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Gas Natural Inc. Reports 2015 Third Quarter Results Also reports stipulation filed by PUCO Staff
CLEVELAND, Nov. 9, 2015 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) (the "Company"), a holding company operating local natural gas utilities serving approximately 69,000 customers in six states, reported financial results for the third quarter and nine-month period ended September 30, 2015. As previously announced, the Company completed the sale of its Wyoming operations on July 1, 2015 for $16 million and the divested unit is reported as discontinued operations.
The Company also reported that a Stipulation and Recommendation between Gas Natural Inc.'s Ohio utilities and Commission Staff of the Public Utilities Commission of Ohio ("PUCO") was filed with the PUCO on Friday, October 30, 2015. The PUCO has the final authority regarding all settlement stipulations filed by the Staff. The Stipulation is subject to approval by the PUCO and can be found at this link: http://dis.puc.state.oh.us/DocumentRecord.
The Company reported a loss from continuing operations of $2.3 million, or $0.22 per share, for the third quarter, compared with a loss of $1.5 million, or $0.14 per share, for the third quarter of 2014. On a year-to-date basis, income from continuing operations was $0.4 million, or $0.04 per share, compared with $1.5 million, or $0.15 per share, for the first nine months of 2014.
Adjusted loss from continuing operations, a non-GAAP number, was $1.4 million, or $0.13 per share, for the third quarter, compared with an adjusted loss from continuing operations of $1.2 million, or $0.11 per share in the third quarter of 2014. Adjustments to loss from continuing operations for the 2015 third quarter excludes, net of tax, $0.4 million of non-recurring professional and legal fees, $0.2 million of incremental regulatory and other expenses, and a $0.3 million asset impairment charge.
On a year-to-date basis, adjusted income from continuing operations, a non-GAAP number, was
$2.7 million, or $0.25 per share, compared with $3.2 million, or $0.31 per share, for the first nine months of 2014. The 2015 year-to-date adjusted results excludes, net of tax, $1.1 million of non-recurring professional and legal fees, $0.6 million of incremental regulatory and other expenses, $0.5 million of goodwill and asset impairment charges. See attached table for a reconciliation of GAAP (loss) income from continuing operations to non-GAAP adjusted income (loss) from continuing operations for the 2015 third quarter and year-to-date periods.
Mr. Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, commented, "We have made significant progress on many fronts this year which include the following:
- Completed the divestiture of our non-core Wyoming assets (announced July 1, 2015)
- Added approximately 1,000 new customers in our core markets in the quarter
- Received a positive outcome with the Montana PSC, allowing us to dividend funds from our Montana-based subsidiary to the corporate level.
He continued, "And, there were several additional developments in the last several weeks that bode well for our future.
- Most recently, we entered into a stipulation with the PUCO Staff that, subject to final approval by the Commission, will address the issues raised by last year's investigative regulatory audit of our Ohio utilities.
- We just completed the sale of our former corporate headquarters building which monetized another non-core asset.
- We also secured interim financing that provides us with greater liquidity during the low-cash flow months of summer before the colder weather sets in. Historically, we generate significant cash during the cold weather months and replenish our cash reserves.
- We are awaiting regulatory approvals on the pending sales of our Kentucky and Pennsylvania utilities.
All of these accomplishments set the stage for us to focus our energy and resources on growing our strong core business, implementing systems and processes to strengthen our operational performance and building a culture of continuous improvement."
Natural Gas Operations Segment Review
The Natural Gas Operations segment reported $11.4 million in revenue for the 2015 third quarter, a decrease of $1.2 million, or 9%, from the prior-year quarter, which was primary attributable to lower gas prices passed on to customers in its Ohio, Montana and North Carolina markets. The decrease was partially offset by a $0.4 million increase in revenue from the Company's Maine market, which was the result of continued customer growth and the Loring Pipeline which became operational in September 2014.
Revenue for the first nine months of 2015 was $77.4 million, a decrease of $10.9 million, or 12.4%, with the change largely driven by lower gas prices passed on to customers and warmer weather on a year-to-date basis in the Ohio, Montana and North Carolina markets. Additionally, revenue for the year-to-date period in the North Carolina market was unfavorably impacted by $0.5 million for adjustments to sales volumes used in the unbilled revenue calculation in the 2015 second quarter. These decreases were partially offset by a $1.6 million increase in revenue in the Company's Maine market based on higher volumes due to customer growth, including from the Loring pipeline, and colder weather.
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Natural Gas Operations Income Statement
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
($ in thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Operations
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$ 11,355
|
|
$ 12,543
|
|
$ 77,403
|
|
$ 88,327
|
|
Gas Purchased
|
|
4,583
|
|
5,739
|
|
45,919
|
|
56,258
|
|
Gross Margin
|
|
6,772
|
|
6,804
|
|
31,484
|
|
32,069
|
|
Operating expenses
|
|
9,310
|
|
8,120
|
|
26,294
|
|
24,223
|
|
Operating (loss) income
|
|
(2,538)
|
|
(1,316)
|
|
5,190
|
|
7,846
|
|
Other income
|
|
151
|
|
369
|
|
493
|
|
620
|
|
(Loss) income before interest and taxes
|
(2,387)
|
|
(947)
|
|
5,683
|
|
8,466
|
|
Interest expense
|
|
(621)
|
|
(586)
|
|
(1,912)
|
|
(1,895)
|
|
(Loss) income before income taxes
|
|
(3,008)
|
|
(1,533)
|
|
3,771
|
|
6,571
|
|
Income tax benefit (expense)
|
|
1,105
|
|
653
|
|
(1,429)
|
|
(2,381)
|
|
Net (loss) income
|
|
$ (1,903)
|
|
$ (880)
|
|
$ 2,342
|
|
$ 4,190
|
|
|
|
|
|
|
|
|
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Gross margin for the third quarter of 2015 was $6.8 million, relatively unchanged from the prior-year period as $0.2 million in increased sales volumes and Loring Pipeline revenue in the Maine market were offset by $0.2 million of adjustments of additional disallowed gas costs in Ohio that were mandated by the PUCO. On a year-to-date basis, gross margin decreased by $0.6 million to $31.5 million primarily due to the PUCO gas cost adjustments in Ohio that took place in the second and third quarters, and warmer weather in the Montana market. These decreases were partially offset by increased sales volume in the Maine market and revenue from the Loring Pipeline.
Operating expenses increased by $1.2 million, or 14.7%, in the quarter to $9.3 million. The increase in quarterly operating expenses was attributable to a $0.4 million impairment charge related to the pending sale of the Company's former headquarters building, higher corporate cost allocations and payroll expenses, property tax increases and higher outside and professional services costs. Depreciation and amortization expense decreased slightly due to lower capital expenditures. Year-to-date operating expenses were $26.3 million, $2.1 million, or 8.5%, higher than the prior-year period. The increase reflects the same factors affecting operating expenses in the 2015 third quarter, as well as an impairment charge of $0.4 million related to the pending sale of the Company's Kentucky utility operations and a $0.2 million increase in depreciation and amortization expense as amortization of a regulatory asset not present last year offset lower depreciation expense.
The segment reported a 2015 third quarter net loss of $1.9 million compared with a net loss of
$0.9 million in the 2014 third quarter. For the first nine months of 2015, net income for the segment was $2.3 million compared with $4.2 million for the prior-year period.
Other Operating Segments
The Marketing and Production Operations segment was near breakeven in the third quarter of 2015, reflecting improvement from a $0.1 million loss in the prior-year period. Revenue increased by
$0.7 million to $1.7 million for the third quarter of 2015, compared with the same period in 2014 while gross margin decreased by $0.1 million to $0.1 million. The combination of higher volume and significantly lower operating expenses in the quarter offset most of the impact of lower pricing. For the first nine months of 2015, the segment had a net loss of $0.1 million, a $0.8 million improvement from a $0.9 million net loss in the prior-year period, as a $1.6 million reduction in operating expenses more than offset the effect of lower volume.
Net loss from continuing operations for the Corporate and Other Operations segment in the 2015 third quarter was a $0.3 million loss compared with a $0.5 million loss in the prior-year quarter. The segment also reported net income from discontinued operations of $3.4 million in the quarter, compared with breakeven in the prior year. For the first nine months of 2015, the segment recorded a net loss from continuing operations of $1.8 million, approximating the loss in the prior-year period. Net income from discontinued operations for the year-to-date period was $4.0 million, compared with $0.6 million in the prior year.
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
$0.5 million and $0.6 million, respectively, in the third quarters of 2015 and 2014. On a year-to-date basis, the same measure was $12.6 million for both 2015 and 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 a reconciliation of GAAP (loss) income from continuing operations to Adjusted EBITDA.
Balance Sheet and Cash Management
Cash and cash equivalents as of September 30, 2015 were $3.9 million, an increase of $2.3 million from December 31, 2014.
Cash provided by operating activities of continuing operations in the first nine months of 2015 was
$12.2 million, a $3.6 million increase from the prior-year period. The improvement was primarily related to fluctuations in working capital partially offset by the decrease in net income from continuing operations.
Capital expenditures for the first nine months of 2015 were $8.3 million compared with $16.3 million in the prior-year period. Total capital expenditures for 2015 are expected to be approximately $11 million to $12 million. Capital investments are focused on the growth of the Company's Natural Gas Operations segment, as well as ongoing construction activities in all of the Company's utility service areas to support expansion, maintenance and enhancements of its gas pipeline systems. This includes systems in its North Carolina and Maine markets to meet high customer demand in these underserved markets.
Mr. Osborne concluded, "I believe we have accomplished a great amount in the 18 months that new leadership had been in place. We have strengthened our regulatory relationships, executed our asset rationalization program, implemented operational improvements and focused investments in our markets with the highest and most profitable growth potential. In particular, we have had positive results from our Maine operations where the Loring Pipeline, activated just over a year ago, is generating profits and customer numbers are growing in this underserved market. We expect we will further benefit as Maine has historically been our coldest weather market. Our purpose and focus is on driving earnings power and increasing shareholder value."
Webcast and Conference Call
Gas Natural will host a conference call and live webcast Tuesday, November 10th at 1:00 p.m. Eastern Time. During the conference call and webcast, management will review the financial and operating results for the third 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 investor.egas.net.
A telephonic replay will be available from 4:00 p.m. Eastern Time on the day of the teleconference through Tuesday, November 17, 2015. To listen to a replay of the call, dial (858) 384-5517 and enter the conference ID number 13621136. 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 26 billion cubic feet of natural gas to approximately 69,000 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 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 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:
FINANCIAL TABLES FOLLOW.
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Gas Natural Inc. and Subsidiaries
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Condensed Consolidated Statements of Operations
|
|
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Natural gas operations
|
$ 11,355,099
|
|
$ 12,542,698
|
|
$77,402,612
|
|
$88,327,066
|
|
Marketing and production
|
1,728,716
|
|
1,072,273
|
|
5,460,246
|
|
7,284,543
|
|
Total revenues
|
13,083,815
|
|
13,614,971
|
|
82,862,858
|
|
95,611,609
|
|
COST OF SALES
|
|
|
|
|
|
|
|
|
Natural gas purchased
|
4,583,203
|
|
5,739,430
|
|
45,918,641
|
|
56,257,668
|
|
Marketing and production
|
1,639,912
|
|
860,900
|
|
5,018,370
|
|
6,538,023
|
|
Total cost of sales
|
6,223,115
|
|
6,600,330
|
|
50,937,011
|
|
62,795,691
|
|
GROSS MARGIN
|
6,860,700
|
|
7,014,641
|
|
31,925,847
|
|
32,815,918
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
Distribution, general, and administrative
|
6,806,138
|
|
6,321,270
|
|
19,792,959
|
|
19,018,069
|
|
Maintenance
|
256,483
|
|
295,762
|
|
871,714
|
|
920,308
|
|
Depreciation and amortization
|
1,790,111
|
|
1,830,287
|
|
5,327,327
|
|
5,178,270
|
|
Accretion
|
-
|
|
9,255
|
|
21,077
|
|
36,533
|
|
Provision for doubtful accounts
|
34,713
|
|
7,626
|
|
133,041
|
|
829,814
|
|
Taxes other than income
|
1,014,908
|
|
901,329
|
|
3,023,365
|
|
2,861,724
|
|
Total operating expenses
|
9,902,353
|
|
9,365,529
|
|
29,169,483
|
|
28,844,718
|
|
OPERATING (LOSS) INCOME
|
(3,041,653)
|
|
(2,350,888)
|
|
2,756,364
|
|
3,971,200
|
|
Loss from unconsolidated affiliate
|
-
|
|
-
|
|
-
|
|
(977)
|
|
Other income, net
|
277,402
|
|
408,821
|
|
593,429
|
|
617,656
|
|
Gain on sale of marketable securities
|
|
|
183,371
|
|
|
|
183,371
|
|
Acquisition expense
|
-
|
|
-
|
|
-
|
|
(7,197)
|
|
Interest expense
|
(811,765)
|
|
(764,367)
|
|
(2,566,866)
|
|
(2,334,435)
|
|
(Loss) income before income taxes
|
(3,576,016)
|
|
(2,523,063)
|
|
782,907
|
|
2,429,618
|
|
Income tax benefit (expense)
|
1,312,049
|
|
1,008,494
|
|
(342,191)
|
|
(901,141)
|
|
(LOSS) INCOME FROM CONTINUING OPERATIONS
|
(2,263,967)
|
|
(1,514,569)
|
|
440,716
|
|
1,528,477
|
|
Discontinued operations, net of tax
|
3,394,981
|
|
34,825
|
|
4,044,776
|
|
581,652
|
|
NET INCOME (LOSS)
|
$ 1,131,014
|
|
$(1,479,744)
|
|
$ 4,485,492
|
|
$ 2,110,129
|
|
|
|
|
|
|
|
|
|
Basic weighted shares outstanding
|
10,494,130
|
|
10,487,511
|
|
10,490,736
|
|
10,475,213
|
|
Dilutive effect of stock options
|
1,134
|
|
-
|
|
1,173
|
|
-
|
|
Diluted weighted shares outstanding
|
10,495,264
|
|
10,487,511
|
|
10,491,909
|
|
10,475,213
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$ (0.22)
|
|
$ (0.14)
|
|
$ 0.04
|
|
$ 0.15
|
|
Discontinued operations
|
0.32
|
|
-
|
|
0.39
|
|
0.05
|
|
Net income (loss) per share
|
$ 0.10
|
|
$ (0.14)
|
|
$ 0.43
|
|
$ 0.20
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
$ 0.135
|
|
$ 0.135
|
|
$ 0.270
|
|
$ 0.405
|
|
Gas Natural Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
|
September 30,
|
|
December 31,
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
Cash and cash equivalents
|
$ 3,904,154
|
|
$ 1,585,926
|
|
Accounts receivable
|
|
|
|
|
Trade, less allowance for doubtful accounts of $272,367
and $370,909, respectively
|
4,403,443
|
|
12,095,535
|
|
Related parties
|
164,302
|
|
250,101
|
|
Unbilled gas
|
2,260,541
|
|
7,630,852
|
|
Note receivable, current portion
|
726
|
|
2,070
|
|
Inventory
|
|
|
|
|
Natural gas
|
5,733,778
|
|
5,301,895
|
|
Materials and supplies
|
2,324,890
|
|
2,300,990
|
|
Prepaid income taxes
|
434,100
|
|
431,681
|
|
Regulatory assets, current
|
2,713,255
|
|
4,097,822
|
|
Deferred tax asset
|
578,033
|
|
635,195
|
|
Prepayments and other
|
2,064,654
|
|
986,941
|
|
Assets held for sale
|
3,647,248
|
|
802,436
|
|
Discontinued operations
|
-
|
|
11,653,934
|
|
Total current assets
|
28,229,124
|
|
47,775,378
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
Property, plant and equipment
|
192,675,626
|
|
187,566,638
|
|
Less accumulated depreciation, depletion and amortization
|
(48,637,868)
|
|
(45,555,553)
|
|
PROPERTY, PLANT, & EQUIPMENT, NET
|
144,037,758
|
|
142,011,085
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
Notes receivable, less current portion
|
32,502
|
|
90,345
|
|
Regulatory assets, non-current
|
1,653,750
|
|
2,055,404
|
|
Debt issuance costs, net of amortization
|
713,198
|
|
1,079,447
|
|
Goodwill
|
15,872,247
|
|
16,155,672
|
|
Customer relationships, net of amortization
|
2,707,486
|
|
2,927,500
|
|
Restricted cash
|
1,897,672
|
|
1,897,677
|
|
Other assets
|
14,360
|
|
11,404
|
|
Total other assets
|
22,891,215
|
|
24,217,449
|
|
TOTAL ASSETS
|
$ 195,158,097
|
|
$ 214,003,912
|
|
Gas Natural Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
|
September 30,
|
|
December 31,
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
|
|
LIABILITIES AND CAPITALIZATION
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Checks in excess of amounts on deposit
|
$ 34,504
|
|
$ 194,524
|
|
Line of credit
|
15,750,000
|
|
28,760,799
|
|
Accounts payable
|
|
|
|
|
Trade
|
6,174,579
|
|
14,115,367
|
|
Related parties
|
62,943
|
|
170,319
|
|
Notes payable, current portion
|
521,321
|
|
542,201
|
|
Contingent consideration, current
|
671,638
|
|
671,638
|
|
Derivative instruments
|
31,290
|
|
3,023,271
|
|
Accrued liabilities
|
4,920,853
|
|
4,860,663
|
|
Accrued liabilities - related parties
|
99,150
|
|
111,133
|
|
Customer deposits, current
|
400,522
|
|
634,090
|
|
Obligation under capital lease, current
|
199,517
|
|
188,224
|
|
Regulatory liability, current
|
1,065,596
|
|
925,175
|
|
Build-to-suit liability
|
7,408,163
|
|
5,597,287
|
|
Other current liabilities
|
959,695
|
|
940,643
|
|
Liabilities held for sale
|
262,513
|
|
61,416
|
|
Discontinued operations
|
20,139
|
|
544,432
|
|
Total current liabilities
|
38,582,423
|
|
61,341,182
|
|
|
|
|
|
LONG-TERM LIABILITIES
|
|
|
|
|
Deferred investment tax credits
|
97,396
|
|
113,193
|
|
Deferred tax liability
|
13,166,934
|
|
10,538,394
|
|
Asset retirement obligation
|
1,217,595
|
|
1,196,518
|
|
Customer advances for construction
|
1,026,700
|
|
993,681
|
|
Regulatory liability, non-current
|
1,210,816
|
|
1,089,850
|
|
Customer deposits
|
949,540
|
|
949,540
|
|
Obligation under capital lease, less current
|
1,475,197
|
|
1,674,714
|
|
Contingent consideration, less current
|
-
|
|
75,362
|
|
Total long-term liabilities
|
19,144,178
|
|
16,631,252
|
|
NOTES PAYABLE, less current portion
|
39,335,068
|
|
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 and 30,000,000 shares, respectively;
Issued: 10,501,263 and 10,487,511 shares, respectively;
Outstanding: 10,501,263 and 10,487,511 shares, respectively
|
1,574,690
|
|
1,573,127
|
|
Capital in excess of par value
|
63,958,752
|
|
63,826,341
|
|
Retained earnings
|
32,562,986
|
|
30,911,150
|
|
Total stockholders' equity
|
98,096,428
|
|
96,310,618
|
|
TOTAL CAPITALIZATION
|
137,431,496
|
|
136,031,478
|
|
TOTAL LIABILITIES AND CAPITALIZATION
|
$ 195,158,097
|
|
$ 214,003,912
|
|
Gas Natural Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
Nine months ended September 30,
|
|
2015
|
|
2014
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
$ 4,485,492
|
|
$ 2,110,129
|
|
Less income from discontinued operations
|
4,044,776
|
|
581,652
|
|
Income from continuing operations
|
440,716
|
|
1,528,477
|
|
|
|
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
5,327,327
|
|
5,178,270
|
|
Accretion
|
21,077
|
|
36,533
|
|
Amortization of debt issuance costs
|
517,379
|
|
304,177
|
|
Provision for doubtful accounts
|
133,041
|
|
829,814
|
|
Stock based compensation
|
133,974
|
|
312,100
|
|
Loss on goodwill and asset impairments
|
803,518
|
|
-
|
|
Gain on sale of marketable securities
|
-
|
|
(183,371)
|
|
(Gain) loss on sale of assets
|
(34,812)
|
|
10,635
|
|
Loss from unconsolidated affiliate
|
-
|
|
977
|
|
Unrealized holding gain on contingent consideration
|
(75,362)
|
|
(3,000)
|
|
Change in fair value of derivative financial instruments
|
(119,596)
|
|
(8,419)
|
|
Investment tax credit
|
(15,797)
|
|
(15,797)
|
|
Deferred income taxes
|
2,685,702
|
|
1,243,512
|
|
Changes in assets and liabilities
|
|
|
|
|
Accounts receivable, including related parties
|
7,532,912
|
|
5,467,686
|
|
Unbilled gas
|
5,360,535
|
|
5,011,695
|
|
Natural gas inventory
|
(431,883)
|
|
(3,048,511)
|
|
Accounts payable, including related parties
|
(7,572,247)
|
|
(3,425,347)
|
|
Recoverable/refundable cost of gas purchases
|
(1,147,233)
|
|
(624,880)
|
|
Regulatory assets & liabilities
|
186,122
|
|
(2,401,250)
|
|
Prepayments and other
|
(1,101,642)
|
|
(560,351)
|
|
Other assets
|
(453,379)
|
|
(141,418)
|
|
Other liabilities
|
57,390
|
|
(912,571)
|
|
Net cash provided by operating activities of continuing operations
|
12,247,742
|
|
8,598,961
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Capital expenditures
|
(8,325,234)
|
|
(16,276,508)
|
|
Proceeds from sale of fixed assets
|
65,660
|
|
33,234
|
|
Proceeds from sale of marketable securities
|
-
|
|
421,875
|
|
Proceeds from note receivable
|
59,187
|
|
2,752
|
|
Restricted cash – capital expenditures fund
|
-
|
|
57,441
|
|
Customer advances for construction
|
33,335
|
|
15,303
|
|
Contributions in aid of construction
|
605,785
|
|
1,942,695
|
|
Net cash used in investing activities of continuing operations
|
(7,561,267)
|
|
(13,803,208)
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from line of credit
|
13,750,000
|
|
16,450,000
|
|
Repayments of line of credit
|
(26,760,799)
|
|
(16,919,000)
|
|
Repayments of notes payable, including related parties
|
(5,406,672)
|
|
(3,429,702)
|
|
Proceeds from notes payable, including related parties
|
5,000,000
|
|
102,000
|
|
Repayments of build-to-suit
|
(1,371,434)
|
|
-
|
|
Payments of capital lease obligations
|
(188,224)
|
|
(177,570)
|
|
Debt issuance costs
|
(151,130)
|
|
(9,298)
|
|
Restricted cash – debt service fund
|
5
|
|
131,840
|
|
Exercise of stock options
|
-
|
|
45,761
|
|
Dividends paid
|
(2,833,656)
|
|
(4,242,608)
|
|
Net cash used in financing activities of continuing operations
|
(17,961,910)
|
|
(8,048,577)
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
Operating cash flows
|
1,288,242
|
|
1,907,389
|
|
Investing cash flows
|
14,305,421
|
|
(346,220)
|
|
Financing cash flows
|
-
|
|
53,892
|
|
Net cash provided by discontinued operations
|
15,593,663
|
|
1,615,061
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
2,318,228
|
|
(11,637,763)
|
|
Cash and cash equivalents, beginning of period
|
1,585,926
|
|
12,741,197
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ 3,904,154
|
|
$ 1,103,434
|
|
Gas Natural Inc. and Subsidiaries
|
|
Segments of Operations
|
|
(Unaudited)
|
|
|
Three Months Ended September 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Marketing &
|
|
Corporate &
|
|
|
|
Operations
|
|
Production
|
|
Other
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUE
|
|
$ 11,356,319
|
|
$ 1,885,718
|
|
$ -
|
|
$ 13,242,037
|
|
Intersegment eliminations
|
|
(1,220)
|
|
(157,002)
|
|
-
|
|
(158,222)
|
|
Total operating revenue
|
|
11,355,099
|
|
1,728,716
|
|
-
|
|
13,083,815
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
4,584,423
|
|
1,796,914
|
|
-
|
|
6,381,337
|
|
Intersegment eliminations
|
|
(1,220)
|
|
(157,002)
|
|
-
|
|
(158,222)
|
|
Total cost of sales
|
|
4,583,203
|
|
1,639,912
|
|
-
|
|
6,223,115
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
6,771,896
|
|
88,804
|
|
-
|
|
6,860,700
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
9,335,060
|
|
141,801
|
|
450,737
|
|
9,927,598
|
|
Intersegment eliminations
|
|
(25,245)
|
|
-
|
|
-
|
|
(25,245)
|
|
Total operating expenses
|
|
9,309,815
|
|
141,801
|
|
450,737
|
|
9,902,353
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
$ (2,537,919)
|
|
$ (52,997)
|
|
$ (450,737)
|
|
$ (3,041,653)
|
|
|
|
|
|
|
|
|
|
|
NET LOSS FROM CONTINUING OPERATIONS
|
|
$ (1,902,628)
|
|
$ (65,648)
|
|
$ (295,691)
|
|
$ (2,263,967)
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
-
|
|
-
|
|
3,394,981
|
|
3,394,981
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
$ (1,902,628)
|
|
$ (65,648)
|
|
$ 3,099,290
|
|
$ 1,131,014
|
|
Three Months Ended September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Marketing &
|
|
Corporate &
|
|
|
|
Operations
|
|
Production
|
|
Other
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUE
|
|
$ 12,619,151
|
|
$ 2,134,914
|
|
$ -
|
|
$ 14,754,065
|
|
Intersegment eliminations
|
|
(76,453)
|
|
(1,062,641)
|
|
-
|
|
(1,139,094)
|
|
Total operating revenue
|
|
12,542,698
|
|
1,072,273
|
|
-
|
|
13,614,971
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
5,815,883
|
|
1,923,541
|
|
-
|
|
7,739,424
|
|
Intersegment eliminations
|
|
(76,453)
|
|
(1,062,641)
|
|
-
|
|
(1,139,094)
|
|
Total cost of sales
|
|
5,739,430
|
|
860,900
|
|
-
|
|
6,600,330
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
6,803,268
|
|
211,373
|
|
-
|
|
7,014,641
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
8,146,216
|
|
372,682
|
|
873,202
|
|
9,392,100
|
|
Intersegment eliminations
|
|
(26,571)
|
|
-
|
|
-
|
|
(26,571)
|
|
Total operating expenses
|
|
8,119,645
|
|
372,682
|
|
873,202
|
|
9,365,529
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
$ (1,316,377)
|
|
$ (161,309)
|
|
$ (873,202)
|
|
$ (2,350,888)
|
|
|
|
|
|
|
|
|
|
|
NET LOSS FROM CONTINUING OPERATIONS
|
|
$ (879,952)
|
|
$ (108,248)
|
|
$ (526,369)
|
|
$ (1,514,569)
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
-
|
|
-
|
|
34,825
|
|
34,825
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$ (879,952)
|
|
$ (108,248)
|
|
$ (491,544)
|
|
$ (1,479,744)
|
|
Gas Natural Inc. and Subsidiaries
|
|
Segments of Operations, Continued
|
|
(Unaudited)
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Marketing &
|
|
Corporate &
|
|
|
|
Operations
|
|
Production
|
|
Other
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUE
|
|
$ 77,419,693
|
|
$ 8,916,218
|
|
$ -
|
|
$ 86,335,911
|
|
Intersegment eliminations
|
|
(17,081)
|
|
(3,455,972)
|
|
-
|
|
(3,473,053)
|
|
Total operating revenue
|
|
77,402,612
|
|
5,460,246
|
|
-
|
|
82,862,858
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
45,935,722
|
|
8,474,342
|
|
-
|
|
54,410,064
|
|
Intersegment eliminations
|
|
(17,081)
|
|
(3,455,972)
|
|
-
|
|
(3,473,053)
|
|
Total cost of sales
|
|
45,918,641
|
|
5,018,370
|
|
-
|
|
50,937,011
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
31,483,971
|
|
441,876
|
|
-
|
|
31,925,847
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
26,381,246
|
|
596,698
|
|
2,278,814
|
|
29,256,758
|
|
Intersegment eliminations
|
|
(87,275)
|
|
-
|
|
-
|
|
(87,275)
|
|
Total operating expenses
|
|
26,293,971
|
|
596,698
|
|
2,278,814
|
|
29,169,483
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS)
|
|
$ 5,190,000
|
|
$ (154,822)
|
|
$ (2,278,814)
|
|
$ 2,756,364
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|
$ 2,342,145
|
|
$ (83,643)
|
|
$ (1,817,786)
|
|
$ 440,716
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
-
|
|
-
|
|
4,044,776
|
|
4,044,776
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$ 2,342,145
|
|
$ (83,643)
|
|
$ 2,226,990
|
|
$ 4,485,492
|
|
Nine Months Ended September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Marketing &
|
|
Corporate &
|
|
|
|
Operations
|
|
Production
|
|
Other
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUE
|
|
$ 88,568,864
|
|
$ 13,136,479
|
|
$ -
|
|
$ 101,705,343
|
|
Intersegment eliminations
|
|
(241,798)
|
|
(5,851,936)
|
|
-
|
|
(6,093,734)
|
|
Total operating revenue
|
|
88,327,066
|
|
7,284,543
|
|
-
|
|
95,611,609
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
56,499,466
|
|
12,389,959
|
|
-
|
|
68,889,425
|
|
Intersegment eliminations
|
|
(241,798)
|
|
(5,851,936)
|
|
-
|
|
(6,093,734)
|
|
Total cost of sales
|
|
56,257,668
|
|
6,538,023
|
|
-
|
|
62,795,691
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
32,069,398
|
|
746,520
|
|
-
|
|
32,815,918
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
24,301,048
|
|
2,156,684
|
|
2,464,547
|
|
28,922,279
|
|
Intersegment eliminations
|
|
(77,561)
|
|
-
|
|
-
|
|
(77,561)
|
|
Total operating expenses
|
|
24,223,487
|
|
2,156,684
|
|
2,464,547
|
|
28,844,718
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS)
|
|
$ 7,845,911
|
|
$ (1,410,164)
|
|
$ (2,464,547)
|
|
$ 3,971,200
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|
$ 4,189,646
|
|
$ (936,885)
|
|
$ (1,724,284)
|
|
$ 1,528,477
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
-
|
|
-
|
|
581,652
|
|
581,652
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$ 4,189,646
|
|
$ (936,885)
|
|
$ (1,142,632)
|
|
$ 2,110,129
|
|
Gas Natural Inc. and Subsidiaries
|
|
Natural Gas Operations
|
|
Utility Throughput
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
(in million cubic feet (MMcf))
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Full Service Distribution
|
|
|
|
|
|
|
|
|
|
Energy West Montana (MT)
|
|
238
|
|
253
|
|
2,039
|
|
2,464
|
|
Frontier Natural Gas (NC)
|
|
152
|
|
168
|
|
668
|
|
762
|
|
Bangor Gas (ME)
|
|
124
|
|
192
|
|
1,254
|
|
1,261
|
|
Ohio Companies (OH)
|
|
299
|
|
292
|
|
2,592
|
|
2,646
|
|
Public Gas (KY)
|
|
4
|
|
14
|
|
92
|
|
101
|
|
Total full service distribution
|
817
|
|
919
|
|
6,645
|
|
7,234
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
2,342
|
|
1,871
|
|
8,106
|
|
7,865
|
|
Bucksport
|
|
124
|
|
2,018
|
|
537
|
|
4,778
|
|
|
|
|
|
|
|
|
|
|
Total volumes
|
|
3,283
|
|
4,809
|
|
15,288
|
|
19,877
|
|
Heating Degree Days
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Percent Colder (Warmer)
|
|
|
|
|
September 30,
|
|
2015 Compared to
|
|
|
Normal
|
|
2015
|
|
2014
|
|
Normal
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Falls, MT
|
|
354
|
|
319
|
|
325
|
|
(9.89)%
|
|
(1.85)%
|
|
Bangor, ME
|
|
152
|
|
134
|
|
235
|
|
(11.84)%
|
|
(42.98)%
|
|
Elkin, NC
|
|
30
|
|
48
|
|
63
|
|
60.00%
|
|
(23.81)%
|
|
Lancaster, OH
|
|
90
|
|
44
|
|
128
|
|
(51.11)%
|
|
(65.63)%
|
|
Jackson, KY
|
|
84
|
|
67
|
|
97
|
|
(20.24)%
|
|
(30.93)%
|
|
Weighted average
|
212
|
|
177
|
|
224
|
|
(16.62)%
|
|
(21.12)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
Percent Colder (Warmer)
|
|
|
|
|
September 30,
|
|
2015 Compared to
|
|
|
Normal
|
|
2015
|
|
2014
|
|
Normal
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Falls, MT
|
|
4,780
|
|
4,233
|
|
5,188
|
|
(11.44)%
|
|
(18.41)%
|
|
Bangor, ME
|
|
4,706
|
|
5,737
|
|
5,352
|
|
21.91%
|
|
7.19 %
|
|
Elkin, NC
|
|
2,484
|
|
2,657
|
|
2,856
|
|
6.96%
|
|
(6.97)%
|
|
Lancaster, OH
|
|
3,487
|
|
3,819
|
|
4,050
|
|
9.52%
|
|
(5.70)%
|
|
Jackson, KY
|
|
2,756
|
|
3,042
|
|
3,178
|
|
10.38%
|
|
(4.28)%
|
|
Weighted average
|
4,111
|
|
4,093
|
|
4,601
|
|
(0.43)%
|
|
(11.04)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Natural Inc. and Subsidiaries
|
|
Reconciliation of GAAP (Loss) Income from Continuing Operations to
|
|
Adjusted (Loss) Income from Continuing Operations(1)
|
|
|
(in thousands, except per share data)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
$
|
per diluted share
|
|
$
|
per diluted share
|
|
$
|
per diluted share
|
|
$
|
per diluted share
|
|
GAAP (loss) income from continuing operations
|
$(2,264)
|
$(0.22)
|
|
$(1,515)
|
$(0.14)
|
|
$ 441
|
$0.04
|
|
$1,528
|
$0.15
|
|
Add back after tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer bankruptcy write-off
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
673
|
0.06
|
|
Non-recurring legal and professional fees
|
408
|
0.04
|
|
306
|
0.03
|
|
1,134
|
0.11
|
|
706
|
0.07
|
|
Non-recurring regulatory and
other expenses
|
241
|
0.02
|
|
135
|
0.01
|
|
626
|
0.06
|
|
384
|
0.04
|
|
Gain on marketable securities
|
-
|
-
|
|
(110)
|
(0.01)
|
|
-
|
-
|
|
(110)
|
-
|
|
Business combination impairments/adjustments
|
260
|
0.02
|
|
-
|
-
|
|
452
|
0.04
|
|
-
|
-
|
|
Non-GAAP adjusted (loss) income
from continuing operations(1)
|
$(1,356)
|
$(0.13)
|
|
$(1,183)
|
$(0.11)
|
|
$2,652
|
$0.25
|
|
$3,181
|
$0.31
|
|
Gas Natural Inc. and Subsidiaries
|
|
GAAP (Loss) Income from Continuing Operations to Adjusted EBITDA Reconciliation(1)
|
|
|
|
|
|
(in thousands)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
GAAP (loss) income from continuing operations
|
$(2,264)
|
|
$(1,515)
|
|
$ 441
|
|
$ 1,528
|
|
Add back:
|
|
|
|
|
|
|
|
|
Net interest expense
|
812
|
|
764
|
|
2,567
|
|
2,334
|
|
Income taxes
|
(1,312)
|
|
(1,008)
|
|
342
|
|
901
|
|
Depreciation, amortization and accretion
|
1,790
|
|
1,839
|
|
5,348
|
|
5,215
|
|
Customer bankruptcy write-off
|
-
|
|
-
|
|
-
|
|
1,056
|
|
Non-recurring legal and professional fees
|
644
|
|
510
|
|
2,014
|
|
1,123
|
|
Non-recurring regulatory and other
expenses
|
380
|
|
225
|
|
1,111
|
|
610
|
|
Gain on marketable securities
|
-
|
|
(183)
|
|
-
|
|
(183)
|
|
Business combination impairments/adjustments
|
410
|
|
-
|
|
803
|
|
-
|
|
Non-GAAP Adjusted EBITDA(1)
|
$ 460
|
|
$ 632
|
|
$12,626
|
|
$12,584
|
(1)Non-GAAP Financial Measures:
The Company believes that, when used in conjunction with GAAP measures, Adjusted (Loss) 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 (Loss) 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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gas-natural-inc-reports-2015-third-quarter-results-300175241.html
SOURCE Gas Natural Inc.
Source: PR Newswire
(November 9, 2015 - 5:32 PM EST)
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