- Earnings call transcript Q3 2022

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Operator

Good morning and thank you for standing by. Welcome to the OGE Energy Corp's Third Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. And I will now hand the conference over to your first speaker, Jason Bailey, Director of Investor Relations at OGE. Jason. ahead, Go

Jason Bailey

CEO; and Energy Eric, me everyone, welcome President, and I our Thank third good quarter OGE and Chairman, our Corp's Sean With Bryan XXXX to Buckler, have CFO. you, Trauschke, morning, and earnings today, call.

of as we will being the like answer questions. always, followed we from first financial of to today, may from follow oge.com. you that and I'd is explanation will webcast an Bryan call this remind results, terms hear Sean, at In by and conference you finally, your along

addition, will that conference the In same the archived on call and slides call be accompanying website. following

Before statement call remarks. financial simply best states we now your Harbor regarding direct forward-looking forward-looking to that we statements. turn I'll statements the and cannot an Sean Sean? I'd his results, our begin to for is the guarantee but This this like requirement estimate Safe attention opening to financial date. for the is over to presentation, SEC

Sean Trauschke

Jason. Thank today. Good joining us you for you, everyone. Thank morning,

taking costs understand and we to energy get customers are our produce Before pressures on have across specific economic customers reflect the discuss rising bills. the of do about understand the results. I'll electricity are about that after the the to fuel board we to actions increasing today. want inflationary our concerns cost household I of the quarter's contributes We and and experiencing all customers started, concerns us increasing our talk we about

$X.XX This operations results. from $X.XX company of consolidated of includes financial and holding gas earnings earnings morning, quarter of $X.XX. loss earnings share, a to reported per Earlier we this per of our share. third natural utility $X.XX Turning

XX flowing were country, other this to service quarter of public the no execution due summer to days to of conservation Our grid energy keep by the across there our areas solid protective for with area. exceptional a upwards during Unlike team XXX-degree hot our grid. who work very performance to calls in is

and it's system XX day our and our Our team lights incredibly I'm hours is proud work their designed, conditions, the keep these for for system on to operated built, customers. is of a our for

highly investments planning a was The we of prepared. really with undertake be productive in also exit midstream and Transfer third In quarter, of the the of sale was investments to reflection units. quarter final third completed the our Energy our we the

business protect to has of economic and focus doubled planning discuss our on measured in reliability customers want While I moment midstream and affordability. to this and take effort been for close with the down taken a this move service We've area to part forward. the what equal I a long to and on will be last business reflect a time approach results, to decade the end financial on growth future our

We we continue setting our to we customers up the will for say strong this deliver future. in accomplish results do, what to

approximately underground XX over by and resiliency, end that major highways. underground year, we interstate continues, security a This and reliability, lines. lines XXX to grid for initiative safety having events. multi-year Our run reliability will improves including work vehicles during And customers of and than lines response these buried weather anticipate XXXX, of Undergrounding both across we area. lines service and more emergency our the those

growing our and and availability. chain mid existing substations to equipment continue build substations supply service in area upgrade constraints even new We to support

during for continue outages. to outages to circuits. payoff These or see of continue our enhanced reduced significantly improve a We results of eliminated our restoration investments thousands saving and customers of result process as hundreds distribution from minutes

will construction system we at continue the XXX local investment facilities of economic the Port Muskogee megawatts in [ph] nearing invest support to new serve] to that customers. to local our of [load to completion such involves of approximately Additionally, support growth. enable new area, service transmission our One

following favorable you the are Reduction we RFP, the solar of many the given reissued aware, As Act. Inflation opportunities

nation. As the three our requirements an RFPs forward results continues communities service the holistically active ensure delivers good And long-term from That's some Oklahoma than review is average for and regions position we'll we our increased in requirements, of the even generation path are to you're country simply review high economic seeing their generation area head winter. here. for will to our at of the with strength with our This service. not and and all reserve as growing The With our once we [ph]. comes of fuel unemployment customers. low for meets good true the from with challenges margin into grow news Western those remaining update lower prices we for reliable levels, concern provide combined electric Arkansas, the [RT] facing growth in rates reliability

continue Our ensure in service electric to resiliency the investments have customers generation reliability in and paid summer and our will this off and reliable future. grid

customers and our committed are helping increasing inflation they season we monthly We continuing customers bill. communications this tough how are can during about to rise, their manage economic to with to energy use

program dollars of home household thousands of upgrades with customers provides at at or incomes cost $XX,XXX to weatherization below. no Our additional

a [XX usage. to customers reduce and age Our options their silver of energy bill of [ph] lower older offers suite years] monthly energy their our and

for generation commercial and programs savings thousands deliver efficiency customers, megawatt energy needs. residential of our Additional reduce help and future

we customers Oklahoma, billing Our predictable Bill in in programs bills average increase give these billing Flat and monthly in more monthly last both Arkansas, of seen programs, an levelized Guaranteed have billing, quarter. this

rates electricity we a committed need. we our bills, low who service macroeconomic alone, million with enhancing bill bill life local agencies, are $XX of federal, we and through our sponsored state, connecting Affordable assistance. received today's assistance to on in our customers company as focused as that well to focus as programs. environment We OG&E know to their life outstanding also is This year deliver sustaining customers team challenges as and is operational as hallmark for Our have customers creates are possible. customers maintain keeping

Our X% approximately load for expect in the and outstanding continues full-year. keep to XXXX, experienced pace forecast growth growth the for of XXXX with we we

forecast load remains our service to grow. area long-term continues Our as strong

continue Our economic our new development XXXX. economic across business Compass highly to from efforts across will business dividends all announced rates in competitive fertilizer half to an the and relocation to when development jobs Storage is X,XXX expansion coke This a the a by deciding first of pay know secured plant Mulberry, and projects companies significant of territory. partnerships compared by cost XX help The in expansion of consider others. Cold the that through or growth and when new to We Arkansas. is our factor Oklahoma servicer, the [indiscernible] offer we continue the nearly expansion electricity and add

with communities and advance work and to innovation continue in and to Oklahoma technologies Arkansas. partners We

part for important awarded For to school a EPA for districts as example, they with we worked close EPA bus support to school income as rural We're state. buses program apply the the delighted IIJA. school just bring with want to clean million the last I districts and do these week, And schools. few these of low was thoughts. to $XX announced electric

the service our me employees. to development national are this greatest reliability economic and continues performance strong better continuing are grow area about all growing. strength, are First, to and activity the our Unemployment to our talk our these active economies leads excel. than With is economic average, communities development stronger. safety the across business and and rates And investments,

on Just as track of last one year, is record. safest be the XXXX to years on

from it's they purpose but stood Magazine employer Oklahoma. One we as of effectively work, Energy communities and he to as the a not again Hurricane in named from from employer two just our integrally day. relationships know receive and our to been what It's We're but the And that to power And Florida Ian. letter important excellence every electricity brought broaden all following dedication of crew a dedication largest efficiently alongside fabric the recognition A and of where on customers supporting every single out. who community are. person Melbourne, to Our our every saw our me and home recently customer, of efforts how without to do after neighborhood not winter from the as his are of our proud they day recently our I together number but employees professionalism and them their state, received life. worked we what the them, the to OGE I'm expected firsthand, in is work energize Florida Forbes letter tied example employees, our Florida and incredibly live get people their about and to to back someone both in when watched in the on. state state. team and his I'm once restoration customer to building their gentleman here crews grateful many the that returned arrived had our team our

it's more the continuous states our reliability businesses So, investment service resiliency. and and more simply the more with Arkansas, in more are and This coming of country. combined to prone area. and two Oklahoma growth put, our and most families, Afterall, weather

opportunities few we keep affordability communities this of We for for worked to we our our years many, tremendous of over create intend for the manage this years going. to to and come. last many lens through We hard the have it customers. growth all and

to over Bryan? So, with the I'll call Bryan. that, turn

Bryan Buckler

strong by growing consistent Sean. load were recoveries contributed from same as favorable compared in as commission. XXXX. of base, compared in you, $X.XX volumes order reported with and Thank earnings higher period increase Starting of a became July in These on you, with on XXXX. the electric The that quarter in the consolidated to earnings third rate higher revised of weather, per Jason, $X.XX Slide in sales depreciation primarily depreciation diluted well Thank $X.XX to utility, partially capital was $X.XX effective well increased investments. offset everyone. third per as by from morning, X, good general share rates expected same the in and drivers period the warmer the the we quarter as Oklahoma review OG&E, driven results share, asset growth

XXXX. our in Natural the XXXX. an completion Other Energy of equity interim compared was transfer energy from of decrease holding a share same $X.XX in units. a compared in in $X.XX in Our period net same will loss The our to The to Enable, exit period per of the including XXXX. in income $X.XX segment was the earnings the due of of first of by contributed offset Gas the in to and I share in our gain the company, on due recorded quarter, increase earnings the earnings of of consolidating Transfer elimination discuss operations, loss partially primarily that to was Midstream third in the tax net loss experienced moment. primarily per reversal a $X.XX partial period benefit quarter of

be For the full-year at a share. electric of expect per $X.XX XXXX, and holding $X.XX now to to we be company range approximately $X.XX to in the diluted earnings of utility per share loss earnings

to X. Slide economic on and load results Turning indicators

X.X% customer the and XX over months, and Our in with territory of service Oklahoma count grew the attractiveness expectations in-line Arkansas. reflecting our our past

X.X%, growth. Our at by classes. normalized strong by hot expectations our a year with business volumes were at the date which during unusually to and Weather service oilfield look authority conservation customer usage commercial, of territory we was class, weather especially decline reduce residential closer impacted believe normalized a X.X%, the public growth is below remained commercial Taking load strong experiencing supported the weather. to

third for agriculture, the and manufacturing. XXXX, industries, growth commercial quarter, class many was weather in data including higher XX.X% normalized by than mining, the For driven

historically before weather growth retail customer For that we load normalized exceed total to X% upside outstanding consideration potential be companies. will confidence from of data again from This load XXXX mining all the even forecast growth ever growth load we've approximately are our increasing groups, load X%. full-year XXXX incremental adjusting drives experienced

X. Slide to Moving

the As the quarter. energy of third Sean exit units mentioned, we the completed transfer in remainder the of

should in focus interest true measured We is better the the on pleased sell shares operations, premium down are which our our utility business. no the during of investors to electric a allow We what longer have of year. mid-stream prudent, value an we with believe very

a topic industry, Let of me in attention rate risk. our update you on lot now a garnering interest briefly

rate million less we of First, than floating debt. $XXX have

asset update are balance to have respect we in million. positioned months. through to utility are maturity regulatory is no fuel rate we $XXX we our what maturities other country And companies experiencing, XXXX. refinancing well Accordingly, an Secondly, our in that gears, across only Shifting wanted provide industry. the XXXX on debt I believe similar fixed to with very risk,

$XX While fuel impacts under recoveries implemented we as effective X customer’s the months Oklahoma, recovery we're period. have help Arkansas, million that XX XXX mitigate bills. over will of begun fuel recovery the In monthly we new rates less, balance or the periods on proposed month-end recover based August recovered XX recovery down months. million in of a are recovery In typically to balance have we November longer XX-month

and information a that will While XXXX assumptions. refreshed during I've provided key capital fair you other and we a amount updated I guidance as you and today, remind to at load provide as well call, look an plan, investment of quarter with EPS fourth our financial want official financing financial

stand. by where Let summarizing up we me wrap

one in the support by sheets we the of service to and industry. Our infrastructure territories of Oklahoma grow strongest plan communities, and in these continue and the Arkansas important backed make to continue for balance investments growth to Western

continue to your to return with for drive our long-term EPS confidence As and X% approach X%, coupled stable open an XXXX, we we that, OG&E the ability a lines for we investors With of which growing our in when plans to will attractive proposition. total dividend a offers CAGR questions. have

Sean Trauschke

are we for ready Operator, questions.

Operator

of Bank America. at Ventura Darryl

ahead. Your open. Please line go is

Julien Dumoulin-Smith

morning questions to morning Speakers] team. here. [Multiple Julien It's good both. Thanks taking appreciate update. the the the and for good Hey, time Hey, you and

Bryan Buckler

Good morning.

Julien Dumoulin-Smith

strategies the reevaluating fuel here may, then state. here the balance? comments, You that earlier in about I [ph]? talk procurement remarks, in-light practices just talked to fuel reissued can think some talk to and about how in-light do avoid pivoting fuel does this? about you rapid IRA, large] with you know conversation at the at uptick appreciate think I of the more if and related, this longer-term little conversation, about be coincide looking I you maybe there's fuel here can longer-term How the And So, on bit opportunity solar amortization, just the you how we a the the outset opportunities in that? was there of [for about specific renewable hedging RFP in hedging

Sean Trauschke

Yes. Julien, hear it's of again. thanks – things. Couple for the is to you question. good This from

with of we in hedging lot discussion, discussion of is, that physical discussion supply Storm the we've so certainly key Uri. we really a the the commission was that have What was on the physical position, much done factors larger and storage we've coming On we've have about a had taken got out It supply. case. That the one gas that Winter hedging. natural

some looking continually the we're if our see already changed better We've mitigate there. can So, at. some. We've procurement impact we changed of already to practices

discussion discussion. plays see hedging the We'll So, out. where that will be continuing

about you're that RFPs the think mentioning appreciate we there, and I out about As you have correct, solar RFP. the

all get going those they So, how need. back we're all to to and see we're fit and going look at our those

reduce number be all opportunity volatility, would us. As that to helpful. helpful of some you of have would over an extent a at that out recall, fuel we be we to years, need That don't It's a certainly once. to the but have spread that

provides credits there got I customers, we that these some has my of changed. that opportunity to make that be beneficial rely sure own intent And assets IRA we've but our think then reliability on. to have terms to we in also could that not again, the

at one of and to that know as been is, this more the was because must that. our these want are operators we run recognized We to to the us. of own of coming all on of is think I coming that probably to we've that. sure hot has to resolute don't want good of we We charge energy to of customers. sure of in we're Uri we in anything control accountable end we And as the support want our out terms if how and it and summer to points make making plants flowing we're day that out others rely

Or get points you So, your Did I I there. was hope Julien? questions? have helpful that

Julien Dumoulin-Smith

X% so. Yes, if leave I I the the squeeze for year if one in here sticking with can on more bit commentary X% just get granularity I'll here, XXXX, economy could may, And here, add growth, there. on at still I an then think I question the loan it and the maybe dynamic here here exceptional to year exceeding I X%. trend but exceeding again, little I date. that's mean, the you in mean, a

here said may ahead? that the be must of You larger guidance loads in more here that you in formal of but next be having a conversations the your quarter, you with little bit know I some year of provide have zeroing you just on some to where land perhaps clarity add conversation? that on could

Sean Trauschke

a Yes. that Bryan's it's to we've November see lot and see land new it. remarks to the I the We I of new growth crystal in it's what side the of it expansion and think But there's announced facilities. ball we when seen, We businesses. this where see commercial activity certainly it's in got population February. development, on going We coming. here see don't the in we've know exactly sitting existing

probably development last anything going in kind we that the think confident is just, in I that's really have pinpointing very to right? hesitancy that pipeline. win discussions was week, very of the city next year some some here We're in just I hit, the of opportunities. exciting when

of lot on things a there's so, And going there.

focused been of for this it's years terms territory. our a engine of creating really a correct, validation Julien. going growing. It's sitting I absolutely in so, here economic is number year, difficult online in And we've what on it's service your of to, of May come whether of thesis next here versus And something's today but kind of pinpoint to that November think really in

Julien Dumoulin-Smith

here Yes, peers. of versus your many pretty remarkable

there. Appreciate you guys. Thank it. just I to So, follow-up wanted

Bryan Buckler

care. Take Julien. Thanks

Operator

Lee ahead. go from Please your is Brandon, line open. Instructions] And is Brandon our [Operator Mizuho. next caller

Brandon Lee

Sean Hey, Bryan. good morning and

Just a quick question.

Sean Trauschke

Brandon. morning, Good

Brandon Lee

morning. your mentioned Good dependent sort of you load. How data know on of in you load? crypto do is transient And load service or territory? that I mining it briefly kind prices it Is prices? view Thanks. bitcoin

Sean Trauschke

Thanks question. this. tackle He's to that for into Yes. let the going I'm one. knee deep Bryan Brandon

ahead. go Bryan So,

Bryan Buckler

growth that good and morning. population well, field Yes. as we're that been I'll Brandon, have add come this authority us Hey commercial, to residential, that Julien's little And systems to strong. great mentioned. sectors in several seen seeing the at like casinos industrial, give a really question growth year. oil you has been growth will in strong outages public That look that we've includes state. just but and that the next some an on year, bounce on things back confidence bit back and and those good school reasonably that Sean

commercial lot been the business is warehouses and balance the here there Oklahoma-owned company. a in the quarter, in is oil of brick it's year, the the cooling and of the of data in are, traditional managed that's mortar, particular, an topic state On in the customer have your third art kind systems. biggest but with different housed so but mining the growth half less on front, a types, data nice first in of we equipment Their there mining

an it's So, company. Oklahoma

pricing $XX,XXX data to state matter is finish economics. – We've they far anchored off seen We Bitcoin to that growth your date they're will just so been not from some Bitcoin may it’s of what more profitable. $X,XXX Does above. right, some into other question, their as the They're have or running in anywhere are, but told come rooted does to other but it's states. and as seen that to companies the that you've potential in in perhaps mining be we've

X% to for that that's enthusiasm given growth mining. not incremental rate at or excluding for but next looking an completely you So, XXXX, what's year, we're higher from growth our watch, is us data just a indicator

on point So, I too. be just clear want to that

Brandon Lee

had. Great. That's lot. perfect. all I Thanks That's a

Bryan Buckler

Thank you.

Operator

open. next standby Gregg Okay is Orrill ahead. And for Please caller. up UBS. at our next is your Greg, go line

Gregg Orrill

proceeds after I tax for Energy have Thanks. if the Thanks number wondering uses] Transfer [ph]? on Yes. from the question. you and [additional an any was

Sean Trauschke

to… want you Bryan, Yes.

Bryan Buckler

absolutely. Yes, Gregg, good Hey, morning.

and of As exiting that the had just a you're basis per the as unit that, a settled ET the slide given shares. we in we've ET our deck, tax and reminder, negative kind transactions modeling on we you price

of you rate area the when of kind from a plus negative normal So, be, net effective out the tax consider proceeds, on the your just kind to played tax rate cash XX% XX% gross tax to basis perspective.

your modeling. with you helps that hopefully So,

down on pay course And of to short-term company proceeds, holding so, that used debt. we've some

position so, on And balance good a we're sheet. the in

Gregg Orrill

Okay.

Sounds good. Thank you.

Operator

Standby next caller. for our

go from Okay. Mr. calling Gandhi Adithya Wolfe please is Gandhi, ahead. in Research. Mr.

Adithya Gandhi

Thank you. morning, Good morning, Sean. Good Bryan.

Sean Trauschke

morning. Hey, good

Adithya Gandhi

Good morning.

on from the to to that growth of think Just sort relatively expressed into the utility you'll – change or a sure is linear? of earnings Does growth your rate, overeating rate we an noticed should annual utility of linear way I'm first, I shape X% want that. that this X% you'll as not to the being now not, earnings growth CAGR. still Just make sort

Sean Trauschke

been each that over growth the that. eat achieve to we're consistent shouldn't at with would pretty what that anything X% You working We've to XXX% in all. is that's year. and Yes. agree X% I rate

base $X.XX had we So, XXXX. in

You year, the in the And X% year guidance us be achieve to saw future. expect $X.XX every us you X% to this our to X% growth. throughout trying hit that should which mid-point

Adithya Gandhi

Got the XXXX if we will Should your XXXX other it. at of of bit. current add a you but, QX, earnings, I O&M that sort from my gets question, you. utility forward XXXX taking guess of guidance us XXXX your last give just I second quarters sort we of little steps into assume formal to, Thank to And know pulling your above de-risk sort any some range. or four

could add on just that? you some If color

Sean Trauschke

Yes.

weather, but when always would don't you, move around, I haven't just we say, things move on we've intent the where our growing to the safe benefit think things for things certainly fair to but I business, it's were we in and we're around around we moving long-term. we think say, past – years had caution the of had it's I

well. XXXX to do be in could XXXX or we in things So, as other very them years pulling likely from

still and this the focused technologies costs managing some we're of on the we're those too. identifying for reduce opportunities efficiencies to business and So, laser long-term

So – We're think is but around. your things I some right. moving thesis

Adithya Gandhi

That's can just that last in. one question, squeeze And helpful. you. Thank if I

testimony of a days interveners few years, intravenous with you sorry the ago months. in Oklahoma investigation than cost regarding like So, XX on longer just fuel amortization the, came Show your XX in sort recommending most know Cause periods

potential are is conversations and you should And thinking you've how about cash had rating implications And we that numbers, again, extremely balance understand credit just your of but if that Just I thinking to on sheet strong flow? debt about how metrics, with be the any your you've agencies. credit had great that? FFO just

Sean Trauschke

you're Yes, are on – listening aware afternoon, interested I sure I'm probably [ph]. I [X:XX] scheduled you’re think hearings think the parties some this there's as for this call. And at

So, treated want it's say may fairly expect safe I by we that anything think say, for to the commission. the to outcome prejudice sure, but be to I don't

We customers, get are to to sensitive resolved very all quickly. the and pretty impact expect of this we

Adithya Gandhi

much. Okay, great. so you Thank

Sean Trauschke

you. All Thank right.

Operator

Okay.

open. from is Lednev your Constantine ahead. Please Constantine, line is go caller Guggenheim. next Our

Constantine Lednev

quarter. a good Hi, morning, Bryan Congrats on and Sean, team. great

Sean Trauschke

Good morning. Thank you.

Bryan Buckler

Constantine. morning, Good

Constantine Lednev

how I had chain, follow-up some little playing lot how delays RFP but about were think answered. the in the the just the that curious factor have you out availability been maybe to potential very your some of a a There bit generation remarks resources wanted previously. in and I process. playing supply questions see view? you're a you thinking across of comprehensive

Sean Trauschke

Well, bids received solar the we haven't on the RFP. back

coming deal we our have reliability. the our got too. in we that complete to sure about we due matters we've think also up got parameter to I That but with are points, portfolio those generation very it need that got with know because I Those talked And or Constantine. we've availability. make that that. but to on we've to how match windows tell a times that slots And remarks, is don't real weeks, about where will affordability. and time talked all in many touches So, We've

get year better in in to a things availability bit think a we that some we're spot to hopeful as We're result I saw be for was the our problem. of a and able earlier company. going

Constantine Lednev

pullback the new specific at on kind interconnections Excellent. the as looking you higher out load on any business future? of And service a just that any maybe in forward of pull detail level provide on across and kind sector you're for any area, can what or

Sean Trauschke

back didn't sector or particular I … on – forward get pulled pulled

Constantine Lednev

obviously, I you interconnection of previously but crypto We that for talking about are it, that in or about any kind a XXXX? talked mean kind you in or side contributing variety business, of other of subsectors different, kind to starting the to growth. seeing trends plan of of

Sean Trauschke

particular pop-up. are the No, facilities Bryan not we're board think some and a across seeing sector. mentioned, manufacturing And it we seeing I

residential store something creates businesses, that a has then it's new so whether new new And homes and new establishments, customers. like And restaurant grocery commercial benefit that of also compounding that. or or

us, from So, the heard bullish our you hopefully, we're of on growth service territory.

Bryan Buckler

love Maybe – [you'll this] [ph].

electronics supplier. year here One and of the up industry electric late new opening is are an manufacturing [indiscernible] facility or Sean is they mentioned that this

could country. and for industry chain the our miles just in thrilled own equipment from them So, warehousing to be dynamics materials given the our own have supply we more away

for that us, So, but was board. the a it's one across exciting John’s really right,

Constantine Lednev

in maybe with that that more bit quick where services? supporting sector of gas a and they very seeing terms where of follow-up kind commodities, of activity, just a are? And Yes, or you oil of familiar a pickup one. kind in Are the

Sean Trauschke

that's Maybe certainly more in slight, just not sure on driver flowing, not the as volume the We're but with either. real that conversations people, I'm you counting know driver. there's

Constantine Lednev

taking congrats Okay. questions and again. Thanks for the

Sean Trauschke

Thank All right. you.

Operator

Relations of for OGE back to this At Bailey, remarks. it like time, turn closing Investor Director to Jason Okay. at I'd

Jason Bailey

Eric, OGE you, for everyone thank thank your Hey, in and and interest safe day. you please a have

Operator

our session. concludes That good. Very

You may disconnect.

OGE Energy (OGE) 3 Nov 222022 Q3 Earnings call transcript