RGC Resources, Inc. Q3 FY2025 earnings call

• Administrative: Tommy is absent as he's with his grandchild. - Main extensions/renewal: Strong main extensions and steady renewal activity; 3.1 miles of main renewed and 228 services year-to-date via SAVE program; 3.9 new main miles installed (50% higher than 2024 total) and 541 new services connected by June 30. - Delivered gas volumes: Q3 2025 up 6% vs 2024; YTD 2025 up 15% due to colder winter. - Regulatory: Received final 2024 rate case order in April, filed rider updates for SAVE and renewable natural gas facility in May/June, expect final orders by Sep 30, 2025. - CapEx: YTD $15.7M, down 5% from prior year; no large one-time CapEx like in 2024. - Financial: Q3 net income $538,000 ($0.05/share); YTD net income $13.5M ($1.31/share), up 16% from YTD 2024. - Balance sheet: Renewed Roanoke Gas line of credit to $30M for 2 years; refinanced Midstream debt to 7-year note at SOFR + 1.55%, with plan to swap to fixed rate. - Economic development: Google deal in Botetourt County announced in late June; ongoing economic development opportunities; Roanoke hospital expansion phasing in, cancer center under construction. - Capital forecast: YTD around $21M, reallocated based on opportunities; July weather hampered construction. - Earnings: EPS range $1.22-$1.27 for full year; Q4 expected to be modest net loss due to weather-sensitive volumes.

For the third quarter of 2025, total delivered gas volumes increased 6% compared to Q3 2024. Residential and commercial volumes were slightly down due to shoulder period weather variations. Year-to-date (YTD) in fiscal 2025, delivered gas volumes moved up 15% across all categories as a colder winter led to 18% higher heating degree days. Total CapEx YTD was $15.7 million, down approximately 5% from the same period in the prior year. In terms of revenue contribution, the industrial customer's high consumption contributed to the volume increases, while residential and commercial volumes were affected by weather mix.

• Full year EPS expected in range of $1.22 to $1.27. - Q4 anticipated to be a modest net loss as more revenue/earnings tied to weather-sensitive volumes. - 2026 MVP growth expected to be higher, tied to Franklin County expansion; customer growth optimistic, similar or better than 2025.

• Weather impact: Shoulder periods affecting residential/commercial gas volumes. - Expense risks: Inflation and interest rates affecting operational expenses. - Housing market: Nationwide housing slowdown concerns but housing shortage in Roanoke region remains.

Q: Looking at 2025 capital forecast and 2026 expectations, especially MVP growth and Google-related investments.

A: MVP growth expected to be significantly higher in 2026, tied to Franklin County expansion; SAVE Rider spending expected to be consistent; customer growth is optimistic and likely to be similar to or better than 2025.

Q: About customer penetration along existing mains and impact of electricity rates.

A: Active in saturation studies and penetration analysis; conversion customers from non-natural gas fuel sources due to high electricity costs are steady to strong, and the trend is expected to continue as high electricity prices in PJM are likely to persist.