Gas Natural Inc. Reports 2015 Second Quarter Results

Aug 10, 2015, 19:14 ET from Gas Natural Inc.

CLEVELAND, Aug. 10, 2015 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) ("Gas Natural" or the "Company"), a holding company operating local natural gas utilities serving approximately 68,000 customers in six states, reported financial results for the second quarter of 2015 ended June 30, 2015.  As previously announced, the Company completed the sale of its Wyoming operations on July 1, 2015 for $17 million and the divested unit is reported as discontinued operations.    

The Company reported a loss from continuing operations of $1.7 million, or $0.16 loss per share, for the second quarter, compared with a loss of $1.5 million, or $0.14 loss per share, for the first quarter of 2014.  On a year-to-date basis, income from continuing operations for the 2015 first half was $2.7 million, or $0.26 per share, compared with $3.0 million, or $0.29 per share, for last year's first half. 

Adjusted loss from continuing operations, a non-GAAP number, was $0.6 million, or $0.06 per share, for the second quarter of 2015 compared with $0.6 million loss, or $0.06 loss per share, for the second quarter of 2014.  Adjusted loss from continuing operations for the 2015 second quarter excludes $1.1 million non-recurring legal and professional fees, regulatory and other expenses, and a goodwill and asset impairment charge.  In the 2014 second quarter, adjusted loss from continuing operations excludes $0.8 million related to an uncollectible accounts expense resulting from a customer's bankruptcy proceeding as well as non-recurring legal and professional fees.

On a year-to-date basis, adjusted income from continuing operations, a non-GAAP number, was
$4.2 million, or $0.40 per share, in the 2015 period compared with $4.3 million, or $0.41 per share, for the prior-year period.  See attached table for a reconciliation of GAAP income from continuing operations to non-GAAP adjusted income from continuing operations.

Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, commented, "We continue to advance our strategy to expand in underserved markets and rationalize assets for redeployment to areas where we can focus on growth, quality customer service and solid returns on investments. Although full service utility throughput was down 19% primarily due to warmer weather in North Carolina and Montana, we still achieved customer growth in Ohio, North Carolina and Maine, while also realizing the early benefits of the September 2014 activation of Phase 1 of the Loring pipeline. It is noteworthy that we are just beginning to tap the potential of our Maine and Ohio pipeline assets. We also brought the sale of our Wyoming operations to a very successful conclusion on July 1, providing us new capital to make investments in markets with the highest and most profitable growth potential."  

Natural Gas Operations Segment Review

The Natural Gas Operations segment reported $14.8 million in revenue for the 2015 second quarter, a decrease of $4.2 million, or 22%, from the prior year quarter, which was attributable to multiple factors.  Ohio market revenue declined $1.3 million largely due to lower natural gas prices passed on to customers.  Revenue from the Montana market declined $2.1 million due to significantly warmer weather compared with the prior-year period.  Revenue from the North Carolina market decreased by $1.5 million primarily due to a $534,000 downward adjustment to sales volume used to calculate unbilled revenue in North Carolina and decreased volume due to warmer weather.  These decreases were partially offset by a $0.8 million increase in revenue from the Company's Maine market, which was the result of continued customer growth, as well as colder weather in Maine.

For the first half of 2015, revenue decreased 12.9% to $66.0 million, with the changes largely driven by the same factors affecting the second quarter.  The decrease was partially offset by a volume increase in Maine and revenue from the Loring pipeline in Maine, which became operational in September 2014.  

Income Statement -- Natural Gas Operations Segment










Three Months Ended June 30,


Six Months Ended June 30,

($ in thousands)

2015


2014


2015


2014









Natural Gas Operations








Operating revenues

$14,768


$18,977


$66,047


$75,784

   Gas purchased

7,474


10,671


41,335


50,518

Gross margin

7,294


8,306


24,712


25,266

   Operating expenses

8,206


8,334


16,984


16,154

Operating (loss) income

(912)


(28)


7,728


9,112

   Other income

136


193


341


301

Income before interest and taxes

(776)


165


8,069


9,413

   Interest expense

(620)


(644)


(1,291)


(1,309)

Income before income taxes

(1,396)


(479)


6,778


8,104

   Income tax benefit (expense)

528


161


(2,533)


(3,034)









Net loss (income)

$    (868)


$    (318)


$  4,245


$  5,070

Gross margin for the second quarter of 2015 decreased to $7.3 million compared with $8.3 million in the prior-year quarter.  The decrease was driven by an adjustment of additional disallowed gas cost in Ohio mandated by the Public Utilities Commission of Ohio (PUCO), the downward adjustment to sales volume for unbilled revenue in North Carolina, which were partially offset by customer growth and colder weather in Maine.  On a year-to-date basis, gross margin decreased by $0.6 million to $24.7 million primarily due to the Ohio PUCO adjustment and warmer weather in Montana, which was offset in part by customer growth in the North Carolina and Maine markets, along with colder weather in Maine.   

Operating expenses decreased by $0.1 million for the quarter.  The decrease in operating expenses reflected a reduction in personnel costs, a decrease in outside and professional services costs, board fees and lower bad debt expense, partially offset by a $0.4 million goodwill and asset impairment charge.  Depreciation and amortization expense was essentially flat due to decreased capital expenditures that offset amortization of a regulatory asset.  For the first half of 2015, the
$0.8 million increase in operating expenses reflected higher outside and professional services costs, an increase in board fees during the first quarter and the goodwill and asset impairment charge, which were partly offset by a decrease in personnel costs and lower bad debt expense.  Depreciation and amortization expense increased by $221,000 primarily due to amortization of the aforementioned regulatory asset not present in the prior year period.

The segment reported a 2015 second quarter net loss of $0.9 million compared with a net loss of
$0.3 million in the 2014 quarter.  For the 2015 first half, net income for the segment was $4.2 million compared with $5.1 million for the 2014 first half. 

Other Operating Segments
Net loss for the Marketing and Production Operations segment improved by $0.8 million to near breakeven in the second quarter of 2015.  Revenue decreased by $0.2 million to $1.3 million for the second quarter of 2015, compared with the same period in 2014 and gross margin increased by
$0.1 million to $0.2 million.  Most of the impact of lower pricing was offset by higher volumes.  For the first half of 2015, the segment was near breakeven compared with a $0.8 million net loss in the prior-year first half.

Net loss for the Corporate and Other Operations segment increased by $0.3 million to $0.6 million compared with net loss of $0.3 million in the prior-year quarter.  The change was primarily due to higher administrative and interest costs and expenses related to the sale of the Wyoming operations, partly offset by higher tax benefits in the quarter.  For the first half of 2015, the segment recorded a $0.9 million net loss, compared with a $0.7 million net loss in the prior-year first half.

Adjusted EBITDA
Adjusted earnings from continuing operations before interest, taxes, depreciation, amortization, accretion, and non-recurring expenses ("Adjusted EBITDA"), a non-GAAP financial measure, was
$1.7 million and $1.4 million, respectively, in the second quarters of 2015 and 2014.  On a year-date basis, the same measure was $12.2 million and $12.0 million in 2015 and 2014, respectively.  The Company believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance.  See the attached tables for important disclosures regarding the Company's use of Adjusted EBITDA, as well as a reconciliation of GAAP income from continuing operations to Adjusted EBITDA.

Balance Sheet and Cash Management
Cash and cash equivalents as of June 30, 2015 were $2.3 million, up from $1.6 million at
December 31, 2014.

Cash provided by operating activities of continuing operations for the six months ended June 30, 2015 was $11.4 million, a $2.3 million increase from the prior-year period.  The improvement was primarily due to fluctuations in working capital. 

Capital expenditures for the six months ended June 30, 2015 were $5.0 million compared with
$10.7 million in the prior-year period.  Capital expenditures in 2015 are expected to be approximately $8 million to $9 million, and are focused on the growth of the Natural Gas Operations segment as well as ongoing construction activities in all of the Company's utility service areas to support expansion, maintenance and enhancement of its gas pipeline systems.  This includes expanding its systems in its North Carolina and Maine markets to meet high customer demand in these underserved markets. 

Mr. Osborne commented, "We are making excellent progress in our strategy to transform Gas Natural into a benchmark natural gas utility.  Our asset rationalization program is moving forward nicely and the capital from these divestitures will put us in an excellent position to expand in markets where we already have a well-established presence and can benefit from low market penetration, market-based rates and rising demand for natural gas.  Additionally, our pipeline investments in Ohio and Maine offer significant growth potential that we are just beginning to tap."  

He concluded, "Over the last year, under new leadership, we have enhanced operations, improved the control structure and further strengthened the balance sheet.  We continue to improve our relationships with regulatory agencies in our markets.  All of this will serve us well in the future as we manage our business with a focus on improving returns and increasing shareholder value."  

Webcast and Conference Call
Gas Natural will host a conference call and live webcast Tuesday, August 11th at 10:00 a.m. Eastern Time.  During the conference call and webcast, management will review the financial and operating results for the second quarter and discuss Gas Natural's corporate strategies and outlook.  A question-and-answer session will follow.   The teleconference can be accessed by calling (201) 689-8471.  The webcast can be monitored on the Company's website at www.egas.com

A telephonic replay will be available from 1:00 p.m. ET on the day of the teleconference through Tuesday, August 18, 2015.  To listen to a replay of the call, dial (858) 384-5517 and enter the conference ID number 13614153.  An archive of the webcast will be available on the Company's website at www.egas.com and will include a transcript, once available.

About Gas Natural Inc.
Gas Natural Inc., a holding company, distributes and sells natural gas to end-use residential, commercial, and industrial customers.  It distributes approximately 26 billion cubic feet of natural gas to approximately 68,000 customers through regulated utilities operating in Montana, Ohio, Pennsylvania, Maine, North Carolina and Kentucky.  The Company's other operations include interstate pipeline, natural gas production, and natural gas marketing.  The Company's Montana public utility was originally incorporated in 1909.  Its strategy for growth is to expand throughput in its markets, while looking for acquisitions that are either adjacent to its existing utilities or in undersaturated markets. 

Gas Natural Inc. regularly posts information on its website at www.egas.net.

Safe Harbor Regarding Forward-Looking Statements
The Company is including the following cautionary statement in this release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, Gas Natural Inc. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," "believes" and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the Company's business generally include but are not limited to the Company's ability to successfully integrate the operations of the companies it has recently acquired and consummate additional acquisitions, the Company's continued ability to make dividend payments, the Company's ability to implement its business plan, fluctuating energy commodity prices, the possibility that regulators may not permit the Company to pass through all of its increased costs to its customers, changes in the utility regulatory environment, wholesale and retail competition, the Company's ability to satisfy its debt obligations, including compliance with financial covenants, weather conditions, litigation risks, and various other matters, many of which are beyond the Company's control, the risk factors and cautionary statements made in the Company's public filings with the Securities and Exchange Commission, and other factors that the Company is currently unable to identify or quantify, but may exist in the future. Gas Natural Inc. expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Gas Natural Inc.'s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For more information, contact:


Gas Natural Inc.

Investor Relations:  

James E. Sprague, Chief Financial Officer

Deborah K. Pawlowski or Karen L. Howard, Kei Advisors LLC

Phone: (216) 202-1564

Phone:  (716) 843-3908 / (716) 843-3942

Email:  jsprague@egas.net

Email:  dpawlowski@keiadvisors.com / khoward@keiadvisors.com

FINANCIAL TABLES FOLLOW.

 

Gas Natural Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2015


2014


2015


2014

REVENUES









Natural gas operations


$14,767,783


$18,977,005


$66,047,513


$75,784,368

Marketing and production


1,278,299


1,522,914


3,731,530


6,212,270

Total revenues


16,046,082


20,499,919


69,779,043


81,996,638










COST OF SALES









Natural gas purchased


7,474,085


10,671,634


41,335,438


50,518,238

Marketing and production


1,071,569


1,436,158


3,378,458


5,677,123

Total cost of sales


8,545,654


12,107,792


44,713,896


56,195,361










GROSS MARGIN


7,500,428


8,392,127


25,065,147


25,801,277










OPERATING EXPENSES









Distribution, general, and administrative


6,369,218


6,267,338


12,986,821


12,747,746

Maintenance


287,751


319,466


615,231


624,546

Depreciation and amortization


1,658,495


1,678,661


3,537,216


3,347,983

Accretion


9,897


13,050


21,077


27,278

Provision for doubtful accounts


46,586


813,452


98,328


821,731

Taxes other than income


1,005,294


1,039,209


2,008,457


1,960,395

Total operating expenses


9,377,241


10,131,176


19,267,130


19,529,679










OPERATING (LOSS) INCOME


(1,876,813)


(1,739,049)


5,798,017


6,271,598










Loss from unconsolidated affiliate


-


(4)


-


(977)

Other income, net


38,405


158,549


316,027


259,325

Acquisition expense


-


(1,869)


-


(7,197)

Interest expense


(886,099)


(760,969)


(1,755,121)


(1,570,068)

(Loss) income before income taxes


(2,724,507)


(2,343,342)


4,358,923


4,952,681










Income tax benefit (expense)


1,012,433


849,843


(1,654,240)


(1,909,635)










(LOSS) INCOME FROM CONTINUING OPERATIONS


(1,712,074)


(1,493,499)


2,704,683


3,043,046










Discontinued operations, net of tax


212,879


64,881


649,795


546,827










NET (LOSS) INCOME


$ (1,499,195)


$ (1,428,618)


$  3,354,478


$  3,589,873



















Basic weighted shares outstanding


10,487,610


10,468,961


10,487,561


10,468,961

Dilutive effect of stock options


-


-


1,320


429

Diluted weighted shares outstanding


10,487,610


10,468,961


10,488,881


10,469,390










BASIC AND DILUTED (LOSS) EARNINGS PER SHARE:









Continuing operations


$         (0.16)


$         (0.14)


$          0.26


$          0.29

Discontinued operations


0.02


0.01


0.06


0.05

Net (loss) income per share


$         (0.14)


$         (0.13)


$          0.32


$          0.34










Weighted average dividends declared per common share


$                -


$         0.135


$        0.135


$        0.270

 

Gas Natural Inc. and Subsidiaries

Consolidated Balance Sheets






June 30,


December 31,


2015


2014


(unaudited)



ASSETS




CURRENT ASSETS




Cash and cash equivalents

$    2,328,471


$    1,585,926

Accounts receivable




Trade, less allowance for doubtful accounts of$286,489and $370,909, respectively

5,808,510


12,095,535

Related parties

220,876


250,101

Unbilled gas

1,716,361


7,630,852

Note receivable, current portion

726


2,070

Inventory




Natural gas

3,502,822


5,301,895

Materials and supplies

2,668,307


2,300,990

Prepaid income taxes

431,681


431,681

Regulatory assets, current

3,139,033


4,097,822

Deferred tax asset

602,923


635,195

Prepayments and other

1,019,511


986,941

Assets held for sale

2,712,579


802,436

Discontinued operations

10,483,892


11,653,934

Total current assets

34,635,692


47,775,378





PROPERTY, PLANT AND EQUIPMENT




Property, plant and equipment

190,571,852


187,566,638

Less accumulated depreciation, depletion and amortization

(47,245,750)


(45,555,553)

PROPERTY, PLANT, & EQUIPMENT, NET

143,326,102


142,011,085





OTHER ASSETS




Notes receivable, less current portion

36,528


90,345

Regulatory assets, non-current

1,788,743


2,055,404

Debt issuance costs, net of amortization

877,818


1,079,447

Goodwill

15,872,247


16,155,672

Customer relationships, net of amortization

2,777,986


2,927,500

Restricted cash

1,897,683


1,897,677

Other assets

38,179


11,404

Total other assets

23,289,184


24,217,449

TOTAL ASSETS

$201,250,978


$214,003,912

 

Gas Natural Inc. and Subsidiaries

Consolidated Balance Sheets






June 30,


December 31,


2015


2014


(unaudited)



LIABILITIES AND CAPITALIZATION




CURRENT LIABILITIES




Checks in excess of amounts on deposit

$       120,155


$       194,524

Line of credit

18,700,000


28,760,799

Accounts payable




Trade

5,194,009


14,115,367

Related parties

24,095


170,319

Notes payable, current portion

530,291


542,201

Short-term note payable - related party

5,000,000


-

Contingent consideration, current

671,638


671,638

Derivative instruments

320,190


3,023,271

Accrued liabilities

3,461,371


4,860,663

Accrued liabilities - related parties

82,817


111,133

Customer deposits, current

451,522


634,090

Obligation under capital lease, current

188,224


188,224

Regulatory liability, current

1,446,654


925,175

Build-to-suit liability

6,847,427


5,597,287

Other current liabilities

922,682


940,643

Liabilities held for sale

181,793


61,416

Discontinued operations

540,986


544,432

Total current liabilities

44,683,854


61,341,182





LONG-TERM LIABILITIES




Deferred investment tax credits

102,662


113,193

Deferred tax liability

12,544,216


10,538,394

Asset retirement obligation

1,217,595


1,196,518

Customer advances for construction

1,024,206


993,681

Regulatory liability, non-current 

1,170,136


1,089,850

Customer deposits

949,540


949,540

Obligation under capital lease, less current

1,674,714


1,674,714

Contingent consideration, less current

75,362


75,362

Total long-term liabilities

18,758,431


16,631,252





NOTES PAYABLE, less current portion

39,461,182


39,720,860





COMMITMENTS AND CONTINGENCIES

-


-





STOCKHOLDERS' EQUITY




Preferred stock; $0.15 par value; 1,500,000 shares authorized, no shares issued or outstanding

-


-

Common stock; $0.15 par value;
      Authorized: 30,000,000 shares, respectively;
      Issued: 10,494,011and 10,487,511 shares, respectively;
      Outstanding: 10,494,011 and 10,487,511 shares, respectively

1,573,352


1,573,127

Capital in excess of par value

63,925,018


63,826,341

Retained earnings

32,849,141


30,911,150

Total stockholders' equity

98,347,511


96,310,618

TOTAL CAPITALIZATION

137,808,693


136,031,478

TOTAL LIABILITIES AND CAPITALIZATION

$201,250,978


$214,003,912

 

Gas Natural Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


Six months ended June 30,


2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES




Net income

$ 3,354,478


$ 3,589,873

Less incomefrom discontinued operations

649,795


546,827

Incomefrom continuing operations

2,704,683


3,043,046





Adjustments to reconcile incomefrom continuing operations to net cash provided by operating activities:




Depreciation and amortization

3,537,216


3,347,983

Accretion

21,077


27,278

Amortization of debt issuance costs

352,758


204,019

Provision for doubtful accounts

98,328


821,731

Stock based compensation

98,902


308,330

Loss on goodwill and asset impairment

393,107


-

Loss(gain) on sale of assets

(35,323)


4,292

Loss from unconsolidated affiliate

-


977

Change in fair value of derivative financial instruments

(135,120)


-

Investment tax credit

(10,531)


(10,531)

Deferred income taxes

2,038,094


2,181,681

Changes in assets and liabilities




Accounts receivable, including related parties

6,066,149


4,123,081

Unbilled gas

5,913,355


5,427,211

Natural gas inventory

1,799,073


1,506,674

Accounts payable, including related parties

(8,378,473)


(5,277,741)

Regulatory assets & liabilities

(1,038,131)


(1,505,715)

Prepayments and other

(35,011)


26,640

Other assets

(496,983)


(2,416,331)

Other liabilities

(1,464,268)


(2,652,233)

Net cash provided by operating activities of continuing operations

11,428,902


9,160,392





CASH FLOWS FROM INVESTING ACTIVITIES




Capital expenditures

(4,972,609)


(10,664,364)

Proceeds from sale of fixed assets

49,660


33,234

Proceeds from note receivable

55,161


2,252

Restricted cash – capital expenditures fund

-


(106)

Customer advances for construction

30,842


4,793

Contributions in aid of construction

195,091


988,724

Net cash used in investing activities of continuing operations

(4,641,855)


(9,635,467)





CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from lines of credit 

13,500,000


10,350,000

Repayments of lines of credit

(23,560,799)


(14,919,000)

Repayments of notes payable

(271,588)


(3,294,190)

Proceeds from notes payable

5,000,000


102,000

Repayments of build-to-suit

(991,121)


-

Debt issuance costs

(151,130)


-

Restricted cash – debt service fund

(6)


131,376

Exercise of stock options



45,762

Dividends paid

(1,416,488)


(2,826,793)

Net cash used in financing activities of continuing operations

(7,891,132)


(10,410,845)





DISCONTINUED OPERATIONS




Operating cash flows

2,244,634


1,253,981

Investing cash flows

(398,004)


(203,588)

Net cash  provided by discontinued operations

1,846,630


1,050,393





NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

742,545


(9,835,527)

Cash and cash equivalents, beginning of period

1,585,926


12,741,197





CASH AND CASH EQUIVALENTS, END OF PERIOD

$ 2,328,471


$ 2,905,670

 

Gas Natural Inc. and Subsidiaries

Segments of Operations







Three Months Ended June 30, 2015















Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated









OPERATING REVENUE

$14,846,487


$ 2,404,029


$                -


$ 17,250,516

Intersegment eliminations

(78,704)


(1,125,730)


-


(1,204,434)

Total operating revenue

14,767,783


1,278,299


-


16,046,082









COST OF SALES

7,552,789


2,197,299


-


9,750,088

Intersegment eliminations

(78,704)


(1,125,730)


-


(1,204,434)

Total cost of sales

7,474,085


1,071,569


-


8,545,654









GROSS MARGIN

7,293,698


206,730


-


7,500,428









OPERATING EXPENSES

8,232,263


222,141


949,182


9,403,586

Intersegment eliminations

(26,345)


-


-


(26,345)

Total operating expenses

8,205,918


222,141


949,182


9,377,241









OPERATING LOSS

$    (912,220)


$     (15,411)


$   (949,182)


$  (1,876,813)









NET LOSS FROM CONTINUING OPERATIONS

$    (868,587)


$     (21,636)


$   (821,851)


$  (1,712,074)









DISCONTINUED OPERATIONS

-


-


212,879


212,879









NET LOSS

$    (868,587)


$     (21,636)


$   (608,972)


$  (1,499,195)













Three Months Ended June 30, 2014















Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated









OPERATING REVENUE

$19,055,806


$ 3,071,792


$               -


$ 22,127,598

Intersegment eliminations

(78,801)


(1,548,878)


-


(1,627,679)

Total operating revenue

18,977,005


1,522,914


-


20,499,919









COST OF SALES

10,750,435


2,985,036


-


13,735,471

Intersegment eliminations

(78,801)


(1,548,878)


-


(1,627,679)

Total cost of sales

10,671,634


1,436,158


-


12,107,792









GROSS MARGIN

8,305,371


86,756


-


8,392,127









OPERATING EXPENSES

8,334,948


1,401,544


420,429


10,156,921

Intersegment eliminations

(500)


-


(25,245)


(25,745)

Total operating expenses

8,334,448


1,401,544


395,184


10,131,176









OPERATING LOSS

$      (29,077)


$(1,314,788)


$   (395,184)


$  (1,739,049)









NET LOSS FROM CONTINUING OPERATIONS

$    (317,705)


$   (849,438)


$   (326,356)


$  (1,493,499)









DISCONTINUED OPERATIONS

-


-


64,881


64,881









NET LOSS

$    (317,705)


$   (849,438)


$   (261,475)


$  (1,428,618)

  

Gas Natural Inc. and Subsidiaries

Natural Gas Operations







Six Months Ended June 30, 2015















Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated









OPERATING REVENUE

$66,213,374


$ 7,030,500


$              -


$ 73,243,874

Intersegment eliminations

(165,861)


(3,298,970)


-


(3,464,831)

Total operating revenue

66,047,513


3,731,530


-


69,779,043









COST OF SALES

41,501,299


6,677,428


-


48,178,727

Intersegment eliminations

(165,861)


(3,298,970)


-


(3,464,831)

Total cost of sales

41,335,438


3,378,458


-


44,713,896









GROSS MARGIN

24,712,075


353,072


-


25,065,147









OPERATING EXPENSES

17,046,186


454,897


1,828,077


19,329,160

Intersegment eliminations

(62,030)


-


-


(62,030)

Total operating expenses

16,984,156


454,897


1,828,077


19,267,130









OPERATING INCOME (LOSS)

$  7,727,919


$   (101,825)


$(1,828,077)


$   5,798,017









NET INCOME (LOSS) FROM CONTINUING OPERATIONS

$  4,244,773


$     (17,995)


$(1,522,095)


$   2,704,683









DISCONTINUED OPERATIONS

-


-


649,795


649,795









NET INCOME (LOSS)

$  4,244,773


$     (17,995)


$   (872,300)


$   3,354,478













Six Months Ended June 30, 2014















Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated









OPERATING REVENUE

$75,949,713


$11,001,565


$              -


$ 86,951,278

Intersegment eliminations

(165,345)


(4,789,295)


-


(4,954,640)

Total operating revenue

75,784,368


6,212,270


-


81,996,638









COST OF SALES

50,683,583


10,466,418


-


61,150,001

Intersegment eliminations

(165,345)


(4,789,295)


-


(4,954,640)

Total cost of sales

50,518,238


5,677,123


-


56,195,361









GROSS MARGIN

25,266,130


535,147


-


25,801,277









OPERATING EXPENSES

16,154,832


1,784,002


1,641,835


19,580,669

Intersegment eliminations

(500)


-


(50,490)


(50,990)

Total operating expenses

16,154,332


1,784,002


1,591,345


19,529,679









OPERATING INCOME (LOSS)

$  9,111,798


$ (1,248,855)


$(1,591,345)


$   6,271,598









NET INCOME (LOSS) FROM CONTINUING OPERATIONS

$  5,069,598


$    (828,637)


$(1,197,915)


$   3,043,046









DISCONTINUED OPERATIONS

-


-


546,827


546,827









NET INCOME (LOSS)

$  5,069,598


$    (828,637)


$   (651,088)


$   3,589,873

 

Gas Natural Inc. and Subsidiaries

Natural Gas Operations









Utility Throughput

















Three Months Ended June 30,


Six Months Ended June 30,

(in million cubic feet (MMcf))

2015


2014


2015


2014









Full service distribution:








Energy West Montana (MT)

474


617


1,800


2,212

Frontier Natural Gas (NC)

45


165


516


593

Bangor Gas (ME)

290


290


1,130


1,069

Ohio Companies (OH)

471


519


2,293


2,354

Public Gas (KY)

13


15


88


87

Total full service distribution

1,293


1,606


5,827


6,315









Transportation

2,446


2,648


5,765


5,994

Bucksport

285


1,803


413


2,760









Total volumes

4,024


6,057


12,005


15,069





















Heating Degree Days














Three Months Ended


Percent Colder (Warmer)





June 30,


2015 Compared to



Normal


2015


2014


Normal


2014












Great Falls, MT

1,215


1,136


1,273


(6.50%)


(10.76%)

Bangor, ME

978


1,150


1,078


17.59%


6.68%

Elkin, NC

337


327


359


(2.97%)


(8.91%)

Lancaster, OH

544


456


544


(16.18%)


(16.18%)

Jackson, KY

395


344


385


(12.91%)


(10.65%)


Weighted Average

872


813


912


(6.73%)


(10.78%)



























Six Months Ended


Percent Colder (Warmer)





June 30,


2015 Compared to



Normal


2015


2014


Normal


2014












Great Falls, MT

4,426


3,914


4,863


(11.57%)


(19.51%)

Bangor, ME

4,554


5,603


5,117


23.03%


9.50%

Elkin, NC

2,454


2,609


2,793


6.32%


(6.59%)

Lancaster, OH

3,397


3,775


3,922


11.13%


(3.75%)

Jackson, KY

2,672


2,975


3,081


11.34%


(3.44%)


Weighted Average

3,901


3,916


4,379


0.39%


(10.57%)

 

Gas Natural and Subsidiaries

Reconciliation of GAAP Income from Continuing Operations to

Adjusted Income from Continuing Operations(1)





(in thousands, except per share amounts)

Three Months Ended


Six Months Ended

June 30,


June 30,


2015


2014


2015


2014


$

per diluted share


$

per diluted share


$

per diluted share


$

per diluted share

GAAP income from continuing operations

$(1,712)

$(0.16)


$(1,493)

$(0.14)


$2,705

$ 0.26


$3,043

$ 0.29

Add back, after tax:












Customer bankruptcy write-off

-

-


673

0.06


-

-


673

0.06

Goodwill and asset impairment charge

248

0.02


-

-


243

0.02


-

-

Non-recurring legal and professional fees

421

0.04


176

0.02


774

0.07


390

0.04

Non-recurring regulatory and other expenses

438

0.04


-

-


453

0.04


237

0.02

Non-GAAP adjusted income from continuing operations(1)

$   (605)

$(0.06)


$   (645)

$(0.06)


$4,176

$ 0.40


$4,343

$ 0.41

 

Gas Natural and Subsidiaries

Reconciliation of GAAP Income from Continuing Operations to Adjusted EBITDA(1)


(in thousands)

Three Months Ended


Six Months Ended

June 30,


June 30,


2015


2014


2015


2014

GAAP income from continuing operations

$(1,712)


$(1,493)


$  2,705


$  3,043

Add back:








Net interest expense

886


761


1,755


1,570

Income taxes

(858)


(850)


1,808


1,910

Depreciation, amortization and accretion

1,668


1,692


3,558


3,375

Customer bankruptcy write-off

-


1,056


-


1,056

Goodwill and asset impairment charge

393


-


393


-

Non-recurring legal and professional fees

667


276


1,250


612

Non-recurring regulatory and other expenses

693


-


731


385

Non-GAAP Adjusted EBITDA(1)

$  1,737


$  1,442


$12,200


$11,951

 (1)Non-GAAP Financial Measures:
The Company believes that, when used in conjunction with GAAP measures, Adjusted Income from Continuing Operations and Adjusted EBITDA, or earnings before interest, taxes, depreciation, amortization, accretion and non-recurring charges, which are non-GAAP measures, allow investors to view its performance in a manner similar to the methods used by management and provides additional insight into its operating results.  Adjusted Income from Continuing Operations and Adjusted EBITDA are not calculated through the application of GAAP and are not the required form of disclosure by the Securities and Exchange Commission.  As such, these measures should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.  The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

 

SOURCE Gas Natural Inc.



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