OGS - Earnings call transcript Q2 2019

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Operator

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

Brandon Lohse

you conference us call. thank quarter our and earnings XXXX morning for on joining second Good This a made replay is will call being be available webcast later live and today. questions. we'll to prepared be our remarks, take After your happy

those include differ A reminder that covered in forward-looking expectations XXXX made projected Securities during by considered XXXX. materially the predictions be results and provision and ONE of Acts statements. that should the forward-looking this or statements Gas' call statements from might could are Safe Actual any Harbor of

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

Joining - us Vice the this and and President Operations; Senior McAnnally, Officer. President Chief and Lawhorn, morning are Sid on Pierce Vice Norton, President Senior Dinan, Executive call Officer; Chief - President Curtis Vice Financial Commercial; Caron Senior

And call now, to Caron. I'll the over turn

Caron Lawhorn

and $XX.X joining $XX.X XXXX Good you same with compared $X.XX Brandon. today. Thanks, year. or diluted per period quarter million thank everyone, second last income was for share Net million $X.XX morning, the or share for diluted for us per

lower results customer in and in new and rates Kansas, net growth volumes Our second Texas. weather quarter and of reflect residential sales Oklahoma normalization

the second employee in benefit for in plan assets year, on quarter in million costs is $XXX.X Offsetting income $XXX.X line part below million other costs. employee-related the Operating due to with is increase the return the compared last period and decrease same were primarily a of expense. included the which

Oklahoma taxes in excess higher Kansas, XXXX, of resulting customers returning higher of as accumulated notes maturing notes million a senior is November reflected rates our you senior year. reduction expense are revenues. deferred As this we of will slightly a with in we income which In interest refinanced million to of and XXX recall, at $XXX interest

XXXX. June expense approximately million of by million activities through the liability includes $X.X was operating the the $XXX Cash for was tax quarter. amortization of regulatory which associated second provided Income

previously flows reform. continue to impacted be we by our As indicated, XXXX cash tax

and this in the of a to year, In Oklahoma February, filing. $XX.X of base Oklahoma over refinanced period for XX in taxes. in PBRC rates we collection third for months Kansas by $XX.X the customers In quarter million the we expect $XX.X million crediting begin million were XXXX lowered over

adjustments, on through have these rates With we worked impact the tax will jurisdictions. all of reform in base

This ONE Board dividend a Directors guidance the Earlier same of Gas consistent company's with the the XXXX. share, this for quarter. declared $X.XX dividend month, of as the per is previous

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

to share $X.XX of earnings share We $X.XX the $X.XX point updated previously to basis of guidance announced XXXX $X.XX, the range our to a of $X.XX bid per new diluted from up a $X.XX. with compared on range

Our reflects the the $XXX weather offset cooler rates Capital partially expenditures expenses. expected approximately updated guidance positive by year. in and million operations first impacts maintenance higher new remain for are and to from quarter

X.XX billion approximately and cases Authorized full of as Authorized rate base defined is including completed rate as regulatory interim reflected Central completed base filings. is reflecting rate rate rate recently the activity the in June and regulatory base, proceedings, Texas, XXth. the

in into rate our Oklahoma, not that our in base, rate in defined base and rate are with investments of XX% for project XX% in Texas. and We system reflected filings regulatory be approved approximately that XXXX average components $X.XX base authorized additional XX% Kansas, yet estimated changes plus in which as billion our will is other

commercial any program. still XXXX. paper capital ONE do capacity Gas ended million $XXX anticipate we the not in market approximately of with or our equity quarter needs And under

Curtis I'll regulatory over it now, Dinan for Curtis? update. turn to And

Curtis Dinan

everyone. morning, good and , Caron Thanks,

stipulation a XX credit Oklahoma. to Oklahoma filed Change a This the over in X.X% savings for begin be returned PBRC authorized in and filing customers million or was was reached includes to tax a were This Natural represents a $XX.X PBRC. ROE months Let's XXXX. In stipulation Performance-Based June, Rate Gas’ amounts all credit of that above period. attributable earnings to settlement including

credit million second of will the An with quarter. associated excess Oklahoma XXXX the impact The ADIT. not is earnings. joint Corporation on third If significant expected in approved, stipulation a order Commission is have $XX.X provisions from the the

is before a have will to filing We in more PBRC case required filed be full one XXXX in rate XXXX.

to West Central Texas for the all Service Gas Service Gas filings cities agreed increases $X.X and to Program GRIP The Texas. Commission of March, and $X.X on In areas areas. million, in million Moving the the Texas Texas or in both customers and made respectively. Reliability Railroad Infrastructure service

Central rates in became and June, New in July. Texas in effective Texas new effective became rates West in

Surcharge And Reliability System plan through in XXXX. Kansas, file for we GSRS next the to XXXX or Gas June period August covering September our in

our scope be will new the the eligible this monthly legislation increases surcharge. expenditures are reminder, and expands that of GSRS that recovery on the under residential for filing under a first cap As

over Pierce it Norton. turn to our I'll CEO, now, Pierce? And

Pierce Norton

Curtis. Thanks,

annual As margin for a we This recognizes which updated the XXXX, our guidance services. earnings in which in and this increases for to from midpoint Caron lesser and in operating our an $X.XX noted, includes of performance share outside per due have of employee-related raised and update, the of is $X.XX. remainder overall costs, expenses net to-date where updated primarily estimates annual is projected our the we to guidance our year. to increase $XX of Included extent, operating reflective is the million, expenses,

bond is employee that the best our align and the in reliable, that affordable that natural conveniently met the targets year benefit provides the and and stakeholders, interest to our We tremendous an X.X million include of customer, comfort energy gas the holder all employee, holder. delivering around. financial program costs pride when Employee-related based source, in operating equity customers incentive on take

driven other our maintain about thankful managing safely a for energy our X,XXX as day. It by part accomplish These of expenses culture employees working alternatives. every goals. to values our one our efforts takes our their efforts. every over on And they and core their as go competitive focused together employees am to work I We advantage of operating remain exemplify a

you Thank joining us for this morning.

for are operator, Now, now we questions. ready

Operator

[Operator the will Thank Chris come with first question Instructions]. Sighinolfi from And you. Jefferies.

Chris Sighinolfi

have of at of I fact month Jobs the the second can in really think performance amortized had of really the and period trued a of for the clean-up Caron. Tax business everything couple commencing provisions that questions I we impacts being where cash in next I of Act operating it OCC regard to could; impacts quarter all over guess net clean here at the of that goes a the this you're if sort Then up period, half that's we look year? gets of to I expecting and fully With should first been one XX the would that recognized look order Cuts the then?

Curtis Dinan

PBRC approval Hey, point. in rate be that we is into Chris. to we're sometime we year, last Because at in starts would XX think it. that later, from normal Kansas. you'll is right that filing. Gas’ months Texas. at from Curtis. then case anticipating the This have Oklahoma a reflected recall -- we've the And cadence And the Earlier And year, in would the Natural I what the already approval look be once in rates this the quarter I became OCC for way then third think everything

Chris Sighinolfi

degree low also seems impacts. -- because see have last this winter we and because smaller. I the else has -- gas cash draws noticed Okay, equal price would significant it normally fall. year, quarter this capital predicted, lumpy coming does as enter with Curtis the been the you the would we've obviously that like as that were the have might It we've is up working fluctuations days fairly noticed last lower year-to-year. been they impacts earnings heating season the from but than be normally All presumably, some

I for And looks calibrate our tax we might just the just these impacts. to, some I'm what more So guess, see model environment trying also then like. fluctuations.

is? think the would now that where So way going price given on environment environment year-end is maybe about into the commodity of uses right the cash you

Curtis Dinan

can out are a complete that Caron of to and We working those XX because There it. there's now will But period. But were happening And to happen Texas. the PBRC or Oklahoma, in the were once Oklahoma's in filings. upcoming spread taxes income And lumpy, that the consistent take we're probably deferred the piece about Yes, type accumulated the credit we that out cases. case right. working we Oklahoma's of cases month Chris, typically absolutely coming we rate be initial excess refunds rate ADIT you're got to other the let one-time the Caron as pretty adjustments, address rate components. me of also although that still capital have But file or the accumulated better been address the through quite have the have more this these cases. we'll that been speak in for Kansas of cadence doing pieces capital again, can over of as then piece

Caron Lawhorn

I kind just think that's fair. And of is interesting. it

was it first flow, the our consistent. look back last relatively cash our anomaly flow was you at If half -- really of look cash year,

this And experiencing, on so, continue that to that regulatory of path. other us all expect I noise we're than

Chris Sighinolfi

cover performance and just are of policies it's I some companies past amongst this bit to and And And item, haven't market factors on we exceed other we the would characterize formal you in I you on then about is life non-qualified Did inquire And for the get in, There's was sounded have to other just things, of movement quarters, there any guidance that that last full some the think plans. year. There guidance something to the might benefit the the for just company quarter with move And broad other income. the I'm that regard accordingly. led on for disclosure expectation but color the what nature was utility indicate mention a that the have some in one other more one it you had insurance how year the of from similar. it. invested bothered had things you of coming equity fluctuate of expected? little maybe Is It that curious it. so number? performance like if employee

Caron Lawhorn

what to think correct. our with in employee dissimilar terms probably plans. you I we of is we you described And correct. you're not deal And how have So benefit utility other have are what

the guidance fluctuate. don't what try do So market, employee the a to plans to we to really going reflects our anticipate market is are going flat how and

some expenses. operating expenses. those plan As fluctuation that offsetting in you is of assets offset movement The know, is operating in

to going did the we balance first was the maintain didn't we through year. in happen we've achieved to of the of so what some for but part of the would anticipate guess And try guidance that year what

Operator

[Operator Instructions].

go on, with Agnieszka Moving Zmigrodzka UBS. we'll to

Agnieszka Zmigrodzka

as the growth So discussed for O&M higher. remarks, Could beyond your we in prepared O&M XXXX? was please discuss expectation revised guidance

Curtis Dinan

there, is asked but broke you expand O&M bit you that a what a Aga, up -- think I little asked on you I to growth, think I bit little right? think front,

Agnieszka Zmigrodzka

O&M yes. expenses,

Curtis Dinan

have in a X% I kind in year-over-year, little annual little a Well, mean, increase okay. general, expenses, O&M it'll less. bit of to bit we years an O&M expenses, on some guided a years more, basis some be toward our X% be it'll

range year, So what at that projected. the increase guidance originally we in this X% within to that recently still we've the falls it the $XX had even with expected million as

factors. line. So ebb different in right Those of kind that's expenses on kind flow and of based

not. which were of in and some Some control our

So I'll if expand ask phone on McAnnally, he's on that. us call he anything Sid got to is the with

Sid McAnnally

we appears efficiencies. we that for But variances. is externally. at processes major we internally how look And balance one looking always improve It or any Aga. work of don't opportunities to ways the expect and Hi, we are

the up, got that So longer we costs way come to that opportunistic look when execute term stability may work. an opportunity in have the at we've we

training fuse. taps also our continue because technologies. technology a we capacity to that had arising routing short increases, techs. than some a opportunities see to that inspect be efficiencies that from An work, rather And we had provided additional pretty additional to with mandate capacity. some We field in form recently of provide outsourcing would [FEMSA] example system We from

additional were And to skill our provide also going employees so in-source forward. our supported able work sets that which internal to we goals and

Agnieszka Zmigrodzka

by this Gas pace have for replacement Was of XQ. impacted any you to Oklahoma, regarding I in Thank ONE work? colour. a question impact flooding also

Sid McAnnally

first significant We Oklahoma, worked to out, we still thank as want responders pointed and folks the the a go you got with. suffering that in did flooding are from few them. have our and we that thoughts to flood out We've

to either company, the we impact material system, our any on see the did of terms not or In impact O&M. our

pick we incur capital delay will some of expect half. back-up the bit did what time, would Although that little second over you in additional a

was that material. nothing So

Operator

no at or turn it this And there further Mr. for to Lohse like any additional Instructions] back are time. [Operator questions I'd comments. to closing

Brandon Lohse

all again interest Gas. in you Thank ONE your for

period quarter October. we until books extend third quiet Our release our early we starts the close it in for when and late October in earnings

provide details Thank the great you. will call and We a at your date a day. rest of on later conference have

Operator

And you everyone We'd to like thank for that participation. does conclude conference. today's their

You may now just disconnect.

ONE Gas (OGS) 30 Jul 192019 Q2 Earnings call transcript