Rgc Resources Inc. · NASDAQ:RGCO
Rgc Resources — Investor Presentation (May 2018)
25 slides from Rgc Resources's investor presentation, May 18, 2018
Slide 1: Investor Presentation
Investor Presentation John S. D’Orazio, CEO May 2018 Paul W. Nester, CFO
Slide 2: Forward-Looking Statements
Forward-Looking Statements The statements in this presentation by RGC Resources, Inc. (the "company") that are not historical facts constitute “forward- looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks and uncer
Slide 3: Agenda
Agenda Company Overview Key Highlights Growth Strategy 2018 Update Financial Highlights Outlook 3
Slide 4: Organizational Structure
Organizational Structure NASDAQ: RGCO Regulated Non-Utility Local Distribution Company (LDC), Partner in Mountain Valley Pipeline located in Roanoke, VA, founded (MVP) in 1883 Partner in proposed MVP Southgate Provided 98% of earnings in fiscal project 2017 4
Slide 5: Roanoke Gas Service Territory
Roanoke Gas Service Territory Serve over 60,500 natural gas customers Customer Count breakdown: Residential 90% C&I 10% Volume breakdown: Residential 40% C&I 60% Note: Number of customers based on rolling 12-month average. Volume breakdown per prior fiscal year. 5
Slide 6: Key Highlights
Key Highlights Total shareholder return of 249% since 2008, compared with 118% for the S&P 500 74 years of consecutive dividend payments Demonstrated Track Record of Delivering 14 years of consecutive dividend increases Shareholder Value $0.62 per share annual dividend, a 6.9% increase over
Slide 7: Key Highlights
Key Highlights Infrastructure Riders System Expansion Weather Normalization Regulated by VA State Corporate Commission (SCC) VA regulatory climate ranked among best states for business1 9.75% authorized ROE (Upper range 10.1%) Attractive cost of recovery mechanisms Highly Stable Business M
Slide 8: Growth Strategy
Growth Strategy Regulated Utility Investment CapEx Ongoing Regulated Utility Growth Volumes Delivered Customer Growth Non-Utility Investments MVP 8
Slide 9: Regulated Utility Investment: CapEx
Regulated Utility Investment: CapEx Fiscal YTD at March 31: $12.5 $10.5 Millions Other $8.5 Capital $2.5 $6.5 2017 SAVE 2018 Rider $4.5 $5.0 Customer $2.5 & System $0.5 Expansion $2.9 $1.5 million, or 13% decrease in capital spending 9
Slide 10: Regulated Utility Growth: Volumes
Regulated Utility Growth: Volumes Volumes Delivered (DTH) Fiscal YTD at March 31: 3,500 3,000 2,500 2,000 Thousands 1,500 1,000 500 - Residential Commercial Industrial YTD 2017 YTD 2018 2018 vs 2017 Commercial 20% Industrial 3% Top 10 Customers 9% 10
Slide 11: Regulated Utility Growth: Customers
Regulated Utility Growth: Customers Average Customers (twelve-months ended March 31) 60,600 60,400 60,200 60,000 59,800 59,600 59,400 59,200 59,000 58,800 58,600 2015 2016 2017 2018 Consistent customer growth year over year since 2015 155 new customers in the second fiscal quarter 360 total ne
Slide 12: Regulated Utility Growth: Customers
Regulated Utility Growth: Customers Ballast Point’s industrial-scale brewery for its East Coast General Shale recently converted operations from 66% coal operations is up and brewing in Roanoke, VA to 100% natural gas The Roanoke Times – 8.9.17 Steel Dynamics to invest $28 million at the Roanoke Bar
Slide 13: Update: RGC Midstream Investment
Update . RGC Midstream investment $35 million . FERC approved and construction in progress . Targeted in-service date end of calendar year 2018 . Estimated $4.4 million annual EBITDA contribution RGC Midstream CapEx $30 $25 $20 ($mm) $10 $5 $5 $0 2017A 2018E 2019E 13
Slide 14: Financial Highlights
Financial Highlights Earnings Per Share: $0.90 TTM March 31 $0.89 $0.86 $0.86 $0.80 Six-months ended March 31: $0.76 $0.70 2018 2017 Basic: $0.76 $0.76 $0.67 Diluted: $0.75 $0.76 $0.60 $0.60 Pre-Tax Reform: $0.56 EPS: $0.78 $0.50 $0.52 $0.50 $0.40 2015 2016 2017 2018 Pre-Tax Reform Dividends/Share *
Slide 15: Financial Highlights (continued)
Financial Highlights (continued) ROE CapEx ($000’s) $22,000 11.0% $21,179 $20,000 $19,418 10.0% $18,000 9.4% $16,000 9.0% 10.7% $15,143 $14,313 $14,000 9.7% 9.1% 8.0% 8.7% $12,000 $10,000 7.0% 2015 2016 2017 2018 2015 2016 2017 2018 Pre-Tax Reform CapEx (TTM) 15
Slide 16: Financial Highlights (concluded)
Financial Highlights (concluded) Updated through market close, May 11, 2018. $0.67 special dividend, paid in 2012, excluded from graph, but included in total returns. 16
Slide 17: Outlook
Outlook Rate Case Strategy Economic Development and System Expansion CapEx Forecast EPS 17
Slide 18: Outlook: Rate Case Strategy
Outlook: Rate Case Strategy Last rate case 2013 File September 2018 Primary drivers: Incorporate tax reform Recover non-SAVE CapEx investments Embed SAVE surcharges into base rates 18
Slide 19: Outlook: Economic Development
Outlook: Economic Development Eldor plans to hire 350 workers within the next five years to work in a 250,000-square-foot, high-tech factory that it is spending $75 million to build. Longer-term plans call for another 300 jobs by 2024. The Roanoke Times – 10.04.17 Humm Kombucha will build a $10 mill
Slide 20: Outlook: Economic Development
Outlook: Economic Development The Virginia Tech Carilion Research Institute (VTCRI) in Roanoke expands its biomedical research facilities with the addition of a new $90 million building, known as the Virginia Tech Carilion Biomedical Research Expansion. The project broke ground on Tuesday, Oct. 24.
Slide 21: Outlook: System Expansion
Outlook: System Expansion Franklin County Expansion: MVP Summit View Business Park 500 acre industrial along proposed MVP path City of Roanoke RGC planned interconnect and distribution system Potential to add 1,500 new customers Rate base growth of $10 million Summit View Business Park Roc
Slide 22: Outlook: CapEx
Outlook: CapEx $25 $22.0 $20.7 $18.9 $20 $18.0 $18.4 $18.4 $15 Millions $10 $5 $0 2017A 2018E 2019E 2020E 2021E 2022E Forecast totals through 2022: SAVE Infrastructure Replacement $47.4 Customer Growth & System Expansion $29.7 Utility Maintenance $18.7 Total $95.8 22
Slide 23: Southgate
Southgate . 70 mile natural gas pipeline system . 20 and 16 inch steel underground pipe . Starts at TRANSCO 165 and extends into central NC . Anchored by firm capacity commitment from PSNC Energy . Same project partners as MVP Proposed Schedule . Ongoing: Public Participation . May 2018: FERC Pre-fi
Slide 24: Outlook: EPS
Outlook: EPS 2018: $0.90 to $0.91 2019: $1.00 to $1.04 24
Slide 25: Questions
Questions