RGC Resources Reports 'Steady' Q1 Earnings Amid Winter Challenges

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RGC Resources (NASDAQ:RGCO) executives said the company delivered a 'steady' first quarter for fiscal 2026, while also dealing with unusual winter conditions and a sharp spike in natural gas prices that is expected to create a sizable temporary gas-cost undercollection. The company installed 0.6 new main miles and connected 196 new services, nearly matching the prior-year quarter. However, new main miles were down from 1.1 in the prior-year quarter, which the company attributed partly to weather. RGC Resources also noted a large industrial customer reduced natural gas usage from record levels a year ago, while residential usage increased 8% and other commercial volumes rose, primarily due to an 11% increase in heating degree days versus the year-ago quarter.

Why it matters

RGC Resources' Q1 results highlight the challenges utilities face in managing volatile energy costs and weather-related disruptions, which can impact customer demand, infrastructure investment, and financial performance. The company's regulatory filings and efforts to recover gas-cost undercollections also demonstrate the importance of constructive relationships with state regulators in ensuring reliable service and financial stability.

The details

RGC Resources reported net income of $4.8 million, or $0.47 per share, compared with $5.3 million, or $0.51 per share, in the same quarter a year earlier. The company cited higher costs for personnel, IT, property taxes, and depreciation as offsetting gains from improved gas margins and lower interest expense. Capital expenditures for the quarter totaled $5.6 million, flat compared to the prior-year period. Management also discussed an extended cold snap in late January and early February, noting the company's distribution system performed 'flawlessly' and that the LNG plant was used to provide peaking supply on some of the coldest days. However, the company estimates the winter weather event created an $8 million to $10 million undercollection on gas costs that it plans to work with regulators to recover over the next 12 to 18 months.

• In the first quarter of fiscal 2026, RGC Resources installed 0.6 new main miles and connected 196 new services, nearly matching the 197 new services added in the first quarter of fiscal 2025.
• From January 24 through February 9, Roanoke was 53% colder than normal by heating degree days, with 680 heating degree days versus a normal of 445.

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