Release Date: December 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RGC Resources Inc (NASDAQ:RGCO) reached a favorable settlement in their general rate case, allowing for an increase of $4.08 million in annual revenue.
• The company connected 631 new services and renewed 412 services, indicating growth in their customer base.
• RGC Resources Inc (NASDAQ:RGCO) completed significant infrastructure projects, including two interconnects with the MVP and expansion for a top customer.
• The Mountain Valley Pipeline is now operational, providing significant energy transportation capacity through their service territory.
• The company announced a dividend increase of just under 4%, reflecting confidence in their financial stability and growth prospects.

Negative Points

• Delivered gas volumes for the quarter were 5% lower compared to the same period in 2023, attributed to warm weather and lower commercial volumes.
• Net income for the fourth quarter was significantly lower at $141,000 compared to $1 million in the same quarter of 2023.
• Higher interest costs impacted net income, reflecting the challenges of a higher interest rate environment.
• The company experienced inflationary cost pressures, which they had to manage alongside higher interest rates.
• RGC Midstream's contribution to earnings is expected to be lower in 2025 compared to 2024 due to the completion of construction-related earnings.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with RGCO.

Q: What are the current gas flow levels in the Mountain Valley Pipeline (MVP) given the recent cold weather? A: Paul Nester, President and CEO, mentioned that the pipeline is mostly full, operating between 1.5 to 2 billion cubic feet per day, which is expected given the cold temperatures in the mid-Atlantic and eastern seaboard areas.

Q: With the post-election environment, are there any changes or accelerations in infrastructure expansion plans? A: Paul Nester noted that while there is optimism about energy policy under the new administration, any expansion, such as the MVP, depends on market demand for natural gas. The timing of such expansions remains uncertain.

Q: Now that cash is flowing from MVP, will RGC Resources reinvest this into expansions? A: Tim Mulvaney, Vice President, Treasurer, and CFO, explained that while some cash will cover interest costs, there is potential for reinvestment in opportunities like compression and Southgate expansions to enhance cash flow.

Q: What is the rate base number for the Roanoke rate order? A: Tommy Oliver, Senior Vice President, Regulatory and External Affairs, stated that the rate base is around $200 million, with additional rate bases for SAVE and RNG, totaling approximately $210 to $220 million.

Q: What are RGC Resources' equity needs moving forward? A: Paul Nester indicated that the company feels well-capitalized, especially with a 59% equity structure approved by the commission. There are no significant equity infusions planned for 2025, but they will monitor market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.