ONE Gas (OGS) 3 May 222022 Q1 Earnings call transcript

Good day, and welcome to the ONE Gas First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Brandon Lohse. Please go ahead, sir.

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

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

to the turn call I'll Now, over Sid.

Gas, toward attention us Caron safe strategic positioning suggests as over calling the details to dynamic business reliable renewable significant it on progress to Curtis respond on Thanks, review environment. territory are natural we're of lead organic service many the turn to natural to then Caron? gas our I'll address continuing to Brandon, issues environment, growth the current ONE gas of our these customers, focus to maintains path, are and A that making morning, the There that and the building delivery goals. emerging while our and additional capacity and in our conclusions. to discuss in today's everyone. right company to we execute for plan. team focused good At landscape the on our

diluted was or in Net the good period per first the per share $XX.X XXXX. same $X.XX million $XX.X and morning, diluted income for Sid, with compared Thanks, share million or $X.XX everyone. quarter

first with noncash our XXXX. assets by impacted in quarter comparison, associated nonqualified to the XXXX, in the plans. These not of the value in our $X.X of quarter mark-to-market of $XXX,XXX. were items, expenses for income of $X.XX first are By benefit million guidance, and Our of unrealized related recognized quarter which results impacted included we EPS XXXX by liabilities decrease first a employee

the to business. attention the our performance operational of Turning

first second an income over million filings interim Natural $XX.X new or in year. Kansas the Oklahoma the increase and Our primarily include filings of results $XX.X increase half Operating rates, quarter year, last million operating period reflects and of regulatory including of in in due same the an Texas. case X% completed to income last rate from

natural experience, increased our to In in from sales customers we addition, gas residential $X.X primarily continue that in base Texas. to and due the Oklahoma million customer growth

in of and decrease our of are prices this than team In energy our social time profile Further, of on and our from very with due customers. The see million. higher on quarter, our the receivables past the energy an we fewer offsetting That Our behalf million Partially more costs of the maintenance over our employee-related operations quarter customers. outside continue XXXX expenses is $X.X increase to a gas of customers' we million appreciate and in our agencies and assistance last said, of first in year-end, $X.X status. of assistance $X.X on service natural received We payments bad mindful bills. efforts improved increases increases those customer services their year. work service payments we first has impact increased in million our customer behalf of to million. of since debt $X.X of a due expense $X.X receivables the

prior investment. was and higher of result eye customers or who year, than capital assistance. our need increase payment Depreciation reflecting our close a will expense the an We net a our level other as property, to plant equipment arrangements and million with keep continue of receivables on work in higher $X.X

XX, removal in Uri, base Our be be expectation Curtis of XXXX. capital use was asset the the XXXX. consistent describe due increase in as of anticipate a base we for $X.X billion. $X.XX the first increase we related over capital call $XXX in million with of compared rate expenditures billion that $XXX states, The March for will to that as proceeds of will and XX% Authorized the approximately estimate XXXX is million progress investment year, Securitization continues the $XXX $XXX costs our our quarter for will about invested full to momentarily. all million approximately an in proceeds receive rate were billion million and to average We $X.XX we portion which March notes and X will Storm the to Winter is XXXX.

our quarter we at $XXX the credit million no in Looking and program paper ended liquidity, under with our our capacity facility. borrowings commercial of

at-the-market Yesterday, a of our issuance program Gas unchanged. share, per Board we we have $X.XX the of dividend ONE the our equity of in Directors the quarter, for under of equity guidance the of million XXXX. $XX contemplated issued With equity amount during had declared

$X.XX financial XXXX guidance, investments of earnings to million. $X.XX, diluted million, of Our $XXX per a to share including million range $XXX and income net $XXX of capital

in our remains it turn over will strong I'll base Curtis XXXX outlook beyond. for and our Curtis, of growth you. customer rate and to discuss, base As

I'll morning, activities. on commercial you, Thank everyone. Caron, update our start and a with brief good

into several our support expanding new to capital Over growth the on a of years, focused developments. next is several new areas portion

the major but capacity, not As we for the expansion. are designing projects, capture we next our significant opportunity, also, for building and current system just

the support building expansion first years. million over will development opportunities highlight projects connections to today, X next of customer like expansion many phase that the years come. the X to Oklahoma City lots continue to and strong In of X-year I'd large XX,XXX we to a Metro, growth will for project completed the and $XX a are these planned provide take over moment new projects. additional Our X

additional underway. In residential Austin, of of lots developments $XX Oklahoma U.S., million years. we an the area multi-phased a one us at Approximately for opportunities X approximately first customers, the also further growth and the expected information meeting a X commercial good initial other the an and project positions projects XX-mile quarter to we to several of are align population repeat fastest-growing reach we coming of to we this from felt the position system expansion X with time. market internal mainline have immediate housing extension over over the little the decade. our is year, to where and invest area. opportunities. began While for of significant these remote Austin of in that builder will several projects next completed XX,XXX enhancements wave have to that the markets the which of how business years $XX examples to are ago, example, partners. These next needs type a And construction are earning and system use It Like market that expansion and commercial data also of this completed in mainline developer two extension, projects the million this we we in demonstrates us residential

and our our projects system Our areas growth enhance resiliency to expansion service focuses strategy that position on future opportunities. capture long-term

Turning our our emissions of a profile. efforts to to reduce renewable natural part gas. RNG key is

are that front, over potential, are service we of RNG On annual RNG Bcf XXX RNG has encouraged the situated of and uniquely in markets. increasing region developers in a with our production engagement the

the the of are projects. We design have completing their interconnect completed evaluation and XX projects developers through the preliminary

Oklahoma to RNG expect from be We projects have footprint supply filed tariff support opt-in that will our gas year. later across this will options our several that

the issuance, securitized Moving associated seeking Oklahoma validation as Court year. Gas on to received a order. And required able net The Railroad by of statute, to Authority April issuance. and in statute. Public being the the a the the Natural bonds the securitized the Kansas order. recover ODFA then for [indiscernible] issue order Storm settlement that a over the will a financing to XX, Uri financing issued X validates the and Winter the issues issue will Oklahoma, application February bonds costs this the In Finance ruling, the to proceeds Pending Natural issue order a to Development submitted a the Commission the financing with financing Finance the contemplated agreement proceed unanimous the with to Service bonds bond X approved, led securitization. Authority. before on securitized by to August on If is Gas flexibility the Corporation ODFA requesting hearing provide the ruling On application Gas financing Oklahoma by as If Authority to court Supreme March Kansas Oklahoma Commission, the issue Gas XX, must requests bonds financing and issuance be its to Oklahoma by order is order the bonds review issue the ONE bond X. under Finance Texas, Texas process

regulatory On offsetting base $X.X an million application approximately $XX.X well EBIT increase to in as Gas a Turning of for matters. its required XX, Oklahoma March other Natural filed million. as PBRC rates, credit

average As filed, bill. the net residential per $X increase a customer in month be the impact would

July. wrap on Grande million. to Industry-wide Gas requesting in cost, million, Texas rates finally, this times approved, have I'll state $X.X week, we Last customers and and in of in the $X in filed first comment would increased. an cost filings lead all Texas June supply If made items August of and service new the the up affected Central and year. effect for of increase of take certain the infrastructure material new During rates service and $X.X requesting for increase the a areas, Service reliability our gas has with quick West expected Gulf of operations. quarter, a million program Rio effective inflation adjustment Valley, an And become with

materials future and to We advanced previous up and through allowed mitigate work. These diverse key key to strategy X sometimes maintenance of to supplies, have been and to our a purchasing capital for disruptions network, supplier to planned parts of materials impact supplies, our buildup the advance. inventory production critical have in slots commit years and maintain our to able us practices and avoid our

remarks. monitor remain And now, our continue I'll our it execute. to closing investment and ability for Sid ongoing the we to We to situation, forecast confident capital but over turn in

been the emphasis we through have and office years, the safety back teams into Thank who The working pandemic. culture, field value gratitude with X a focus employees remotely work successfully you, our and both. as our who more in with creation, in back our employees to importance are came of hybrid the welcomed After on schedule. than its offered

than score, received employee engagement which our declined Gas Gallup, from This employee engagement compares our recently results at engagement the also annual for to the more is and level testament company that increased leaders culture and scores to the engagement learn a ONE pleased in our demonstrating survey the challenging average first in We improved. core of of time our employee to decade. a our we're national and values improvement times. maintaining through employees of An work

fifth the the the injuries We peers. Gas rate for Gas also our consecutive that received from year, among ONE American significant notice Association of had lowest

Our more serve of our day for Operator, and company our employees. for would questions. Thank be us joining achieve million to to safety, this without all want not growth now you our every reliability we're ready customers. and dedication each hard for their for I to morning. than of goals contributions them X,XXX thank X.X able working the

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

It's Kody Julien. Clark, for on

So can around commentary in first, being the included guidance. if not you pension wondering clarify

you be the do the a you're for assuming of that the coming split the on midpoint in first in the assuming year? below what I equity? debt are Specifically, What's at are impact there would mark-to-market offsets the midpoint? put that mean, basis? And quarter? we Or quarterly should you some given drag you $X.XX and back

My didn't microphone my on. have apologies. I

and Let again. It the impact mark-to-market include $X.XX me of our the plans. try associated does I is pension OPEB. assets with that of not qualified The and with spoke associated liabilities

improves closed has that? are time compared answer because plans but OPEB the Our over of time, which to that. pension you Does rising, has and actually plan year, new expense been for that been retiree well is had entrants, entrants rates the and the And some discounted closed questions of funded. last all it's to new course, flat impact our on also pension to medical declining interest are

the... Yes, just stand you the given and guidance question that, where within

from and fluctuates mark-to-market time, it's The is number over not of guidance. mark-to-market. absorbed On quarter-to-quarter. material easily our in And range a

about with we So our guidance think year. expense we income don't estimate when for try the a to specific number or associated that

$X.X income. of it had we expense year, million As was only this last actually I it and mentioned, quarter. And was $XXX,XXX,

over get quarter-to-quarter, So from swings big a impact. but big these time, not we

some price then wondering any markets late performance I'm have and strong markers M&A. we've Understood. for despite if relative disconnect of you of to to on the recent seems valuations and very the seen second, in in just general, updated given still between gas a of and There electrics. And rebating Okay. utilities all private gas LDCs thoughts utilities constructive some be public shares

noted we've position our Kody, dislocation the Yes, that pricing. But in same. remains

Curtis lined As have. with is pleased we on plan are We the opportunities strategic target. organic we of think very out, the inventory that

place heads are and execution we strategy down and got environment. right about the believe So we've the in all that for current

I'll team. pass off Okay. back here it Sid the Thanks, and jump in queue. and

Thanks, Kody.

from a take now Gabe [Operator Moreen Instructions]. with Mizuho. we'll And question

is issuance. on equity ones. A the couple One housekeeping of

for I the was anything first Can you the think that done date? to you you're after finished year. quarter just Caron speak issued mentioned to whether

did not. we Gabe,

Okay.

first might What outcome reading is the expect not -- what it Great. that as then, million-ish if right? I So Obviously, Supreme can as to securitizations, just Can Court little issues thing be front quarter, And about the Oklahoma about? was debated? being you an in it, talk on familiar. Oklahoma. a challenge the $XX to when this that timing you Caron, are speak that review of is maybe the you a ask in the and I'm there? I'm about bit Okay. I Can novel think

And Curtis. Supreme the the statute. was before is Gabe, Court hearing under the required this

would Supreme that and those, process course process is the the the the our Development normal Supreme side, seen all which in required action. we're the expected. the gas through moves to would go that's issued point electric process. you they in So timing have when review peers through industry we just the when of or nothing state And order, through as the issue have go a the Oklahoma contemplated to timeline going back then issuance both to commissions up Court bond same an ruling. Court's have if a completely statute, going the to at it process other Authority the financing don't to the order, on the We for Court There's the where so then the Finance issue Supreme

a anything about debt? it the medium just will now, on And be that seen, changes allocation step bigger about change also, business, gas the anything change then working in of maybe, whether picture, in term. step sort or how for then capital remain to -- there in I costs you're it's or guidance, increased is thinking for whether But guess, of not the to gas costs bad within cost, capital it long and

what customers. the the there's first we're spending But our it And I'll market the growth of to One, mindful impact about. think to very take continues in Gabe, Housing is. that program, side, things of has the really on capital very low, our on inventories we're demand So quickly. part that. of are obviously of terms and that couple market a move responding to

builders demand product. So our there's are neighborhoods, to be high in neighborhoods. a offer these developers and natural to for putting gas in new those service that able want The

on do driving to we've that that's capital. several as other before, our And about those times big system we the spending So agnostic then, we're talked a of portion factors. integrity,

on capital the stay to for those integrity the maintain the on items to day we reliability. And as spend we just well. to continue and have system X, spending since We have that's needed as system focused

in prior we inflation guidance interest relates January recent in it this increase of guidance, and costs. of as in kind our Gabe, to course, issued to ramp-up And

nothing other manageable and that certainly believe those continue related year. no, for the plan. have specific on in there's That So impact a to XXXX. than that in would the that, general inflation are affirmed guidance expect plan evaluated we've we evaluate And the to impacts normally we our now, for and said,

take from We'll follow-up with Dumoulin-Smith now the of Instructions]. a Bank of line [Operator America. Julien

again. Kody

quick follow-up one Just housekeeping item.

continued degree down here, residential this can what's were wondering a looks a dynamic? residential heating at like while you be on in looking higher, Texas but growth factor days Just give mix year-over-year, a customer bit more driving little might and X% volumes color it if

Yes. purely that again. impacts quarter Kody, the what to and this Uri the we Storm That's in this is related Curtis weather the were first year patterns versus Winter saw year. like last

to -- February. with electric not compare then difficult well, were Just But the the outages. in also cold some as it's because the of customers it's of concentration dealing weather around our territories also,

having been impact higher an their And not year, that have last so even while may had well. electricity, as volumes

apples comparison. it's oranges So and really

Instructions]. [Operator

appears it like presenters there any back to questions, remarks. turn closing our further are over As telephone I'd or to conference no additional the for

in Thank interest your ONE you Gas. again for all

second Our early extends close until the on great provide a later We'll quiet call in we starts period details day. we at the when in quarter for date. our books a release Have July conference August. earnings and

And that all thank for today's your conference. once does again, conclude you We participation.

may disconnect. You now