RGC Resources, Inc. Q2 FY2026 earnings call

• Operational activity: First half of fiscal 2026 main extensions and renewal activity was steady. Installed 2.7 main miles, similar to fiscal 2025's first half. Connected 340 new services in 2026, close to 2025's 359 connections. Renewed 1.5 miles of main and 196 services, service renewals increased almost 25% despite main miles renewed down due to weather.
• Delivered gas volumes: Second quarter total volumes down 5% vs fiscal 2025's second quarter, residential and commercial volumes both down ~5%, heating degree days down 2%; first six months total volumes down 3% vs first half of fiscal 2025, industrial usage decline due to one customer, heating degree days up 3%.
• CapEx: First half of fiscal 2026 total spending $9.8 million, down ~8% over same period last year, affected by winter weather.
• Financial results: Second quarter net income increased, year-to-date net income increased.
• CEO remarks: Thanked customers and employees for winter performance, mentioned a top five customer idled operations in March and damage to LNG peak shaving facility, unable to estimate costs related to LNG facility damage.
• CFO remarks: Balance sheet strong, discussing refinancing of $15 million note at Roanoke Gas.
• CEO on future: Capital spending forecast remains at $22 million, will rebalance spending mix and be flexible based on LNG facility facts; noted seasonality of industry, macroeconomic concerns like inflation above 2%, working on efficiency and cost management, local economy steady with Google data center moving forward.

For delivered gas volumes: In the second quarter, despite an extreme cold spell, the quarter was warmer than fiscal 2025's second quarter, total volumes were down 5% compared to fiscal 2025's second quarter, residential and commercial volumes were both down ~5%, and heating degree days were down 2%. For the first six months of fiscal 2026, total volumes were down 3% compared to the first half of fiscal 2025, with the decline in industrial usage mainly due to one customer, and heating degree days increased 3%. CapEx: Total spending in the first half of fiscal 2026 was $9.8 million, down approximately 8% over the same period last year. Financial results: Second quarter net income was $8.7 million, or $0.84 per diluted share, a 14% increase compared to the same quarter in 2025. Year-to-date net income in the first half of 2026 was $13.6 million, or $1.31 per diluted share, a 5.3% increase compared to the first half of fiscal 2025.

• Narrowed and raised 2026 earnings per share range to $1.31 on the lower end and $1.37 on the higher end.
• Capital spending forecast remains at $22 million, flexible to reposition investments based on LNG facility facts.
• Noted third and fourth quarters will not have earnings like first and second quarters, continue to see macroeconomic concerns, inflation above 2%, work on efficiency and cost management, and local economy steady with development ongoing.

• Weather affected main miles renewed in the first half of fiscal 2026.
• A large customer ceased operations in the second quarter, affecting gas volumes and earnings.
• Damage to LNG peak shaving facility, unable to use it in the coming winter season, unable to estimate repair or replacement costs.
• Interest rate market volatility, working on refinancing the $15 million note.
• Practical inflation remains above the Fed's 2% target, causing cost pressures.