RGC Resources (RGCO) Q3 2024 earnings summary

Executive summary

• MVP began service in June, enhancing system reliability and supporting regional growth, with initial gas deliveries to Roanoke Gas and full shipper contracts effective July 1st.

• Net income for Q3 was $156,692 ($0.02 per share), down from $686,816 ($0.07 per share) year-over-year, while nine-month net income rose to $11.6 million ($1.15 per share) from $10.3 million ($1.04 per share).

• Both MVP interconnect stations are operational, enabling new firm capacity and first-time gas service in Franklin County.

• Main extensions and renewals totaled 4.6 miles and 478 new services connected in the first nine months of fiscal 2024.

• Roanoke Gas implemented new interim non-gas base rates on July 1, 2024, subject to refund, with a hearing set for November 2024.

Financial highlights

• Q3 operating income was $1.56 million, down from $1.80 million year-over-year; nine-month operating income was $16.8 million, nearly flat year-over-year.

• Operating revenues for Q3 were $14.5 million, up from $13.7 million year-over-year; nine-month operating revenues were $71.5 million, down from $85.0 million.

• Gross utility margin for Q3 rose 5% to $9.1 million; nine-month margin increased 8% to $40.7 million.

• CapEx for the first nine months was $16.6 million, down from $19.4 million last year, reflecting lower spending after a one-time RNG project in 2023.

• Operating cash flow for the nine months was $17.1 million, down from $23.6 million year-over-year, mainly due to lower gas storage values and customer refunds.

Outlook and guidance

• Full-year EPS guidance range raised to $1.12–$1.16 per share, with management optimistic about reaching the upper end.

• No EPS guidance provided yet for fiscal 2025; key variables include the pending rate case, inflationary pressures, and interest rate trends.

• Capital spending for 2025 expected to be similar to 2024, in the $20–$22 million range.

• New depreciation rates, effective retroactively to October 1, 2023, will slightly decrease depreciation expense in Q4 2024.

• MVP is expected to provide stable earnings and cash distributions beginning before the end of calendar 2024.