RGC Resources, Inc. (NASDAQ:RGCO) Q1 2019 Earnings Conference Call Transcript
Feb 11, 2019 • 09:00 am ET
John S. D'Orazio
Welcome to RGC Resources First Quarter Earnings Call. I'm John D'Orazio, President and CEO of RGC Resources. Thank you for taking the time out of your morning 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 (Multiple Speakers). Could you please mute your line? (Multiple Speakers). Could you please mute your line, who's ever talking there? Thank you.
All right. Let me repeat. So, moving on to Slide 2, we plan to review key operational and financial highlights, our outlook for 2019 and take any questions.
As shown on Slide 3, first quarter 2019 earnings per share are $0.30, which is a $0.02 or 7% improvement over first quarter of 2018. As Slide 4 highlights, we invested $5.7 million in a regulated utility in the first quarter, a 6% increase over the same period last year. We spent approximately $1.4 million on infrastructure replacement, $2.9 million on customer growth and $1.5 million on other capital needs. The quarter-to-quarter change was primarily due to elevated spending related to customer growth. We continue to experience steady customer growth. As shown on Slide 5, we added 213 new customers in the first quarter.
On Slide 6, our total volume increased 5% and our commercial and industrial volumes increased 4% in the first quarter compared to the same period last year. We're on Slide 7. The MVP project was over 70% complete coming into January of 2019. The targeted in-service date is the end of 2019. We invested approximately $10 million in the MVP project in the first quarter. We anticipate investing a total of $23 million in fiscal 2019. The MVP Southgate project, which is a 70 mile, 24-inch and 16-inch pipeline was filed with FERC in November of 2018. MVP Southgate is projected to be in-service at the end of 2020.
Now, I'd like to introduce Paul Nester, our Chief Financial Officer, he will review our financial results.
Paul W. Nester
Thank you, John. For those of you following along via webcast, we are on Slide 8. We will begin by reviewing first quarter results. Operating income was approximately $3.3 million. We experienced top line increases in the infrastructure replacement rider or SAVE revenue and revenues related to customer growth and industrial volumes. These were offset by increases in depreciation expense and various operating and maintenance expenses.
Equity earnings in our Mountain Valley Pipeline investment increased approximately $414,000 over the prior year due to the increase in investment in the project. Other operating income is favorable when compared to first quarter 2018, primarily due to the $156,000 pre-tax impact of revenue sharing. Due to tax reform, income tax expense for the first quarter was $433,000 favorable.
Let's review our trailing 12-month results. Operating income is below the prior year due