Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, CCA, ERP, DIV, FVT

ONE Gas Announces Second-quarter 2018 Financial Results


TULSA, Okla., July 30, 2018 /PRNewswire/ -- ONE Gas, Inc. (NYSE: OGS) today announced financial results for its second quarter 2018 and updated 2018 financial guidance.

Highlights include:

"Colder-than-normal weather and new rates in our service territories positively impacted second- quarter results," said Pierce H. Norton II, president and chief executive officer. "Our employees remain diligent and focused on managing expenses and providing safe and reliable service to our more than 2 million customers."

SECOND-QUARTER 2018 FINANCIAL PERFORMANCE

ONE Gas reported operating income of $41.0 million in the second quarter 2018, compared with $48.4 million in the second quarter 2017.

Net margin increased by $1.2 million compared with second quarter 2017, which primarily reflects:

Second-quarter 2018 operating costs were $117.6 million, compared with $110.9 million in the second quarter 2017, which primarily reflects:

Second-quarter 2018 depreciation and amortization expense was $39.8 million, compared with $37.9 million in the second quarter 2017, due primarily to an increase in depreciation expense from capital investments placed in service and an increase in the amortization of the ad- valorem surcharge rider in Kansas.

Results for the second quarter of 2018 reflect lower income tax expense of approximately $3.8 million due primarily to the decrease in the federal statutory income tax rate to 21 percent in 2018 from 35 percent in 2017 as a result of the Tax Cuts and Jobs Act of 2017.

Capital expenditures were $89.2 million for the second quarter 2018, compared with $84.2 million in the second quarter 2017, due primarily to increased system integrity activities and extending service to new areas.

Key Statistics: More detailed information is listed in the tables.

YEAR-TO-DATE 2018 FINANCIAL PERFORMANCE

Operating income for the six-month 2018 period was $171.3 million, compared with $177.8 million for the same period last year.

Net margin increased by $2.0 million compared with the same period last year, which primarily reflects:

Operating costs for the six-month 2018 period were $236.4 million, compared with $231.7 million for the same period last year, which primarily reflects:

Depreciation and amortization expense for the six-month 2018 period was $78.7 million, compared with $74.9 million for the same period last year, due primarily to an increase in depreciation expense from capital investments placed in service and an increase in the amortization of the ad-valorem surcharge rider in Kansas.

Results for the six-month 2018 period reflect lower income tax expense of approximately $20.0 million due primarily to the decrease in the federal statutory income tax rate to 21 percent in 2018 from 35 percent in 2017 as a result of the Tax Cuts and Jobs Act of 2017.

Capital expenditures for the six-month 2018 period were $175.8 million, compared with $154.7 million for the same period last year, due primarily to increased system integrity activities and extending service to new areas.

The company ended the second quarter 2018 with $12.6 million of cash and cash equivalents and $514.2 million of credit available under its $700 million credit facility. The total debt-to-capitalization ratio at June 30, 2018, was 41 percent, and the ratio of long-term debt-to- capitalization ratio was 37 percent.

> View earnings tables

REGULATORY ACTIVITY

Oklahoma

In March 2018, Oklahoma Natural Gas filed its second annual Performance-Based Rate Change (PBRC) application following the general rate case that was approved in January 2016. The filing was based on a calendar test year of 2017. The PBRC filing identified a $5.6 million credit to base rates primarily due to the reduction in the corporate federal statutory income tax rate. If approved as filed, the credit will be applied to customers' bills over a 12-month period following receipt of an order. The filing also requested an energy-efficiency program true-up and a utility incentive adjustment of approximately $2.1 million.

A hearing before the administrative law judge was held on July 27, 2018, with an order expected in the third quarter 2018.

Kansas

In June 2018, Kansas Gas Service filed a request with the Kansas Corporation Commission (KCC) for an increase in base rates, reflecting investments in system improvements and changes in operating costs necessary to maintain the safety and reliability of its natural gas distribution system. Kansas Gas Service's request, if approved, represents a net base rate increase of $42.7 million. Kansas Gas Service is already recovering $2.9 million from customers through the Gas System Reliability Surcharge, resulting in a total base rate increase of $45.6 million. Benefits of the corporate income tax cuts associated with the Tax Cuts and Jobs Act of 2017 are also reflected in Kansas Gas Service's filing. This request would increase the average residential customer's natural gas bill by $5.67 per month.

In accordance with Kansas law, the KCC has 240 days to consider Kansas Gas Service's filing.

Texas

West Texas Service Area:

In March 2018, Texas Gas Service made filings under the Gas Reliability Infrastructure Program (GRIP) for all customers in the West Texas service area. The Texas Railroad Commission (RRC) and the cities agreed to an increase of $3.5 million, and new rates became effective in July 2018.

Rio Grande Valley Service Area:

In April 2018, Texas Gas Service filed an annual Cost-of-Service Adjustment for the incorporated areas of the Rio Grande Valley service area. The cities approved an increase of $1.1 million, and new rates will become effective in August 2018.

Central Texas Service Area:

In March 2018, Texas Gas Service made GRIP filings for all customers in the Central Texas service area. The RRC and the cities agreed to an increase of $3.3 million, and new rates became effective in July 2018.

North Texas Service Area:

In June 2018, Texas Gas Service filed a rate case for customers in its North Texas service area for an increase of $1.0 million. If approved, new rates are expected to become effective in December 2018.

2018 FINANCIAL GUIDANCE

Management's net income outlook for 2018 is expected to be in the range of $167 million to $178 million, or $3.15 to $3.35 per diluted share. The financial guidance reflects the impact of colder-than-normal weather and higher transport volumes.

Capital expenditures are expected to be approximately $375 million to $390 million in 2018, with 70 percent of these expenditures targeted for system integrity and replacement projects.

Additional information is available in the guidance table on the ONE Gas website.

EARNINGS CONFERENCE CALL AND WEBCAST

The ONE Gas executive management team will conduct a conference call on Tuesday, July 31, 2018, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call also will be carried live on the ONE Gas website.

To participate in the telephone conference call, dial 888-487-0360, pass code 9386886, or log on to www.onegas.com.

If you are unable to participate in the conference call or the webcast, a replay will be available on the ONE Gas website, www.onegas.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass code 9386886.

LINK TO EARNINGS TABLES

http://www.onegas.com/~/media/OGS/Earnings/2018/Q2_2018_OGS-Ddke4j98Qqde4c0m.ashx

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ONE Gas, Inc. (NYSE: OGS) is a 100-percent regulated natural gas utility, and trades on the New York Stock Exchange under the symbol "OGS." ONE Gas is included in the S&P MidCap 400 Index, and is one of the largest natural gas utilities in the United States.

ONE Gas provides natural gas distribution services to more than 2 million customers in Oklahoma, Kansas and Texas.

ONE Gas is headquartered in Tulsa, Okla., and its divisions include Oklahoma Natural Gas, the largest natural gas distributor in Oklahoma; Kansas Gas Service, the largest in Kansas, and Texas Gas Service, the third largest in Texas, in terms of customers.

Its largest natural gas distribution markets by customer count are Oklahoma City and Tulsa, Okla.; Kansas City, Wichita and Topeka, Kan.; and Austin and El Paso, Texas. ONE Gas serves residential, commercial, industrial, transportation and wholesale customers in all three states.

For more information, visit the website at http://www.ONEGas.com.

Some of the statements contained and incorporated in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The forward-looking statements relate to our anticipated financial performance, liquidity, management's plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "should," "goal," "forecast," "guidance," "could," "may," "continue," "might," "potential," "scheduled," "likely," and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements, which are applicable only as of the date of this news release. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward- looking statement include, among others, the following:

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Item 1A, Risk Factors, in our Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

Analyst Contact:

Brandon Lohse


918-947-7472

Media Contact:

Jennifer Rector


918-947-7571

 

SOURCE ONE Gas, Inc.


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