ONE Gas (OGS) 27 Feb 222021 Q4 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the ONE Gas Fourth Quarter Year End Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandon Lohse. Please go ahead.

you call. us thank XXXX year and conference earnings morning, for on joining end Good is webcast call available This being later be replay today. made will live, and a questions. be After remarks, happy to our we'll take prepared your Securities of reminder XXXX of Gas or Exchange and the amended. Litigation ONE and are Private statements might forward-looking the and by Act be expectations during call Securities predictions this A XXXX, that XXXX, that of safe of include each covered considered the should Securities Act statements made Act harbor Reform provisions as could Actual any materially results statements. differ in from those forward-looking projected

For our a factors SEC cause could to to actual results discussion of filings. refer differ, please that

morning Senior now, I'll us Chief Chief President Caron. President Sid And and McAnnally, Executive Vice Operating Officer; Officer. call Senior the Joining this and Curtis and President Vice the Financial on and Dinan, are to over Officer; call turn Chief Caron Lawhorn,

Good million per quarter in income morning, or $X.XX same for diluted Thanks, per Net with million, fourth compared XXXX. period $X.XX share, or the the everyone. $XX.X Brandon. $XX.X share was XXXX diluted

include growth. services. compared and million customer increase outside employee results sales quarter due costs last to $X.X of primarily in residential in new which increase the year, in and same fourth Our period $XX Operating were experienced higher million quarter year, $XX.X a net from and million to the $X.X is revenues for million last rates $X.X over million the we same period an labor benefits from

$X.X $X.X year. the million for debt last quarter bad and year full was expense than for lower our However, million lower the

were our instrumental for may on the was the in $XX the team that the $XX approximately million to worked quarter. payments in available, energy Energy social received million efforts XXXX, of agencies. service service inform portal customers the us customers to agencies to in customer about for of be key our of we the improvement government online nearly a These increase our significant in an for implemented customers. year, with assistance streamline One collected fourth the our receiving diligently assistance XXXX drivers with from Assistance process we compared of XXXX in and behalf payments Throughout the half and

full Operating the $XX.X was For from XXXX. $XXX.X or per diluted million net in expense level new primarily $X.XX costs share year services for of per were residential $XX.X plant versus year equipment $XX.X million reflecting $X.X XXXX million, an and XXXX, from higher the than $XX Revenues of as was investment. diluted cost benefits. income labor less higher of result of a as million, outside growth. employee million million our or $X.XX net the rates customer than includes gas Depreciation which the capital prior was share natural and year, higher result increases increase in million the $XXX.X and property, and in

proceedings, Kansas $X.XX was rate year base interim million approximately billion. Our our areas. billion, and XX% to rate for in million, and in of compared cases rate to system new were Average XXXX. full reflected and which for and integrity total removal capital of the $XXX quarter with XX% asset Oklahoma, increase rate the service in to year attributable fourth was in including the bringing is to filings that $XXX base expenditures primarily for in $XXX extension is base, Authorized The regulatory rate Texas. XX% costs projects million, $X.XX completed

program. $XXX our program. Looking our market under of at credit equity No under ended liquidity, in our and million facility, the our paper the year capacity available we with million $XXX at commercial borrowings

we moment track storm, as of storm have billion to winter our outstanding costs securitized. associated get debt We in with a will on a are $X.X describe winter Curtis

next that affirmed revised stable Aside also winter debt is in bonds, ratings. from XXXX. to pleased negative our maturity recently credit I'm to our its Moody's and long-term outlook, from storm mention the moving us

forward, to per metrics. will with the analysis our its the and Moody's range XXXX to securitization of flow share with guidance we debt associated month, of our Last cash from for financial exclude Going in expected released credit diluted earnings fall $X.XX $X.XX.

XXXX. $XXX investments capital expected a about part system XXXX. integrity, for are to representing which profile the continue or of a capital strategy the million, plan, our spending and year safety, is increase improve to million spending of Our our increase in key our anchor expected to emissions of system over $XXX be Investments in XX% in the reliability capital and half

for other be half five opportunities reach of for execute higher previous million we to expand to our as Total plan. increase than billion. $XXX capital growth customers. to $X.X is on spending next new years anticipated our to the continue The is That's the system

X%. X% to X% to is which at growth base up rate higher expect X%, also We from

Our the for up forecasted annual with year anticipate income with XX%, XX% which growing financing needs $X.X net X% to X% X% be from XXXX to X%, to up to about We X%. form five of is X% through rate is of that X% of EPS net billion, expected equity. to growth in from from

target share, X% declared to ONE previous payout Gas per the XX%, approval. X% of dividend or annual XXXX $X.XX of to X.X% dividend of board with an the subject a growth ratio increase January, In XX% quarter. $X.XX of to average expect from a Board We through between Directors

it for an turn to Curtis I'll over the regulatory from on update latest commercial. Now, and

recovery on agreement across with Oklahoma of Natural order three the Oklahoma continues deemed such January was time the On and issued, terms that the XX, a everyone. and Gas but progress a later states. as morning, all December than an the the order Corporation costs by all of bonds, of February issue Caron. from In Finance Kansas X, XXXX. At incurred Commission which XX, Commission related net securitize Kansas proceeds regarding Kansas, incurred agreement, Gas winter received approved soon securitization Natural Authority costs you, terms Thank good Yuri brief Oklahoma provide Service update settlement prudent. start costs gas And on extraordinary storm meaningful requests during Yuri. the as settlement all the no recovery the financing I'll Gas feasible, including of we approving during to Oklahoma as Development Corporation by the

Authority settlement all The process January exceed costs storm Finance Texas extraordinary customers agreement the to process days Public West Our March. financing financing in began from to next date to service Gas have Railroad year. gas step approved costs, a process an the Texas of order, Railroad will the of to filing XX the participating unanimous expect from not then is Service begun begin authorizing recover to pursuant would carrying the collecting a approved, securitization to The for issue application to purchase issuing February Commission requesting Also, financing related which Service costs in do bonds. to the Texas those Texas of extraordinary period file area, and this a Gas issue order, the order securitized years. XXX including carrying the issued other if single a and early over of a in the has the which, we natural company of Commission costs process gas the and by three on bonds, Texas securitized X, allow KCC the year utilities

Program case. November, there matters. the regulatory was the Grande sometime the we mechanism. Infrastructure Texas by customers in requesting other years represents when West approved performance a for expect This March an all Natural previous the to filing change February Gulf of make General filing Rate in program On service the Turning based the in take increase service in following Gas PBR area Central million authorizing XXXX. change year Gas the no Valley a Rio area Oklahoma Reliability Gas of continuation to cost was Gas with to Texas Infrastructure make next from rate filing a our will as June Service interim In as Service effect rates XX. filing of XX, well in a the Reliability case $X.X March in expected adjustment rate April. filing Area of interim Oklahoma in service Also, made conclusion an

our to to continue connected new we with maintain customers to expanding XX,XXX activities, service approximately momentum on new customers commercial during Moving XXXX.

in to expected build is to As several the developed strong gas growth We've expansion. Caron that capital mentioned, expected five to to see that years. to On guidance The economic in footprint, in we entire and next out noting extensions which across several be we expenditures $X.X our we infrastructure plan seeing we're XXXX. average, and be the approach line Texas our annual for system over states. expect supports now the natural in XXXX includes billion activity those demand year XXXX X% includes territory updated XXXX few by plan through spend will new additional customer capital Oklahoma, spurred master X.X% Texas communities previous over growth for development our five calls housing markets that for year billion discussed period, approximately by $X.X service and on main

expect of negotiations of renewable interconnect seven our we Many the of projects we have process, stages inner gas of an work result, to across evaluation, another projects from design, natural and meter follow territories rate interconnect these and year. BCF a number potential the our through final approximately total and increasing Vanguard of our of Updating those a three investments. As originate that efforts, in advanced Renewables connections design last RNG active projects. XX XXX XX was identified feedstock in with

RNG $X rate program up customers process portfolio. As in are our a of tariff for authorized of from to general annual voluntary also in purchase developing million to the Oklahoma supply Oklahoma we the gas case, RNG

the our customers to to residential, I'll transport reduce as industrial now and RNG turn over for emissions. it look many for momentum closing expect demand commercial remarks. of to customers And Sid continue and their We including

Curtis. our as to that and our storm history. We as that Despite experience, in our our in prolonged Thank total and and closed maintain the be anniversary Yuri focus. provided team thank rates continues year, dedication with we values incidents to the same. to with to outstanding for X.X customers. out opportunity challenges performance deeper has recently that together the incident faced you, environment our the COVID safe the million a We last with well lowest mission. work company's and all Caron the core for focus, of primary recordable lost culture the our our took our service a observed sharper operations A winter Sharing work begins company year workdays, remain

capital We our to budget date. also largest executed

to be demand Natural gas and to advantage. our ahead competitive a in to look we in As we continues the areas XXXX, affordable provide footprint geographic serve. continues available,

talk capital about and Curtis per and support the significant Caron increases of in integrity, in system You year, investments driven for and base, step growth this these our by opportunities income When levels customer heard growth. continued in five rates earnings up year spending reliability, meaningful combined, share. rate net new

I'd a core closing, focus commitment to challenges strategy. we goal you proximate backbone value work baseline, a of provide to future setting significant a Over questions. growth delivering deliver over anchored to to our Operator, announced our we're We the XX% In past a intentional to Natural and as values of to achieve clear the and climate and stakeholders. Gas, cleaner feedstock service presented includes results distribution in customers all employees by opportunities exceptional XXXX been the These our goal energy By coupled X,XXX our continuing ready approach also us service, to Their related of system, transparent to including for to from that a goals. last us we've level recognize efforts, our our leaks this from future. assets. reduction on emissions with year's for keeps facing like for for about execute high the now transition every Thank Renewable year, our with due each joining a our pipelines. of a and day, XXXX morning. projected for our recently amount

first from from question [Operator take Instructions] Julien We'll America. Bank of our Dumoulin-Smith

on Kody my Thanks Julien. is Clark for taking this Hey, questions. for

number the and So being first a customer of on know and volume and increased just growth the reliability And drivers continued touching pieces some safety moving CapEx robust, of and of and spending CAGR. particularly outcomes, the with you just driver most is if what rate possible. main But the CAGR curious if in out behind characterize constructive the CapEx could increased here, case. recent regulatory Oklahoma I

about and we Curtis, thanks think because single of is this really it. there question. not way the the for Kody, several are capital as different driver There's categories a

other our the comments then So in the remarks, some the that continuing to my of group increased spending talked increase related system integrity and we the capital prepared about work. of made, and

last that's our I as our as and that we of by in in been Oklahoma, over look at a more into in types see very company, more strong companies continuing eight and the at a our economic And in you territories. led system scale to it really process, history those If and update investments. development large population on commented also lot continue continual Texas being look years, is up moving We've earlier, growth of states. those two growth activity those service from to to

to with into metro lot that those So Apple and headlines areas have the a of the support But having similar workers others that are necessary Austin and our Tesla, are set there's like and and economic other moved around Samsung bringing wins businesses. the area.

reacting So is communities. to a in that and the we're and growth in migrations of lot capital growth those on response the more those spending of to, housing development in our

communities comments, So might about we're small several time, large out new, that's to talked XX,XXX maybe XXX to mainline to reaching extensions in masterplan those in XX,XXX very hold today. that X,XXX or to my compared that going years neighborhoods be over homes communities those couple over next I the homes of doing to

territories we really required systems. then our don't category driven relates government around rapid service of in about to as that much economic And relocations and it's activity. talk the So our growth by third

spending in spending those the right right ways, those ways. of assets like if of And new on we So to then our in of have right activities move with that, capital our and infrastructure we're also. part and bridges, additional that's out ways highways of of

the So very primary broad those categories driving three That's increase. brush.

and give more thinking Got Thanks that, you're it. little services color higher bit on year-over-year. to then much impacts can labor, costs how the inflationary for were outside Curtis. a And about you business,

of paired there's with So term. of available, near thinking the wondering inflation and in in how costs. if of you're seeing of kind O&M terms also offsets trending potential And this kind about bill recovery any Yuri

Yes, sure, Cody.

we've things O&M like inflation, we laid know, and plan, impacts out that estimates, at managing that before we pretty issues some you our But our impacts include able we've to in COVID some disruptions. the a across that for by focused position well expenses. wage we're the supply dividends, tried as ourselves terms you As to critical feel the of may also positioned on to and And with avoid conversations we in been of Caron Curtis, chain, as went supply We to on chain to is time gone be eye the a like paid this looked recall era, us back that way growth. execute of really and chain seen can consider allowed supply through the industry. how in we've planning

so far. been without interruption our to and programs we've our So programs to able maintenance supply continue growth both

execute bring more we with do those we to in and have because lower think that continue terms between services at company, opportunities an do So mitigate. O&M. outside the cost. it in to looking to at what than on there's the willing We're we'll service it us for balance successfully inside of a we to executed a be impact positive We're some programs constantly and opportunity focused where of on can

part customers, on fact we minimize our and In to are that business our of customer that customer responsible our the execute is terms focused to bills. the to on in of our we are practices, that of your about all be very the service focused impact employees internal impacts are way last question, thinking on sure our being constantly

our Stifel. take Akyol from question Selman with next We'll

very Thank value how expand think and you about see And think bit outside much. other about you forward, Could And responsibly on terms little that? morning. maybe when in think sourced of it you RNG? you RNG? whole RNG. But a Good do just going expansion considerations to any the I about maybe of chain, you gas

thank Sure, question. and the for you

of hear are the us very location RNG. infrastructure, about in opportunities proximity supplies you We and its are of feedstock to because as excited, that could that the the presented to report Curtis's our

in go projects really supply. to don't looking fortunate to of be are It's have to we outside number partnerships readily we've pursued. We and a contacting available, look for to that our a have where for we entities, footprint us addition in territory, the

we it's rich forward. going a think us for So going to be environment

believe at we us to we let at that continue RNG the term. looked a longer consider can environment. opportunities RNG is territory, should to hydrogen and you what share Curtis term, really saw the stood speak But the I do that a with cleaner opportunity, assets was, and back service more one and the just And look make have provides impact to and about we transition how mid the allows it. to positive us energy our Before sense to the think our have, with ask that way, participate to meaningful and near bit blending for us, the what the on term we that we about assets in to fuels. question, and me is We most opportunity one and in by we provided the short ask the little opportunities

more So Curtis, you color that we to if would the bit a add little see. opportunities

morning, Good Selman.

comments, As identified RNG I mentioned service we've of within potential about territories. XXX our in Bcf my

development has that will future, exists come something in And But continue. that that today. the so the sources around something to is not is that those

as had system. a you the these of a most mentioned, were that that are come which began to smaller of producers being that not high of, really than well, at grading and they're that. most hydrocarbon to think our projects our don't with a potential, potential I of proximate those would completing study facilities in working after those which And they high inventory and benefit much large at those So of we determine lot partners RNG The pressure.

And pipe pressures. is so of that the lower lots operating advantage at having LDCs of miles have

RNG a So being lot without supplies required us able those gives to in bring advantage. compression that of

are so point. that's have continuing it XX we those I mentioned to that of there at projects various focus process continue through that environmental use capturing stages system to capturing big pursue occurring environmental of this what impact. because benefit into those be positive a in very has for that a benefit those of we're focus that today, the and our that continue on. emissions And And And fugitive are putting team. direct those screening our the will made commercial to

Brian with go to Sidoti. Russo We'll next

Hi, just cases, ROE terms you trends, bit seemed in to a good I curious had rate future relates morning. of degradation your in it little XXXX. ROE Hey, was of as like

probably Just And base it from next timing which given to time rates looks mid the the isn't the maybe filing of overlay just of you annual rate those trending. the see might you gen Oklahoma, in your X% back cases prevent like guidance range, and I and tracking where your the XX to was high ROEs new of mechanisms. curious, your some

our been ROE This that to address items several have morning, years, is ballpark. in the or of cases rate allowed over few We've, the Good coming past achieved XX,XX Curtis, out Brian. there.

So it area. stable have been seems in to fairly that

rates into climbing. Now interest we're inflationary see you an environment, getting

rates bit think declining we that and to were going to know downward much. those ROEs are little there's pressure we're seen past suddenly when the But so where climbing. going interest we've a don't not stable. more we've forward period see a course do That's come call same start I in here reverse So necessarily a the that that

on has the to it filings. As our other impact that

do any and of those time. GSRS our in we'll other haven't filings continuing in we year in filings of pursue remain that general Kansas, each in this so any PBR in Oklahoma. at to we'll August, have March, filing then to each COSA We year. we have cases filings a But And service filings Texas. are filing we on pursue the schedule our interim that's whether this rate territories announced GRIP our In

Smith Julian with from question America. of next our Bank take We'll

again, sorry, follow Kody Hey, just is for all. you one this up

morning. you if saw public clearly if curious in the for M&A, updated you And any valuations a in this disconnect have So price thoughts wondering marker private very view the markets. have on on between LDC another constructive

the forward the We opportunities And are you We did. taking plan for on in is, a But what dislocation about our our and continued do the thanks so you territory. and to We same the since with of are focus metrics earlier excited covered given the it. company that core maintenance and we're call on the founded, keep Kody, was that we in that question. focus us. we've think plan plan. growth think like execute had the opportunities these really our the positioned up system our opportunities values on of in going that advantage remains well we this really reference. unique front the execute saw the the step that that signal, to note side, in heads we integrity/ that down to service forward we We're news feel have we the both and

in further have We questions queue at this the time. no

all in Gas. you interest again for your Thank ONE

early release the earnings when in books for May. period first until we April in starts close our extend quiet and Our quarter

We date. you. day. a a later will provide Have call details on at Thank great the conference

concludes We Ladies and today's gentlemen, appreciate your this participation. conference.

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