GAAP results for a comprehensive understanding of the company's financial position.
The involvement of RGC Resources, Inc. in the Mountain Valley Pipeline project is a strategic move that positions the company within a significant infrastructure initiative. The MVP is designed to transport natural gas from the Appalachian Basin, which is expected to meet growing energy demands and potentially lead to increased revenue streams for RGC Resources. The successful construction and eventual operation of the MVP could enhance the company's market presence and competitive edge in the energy sector.
However, the MVP has faced regulatory and environmental challenges in the past, which can lead to delays and increased costs. Stakeholders should consider these potential risks when evaluating the company's long-term prospects. Additionally, the energy sector is subject to regulatory changes and shifts in energy policy, which could influence the project's viability and the company's operations. Close attention to regulatory developments and the public sentiment towards fossil fuel infrastructure is advisable for a comprehensive risk assessment.
The earnings report from RGC Resources, Inc. suggests that the company is expanding its customer base and investing in infrastructure to improve system reliability. This proactive approach to infrastructure investment is critical for long-term growth in the utility sector, as it can lead to operational efficiencies and increased capacity to serve more customers. The company's ability to drive earnings through these investments, despite inflationary pressures, indicates a robust business model and effective management strategies.
Looking ahead, the rate application filed by Roanoke Gas is a strategic move to address increasing costs. The outcome of this application will be an important factor for investors to watch, as it will impact the company's revenue and profitability. Additionally, the ability of RGC Resources to navigate the regulatory landscape and manage external pressures will be crucial in maintaining its growth trajectory and shareholder value.
ROANOKE, Va., Feb. 05, 2024 (GLOBE NEWSWIRE) -- RGC Resources, Inc. (NASDAQ: RGCO) announced consolidated Company earnings of
Roanoke Gas continued to make investments in utility infrastructure to improve system reliability and deliver gas to new customers to drive earnings. CEO Paul Nester stated, “Higher utility margins were welcomed in the quarter particularly in light of inflationary pressures that will temper performance in the coming quarters. Good weather enabling strong construction progress of the MVP during the quarter was gratifying, and we eagerly await for the completion of the pipeline.” Nester further commented, “Roanoke Gas is experiencing increasing costs and has filed for relief through a rate application with the State Corporation Commission.”
RGC Resources, Inc. provides energy and related products and services to customers in Virginia through its operating subsidiaries Roanoke Gas Company and RGC Midstream, LLC.
Utility margins is a non-GAAP measure defined as utility revenues less cost of gas. Management considers this non-GAAP measure to provide useful information to both management and investors for purpose of such comparability and in evaluating operating performance, but it should be considered in addition to results prepared in accordance with GAAP and should not be considered a substitute for, or superior to, GAAP results.
The statements in this release that are not historical facts constitute “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company’s actual results and experience to differ materially from any expectations expressed in the Company’s forward-looking statements, regarding inflation, customer growth, infrastructure investment and margins. These risks and uncertainties include gas prices and supply, geopolitical considerations, expectations regarding the MVP construction and operation, and regulatory and legal challenges along with risks included under Item 1-A in the Company’s fiscal 2023 Form 10-K. Forward-looking statements reflect the Company’s current expectations only as of the date they are made. The Company assumes no duty to update these statements should expectations change or actual results differ from current expectations except as required by applicable laws and regulations.
Past performance is not necessarily a predictor of future results.
Summary financial statements for the first quarter are as follows:
| RGC Resources, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Income | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating revenues | $ | 24,419,352 | $ | 33,282,335 | ||||
| Operating expenses | 17,767,315 | 27,737,850 | ||||||
| Operating income | 6,652,037 | 5,544,485 | ||||||
| Equity in earnings of unconsolidated affiliate | 1,467,835 | 1,232 | ||||||
| Other income, net | 120,786 | 74,606 | ||||||
| Interest expense | 1,636,273 | 1,369,164 | ||||||
| Income before income taxes | 6,604,385 | 4,251,159 | ||||||
| Income tax expense | 1,584,393 | 994,754 | ||||||
| Net income | $ | 5,019,992 | $ | 3,256,405 | ||||
| Net earnings per share of common stock: | ||||||||
| Basic | $ | 0.50 | $ | 0.33 | ||||
| Diluted | $ | 0.50 | $ | 0.33 | ||||
| Cash dividends per common share | $ | 0.2000 | $ | 0.1975 | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 10,029,243 | 9,830,206 | ||||||
| Diluted | 10,031,354 | 9,837,188 | ||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| December 31, | ||||||||
| Assets | 2023 | 2022 | ||||||
| Current assets | $ | 34,769,875 | $ | 47,845,073 | ||||
| Utility property, net | 250,343,833 | 234,849,715 | ||||||
| Other non-current assets | 29,589,527 | 25,257,374 | ||||||
| Total Assets | $ | 314,703,235 | $ | 307,952,162 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | $ | 64,196,722 | $ | 60,164,437 | ||||
| Long-term debt, net | 102,461,196 | 113,288,995 | ||||||
| Deferred credits and other non-current liabilities | 44,500,714 | 39,608,723 | ||||||
| Total Liabilities | 211,158,632 | 213,062,155 | ||||||
| Stockholders' Equity | 103,544,603 | 94,890,007 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 314,703,235 | $ | 307,952,162 | ||||
| Contact: | Timothy J. Mulvaney | |
| Vice President, Treasurer and CFO | ||
| Telephone: | (540) 777-3997 |
