OGS - Earnings call transcript Q3 2017

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Operator

Good day, everyone. And welcome to the ONE Gas third quarter earnings conference call. Today's conference is being recorded.

For opening remarks, I will now turn the call over to Mr. Curtis Dinan. ahead. go please Curtis,

Curtis Dinan

After provision thank Acts during that call earnings joining is conference that a your made covered live And or be we XXXX third considered to be should and happy Actual this being on quarter differ and take might available. be will are XXXX call. expectations A results Securities forward-looking replay prepared made materially projected you forward-looking morning. the by of remarks, us and 'XX. would reminder for questions. Harbor our from webcast our statements Safe predictions Good This of in include ONE the statements. statements could Gas any those call

results For the a quarter. consistent of the to company's filings. our This Gas refer ONE $X.XX from guidance is for discussion declared Yesterday, SEC to per of please factors a actual previous of dividend cause differ, Directors Board unchanged dividend the share, that with XXXX. could

have a previously with increase XX% XXXX, and we annual ratio XX% between XXXX to X% dividend the to of XX%. be average dividend to we payout targeted As expect indicated,

also we in narrowed guidance, XXXX August. affirmed back our We which

$XXX net We $X.XX be the expect five-year million January. in XXXX updated $X.XX forecast releasing within We guidance or to our per range to million anticipate of $XXX share. income to diluted and our

quarter million third income for quarter $X.XX compared for last same share Net year. to or results. per or $XX.X $X.XX the $XX.X on diluted XXXX diluted Now, per the million was with third of period share

period Gulf West impacted rate case jurisdictions, Texas the includes systems, Texas cases Kansas and from results. and in the New Central rate our rates investing of which in our Coast, recent of the positively effect third were same rate more details million discuss year. the million minutes. few in cases Operating will for $XXX.X compared the quarter cost last $XXX.X for our with a of Pierce the

but shift This maintenance the projects the capital the shift, operations first and mix capital. of our third million increased in to the with lower third maintenance half were operations to in expenditures year mix and maintenance and project Capital in that towards expected the quarterly year-to-date quarter projects in and call, mix contributed capital projects was XXXX. our the during second $X of and million to expenses $XX expenditures weighted focused capital last quarter second the operations same we described higher the for XXXX, project approximately higher than quarter of average. more period compared more As be half to

rate was including rate expenditures We to and rate And in other in to range cases Earlier towards regulatory approximately be our expect Officer. since full now the President in year base system month, targeted Executive XXXX, amended Chief we $X XX, that in rate as Oklahoma, being billion Gas it which borrowings this short-term Considering agreement in credit have base with the and rate million $X.X average under over XXXX. had our issued investments Gas turn XX, defined Pierce XXXX additional base, in now, rate restated expires $XXX ONE I'll and current authorized Norton, proceedings, full approximately October our XX% At will changes million interim base that agreement. capital September the occurred of September on the Texas. we to of base XX% projects. Pierce? the and in filings, regulatory of a approximately $XXX those and in latest $XXX ONE filings, Kansas, with XX% replacement in million rate established integrity At billion. our and XX% $XXX our system million, components

Pierce Norton II

with to Texas and the Texas. give And rate TGS Grande new Curtis. morning, Gas area. filed month. effective good case service Rio and area for cities update, Service like of the increase rates $X.X to Rio became in beginning I'd million, In Valley customers a June, its regulatory of everyone. Thanks, Grande an you agreed a service this brief Valley

change stipulation to Performance-Based agreement Oklahoma. August, Change following in that rates. X% Therefore, was on did was were XX% approved request our for after ROE. Corporation in PBR rate to the or allowed The Now In case within general earning we range not Oklahoma January XXXX. a demonstrated by first of and that joint a settlement Commission we annual approved the Rate base the

million be in Gas next System relief for Service the sites costs January order And after Kansas, application X, made of of $X.X rider if authority incurred unanimous Service, Gas in at cost manufactured accumulate Reliability At related with remediation in any KGS a XX-year the amortized carrying will related former If the the former the future and for Gas will of the we XXXX, approval PBR be file Citizens' Kansas accounting the cap. expected up for expected no January nearby rates effective regulatory increase approved seeking $X.X and approved, XX approval will request agreement XX an be $XX April, Gas And in net Ratepayer amounts Kansas XXXX a cost to liability of investigation a The for the Service March time, filing The KCC expected Kansas incurred defer the million, is unamortized XXXX. month, be filed interim proceeding than rate estimated this plant Board an application staff with sites. recorded approximately new a charges. base Kansas to the early XXXX. in in approved January the net and a a an period. MGP the allow insurance issue January million over in settlement approved, approved, is included million, the not associated later its with order the recoveries Corporation Earlier is KCC X, Surcharge $XX remediation and to KCC and our work, Utility MGP sites. filed will to be of investigation to XXXX. insurance gas rate former order the recoveries, The XX exceed Commission approved. MGP investigation If agreement year for at will is to at $XX required rate to Our regarding of any and the or agreement remediation cap represented is future filed at the $X.X under million asset August million.

additional We in have liabilities XXXX. recorded any not

jurisdictions through a spinoff. of completion rate been rate Valley the case, since our the the case Grande Rio With material XXX% of have

do As from we we previously XXXX. material anticipate stated, impact have a until not new rates

on be during period our focus costs Our will to of capital this continue spending up next and leading programs rate cases. round to to execute our control to

to not commitment Now, every business injuries diligently the our storm. this to is affected or like vehicle our any safely and We high employees I'd preventable day. like of impact who to support Harvey. to and employees of our to response hard-working to during due incidents commend the dedication an exhibit communities our the Hurricane level the that speak I'd reportable in our by on the did work experience operations example storm and

their off due impact. XXX% for now settings approximate capital to other customer's XX,XXX XXX of employees to which preliminary be related is $XXX,XXX for and meters to an are counts questions. Port regulators approximately damage. by reasons. reliable remain estimates to the for ready Approximately request Approximately related all indicating safe either inspected Arthur. thank were our X,XXX meter to the primarily with is regulators, Operator, cost, in more than $XXX,XXX. storm or to X.X X,XXX customers. X,XXX expected commitment We're In approximately safety-related the have replaced of and focus the tracking I'd providing We like meters to million The and expenses closing, we service our and

Operator

question you, Spencer Joyce [Operator from Thank Instructions] first Lyons. with Hilliard Our sir. today

Spencer Joyce

Curtis, Pierce, quarter. morning. good Nice

Pierce Norton II

Good Spencer. morning,

Spencer Joyce

A quick the of up to some just on one, Harvey. follow Hurricane comments on

color. there your to you there. I'm construction through wondering the out the any perhaps your you budget like okay. kind issues or or year? impact ability no, It of if pulling there are end sounds capital of appreciate assuming the but availability carry impair I'm all second-level Are through seeing crews just So,

Pierce Norton II

business Spencer. from efforts, other in We've as We've already replaced. already actually everything XXX% the be completed to our in workplaces. needs they've used their no, assessments. that of And to is back bring to Port was places gone usual. replaced assist Arthur answer And it's our The to company respective everybody that in now

Spencer Joyce

time? And of prepared the that's Can figure one the if you over that that could, you end What towards $XXX,XXX a helpful. was very mentioned go you remarks. specifically? more Okay,

Curtis Dinan

like items the in it we Most the cetera, or responded that And Curtis. supplies, et that, labor of recognized is primarily this travel Spencer, to storm. third as represents quarter. costs, was

Spencer Joyce

Okay.

mostly then, be and in would sort would've third it and would some been hurricane the fixtures I figure guess, that direct total $XXX,XXX of of the impact. represent that's replaced. quarter But that…? your Is the labor, So, supplies

Curtis Dinan

and $XXX,XXX had The Yeah. there's be that cost is and addition, to piece. for And of then, like capital expense in things regulators $XXX,XXX replaced. the meters that

So, two separate amounts.

Spencer Joyce

me. you remind across QX? looking Okay. lower here Curtis, we legal item much for Have Will can That's Perfect. cadence was seen One us the I this what that? was cost for final you year? of for. year. And bit perhaps all there out Have out that some of the a of see just a last item was Or specific year? there come little internalized more close what to then, that? of

Curtis Dinan

legal relates as Spencer? costs, the to So, it

Spencer Joyce

Yeah, yeah.

that piece. little Just specifically

Curtis Dinan

we another occurred recorded settlement a So, a third comp quarter couple year. issue last that the there the in that of then, things year. was And larger quarter. One got was last in that workers' recognized

Spencer Joyce

helpful. Nice That’s had. quarter. very that's Okay, I all

Curtis Dinan

you. Thank

Pierce Norton II

Thank you, Spencer.

Operator

next We'll Sighinolfi Christopher with go Jeffries. to

Spencer Joyce

guys. morning, good Halloween. Hey, Happy

Pierce Norton II

Chris. morning, Good

Spencer Joyce

end. XXXX from was you XQ a my guidance modest were on you the costing pretty uptick a last And obviously, O&M. couple anticipating quarter, significant in to for had the year I questions a know cadence. full cost guys up of there following just I the XXXX. what when reduction in Just quickly XQ then, guess, amended year-on-year from real the

operating into than of that there might XQ and away Or in a So, from quarter? XQ. was sorry, what perhaps away the wondering, just is see timing I'm that expected shifted and different was anything you continuation fourth from more we XQ –

Curtis Dinan

half describing in of XXXX. capital item and in the was about that the I my first be were more of our shifted field is of third And that more focus we we doing the as quarter. those crews the the O&M focused in anticipating biggest remarks into quarter were projects to fourth what The happening in heavily the continuing

O&M and more doing capital projects. crews So, less

So, then their of O&M rate projects and instead expense. into into going labor capital into base goes those

that's as of shift piece really not always a things There's out regard. in came really bit in a were quarter numbers. but the that between we little driver little bit those big that in it big to the the So, quarters, or expecting timing

Now, you higher a they're just don't periods expenses the in quarter expect, pattern, then second we as in if so on O&M and our lower the are quarter, and fourth months, look third first quarters. – at would winter in and historical the heating quarterly in but guidance, those typically the give O&M you our

Spencer Joyce

Right, is in okay. out, operations at guys that of trying the guidance the presumably changed at what had versus what has – the Curtis, figure envisioned guess time guidance. you I the I the was to terms of of nothing time

the year, XXXX, and you in on half O&M first of then focused this versus was we of half projects big first were the third up saw O&M because stepdown this more quarter. presumably The

plants, curious just this you ask just versus the around might guidance. if I how could I into the that, on from states. But So, guess, was decipher of winter. I we've annual the hear servicing about cadence activities the away I gas seen the manufactured other that

of for Kansas been in York the of New initiative, curious, driving, is or totality Kansas Environment, could you by how profile some an some where then, dealing this KCC. – completing in if remediation with and we work is are. final of something guys guys context brought it, as this initiative give Department the us historical cleanup you to time are just But, if Health has and on the this we an are there time. it's a I you curious the terms was if remains that see any EPA that it's help for if the And

Pierce Norton II

the the to that we Health changed, and Chris, accordance than investigate had. Environment nothing that has with and of consent fact in Really, continue remediate Kansas Department order we other

thing past. remediation, in only the the we've whatever to leads through, go you continue investigation as you different So, different changes that to or so is as then done really levels that this nothing do than of

the that's from put KDHE. that So, to to then, just order. then And we in and and and by it's not explained to a the basically, in those But more that start this Utility Kansas have yet clarity, when staff my we follow you Citizens' framework agreed accrue the little Commission. continuing to wanted That's as by Commission been we the Corporation is company. it's order Kansas until comments the the that's Corporation final actually Ratepayer Board expenses, approved

has really the place order put the to enact other was just KDHE. nothing in continuing So, by changed than that

Spencer Joyce

that Okay. legacy or And, than totality Curtis, remediation it's XX is you is last I those Are meaning, release. Service? – still Gas that there that – guess, to are Kansas that just regard cited think, sites, what or with in work more is I what was ones night's of require the

Curtis Dinan

Service. Gas That is of totality the Kansas of legacy the

Spencer Joyce

Got it.

the that clarification. Okay. Thanks time call. on today's for Appreciate

Curtis Dinan

Chris. welcome, You're

Operator

Downey Asset Canon Patrick to with next go Management. We'll

Patrick Downey

it Hey, guys. How is going?

Pierce Norton II

Patrick. Good,

Patrick Downey

ask the companies order replacement and believe affected rider Kansas to asset current replace I issued order your back wanted new Kansas. September, Does Kansas? I all gas program about in GSRS they which Hey, this that in within

Pierce Norton II

The short is Patrick, no. It it. not replace does answer,

So, Gas you System GSRS mentioned. Surcharge. the years, Reliability been the we've just obsolete covered replacing materials been these that under for has that That's

to continue file Program. stands in initiate to case, to that ARP, which We actually have Replacement addition for would is rate Accelerated it expect and the actually to GSRS. the a the We

has on per to it per level So, a GSRS the month spending. of $X.XX the as cap customer

we whether do is file going in – in rate or would we're we And make case, of So, ARP decision that the we'll not that's a do to to. participate next at ARP, time or but then what be our to going addition do that's the we're not program.

Patrick Downey

or just just an Okay. is a But increase is annual month cap the $X.XX revenue per hard cap? that

Pierce Norton II

No, expenditures. that's associated an with capital those annual increase cap that's

Patrick Downey

All right. Okay.

Operator

time, back remarks. questions I'll And closing this Curtis the Dinan call to [Operator with Instructions] at no other for turn

Curtis Dinan

for morning. joining this us Thank you

we the February. rest January a on at early in and Our starts extends day. call quiet period release for great Have fourth when a we details We'll date. provide books your conference until quarter in close our earnings later the of

Operator

gentlemen, conclude your and participation. for today's you does Ladies This conference. thank

now You disconnect. may

Curtis Dinan	Senior Vice President, Chief Financial Officer and Treasurer
Pierce Norton II	President and Chief Executive Officer
Spencer Joyce	Hilliard Lyons
Christopher Sighinolfi	Jefferies
Patrick Downey	Canon Asset Management

ONE Gas (OGS) 31 Oct 172017 Q3 Earnings call transcript