Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 24, 1995 TAG: 9501280017
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER|
DATELINE: LENGTH: Medium
Roanoke Gas' sales for the fiscal year beginning Oct.1 are running 395 trillion cubic feet below what the company had projected, and the company's gross margin - sales minus gas costs - stands $723,000 below what was budgeted, because winter temperatures have been 15 percent above normal, John Williamson III, vice president for rates and finance, told the company's annual stockholders' meeting Monday morning.
To compensate for the lost revenue, the Roanoke-based utility plans to cut its expenses by $350,000 and build more of the projects in its capital budget with its own workers rather than outside contractors, Williamson said. If the warmer-than-normal weather continues, the company will have to look for more savings to offset the lost revenue, he said.
Roanoke Gas held a breakfast meeting for its stockholders this year. The result Monday was a turnout of about 150 people, many times more than attended last year's annual meeting.
In contrast with this winter, last winter was 4 percent colder than normal, a fact that was reflected in the company's earnings statement for its 1994 fiscal year.
Roanoke Gas' net earnings for the year ending Sept. 30 were $1.68 million, compared with $1.44 million in the previous year. Earnings per share of common stock were $1.25, compared with $1.13. The company was able to achieve its goal of increasing earnings per share 10 percent even with an increase in the number of shareholders, said Roanoke Gas President Frank Farmer.
The company added 724 stockholders and $1.45 million in equity during the fiscal year through a stock purchase and dividend reinvestment plan that was begun during the year. The company is pushing stock sales again this year through mailings to customers. The revenue from the sales is being used to finance the company's capital improvements budget.
The company's annual dividend of $1 per share has not been increased in five years; it constitutes a yield of about 6 percent on stockholders' equity. Williamson said the company had hoped to be able to consider an increase in the dividend this year, but that will be more difficult because of the warm weather. The company's dividend payout represented 80 percent of net earnings last year.
In answer to a stockholder's question, Williamson said the company is considering extending its stock purchase plan to local residents who are not gas customers. The company's stock, however, already is available to the general public on the Nasdaq exchange, where it began trading last year. As of Sept. 30, stockholders numbered 1,625.
In answer to a question from another shareholder, Farmer acknowledged that some companies have inquired about buying Roanoke Gas, but he said the board of directors has decided in the interest of shareholders not to sell the company. On the other hand, Farmer said, Roanoke Gas is looking at the possibility of buying other gas companies, but he declined to reveal which they are.
Last year, Roanoke Gas spent $5.5 million to add to its plant and equipment, which included 12.3 miles of new main-line distribution pipes and the replacement of 7.5 miles of antiquated metal piping with new plastic pipe. This year the company has planned $5.2 million in capital spending, including nearly $1 million for renovation of its liquefied natural gas plant in Botetourt County, where work began in August and is 95 percent complete, said Arthur Pendleton, vice president for operations.
Seeking ways to increase gas sales, Roanoke Gas has been pushing the conversion of electric water heaters to gas and the acquisition of new customers along existing gas distribution lines, said Rob Glenn, vice president for marketing and strategic planning.
A new program of commissioned sales of gas appliances resulted in 714 sales last year and the addition of 22 billion cubic feet in potential new gas sales yearly, Glenn said. Additionally, the company has recorded 663 new appliance sales in the current year.
Roanoke Gas sells natural gas in Roanoke, Salem and Bluefield in Virginia, and in Bluefield, W.Va. The company serves propane customers in Southwest Virginia through its Highland Propane Co. subsidiary.
by CNB