RGC Resources, Inc. Q2 FY2025 earnings call

Operational Highlights - Main extensions and renewals: Strong first half of fiscal 2025 with 2.7 main miles installed, 359 new services connected, and 1.9 miles of main and 159 services renewed. - Delivered gas volumes: Up 20% in Q2 2025 vs Q2 2024 and 18% in first half of fiscal 2025 vs first half 2024 due to industrial and residential/commercial consumption. - Regulatory: State Corporation Commission confirmed rates in 2024 rate case, will file normal rider updates in third quarter. - Financial: Net income up 17% in Q2 2025, strong balance sheet with renewed line of credit. - Employee safety: No outages or system disruptions this winter. - Economic development: Recent expansions by local companies, Tiny Cargo Company spin-out from Fralin Biomedical Research Institute, and healthcare system expansions.

In the first half of fiscal 2025, main extensions and renewal activity were strong. They installed 2.7 main miles (higher than full 2024 fiscal year), connected 359 new services, and renewed 1.9 miles of main and 159 services. Delivered gas volumes for Q2 2025 were up 20% compared to Q2 2024, with total volumes in the first half of fiscal 2025 up 18% vs first half 2024. Residential and commercial volumes contributed to the increase due to higher heating degree days.

Guidance - Raised 2025 earnings per share guidance to $1.22 on the lower end and $1.27 on the higher end. - Expect a small net loss in the fourth quarter as revenues and earnings are tied to weather-sensitive volumes of the first and second quarters.

Risks - Macroeconomic factors like tariff roller coaster and economic uncertainty affecting business activity. - Winter weather early in the quarter affected capital expenditures and expansion in Franklin County.

Q: Got a couple of questions starting on interest expense, wondering about interest expense continuing to decline and refinancing.

A: Tim Mulvaney said interest expense is lower than a year ago, but short term may benefit from potential rate cuts, longer term depends on economy and Fed reaction.

Q: Will we see any AFUDC for Southgate next year that's meaningful?

A: Paul Nester said they are a smaller percentage owner in Southgate with cost method of accounting, precluding recognition of AFUDC related to Southgate.

Q: Customer refunds in 3Q associated with rate case, will they be offset by WNA adjustment?

A: Paul Nester said they will be totally offset by the WNA adjustment, with the WNA charge starting in May and billed every two months.