ONE Gas (OGS) 20 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the ONE Gas Fourth Quarter Year-End Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Brandon Lohse. Please go ahead, sir.

you XXXX us earnings thank quarter our and year-end and conference morning for on joining fourth Good call. today. This and call later a live replay will is be made being webcast available happy our to After we remarks, will take questions. prepared your be

call Harbor A ONE might Securities provision be forward-looking of Gas discussion during covered SEC are should include results Actual statements any XXXX predictions differ the that and reminder factors or by made from that considered those statements this cause expectations 'XX. the in results refer Act for of projected differ, forward-looking statement actual materially could of could filings. that please and to to Safe our

on and President Sid and President, us Lawhorn, Commercial; Officer. call Financial Pierce Caron Chief Senior Executive Senior are Senior and President, Vice Norton, Vice Joining McAnnally, Vice President Operations; this Officer; the morning Chief Curtis Dinan,

call the Caron. turn I'll now over to And

today. Thanks Brandon. joining for Good us you morning and thank everyone

quarter share, same or year. Net for million the income period $XX.X $XX.X fourth per share $X.XX with XXXX or compared for diluted was diluted last per $X.XX million,

net Our in $XX.X related quarter the and and customer compared $XXX.X Operating primarily Oklahoma employee expenses results including new service period reflected and same million year, bad million growth in increase in were residential the the last for for increase $XXX.X fourth fourth costs Texas. areas debt to rates million, quarter in our with margin expenses. contributing

mid-year, down through relative was debt we the our While slight expense with slightly increase full ended bad to XXXX. year a

Net and volume higher per customer in was sales service and rates of due $XXX.X normalization compared growth diluted XXXX in million customers Kansas residential our in or from share, Texas. XXXX. in to with increased $XX.X income in per or $XXX.X $X.XX higher net Oklahoma million, margin volumes, new for weather Texas, transportation $X.XX diluted areas, share million Net

general costs the operating the for activities, primarily related costs, service and costs XXXX debt in materials full-year costs, bad due expense. $XX.X including million pipeline XXXX costs, and Operating legal-related minor aforementioned costs employee to increases outside for were maintenance higher than fleet

from plans primarily investments decreased Other these which employee cost operating from million After the the netting costs in for non-qualified expenses, X.X% year. earnings costs. associated expense offset operating benefit against $X.X the prior earnings net included to plans, year with on these the our prior associated increased due

the million at due expense Interest million with relative million to the of $XXX XXXX rates interest at $XXX $XX.X higher senior of year as in was the a fourth prior to of senior refinancing quarter notes notes

expense as Our includes full-year or liability a income for ADIT, excess $XX.X tax is Deferred of credit in amortization Taxes for million offset XXXX Accumulated which revenues. a Income regulatory

fourth of We and including base in that billion Texas. year the Capital interim rate reflected in were and asset approximately and the year bringing $X.XX $X.XX rate rate of regulatory XX% filings was full rate base Kansas, is and cases Authorized which proceedings, to completed our Oklahoma, rate the ended removal expenditures in XX% for base, $XXX.X average total $XXX.X quarter, costs million. with an with billion for million XX%

Gas ONE time first paper for under payments million approximately quarter In approximately ended program. with capacity $XXX.X of we taxpayer the a fourth with $XX of the cash were our XXXX, million. commercial

previous of $X.XX or Board a Gas $X.XX share. compared per of of ONE per X% of the January, dividend share, increase In a an Directors declared $X.XX dividend with

of to average XX% net with X% to annual to dividend XXXX XX% payout dividend the XXXX increase X% expect ratio be income. and targeted We a of between

announced guidance we per month, $X.XX $X.XX share. per to our earnings Last at XXXX share

$XXX the as service primarily and as new million reliability asset to focused well projected Our extending costs XXXX capital maintaining remain on system, of expenditures are and and areas. be removal safety our will to

experience. to five Embedded technology in a X%. costs investments make year to guidance to forecasted X% average the financial continue operating increase customer also in of annual efficiencies, our in improve will We increase is and

next needs five $XXX financing that over to million net of anticipate equity. years We approximately $XXX of being the one million quarter with

growth compares X% to EPS. year is last to X% EPS net Our the forecast income for we forecasted of previous This X%. to our was guidance year both rate X%, five provided and which

For on refined the issue focus since company, long-term EPS. the standalone equity our first to and next years becoming we're over specifically rate time a planning to five growth have

growth next and income earnings average significantly. five anticipate will Our our changed outlook the X%. years that between hasn't We rates X% net over

it I'll Curtis turn now, updates. Curtis? And over to regulatory Dinan for

everyone. good Caron Thanks, morning and

request Corporation effective the in Commission with Kansas Services November rate or million. Surcharge December. begin GSRS Kansas. rider relief Gas System $X.X became Gas approved interim Reliability Kansas Let's for Rates In XXXX, for the under

based the In Oklahoma this change Oklahoma, approved, Oklahoma since that anticipate filing a base making month, early performance rate in will be first increase we will request gas rates. natural an XXXX. rate it and increase in If

in XXXX. effective August are rates to New be expected

rate our file in XXXX. full As will case we required tariff, a by

And the Texas If Central rates rates from to six. finally in are will rate increase Texas decrease the Gulf Service become requesting consolidate million. approved, and expected XXXX third for our and of the Coast effective all to in Gas new number customers Coast $XX.X Texas, jurisdictions to and filed quarter in case by in five areas the area service Texas Gulf Central Service Texas with

on XX%. on change the point change structure based by X% by capital XX%, ROE in change of that a and in a approximately XX equity estimate a is $XXX,XXX. We filing basis revenue requirement and of would Our equity equity a $XXX,XXX with return approximately approximately

CEO, Pierce it turn over And now our Pierce? Norton. I'll to

Caron. and Curtis you, Thank

was Gas. good for XXXX another ONE year

our of metrics. very XXXX safety we made on progress in continued We proud the are

processes to customers, zero culture and on our We public. to will employees, that harm continue target focus and a the

accelerated is iron important important I completed of reduce reduction want part to emissions. our also we but from to perspective, was That XXXX reiterate that in our five-year a program. replacement methane strategy risk cast an

materials pipe other remaining attention vintage to in system. will now our We turn our

plus to a capital. our With still deploy to materials year the left remaining vintage replace, runway XX have we

We and adjust will and pace the availability, quality balance our among to impact. reduction, based on customer risk monitor credit construction resource continue metrics,

on decade a as can we importantly, opportunities the all we've new of of to focus we evolve. continue reflect our while in reliable keeping that to implement solutions solutions growth. continues from and proudly when reducing decade, spun completion affordable we look on zero service reliability, accomplished more solve have organic to But a ahead and complexities energy next safety, the providing emissions, With XXXX. company technology The and the the emissions at in first to that achieving

significant related will resiliency that it reductions. important decade, cost of to become emissions next achieving the and part be the In discussion

conviction We part gas be natural natural of and distribution gas will continue a that solution. great to have the assets a significant

to the serving and that I every make possible It's day. our and our talented business and strategy. communities will our it have company them of continue to execute customers values, for for living thank employees this core out

you Thank joining us we're and now questions. for take operator this ready to morning

[Operator Instructions] We'll Sidoti take Brian our Company. with from first Russo and question

Thank you Texas rate rate when filing, remind information for case? the us you case could was incremental on the the last

last or The the rate Texas? case in last rate case Central Texas

this current applicable more case? to is rate Whatever

Texas years XXXX, ago. Central in four one is or three last yes about approximately, was The

increase XX And increase is XX, request, average? percentage approximately that what million revenue on

me that but certainly I can detailed right with data we don't get you. Brian, that for here, have

relationship Okay, is can PUCT, Texas Commission the your Railroad fine. regulated versus you by ONE the maybe the with RRC? that's And in characterize the just that with Gas understanding

Railroad Let the the the up the we jurisdictions. first Brian. with me in Commission. filed areas, back second, just And those with in actually we areas City We're unincorporated a file of Councils incorporated then

So the biggest rate population are incorporated that's affected the in by those cases cities.

Council. City then then starts And if it get the the that so again, resolved RRC. that at it's appealed not And with to can level,

a I we But So and anything at I with Council norm the think with broadly, out relationship either of those. would City levels both of constructive the say don't have the there's that very RRC.

in settlements RRC? And and/or have City with the Council you the the past reached a

Typically hearing. reached ends have that settlement RRC it those council's more or unusual cases. we to we the the with going and It up has get been the settlement don't in

So your dead assumption on. is

that you the and - growth just X.X%, of correct Kansas states? real Texas a are flat. distinguish then driving profiles just is And looks it growth math like while customer customer relatively is maybe three growth, amongst Can Oklahoma quickly growth also my

Yes, been really have highest in Oklahoma, above in up rates growth growth in average right flat a primarily it. of have exactly closer areas. that for years above a you're Paso in there. Kansas, on we're to slightly up Texas been our little it's at Both picking average, El strong customer that trend, in little the that you're number maybe Austin but the that right a and And

to management was ROE, you implement importantly, relative even what - assumes it's initiatives help the then an earned your earned improve have or ROE place or close refinancing in or rates think plan your also at the regulatory And gap of to and that or to any guidance do their lower ongoing initiatives allowed ROE? whether I further more X.X% and XXXX

number a of internally, we externally, to look try well described. you things that as as there's for as Yes,

first for XXXX. Let ROE X.X% correct the one thing, is me the that is expected

initiatives take so as our be everything as controlling good first. job we in to so possible And some efficient can first that of that of are operations we we the costs are a doing do to

in as processes. Second, regulatory we as efficient look to we our be can be

those for rate or filings, reflective as are as full looking as company. as rate happening make So that case, we different to what's whether interim a in sure ways it's it's the make the possible filings,

capital that other help. to example eligible and we of cyber as the having relates So for impact and the a to where those physical a importantly which in of also that impact customer passed cap filing external monthly types included you of and legislation $X.XX ago, and GSRS a filings. The from bill year safety, I'll of security increased be sought it safety was the give to also it more cap that customer Kansas - it increased an system about It defined GSRS $X.XX. bill to

ended first our approved filing $X.X only and that under that's and Commission a We requesting was It legislation filing year was what last up million through process. the we had that partial by year.

customer impact And the one that not $X.XX was was and year per impact. first again, that the $X.XX - a month. was the over on So full

that's from So rate time. able perspective a to relief reach that over provide or ROEs process those has that sought to improve help some external a we been an

next be GSRS your very filing will that's in helpful. Kansas? When Okay,

June every in Sure, you days, this of will our through July capital come next will XXXX from August X be so XXXX. XXX for year. And of that one of do XX one can

smooth, the just, go mean, EPS a of rate is forward years expenditures recovery I kind at to capital over - at by that next then it basis your And the CAGR kind be or it X%. we look levelized year forecast X% How mechanisms should now given on given that’s a other case is will it the of vary and will several any year it developments? or or

this exactly Caron, is right. you're Brian,

uptick, rate we Our is still impact coming relatively Oklahoma capital an is steady rate case have bit of case year whatnot. impact our up. spending and a filing be year-to-year that is that weather jurisdiction projected Oklahoma be have got smooth, the little on with a fluctuating This But our big of year will test regulatory outcome significant to activity we've can swings. largest kind our and earnings. so the will a next on

Thank great. very you Okay much.

is Brian, again. this Curtis

back case, filed in Texas a your increase that Central filing. rate in come as on that's first X% to to the question about Just all

Question Instructions] Chris Jefferies. from [Operator Sighinolfi,

regard a had it miss to are I looks asset line items I I'll and just night, think fact cash I operating couple - like but that With the I last - in for think in would costs removal quick. the this Caron. capital. actually working be

budget bit removal maybe over you I next of down like see me capital know given, during those - think of it? you something years? little it side Is trended expect this couple do 'XX? I those from asset Is you've that profile the guess on a that educate that as 'XX - about question to to think you the modestly of what includes costs would the - given something continue as to how Are it As well. you looking

a I costs. a in change don't bit this expect significant removal So Those may estimate. year. are come Chris, They an in down asset part

those - don't If estimate on they come cash we the days. practical how but slightly, differently. fine-tune really flow separately statement that It's system material. don't we a as think it about really part our be so our may them - in think we any of perspective. down I all matter, it while get improvement, rate we will as costs, kind don't as presented It's of just So put all

second my that thinking which make correctly. anticipated sure I was wanted additions - the rate about question, - I was part of missed - first case was That you because to I that

the is embedded you're quoting CapEx everything as over So forecast time?

correct. That's

from [Operator questions Instructions] Follow Russo. up Brian

up, notes that forecast just noticeably instead be XXXX quickly or included financing hi, $XXX Yes, year-end laid the and thanks the the of the January? real at follow for excluded back eventually payable year-over-year. million termed up out balance Will guys you out in in

Say out on. we needs in that and be yes turned provided to our it eventually is financing guidance those, will included have it

no are time. There I any the questions conference remarks. turn further to you additional Mr. will at back this Lohse, or for closing

we again earnings your close A release we in April. our until books starts when Gas. for April quite at ONE for in the all end the first extends you interest Thank of and early period quarter

you. call Thank conference Have the We great everybody. later today. will details day a provide in

you concludes today's Thank participation. your this call. And for

disconnect. now may You