RGC Resources’ Earnings Call: Record Gas Delivery and Strategic Growth

Rgc Resources ((RGCO)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for RGC Resources reflected a mixed sentiment, highlighting both strong operational achievements and certain financial challenges. The company reported record gas delivery and increased net income, alongside strategic debt refinancing, which underscores a robust performance for fiscal 2025. However, the presence of seasonal losses in the fourth quarter and inflationary cost pressures balanced out the overall sentiment.

Record Gas Delivery

RGC Resources achieved a new record in gas delivery, with heating degree days increasing by 18% and total volumes rising by 14% compared to the previous year. This significant growth underscores the company’s operational efficiency and its ability to meet increased demand.

Strong Financial Performance

The company reported a net income of $13.3 million or $1.29 per share for fiscal 2025, marking a 15% increase from fiscal 2024. This strong financial performance highlights RGC Resources’ successful strategies in navigating market challenges and enhancing profitability.

Debt Refinancing

RGC Resources successfully refinanced its debt related to the Mountain Valley Pipeline (MVP) investment, extending the maturity to 2032 with reasonable amortization. This strategic move is aimed at supporting long-term financial stability and investment growth.

Growth in Customer Base

The company connected over 700 new services, with expectations to reach approximately 65,000 customers by the end of the second quarter. This growth reflects RGC Resources’ expanding market presence and its commitment to customer acquisition.

Capital Expenditure Management

Total capital spending was $20.7 million, a 6% decrease compared to fiscal 2024. The company continues to invest in extending and renewing its system, demonstrating prudent financial management and a focus on sustainable growth.

Seasonal Loss in Fourth Quarter

RGC Resources experienced a net loss of $204,000 or $0.02 per share in the fourth quarter, attributed to traditionally weaker performance during this period and higher expenses due to inflation.

Non-Recurring Gains

The company benefited from non-recurring gains of approximately $0.06 per share each year from housing authority donations, which will not recur in 2026, impacting future financial results.

Inflationary Cost Increases

Ongoing inflationary pressures led to higher expenses, affecting RGC Resources’ financial performance. The company is navigating these challenges while maintaining its operational efficiency.

Lower Equity Earnings from MVP

RGC Resources reported lower equity earnings from its investment in the Mountain Valley Pipeline due to the absence of Allowance for Funds Used During Construction (AFUDC), impacting overall earnings.

Forward-Looking Guidance

Looking ahead to fiscal 2026, RGC Resources plans to maintain a capital expenditure budget of $22 million, focusing on system enhancements and renewals. The company anticipates steady customer growth, with an average of over 660 new customers per year, aiming for a customer count of approximately 65,000 by mid-2026. While record gas delivery volumes from 2025 are not expected to recur, a new rate case filed seeks a $4.3 million increase in annual revenues. Additionally, the company has extended its debt maturity related to the MVP to 2032 and authorized a dividend increase, reflecting confidence in future performance.

In summary, RGC Resources’ earnings call presented a balanced view of its fiscal 2025 performance, with notable achievements in gas delivery and financial growth tempered by challenges such as seasonal losses and inflationary pressures. The company’s forward-looking guidance indicates a strategic focus on sustainable growth and financial stability, positioning it well for future success.