RGC Resources (RGCO) investor relations material

Executive summary

• Second quarter net income rose 14% year-over-year to $8.7 million ($0.84/share), and six-month net income increased 5.3% to $13.6 million ($1.31/share), driven by higher operating margins, new rates, MVP pipeline earnings, and lower interest expense.

• Operating revenues for the quarter were $45.5 million, up 25% year-over-year, and six-month revenues reached $75.7 million, reflecting higher non-gas base rates and commodity prices, partially offset by lower delivered volumes due to warmer weather and reduced usage by a major customer.

• Delivered gas volumes declined 5% in Q2 and 3% for the first half year-over-year, mainly due to warmer weather and the idling of a major industrial customer.

• Service renewals increased by 25% in the first half year-over-year, with continued residential development and steady operational activity.

• Growth was partially offset by inflationary pressures and the loss of a major industrial customer.

Financial highlights

• Q2 net income: $8.7 million ($0.84/share), up from $7.4 million ($0.74/share) in Q2 2025; six-month net income: $13.6 million ($1.31/share), up from $1.26/share in the first half of 2025.

• Quarterly operating revenues were $45.46 million, up from $36.46 million year-over-year; six-month revenues were $75.72 million, up from $63.75 million.

• Gross utility margin for the quarter increased 7% to $20.82 million; six-month margin rose 4% to $36.47 million.

• CapEx for the first half: $9.8 million, down 8% year-over-year due to weather impacts.

• Operating cash flow for the six months was $16.47 million, down from $21.83 million, mainly due to higher under-recovered gas costs and increased accounts receivable.

Outlook and guidance

• 2026 EPS guidance raised and narrowed to $1.31–$1.37.

• New non-gas base rates are expected to generate $4.3 million in additional annual revenues, with final regulatory approval anticipated in fiscal Q1 2027.

• Second half headwinds include the loss of a major industrial customer and the LNG facility outage.

• Capital spending forecast for FY2026 remains at $22 million, with flexibility to adjust for LNG facility developments.

• Management expects continued inflationary pressures on operating costs and plans to fund capital needs through operating cash flows, credit facilities, and equity issuance.