RGC Resources Inc.

Well, good morning. Thank you for joining us as we discuss RGC Resources 2023 third quarter results. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources, Inc. I am joined this morning by Paul Nestor, President and CEO of RGC Resources, and Kelsey Davenport, our Director of Finance. Before we get started, I want to review a few administrative items. we have muted all lines and ask that all participants remain muted. The link to today's presentation is available on the investor and financial information page of our website at www.rgcresources.com. Lastly, at the conclusion of the presentation and our remarks, we will take questions. So let's transition over to slide one. And I'll note that this presentation contains forecasts and projections. The slide one is the forward-looking statement disclaimer. On to slide two, which contains our agenda. During the presentation, we will review our quarterly operational and financial results and discuss the outlook for the remainder of fiscal 2023 with time allotted for questions at the end. Over to slide three, our main extensions for the year have totaled 3.1 million, I'm sorry, 3.1 miles. and we have added, which is really reflective of the great construction weather we've experienced in the Roanoke area, and we have added 464 customers through the first nine months of the fiscal year. Our customer count in the graph on the right side of the slide represents a steady increase in total customers since 2020. You've got to be mindful that customer counts for 2021 and 2022 were impacted by the state-mandated service disconnection moratorium that occurred during parts of 2020 and 2021. Overall, our collections have improved, and we are experiencing collection activity which largely resembles pre-pandemic results. Our bad debt expense for the nine months is approximately $223,000 less than this time last year. So we're on slide four, which shows our delivered gas volumes. which were lower than last year, largely due to warmer weather compared to the third quarter of 2022. Heating degree days were 6% lower, which resulted in 3% lower delivery of total volumes compared to third quarter of last year. Slide five, for the first nine months of the current fiscal year, gas volumes are lower, again, largely due to fewer heating degree days. and commercial and industrial volumes were also 2% lower than year-to-date last year. I'm now going to turn it over to Paul Nestor, Presidency of RGC Resources, who will discuss our financial results.

Thank you, Tommy, and good morning, and thanks to everyone for joining us today. We are on slide six. You know, the third quarter operating income increased $158,000, or 9.6%, to $1,798,000. This is obviously an improvement over the third quarter of 2022. This increase was primarily driven by the interim base rates that we implemented on January 1st in addition to our investment in the RNG project and Mountain Valley Pipeline AFUDC. We're going to talk about Mountain Valley a little bit later in the presentation. One thing to note on slide six, our interest expense um is under pressure due to the rising interest rate environment we still have floating rate debt supporting our mountain valley investment and it is subject to rising interest rates our net income for the quarter was 687 000 up approximately 94 000 compared to the third quarter of 2022 and this did include 519 000 of the non-cash afudc related to mountain valley returning to full construction in june 2023 to aid in the comparison of our trailing 12-month results which includes impairments recorded on our mvp investment in fiscal 2022 we have represented our financial results on an underlying basis on slide seven the ten percent increase that we see on slide seven for trailing 12 results of 955 000 really reflects two things first It's execution on the RoNo gas organic growth strategy. Tommy just covered our volume deliveries and our main miles and our customer additions. We just continue to have excellent results in our operation on all those fronts. We're still investing in rate-based. Tommy's going to cover that in just a minute, and customer growth. And again, we had a nice strategic investment in a new technology, which is reducing emissions in our RNG facility. And then the second piece of that earnings change is the non-cash equity earnings from the Mountain Valley investment. Tommy is now going to review Renogas' year-to-date capital spending as well as our capital spending projection for the remainder of fiscal 2023.

Thank you, Paul. And we're on slide eight. We continue to execute our 2023 Renogas capital investment plan with $19.4 million in utility properties. which represents an increase of $1.9 million compared to 2022. The increase is primarily the result of the investment we made in the RNG facilities completed and to make it operational. Turning to slide nine, we're going to review the outlook for the remainder of the fiscal year, including Roanoke Gas's capital budget forecast, provide an outlook for RGC midstream, and provide updated guidance for 2023 as well as provide initial guidance for 2024. So on to slide 10, we anticipate approximately $4.5 million of additional spending on utility plants for the remainder of the fiscal year for a total of approximately 23.9 for the fiscal year. You may notice that amount is higher than the second quarter forecast in May due to anticipated spending in the fourth quarter for the Roanoke gas interconnections to the Mountain Valley pipeline.