OGS - Earnings call transcript Q3 2018

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Operator

Good day and welcome to the ONE Gas Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Brandon Lohse. Sir, please go ahead.

Brandon Lohse

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

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

Our and first speaker, ONE Vice this morning, is Curtis Chief Gas. Dinan, Senior of President Financial Officer Curtis?

Curtis Dinan

to increased the million cost debt for expense. bad last $X year. minute. by effects share Good employee rate million diluted and per comment more third results ongoing Capital our in deferrals million you $XX.X the and for due the Texas. per residential and quarter reform diluted year. last the which period third $XX.X of in were period for year related million adjustment impact was share, cost I'll tax Brandon. increase $XX.X third from joining our compared for third an income and period everyone for net was growth The income in with the to the last to compared quarter largest for offset with customer Texas in Beginning Thanks, and and with $X.XX XXX.X the timing increases results, tax related quarter as in to new a quarter or compared same Kansas morning $X.XX of us or expenditures thank million Operating million rates Oklahoma $XXX.X XXX.X was with the XXXX same today. same million partially

capital with and year in towards $XXX to of million XX% full the expecting approximately integrity replacement $XXX be expenditures project. million to range still targeted are We system

in reduction difference authority accounting XXXX, of $X negative earnings in previous with Company's liability liability to taxes is guidance quarter declared to in $X.X $X.X dividend a tax created Yesterday, jurisdictions and to change expect expense in and jurisdictions, federal resulting customers of pending and a a of regulatory most remaining per resulted tax in statutory returning income Recall the This a Gas from rate excess recent million, orders jurisdictions update a filings taxes positive adjustments from our the of our The reduction to third reform. with quick all establishment the our Oklahoma completed revenues difference $X.XX the million process regulatory deferred in $X.XX income Directors $X.XX in a saw filings of our third rates. be calls is effect unchanged the across impact the In in our for ONE and we on the on in timing Board This and has still Kansas. for the for the share, in have the $X.XX from We rate of between including million from reversal accumulated our The this deferral revenue the dividend was fourth been in consistent the in of determined. first our or quarter. another from XXXX. reflected filings Now in quarter. regulatory compliance reverse tax. our now the in tax second tax the The established quarter and tax by earnings each and related the income for offset this two quarter timing net impact income partially that previous reduction $X.X our expense. drops quarter.

X% to to range average have the expect be net our XXXX provided payout rate $XXX base X% our during XXXX two with XXXX ratio guidance We between of As we we've different of or we of to share. targeted indicated income. $X.XX income XX% net previously, dividend XX% and annual dividend calculations. a million million to $XXX $X.XX to calls, diluted earnings affirmed per increase Historically,

The first base XX, base At base the interim rate is latest our defined reflected was rate authorized regulatory and rate billion. full rate filings. rate $X as proceedings including approximately authorized September in cases XXXX,

additional in our will year-end average in XXXX investments in with rate IRS average of assets Kansas our utility the other approved in second as system, which Texas. base In and for rate base XX% are base project rate fourth service estimated We filings. that is defined rate of regulatory that Oklahoma, guidance not the XXX% changes XXXX that in yet the XX% in base August, in XX% billion estimated be quarter The issued X.XX for reflected placed authorized during bonus components approximately depreciation. is eligible our and plus are

from would that estimates. eligible. not prior depreciation Gas ONE President Norton, I'll had taxes, Executive additional Pierce increasing over effect now, estimated assets to reducing previously rate Pierce? it have these be And average We assumed base our slightly the This and deferred of bonus Officer. Chief thereby turn

Pierce Norton

A our recommended giving by you September, XX-year throughout for Oklahoma. between Thanks, the scheduled order to ALJ want regulatory for on update of end a non-unanimous areas, commission excise the recent anticipated is would judge amortization and The which morning report In our change Corporation except issued the the deferred final I for Oklahoma hearing year. to the before good law approved everyone. an Curtis, like administrative I amortization accumulated period this and consent XX service application. performance-based rate agreement so is and his November recommended in Commission income taxes unprotected regarding Company for the the period. staff the the begin activity he by a

Texas. So onto

filing. by in Rio pursuant X.X rates approval cost adjustment area effect incorporated received to New service increase the for million we August went into the Valley in the customers service of Grande after

XXXX. Gas Corporation in to expected million Kansas an December procedural January approximately surcharge in requested December, of through X.X hearings due is be In reliability XXXX XX was on Kansas Xst increase for an final schedule Xnd, XXXX. in with to is the request, Service from Finally, related rates are approved scheduled the effect gas new pending Rate expected XXth, Commission evidentiary and its August, the KCC the Gas the August XXth system from of Service order a order and Kansas Kansas February

are of expected first rates the before to of XXXX. effective the New quarter be end

natural increase for the a approximately be safety net to As increase is reminder, gas the million. file in in changes operating net income a distribution a equity in of of XX.X rates system. on based ratio. million, would cost XX% following operating necessary the and this reliability common the on of KCC The in investments XX its increase equity is in return and maintain rates with XX.X% The system requested and request reflecting an

For X.X every XX basis on ROE, million. point impact operating change is requested in approximately the the income our

a gas X% selected change announced is impact U.S. distribution contract. approximately been own, the the under operate the and Fort natural in every Service Xth, ratio, maintain has On it requested equity our X.X by XX-year facilities at October the Riley For Gas government on to million. Kansas operating income

post. my now to At XXXX. will closing, would contract members the in to workers and retirees, commended. and more express will Kansas to of by Kansas the service X,XXX focus process both ready every add the family XX,XXX to commitment Service and gas If reliable by is off over reviewed base. the than provide and employees, the the with to day to and supports transition installation will than we of gas intent be civilian closing, the system is X.X the for owned I terms approved, take their questions. Army Riley The privatization rate veterans Operator, Fort U.S. X.X X,XXX in be more over XX,XXX operations million Gas our than living XX,XXX and million military, approximately X,XXX has safe April hard-working KCC. Fort more customers start Riley In like contract active gratitude an natural are

Operator

question our with from And Chris Jefferies. come Instructions] [Operator will first Sighinolfi

Chris Sighinolfi

had systems about I talked Fort haven’t I just of but available, Pierce, description on have Riley, your municipal kind we previously follow-up question may on guess, a that thought some the guess installations. their gas guess one-off by opportunity? effort a armed an is that hands? about private into of that the U.S. that more I Or more infrastructure professional Is services government to move

Pierce Norton

territory years gas type of Administration. effort They assets, the We prior actually motion actually Bliss, toward our other Fort in and privatization areas ago. like own started this this been President Trump they moving some Chris service assets operate to and in have even natural

takes run I something a a So, for to through to the go process. they just while think this while. have that had is ongoing It

Chris Sighinolfi

I about there's hardware you systems any relative the previously, standardization there Is done guess, operate What you've how to what's of that those the state expected formally fact systems of run and can terms upgrading use a in required in that's the anything that assets. own -- of the your federally the you you guess government? in I experience or some used or regard? anything been guys overtaking by say associated if versus be to

Pierce Norton

in same we the that other do it's every thing place. Well,

there's comes those what of due far diligence the Chris, already long amount systems. as that’s takes and as done of due As on significant down a your as that's really to is part does it question, of already diligence part been it

know system. we use who our them built at same of on some them. contractors So, maintained who that know We we the

in routine our here the on So, just confidence we systems that have out is and on maintenance would it were from like do we systems. correctly put

Chris Sighinolfi

future? point life inoculate closure that you case contracts heard XX-year to was think in the And some prepared is the in base there in a just your I I remarks risk mentioned

Pierce Norton

so things That's grow for exactly allow do reason different to contract. right. and was of some are a Yes, base can there closure there we us things whatever, that some some level that there in

Chris Sighinolfi

Pierce, the next part. was really impromptu look the that you forward maturing was that color. based didn’t I as more guess born my on on think that I of into terms just it prepared interested, I -- I year, future I I in remarks, have was February. appreciate and the in periods Okay,

do your thoughts what at the yield of just you thoughts that do thought with deals be at given capital flattening size what the and this on curious you duration curve same you the on that? refinancing point, and if curious it Just program, appropriate the would thought

Pierce Norton

the of million the You January next that as year. have maturity bond referring we to of XXX at end

that determinations they XXX how made million haven't or as we do of outstanding will what or had We under refinance What timing end the look it third what said quarter, the under final will may million revolver. as tenure our at the that to of when had even like we be. $XXX

liquidity So is at this position point. our strong really

how we refinancing and look about that to like. as And may so, options think what that timing of gives us what the that

Chris Sighinolfi

will Okay, think capacity you'll comes it you so before we out just the that attractive you be at about if -- something what Or as markets how but just it? think to revolver, that maturity, decided exactly just put way it not down actually haven't do look evaluate super are on term point. Is we it the that it, structure you like? closer that to grind will aren’t you but on

Pierce Norton

both Yes, be, that's look assumptions. so bit going what of a would exactly sort we of haven't decided of that or what like to little timing your

Operator

Aga with question come from next will Our UBS.

Aga Zmigrodzka

growth like the the you in the Thank around growth do discuss about down your you. third you footprint? customers' Looks from customers think Could And how going growth to X.X% quarter, X.X% XX. please forward? was customers'

Curtis Dinan

growth those are net numbers. Aga, numbers So,

movement have -- system the quarter to from best year customers look and you in during middle the time if you Mark do that they winter. quarter, from some so in that that you find of in the the So, exit the is customers to come,

the about when to compare January experience numbers, similar date we've at get to years. very year-over-year. look about you X.X% about is been in X.X% in But several Kansas Texas, of numbers, So, in annualized the if which X.X% the we in the over it's timeframe, year past one to what those so best Oklahoma

Aga Zmigrodzka

the O&M roughly year the but XQ, you than of Fully increase. guidance question. for is efficiencies you below XX below higher guidance follow-up get the O&M one Typically, O&M to the incremental expenses guidance, what before have number potential in provided I million year implies quarter-over-quarter full or guidance? room see do

Curtis Dinan

right that are believe step definitely given overall and our our we still earlier. We are within that guys numbers they O&M range guidance and you

Operator

Dennis from comes of America. question Bank next Our Coleman with

Dennis Coleman

And just can Just so, number couple how I How get a it, Pierce, repeat ones. on the single it there? people a of in I would the can just you ask quick if be? Fort numbers many total to is many Riley? customers

Pierce Norton

military there's base. total in active Well, about that XX,XXX on

and or be about ebb they civilian because workers. can deployed flow X,XXX then whatever could get that you Now

that base differently was market. that you stuffer number see and configured important is The civilian their disclosed sometimes the rate million of meters the because on in what X.X might than

So, the on thing base I it's focused would is rate there billion X.XX then about overall the and remind entire they X.X of are the million you of that company.

important to routine business it's just but us. not it's -- So, us, it's for

Dennis Coleman

have is regulatory Is does so, it or it… a the does just the it -- military different And it federal or authority? government

Pierce Norton

No, Kansas it all Corporation falls under the Commission.

Kansas. So the into it's of rolled rate all whole base

Dennis Coleman

mentioned of sure base make understand I do just to rate should and you the know billion that this, X.XX And that. I but

end of the X.XX rate of end you base which at September of estimated the be base average XXXX? would and So, said billion at rate billion was of it authorized X

Pierce Norton

Yes.

Dennis Coleman

XXX it's but for? filed has so, million between And been difference the --

Curtis Dinan

expenditures represents last what filings. been made rate the is No, that that the since primarily have capital

that So that money the and GSRS the what base X billion. Oklahoma fully the to average reflected in But that’s those last filing X continue different authorized was Kansas, X.XX not rate billion so yet we those PBR established so last filing things the all establish billion filings. spend rate our in

Pierce Norton

to reported we every the that as the the Company think all because The most those reason We single way components we is know state. in bases rate that's accurate.

like all real able most give And those the going to so reflection we be, to as to to in are what numbers be time. accurate you guidance feel that's

Dennis Coleman

I if understand. example, I just sure for make But

Kansas the change when some it will year case presumably approved is that the authorized level at rate rate So, base? next

Pierce Norton

correct. That’s

Curtis Dinan

first that. X would that million increase you the Yes, number gave I following

Dennis Coleman

presumably And so, X.XX. narrow into that

Curtis Dinan

Yes.

Operator

all gentlemen, in And All have right, queue no this at Instructions] currently questions thank [Operator right we you. time. the

Brandon Lohse

this for you Thank us joining morning.

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

Operator

disconnect. Thank concludes now teleconference today you, ladies gentlemen. and may This you and

ONE Gas (OGS) 30 Oct 182018 Q3 Earnings call transcript