RGC Resources 2025 Q2 Earnings Strong Performance with Net Income Growth of 19.1%

RGC Resources (RGCO) reported its fiscal 2025 Q2 earnings on May 07th, 2025. RGC Resources exceeded market expectations with robust earnings growth in its fiscal 2025 Q2. The company reported an impressive 19.1% increase in net income, reaching $7.68 million compared to $6.44 million in the same quarter of the previous year. The earnings per share (EPS) rose 17.5% to $0.74 from $0.63 in 2024 Q2. Analysts' expectations were surpassed, showcasing the company's solid operational performance. Guidance remains in line, with RGC Resources anticipating continued growth supported by infrastructure investments and customer demand.

Revenue

The total revenue for RGC Resources saw a notable increase in fiscal 2025 Q2, climbing by 11.6% year-over-year to reach $36.46 million. The gas utility segment was particularly strong, generating $36.44 million, while non-utility operations contributed $26,161. Overall, this growth in revenue reflects the company's ability to capitalize on favorable market conditions and operational efficiencies.

Earnings/Net Income

RGC Resources reported a significant rise in its earnings per share (EPS), which increased by 17.5% to $0.74 in 2025 Q2, up from $0.63 in 2024 Q2. The company's net income also saw robust growth, reaching $7.68 million in 2025 Q2, marking a 19.1% rise from $6.44 million in the previous year. This continued earnings growth underscores the company's strong financial performance and stability.

Post-Earnings Price Action Review

The strategy of investing in RGC Resources shares following its quarterly revenue increases has proven highly lucrative over the past five years. This approach delivered a total shareholder return (TSR) of 55%, significantly outperforming the company's share price return of 36%. Key factors driving this success include significant revenue growth and earnings increases, with RGC Resources experiencing a 12% boost in utility margin and a 17.5% growth in EPS during Q2 FY2025. This was largely fueled by higher base rates and increased utility volumes. Additionally, TSR encompasses dividend income, with the company recently raising its dividend to $0.2075 per share, reflecting management's confidence in stable cash flows. Despite some market skepticism, insider buying activity over the past year suggests long-term confidence in the company's value. In summary, the strategy of purchasing RGC Resources shares after revenue jumps and holding for 30 days has been profitable, driven by strong earnings growth and consistent dividend payments. This underscores the importance of considering both share price appreciation and underlying earnings and dividend growth when evaluating investment strategies.

CEO Commentary

Paul Nester, CEO of RGC Resources, Inc., emphasized a successful second quarter marked by a 12% increase in utility margin. This growth was driven by cooler winter weather and substantial usage from a major industrial customer. Although the company's earnings from the Mountain Valley Pipeline (MVP) decreased to $801,175 due to the pipeline's transition from construction to operation, Nester highlighted the impact of higher base rates effective July 1, 2024, on overall earnings. Despite these positive developments, the company faced challenges, including lower earnings from affiliates and increased interest expenses.

Guidance

RGC Resources anticipates continued growth driven by ongoing investments in infrastructure and customer demand. The company acknowledges risks that could affect future performance, including inflation, interest rates, and gas supply volatility. Management emphasizes the importance of monitoring these factors closely, particularly as they relate to margins and overall operational performance. Forward-looking statements reflect the company’s expectations as of now, with no obligation to update unless required by law.

Additional News

In recent non-earnings news, RGC Resources, Inc. declared a quarterly dividend of $0.2075 per share, payable on August 1, 2025, to shareholders of record on July 18, 2025, marking the company’s 325th consecutive quarterly cash dividend. Furthermore, insider trading activity indicates confidence in the stock, with notable purchases made by key executives, including CEO Paul Nester, who acquired 1,000 shares. Additionally, the company hosted its quarterly conference call to review fiscal second-quarter results on May 8, 2025, providing insights into operational strategies and future expectations.