RGC Resources, Inc. (NASDAQ:RGCO) Q2 2024 Earnings Call Transcript May 6, 2024
RGC Resources, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Tommy Oliver: Good morning and thank you for joining us as we discuss RGC Resources, Inc.’s 2024 Second Quarter Results. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources. I am joined this morning by Paul Nester, President and CEO of RGC Resources; and Tim Mulvaney, our Treasurer and CFO. Before we get started, I wanted to review a few administrative items. We have muted our lines and ask that all participants remain muted. The link to today’s presentation is available on Investor and Financial Information page on our website at www.rgcresources.com. At the conclusion of the presentation and our remarks, we will take questions. So let’s start on Slide 1. This presentation aims forecast and projections — Slide 1 has information about risks and uncertainty, including forward-looking statements that should be understood in the context of our public filings.
Slide 2 contains our agenda. We will review our quarterly operational and financial results, provide an update on our rate case and the MVP and discuss the outlook for the full year fiscal 2024 with time allotted for questions at the end. Turning to Slide 3. Total billed customers at the end of April were 63,660. This reflects our continued steady growth within our historic footprint. Main extensions for the first 6 months of the 2024 fiscal year totaled 1.2 miles and we connected 370 new services during that same period. Slide 4 shows our delivered gas volumes for the quarter. Volumes overall were 9% higher compared to last year’s second quarter, attributable to colder weather in the second quarter of the 2024 fiscal year. Gas volumes were up in total.
Residential and commercial volumes were higher as a result of more heating degree days. It was enhanced by a year-over-year increase in industrial throughput as natural gas prices are at historic levels. Slide 5 shows the same two charts for the year-to-date. Total volumes were up modestly for the first half of fiscal 2024 despite fewer heating degree days. As in the quarter, delivered gas volumes were lower. Now we are on Slide 6. Our CapEx spending totaled $11.3 million for the first 6 months of fiscal 2024 compared to $12.9 million [ph] last year at the same time. This decrease is attributable to the $3.1 million spent in 2023 related to the RNG facility, offset by current year spending for the MVP interconnections. Excluding the RNG spend, our overall capital spend is up $1.7 million over last fiscal year’s comparable period spending.
And Paul will discuss the full year’s capital spending projection shortly. And now I’m going to turn it over to Tim Mulvaney, our Treasurer and CFO, who will discuss our financial results. Tim?
Tim Mulvaney: Thank you, Tommy. We’re moving on to Slide 7. We had a steady quarter against inflationary headwinds. Second quarter operating income decreased $960,000 or approximately 10% to $8.6 million in the second quarter — compared to the second quarter of 2023. We continue to experience cost pressures across the board but particularly in personnel and IT-related costs. We expect this pressure to continue in the third quarter with rates under the February second filed rate case, taking effect July 1. Tommy will discuss the rate case in more detail shortly. Equity in the earnings of unconsolidated affiliates was $1.2 million pretax to noncash AFUDC which resulted from our investment in the MVP. This AFUDC will taper off as construction on various sections is completed and ultimately cease as the pipeline goes into service.
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