CLEVELAND, March 16, 2017 /PRNewswire/ -- 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

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.

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.

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.

*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.   

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 a$0.6 million ongoing 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 quarters 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.

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:

FINANCIAL TABLES FOLLOW.

SOURCE Gas Natural Inc.

CLEVELAND, March 1, 2017 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) (the "Company"), a holding company operating local natural gas utilities serving approximately 68,600 customers in four states, announced that its Board of Directors has declared a dividend of $0.075 per share to shareholders of record as of March 15, 2017. The dividend will be payable on March 29, 2017. Gas Natural has approximately 10.5 million shares of its common stock outstanding.

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 68,600 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.  Gas Natural Inc. regularly posts information on its website at www.egas.net.

For more information, contact:

SOURCE Gas Natural Inc.

CLEVELAND, Dec. 28, 2016 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) ("Gas Natural" or the "Company"), a holding company operating local natural gas utilities serving approximately 68,600 customers in four states, today announced that, based on votes cast at the Company's special meeting of shareholders held earlier today, Gas Natural's shareholders voted to approve the Company's previously announced plan to merge with FR Bison Merger Sub, Inc., an indirect wholly-owned subsidiary of First Reserve Energy Infrastructure Fund II, L.P ("First Reserve"), a leading global private equity and infrastructure investment firm exclusively focused on energy.  Over 73.0% percent of the outstanding shares voted, with 98.2% percent approving the proposed merger.

"We are pleased with the result of the vote as it overwhelmingly demonstrates the strong support for the transaction by our shareholders," said Gregory J. Osborne, Gas Natural's President and Chief Executive Officer.  "We have achieved a major milestone toward completing the merger with First Reserve.  With shareholder support, we can move forward and seek regulatory approvals.  The result of the vote demonstrates shareholder confidence in the strength of the franchise to serve our customers' needs and to grow the business.  I would like to thank Gas Natural Inc. shareholders and employees for their support throughout the process."

Under the terms of the merger agreement with First Reserve, Gas Natural shareholders will receive $13.10 for each share of Gas Natural common stock that they own.

Gas Natural and First Reserve continue to expect to complete the transaction in the second half of 2017, subject to the satisfaction of the remaining customary closing conditions, including the approval of the Maine Public Utilities Commission, the Montana Public Service Commission, the North Carolina Utilities Commission and the Public Utility Commission of Ohio.

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 68,600 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.  Gas Natural Inc. regularly posts information on its website at www.egas.net.

About First Reserve
First Reserve is a leading global private equity and infrastructure investment firm exclusively focused on energy. With over 30 years of industry insight, investment expertise and operational excellence, First Reserve has cultivated an enduring network of global relationships and raised approximately USD $31 billion of aggregate capital since inception.  Putting these to work, First Reserve has completed approximately 600 transactions (including platform investments and add-on acquisitions), creating several notable energy companies throughout First Reserve's history.  Its portfolio companies operate on six continents, spanning the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and infrastructure.  For more information, please visit www.firstreserve.com.

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," "may," "will" 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 complete the proposed transaction; any event, change or circumstance that might give rise to the termination of the merger agreement; the effect of the announcement of the proposed transaction on the Company's relationships with its customers, operating results and business generally; the risk that the proposed transaction will not be consummated in a timely manner; the failure to receive, on a timely basis or otherwise, approval of the merger, and the other transactions contemplated by the merger agreement, by the Company's shareholders or the approval of government or regulatory agencies with regard to the merger; the failure of one or more conditions to the closing of the merger to be satisfied; risks arising from the merger's diversion of management's attention from our ongoing business operations; risks that the Company's stock price may decline significantly if the merger is not completed; 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 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 (the "SEC"); 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 factors that may affect the future results of the Company are set forth in its filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2015 and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, which are available on the SEC's website at www.sec.gov.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof.

SOURCE Gas Natural Inc.

CLEVELAND, Nov. 30, 2016 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) (the "Company"), a holding company operating local natural gas utilities serving approximately 68,600 customers in four states, announced that its Board of Directors has declared a dividend of $0.075 per share to shareholders of record as of December 16, 2016.  The dividend will be payable on December 30, 2016.  Gas Natural has approximately 10.5 million shares of its common stock outstanding.

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 68,600 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 underserved markets.  Gas Natural Inc. regularly posts information on its website at www.egas.net.

For more information, contact:

SOURCE Gas Natural Inc.

CLEVELAND, Nov. 23, 2016 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) ("Gas Natural" or the "Company"), a holding company operating local natural gas utilities serving approximately 68,600 customers in four states, today announced the expiration of the 42-day "go-shop" period pursuant to the terms of the previously announced definitive merger agreement under which First Reserve agreed to acquire all of the outstanding shares of Gas Natural common stock for $13.10 per share in cash (the "Merger Agreement").

Pursuant to the terms of the Merger Agreement, beginning on October 10, 2016, and ending at 11:59 p.m. Eastern Time on November 22, 2016, Gas Natural and its authorized representatives, under the direction of Gas Natural's board of directors, were permitted to actively initiate, solicit, and encourage, and to enter into negotiations and discussions with parties that offered, alternative proposals to acquire Gas Natural.

During the "go-shop" period, representatives of Janney Montgomery Scott LLC ("Janney"), financial advisor to the Company's board, began the go-shop process by contacting a total of 78 potential acquirers, comprised of 62 strategic parties and 16 financial parties, which resulted in six parties negotiating and entering into confidentiality agreements with the Company.  None of the parties that signed a confidentiality agreement during the "go-shop" period was interested in pursuing an alternative transaction, as Gas Natural did not receive any binding proposals.

Starting at 12:00 a.m. Eastern Time on November 23, 2016, Gas Natural became subject to customary "no shop" provisions contained in the Merger Agreement that limit its and its representatives' ability to solicit alternative acquisition proposals from third parties or to provide confidential information to third parties, subject to customary "fiduciary out" provisions.

Gas Natural and First Reserve expect to complete the transaction in the second half of 2017, subject to the satisfaction of customary closing conditions, including the approval of the Maine Public Utilities Commission, the Montana Public Service Commission, the North Carolina Utilities Commission, the Public Utility Commission of Ohio and Gas Natural's shareholders, and the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Janney is serving as exclusive financial advisor to the Company and provided a fairness opinion to the Company's board of directors.  Kohrman Jackson & Krantz LLP is serving as legal counsel to the Company in connection with the pending transaction.

Lazard Frères & Co. LLC is serving as exclusive financial advisor and Simpson Thacher & Bartlett LLP is serving as legal counsel to First Reserve in connection with the pending transaction.

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 68,600 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.  Gas Natural Inc. regularly posts information on its website at www.egas.net.

About First Reserve
First Reserve is a leading global private equity and infrastructure investment firm exclusively focused on energy. With over 30 years of industry insight, investment expertise and operational excellence, the Firm has cultivated an enduring network of global relationships and raised approximately USD $31 billion of aggregate capital since inception. Putting these to work, First Reserve has completed approximately 600 transactions (including platform investments and add-on acquisitions), creating several notable energy companies throughout the Firm's history.  Its portfolio companies operate on six continents, spanning the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and infrastructure.  For more information, please visit www.firstreserve.com.

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," "may," "will" 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 complete the proposed transaction; any event, change or circumstance that might give rise to the termination of the merger agreement; the effect of the announcement of the proposed transaction on the Company's relationships with its customers, operating results and business generally; the risk that the proposed transaction will not be consummated in a timely manner; the failure to receive, on a timely basis or otherwise, approval of the merger, and the other transactions contemplated by the merger agreement, by the Company's shareholders or the approval of government or regulatory agencies with regard to the merger; the failure of one or more conditions to the closing of the merger to be satisfied; risks arising from the merger's diversion of management's attention from our ongoing business operations; risks that the Company's stock price may decline significantly if the merger is not completed; 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 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 (the "SEC"); 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 factors that may affect the future results of the Company are set forth in its filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2015 and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, which are available on the SEC's website at www.sec.gov.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof.

Additional Information and Where to find It:
This communication may be deemed to be solicitation material in respect of the merger of the Company and a subsidiary of First Reserve. In connection with the merger, the Company filed a preliminary proxy statement with the SEC on November 9, 2016, that contains important information about the proposed transaction and related matters. The Company intends to file additional relevant materials with the SEC, including a proxy statement in definitive form and will deliver a copy of the proxy statement to its shareholders.  Investors are urged to read the preliminary proxy statement and the definitive proxy statement and other relevant documents carefully and in their entirety when they become available because they will contain important information about the merger and related matters.  Investors may obtain a free copy of these materials (when they are available) and other documents filed by the Company with the SEC at the SEC's website at www.sec.gov, at the Company's website at www.egas.net or by writing to the Company's Corporate Secretary at Gas Natural Inc., 1375 East 9th St., Suite 3100, Cleveland, Ohio 44114, or by calling the Company's Corporate Secretary at (216) 202-1509.

Security holders also may read and copy any reports, statements and other information filed by the Company with the SEC at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549.  Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.

Participants in The Solicitation 
The Company and its directors, executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the transaction.  Information regarding the Company's directors and executive officers is available in the Company's proxy statement filed with the SEC on June 20, 2016 in connection with its 2016 annual meeting of shareholders.  Other information regarding persons who may be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.

For more information, contact

SOURCE Gas Natural Inc.

CLEVELAND, Nov. 9, 2016 /PRNewswire/ -- Gas Natural Inc. (NYSE MKT: EGAS) (the "Company"), a holding company operating local natural gas utilities serving approximately 68,600 customers in four states, reported financial results for the third quarter ended September 30, 2016.  Results for the third quarter and first nine months of 2016 do not include the results of the Kentucky and Pennsylvania utilities which were divested in the fourth quarter of 2015 ("Divestitures"). 

Third Quarter 2016 Summary

• Full service distribution throughput increased modestly due to the addition of approximately 400 new customers in the quarter
• Net loss from continuing operations improved to $0.17 per share
• Closed on $92 million debt refinancing in early fourth quarter
• Signed merger agreement with First Reserve Energy Infrastructure in early fourth quarter

Mr. Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, commented, "With much of the costs and distractions of our prior legal and regulatory matters behind us, we can now more acutely focus on improving our cost structure and growing our operations.  As recently announced, early in the fourth quarter we completed the refinancing of our debt that was supported by our new organizational structure.  Closure of those initiatives positions us well to accelerate our progress as we strive to achieve our vision of becoming a premier natural gas company recognized as a benchmark in our industry."

He added, "We are working diligently through the merger process with First Reserve, announced in early October, as we endeavor for a seamless process that will prove favorable for our customers, employees, regulators and shareholders."

Third Quarter and Year-to-date 2016 Operations Review

Revenue for the 2016 third quarter increased approximately 2% over the prior-year quarter.  The increase was driven by higher sales in Marketing & Production 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.  The Natural Gas Operations segment, despite modestly higher volume, realized lower natural gas prices as well as $0.1 million less revenue from the Divestitures.

Revenue for the first nine months of 2016 was down approximately 17% compared with the prior-year period.  The increase in Marketing & Production was for the same reason as described above for the quarter.  This was more than offset by the Natural Gas Operations segment that was impacted by lower volume due to warmer weather, lower gas prices, and a $1.4 million reduction from the Divestitures.

Gross margin for the third quarter of 2016 decreased 4% compared with the prior-year period primarily due to the impact of paper mill closures in Maine, partially offset by increased full service distribution throughput to new customers.  Customer count grew by approximately 400 in the quarter to 68,600, compared with the end of the second quarter of 2016. 

Gross margin for the first nine months of 2016 decreased 7% compared with the prior-year period.  The decrease was primarily the result of warmer weather in each 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 last year.

For the third quarter of 2016, the operating loss was $0.3 million greater than the prior-year's loss, primarily due to lower gross margin.  Comparing the year-to-date periods, 2016 operating income was $3.1 million lower than 2015 on lower gross margin and higher operating expenses.   

Within the Natural Gas Operations segment, operating expenses for the quarter decreased $0.3 million as legal and professional expenses were down $0.4 million and $0.2 million of expenses were eliminated with the Divestitures.  Those reductions were partially offset by increased investments in information technology. 

On a year-to-date basis, the Natural Gas Operations' operating expenses were $0.9 million higher than the prior year, primarily due to increases in personnel costs and investments in information technology, partially offset by $0.9 million of expenses being eliminated with the Divestitures.  The Marketing & Production segment comparison benefited from the favorable settlement of a legal matter in the 2016 second quarter.  Litigation, settlement and proxy contest costs drove increased expenses within the Corporate & Other segment.   

Adjusted EBITDA, a non-GAAP financial measure, was down about $0.5 million due to lower gross margin in the 2016 third quarter and higher atypical expenses in last year's third quarter.  On a year-to-date basis, Adjusted EBITDA was unfavorably impacted by lower gross margin and higher information technology costs as well as differences in atypical items.  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.  

Other income (loss), net increased by $0.2 million in the quarter due to recognition in last-year's quarter of a $0.4 million loss related to the sale of a building.

Compared with the prior-year quarter, the income tax benefit increased by $0.5 million to $1.8 million.  Excluding discreet items, the effective tax rates were 36.2% and 36.4% for the 2016 and 2015 third quarters, respectively.  Excluding discreet items for the nine month year-to-date periods, the effective tax rates were 31.5% and 37.6% for 2016 and 2015, respectively.  The improvements in the 2016 periods 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 September 30, 2016 grew to $3.8 million from $2.7 million at December 31, 2015. 

Cash provided by operating activities in the 2016 first nine months was $10.5 million compared with $12.2 million in the 2015 period, with the decrease primarily due to lower income from continuing operations and lower working capital requirements related to the lower price of natural gas. 

Capital expenditures for the first nine months of 2016 were $5.8 million compared with $8.3 million in the prior-year period.  2016 capital expenditures included approximately $1.9 million for the Company's ERP system that were not financed under a lease agreement.  Remaining capital expenditures for 2016 are expected to be approximately $1.3 million.  The majority of capital is focused on growth of the Company's Natural Gas Operations segment, including construction activities to support expansion, maintenance and enhancements of its gas pipeline systems.

Cash used in financing activities was $4.7 million in the 2016 first nine months compared with $18.0 million in the prior year period.  Debt repayment was the primary use of cash in both periods.

Webcast and Conference Call

Gas Natural will host a conference call and live webcast on Wednesday, November 9, 2016 at 1:30 p.m. Eastern Time.  During the conference call and webcast, management will review the financial and operating results for the 2016 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) 493-6725.  The webcast can be monitored on the Company's website at investor.egas.net.

A telephonic replay will be available from 4:30 p.m. Eastern Time on the day of the teleconference through Wednesday, November 16, 2016.  To listen to a replay of the call, dial (412) 317-6671 and enter the conference ID number 13647842.  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 residential, commercial, and industrial customers.  It distributes approximately 21 billion cubic feet of natural gas to roughly 68,600 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.

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 consummate the corporate reorganization and debt refinancing on terms that are acceptable to the Company, or at all; 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.

FINANCIAL TABLES FOLLOW.