Good morning, and thank you for joining us as we discuss RGC Resources Inc.'s 2024 First Quarter Results. I am Tommy Oliver, Senior Vice President, Regulatory and External Affairs for RGC Resources. I'm joined this morning by Paul Nester, President and CEO of RGC Resources and Tim Mulvaney, our Treasurer and Chief Financial Officer.

[Operator Instructions] Let me review a few administrative items before we get started. [Operator Instructions] The link to today's presentation is available on the Investor and Financial Information page on our website at www. rgcresources.com. The conclusion of the presentation and our remarks, we will take questions. So let's transition to Slide 1.

This presentation contains forecasts and projections. Slide 1 has information about risks and uncertainties, including forward-looking statements that should be understood in the context of our public filings. Transition to 2. Slide 2 contains our agenda.

We will review our quarterly operational and financial results and discuss outlook for full year fiscal 2024 with time allotted for questions at the end. Turning to Slide 3. Main extensions for the quarter totaled just under a mile, and we connected 185 service lines. Total customers were 63,319 at the end of the first quarter.

As we discussed in prior earnings calls, the customer count for 2021, 2022 were impacted by the state-mandated service disconnection moratorium that occurred during parts of 2020, 2021.

When factoring this into our customer accounts for the prior four years shown in the graph on the right side of the slide, we have experienced steady growth over this period.

Transition to Slide 4, where our delivered gas volumes for the quarter, which were 9% lower compared to last fiscal year, and this is attributable to warmer weather in the first quarter of the 2024 fiscal year. As shown on this slide, gas volumes were down in total.

Residential and commercial volumes were lower as a result of fewer heating degree days but that was offset by a nice year-over-year industrial utilization increase as natural gas prices remain low. So let's turn to Slide 5. Our CapEx spending totaled $5.3 million in the current quarter compared to $7.5 million last year at this time.

The decline is attributable to spending for the RNG facility last year that became operational in March of 2023. When one removes the effects of the RNG spending, the year-over-year variance is approximately $500,000 spread across all categories. Paul will discuss the full year capital spending projection shortly.

I'm now going to turn it over to Tim Mulvaney, our Treasurer and CFO, who will discuss our financial results.

Tim?.

Thank you, Tommy. Moving to Slide 6. We had a strong quarter. First quarter operating income increased $1.1 million or 20% to $6.7 million compared to the first quarter of 2023. The increase was primarily driven by interim base rates that were implemented on January 1, 2023.

Equity and net earnings of unconsolidated affiliates was $1.5 million pretax due to noncash AFUDC, which resulted from our investment in the MVP. This AFUDC will taper off as the construction on various sections is complete and will cease as the pipeline goes into service.

Interest expense increased $268,000 due to the higher interest rate environment, which is impacting our floating rate debt, supporting the investment in the Mountain Valley Pipeline as well as the Roanoke Gas line of credit.

Our net income for the quarter was $5 million in the first quarter of this year compared to $3.3 million in the same quarter a year ago. The combination of the rate case and the presence of the AFUDC from the MVP drove the strong results. EPS was $0.50 per share for the first quarter of this year compared to $0.33 per share in the quarter a year ago.

I will now turn the presentation over to Paul Nester, RGC Resources President and CEO for an outlook on 2024..

Thank you, Tim. And I would like to just take a minute and have you join me in congratulating Tim. The Board appointed Tim as our permanent Treasurer and Chief Financial Officer last week and -- after serving in the interim role for about five months. So we're just delighted to have Tim with us. We are on Slide 7.

I plan to touch on our capital spending projection for fiscal 2024, the status of the MVP project, and our earnings forecast for the full fiscal year. But before we get to those items, I'm going to ask Tommy to come back on and provide us a regulatory update.

Tommy?.

Surely, Paul. As I mentioned on the last earnings call, we settled our event pending rate case with the Virginia staff, and we're awaiting a final order from the commission. We received the final order in December of this -- of last year in which the commission accepted the settlement in full.

Refunds to customers will be made in the second quarter of 2024 with no income statement impact to be made in accruals for the refunds in fiscal 2023. Unfortunately, like most consumers and businesses, we continue to experience upward expense pressure.

As such, on February 2, we filed a general rate case with the commission in which we are seeking an increase of $4.3 million or approximately a 5% increase in total revenues. The increase includes a projected rate base and an increase in the authorized ROE, which reflects current capital markets.

The $4.3 million does not include any rolling of SAVE capital as the new SAVE plan became effective October 2023. Since this case was filed as a general rate case, we expect the commission to suspend the implementation date for interim rates until July 1, 2024.

We'll know more about the schedule when the commission issues its order for notice and hearing for this case in early March. So I'll turn it over to Paul now..

Yes. Thank you, Tommy, for reviewing that. It's a little unusual if you know much about our history to -- so quickly file certainly a general rate case after just completing an expedited case.

But again, the overall inflationary environment, as Tommy said, we certainly know our customers and our vendors are feeling that as well, has led us to that action. Thanks to Tommy and Nick and the Regulatory Department for all their efforts on that. We're on Slide 8.

The 2024 Roanoke Gas capital plan is still holding at about $21 million, which is, again, down from last year due to the aforementioned RNG project. The projection right now is very similar to what we shared with you on the December earnings call. Moving on to Slide 9.

It has been an exciting several months on the MVP project, weather in the fall period and into December was excellent in this region, and it enabled really outstanding construction progress. The picture on Slide 9 is of our Summit View Interconnect actually.

That picture was taken in mid-December, and we are working on both our Lafayette and Summit View Interconnect sites simultaneously. We are on track for both of those sites and stations to be complete when Mountain Valley is complete and flowing natural gas.

Mountain Valley still has some work to be done, of course, but we are genuinely happy to be nearing the end of this long -- what's turned in to be a very long journey with the project. I think related to this, and Tim mentioned it a little bit in his comments on the interest expense.

Tim, do you mind taking a moment and providing a brief update on our financing activities for our RGC Midstream subsidiary?.

Sure, Paul. We have two facilities related to RGC Midstream that come due this year, totaling approximately $33 million. And we've begun discussions with our banks, and those discussions have been very positive. We fully expect to renew the facilities in the coming months..

Yes, fantastic. Again, a lot of good effort there.

And I'll just make a comment, those view that are in project work or construction work or partnership, you know that sometimes the secret to success is good partners are great partners, and I will tell you that not only is the joint venture been a group of great partners, but our financing partners now over many years have been excellent, too.

Our consolidated earnings guidance on Slide 10 for 2024 is also unchanged from what we shared with you in December. Again, we talked on that call about the inflationary pressures weighing on the year-over-year earnings per share.

And as Tommy just updated us, we're addressing that to the most expedient extent possible through the general rate case filing. Maybe just in summary, we're off to a great start. We've had a fantastic first quarter. I am really happy about the direction and trajectory of the company.

Right now, our -- we continue to work safely and do everything we can to meet the customers' needs, and I'm just so happy about that. With that, that concludes our prepared remarks..

[Operator Instructions]..

Good morning, everyone..

Good morning, Mike.

How are you?.

Doing fine, sir.

Yourself?.

We're doing very well. It's a beautiful, cool, sunny morning here in the Greater Roanoke Valley..

I saw that. I was looking at your weather there. It was supposed to warm up, but it looks like it's going to - that seems to be changing a little bit. Anyway on your rate case filings, you're in good company. I've never seen so many rate cases filed by utilities in my entire career. And they're all coming relatively close together.

So you're in a good company, I don't think it's going to be a surprise for the commission. I'm seeing it on the water side, the gas and the electric side.

Just wondering when you think that might be finalized, and we looking at the October, November time frame?.

Yes, Mike, I'll let to Tommy answer the specifics of the timing there, but I'll just make a comment. I know we've shared this with our Board and our employees and even in fact some of our customers. But the inflationary pressures over the last 24 months are unlike any I've seen in my professional career.

So your comment about the other companies also having to be at the table ratemaking does make complete sense.

With that, Tommy, maybe you want to talk about the schedule a little bit?.

Sure, Mike. Unlike the prior case that resolved as an expedited cases, this is a general case, the scope is a little broader. So we're expecting this to -- the process to play out over a 12- to 15-month period for final resolution until first quarter of 2025 or first calendar quarter 2025..

Got it. And then with Mountain Valley coming online.

Paul, just wondering what you're thinking in terms of how much of your actual gas supply for Roanoke Gas you're actually going to pull from that line?.

Yes. So Mike, presently, and this is public knowledge, we're signed up for 10,000 dekatherms a day and that represents approximately 15% of our firm supply. And again, that's just a starting point. So it is meaningful. And as you know, natural gas supply and natural gas distribution, it's those incremental dekatherms that are especially meaningful.

So we're really looking forward to the 10,000 a day coming online and coming into the system. We've discussed this in our filings and in hearings and support letters over the years to FERC and the courts and others. The ability to have Marcellus and Utica Basin gas flowing through Mountain Valley into our system is just a wonderful opportunity.

It is, as you know, approximately the cheapest natural gas in the world and the ability to bring that into this region and what that means for economic development is truly something that we're excited about..

Is there an upward limit kind of a cap as to how much you would actually take off that line of your total supply?.

Yes. That's a good question, Mike. As you know, it's going to transport 2 Bcf a day, have the capacity to transport that much gas ultimately. That entire 2 Bcf is spoken for or reserved, if you will, at this time.

Certainly, if we had economic development that require more natural gas, we would do everything in our power to make that happen, but it would require some contract work presently..

Okay. And then last question. Southgate, I noticed the size of the pipe was increased.

Wondering, where that process stands in terms of timing, and when that really gets going?.

Yes. I think the joint venture partners that are part of Southgate made an announcement in December in that regard, that included a change in the scoping of the project. And I believe, if I remember correctly, Mike, I think the timing of that was late 2027, early 2028 calendar years, I believe.

So certainly looking forward to the main line, getting completed and in service. And hopefully, some of the process for Southgate will ramp up at that point. All right. That's all I had, gentlemen. Thank you. [Operator Instructions].

All right. Well, if there are no more questions, this concludes our first quarter earnings call. We do appreciate everyone taking time out of their busy schedule to join us, and we are looking forward to speaking with you again in a time frame as we discuss our fiscal second quarter results. Have a great day. Thank you..