• New Services Connected: 197 new services in Q1 2025, compared to 185 in Q1 2024.
• Gas Volumes: Total volumes up 16% compared to Q1 2024.
• Residential and Small Commercial Volumes: Increased by 4% due to a 10% rise in heating degree days.
• Capital Expenditure (CapEx): $5.7 million in Q1 2025, up 8.4% from the same period in 2024.
• Net Income: $5.3 million or $0.51 per share, compared to $5 million or $0.50 per share in Q1 2024.
• Equity Earnings from Unconsolidated Affiliates: $854,000 pretax, down from $1.5 million in Q1 2024.
• Interest Expense: Increased by $143,000 compared to Q1 2024.
• Current Portion of Long-term Debt: $26.2 million as of December 31, 2025.
• Annual Capital Spending Forecast: $21.5 million to $22 million for fiscal 2025.
• Earnings Per Share (EPS) Forecast: $1.18 to $1.25 for fiscal 2025.

• Warning! GuruFocus has detected 6 Warning Signs with RGCO.

Release Date: February 11, 2025

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

Positive Points

• RGC Resources Inc (NASDAQ:RGCO) reported a 16% increase in total gas volumes for the first quarter compared to the previous year.
• The company connected 197 new services, up from 185 in the same quarter last year, indicating growth in customer base.
• Net income increased to $5.3 million or $0.51 per share, compared to $5 million or $0.50 per share in the previous year.
• The company successfully received its first cash distribution from MVP, amounting to approximately $800,000.
• RGC Resources Inc (NASDAQ:RGCO) maintained a strong capital spending plan, with a forecast of $21.5 million to $22 million for fiscal 2025, supporting infrastructure improvements.

Negative Points

• Equity earnings from unconsolidated affiliates decreased to $854,000 from $1.5 million in the same quarter last year.
• Interest expense increased by $143,000 due to higher average balance on the Roanoke Gas line of credit and higher interest rates.
• The company faces economic uncertainty due to recent changes in the presidential administration, which may lead to inflationary pressures.
• Expansion into Franklin County has been slower than anticipated due to winter weather conditions.
• The current portion of long-term debt stands at $26.2 million, necessitating refinancing efforts before maturity at the end of the year.

Q & A Highlights

Q: Can you provide an overview of the main extensions and renewal activities for the first quarter of fiscal 2025? A: Lawrence Oliver, Senior Vice President, stated that the company installed 1.1 main miles and connected 197 new services, compared to 185 new services in the first quarter of fiscal 2024. Additionally, 65 services were renewed, demonstrating continued investment in system safety and reliability.

Q: How did the delivered gas volumes perform in the first quarter compared to the previous year? A: Lawrence Oliver noted that total delivered gas volumes increased by 16% compared to the first quarter of 2024, driven by a transportation customer increasing its natural gas consumption. Residential and small commercial volumes rose by 4% due to a 10% increase in heating degree days.

Q: What were the financial highlights for the first quarter of fiscal 2025? A: Timothy Mulvaney, CFO, reported a net income of $5.3 million or $0.51 per share, up from $5 million or $0.50 per share in the same quarter of the previous year. This was attributed to increased Roanoke Gas margins from higher rates, despite lower equity earnings from an unconsolidated affiliate and higher interest expenses.

Q: What is the status of the company's capital spending and financial outlook for fiscal 2025? A: Paul Nester, CEO, confirmed that the total year capital spending remains at $21.6 million, with potential adjustments in capital mix. The earnings per share forecast is maintained at $1.18 to $1.25, with a more precise estimate expected after the second quarter.

Q: How is the company addressing potential inflationary pressures in fiscal 2025? A: Lawrence Oliver explained that the stipulated revenue requirement increase of $4.08 million is based on projections through June 30, 2025, capturing inflationary pressures. The company has addressed cost pressures through back-to-back rate cases, positioning it to manage potential inflationary impacts.

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