ONE Gas (OGS) 7 May 242024 Q1 Earnings call transcript

Good day, and welcome to the ONE Gas First Quarter Earnings Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Erin Dailey. Please go ahead, Ms. Dailey.

Matt. you, Thank and first everyone, for us joining Good XXXX thank earnings our quarter conference on morning, you call. This call be will a and is being available webcast later live, replay today. we're take prepared happy our remarks, your After questions. to

predictions Act safe Act call Act this Exchange of Litigation Securities XXXX, and include expectations forward-looking during made of of as the amended. should by the and that any considered the Statements be covered Reform Securities forward-looking XXXX provisions each ONE and XXXX, might results from of Gas the or harbor differ could are those Securities statements Private in statements. projected Actual materially

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

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

you to in good and our financial Erin, Thanks, track weather performance. results, financial Based midpoint our territory. guidance we're winter first to first XXXX with morning, to warm despite on quarter of on service We're happy discuss our the quarter achieve our be this everyone. morning

execution expenses, the made of the is our and our in-house possible such plan. Our success as locating and efficiencies management strategic realizing of by of O&M the line functions of bringing the coworkers diligence

the our of helping our are remain maintain gas customers, our we delivery recent We continue business. us and developments of we to impact as primary on meters, system customers. our fund add the natural economic and new our for in affordability mission, focused We address safe regulatory enhances engaging reliable to which activity growing planned, as

a row. American day commitment We among a significant recently the to seventh learned is our coworkers rate and and one a peer way lowest we for renewed to a each that's of customers requires safe having that year achievement our companies environmentally injuries in in the This the remarkable and responsible. Gas Association for Award received operate Safety keep that

pleased to progress emissions goal by to due XXXX XX, of as us with December pipeline plan. stated reach mains XX%, This we've on services associated XX% by also leaks I'm as our a executing track of even reducing achieved announce our reduction replacement a keeps that continue we measured system. from safety-driven in to our baseline, to XXXX, emissions and grow XXXX

we MSCI that achieved learned also our rating safety to management We ESG due of risks. AAA from and climate-related a

policies to around practices provide and ESG continue identify address and will disclosures robust and our proactively will risks. We related

turn it I'll over for our Now discuss to the performance to quarter. Chris? financial Chris

and everyone. good Thanks, morning, Sid,

posed noted, Sid persistent performance As elevated had interest the and despite by financial this quarter we solid headwinds inflation. rates

can great Our control. we the to continue do risks managing teams job a

Net million income same $XX first the diluted per in $X.XX $X.XX $XXX share or for period quarter the with or compared was million XXXX.

for effective due Although the first mechanisms. earnings weather service normal, our than material normalization X% warmer was was not weather across on to quarter territories impact our the

and $X.X rates from our revenues base. of million customer new $XX.X reflect million growth increase First continued quarter from an in

approximately in-sourcing as XXXX, of quarter first process benefits continuing fruit. the efficiencies we the X% First expenses were the experienced have moderating O&M last higher our trend throughout quarter borne and year, than efforts

operating counterbalance per We pressures. year a expenses X% continue grow XXXX. inflationary And help through to expect approximately as initiatives project by these to to reminder,

with of increased investments primarily period the associated nearly to $X net our market value to benefit year, the due income plans. Other employee nonqualified increases compared in same million last

the XXXX, senior the roughly lower which paper issuance million maturity $XXX February period Excluding X.X% $X.X December on coupon balances, in same X% higher rates the KGSS-I, expense higher related the was amounts and first to and notes of the reflects interest commercial of or of March. quarter than in in notes million in

$X credit Last to our expanded paper facility program from billion $X.X we each both commercial billion. and fall,

March with and Our absorbed with at issuance is compared senior short-term in we as maturity a February maturity debt initially elevated note our XXXX March XX December commercial our prefunded to paper. year-end

to look construction sales will in issue debt and used We becomes equity progress long-term the in our year exercise later agreements useful. as forward work and

the monetize gas cash mechanisms, have season. our under effective storage while the normal weather-normalization flows as and first we quarter, initial we in less conditions. were balances will inject provide warm not weather mean of we Also, refill affected jurisdictions this storage the as mitigated which much earnings experienced we as would weather Higher impact did

cash And so offset the the next through move we expect as quarters. storage-related be we flow to impacts X

shares sales $XXX settlement settled at million. forward quarter X.X million with all per approximately an end proceeds have average common of Had by of nearly been of forward agreements for we XXXX $XX stock net approximately price our have shares share. received of at would the We end,

for of under program. at-the-market available have also million issuance $XXX our approximately We equity equity

capital declared affirm the executed With quarter. guidance, million. $XXX our income investments including of million have Board We XXXX for net of of year, ONE equity diluted XXXX. last earnings of to million, to financial of $X.XX forward previous $X sales approximately dividend Gas $X.XX needs share per a Directors $XXX the our and $XXX share, per largely Yesterday, we satisfied unchanged from

and not guidance noted from very to remains XXXX the and pace, the I worth market happen. not point our them of given we which occurring and fluctuate, continue that, interest alive Moreover, attention much expectations. did market I of thought Reserve, any volatility the consensus responsive. upon presentations, Accordingly, it to would magnitude appears our our this back rate discussion market's rates Federal vigorous that investor forecast, the Finally, timing and for We modeling which the which which a in year. multiyear that X-year is debate assumptions, predicated our I'd heightened your today outlined guidance to interest assume rate sense cuts about financial is potential a highly quarter, cuts repeating last underpin

I'll And Curtis. to over turn now it

and and night. you, the an moved I'll good everyone. Thank Chris, start last that through on Kansas activity update morning, with storm Oklahoma

Oklahoma, damage not Barnsdall in our we not any and system Bartlesville, any significant widespread was and coworkers. experience of have any there While to reported did injuries damage did

Turning filed to The in March. activities. our Service case Gas rate regulatory was Kansas

a equity We revenue an results million X% a million change $XX.X requested XX approximately point the on and actual ratio are increase approximate results in of in our of change. ROE revenue capital reflecting change based and requesting in equity revenue requested ratio $X.X the requested million change net equity, basis an a on in structure. each Each XX.XX% XX.X%, return $X.X

to and low rate structure dual Corporation an adjustment. high customers annual and the rate for asked Kansas allow also Commission a usage We performance-based

We rates expect into November. in go to new effect

program June. the an in all to filing for a February, customers Service made made in to June. the full We In effective seeking area region $XX.X million file adjustment $X.X million be in be in West-North Gas Gas Texas reliability service rate case Central-Gulf effective a territory Service for all requesting the plan Texas March, in to infrastructure Central-Gulf early increase customers GRIP in with filings a for gas rates July.

with filed in rates February June. its Finally, application annual adjustment a change rate million late $XX.X seeking Oklahoma in into performance-based effect expected Natural to go Gas

operating our commercial activities. Turning and to

of execution period running strong for the continues last same to be capital with investments our the Our year. ahead first quarter

April new sets in immediate-term saw X,XXX slight elevated impact active rates of have while meters a the were in alone, meter deceleration over this the pace first potential growth, new the quarter as at XXXX. set homebuilders year-to-date mortgage buyers, decisions X,XXX April, since new Looking and most meters we of the through April making

our previously, jobs, and economic our need continues discussed have region new employers ongoing housing. for enjoy strong moving people growth, with we As territories, to into bringing an

the customer development. position base arising and to us capital Our economic from growing serve planning execution that

I'll it over now And for to Sid closing turn remarks.

both. Thank you,

to our work Our success by the coworkers Gallup was commitment our way in of the ONE one is to experience looked mission. of positive at reflected which possible Gas. results Annual coworkers indicator our employee engagement at the and A made survey, our another

our creating shareholders. for industry-leading to on are While workplace value our safety and commitment our year, engagement while long-term customer best and both consecutive provide results scores possible, increased already working improvements, the eighth we for experience reflecting the

of systems service and that responded, recognize last systems territory, customers we our who night, As series were ensuring safe. our storm and mentioned, Curtis moved our through teams a

And We effort. to are coworkers for our operations grateful each and of our to X,XXX our in I'm and every response grateful who excellent to took X.X person to dedication part safe million customers. service each their

we're ready now us Thank questions. for for you morning. all this Operator, joining

first question is Morgan with line Instructions] Stanley. The from Arcaro of David [Operator the

just talk right that yields up the just say -- to how with some up against is based in that fair later got even financial issuance where coming plan it could debt you've market, now. maybe you guess, I your are the this but year, refinancing on lining through Is

hadn't You a terms downtick in assuming really been yield. of

terms like market of the So is pricing? of on track what so far looking in terms in

Yes. David, this Chris. is

think spreads we credit this tightened relative seen two were it. around It's are I have them, of doing to a what not relative corporate they to it look last fall. gyrate have where fair treasuries characterization. at parts only doing, that's are what year. it's to and There's those They

benefit. a And so that's

We some explained various you that as true fall, flexibility be us out, consider also maturity continues does to to had our the afford in schedule it look and tenors.

notes, XX-year since true XX-year notes this had and the been and have has notes. presently, So we X-year spin,

expectations at what look maturity you affords doing fair treasuries in. and that treasuries spreads where is think, But us, so are of result a our net continue schedule And market to I those what to reality. we what our characterization current versus started,

And if case, look when and timing the that? your the potential Understood. settle to rate should what case that on Okay. then Kansas could the wondering I just thoughts for speak like Great. we to would with for was watch you

is statutory rate which Kansas. That typically runs is Curtis. this case cases the XXX period days, in David, for

full to the with able with in typically have have had litigation. past been and not the go to the a and We commission interveners those through settle

end So really specific time to case until won't that itself have closer get on the of frame. any the we comments

Christopher with is question line from the of Next Jeffrey Mizuho.

was I think, from in the than Maybe -- OpEx inflation last just touching year's. that on decelerated, more

plan? if there's wondering OpEx, of anything that quarter, the kind shaping 'XX to of still the whether specific this and front-loaded true holds through Just more

in the starting XXXX. in-source the your near folks this Yes. or We're benefits certainly operate the is effort through late we'll Chris, we us longer But it the quarter seeing and the take and the company in made term additional part joining of providing to that in those flexibility seeing our first we need of having of 'XX period. through I'll to and were continuing to to the benefits several specifically, question. to term Chris talk Curtis. turn this we that, functions with

the during I quarter. in his the first experienced thing it's other the The is, time we resources. when have would like weather mentioned Chris quarter, warmer-than-normal in on our over less out first typically point and A period will comments, less we pull that

some savings So we pick of an environment. in up that type also O&M

really question. it's to of two longer turn primarily. combination talk a of term rest to your So Chris And things the bit little a to those it I'll

we effects point, did first Curtis' some To have the in quarter.

as inflation period what is just had our arguably generally. presentation you in territories labor in our to with happens that think details going over in the and we biggest kind fall market of wage guidance is look multiyear I the -- driver be out, what the back a

But most And market. market that's so going O&M what and week about attention driver in its to that's talked has to inflation any going Fed our the paying labor last be meeting the forward. something happens weakening there's the in to of the -- primary labor recent

capacity continue look largely phases have to in-sourcing at completed, phases Curtis' subsequent on although been continue think to that group to around and initial that I move building needle the of the opportunities did we front.

the think of just largely happens the efficiency our what territories. with market now capacity riding and tide that then and I inflation side building in behind us labor is gains, of So it's

is chance always Chris, be I'd and the Curtis to more Yes. insourcing an when We're looking add efficient the of the present. think more effective. both only example opportunistic I that that for opportunities mentioned being

thought increase, example good efficiencies places might as be to efficient. opportunity at a a we ago as saw a entire saw looked we project the few that prices well. contractor so started as we some see, we of that our financial there are then through And menu is the to could add insourcing years starting to we COVID, And more

expect the can you from of us that see when presents to itself. So more opportunity

understood I as case should the maybe, then And we a helpful. remarks, Very in the for Central-Gulf rate prepared filing Texas. from expect

kind thoughts that 'XX, Just any maybe kind that as of of financing case? for 'XX, to outlook any initial it on and around implications pertains the

pass in then case and your for Chris, question that that, of still right now. second half to part it prep first Chris the take I'll rate but the of again, for we're

that early that won't point. other we any part it in until to As but And be past discuss of in file comments, my June. have to we do provide expect I happy or any to indicated able once get that, details we the we comments

And to any in all plans. in calendar regulatory then recovery talk not of is Chris, regulatory continued there's our that of change the and had process really talked we Obviously, into financial the a we I've fall, that our and and in about baked outlined fall. plan the financial

ONE Quarter Webcast. and Call the First Conference This Earnings Gas concludes

may now You disconnect.