John D'Orazio – President and Chief Executive Officer Paul Nester – Chief Financial Officer.

Mark Levin – Seaport Global Securities.

Good morning and welcome to RGC Resources Third Quarter Earnings Call. I'm John D'Orazio, President and CEO of RGC Resources. Thank you for taking the time out of your day to attend. Please mute your line and hold your questions until the completion of the presentation.

Also the link to today's presentation is available on our Web site at rgcresources.com on the Investor and Financial Information page. Before we begin, just a reminder on forward-looking statements as shown on slide two. Moving to slide three, we plan to review key operational and financial highlights, our outlook for 2018, and take any questions.

Our third quarter earnings per share are $0.14, as shown on slide four. Fiscal year-to-date earnings per share are $0.88, which is a $0.04 improvement over 2017. We will cover more third quarter and year-to-date financials results later in the presentation.

As slide five highlights, we invested $7 million in regulated utility in the third quarter, $2 million increase over the same period last year. Approximately $1.9 million was spent on infrastructure replacement; $4.9 million on customer growth, and $0.2 million on other capital needs.

The quarter-to-quarter increase was primarily due to elevated spending on system reinforcement projects supporting customer growth. Slide six shows year-to-date capital spending. We are approximately $1 million ahead of 2017, primarily due to infrastructure replacement and system reinforcements.

We continue to experience steady customer growth as shown on slide seven. We added 129 customers in the third quarter, and have added 489 customers year-to-date. On slide eight, our residential volumes increased 35% and our commercial volumes increased 13% in the third quarter compared to the same period last year.

On slide nine, our year-to-date commercial volumes increased 20% compared to the same period last year. Of significance, our top ten customer's usage increased 9%. We are on slide 10. Mountain Valley Pipeline is under construction with a targeted in-service date of the first quarter 2019.

Fiscal year-to-date, we have invested $5.2 million in the project. As you may recall, the MVP Southgate expansion was also announced in April with projected in-service date at the end of 2020. Now I would like to introduce Paul Nester, our Chief Financial Officer. He will review the third quarter and year-to-date financial results..

Thank you, John. For those of you following along via webcast, we are on slide 11. For the third quarter, operating income was approximately $539,000 or 41% higher than 2017, primarily due to increases in the infrastructure replacement rider or SAVE revenue, customer growth, and industrial volume.

Equity earnings in our Mountain Valley Pipeline investment increased approximately $133,000 over the prior year due to the increasing investment in the project. Year-to-date operating income is slightly below the prior year due to the $1,148,000 tax reform adjustment.

Without this adjustment, operating income increased approximately $1,097,000 primarily due to increases in the SAVE rider revenue, customer growth, and industrial volume. Equity earnings in Mountain Valley Pipeline increased $295,000 year-to-date. As we have planned, our operating expenses excluding gas cost remained flat to 2017.

Interest expense has increased approximately $112,000 in the third quarter and $429,000 year-to-date on higher borrowing and higher rate when compared to 2017. Our tailing 12-month earnings are up 5.2% and $0.91 compared to $0.86 in the prior period. John will now provide the 2018 outlook..

Thank you, Paul. Let's review our capital expenditure projections on slide 12. We maintain our focus on infrastructure replacement and customer growth, representing approximately 86% of our capital spending. We plan to spend approximately $22.6 million in fiscal 2018, an increase of $1.9 million from the 2017.

Further, we anticipate investing $9.8 million in the Mountain Valley Pipeline in the fourth quarter. Due to project delays attributable to weather and legal proceedings, our 2018 MVP investment total is lower.

Correspondingly, our fiscal 2019 investment estimate has increased to $70 million, and the expected completion date has moved from the end of calendar 2018 to the first quarter of 2019. Finally, our fiscal 2018 earnings guidance range remains at $0.90 to $0.91 per share. That concludes our prepared remarks.

We would now like to take any questions from the audience..

Hey, good morning. This is Mark Levin from Seaport. How are you? Congratulations on a good quarter..

Good. Thank you..

Yes, you are very welcome.

So just two quick ones, and it maybe a little early in the year, but a couple of things, one is on the -- are you still feeling reasonably confident about the dollar per share guidance for '19, has anything changed either positively or negatively that would make you feel more or less confident around that number? And then the second question has to do with just CapEx for '19, any early thoughts? Thank you..

All right. On the guidance for '19, yes, we're comfortable with the guidance between the $1 and $1.04 per share for 2019. And our CapEx predictions, I will turn that over to Paul. He has his figures..

Hey, Mark. Good morning. Yes, we are in the process of preparing our budget and forecast for '19 on the CapEx and refining that and I think as you probably recall from our prior presentation, we are in that $18 to $19 million range.

We do see that number drifting up a little bit, probably not quite as high as 2018, we think will probably be in the $20 million to $21 million for 2019..

Got it. That's very helpful..

-- just providing the gas CapEx..

Got you. And then obviously you guys break out Mountain Valley.

And then on MVP, any -- just updates, I think you mentioned in-service first quarter, just any color around how that's going?.

Yes. I think you will remember on the last call we said let's hope that it dries out a little bit, it's been a wet cold spring here in this part of Virginia. The cold left, but the wet hasn't left. So, we have had tremendous rain really in the last month.

And of course as you have probably seen from EQM and NextEra, the primary project partners, and John just mentioned, you know, the in-service date has moved to the first quarter.

So they're vigorously working towards that, and doing everything they can to try to meet that timeline, and really all things considered with the weather, the project is really moving along just fine.

There has been a couple of legal proceedings that have made the news, notably coming out of the Fourth Circuit Court of Appeal, the project is working those. And no definitive timeline on those market at this point because the Fourth Circuit doesn't really have a definitive timeline. But they're working on those honestly as well..

And that's perfect.

And then just final question from me, the 10-Q, would you think that would be up this morning or sometime today?.

It's looking like Monday right now. We could file it later today, but it maybe Monday..

Okay, great. Thanks very much. I appreciate the time this morning..

Thank you..

Thank you..

Are there any other questions? All right. If there are no other questions, we would like to thank everybody for attending our call, and enjoy the rest of your summer. Thank you..

Thank you..