RGC Resources Inc (RGCO) 2024 Q1 法說會逐字稿

Good morning and thank you for joining us as we discuss RGC Resources, Inc.'s 2024 first-quarter results. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources. I'm joined this morning by Paul Nester, President and CEO of RGC Resources; and Tim Mulvaney, our Treasurer and Chief Financial Officer.

早安，感謝您加入我們，我們將討論 RGC Resources, Inc. 的 2024 年第一季業績。我是 RGC Resources 監管和對外事務資深副總裁 Tommy Oliver。今天上午，RGC Resources 總裁兼執行長 Paul Nester 也加入了我的行列。以及我們的財務主管兼財務長 Tim Mulvaney。

Let me review a few administrative items before we get started. We have muted all lines and ask that all participants remain muted. The link for today's presentation is available on the Investor and Financial Information page on our website at www.rgcresources.com. [After] the conclusion of the presentation and our remarks, we will take questions.

在我們開始之前，讓我先回顧一些管理專案。我們已將所有線路靜音，並要求所有參與者保持靜音。今天示範的連結可在我們網站 www.rgcresources.com 的投資者和財務資訊頁面上找到。 [在]演講和發言結束後，我們將回答問題。

So let's transition to slide 1. This presentation contains forecasts and projections. Slide 1 has information about risks and uncertainties, including forward-looking statements that should be understood in the content of our public filings.

讓我們轉到投影片 1。該簡報包含預測和預測。第 1 張投影片包含有關風險和不確定性的信息，包括應在我們的公開文件內容中理解的前瞻性陳述。

Transition to 2. Slide 2 contains our agenda. We will review our quarterly operational financial results and discuss the outlook for full year fiscal 2024. We have time allotted for questions at the end.

過渡到 2。幻燈片 2 包含我們的議程。我們將審查季度營運財務業績並討論 2024 財年全年的前景。最後我們有時間回答問題。

Turning to slide 3, main extensions for the quarter totaled just under a mile and we connected 185 service lines. Total customers were 63,219 at the end of the first quarter. As we discussed in prior earnings call, the customer count for 2021-2022 were impacted by a state mandated service disconnection moratorium that occurred during parts of 2020-2021. When factoring this into our customer counts for the prior four years shown in the graph on the right side of the slide, we have experienced steady growth over this period.

轉向投影片 3，本季的主要延伸線路總計不到一英里，我們連接了 185 條服務線路。截至第一季末，客戶總數為 63,219 名。正如我們在先前的財報電話會議中討論的那樣，2021-2022 年的客戶數量受到 2020-2021 年部分時間國家強制暫停服務的影響。當將其納入幻燈片右側圖表所示的前四年的客戶數量時，我們在此期間經歷了穩定的成長。

Transition to slide 4 where our delivered gas volumes for the quarter, which were 9% lower compared to last fiscal year. And this is attributable to warmer weather in the first quarter of the 2024 fiscal year. As shown on the slide, gas volumes were down in total. Residential and commercial volumes were lower as a result of fewer heating degree days, but that was offset by a nice year-over-year industrial utilization increase as natural gas prices remain low.

過渡到幻燈片 4，我們本季交付的天然氣量與上一財年相比下降了 9%。這歸因於2024財年第一季天氣變暖。如幻燈片所示，氣體總量下降。由於暖氣度數減少，住宅和商業銷量下降，但由於天然氣價格仍然較低，工業利用率比去年同期大幅增長，抵消了這一影響。

So let's turn to slide 5. Our CapEx spending totaled $5.3 million in the current quarter compared to $7.5 million last year at this time. The decline is attributable to spending for the R&D facility last year that became operational in March of 2023. When one removes the effects of the R&D spending, the year-over-year variance is approximately $500,000 spread across all categories.

讓我們轉向投影片 5。本季我們的資本支出總額為 530 萬美元，而去年同期為 750 萬美元。這一下降歸因於去年於 2023 年 3 月投入營運的研發設施的支出。當消除研發支出的影響時，所有類別的同比差異約為 50 萬美元。

Paul will discuss the full year capital spending projection shortly. I'm now going to turn it over to Tim Mulvaney, our Treasurer and CFO, who will discuss our financial results. Tim?

保羅將很快討論全年資本支出預測。我現在將把它交給我們的財務主管兼財務長 Tim Mulvaney，他將討論我們的財務表現。提姆？

Thank you, Tommy. Moving to slide 6. We had a strong quarter. First-quarter operating income increased $1.1 million or 20% to $6.7 million compared to the first quarter of 2023. The increase was primarily driven by interim base rates that were implemented on January 1 of 2023.

謝謝你，湯米。轉到幻燈片 6。我們有一個強勁的季度。與 2023 年第一季相比，第一季營業收入增加 110 萬美元，即 20%，達到 670 萬美元。這一增長主要是由 2023 年 1 月 1 日實施的臨時基本費率推動的。

Equity and net earnings of unconsolidated affiliates was $1.5 million pretax due to non-cash AFUDC, which resulted from our investments in MVP. This AFUDC will taper off as the construction of various sections is complete and will cease as the pipeline goes into service. Interest expense increased $268,000 due to the higher interest rate environment, which is impacting our floating rate debt, supporting the investment in the Mountain Valley Pipeline as well as our Roanoke Gas lineup product.

由於非現金 AFUDC，未合併附屬公司的股本和淨利潤為 150 萬美元，這是我們對 MVP 投資的結果。隨著各個部分的建設完成，該 AFUDC 將逐漸減少，並隨著管道投入使用而停止。由於較高的利率環境，利息支出增加了 268,000 美元，這影響了我們的浮動利率債務，支持了對 Mountain Valley Pipeline 以及我們的 Roanoke Gas 系列產品的投資。

Our net income for the quarter was $5 million in the first quarter of this year compared to $3.3 million during the same quarter a year ago. The combination of the rate case and the presence of the AFUDC from the MVP drove the strong results. EPS was $0.50 per share for the first quarter of this year compared to $0.33 per share in the quarter a year ago.

今年第一季我們的淨利潤為 500 萬美元，而去年同期為 330 萬美元。費率案例和 MVP 的 AFUDC 的存在相結合推動了強勁的結果。今年第一季每股收益為 0.50 美元，而去年同期為每股 0.33 美元。

I will now turn the presentation over to Paul Nester, RGC Resources, President and CEO, for an outlook on 2024.

我現在將演講交給 RGC Resources 總裁兼執行長 Paul Nester，展望 2024 年。

Thank you, Tim. And I would like to just take a minute and have you join me in congratulating Tim. The Board appointed Tim as our permanent Treasurer and Chief Financial Officer last week after serving in the [interim] role for about five months. So we're just delighted to have Tim with us.

謝謝你，提姆。我想花一點時間請您和我一起祝賀蒂姆。在擔任[臨時]職位約五個月後，董事會上週任命蒂姆為我們的永久財務主管和財務長。所以我們很高興蒂姆和我們在一起。

We are on slide 7. I plan to touch on our capital spending projection for fiscal 2024, the status of the MVP project and our earnings forecast for the full fiscal year. But before we get to those items, I'm going to ask Tommy to come back on and provide us a regulatory update. Tommy?

我們在投影片 7 上。我計劃談談我們對 2024 財年的資本支出預測、MVP 專案的狀況以及我們對整個財年的獲利預測。但在我們討論這些項目之前，我要請湯米回來向我們提供監管方面的最新情況。湯米？

Surely, Paul. As I mentioned on the last earnings call, we settled our event pending rate case with the Virginia staff, and we're awaiting a final order from the Commission. We received the final order in December of this -- of last year in which the Commission accepted the settlement in full. Refunds to customers will be made in the second quarter of 2024 with no income statement impact to be made in accruals for the refunds in fiscal 2023.

當然，保羅。正如我在上次財報電話會議上提到的，我們與維吉尼亞州工作人員解決了事件待決費率案件，我們正在等待委員會的最終命令。我們在去年 12 月收到了最終命令，委員會在其中完全接受了和解方案。客戶退款將在 2024 年第二季進行，不會對 2023 財年的退款應計利潤表產生影響。

Unfortunately, like most consumers and businesses, we continue to experience upward expense pressure. As such, on February 2, we filed a general rate case with the Commission in which we are seeking an increase of $4.3 million or approximately a 5% increase in total revenues. The increase includes the projected rate base and an increase in the authorized ROE, which reflects current capital markets.

不幸的是，像大多數消費者和企業一樣，我們繼續面臨費用上漲的壓力。因此，我們在 2 月 2 日向委員會提交了一份一般費率案件，尋求增加 430 萬美元，即總收入增加約 5%。這一增長包括預計的利率基數和授權股本回報率的增長，這反映了當前資本市場的情況。

The $4.3 million does not include any rolling of SAVE capital as the new sales plan became effective October 2023. Since this case was filed as a general rate case, we expect the commission to suspend the implementation date for interim rates until July 1, 2024. We'll know more about the schedule when the Commission issues its order for notice and hearing for this case in early March.

由於新銷售計劃於2023 年10 月生效，這430 萬美元不包括任何SAVE 資本滾動。由於此案是作為一般費率案件提交的，我們預計委員會將暫停臨時費率的實施日期，直至2024 年7月1 日。當委員會在三月初發布此案的通知和聽證會命令時，我們將了解更多有關時間表的資訊。

I'll turn it over to Paul now.

我現在就把它交給保羅。

Yeah. Thank you, Tommy, for reviewing that.

是的。謝謝湯米的評論。

It's a little unusual if you know much about our history to -- so quickly file certainly a general rate case after just completing an expedited case. But again, the overall inflationary environment, as Tommy said, we certainly know our customers and our vendors are feeling that as well, has led us to that action. Thanks to Tommy and Nick and the regulatory department for all their efforts on that.

如果您對我們的歷史了解很多，那麼在完成加急案件後如此迅速地提交一般費率案件，這有點不尋常。但正如湯米所說，整體通膨環境，我們當然知道我們的客戶和供應商也有這種感覺，導致我們採取了這項行動。感謝湯米和尼克以及監管部門為此所做的一切努力。

We're on slide 8. The 2024 Roanoke Gas capital plan is still holding at about $21 million, which is again down from last year due to the aforementioned RNG project. The projection right now is very similar to what we shared with you on the December earnings call.

我們在幻燈片 8 上。2024 年羅阿諾克天然氣資本計劃仍保持在約 2100 萬美元，由於上述 RNG 項目，這一數字再次低於去年。目前的預測與我們在 12 月財報電話會議上與您分享的預測非常相似。

Moving on to slide 9. It has been an exciting several months on the MVP project. Whether in the fall period and into December, it was excellent in this region, and it enabled really outstanding construction progress.

繼續看投影片 9。MVP 專案的這幾個月是令人興奮的。無論是秋季還是進入12月，該地區的情況都非常好，並且實現了非常出色的施工進度。

The picture on slide 9 is our Summit View interconnect actually. That picture was taken in mid-December, and we are working on both our Lafayette and Summit View interconnect sites simultaneously. We are on track for both of those sites and stations to be complete when Mountain Valley is complete and flowing natural gas.

第 9 張投影片上的圖片其實是我們的 Summit View 互連。這張照片是在 12 月中旬拍攝的，我們正在同時建造 Lafayette 和 Summit View 互連站點。當山谷竣工並輸送天然氣時，我們預計將完成這兩個地點和車站的建設。

Mountain Valley still has some work to be done, of course. But we are genuinely happy to be nearing the end of this long -- what's turned in to be a very long journey with the project.

當然，山谷還有一些工作要做。但我們真的很高興這個漫長的過程即將結束——這個項目變成了一個非常漫長的旅程。

I think related to this, and Tim mentioned it a little bit in his comments on the interest expense. Tim, do you mind taking a moment and providing a brief update on our financing activities for our RGC Midstream subsidiary?

我認為與此相關，蒂姆在他關於利息支出的評論中提到了一點。提姆，您介意花點時間簡單介紹一下我們 RGC 中游子公司的融資活動嗎？

Sure, Paul. We have two facilities related to RGC Midstream that come due this year, totaling approximately $33 million. And we've begun discussions with our banks, and those discussions have been very positive. We fully expect to renew the facilities in the coming months.se discussions have been very positive. We fully expect to renew the facilities in the coming weeks.

當然，保羅。我們有兩筆與 RGC Midstream 相關的融資將於今年到期，總額約 3,300 萬美元。我們已經開始與銀行進行討論，這些討論非常積極。我們完全期望在未來幾個月內更新設施。這些討論非常積極。我們完全期望在未來幾週內更新這些設施。

Yeah, fantastic. Again, a lot of good effort there. And I'll just make a comment, those view that are in project work or construction work or partnership, you know that sometimes the secret to success is good partners or great partners. And I will tell you that not only is the joint venture been a group of great partners, but our financing partners now over many years have been excellent, too.

是的，太棒了。再說一次，那裡付出了很多努力。我只想發表評論，那些在專案工作、建設工作或合作夥伴關係中的觀點，你知道，有時成功的秘訣是好的合作夥伴或偉大的合作夥伴。我要告訴你的是，這家合資企業不僅是一群優秀的合作夥伴，而且我們多年來的融資合作夥伴也非常優秀。

Our consolidated earnings guidance on slide 10 for 2024 is also unchanged from what we shared with you in December. Again, we talked on that call about the inflationary pressures weighing on the year-over-year earnings per share. And as Tommy just updated us, we're addressing that to the most expedient extent possible through the general rate case filing.

我們在投影片 10 上給出的 2024 年綜合獲利指引也與我們 12 月與您分享的內容相同。我們在那次電話會議上再次討論了通膨壓力對每股盈餘的影響。正如湯米剛剛向我們通報的最新情況一樣，我們正在透過一般費率案件歸檔來盡可能方便地解決這個問題。

Maybe just in summary, we're off to a great start. We've had a fantastic first quarter. I am really happy about the direction and trajectory of the company. Right now, our -- we continue to work safely and do everything we can to meet the customers' needs, and I'm just so happy about that.

也許總而言之，我們有了一個好的開始。我們的第一季表現非常出色。我對公司的方向和軌跡感到非常高興。現在，我們繼續安全工作，並盡一切努力滿足客戶的需求，我對此感到非常高興。

(Event Instructions)

（活動須知）

Good morning, everyone.

大家，早安。

Good morning, Mike. How are you?

早上好，麥克。你好嗎？

Doing fine, sir. Yourself?

幹得很好，先生。你自己？

We are doing very well. It's a beautiful, cool, sunny morning here in the Greater Roanoke Valley.

我們做得很好。這是大羅阿諾克山谷一個美麗、涼爽、陽光明媚的早晨。

I saw that. I was looking at your weather there. It was supposed to warm up, but it looks like it's going to -- that seems to be changing a little bit.

我看到了。我正在看你那裡的天氣。它本來應該變暖，但看起來它會——這似乎正在發生一些變化。

Anyway, on your rate case filings, you're in good company. I've never seen so many rate cases filed by utilities in my entire career. And they're all coming relatively close together. So you're in a good company, I don't think it's going to be a surprise for the commission. I'm seeing it on the water side, the gas, and the electric side. Just wondering when you think that might be finalized, are we looking at October, November timeframe?

不管怎樣，在你的費率案件備案中，你是很好的夥伴。在我的整個職業生涯中，我從未見過公用事業公司提起如此多的費率案件。而且它們都比較接近。所以你在一家好公司，我認為這不會令委員會感到驚訝。我在水側、瓦斯側和電力側都看到了這一點。只是想知道您認為什麼時候可以最終確定，我們是否正在考慮 10 月、11 月的時間表？

Yeah, Mike, I'll let Tommy answer the specifics of the timing there, but I'll just make a comment. I know we've shared this with our Board and our employees and even in fact some of our customers. But the inflationary pressures over the last 24 months are unlike any I've seen in my professional career. So your comment about the other companies also having to be at the table ratemaking does make complete sense. With that, Tommy, maybe you want to talk about the schedule a little bit?

是的，麥克，我會讓湯米回答具體的時間安排，但我只會發表評論。我知道我們已經與董事會和員工甚至我們的一些客戶分享了這一點。但過去 24 個月的通膨壓力是我職業生涯中從未見過的。因此，您關於其他公司也必須參與定價的評論確實完全合理。湯米，也許你想談談日程安排？

Sure, Mike. Unlike the prior case that resolved as an expedited cases, this is a general case. The scope is a little broader. So we're expecting this to -- the process to play out over a 12- to 15-month period for final resolution until first quarter of 2025 or first calendar quarter 2025.

當然，麥克。與先前作為加急案件解決的案件不同，這是一個一般案件。範圍稍微寬一些。因此，我們預計這一過程將在 12 至 15 個月的時間內完成，直到 2025 年第一季或 2025 年第一季才能得出最終解決方案。

Got it. And then with Mountain Valley coming online. So Paul, just wondering what you're thinking in terms of how much of your actual gas supply for Roanoke Gas you're actually going to pull from that line?

知道了。然後 Mountain Valley 上線。保羅，只是想知道您對羅阿諾克天然氣公司的實際天然氣供應量有何想法，您實際上將從該線路中提取多少天然氣？

Yes. So Mike, presently, this is public knowledge, we're signed up for 10,000 dekatherms a day and that represents approximately 15% of our firm supply. And again, that's just a starting point. So it is meaningful.

是的。麥克，目前，這是眾所周知的，我們每天簽約購買 10,000 個十卡瑟姆，約占我們公司供應量的 15%。再說一次，這只是一個起點。所以這是有意義的。

And as you know, natural gas supply and natural gas distribution, it's those incremental dekatherms that are especially meaningful. So we're really looking forward to the 10,000 a day coming online and coming into the system.

如您所知，天然氣供應和天然氣分配，這些增量十卡熱值特別有意義。所以我們真的很期待每天有 10,000 人上線並進入系統。

We've discussed this in our filings and in hearings and support letters over the years to FERC and the courts and others. The ability to have Marcellus and Utica Basin gas flowing through Mountain Valley into our system is just a wonderful opportunity. It is, as you know, approximately the cheapest natural gas in the world. And the ability to bring that into this region and what that means for economic development is truly something that we're excited about.

多年來，我們在文件、聽證會以及給 FERC、法院和其他機構的支持信中討論了這一點。能夠讓馬塞勒斯和尤蒂卡盆地的天然氣通過山谷流入我們的系統，這只是一個絕佳的機會。如你所知，它大約是世界上最便宜的天然氣。能夠將其帶入該地區以及這對經濟發展意味著什麼，確實令我們感到興奮。

Is there an upward limit cap as to how much you would actually take off that line of your total supply?

您實際從總供應量中扣除的數量是否有上限？

Yeah. That's a good question, Mike. As you know, it's going to transport 2 Bcf a day, have the capacity to transport that much gas ultimately. That entire 2 Bcf is spoken for or reserved, if you will, at this time. Certainly, if we had economic development that require more natural gas, we would do everything in our power to make that happen, but it would require some contract work presently.

是的。這是個好問題，麥克。如您所知，它每天將運輸 2 Bcf，最終有能力運輸這麼多氣體。如果您願意的話，此時整個 2 Bcf 都已被使用或保留。當然，如果我們的經濟發展需要更多的天然氣，我們會盡一切努力實現這一目標，但目前需要一些合約工作。

Okay. And then last question. Southgate, I noticed the size of the pipe was increased. I'm wondering where that process stands in terms of timing and when that really gets going?

好的。然後是最後一個問題。索斯蓋特，我注意到管道的尺寸增加了。我想知道這個過程的時間安排以及何時真正開始？

Yeah. I think the joint venture partners that are part of Southgate made an announcement in December in that regard that included a change in the scoping of the project. And I believe, if I remember correctly, Mike, I think the timing of that was late 2027, early 2028 calendar years, I believe. So certainly, looking forward to the main line, getting completed in service. And hopefully, some of the process for Southgate will ramp up at that point.

是的。我認為 Southgate 的合資夥伴在 12 月就這方面發布了公告，其中包括專案範圍的變更。我相信，如果我沒記錯的話，麥克，我認為時間是 2027 年底、2028 年初。所以當然，期待主線的完成服務。希望索斯蓋特的一些進程屆時能夠加快。

All right. That's all I had, gentlemen. Thank you.

好的。這就是我所擁有的一切，先生們。謝謝。

Thank you. Do we have any other questions from anyone on the lines? (Operator Instructions)

謝謝。熱線人員還有其他問題嗎？ （操作員說明）

All right. Well, if there are no more questions, this concludes our first-quarter earnings call. We do appreciate everyone taking time out of their busy schedule to join us, and we are looking forward to speaking with you again in the same timeframe as we discuss our physical second-quarter results. Have a great day. Thank you.

好的。好吧，如果沒有其他問題了，我們的第一季財報電話會議就到此結束。我們非常感謝大家在百忙之中抽出時間加入我們，我們期待在討論第二季度實際業績的同時再次與您交談。祝你有美好的一天。謝謝。