RGC Resources Inc. (RGCO, Financial) filed Quarterly Report for the period ended 2009-12-31.
Rgc Resources Inc. has a market cap of $67.5 million; its shares were traded at around $30.12 with a P/E ratio of 13.7 and P/S ratio of 0.8. The dividend yield of Rgc Resources Inc. stocks is 4.4%.
volumes decreased by 8% from last years levels. Residential volumes declined by 6% as a result, the Company believes, of a combination of warmer weather and conservation. Commercial volumes declined by nearly 12% as the unfavorable economic environment appeared to have had a greater impact on natural gas sales to these customers. Industrial volumes declined by 3%. As a result of the implementation of a rate increase during the first quarter of last year and the addition of new gas services, the Company realized approximately $143,000 in additional margin from customer base charges, which is a flat monthly fee billed to each natural gas customer. As discussed above, carrying cost revenues associated with natural gas inventories declined from last years levels corresponding with the sharp decline of the cost of gas in storage. Carrying cost revenues declined by nearly $340,000 for the quarter and are expected to remain at lower levels during the second and third quarters. The Company also accrued approximately $145,000 in WNA revenues as discussed above.
Operations expenses increased by $149,850, or 6%, over the same period last year, primarily as a result of higher employee benefit costs. Total employee benefit costs increased by approximately $153,000 over the same period last year due to a $94,000 increase in pension and postretirement medical costs related to the amortization of a higher actuarial loss and $58,000 in higher health insurance premiums.
In the fourth quarter of fiscal 2009, the Company implemented new depreciation rates related to an updated depreciation study that the SCC requires the Company to conduct every five years. The new rates were approved by the SCC and made effective retroactive to October 1, 2008; however the full impact of the change in depreciation estimate for the year was recorded in the fourth quarter. As a result of the updated depreciation study, the Companys overall composite weighted average depreciation rate declined from 4.12% to 3.31% of total depreciable assets. If the change in depreciation rates had been reflected in the first quarter of fiscal 2009, the impact to the Statement of Income and Comprehensive Income for the three-months ended December 31, 2008 would have been to reduce depreciation expense by $222,550, increase net income by $138,070 and increase earnings per share by $0.06.
Investing activities are generally composed of expenditures under the Companys construction program, which involves a combination of replacing aging bare steel and cast iron pipe with new plastic or coated steel pipe and expansion of its natural gas system to meet the demands of customer growth. Cash flows used in investing activities increased by approximately $200,000 due to a higher level of capital expenditures. Total capital expenditures were $1,652,870 and $1,466,167 for the three-month periods ended December 31, 2009 and 2008, respectively, which reflects increased expenditures for pipeline replacement activity and improvements to the liquefied natural gas facility. Roanoke Gas total capital budget for the current year is more than $7,500,000 with a continued focus on its pipeline renewal program and system improvements. Historically, depreciation cash flow has provided approximately 70% of the annual support for the Companys capital budget. With the implementation of new depreciation rates as a result of the updated depreciation study, operating cash flow from depreciation will be approximately 20% less than what was provided under the prior depreciation rates. As a result future capital expenditure funding will be more dependent on corporate borrowing activity and other sources of funds.
Financing activities generally consist of long-term and short-term borrowings and repayments, issuance of stock and the payment of dividends. As discussed above, the Company uses its line-of-credit arrangement to fund seasonal working capital needs as well as provide temporary financing for capital projects. Cash flow from financing activities changed by approximately $2,895,000, moving from a $2,339,000 source of funds to a $556,000 use of funds. The reason for the move to a net use of funds corresponds to the absence of borrowing activity for the current quarter under the Companys line-of-credit agreement. The impact of much lower natural gas prices and their effect on reducing inventory and accounts receivable levels and
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Rgc Resources Inc. has a market cap of $67.5 million; its shares were traded at around $30.12 with a P/E ratio of 13.7 and P/S ratio of 0.8. The dividend yield of Rgc Resources Inc. stocks is 4.4%.
Highlight of Business Operations:
The commodity price of natural gas has declined from its peak of more than $13.00 per decatherm in the summer of 2008 to under $4.00 per decatherm this past summer and has since increased to about $6.00 per decatherm at the end of December 2009. The lower commodity price of natural gas has reduced the gas cost component of the Companys billing rates making natural gas a lower cost energy source. At the same time, the Company was purchasing natural gas and putting it into storage this past summer at an average price of $4.00 per decatherm compared to $11.00 per decatherm for the prior year. Although the lower natural gas prices will benefit customers by keeping the Companys billing rates low, the decline in the total value of gas in storage has resulted in a significant reduction in carrying cost revenues.volumes decreased by 8% from last years levels. Residential volumes declined by 6% as a result, the Company believes, of a combination of warmer weather and conservation. Commercial volumes declined by nearly 12% as the unfavorable economic environment appeared to have had a greater impact on natural gas sales to these customers. Industrial volumes declined by 3%. As a result of the implementation of a rate increase during the first quarter of last year and the addition of new gas services, the Company realized approximately $143,000 in additional margin from customer base charges, which is a flat monthly fee billed to each natural gas customer. As discussed above, carrying cost revenues associated with natural gas inventories declined from last years levels corresponding with the sharp decline of the cost of gas in storage. Carrying cost revenues declined by nearly $340,000 for the quarter and are expected to remain at lower levels during the second and third quarters. The Company also accrued approximately $145,000 in WNA revenues as discussed above.
Operations expenses increased by $149,850, or 6%, over the same period last year, primarily as a result of higher employee benefit costs. Total employee benefit costs increased by approximately $153,000 over the same period last year due to a $94,000 increase in pension and postretirement medical costs related to the amortization of a higher actuarial loss and $58,000 in higher health insurance premiums.
In the fourth quarter of fiscal 2009, the Company implemented new depreciation rates related to an updated depreciation study that the SCC requires the Company to conduct every five years. The new rates were approved by the SCC and made effective retroactive to October 1, 2008; however the full impact of the change in depreciation estimate for the year was recorded in the fourth quarter. As a result of the updated depreciation study, the Companys overall composite weighted average depreciation rate declined from 4.12% to 3.31% of total depreciable assets. If the change in depreciation rates had been reflected in the first quarter of fiscal 2009, the impact to the Statement of Income and Comprehensive Income for the three-months ended December 31, 2008 would have been to reduce depreciation expense by $222,550, increase net income by $138,070 and increase earnings per share by $0.06.
Investing activities are generally composed of expenditures under the Companys construction program, which involves a combination of replacing aging bare steel and cast iron pipe with new plastic or coated steel pipe and expansion of its natural gas system to meet the demands of customer growth. Cash flows used in investing activities increased by approximately $200,000 due to a higher level of capital expenditures. Total capital expenditures were $1,652,870 and $1,466,167 for the three-month periods ended December 31, 2009 and 2008, respectively, which reflects increased expenditures for pipeline replacement activity and improvements to the liquefied natural gas facility. Roanoke Gas total capital budget for the current year is more than $7,500,000 with a continued focus on its pipeline renewal program and system improvements. Historically, depreciation cash flow has provided approximately 70% of the annual support for the Companys capital budget. With the implementation of new depreciation rates as a result of the updated depreciation study, operating cash flow from depreciation will be approximately 20% less than what was provided under the prior depreciation rates. As a result future capital expenditure funding will be more dependent on corporate borrowing activity and other sources of funds.
Financing activities generally consist of long-term and short-term borrowings and repayments, issuance of stock and the payment of dividends. As discussed above, the Company uses its line-of-credit arrangement to fund seasonal working capital needs as well as provide temporary financing for capital projects. Cash flow from financing activities changed by approximately $2,895,000, moving from a $2,339,000 source of funds to a $556,000 use of funds. The reason for the move to a net use of funds corresponds to the absence of borrowing activity for the current quarter under the Companys line-of-credit agreement. The impact of much lower natural gas prices and their effect on reducing inventory and accounts receivable levels and
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