Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Gas Natural Inc. | v461811_8k.htm |
Exhibit 99.1
|
|
NEWS RELEASE |
1375 East 9th St | Suite 3100 | Cleveland, Ohio 44114 | 216.202.1509
| For Immediate Release |
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
CLEVELAND, OH, March 16, 2017 – Gas Natural Inc. (NYSE MKT: EGAS) (the “Company”), a holding company operating local natural gas utilities serving approximately 69,400 customers in four states, reported financial results for the fourth quarter and year ended December 31, 2016. Comparative results for the fourth quarter, and for full year 2016, do not include the results of the Kentucky and Pennsylvania utilities which were divested in the fourth quarter of 2015 (“Divestitures”).
Fourth Quarter 2016 Summary
| · | Full service distribution throughput increased due to the addition of approximately 800 new customers in the quarter |
| · | Net income from continuing operations improved to $0.13 per share from $0.07 in 2015 |
| · | Merger approval process with regulators is progressing as anticipated |
Mr. Gregory J. Osborne, Gas Natural’s President and Chief Executive Officer, commented, “We grew revenue and gross margin in the quarter as a result of growing our customer base. This is a testament to our keen focus on operations and growth.”
He added, “In December, our shareholders overwhelmingly approved our announced plan to be acquired by First Reserve. The process to obtain approval from the regulatory authorities in Maine, Montana, North Carolina and Ohio is progressing as anticipated. We continue to expect completion of the transaction in the second half of 2017.”
Fourth Quarter and 2016 Operations Review
| Three Months Ended | Years Ended | |||||||||||||||
| (in thousands) | December 31, | December 31, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue by segment: | ||||||||||||||||
| Natural Gas Operations | $ | 27,251 | $ | 26,575 | $ | 87,464 | $ | 103,978 | ||||||||
| Marketing & Production | 3,495 | 2,923 | 11,977 | 8,383 | ||||||||||||
| Consolidated | $ | 30,746 | $ | 29,498 | $ | 99,441 | $ | 112,361 | ||||||||
Revenue for the fourth quarter of 2016 increased approximately 4% over the prior-year quarter. Both of the Company’s operating segments contributed to the increase. The Natural Gas Operations segment experienced higher volume driven by customer growth, partially offset by lower natural gas prices and $0.2 million less revenue from the Divestitures. The Marketing & Production segment recognized higher sales to the Company’s former Wyoming operations which were divested in the third quarter of 2015. Previously, such sales were recorded as intercompany and eliminated from consolidated revenue.
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 2 of 11
Revenue for 2016 was down approximately 11% compared with the prior-year. The increase in Marketing & Production was for the same reason as described above for the fourth quarter. This was more than offset by the Natural Gas Operations segment that was impacted by lower volume due to warmer weather earlier in the year, lower gas prices, and a $1.6 million reduction from the Divestitures.
| Changes in Gross Margin (in thousands) | Three Months Ended | Years Ended | ||||||
| December 31, 2016 | ||||||||
| 2015 Gross Margin | $ | 12,255 | $ | 44,209 | ||||
| Utilities sold | 117 | (299 | ) | |||||
| Weather and other volume changes | 347 | (1,695 | ) | |||||
| Impact of paper mill closures | (125 | ) | (1,826 | ) | ||||
| Gas cost adjustment | - | 693 | ||||||
| New utility customers | 226 | 1,304 | ||||||
| Natural Gas Operations change | 565 | (1,823 | ) | |||||
| New marketing customers | 214 | 513 | ||||||
| Pricing and other | 136 | 25 | ||||||
| Marketing & Production change | 350 | 538 | ||||||
| Consolidated gross margin change | 915 | (1,285 | ) | |||||
| 2016 Gross Margin | $ | 13,170 | $ | 42,924 | ||||
Gross margin for the fourth quarter of 2016 increased 7% compared with the prior-year period primarily due to increased full service distribution throughput to new customers and colder weather, partially offset by the impact of paper mill closures in Maine. Customer count grew by approximately 800 in the fourth quarter to 69,400, compared with the end of the third quarter of 2016.
Gross margin for 2016 decreased 3% compared with the prior-year period. The decrease was primarily the result of warmer weather earlier in the year in most of the Company’s markets, the impact of closed paper mills in Maine, and the Divestitures, partially offset by new customers and the effect of a gas cost adjustment recorded in 2015.
| Three Months Ended | Years Ended | |||||||||||||||
| (in thousands) | December 31, | December 31, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Operating income by segment: | ||||||||||||||||
| Natural Gas Operations | $ | 3,511 | $ | 1,857 | $ | 6,198 | $ | 7,852 | ||||||||
| Marketing & Production | 314 | (45 | ) | 1,184 | (81 | ) | ||||||||||
| Corporate & Other | (1,367 | ) | (388 | ) | (4,330 | ) | (2,667 | ) | ||||||||
| Consolidated | $ | 2,458 | $ | 1,424 | $ | 3,052 | $ | 5,104 | ||||||||
| Non-GAAP Adjusted EBITDA* | $ | 5,895 | $ | 3,765 | $ | 15,172 | $ | 16,391 | ||||||||
*See the attached tables for important disclosures regarding the Company’s use of earnings before interest, taxes, depreciation, amortization, accretion, non-recurring expenses and discontinued operations (“Adjusted EBITDA”) as well as reconciliations of U.S. generally accepted accounting principles (”GAAP”) net income to non-GAAP Adjusted EBITDA for the 2016 and 2015 fourth quarter and annual periods.
For the fourth quarter of 2016, operating income was $1.0 million higher than the prior-year quarter primarily due to higher gross margin. Comparing the annual periods, 2016 operating income was $2.1 million lower than 2015, primarily due to lower gross margin.
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 3 of 11
Within the Natural Gas Operations segment, operating expenses for the quarter decreased $1.1 million as legal and professional expenses were down $0.3 million and personnel costs were also down $0.3 million. Those reductions were partially offset by increased spending on information technology.
On a full year basis, the Natural Gas Operations’ operating expenses were $0.2 million lower than the prior year, primarily due to a $0.7 million decrease in expenditures for professional services and $0.6 million on going reduction of expenses due to the Divestitures. Those decreases were partially offset by higher spending on information technology. The Marketing & Production segment benefited from the favorable settlement of a legal matter in the second quarter of 2016. Litigation, settlement and proxy contest costs drove increased expenses within the Corporate & Other segment.
Adjusted EBITDA, a non-GAAP financial measure, was up approximately $2.1 million primarily due to higher gross margin in the 2016 fourth quarter and higher non-recurring items. On a full year basis, Adjusted EBITDA was unfavorably impacted by lower gross margin and higher information technology costs. The Company believes that, when used in conjunction with measures prepared in accordance with GAAP, Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its financial performance.
Excluding discrete items, the effective tax rates were 36.1% and 37.2% for the fourth quarter of 2016 and 2015, respectively. Excluding discrete items for the annual periods, the effective tax rates were 36.5% and 38.1% for 2016 and 2015, respectively. The improvements in 2016 resulted from the benefit of an R&D tax credit and a favorable change in the Company’s blended state tax rate.
Balance Sheet and Cash Management
Cash and cash equivalents as of December 31, 2016 grew to $6.5 million from $2.7 million at December 31, 2015.
Cash provided by operating activities in 2016 was $11.4 million compared with $9.4 million in 2015, with the increase primarily due to lower working capital requirements related to the lower price of natural gas.
Capital expenditures for 2016 were $7.5 million compared with $9.6 million in 2015. Capital expenditures included approximately $1.9 million and $1.5 million, in 2016 and 2015, respectively, for the portion of the Company’s ERP system that was not financed under a lease agreement. The Company has budgeted $10 million for capital expenditures in 2017, with the majority focused on growth of its Natural Gas Operations segment, including construction activities to support expansion, maintenance and enhancements of its gas pipeline systems.
Cash used in financing activities was $1.5 million in 2016 compared with $19.3 million in 2015. Debt repayment was the primary use of cash in both periods.
About Gas Natural Inc.
Gas Natural Inc., a holding company, distributes and sells natural gas to residential, commercial, and industrial customers. It distributes approximately 21 billion cubic feet of natural gas to roughly 69,400 customers through regulated utilities operating in Montana, Ohio, Maine and North Carolina. The Company’s other operations include intrastate 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-served markets. Further information is available on the Company’s website at www.egas.net.
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 4 of 11
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 acquired and consummate additional acquisitions; the Company's continued ability to make or increase dividend payments; the Company's ability to implement its business plan, grow earnings and improve returns on investment; 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.
Additional Information and Where to Find it
In connection with the transaction with First Reserve described above, on November 23, 2016, the Company filed with the SEC and sent to its stockholders a definitive proxy statement. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE. Investors and security holders may obtain a free copy of the definitive proxy statement and other documents filed with the SEC.
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.
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 5 of 11
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, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUE | ||||||||||||||||
| Natural gas operations | $ | 27,251 | $ | 26,575 | $ | 87,464 | $ | 103,978 | ||||||||
| Marketing and production | 3,495 | 2,923 | 11,977 | 8,383 | ||||||||||||
| Total revenue | 30,746 | 29,498 | 99,441 | 112,361 | ||||||||||||
| COST OF SALES | ||||||||||||||||
| Natural gas purchased | 14,602 | 14,492 | 45,812 | 60,502 | ||||||||||||
| Marketing and production | 2,974 | 2,751 | 10,705 | 7,650 | ||||||||||||
| Total cost of sales | 17,576 | 17,243 | 56,517 | 68,152 | ||||||||||||
| GROSS MARGIN | 13,170 | 12,255 | 42,924 | 44,209 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Distribution, general, and administrative | 7,343 | 7,131 | 27,338 | 26,104 | ||||||||||||
| Maintenance | 269 | 551 | 984 | 1,422 | ||||||||||||
| Depreciation, amortization and accretion | 2,053 | 1,909 | 8,034 | 7,257 | ||||||||||||
| Taxes other than income | 964 | 1,096 | 4,006 | 4,119 | ||||||||||||
| Provision for doubtful accounts | 83 | 144 | 182 | 278 | ||||||||||||
| Contingent consideration gain | - | - | (672 | ) | (75 | ) | ||||||||||
| Total operating expenses | 10,712 | 10,831 | 39,872 | 39,105 | ||||||||||||
| OPERATING INCOME | 2,458 | 1,424 | 3,052 | 5,104 | ||||||||||||
| Other income (loss), net | 83 | 416 | (65 | ) | 86 | |||||||||||
| Interest expense | (856 | ) | (1,037 | ) | (3,169 | ) | (3,604 | ) | ||||||||
| Income (loss) before income taxes | 1,685 | 803 | (182 | ) | 1,586 | |||||||||||
| Income tax (expense) benefit | (365 | ) | (74 | ) | 707 | (417 | ) | |||||||||
| INCOME FROM CONTINUING OPERATIONS | 1,320 | 729 | 525 | 1,169 | ||||||||||||
| Discontinued operations, net of income taxes | (5 | ) | (526 | ) | (12 | ) | 3,519 | |||||||||
| NET INCOME | $ | 1,315 | $ | 203 | $ | 513 | $ | 4,688 | ||||||||
| Basic weighted shares outstanding | 10,518,062 | 10,504,319 | 10,510,644 | 10,496,979 | ||||||||||||
| Dilutive effect of restricted stock awards | 733 | 1,476 | 623 | 1,476 | ||||||||||||
| Diluted weighted shares outstanding | 10,518,795 | 10,505,795 | 10,511,267 | 10,498,455 | ||||||||||||
| BASIC & DILUTED EARNINGS PER SHARE: | ||||||||||||||||
| Continuing operations | $ | 0.13 | $ | 0.07 | $ | 0.05 | $ | 0.11 | ||||||||
| Discontinued operations | - | (0.05 | ) | - | 0.34 | |||||||||||
| Net income per share | $ | 0.13 | $ | 0.02 | $ | 0.05 | $ | 0.45 | ||||||||
| Weighted average dividends declared per common share | $ | 0.075 | $ | 0.270 | $ | 0.300 | $ | 0.540 | ||||||||
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 6 of 11
Gas Natural Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
| December 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 6,463 | $ | 2,728 | ||||
| Accounts receivable, less allowance for doubtful accounts | ||||||||
| of $385 and $506, respectively | 11,093 | 10,823 | ||||||
| Unbilled gas | 7,256 | 6,995 | ||||||
| Inventory | ||||||||
| Natural gas | 3,380 | 4,063 | ||||||
| Materials and supplies | 2,065 | 2,271 | ||||||
| Regulatory assets, current | 3,131 | 2,469 | ||||||
| Other current assets | 2,423 | 2,174 | ||||||
| Total current assets | 35,811 | 31,523 | ||||||
| PROPERTY, PLANT, & EQUIPMENT, NET | 139,691 | 142,416 | ||||||
| OTHER ASSETS | ||||||||
| Regulatory assets, non-current | 1,032 | 1,523 | ||||||
| Goodwill | 15,872 | 15,872 | ||||||
| Customer relationships, net of amortization | 2,322 | 2,625 | ||||||
| Restricted cash | - | 1,898 | ||||||
| Other non-current assets | 2,696 | 1,530 | ||||||
| Total other assets | 21,922 | 23,448 | ||||||
| TOTAL ASSETS | $ | 197,424 | $ | 197,387 | ||||
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 7 of 11
Gas Natural Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| LIABILITIES AND CAPITALIZATION | ||||||||
| CURRENT LIABILITIES | ||||||||
| Line of credit | $ | 13,450 | $ | 15,750 | ||||
| Accounts payable | 10,055 | 8,976 | ||||||
| Notes payable, current portion | - | 5,012 | ||||||
| Note payable to related party | - | 1,980 | ||||||
| Accrued liabilities | 8,265 | 6,873 | ||||||
| Regulatory liability, current | - | 487 | ||||||
| Build-to-suit liability | - | 2,041 | ||||||
| Capital lease liability | 3,618 | 2,876 | ||||||
| Other current liabilities | 1,097 | 1,467 | ||||||
| Total current liabilities | 36,485 | 45,462 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Deferred tax liability | 11,280 | 12,295 | ||||||
| Regulatory liability, non-current | 1,417 | 1,251 | ||||||
| Capital lease liability, non-current | 2,780 | 5,177 | ||||||
| Other long-term liabilities | 3,113 | 3,286 | ||||||
| Total long-term liabilities | 18,590 | 22,009 | ||||||
| NOTES PAYABLE, less current portion | 49,392 | 34,427 | ||||||
| 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: 10,519,728 and 10,504,734 shares as of December 31, 2016 and 2015, respectively | 1,578 | 1,575 | ||||||
| Capital in excess of par value | 64,092 | 63,985 | ||||||
| Retained earnings | 27,287 | 29,929 | ||||||
| Total stockholders’ equity | 92,957 | 95,489 | ||||||
| TOTAL CAPITALIZATION | 142,349 | 129,916 | ||||||
| TOTAL LIABILITIES AND CAPITALIZATION | $ | 197,424 | $ | 197,387 | ||||
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 8 of 11
Gas Natural Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
| Years Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 513 | $ | 4,688 | ||||
| Less (loss) income from discontinued operations | (12 | ) | 3,519 | |||||
| Income from continuing operations | 525 | 1,169 | ||||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 8,034 | 7,236 | ||||||
| Accretion | - | 21 | ||||||
| Amortization of debt issuance costs | 487 | 656 | ||||||
| Provision for doubtful accounts | 182 | 278 | ||||||
| Amortization of deferred loss on sale-leaseback | 1,015 | 358 | ||||||
| Stock based compensation | 107 | 161 | ||||||
| Loss (gain) on sale of assets | 589 | (118 | ) | |||||
| Unrealized holding gain on contingent consideration | (672 | ) | (75 | ) | ||||
| Change in fair value of derivative financial instruments | (193 | ) | (96 | ) | ||||
| Deferred income taxes | (702 | ) | 2,150 | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, including related parties | (451 | ) | 1,293 | |||||
| Unbilled gas | (261 | ) | 658 | |||||
| Natural gas inventory | 683 | 1,239 | ||||||
| Accounts payable, including related parties | 1,271 | (4,665 | ) | |||||
| Regulatory assets and liabilities | (1,148 | ) | (1,283 | ) | ||||
| Other assets | 427 | (680 | ) | |||||
| Other liabilities | 1,472 | 1,122 | ||||||
| Net cash provided by operating activities of continuing operations | 11,365 | 9,424 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (7,525 | ) | (9,567 | ) | ||||
| Proceeds from sale of fixed assets | 25 | 4,054 | ||||||
| Proceeds from note receivable | - | 92 | ||||||
| Customer advances for construction | 78 | 33 | ||||||
| Contributions in aid of construction | 1,351 | 1,193 | ||||||
| Net cash used in investing activities of continuing operations | (6,071 | ) | (4,195 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from lines of credit | 24,750 | 14,150 | ||||||
| Repayments of lines of credit | (27,050 | ) | (27,161 | ) | ||||
| Proceeds from notes payable, including related parties | 53,993 | 8,000 | ||||||
| Repayments of notes payable, including related parties | (45,715 | ) | (6,542 | ) | ||||
| Payments of capital lease obligations | (3,328 | ) | (1,845 | ) | ||||
| Debt issuance costs paid | (1,990 | ) | (235 | ) | ||||
| Restricted cash - debt service fund | 948 | - | ||||||
| Dividends paid | (3,155 | ) | (5,670 | ) | ||||
| Net cash used in financing activities of continuing operations | (1,547 | ) | (19,303 | ) | ||||
| DISCONTINUED OPERATIONS | ||||||||
| Operating cash flows | (12 | ) | 845 | |||||
| Investing cash flows | - | 14,371 | ||||||
| Net cash (used in) provided by discontinued operations | (12 | ) | 15,216 | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 3,735 | 1,142 | ||||||
| Cash and cash equivalents, beginning of period | 2,728 | 1,586 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 6,463 | $ | 2,728 | ||||
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 9 of 11
Gas Natural Inc. and Subsidiaries
Natural Gas Operations
Utility Throughput
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
| (in million cubic feet (MMcf)) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Full service distribution: | ||||||||||||||||
| Energy West Montana (MT) | 1,064 | 1,037 | 3,080 | 3,076 | ||||||||||||
| Frontier Natural Gas (NC) | 288 | 258 | 1,014 | 926 | ||||||||||||
| Bangor Gas (ME) | 530 | 473 | 1,528 | 1,727 | ||||||||||||
| Ohio Companies (OH) | 1,163 | 968 | 3,419 | 3,560 | ||||||||||||
| Public Gas (KY) | - | 19 | - | 111 | ||||||||||||
| Total full service distribution | 3,045 | 2,755 | 9,041 | 9,400 | ||||||||||||
| Transportation | 2,812 | 2,504 | 11,377 | 10,610 | ||||||||||||
| Bucksport | 5 | 60 | 139 | 597 | ||||||||||||
| Total volumes | 5,862 | 5,319 | 20,557 | 20,607 | ||||||||||||
Heating Degree Days
| Three Months Ended | Percent Colder (Warmer) | |||||||||||||||||||
| December 31, | 2016 Compared to | |||||||||||||||||||
| Normal | 2016 | 2015 | Normal | 2015 | ||||||||||||||||
| Great Falls, MT | 2,570 | 2,872 | 2,683 | 11.75 | % | 7.04 | % | |||||||||||||
| Bangor, ME | 2,526 | 2,564 | 2,321 | 1.50 | % | 10.47 | % | |||||||||||||
| Elkin, NC | 1,469 | 1,435 | 1,174 | (2.31 | %) | 22.23 | % | |||||||||||||
| Lancaster, OH | 2,402 | 1,853 | 1,462 | (22.86 | %) | 26.74 | % | |||||||||||||
| Total Weighted Average | 2,443 | 2,361 | 2,088 | (3.36 | %) | 13.07 | % | |||||||||||||
| Years Ended | Percent Colder (Warmer) | |||||||||||||||||||
| December 31, | 2016 Compared to | |||||||||||||||||||
| Normal | 2016 | 2015 | Normal | 2015 | ||||||||||||||||
| Great Falls, MT | 6,929 | 7,049 | 6,916 | 1.73 | % | 1.92 | % | |||||||||||||
| Bangor, ME | 7,483 | 7,174 | 8,058 | (4.13 | %) | (10.97 | %) | |||||||||||||
| Elkin, NC | 3,837 | 4,029 | 3,831 | 5.00 | % | 5.17 | % | |||||||||||||
| Lancaster, OH | 5,889 | 5,053 | 5,281 | (14.20 | %) | (4.32 | %) | |||||||||||||
| Total Weighted Average | 6,403 | 6,101 | 6,211 | (4.72 | %) | (1.77 | %) | |||||||||||||
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 10 of 11
Gas Natural Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income(2)
| (in thousands, except per share data) | Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP net income | $ | 1,315 | $ | 203 | $ | 513 | $ | 4,688 | ||||||||
| Add back, pre-tax: | ||||||||||||||||
| Non-recurring legal, professional and settlement costs | 1,251 | 484 | 4,242 | 2,498 | ||||||||||||
| Non-recurring regulatory and other expenses | - | - | - | 1,111 | ||||||||||||
| Gain on cancellation of contingent consideration liability | - | - | (672 | ) | - | |||||||||||
| Loss on disposal of assets | 50 | (468 | ) | 581 | 335 | |||||||||||
| Tax effect of non-GAAP continuing operations items(1) | (470 | ) | 152 | (1,515 | ) | (1,502 | ) | |||||||||
| Discontinued operations | 5 | 526 | 12 | (3,519 | ) | |||||||||||
| Non-GAAP Adjusted net income(2) | $ | 2,151 | $ | 897 | $ | 3,161 | $ | 3,611 | ||||||||
| Non-GAAP Adjusted net income per diluted share(2) | $ | 0.20 | $ | 0.09 | $ | 0.30 | $ | 0.34 | ||||||||
| (1) | Applies an effective tax rate of 36.1%, 37.2%, 36.5% and 38.1% to the non-GAAP pre-tax adjustments for the periods presented above, respectively, consistent with the actual effective tax rates for those periods excluding nonrecurring tax items. |
| (2) | Non-GAAP Financial Measures: |
The Company believes that, when used in conjunction with GAAP measures, Adjusted Net Income and Adjusted EBITDA, or earnings before interest, taxes, depreciation, amortization, accretion, atypical charges and discontinued operations, 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 Net Income 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.
-MORE-
Gas Natural Inc. Reports 2016 Fourth Quarter and Full Year Results
March 16, 2017
Page 11 of 11
Gas Natural Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA(2)
| (in thousands) | Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP net income | $ | 1,315 | $ | 203 | $ | 513 | $ | 4,688 | ||||||||
| Add back: | ||||||||||||||||
| Net interest expense | 856 | 1,037 | 3,169 | 3,604 | ||||||||||||
| Income tax (benefit) expense | 365 | 74 | (707 | ) | 417 | |||||||||||
| Depreciation, amortization and accretion | 2,053 | 1,909 | 8,034 | 7,257 | ||||||||||||
| Non-recurring legal, professional and settlement costs | 1,251 | 484 | 4,242 | 2,498 | ||||||||||||
| Non-recurring regulatory and other expenses | - | - | - | 1,111 | ||||||||||||
| Gain on cancellation of contingent consideration liability | - | - | (672 | ) | - | |||||||||||
| Loss (gain) on disposal of assets | 50 | (468 | ) | 581 | 335 | |||||||||||
| Discontinued operations | 5 | 526 | 12 | (3,519 | ) | |||||||||||
| Non-GAAP Adjusted EBITDA(2) | $ | 5,895 | $ | 3,765 | $ | 15,172 | $ | 16,391 | ||||||||
| (2) | Non-GAAP Financial Measures: |
The Company believes that, when used in conjunction with GAAP measures, Adjusted Net Income and Adjusted EBITDA, or earnings before interest, taxes, depreciation, amortization, accretion, atypical charges and discontinued operations, which are non-GAAP measures, allow investors to view its performance in a manner similar to the methods used by management and provide additional insight into its operating results. Adjusted Net Income 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.
-END-