Gas Natural Inc. Reports 2015 Fourth Quarter and Full Year Results

Added 2,000 customers to ongoing utilities in 2015, of which 1,000 were in fourth quarter

Mar 15, 2016, 16:45 ET from Gas Natural Inc.

CLEVELAND, March 15, 2016 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) (the "Company"), a holding company operating local natural gas utilities serving approximately 68,000 customers in four states, reported financial results for the fourth quarter and year ended December 31, 2015.  The Company reported income from continuing operations of $0.7 million, or $0.07 per share, for the fourth quarter, compared with income from continuing operations of $1.2 million, or $0.11 per share, for the fourth quarter of 2014.  For the year, income from continuing operations was $1.2 million, or $0.11 per share, compared with $2.7 million, or $0.26 per share, for 2014.

As previously announced, the Company completed the sale of its Wyoming operations on July 1, 2015 for net proceeds of $15.4 million; the divested unit is reported as discontinued operations.  Additionally, the Company completed the disposal of several smaller businesses during the fourth quarter of 2015, for which the net loss is reported as other (loss) income, net.     

Mr. Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, commented, "Despite our fourth quarter revenue being unfavorably impacted by lower natural gas costs and warmer weather, our gross margin modestly outperformed last year.  However, we incurred approximately $1.3 million of pretax costs relating to our recently implemented ERP system, unfavorably impacting our income from continuing operations.  This investment represents the establishment of needed foundational infrastructure to support our future growth."

He added, "Operationally, we continued to make progress in accordance with our strategy to become a holding company of benchmark natural gas utilities.  Significant accomplishments follow: 

  • Added approximately 1,000 new customers in our core markets in the quarter;
  • Disposed of our utilities and assets in Pennsylvania and Kentucky, as well as the building that previously housed our corporate headquarters; and
  • Launched the final phase of our ERP implementation.

More recently, we requested approval from our various regulators of our plans for a new corporate organizational structure and $99 million of new debt financing arrangements.  These actions position us to focus on enhancing our core business, appropriately deploying our capital and human resources to maximize our growth potential and realize our inherent shareholder value."

Natural Gas Operations Segment Review

The Natural Gas Operations segment reported $26.6 million in revenue for the 2015 fourth quarter, a decrease of $8.2 million, or 23%, from the prior-year quarter, which was primarily attributable to lower gas prices passed on to customers and warmer weather in all markets, as well as the impact of disposing of the Company's Pennsylvania and Kentucky utilities.

Revenue for 2015 was $104.0 million, a decrease of $19.1 million, or 16%, with the change largely driven by lower gas prices passed on to customers in all markets and warmer weather in the Ohio, Montana and North Carolina markets.  Additionally, revenue for 2015 in the North Carolina market was unfavorably impacted by $0.5 million for second quarter adjustments to sales volumes used in the unbilled revenue calculation.  These decreases were partially offset by a $1.8 million increase in revenue in the Company's Maine market, resulting from higher volumes due to customer growth, including from the Loring pipeline which began service in September 2014.

Natural Gas Operations Income Statement








Three Months Ended


Years Ended



December 31,


December 31,

($ in thousands)


2015


2014


2015


2014










Natural gas operations









Operating revenues


$ 26,575


$ 34,726


$ 103,978


$ 123,053

Gas purchased


14,461


22,839


60,380


79,097

Gross margin


12,114


11,887


43,598


43,956

Operating expenses


9,453


7,804


35,746


32,074

Operating income


2,661


4,083


7,852


11,882

Other (loss) income


(345)


221


147


890

Income before interest and taxes


2,316


4,304


7,999


12,772

Interest expense


(870)


(725)


(2,782)


(2,619)

Income before income taxes


1,446


3,579


5,217


10,153

Income tax expense


(312)


(1,280)


(1,741)


(3,661)

Net income


$   1,134


$   2,299


$     3,476


$     6,492

Gross margin for the fourth quarter of 2015 was $12.1 million, a $0.2 million improvement over the prior-year period driven by the impact of an unfavorable $0.7 million GCR adjustment in the 2014 fourth quarter that did not recur in the 2015 fourth quarter, partially offset by lower throughput in the 2015 fourth quarter caused by warmer weather.  Gross margin for the full year decreased by $0.4 million to $43.6 million primarily due to lower sales volumes caused by warmer weather, PUCO gas cost adjustments in Ohio that took place in the second quarter, second quarter volume adjustments to the unbilled revenue calculation in North Carolina and the impact of the disposed utilities.  These cost increases were partially offset by the incremental gross margin generated from the start-up of the Loring pipeline and more favorable pricing arrangements in Maine.   

Operating expenses increased by $1.6 million, or 21%, in the quarter, to $9.5 million.  The increase was primarily attributable to $1.0 million of costs associated with the newly implemented ERP system, with the remainder due to lower capitalized labor costs, property tax increases and higher legal costs.  Operating expenses in 2015 were $35.7 million, which were $3.7 million, or 11%, higher than 2014.  The increase reflects the same factors affecting operating expenses in the 2015 fourth quarter.

The segment reported 2015 fourth quarter net income of $1.1 million compared with net income of $2.3 million in the 2014 fourth quarter.  For 2015, net income for the segment was $3.5 million compared with $6.5 million for the prior year. 

Other Operating Segments

The Marketing and Production Operations segment was near breakeven in the fourth quarter of 2015, reflecting improvement from a $0.5 million net loss in the prior-year period.  Revenue increased by
$0.7 million to $2.9 million for the fourth quarter of 2015, compared with the same period in 2014 while gross margin remained relatively constant at $0.2 million.  For the full year, the segment's net loss improved to $0.1 million from a $1.4 million net loss in the prior year.  This improvement was driven by a $1.7 million reduction in operating expenses, which included a $1.1 million bad debt charge in 2014, more than offsetting the effect of lower volume from losing an LNG customer to pipeline competition in 2014.

Net loss from continuing operations for the Corporate and Other Operations segment in the 2015 fourth quarter improved to a $0.4 million loss compared with a $0.6 million loss in the prior-year quarter.  The segment also reported a net loss from discontinued operations of $0.5 million in the quarter, compared with net income from discontinued operations of $0.5 million in the prior year period.  For 2015, the segment recorded a net loss from continuing operations of $2.2 million, relatively consistent with a net loss from continuing operations of $2.3 million in the prior year.  Net income from discontinued operations for 2015 was $3.5 million, compared with $1.0 million for 2014, relating to the Company's divested Wyoming operations. 

Adjusted Income from Continuing Operations

Adjusted income from continuing operations, a non-GAAP number, was $1.0 million, or $0.09 per share, for the fourth quarter, compared with adjusted income from continuing operations of $2.6 million, or $0.22 per share, in the fourth quarter of 2014.  Adjusted income from continuing operations for the 2015 fourth quarter excludes, net of tax, $0.5 million of atypical professional, legal and regulatory expenses offset by $0.2 million of gain on disposals.  The 2014 adjusted results exclude, net of tax, atypical professional, legal and regulatory expenses of $1.1 million and losses on disposals of $0.3 million

For the year, adjusted income from continuing operations, a non-GAAP number, was $3.6 million, or $0.32 per share, compared with $5.8 million, or $0.54 per share, for 2014.  The 2015 adjusted results exclude, net of tax, $2.2 million of atypical professional, legal and regulatory expenses and $0.2 million of losses on disposals, impairment and other.  The 2014 adjusted results exclude, net of tax, $2.2 million of atypical professional, legal and regulatory expenses, a $0.7 million customer bankruptcy write-off and $0.1 million of other items. 

See attached tables for a reconciliations of GAAP income from continuing operations to non-GAAP adjusted income from continuing operations for the 2015 and 2014 fourth quarters and full years.

Adjusted EBITDA

Adjusted earnings from continuing operations before interest, taxes, depreciation, amortization, accretion, and atypical expenses ("Adjusted EBITDA"), a non-GAAP financial measure, was
$3.8 million and $6.5 million, respectively, in the fourth quarters of 2015 and 2014.  On a full year basis, the same measure was $16.4 million for 2015 and $19.1 million for 2014.  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 reconciliations of GAAP (loss) income from continuing operations to Adjusted EBITDA.

Balance Sheet and Cash Management

Cash and cash equivalents as of December 31, 2015 were $2.7 million, compared with $1.6 million at December 31, 2014.     

Cash provided by operating activities of continuing operations in 2015 was $9.4 million compared with $11.1 million in 2014, with the decrease primarily due to lower income from continuing operations. 

Capital expenditures for 2015 were $9.6 million compared with $21.6 million in the prior-year period.  Capital investments are focused on the growth of the Company's Natural Gas Operations segment, as well as ongoing construction activities to support expansion, maintenance and enhancements of its gas pipeline systems.

Cash used in financing activities of continuing operations was $19.3 million in 2015 compared with
$5.0 million in 2014.  Debt repayment was the primary increased use of cash in 2015.

Mr. Osborne concluded, "This has been another very productive year for Gas Natural.  We have been undertaking tremendous changes to result in a stronger, more focused organization, well positioned for the years ahead.  In addition to the fourth quarter accomplishments cited above, we also experienced significant other successes earlier in the year, including:

  • Adding new talent to our Board of Directors;
  • Divesting our Wyoming operations;
  • Adding new talent to our management team, accounting and finance operations;
  • Restructuring our operations to improve efficiency;
  • Receiving a positive outcome with the Montana PSC, allowing us to dividend funds to our corporate level; and
  • Entering into stipulation with the PUCO Staff relating to our 2014 investigative regulatory audit of our Ohio utilities, which remains subject to approval by the PUCO.

While undergoing these significant changes, we also added approximately 2,000 customers to our ongoing utility operations, offsetting those lost with the businesses we divested.  We look forward to bringing resolution to our remaining open issues as we progress through 2016 while we also direct our energy and investments on driving growth in our core markets." 

Webcast and Conference Call

Gas Natural will host a conference call and live webcast on Wednesday, March 16th at 4:30 p.m. Eastern Time.  During the conference call and webcast, management will review the financial and operating results for the 2015 fourth quarter and full year 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 investor.egas.net.

A telephonic replay will be available from 7:30 p.m. Eastern Time on the day of the teleconference through Wednesday, March 23, 2015.  To listen to a replay of the call, dial (858) 384-5517 and enter the conference ID number 13628111.  An archive of the webcast will be available on the Company's website at investor.egas.net/past events 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 21 billion cubic feet of natural gas to approximately 68,000 customers through regulated utilities operating in Montana, Ohio, Maine and North Carolina.  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 under saturated 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 consummate the corporate reorganization and debt refinancing on terms that are acceptable to the Company, or at all; the Company's ability to successfully integrate the operations of the companies it has 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  Income

(in thousands, except share and per share data)












Three Months Ended


Years Ended



December 31,


December 31,



2015


2014


2015


2014

REVENUE








Natural gas operations

$      26,575


$      34,726


$    103,978


$    123,053

Marketing and production

2,923


2,233


8,383


9,517

Total revenues

29,498


36,959


112,361


132,570










COST OF SALES








Natural gas purchased

14,462


22,839


60,380


79,097

Marketing and production

2,727


2,083


7,746


8,621

Total cost of sales

17,189


24,922


68,126


87,718










GROSS MARGIN

12,309


12,037


44,235


44,852










OPERATING EXPENSES








Distribution, general, and administrative

6,358


5,764


26,151


24,832

Maintenance

551


305


1,422


1,225

Depreciation, amortization and accretion

1,909


1,443


7,257


6,657

Taxes other than income

1,096


1,066


4,119


3,927

Provision for doubtful accounts

144


283


278


1,112

Total operating expenses

10,058


8,861


39,227


37,753










OPERATING INCOME 

2,251


3,176


5,008


7,099










Loss from unconsolidated affiliate

-


(352)


-


(352)

Gain on sale of marketable securities

-


-


-


184

Acquisition expense

-


(5)


-


(7)

Other (loss) income, net

(411)


(83)


182


579

Interest expense

(1,037)


(891)


(3,604)


(3,226)

Income before income taxes

803


1,845


1,586


4,277

Income tax expense

(74)


(647)


(417)


(1,548)

INCOME FROM CONTINUING OPERATIONS

729


1,198


1,169


2,729










Discontinued operations, net of income taxes

(526)


451


3,519


1,033










NET INCOME

$           203


$        1,649


$        4,688


$        3,762










Basic weighted shares outstanding

10,504,319


10,487,511


10,496,979


10,478,312

Dilutive effect of restricted stock awards

1,476


695


1,476


505

Diluted weighted shares outstanding

10,505,795


10,488,206


10,498,455


10,478,817










BASIC & DILUTED EARNINGS (LOSS) PER SHARE:







Continuing operations

$          0.07


$          0.11


$          0.11


$          0.26

Discontinued operations

(0.05)


0.05


0.34


0.10

Net income per share

$          0.02


$          0.16


$          0.45


$          0.36










Weighted average dividends declared per common share

$        0.27


$        0.09


$         0.54


$        0.50

 

Gas Natural Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands)


December 31,


2015


2014





ASSETS




CURRENT ASSETS




Cash and cash equivalents

$     2,728


$     1,586

Accounts receivable




Trade, less allowance for doubtful accounts of $506 and $371, respectively

10,635


12,111

Related parties

188


235

Unbilled gas

6,995


7,631

Inventory




Natural gas

4,063


5,302

Materials and supplies

2,271


2,301

Regulatory assets, current

2,469


4,098

Other current assets

2,174


2,857

Discontinued operations

-


11,654

Total current assets

31,523


47,775





PROPERTY, PLANT, & EQUIPMENT, NET

142,416


142,011





OTHER ASSETS




Regulatory assets, non-current

1,523


2,055

Goodwill

15,872


16,156

Customer relationships, net of amortization

2,625


2,928

Restricted cash

1,898


1,898

Other assets

1,832


1,181

Total other assets

23,750


24,218

TOTAL ASSETS

$ 197,689


$ 214,004

 

Gas Natural Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)


December 31,


2015


2014





LIABILITIES AND CAPITALIZATION




CURRENT LIABILITIES




Line of credit

$   15,750


$   28,761

Accounts payable




Trade

8,784


14,115

Related parties

192


170

Notes payable, current portion

5,012


542

Note payable to related party

2,000


-

Derivative instruments

54


3,023

Accrued liabilities

5,837


4,974

Regulatory liability, current

487


925

Build-to-suit liability

2,041


5,597

Other current liabilities

5,325


2,691

Discontinued operations

-


544

Total current liabilities

45,482


61,342





LONG-TERM LIABILITIES




Deferred tax liability

12,295


10,538

Regulatory liability, non-current 

1,251


1,090

Capital lease liability, non-current

5,177


1,675

Other long-term liabilities

3,286


3,328

Total long-term liabilities

22,009


16,631





NOTES PAYABLE, less current portion

34,709


39,721





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; Issued and outstanding: 10,504,734 and 10,492,511 shares as of December 31, 2015 and 2014, respectively

1,575


1,573

Capital in excess of par value

63,985


63,826

Retained earnings

29,929


30,911

Total stockholders' equity

95,489


96,310

TOTAL CAPITALIZATION

130,198


136,031

TOTAL LIABILITIES AND CAPITALIZATION

$ 197,689


$ 214,004

 

Gas Natural Inc. and Subsidiaries


Consolidated Statements of Cash Flows


                                                   (amounts in thousands)

Years Ended December 31,




2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES





Net income


$ 4,688


$ 3,762

Less income from discontinued operations


3,519


1,033

Income from continuing operations


1,169


2,729

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




Depreciation and amortization


7,236


6,604

Accretion


21


51

Amortization of debt issuance costs


656


420

Provision for doubtful accounts


278


1,112

Amortization of deferred loss on sale-leaseback


358


-

Stock based compensation


161


317

Gain on sale of marketable securities


-


(183)

Loss(gain) on sale of assets


(118)


(28)

Loss from unconsolidated affiliate


-


352

Unrealized holding loss (gain) on contingent consideration


(75)


62

Change in fair value of derivative financial instruments


(96)


151

Investment tax credit


(21)


(21)

Deferred income taxes


2,171


2,136

Changes in assets and liabilities:





Accounts receivable, including related parties


1,293


(891)

Unbilled gas


658


(481)

Natural gas inventory


1,239


(458)

Accounts payable, including related parties


(4,665)


1,817

Regulatory assets and liabilities


(1,283)


(1,938)

Prepayments and other


(645)


(24)

Other assets


(35)


235

Other liabilities


1,122


(816)

Net cash provided by operating activities of continuing operations

9,424


11,146






CASH FLOWS FROM INVESTING ACTIVITIES





Capital expenditures


(9,567)


(21,613)

Proceeds from sale of fixed assets


4,054


173

Proceeds from sale of marketable securities


-


422

Proceeds from note receivable


92


3

Restricted cash – capital expenditures fund


-


57

Customer advances for construction


33


17

Contributions in aid of construction


1,193


2,262

Net cash used in investing activities of continuing operations

(4,195)


(18,679)






CASH FLOWS FROM FINANCING ACTIVITIES





Proceeds from lines of credit 


14,150


24,850

Repayments of lines of credit


(27,161)


(20,619)

Proceeds from notes payable


8,000


102

Repayments of notes payable


(6,542)


(3,565)

Payments of capital lease obligations


(1,845)


(178)

Debt issuance costs


(235)


(111)

Exercise of stock options


-


45

Restricted cash – debt service fund


-


132

Dividends paid


(5,670)


(5,659)

Net cash used in financing activities of continuing operations

(19,303)


(5,003)






DISCONTINUED OPERATIONS





Operating cash flows


845


1,924

Investing cash flows


14,371


(511)

Financing cash flows


-


(32)

Net cash  provided by discontinued operations


15,216


1,381






NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


1,142


(11,155)

Cash and cash equivalents, beginning of period


1,586


12,741






CASH AND CASH EQUIVALENTS, END OF PERIOD


$ 2,728


$ 1,586

 

Gas Natural Inc. and Subsidiaries

Segments of Operations

(Unaudited)


Three Months Ended December 31, 2015







(Amounts in thousands)










Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated










OPERATING REVENUE

$     26,583


$       3,216


$              -


$       29,799

Intersegment eliminations

(8)


(293)


-


(301)

Total operating revenue

26,575


2,923


-


29,498










COST OF SALES

14,469


3,021


-


17,490

Intersegment eliminations

(8)


(293)


-


(301)

Total cost of sales

14,461


2,728


-


17,189










GROSS MARGIN

12,114


195


-


12,309










OPERATING EXPENSES

9,453


217


388


10,058

Intersegment eliminations

-


-


-


-

Total operating expenses

9,453


217


388


10,058










OPERATING INCOME (LOSS)

$       2,661


$           (22)


$         (388)


$         2,251










INCOME (LOSS) FROM CONTINUING OPERATIONS

$       1,134


$           (29)


$         (376)


$            729










DISCONTINUED OPERATIONS

-


-


(526)


(526)










NET LOSS

$       1,134


$           (29)


$         (902)


$            203

 

Three Months Ended December 31, 2014







(Amounts in thousands)










Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated










OPERATING REVENUE

$     34,810


$       4,469


$              -


$       39,279

Intersegment eliminations

(84)


(2,236)


-


(2,320)

Total operating revenue

34,726


2,233


-


36,959










COST OF SALES

22,923


4,319


-


27,242

Intersegment eliminations

(84)


(2,236)


-


(2,320)

Total cost of sales

22,839


2,083


-


24,922










GROSS MARGIN

11,887


150


-


12,037










OPERATING EXPENSES

7,830


322


735


8,887

Intersegment eliminations

(26)


-


-


(26)

Total operating expenses

7,804


322


735


8,861










OPERATING INCOME (LOSS)

$       4,083


$         (172)


$         (735)


$         3,176










INCOME (LOSS) FROM CONTINUING OPERATIONS

$       2,299


$         (496)


$         (605)


$         1,198










DISCONTINUED OPERATIONS

-


-


451


451










NET LOSS

$       2,299


$         (496)


$         (154)


$         1,649

 

Gas Natural Inc. and Subsidiaries

Segments of Operations, Continued

(Unaudited)


Year Ended December 31, 2015








(Amounts in thousands)










Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated










OPERATING REVENUE

$   104,003


$      12,132


$              -


$      116,135

Intersegment eliminations

(25)


(3,749)


-


(3,774)

Total operating revenue

103,978


8,383


-


112,361










COST OF SALES

60,405


11,495


-


71,900

Intersegment eliminations

(25)


(3,749)


-


(3,774)

Total cost of sales

60,380


7,746


-


68,126










GROSS MARGIN

43,598


637


-


44,235










OPERATING EXPENSES

35,833


814


2,667


39,314

Intersegment eliminations

(87)


-


-


(87)

Total operating expenses

35,746


814


2,667


39,227










OPERATING INCOME (LOSS)

$       7,852


$         (177)


$      (2,667)


$         5,008










INCOME (LOSS) FROM CONTINUING OPERATIONS

$       3,476


$         (113)


$      (2,194)


$         1,169










DISCONTINUED OPERATIONS

-


-


3,519


3,519










NET INCOME (LOSS)

$       3,476


$         (113)


$       1,325


$         4,688

 

Year Ended December 31, 2014








(Amounts in thousands)










Natural Gas


Marketing &


Corporate &




Operations


Production


Other


Consolidated










OPERATING REVENUE

$   123,379


$      17,605


$              -


$      140,984

Intersegment eliminations

(326)


(8,088)


-


(8,414)

Total operating revenue

123,053


9,517


-


132,570










COST OF SALES

79,423


16,709


-


96,132

Intersegment eliminations

(326)


(8,088)


-


(8,414)

Total cost of sales

79,097


8,621


-


87,718










GROSS MARGIN

43,956


896


-


44,852










OPERATING EXPENSES

32,177


2,478


3,201


37,856

Intersegment eliminations

(103)


-


-


(103)

Total operating expenses

32,074


2,478


3,201


37,753










OPERATING INCOME (LOSS)

$     11,882


$      (1,582)


$      (3,201)


$         7,099










INCOME (LOSS) FROM CONTINUING OPERATIONS

$       6,492


$      (1,433)


$      (2,330)


$         2,729










DISCONTINUED OPERATIONS

-


-


1,033


1,033










NET INCOME (LOSS)

$       6,492


$      (1,433)


$      (1,297)


$         3,762

 

Gas Natural Inc. and Subsidiaries

Natural Gas Operations


Utility Throughput



















Three Months Ended December 31,


Years Ended December 31,

(in million cubic feet (MMcf))

2015


2014


2015


2014










Full service distribution:








Energy West Montana (MT)

1,037


1,046


3,076


3,510

Frontier Natural Gas (NC)

258


352


926


1,114

Bangor Gas (ME)

473


525


1,727


1,786

Ohio Companies (OH)

968


1,136


3,560


3,782

Public Gas (KY)

19


43


111


144

Total full service distribution

2,755


3,102


9,400


10,336










Transportation

2,504


2,579


10,610


10,444

Bucksport


60


663


597


5,441










Total volumes

5,319


6,344


20,607


26,221

 

Heating Degree Days














Three Months Ended


Percent Colder (Warmer)





December 31,


2015 Compared to



Normal


2015


2014


Normal


2014












Great Falls, MT

2,740


2,683


2,694


(2.08%)


(0.41%)

Bangor, ME

2,262


2,321


2,507


2.61%


(7.42%)

Elkin, NC

2,236


1,174


1,603


(47.50%)


(26.76%)

Lancaster, OH

2,004


1,462


1,999


(27.05%)


(26.86%)


Weighted Average

2,378


2,088


2,349


(12.18%)


(11.08%)



























Years Ended


Percent Colder (Warmer)





December 31,


2015 Compared to



Normal


2015


2014


Normal


2014












Great Falls, MT

7,520


6,916


7,882


(8.03%)


(12.26%)

Bangor, ME

6,968


8,058


7,859


15.64%


2.53%

Elkin, NC

4,720


3,831


4,459


(18.83%)


(14.08%)

Lancaster, OH

5,491


5,281


6,049


(3.82%)


(12.70%)


Weighted Average

6,522


6,211


6,986


(4.77%)


(11.09%)

 

Gas Natural Inc. and Subsidiaries

Reconciliation of GAAP Income from Continuing Operations to

Non-GAAP Adjusted Income from Continuing Operations(1)


(in thousands, except per share amounts)

Three Months Ended


Years Ended

December 31,


December 31,


2015


2014


2015


2014


$

per
diluted
share


$

per
diluted
share


$

per
diluted
share


$

per
diluted
share

GAAP income from continuing operations

$ 729

$ 0.07


$ 1,198

$ 0.11


$ 1,169

$ 0.11


$ 2,729

$ 0.26

Add back, after tax:












Customer bankruptcy write-off

-

-


-

-


-

-


673

0.06

Non-recurring legal and professional fees

413

0.03


473

0.05


1,547

0.14


1,179

0.11

Non-recurring regulatory and other expenses

62

0.01


658

0.06


688

0.07


1,042

0.10

Gain on marketable securities

-

-


-

-


-

-


(110)

(0.01)

Loss on disposals, impairment or other

(245)

(0.02)


251

0.02


207

0.02


251

0.02

Non-GAAP adjusted income from continuing operations(1)

$ 959

$ 0.09


$ 2,580

$ 0.22


$ 3,611

$ 0.32


$ 5,764

$ 0.54

 

Gas Natural Inc. and Subsidiaries

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


(in thousands)

Three Months Ended


Years Ended

December 31,


December 31,


2015


2014


2015


2014

GAAP income from continuing operations

$    729


$ 1,198


$   1,169


$   2,729

Add back:








Net interest expense

1,037


891


3,604


3,226

Income taxes

74


647


417


1,548

Depreciation, amortization and accretion

1,909


1,443


7,257


6,657

Customer bankruptcy write-off

-


-


-


1,056

Non-recurring legal and professional fees

484


819


2,498


1,942

Non-recurring regulatory and other expenses

-


1,107


1,111


1,717

Gain on marketable securities

-


(1)


-


(184)

Loss on disposals, impairment or other

(468)


414


335


414

Non-GAAP Adjusted EBITDA(1)

$ 3,765


$ 6,518


$ 16,391


$ 19,105

 

(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 atypical 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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