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

ONE Gas Announces First Quarter 2024 Financial Results; Affirms 2024 Financial Guidance


Declares Second Quarter Dividend

TULSA, Okla., May 6, 2024 /PRNewswire/ -- ONE Gas, Inc. (NYSE: OGS) today announced its first quarter financial results, affirmed its 2024 financial guidance and declared its quarterly dividend.

"Efficient capital execution and our focus on safe operations position us well to serve a growing customer base," said Robert S. McAnnally, president and chief executive officer. "Based on our first quarter results, we remain on track to achieve the midpoint of our 2024 financial guidance."

FIRST QUARTER 2024 FINANCIAL RESULTS & HIGHLIGHTS

FIRST QUARTER 2024 FINANCIAL PERFORMANCE

ONE Gas reported operating income of $145.9 million in the first quarter 2024, compared with $149.2 million in the first quarter 2023, which primarily reflects:

These impacts were partially offset by:

Actual heating degree days across the Company's service areas were 4,741 for the first quarter 2024, 9 percent warmer than normal weather and 3 percent warmer than the same period last year. The impact on operating income was mitigated by weather normalization mechanisms.

Excluding interest related to KGSS-I bonds, net interest expense increased $1.7 million for the three months ending March 31, 2024, due primarily to the issuance of $300 million of 5.10 percent senior notes in December 2023 and the repayment of $300 million of 3.61 percent senior notes and $473 million of 1.10 percent senior notes in February and March 2024, respectively.

Income tax expense includes a credit for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $10.1 million and $9.9 million for the three months ended March 31, 2024, and 2023, respectively.

Capital expenditures and asset removal costs were $179.4 million for the first quarter 2024 compared with $164.6 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas. 

REGULATORY ACTIVITIES UPDATE

In February 2024, Oklahoma Natural Gas filed its annual Performance-Based Rate Change application for the test year ended December 2023. The filing includes a requested $31.8 million base rate revenue increase, $2.4 million energy efficiency incentive and $12.8 million of EDIT to be credited to customers in 2025. A hearing is scheduled for June 4, 2024.

In March 2024, Kansas Gas Service submitted a general rate case requesting an increase in net base rates of $58.1 million. The filing's total request is for a $93.1 million increase, which includes $35.0 million in revenue increase that is already approved and collected through Gas System Reliability Surcharge filings. Kansas Gas Service proposed a performance-based ratemaking mechanism and a rate class designation for residential customers based on annual usage.

In March 2024, Texas Gas Service made a Gas Reliability Infrastructure Program (GRIP) filing for all customers in the West-North service area, requesting a $8.6 million increase to be effective in July 2024.

In February 2024, Texas Gas Service made a GRIP filing for all customers in the Central- Gulf service area, requesting a $12.3 million increase to be effective in June 2024.

2024 FINANCIAL GUIDANCE

ONE Gas affirmed the financial guidance it issued on Nov. 29, 2023, with 2024 net income expected to be in the range of $214 million to $231 million, or $3.70 to $4.00 per diluted share. Capital expenditures, including asset removal costs, are expected to be approximately $750 million in 2024.

EARNINGS CONFERENCE CALL AND WEBCAST

The ONE Gas executive management team will host a conference call on Tuesday, May 7, 2024, at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time). The call also will be carried live on the ONE Gas website.

To participate in the telephone conference call, dial 833-470-1428, passcode 395585, or log on to www.onegas.com/investors and select Events and Presentations.

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 7 days. The playback call may be accessed at 866-813-9403, passcode 784068.

ONE Gas, Inc. (NYSE: OGS) is a 100% 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.

Headquartered in Tulsa, Oklahoma, ONE Gas provides a reliable and affordable energy choice to more than 2.3 million customers in Kansas, Oklahoma and Texas. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.

For more information and the latest news about ONE Gas, visit onegas.com and follow its social channels: @ONEGas, Facebook, LinkedIn and YouTube.

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 Part 1, 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.

APPENDIX

 

ONE Gas, Inc.

CONSOLIDATED STATEMENTS OF INCOME

 

 



Three Months Ended
March 31,

(Unaudited)

2024

2023


(Thousands of dollars, except
per share amounts
)

Total revenues

$         758,320

$      1,032,143

Cost of natural gas

383,003

665,799

Operating expenses

Operations and maintenance

 

132,783

 

126,683

Depreciation and amortization

76,572

71,264

General taxes

20,102

19,166

Total operating expenses

229,457

217,113

Operating income

145,860

149,231

Other income (expense), net

3,508

2,581

Interest expense, net

(31,357)

(30,115)

Income before income taxes

118,011

121,697

Income taxes

(18,694)

(19,076)

Net income

$           99,317

$         102,621

 

Earnings per share
   Basic

 

 

$               1.75

 

 

$               1.85

Diluted

$               1.75

$               1.84

 

Average shares (thousands)



Basic


56,729


55,538

Diluted


56,800


55,800

 

Dividends declared per share of stock

 

$

 

0.66

 

$

 

0.65

 

ONE Gas, Inc.

CONSOLIDATED BALANCE SHEETS

 



March 31, 

December 31,

(Unaudited) 

2024

2023

Assets 

(Thousands of dollars)

Property, plant and equipment

   Property, plant and equipment

 

$         8,606,475

 

$         8,468,967

Accumulated depreciation and amortization

2,368,521

2,333,755

Net property, plant and equipment

6,237,954

6,135,212

Current assets

Cash and cash equivalents

 

11,509

 

18,835

Restricted cash and cash equivalents

9,963

20,552

Total cash, cash equivalents and restricted cash and cash equivalents

21,472

39,387

Accounts receivable, net

324,505

347,864

Materials and supplies

80,349

77,649

Natural gas in storage

110,451

187,097

Regulatory assets

94,692

75,308

Other current assets

32,226

37,899

Total current assets

663,695

765,204

Goodwill and other assets

Regulatory assets

 

283,851

 

287,906

Securitized intangible asset, net

286,234

293,619

Goodwill

157,953

157,953

Other assets

134,350

131,100

Total goodwill and other assets

862,388

870,578

Total assets

$         7,764,037

$         7,770,994

 

ONE Gas, Inc.

CONSOLIDATED BALANCE SHEETS

(Continued)

 




March 31, 

December 31,

(Unaudited) 

2024

2023

Equity and Liabilities     

(Thousands of dollars)



Equity and long-term debt


Common stock, $0.01 par value:


authorized 250,000,000 shares; issued and outstanding 56,569,396 shares at March 31, 2024;

issued and outstanding 56,545,924 shares at December 31, 2023

$                   566

$                   565

Paid-in capital

2,031,168

2,028,755

Retained earnings

799,443

737,739

Accumulated other comprehensive loss

(1,192)

(1,182)

Total equity

2,829,985

2,765,877

Other long-term debt, excluding current maturities, net of issuance costs

1,878,260

1,877,895

Securitized utility tariff bonds, excluding current maturities, net of issuance costs

268,102

282,506

Total long-term debt, excluding current maturities, net of issuance costs

2,146,362

2,160,401

Total equity and long-term debt

4,976,347

4,926,278

Current liabilities

Current maturities of other long-term debt

 

13

 

772,984

Current maturities of securitized utility tariff bonds

28,183

27,430

Notes payable

953,400

88,500

Accounts payable

196,583

278,056

Accrued taxes other than income

64,405

68,793

Regulatory liabilities

34,844

66,901

Customer deposits

58,064

62,187

Other current liabilities

68,032

112,370

Total current liabilities

1,403,524

1,477,221

Deferred credits and other liabilities

Deferred income taxes

 

781,316

 

752,068

Regulatory liabilities

487,475

500,478

Employee benefit obligations

20,220

20,265

Other deferred credits

95,155

94,684

Total deferred credits and other liabilities

1,384,166

1,367,495

Commitments and contingencies



Total liabilities and equity

$         7,764,037

$         7,770,994

 

ONE Gas, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 


Three Months Ended


March 31,

(Unaudited) 

2024

2023


(Thousands of dollars)




Operating activities



Net income

$              99,317

$            102,621

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

76,572

 

71,264

Deferred income taxes

16,247

9,364

Share-based compensation expense

3,117

2,821

Provision for doubtful accounts

1,675

3,925

Proceeds from government securitization of winter weather event costs

?

197,366

Changes in assets and liabilities:

Accounts receivable

 

21,684

 

56,336

Materials and supplies

(2,700)

(2,160)

Natural gas in storage

76,646

170,239

Asset removal costs

(12,621)

(13,567)

Accounts payable

(68,117)

(157,533)

Accrued taxes other than income

(4,388)

(2,204)

Customer deposits

(4,123)

(1,387)

Regulatory assets and liabilities - current

(58,520)

5,585

Regulatory assets and liabilities - noncurrent

2,520

21,871

Other assets and liabilities - current

(39,312)

3,573

Other assets and liabilities - noncurrent

265

952

Cash provided by operating activities

108,262

469,066

Investing activities

Capital expenditures

 

(166,751)

 

(151,030)

Other investing expenditures

(1,259)

(292)

Other investing receipts

2,029

1,443

Cash used in investing activities

(165,981)

(149,879)

Financing activities

Borrowings (repayments) of notes payable, net

 

864,900

 

(272,000)

Repayment of other long-term debt

(773,000)

?

Repayment of securitized utility tariff bonds

(13,780)

?

Dividends paid

(37,336)

(36,002)

Tax withholdings related to net share settlements of stock compensation

(980)

(2,386)

Cash provided by (used in) financing activities

39,804

(310,388)

Change in cash, cash equivalents, restricted cash and restricted cash equivalents

(17,915)

8,799

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

39,387

18,127

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

$              21,472

$              26,926

Supplemental cash flow information:

Cash paid for interest, net of amounts capitalized

 

$              41,497

 

$              33,729

Cash paid (received) for income taxes, net

$               (2,797)

$              (1,870)

 

ONE Gas, Inc.
KGSS-I SECURITIZATION

In November 2022, Kansas Gas Service Securitization I, L.L.C. (KGSS-I) issued $336 million of securitized utility tariff bonds. KGSS-I used the proceeds from the issuance to purchase the Securitized Utility Tariff Property from Kansas Gas Service, pay for debt issuance costs, and reimburse Kansas Gas Service for upfront securitization costs paid on behalf of KGSS-I.

Revenues for the three months ended March 31, 2024, include $11.7 million associated with KGSS-I, which is offset by $7.5 million in operating and amortization expense and $4.1 million in net interest expense.

The following table summarizes the impact of KGSS-I on the consolidated balance sheets, for the periods indicated:


March 31,

December 31,


2024

2023


(Thousands of dollars)

Restricted cash and cash equivalents

$               9,963

$             20,552

Accounts receivable

4,694

5,133

Securitized intangible asset, net

286,234

293,619

Current maturities of securitized utility tariff bonds

28,183

27,430

Accounts payable

118

394

Accrued interest

2,757

7,207

Securitized utility tariff bonds, excluding current maturities, net of discounts and issuance costs of

$5.2 million and $5.3 million, respectively

 

268,102

 

282,506

Equity

1,731

1,768

 

The following table summarizes the impact of KGSS-I on the consolidated statements of income, for the periods indicated:


Three Months Ended
March 31,


2024

2023


(Thousands of dollars)

Operating revenues

$             11,671

$              11,933

Operating expense

(111)

(110)

Amortization expense

(7,385)

(7,089)

Interest income

188

75

Interest expense

(4,327)

(4,809)

Income before income taxes

$                    36

$                     ?

 

ONE Gas, Inc.

INFORMATION AT A GLANCE

 





Three Months Ended
March 31,

(Unaudited

2024

2023


(Millions of dollars)

Natural gas sales

$             694.1

$             971.8

Transportation revenues

$               40.4

$               38.9

Securitization customer charges

$               11.7

$               11.9

Other revenues

$               12.1

$                 9.5

Total revenues

$             758.3

$          1,032.1

Cost of natural gas

$             383.0

$             665.8

Operating costs

$             152.8

$             145.8

Depreciation and amortization

$               76.6

$               71.3

Operating income

$             145.9

$             149.2

Net income

$               99.3

$             102.6

Capital expenditures and asset removal costs

$             179.4

$             164.6

Volumes (Bcf) Natural gas sales Residential

 

 

52.4

 

 

54.6

Commercial and industrial

17.0

18.1

Other

1.1

1.1

Total sales volumes delivered

70.5

73.8

Transportation

63.4

64.9

Total volumes delivered

133.9

138.7

Average number of customers (in thousands)

Residential

 

2,110

 

2,100

Commercial and industrial

165

165

Other

3

3

Transportation

12

12

Total customers

2,290

2,280

Heating Degree Days

Actual degree days

 

4,741

 

4,872

Normal degree days

5,219

5,237

Percent colder (warmer) than normal weather

(9.2) %

(7.0) %

Statistics by State

Oklahoma

Average number of customers (in thousands)

 

 

928

 

 

924

Actual degree days

1,681

1,719

Normal degree days

1,800

1,792

Percent colder (warmer) than normal weather

(6.6) %

(4.1) %

Kansas

Average number of customers (in thousands)

 

656

 

656

Actual degree days

2,201

2,251

Normal degree days

2,460

2,460

Percent colder (warmer) than normal weather

(10.5) %

(8.5) %

Texas

Average number of customers (in thousands)

 

706

 

700

Actual degree days

859

902

Normal degree days

959

985

Percent colder (warmer) than normal weather

(10.4) %

(8.4) %

 

Analyst Contact:

Erin Dailey


918-947-7411

Media Contact:

Leah Harper


918-947-7123

SOURCE ONE Gas, Inc.


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