Rgc Resources Inc. · NASDAQ:RGCO

Rgc Resources — Investor Presentation (May 2019)

30 slides from Rgc Resources's investor presentation, May 17, 2019

  1. Slide 1: Investor Presentation May 2019

    Investor Presentation May 2019 John S. D’Orazio, CEO Paul W. Nester, CFO

  2. 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

  3. Slide 3: Agenda

    Agenda  Company Overview  Financial Highlights  Growth Strategy  Outlook 2

  4. Slide 4: Organizational Structure

    Organizational Structure NASDAQ: RGCO C-Corp formed 1998 Regulated Non-Utility  Local Distribution Company  Partner in Mountain Valley Pipeline (LDC), located in Roanoke, VA (MVP)  Founded in 1883  Partner in proposed MVP Southgate project 3

  5. Slide 5: Roanoke Gas Service Territory

    Roanoke Gas Service Territory  Serve over 61,700 natural gas customers  Customer Count breakdown:  Residential 90%  C&I 10%  Volume breakdown:  Residential 40%  C&I 60% Note: Total customers as of March 31, 2019. Volume breakdown per most recent fiscal year end. 4

  6. Slide 6: Roanoke Gas Regulated Utility

    Roanoke Gas Regulated Utility  Regulated by VA State Corporate Commission (SCC)  VA regulatory climate ranked among best states for business1  9.75% authorized ROE Highly Stable  Business Model Alternative Cost Recovery Mechanisms  Weather Normalization  Revenue Sharing  Infrastructure Riders

  7. Slide 7: Equity and Debt Profile

    Equity and Debt Profile Equity:  Top 3 institutional shareholders:  Market Capitalization: $213M  T. Rowe Price 6.3%  Common shares issued and  BlackRock 4.1% outstanding: 8,043,272  Vanguard 3.7%  $34 million availability on  5.9% insider ownership registered equity shelf Debt:  $11 millio

  8. Slide 8: Key Highlights

    Key Highlights  Total shareholder return: 3 year - 96%; 10 year - 261%  75 years of consecutive dividend Demonstrated Track payments Record of Delivering Shareholder Value  15 years of consecutive dividend increases  4 consecutive years of record earnings Note: Total shareholder return calculate

  9. Slide 9: Growth Strategy

    Growth Strategy  Regulated Utility Investment  CapEx  Ongoing Regulated Utility Growth  Customer Growth  Volumes Delivered  Non-Utility Investments  MVP 8

  10. Slide 10: Roanoke Gas CapEx

    Roanoke Gas CapEx Twelve-Months ended March 31: ($000’s) $26,000 $24,000 $24,200 $22,000 $21,200 $20,000 $19,400 $18,000 $16,000 $15,100 $14,000 $12,000 $10,000 2016 2017 2018 2019 9

  11. Slide 11: Roanoke Gas Fiscal YTD Capital Expenditures

    Roanoke Gas Fiscal YTD Capital Expenditures $12.0 $10.0 Millions $8.0 Other Capital $6.0 $1.8 2018 2019 SAVE Rider $3.4 $4.0 Customer $2.0 Growth & System $0.0 Expansion Total Capital Expenditures $5.8 $0.6 million or 6% increase 10

  12. Slide 12: Regulated Utility Growth: Customers

    Regulated Utility Growth: Customers 2.2% growth since 2016 Average Customers (twelve-months ended March 31) 61,000 60,500 60,000 59,500 59,000 2016 2017 2018 2019 New customer additions: Fiscal 2019 YTD 392 Fiscal 2018 597 Fiscal 2017 631 Fiscal 2016 495 11

  13. Slide 13: Regulated Utility Growth: Economy

    Regulated Utility Growth: Economy Eldor began production last week on its ignition systems, Altec Industries announces $30 million expansion electronic control units and hybrid and electric vehicle to increase its existing plant by 65,000 square feet systems. The company has hired about 120 people w

  14. Slide 14: Fiscal YTD Volume

    Fiscal YTD Volume Volumes Sold (DTH) 3,500 3,000 2,500 Thousands 2,000 1,500 1,000 500 - Residential Commercial Industrial YTD 2018 YTD 2019 2019 vs 2018 Total Volumes 1% C&I 2% 13

  15. Slide 15: Update RGC Midstream

    Update RGC Midstream CapEx  Project 80% complete $30 $20  $46 million cash investment ($mm) $10 $23 $17 $6  Target COD December 2019 $0 Thru 2018A 2019E 2020E Fiscal Year Workers for the Mountain Valley Pipeline weld together sections of pipe near Lindside, WV. (Jenny Harnish/The Register-Herald)

  16. Slide 16: Earnings Per Share

    Earnings Per Share $1.15 TTM March 31: $1.10 $1.05 Six-months ended $0.95 March 31: $0.85 $0.86 $0.86 2018 2017 $0.75 $0.76 Basic: $0.58 $0.47 Diluted: $0.58 $0.47 $0.65 $0.64 $0.55 $0.60 $0.56 $0.52 $0.45 2016 2017 2018 2019 Dividends/Share 15

  17. Slide 17: Return on Equity

    Return on Equity Twelve-Months ended March 31: 11.0% 10.0% 10.8% 9.0% 10.7% 9.7% 9.1% 8.0% 7.0% 2016 2017 2018 2019 16

  18. Slide 18: Outlook

    Outlook  Strategic Opportunities  CapEx Forecast  Rate Case Update  Economic Development and System Expansion 17

  19. Slide 19: Southgate

    Southgate  70 mile natural gas pipeline system  24 and 16 inch steel underground pipe  Starts at TRANSCO 165 and extends into central NC  Anchored by firm capacity commitment from PSNC Energy Schedule  Nov 6, 2018: FERC Application filed  Q1 2020: Begin Construction  Q4 2020: COD 18

  20. Slide 20: Outlook: Roanoke Gas Capital Budget

    Outlook: Roanoke Gas Capital Budget $25 $23.3 $22.8 $20.0 $19.5 $20 $18.6 $15 $14.1 Millions $10 $5 $0 2018A 2019E 2020E 2021E 2022E 2023E Forecast totals through 2023: SAVE Infrastructure Replacement $39.0 Customer Growth & System Expansion $32.0 Utility Maintenance $25.0 Total $95.0 19

  21. Slide 21: Outlook: Rate Case

    Outlook: Rate Case  Filed October 2018 - $10.5 million  Prospective rate year calendar 2019  Primary drivers:  Incorporate tax reform  Recover non-SAVE CapEx investments through 2018  Embed $4.7 million SAVE surcharges into base rates  Last rate case 2013 20

  22. Slide 22: Outlook: System Expansion

    Outlook: System Expansion Franklin County Expansion  Summit View Business Park  500 acre tract along MVP path  RGC interconnect and distribution system under construction  Potential to add 1,500 new customers  Rate base growth of $10 million MVP Existing Service Territory  $1.4 million main ex

  23. Slide 23: Outlook: Economic Development

    Outlook: Economic Development Virginia Tech Carilion Research Institute (VTCRI) growth will allow School of Medicine to grow. While most university medical schools have a connected hospital system, the VTC Partnership has followed a new model - The Roanoke Times – 8.29.16   VTCRI expansion will cr

  24. Slide 24: Outlook: Economic Development

    Outlook: Economic Development McAirlaid’s, Inc. announced today it will increase manufacturing capacity by investing $7.8 million and creating 25 jobs at its Franklin County facility. Roanoke Regional Partnership – 12.20.2018 Empire Bakery Commissary, LLC announced an expansion that will double its

  25. Slide 25: RGCO

    RGCO Updated through market close, May 1, 2019. 2012 special dividend of $0.67 excluded from graph, but included in total returns. 24 .

  26. Slide 26: EPS Guidance

    EPS Guidance Fiscal Year ended: $1.15 $1.10 $1.12 $1.05 $1.07 $1.00 $0.95 $1.08 $0.90 $1.02 $0.95 $0.85 $0.86 $0.80 2017A 2018A 2019 2020 EPS Range 25

  27. Slide 27: Questions

    Life™ “Questions”

  28. Slide 28: Exhibit A: MVP Route (Interstate Map)

    Exhibit A: MVP Route (Interstate Map)

  29. Slide 29: Exhibit A: MVP Route (County Map)

    Exhibit A: MVP Route (County Map) Interconnect into Roanoke Gas Distribution System

  30. Slide 30: Exhibit B: Franklin County: Summit Industrial Park

    Exhibit B: Franklin County: Summit Industrial Park

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