RGC Resources, Inc. (NASDAQ:RGCO) Q4 2018 Earnings Conference Call Transcript

Dec 04, 2018 • 09:00 am ET


RGC Resources, Inc. (NASDAQ:RGCO) Q4 2018 Earnings Conference Call Transcript


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John D'Orazio

All right. Welcome to RGC Resources' Fourth Quarter Earnings Call. I'm John D'Orazio, President and CEO of RGC Resources. Thank you for taking the time out of your day to attend. Please mute your line, and hold your questions until the completion of the presentation. Also, the link to today's presentation is available on our website, at rgcresources.com on the Investor and Financial Information page.

Before we begin, just a reminder on forward-looking statements as shown on slide 1. Moving on to slide 2, we plan to review key operational financial highlights, our outlook for 2019, and take any questions.

Our fourth quarter earnings per share are $0.09. And as shown on slide 3, 2018 fiscal year earnings per share are $0.95, which is a $0.09 or 10% improvement over 2017. We will cover more fourth quarter and year-end financial results later in the presentation.

As slide 4 highlights, we invested 5.8 million in a regulated utility in the fourth quarter, a 1.5 million increase over the same period last year. Approximately 1.8 million was spent on infrastructure replacement, 3.5 million on customer growth, and 0.5 million on other capital needs. The quarter-to-quarter increase was primarily due to elevated spending on system reinforcement projects supporting customer growth.

Slide 5 shows year-to-date capital spending. We are approximately 2.5 million or 12% ahead of 2017, primarily due to infrastructure replacement and system reinforcement project supporting customer growth. We continue to experience steady customer growth as shown on slide 6. We added 108 customers in the fourth quarter and have added approximately 600 customers in the fiscal year.

On slide 7, our total volumes increased 3%, and our commercial and industrial volumes increased 4% in the fourth quarter compared to the same period last year.

On slide 8, our year-to-date commercial volumes increased 20% compared to the same period last year, and of significance our top 10 customers usage increased 7%.

We're on slide 9. Mountain Valley Pipeline or MVP is under construction with a targeted in-service date of the fourth quarter 2019. During fiscal 2018, we invested approximately 11 million in the project, and as you may recall, the MVP Southgate expansion was announced in April. The FERC filing was completed in November 2018, MVP Southgate is projected to be in-service at the end of 2020.

Now I'd like to introduce Paul Nester, our CFO, and he will review the fourth quarter and fiscal 2018 financial results.

Paul Nester

Thank you, John. For those of you following along via webcast, we're on slide 10. We will begin by reviewing fourth quarter results. Fourth quarter operating income is approximately $745,000 and essentially flat to 2017. We experienced increases in the Infrastructure Replacement Rider or SAVE revenue, customer growth and industrial volumes. However, these increases were offset by the $513,000 rate refund related to tax reform. Equity earnings in our Mountain Valley Pipeline investment increased approximately $221,000 over the prior year due to the increasing investment in the project. Other operating income is favorable when compared to