Delta Natural Gas Company Inc. (DGAS) filed Quarterly Report for the period ended 2009-09-24.
Delta Natural Gas Company Inc. is a regulated public utility. As a result of acquisitions and expansions of its customer base within its existing service areas Delta provides retail gas distribution service to customers in central and southeastern Kentucky and additionally provides transportation service to industrial customers and interconnected pipelines located in the area. Delta Natural Gas Company Inc. has a market cap of $89.7 million; its shares were traded at around $27 with a P/E ratio of 17.1 and P/S ratio of 0.8. The dividend yield of Delta Natural Gas Company Inc. stocks is 4.8%. Delta Natural Gas Company Inc. had an annual average earning growth of 0.2% over the past 10 years.
Highlight of Business Operations:
For the three months ended September 30, 2009, there was a consolidated net loss per share of $.17 compared with net income of $.08 per share for the three months ended September 30, 2008. The decrease is due to a $474,000 decrease in net income for our non-regulated segment and a $362,000 increase in the net loss for the regulated segment.
Our ability to maintain liquidity depends on our bank line of credit, shown as notes payable on the accompanying Consolidated Balance Sheets. Notes payable increased to $9,596,000 at September 30, 2009 compared to $3,653,000 at June 30, 2009 due to gas purchased for storage and capital expenditures. Notes payable decreased to $9,596,000 at September 30, 2009 compared to $24,698,000 at September 30, 2008 due to a 64% decrease in the cost of gas purchased for storage during the three months ended September 30, 2009, as compared to the three months ended September 30, 2008.
Cash and cash equivalents were $108,000 at September 30, 2009, as compared with $123,000 at June 30, 2009 and $886,000 at September 30, 2008. The changes in cash and cash equivalents are summarized in the following table:
For the three months ended September 30, 2009, cash used in operating activities decreased $11,353,000 (78%). Cash paid for natural gas decreased $21,443,000 due to decreases in both the cost of gas purchased and the quantities purchased. The decrease was partially offset by an $11,906,000 decrease in cash received from customers due to decreases in both sales prices and volumes sold.
For the three months ended September 30, 2009, consolidated gross margins decreased $1,138,000 (20%) due to decreased non-regulated and regulated gross margins of $1,043,000 (51%) and $95,000 (3%), respectively. Our non-regulated gross margins decreased due to a 49% decrease in volumes sold and a 52% decline in sales prices. Non-regulated customers volumes are generally less sensitive to weather. The non-regulated volumes sold decreased due to a decrease in our non-regulated customers gas requirements, which we attribute primarily to current economic conditions.
We are exposed to risk resulting from changes in interest rates on our variable rate bank line of credit. The interest rate on our bank line of credit with Branch Banking and Trust Company is benchmarked to the monthly London Interbank Offered Rate. The balance on our bank line of credit was $9,596,000, $3,653,000 and $24,698,000 on September 30, 2009, June 30, 2009 and September 30, 2008, respectively. The weighted average interest rates on our bank line of credit were 1.8%, 1.8% and 3.2% on September 30, 2009, June 30, 2009 and September 30, 2008, respectively. Based on the amounts of our outstanding bank line of credit on September 30, 2009, June 30, 2009 and September 30, 2008, a one percent (one hundred basis point) increase in our average interest rates would result in a decrease in our annual pre-tax net income of $96,000, $37,000 and $247,000, respectively. Effective June 30, 2009, the bank line of credit was extended through June 30, 2011. The extension increased the interest rate on the used bank line of credit from the London Interbank Offered Rate plus .75% to the London Interbank Offered Rate plus 1.5%.
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