Saturday, August 14, 2010
Higher temps lower gas company RGC Resources' profits
RGC Resources said its third-quarter profits were down sharply from last year's.
The latest from The Ticker blog
As temperatures rose in recent months, quarterly profits dropped by about 90 percent for Roanoke-based RGC Resources, parent company of Roanoke Gas.
RGC reported Thursday that its consolidated profits for the third quarter ended June 30 totaled $13,466, or a penny per share, compared with earnings of $137,394, or 6 cents per share, for the same period last year.
John Williamson, RGC's company's chairman, president and chief executive officer, attributed the not atypical drop in third-quarter earnings primarily to reduced heating demands during significantly warmer weather in April and May, especially April.
"We usually have low earnings in the third quarter and frequently the fourth quarter is a loss quarter," Williamson said.
In other company news, the InterTech Group, a South Carolina-based private equity firm that is one of the nation's largest privately held companies, has upped its investment in RGC and now holds more than 5 percent of the utility's stock -- reaching a threshold that triggered a related July 6 filing with the U.S. Securities and Exchange Commission. InterTech is RGC's largest investor.
Such ownership stakes can yield clout, but Williamson said he does not think InterTech's increased investment will have any real meaning for RGC.
"InterTech is a private equity operation that I think liked us as an investment for the dividend yield and stability," he said. "I have talked with them a couple of times and they seem to be what they say they are: A passive investor that likes to invest in small, stable gas utilities along with a lot of other things."
Robert Johnston, an executive vice president for the InterTech Group, said he does not anticipate the group will seek changes as long as RGC continues to operate as it has.
"We think it is a very solid company, well run, with a good dividend and recession proof," Johnston said Friday.
Meanwhile, RGC's earnings report released Thursday showed that for the 12-month period ended June 30, profits totaled $4.73 million, or $2.11 per share, compared with $4.65 million, or $2.10 per share during the same period last year.
RGC's subsidiaries include Roanoke Gas, Diversified Energy Co. and RGC Ventures of Virginia.
RGC stock trades on the Nasdaq exchange. On Friday, its stock price closed unchanged at $31.60.
