Gas Natural Inc. Reports Continued Customer Growth in 2014

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- Customer count grew by 4.6% during the year - Full service distribution throughput increased by 12.4% in 2014

March 12, 2015 4:05 PM EDT

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CLEVELAND, March 12, 2015 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) ("Gas Natural" or the "Company"), a holding company operating local natural gas utilities serving approximately 68,000 customers in six states, reported financial results for the fourth quarter and year ended December 31, 2014. As previously announced, the Company has agreed to sell its Wyoming operations which serve 6,700 customers and are reported as discontinued operations.

Income from continuing operations was $1.2 million, or $0.11 per share, for the fourth quarter, compared with $2.8 million, or $0.27 per share, for the fourth quarter of 2013. Adjusted income from continuing operations, a non-GAAP number, was $3.0 million, or $0.28 per share, for the fourth quarter of 2014 compared with $2.5 million, or $0.24 per share, for the fourth quarter of 2013. The 2014 adjustments reflect the exclusion of non-recurring professional and legal fees related to increased regulatory and legal proceedings of approximately $1.5 million and business combination adjustments of approximately $0.3 million, all after taxes. See attached table for a reconciliation of GAAP income from continuing operations to non-GAAP adjusted income from continuing operations.

For the year, income from continuing operations for 2014 was $2.7 million, or $0.26 per share, compared with $5.9 million, or $0.63 per share for the prior year. Adjusted income from continuing operations, a non-GAAP number, was $5.7 million, or $0.55 per share, for 2014 compared with $6.5 million, or $0.70 per share, for 2013. The 2014 adjustments reflect the exclusion of $2.2 million of non-recurring professional and legal fees related to increased regulatory and legal proceedings, a $0.6 million customer bankruptcy write-off, a $0.1 million gain on marketable securities and business combination adjustments of approximately $0.3 million, all after taxes. See attached table for a reconciliation of GAAP income from continuing operations to non-GAAP adjusted income from continuing operations.

Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, noted, "In 2014 we began transforming Gas Natural into a higher quality natural gas utility, with a culture of accountability, transparency and responsible cost discipline, strategically positioned to grow shareholder value. Our 2014 achievements were highlighted by:

Expanded our customer base by nearly 5%;
Increased our full service distribution throughput by over 10%;
Right-sized our operations to ensure we have the right people in the right positions. In fact, we reduced our overall headcount by 12% during the year;
Entered into long-term market-based rate structures with the utility regulators in Maine and North Carolina;
Proactively increased transparency with regulators; We believe the quantity and quality of our communications with our regulators and staff has greatly improved;
Adopted a more comprehensive system of internal controls, separated our corporate offices from our utility offices and enhanced the independence of our Board;
Activated phase one (the first 60 of 189 miles) of our Loring Pipeline in Lincoln, Maine and initiating service to our anchor customer, Lincoln Paper and Tissue; and
Began divesting of non-core utility assets, initially in Wyoming, to redeploy those proceeds into core markets.

"While we have been building a solid, sound operational infrastructure, we continued to focus on operational growth to drive future profits."

Natural Gas Operations Segment Review

The Company added 1,854 new customers during the quarter and 2,980 new customers during the year. The Natural Gas Operations segment reported $2.3 million, or 7%, revenue growth in the quarter on increased natural gas prices, which are passed on to customers, along with higher sales volumes driven by growth in the customer base.

Natural Gas Operations Income Statement

($ in thousands)	Three Months Ended December 31,		Year Ended December 31,
	2014	2013	2014	2013
Natural Gas Operations
Operating revenues	$ 34,726	$ 32,454	$ 123,053	$ 97,233
Gas purchased	22,839	19,551	79,097	55,977
Gross margin	11,887	12,903	43,956	41,256
Operating expenses	7,851	8,352	32,074	29,395
Operating income	4,036	4,551	11,882	11,861
Other income	270	185	890	767
Income before interest and taxes	4,306	4,736	12,772	12,628
Interest expense	(724)	(636)	(2,619)	(2,566)
Income before income taxes	3,582	4,100	10,153	10,062
Income tax expense	(1,280)	(1,067)	(3,661)	(3,242)
Net income	$ 2,302	$ 3,033	$ 6,492	$ 6,820

On a full-year basis revenue was up $25.8 million, or 27%, due to increased natural gas prices passed onto customers and higher sales volumes from the customer growth, magnified by the colder weather in the first three months of the 2014 period.

Gross margin for the fourth quarter of 2014 was $11.9 million compared with $12.9 million in the prior-year period due to warmer temperatures for the fourth quarter in all of our markets. On a full year basis, gross margin increased $2.7 million to $44.0 million primarily due to increased sales volumes which were the result of customer growth in Maine, North Carolina and Ohio, amplified by colder weather in all of our markets.

Operating expenses decreased by $0.5 million for the quarter while the full year period increased by $2.7 million. These expenses included increases in allocations of corporate expenses related to the hiring of new corporate personnel and to improving and auditing our internal control environment. Depreciation and amortization expense increased $1.0 million for the year ended December 31, 2014. The increase was primarily the result of capital investment in growth initiatives and the amortization of a regulatory asset.

Other Operating Segments

The Marketing and Production segment reported a net loss of $0.5 million for the fourth quarter of 2014, compared with net income of $0.7 million in the prior-year period. On a full year basis, net loss of the Marketing and Production segment was $1.4 million compared with net income of $1.0 million for the prior year with the reduction primarily due to an increase in customer bankruptcy write-off expense of $1.1 million. The year-over-year comparison was also negatively impacted by an unrealized holding gain on a contingent consideration liability in 2013.

Adjusted EBITDA

Adjusted earnings from continuing operations before interest, taxes, depreciation, amortization, accretion, and non-recurring expenses ("Adjusted EBITDA"), a non-GAAP financial measure, for the fourth quarter of 2014 was $7.1 million compared with Adjusted EBITDA of $5.9 million for the prior-year period. For the full year, Adjusted EBITDA was $19.1 million, compared with $18.7 million in the prior year. 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 income from continuing operations to Adjusted EBITDA.

Balance Sheet and Cash Management

Cash and cash equivalents as of December 31, 2014 were $1.6 million, up $0.5 million from September 30, 2014, and down $11.2 million from December 31, 2013.

Cash provided by operating activities was $11.1 million in 2014 compared with $15.4 million in the prior year. The decrease was primarily the result of lower net income.

Capital expenditures for 2014 were $21.6 million compared with $23.5 million in 2013. Capital expenditures in 2015 are expected to be approximately $8 million to $9 million, and will remain focused on the Natural Gas Operations segment and the continued expansion of our natural gas utilities service areas. These expenditures will have an emphasis on the Maine, North Carolina and Ohio markets to meet the high customer interest in natural gas service in those service areas.

Mr. Osborne concluded, "Our energized Gas Natural team is aggressively making the changes necessary to strengthen our foundation and drive growth. We are in a much stronger position now as we enter 2015 to continue to execute our strategic plan and create a stronger and growing natural gas utility focused on delivering shareholder value."

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 28 billion cubic feet of natural gas to approximately 68,000 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 the Maine and North Carolina 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 StatementsThe 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:

Gas Natural Inc.	Investor Relations:
James E. Sprague, Chief Financial Officer	Deborah K. Pawlowski or Karen L. Howard, Kei Advisors LLC
Phone: (440) 974-3770	Phone: (716) 843-3908 / (716) 843-3942
Email: [email protected]	Email: [email protected] / [email protected]

FINANCIAL TABLES FOLLOW.

Gas Natural Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

	Three Months Ended		Year Ended
	December 31,		December 31,
	2014	2013	2014	2013
REVENUE
Natural gas operations	$ 34,725,488	$ 32,453,516	$123,052,554	$ 97,233,112
Marketing and production	2,232,744	3,832,615	9,517,287	12,167,241
Total revenue	36,958,232	36,286,131	132,569,841	109,400,353
COST OF SALES
Natural gas purchased	22,838,885	19,551,071	79,096,553	55,977,154
Marketing and production	2,082,803	3,258,354	8,620,826	10,052,865
Total cost of sales	24,921,688	22,809,425	87,717,379	66,030,019
GROSS MARGIN	12,036,544	13,476,706	44,852,462	43,370,334
OPERATING EXPENSES
Distribution, general, and administrative	5,751,555	5,669,779	24,769,623	21,308,592
Maintenance	305,182	314,534	1,225,491	1,142,261
Depreciation and amortization	1,426,299	1,473,273	6,604,569	5,550,753
Accretion	14,933	45,444	51,466	57,912
Taxes other than income	1,066,294	1,065,770	3,928,018	3,671,930
Provision for doubtful accounts	282,301	689,319	1,112,115	726,434
Contingent consideration loss (gain)	62,000	(1,565,000)	62,000	(1,565,000)
Goodwill impairment	-	725,744	-	725,744
Total operating expenses	8,908,564	8,418,863	37,753,282	31,618,626
OPERATING INCOME	3,127,980	5,057,843	7,099,180	11,751,708
Loss from unconsolidated affiliate	(350,747)	-	(351,724)	(5,007)
Gain on sale of marketable securities	-	-	183,371	-
Acquisition expense	-	(27,985)	(7,197)	(272,094)
Stock sale expense	-	(309,432)	-	(309,432)
Other income, net	(38,443)	173,567	579,214	886,832
Interest expense	(891,660)	(796,787)	(3,226,096)	(3,176,155)
Income before income taxes	1,847,130	4,097,206	4,276,748	8,875,852
Income tax expense	(646,441)	(1,299,472)	(1,547,582)	(3,023,711)
INCOME FROM CONTINUING OPERATIONS	1,200,689	2,797,734	2,729,166	5,852,141
Discontinued operations, net of tax	450,959	417,076	1,032,611	819,138
NET INCOME	$ 1,651,648	$ 3,214,810	$ 3,761,777	$ 6,671,279

Basic weighted shares outstanding	10,487,511	10,432,256	10,478,312	9,339,002
Dilutive effect of stock based compensation	695	-	505	720
Diluted weighted shares outstanding	10,488,206	10,432,427	10,478,817	9,339,722

BASIC AND DILUTED EARNINGS PER SHARE:
Continuing operations	$ 0.11	$ 0.27	$ 0.26	$ 0.63
Discontinued operations	$ 0.05	$ 0.04	$ 0.10	$ 0.08
Net income per share	$ 0.16	$ 0.31	$ 0.36	$ 0.71
Dividends paid per common share	$ 0.14	$ 0.14	$ 0.55	$ 0.55

Gas Natural Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	December 31,	December 31,
ASSETS	2014	2013
CURRENT ASSETS
Cash and cash equivalents	$ 1,585,926	$ 12,741,197
Marketable securities	-	406,134
Accounts receivable
Trade, less allowance for doubtful accounts of
$370,909 and $1,978,358, respectively	12,111,026	12,305,657
Related parties	234,610	146,225
Unbilled gas	7,630,852	7,172,062
Note receivable, current portion	2,070	1,938
Inventory
Natural gas and propane	5,301,895	4,996,065
Materials and supplies	2,300,990	2,285,722
Prepaid income taxes	431,681	727,427
Prepayments and other	986,941	970,574
Regulatory assets, current	4,097,822	1,209,982
Deferred tax asset	635,195	1,225,032
Assets held for sale	802,436	-
Discontinued operations	11,653,934	12,032,203
Total current assets	47,775,378	56,220,218

PROPERTY, PLANT AND EQUIPMENT, NET	142,011,085	124,587,645
OTHER ASSETS
Notes receivable, less current portion	90,345	93,727
Regulatory assets, non-current	2,055,404	452,047
Debt issuance costs, net of amortization	1,079,447	1,388,124
Goodwill	16,155,672	16,267,377
Customer relationships, net of amortization	2,927,500	3,230,333
Investment in unconsolidated affiliate	-	351,724
Restricted cash	1,897,677	1,137,442
Other assets	11,404	3,160
Total other assets	24,217,449	22,923,934
TOTAL ASSETS	$ 214,003,912	$ 203,731,797

Gas Natural Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Cont'd)

	December 31,	December 31,
LIABILITIES AND CAPITALIZATION	2014	2013
CURRENT LIABILITIES
Checks in excess of amounts on deposit	$ 194,524	$ 842,443
Line of credit	28,760,799	24,529,799
Accounts payable
Trade	14,115,367	12,355,605
Related parties	170,319	559,933
Notes payable, current portion	542,201	3,502,190
Contingent consideration, current portion	671,638	671,638
Derivative instruments	3,023,271	-
Accrued liabilities	4,860,663	5,751,594
Accrued liabilities, related parties	111,133	-
Customer deposits, current	634,090	667,479
Obligation under capital lease - current	188,224	177,570
Regulatory liability - Over-recovered gas purchases	925,175	793,184
Build-to-suit liability	5,597,287	-
Other current liabilities	940,643	1,464,646
Liabilities held for sale	61,416	-
Discontinued operations	544,432	574,889
Total current liabilities	61,341,182	51,890,970
LONG-TERM LIABILITIES
Deferred investment tax credits	113,193	134,255
Deferred tax liability	10,538,394	9,055,166
Asset retirement obligation	1,196,518	1,145,052
Customer advances for construction	993,681	987,265
Regulatory liabilities, non-current	1,089,850	964,462
Customer deposits	949,540	-
Obligation under capital lease, less current portion	1,674,714	1,862,938
Contingent consideration, less current portion	75,362	13,362
Total long-term liabilities	16,631,252	14,162,500
NOTES PAYABLE, less current portion	39,720,860	40,198,552
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 15,000,000 shares, respectively;
Issued: 10,487,511 and 10,451,678 shares, respectively;
Outstanding: 10,487,511 and 10,451,678 shares, respectively	1,573,127	1,567,752
Capital in excess of par value	63,826,341	63,468,969
Accumulated other comprehensive income	-	104,909
Retained earnings	30,911,150	32,338,145
Total stockholders' equity	96,310,618	97,479,775
TOTAL CAPITALIZATION	136,031,478	137,678,327
TOTAL LIABILITIES AND CAPITALIZATION	$ 214,003,912	$ 203,731,797

Gas Natural Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows

	Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES	2014	2013
Net income	$ 3,761,777	$ 6,671,279
Income from discontinued operations	1,032,611	819,138
Income from continuing operations	2,729,166	5,852,141
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,604,569	5,550,753
Accretion	51,466	57,912
Amortization of debt issuance costs	419,953	418,204
Provision for doubtful accounts	1,112,115	726,434
Stock based compensation	316,985	2,962
(Gain) on sale of marketable securities	(183,371)	-
(Gain) on sale of assets	(28,293)	(158,320)
Loss from unconsolidated affiliate	351,724	5,007
Unrealized holding loss (gain) on contingent consideration	62,000	(1,565,000)
Change in fair value of derivative financial instruments	150,885	-
Investment tax credit	(21,062)	(21,062)
Deferred income taxes	2,135,786	4,024,683
Goodwill impairment	-	725,744
Changes in assets and liabilities:
Accounts receivable, including related parties	(891,338)	(2,187,452)
Unbilled gas	(480,942)	(3,009,029)
Natural gas and propane inventory	(457,611)	(388,858)
Accounts payable, including related parties	1,817,098	3,111,116
Regulatory assets/liabilities	(1,938,386)	1,039,063
Prepayments and other	(24,243)	1,076,550
Other assets	234,751	(464,339)
Other liabilities	(815,380)	642,788
Net cash provided by operating activities of continued operations	11,145,872	15,439,297
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(21,612,680)	(23,516,923)
Proceeds from sale of fixed assets	172,142	968,772
Proceeds from sale of marketable securities	421,875	-
Proceeds from note receivable	3,250	8,681
Investment in unconsolidated affiliate	-	(35,000)
Restricted cash - capital expenditures fund	57,441	1,264,624
Customer advances for construction	16,900	12,028
Contributions in aid of construction	2,262,047	1,105,974
Net cash used in investing activities of continued operations	(18,679,025)	(20,191,844)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from lines of credit	24,850,000	22,519,000
Repayment on lines of credit	(20,619,000)	(21,848,956)
Proceeds from notes payable	102,000	-
Repayments of notes payable	(3,565,224)	(633,498)
Payments of Capital Lease Obligations	(177,570)	(167,518)
Debt issuance costs	(111,275)	(7,607)
Proceeds from issuance of common shares	-	16,721,104
Exercise of stock options	45,762	159,500
Restricted cash - debt service fund	131,864	748,781
Dividends paid	(5,659,098)	(5,005,827)
Net cash (used in) provided by financing activities of continued operations	(5,002,541)	12,484,979
DISCONTINUED OPERATIONS
Operating cash flows	1,924,330	658,105
Investing cash flows	(511,434)	1,738,076
Financing cash flows	(32,473)	(590,059)
Net cash provided by discontinued operations	1,380,423	1,806,122
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(11,155,271)	9,538,554
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	12,741,197	3,202,643
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 1,585,926	$ 12,741,197

Gas Natural Inc. and Subsidiaries
Segments of Operations

Three Months Ended December 31, 2014
	Natural Gas	Marketing &	Corporate &
	Operations	Production	Other	Consolidated

OPERATING REVENUES	$ 35,034,854	$ 4,468,888	$ -	$ 39,503,742
Intersegment eliminations	(309,366)	(2,236,144)	-	(2,545,510)
Total operating revenue	34,725,488	2,232,744	-	36,958,232

COST OF SALES	23,148,251	4,318,947	-	27,467,198
Intersegment eliminations	(309,366)	(2,236,144)	-	(2,545,510)
Total cost of sales	22,838,885	2,082,803	-	24,921,688

GROSS MARGIN	$ 11,886,603	$ 149,941	$ -	$ 12,036,544

OPERATING EXPENSES	7,176,823	321,916	736,210	8,933,901
Intersegment eliminations	(25,337)	-	-	(25,337)
Total operating expenses	7,850,438	321,916	736,210	8,908,564

OPERATING INCOME (LOSS)	$ 4,036,165	$ (171,975)	$ (736,210)	$ 3,127,980

DISCONTINUED OPERATIONS, NET OF INCOME TAX	$ -	$ -	$ 450,959	$450,959

NET INCOME (LOSS)	$ 2,301,884	$ (496,818)	$ (153,418)	$ 1,651,648


Three Months Ended December 31, 2013
	Natural Gas	Marketing &	Corporate &
	Operations	Production	Other	Consolidated

OPERATING REVENUES	$ 32,462,345	$ 6,407,612	$ -	$ 38,869,957
Intersegment eliminations	(8,829)	(2,574,997)	-	(2,583,826)
Total operating revenue	32,453,516	3,832,615	-	36,286,131

COST OF SALES	19,559,900	5,833,351	-	25,393,251
Intersegment eliminations	(8,829)	(2,574,997)	-	(2,583,826)
Total cost of sales	19,551,071	3,258,354	-	22,809,425

GROSS MARGIN	$ 12,902,445	$ 574,261	$ -	$ 13,476,706

OPERATING EXPENSES	8,293,655	(609,201)	760,829	8,445,283
Intersegment eliminations	57,670	-	(84,090)	(26,420)
Total operating expenses	8,351,325	(609,201)	676,739	8,418,863

OPERATING INCOME (LOSS)	$ 4,551,120	$ 1,183,462	$ (676,739)	$ 5,057,843

DISCONTINUED OPERATIONS, NET OF INCOME TAX	$ -	$ -	$ 417,076	$ 417,076

NET INCOME (LOSS)	$ 3,032,558	$ 738,818	$ (556,566)	$ 3,214,810


Gas Natural Inc. and Subsidiaries
Segments of Operations, Continued

Year Ended December 31, 2014
	Natural Gas	Marketing &	Corporate &
	Operations	Production	Other	Consolidated

OPERATING REVENUES	$ 123,378,718	$ 17,605,367	$ -	$ 140,984,085
Intersegment elimination	(326,164)	(8,088,080)	-	(8,414,244)
Total operating revenue	123,052,554	9,517,287	-	132,569,841

COST OF SALES	79,422,717	16,708,906	-	96,131,623
Intersegment elimination	(326,164)	(8,088,080)	-	(8,414,244)
Total cost of sales	79,096,553	8,620,826	-	87,717,379

GROSS MARGIN	$ 43,956,001	$ 896,461	$ -	$ 44,852,462

OPERATING EXPENSES	32,176,823	2,478,600	3,200,757	37,856,180
Intersegment elimination	(102,898)	-	-	(102,898)
Total operating expenses	32,073,925	2,478,600	3,200,757	37,753,282

OPERATING INCOME (LOSS)	$ 11,882,076	$ (1,582,139)	$ (3,200,757)	$ 7,099,180

DISCONTINUED OPERATIONS	$ -	$ -	$ 1,032,611	$ 1,032,611

NET INCOME (LOSS)	$ 6,491,530	$ (1,433,703)	$ (1,296,050)	$ 3,761,777



Year Ended December 31, 2013
	Natural Gas	Marketing &	Corporate &
	Operations	Production	Other	Consolidated

OPERATING REVENUES	$ 97,259,443	$ 20,260,001	$ -	$ 117,519,444
Intersegment elimination	(26,331)	(8,092,760)	-	(8,119,091)
Total operating revenue	97,233,112	12,167,241	-	109,400,353

COST OF SALES	56,003,485	18,145,625	-	74,149,110
Intersegment elimination	(26,331)	(8,092,760)	-	(8,119,091)
Total cost of sales	55,977,154	10,052,865	-	66,030,019

GROSS MARGIN	$ 41,255,958	$ 2,114,376	$ -	$ 43,370,334

OPERATING EXPENSES	29,408,152	500,561	1,807,747	31,716,460
Intersegment elimination	(13,744)	-	(84,090)	(97,834)
Total operating expenses	29,394,408	500,561	1,723,657	31,618,626

OPERATING INCOME (LOSS)	$ 11,861,550	$ 1,613,815	$ (1,723,657)	$ 11,751,708

DISCONTINUED OPERATIONS	$ -	$ -	$ 819,138	$ 819,138

NET INCOME (LOSS)	$ 6,819,661	$ 1,036,626	$ (1,185,008)	$ 6,671,279

Gas Natural Inc. and Subsidiaries
Natural Gas Operations
Utility Throughput

	Three Months Ended December 31,		Year Ended December 31,
(in million cubic feet (MMcf))	2014	2013	2014	2013

Full Service Distribution Revenues
Residential	1,765	1,685	5,427	4,645
Commercial	1,337	2,387	4,909	4,547
Total full service distribution	3,102	4,072	10,336	9,192

Transportation	2,579	3,076	10,444	11,558
Bucksport	663	3,756	5,441	14,301

Total volumes	6,344	10,904	26,221	35,051

Heating Degree Days

		Three Months Ended		Percent Colder (Warmer)
		December 31,		2014 Compared to
	Normal	2014	2013	Normal	2013

Great Falls, MT	2,750	2,694	2,968	(2.04%)	(9.23%)
Bangor, ME	2,263	2,507	2,780	10.78%	(9.82%)
Elkin, NC	1,244	1,603	1,570	28.86%	2.10%
Youngstown, OH	2,223	2,150	2,255	(3.28%)	(4.66%)
Jackson, KY	1,624	1,787	1,714	10.04%	4.26%
Weighted Average	2,409	2,393	2,588	(0.66%)	(7.53%)

		Year Ended		Percent Colder (Warmer)
		December 31,		2014 Compared to
	Normal	2014	2013	Normal	2013

Great Falls, MT	7,508	7,882	7,350	4.98%	7.24%
Bangor, ME	7,047	7,859	7,786	11.52%	0.94%
Elkin, NC	4,292	4,459	4,320	3.89%	3.22%
Youngstown, OH	6,334	6,754	6,337	6.63%	6.58%
Jackson, KY	4,380	4,965	4,711	13.36%	5.39%
Weighted Average	6,788	7,212	6,796	6.25%	6.12%

Gas Natural Inc. and Subsidiaries
Reconciliation of GAAP Income from Continuing Operations to
Adjusted Income from Continuing Operations(1)

(in thousands, except per share amounts)	Three Months Ended December 31,				Year Ended December 31,
	2014		2013		2014		2013
	$	perdilutedshare	$	perdilutedshare	$	perdilutedshare	$	perdilutedshare
GAAP income from continuing operations	$ 1,201	$ 0.11	$ 2,798	$ 0.27	$ 2,729	$ 0.26	$ 5,852	$ 0.63
Add back, after tax:
Customer bankruptcy write-off	-	-	-	-	641	0.06	-	-
Non-recurring legal fees	794	0.08	-	-	1,179	0.11	-	-
Non-recurring regulatory and other expenses	727	0.07	229	0.02	1,043	0.10	1,168	0.13
Gain on marketable securities	-	-	-	-	(111)	(0.01)	-	-
Business combination impairments/adjustments	251	0.02	(524)	(0.05)	251	0.02	(524)	(0.06)

Non-GAAP adjusted income from continuing operations(1)	$ 2,972	$ 0.28	$ 2,503	$ 0.24	$ 5,732	$ 0.55	$ 6,496	$ 0.70

Gas Natural Inc. and Subsidiaries
GAAP Income from Continuing Operations to Adjusted EBITDA Reconciliation(1)

(in thousands)	Three Months Ended December 31,		Year Ended December 31,
	Three Months Ended December 31,		Year Ended December 31,
	2014	2013	2014	2013

GAAP income from continuing operations	$ 1,201	$ 2,798	$ 2,729	$ 5,852
Add back:
Net interest expense	892	797	3,226	3,176
Income taxes	646	1,299	1,548	3,024
Depreciation, amortization and accretion	1,441	1,519	6,656	5,609
Customer bankruptcy write-off	-	-	1,056	-
Non-recurring legal fees	1,307	-	1,942	-
Non-recurring regulatory and other expenses	1,197	367	1,717	1,869
Gain on marketable securities	-	-	(183)	-
Business combination impairments/adjustments	413	(839)	414	(839)

Non-GAAP Adjusted EBITDA(1)	$ 7,097	$ 5,940	$ 19,104	$ 18,690

(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 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 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-continued-customer-growth-in-2014-300049946.html

SOURCE Gas Natural Inc.

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Gas Natural Inc. Reports Continued Customer Growth in 2014

- Customer count grew by 4.6% during the year - Full service distribution throughput increased by 12.4% in 2014

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