RGC Resources Inc (RGCO) Reports Turnaround with Earnings of $11.3 Million for Fiscal 2023
RGC Resources Inc (NASDAQ:RGCO) announced earnings of $11.3 million for the fiscal year ended September 30, 2023, recovering from a net loss in the previous year.
The company's utility margins improved, and the renewable natural gas facility contributed to income growth.
Construction of the Mountain Valley Pipeline (MVP) resumed, with completion expected in early 2024.
Increased non-cash MVP earnings were offset by higher borrowing costs in the Midstream subsidiary.
On November 20, 2023, RGC Resources Inc (NASDAQ:RGCO) released its 8-K filing, reporting a significant turnaround with consolidated earnings of $11,299,282, or $1.14 per share, for the fiscal year ended September 30, 2023. This marks a substantial recovery from the previous fiscal year, which saw a net loss of $31,732,602, or $3.48 per share, primarily due to impairment charges related to the MVP investment.
Fiscal Year Performance and Key Financial Highlights
RGC Resources Inc (NASDAQ:RGCO) reported that the increase in earnings was driven by higher utility margins and the start-up of a renewable natural gas facility in March, which contributed to utility income growth. CEO Paul Nester commented on the company's strategic execution, stating,
Higher utility margins and the start-up of the renewable natural gas facility in March drove utility income growth."
He also expressed optimism about the resumption of MVP construction and its expected completion in early 2024.
The company's net income for the quarter ended September 30, 2023, was $1,014,175, or $0.10 per share, compared to a net loss of $11,415,229, or $1.16 per share, for the same quarter in the previous year. The improvement in quarterly earnings was attributed to non-cash MVP income resulting from the resumption of construction in June 2023.
Financial Statements Summary
The condensed consolidated statements of income show operating revenues of $97,439,765 for the twelve months ended September 30, 2023, compared to $84,165,222 for the previous year. Operating income for the fiscal year was $17,678,480, an increase from $14,916,675 in the prior year. The equity in earnings of unconsolidated affiliates was $2,084,990, compared to just $73,327 in the previous year, reflecting the increased non-cash MVP earnings.
Interest expenses increased to $5,618,805 from $4,497,929, reflecting higher borrowing costs. The balance sheet shows total assets of $303,729,340 as of September 30, 2023, compared to $290,309,243 in the previous year. The company's long-term debt stood at $125,844,728, down from $135,695,289, indicating a reduction in debt levels.
Investor Considerations and Non-GAAP Measures
RGC Resources Inc (NASDAQ:RGCO) emphasized the use of non-GAAP measures such as utility margins and underlying net income to enhance comparability between periods. The company's management believes these measures provide useful information in evaluating operating performance. However, they should be considered supplementary to GAAP results.
The company's forward-looking statements, including expectations regarding customer growth, infrastructure investment, and MVP construction, are subject to various risks and uncertainties. These include gas prices and supply, geopolitical considerations, and regulatory and legal challenges.
In conclusion, RGC Resources Inc (NASDAQ:RGCO) has demonstrated a strong recovery in its fiscal 2023 performance, with significant improvements in earnings and utility margins. The resumption of the MVP construction is a positive development for the company, and investors will likely watch the project's progress closely as it moves towards completion in early 2024.
Explore the complete 8-K earnings release (here) from RGC Resources Inc for further details.
This article first appeared on GuruFocus.
