Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the ONE Gas 2023 Second Quarter Earnings Conference Call. Today's conference call is being recorded.

At this time, I would like to turn the conference over to Erin Dailey. Please go ahead, Ms. Dailey.

Erin Dailey

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

as Act amended. include A reminder any of that covered forward-looking expectations made Litigation results Private during by Reform considered the XXXX predictions be and Act of provisions Act XXXX, ONE and of Securities that should Securities the this or forward-looking statements, Gas's Securities call statements materially might each are of differ and Safe Exchange Actual in could from XXXX, the projected the those statements. Harbor

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

are Officer; Financial Chief Joining Officer. McAnally, Sid Senior us Curtis on Caron Operating Senior Chief and President President Executive the Officer; President and Vice Vice Dinan, morning this Chief Lawhorn, and and call

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

Sid McAnnally

everyone. Thanks, morning, Erin, and good

share our We're second year. happy to our of through first and performance results the quarter half be with the you today to discuss

continue operating system value. cultivating long-term a commitment safely We while growing to our

Our and results through economic management reflect plan second team. diligent external entire by execution our forces both our activities quarter and of financial business focused

our XXXX we our call, ESG On last XX, environmental report and and needs reducing while highlights employing meet coworkers to our prioritizing reliability communities, practices published and our the which our focus quarter's shared expanding efforts of safety, base sound June supporting emissions. on customer responsibility. we governance our On

by on since meet we have on emissions Scope we XXXX emissions XXXX, the track goal. time, that keeping pleased reporting XX% due main are us to X X to report our Scope services for addition to leaks our to In reduced first

example reducing efficiency the manage of workforce. develop one our our and increase strategy for future. will and are to work and the As improving we're damage while of that the line reacting long-term locating. environment our current when macroeconomic speak capacity building strategy is to costs outcomes describes prevention modified approach our to impact Curtis conditions, economic processes how also he we This we of building also

territory bring economic to growth a investment and as our experience effort focused development a environment continues service more new Our region. favorable to robust business

by example economic is the to panel remain North the America our recent Oklahoma, Our support facilities the May about United territory. We announcement service XX of one east in Enel largest expansion of miles locate well ongoing Inola, across manufacturing solar Tulsa. regional to positioned for continue States's our

to our quarter, Caron details Curtis final and and to offer the a Caron? before commercial to returning to over financial discuss it to for perspective. turn then review I'll regulatory operations activities

Caron Lawhorn

and Sid, everyone. Thanks, good morning,

depreciation securitization. into that tables Before I release There statement reminder amortization provided is impact. no impact and the disclose of interest the We that and include the earnings on expense the details, a Kansas net sheet income. yesterday's in balance get revenues, income impact and

or share million Net the share same $XX.X per income diluted was $XX.X diluted second with compared the XXXX. period million $X.XX or in for per quarter $X.XX

new the West-North million last of second January. due over reflecting and last million was same $XX.X Second an Texas year $X.X quarter operating period Gas the increase the in case, half rates, regulatory income interim of from in completed increased Service approved which year, filings to primarily rate

Oklahoma and $X.X operating million residential Texas, our income also customer contributed year-over-year. to in base, growth and Continued commercial in primarily

reduction earnings sales the to in due territories impact our warmer quarter on than income warmer for $X.X service was and normal, weather our operating was the Although experienced across weather normalization X% a by Quarter-over-quarter, lower mitigated year prior mechanism. volumes. second than we XX% the million

costs of maintenance quarter XXXX increases of second $X due in million. and primarily Our to expenses over the employee-related operations increased million $X.X

due expenses performed market employee-related that As to contract in-source by a functions made and and labor. enhance expected proactive conditions certain capacity we've previously our investments workforce we to increased reminder,

our We workforce these to training increase have also beginning programs benefits. flexibility which to modified yield amid are in-sourcing now efforts,

Kansas $X.X year, reflecting level of depreciation equipment million and the of Excluding net the our a plant the prior than was expense amortization higher in property, investment. as result securitization, an impact capital of and higher increase

Other associated year, in increase of with to with the benefit increased income last value our net $X.X due $X.X nonqualified period million investments market million same compared the primarily employee a plans.

period of $XXX higher associated million attributable million August the $XX.X senior expense XXXX, predominantly of was quarter last X.XX% of of securitization. to $X.X One The year. notes the the is in two same items. the is increase remainder includes and in than in expense additional Interest the with million of Kansas issuance

is The our paper. on second interest commercial

commercial our year, XXXX. average was which down the Xx last balance interest approximately when XX% the compared higher paper average of weighted CP we second incurred rate While is quarter in rate than than our to X.X%, more X.X% was

prices to lower positively impacting gas gas summertime storage our financial we expectations, in are XXXX investment initial Relative natural refill. as traditional our execute our storage

a elevated interest rates continue to However, headwind. short-term present

and the expenditures XXXX. in to second were Our quarter asset million approximately costs for $XXX capital compared removal $XXX million

of for Authorized remain estimate our base Our June rate million for be XX approximately capital full $XXX the on will year track forecast. rate billion. base investments $X.XX billion average and $X.XX was our with XXXX as we

under We and ended of million $X liquidity. under our credit the paper borrowings quarter no Turning capacity facility. with commercial $XXX billion our our program to

million of in of and million debt notes XXXX coming have the when first due. maturities $XXX $XXX quarter of debt X.X% notes we long-term are of X.X% Our

XXXX with market we In million forward sales By executed have a shares. for XXXX the we settlement of our greatly remaining our common continuing March, exposure. needs million agreement the our shares shares for for end X derisked equity stock XX, by and December XXXX anticipated to XXXX, with issue and of equity settlements, by forward X.X addressed

the shares $XXX sale million. of execute XXXX. for utilized to shares been the in Had we we forward we place at-the-market settled approximately at have of our all would additional $XXX by program, forward And net received agreements XXX,XXX which quarter, second in million settled June XX, be in put proceeds end an February, equity to

Board of On million, the our $X.XX Directors $XXX unchanged quarter. to from reaffirm earnings per financial income we XX, $X.XX $XXX share, ONE the July million dividend previous guidance, a share of per of $X.XX. XXXX to including And declared lastly, and Gas net diluted of

will remains we focused management, and growth on remain always, As base prudent Curtis and as expense for customer our rate outlook steady. discuss,

I'll over to turn Curtis, it you.

Curtis Dinan

and good everyone. Caron, you, Thank morning,

other XXXX, the $XXX $XX.X on with recover In in issued On a July and year Corporation X, I'll brief an reflecting increase a Commission a start investments a annual approving and application Oklahoma million cost to a with increases. filed in of test our capital regulatory million March our change million. we performance-based XXXX settlement rate activities. update increase $XX.X revenue Oklahoma rate order seeking

New rates went XX. June into effect on

consolidated to XX, El filed Infrastructure In allowed on increase, Program for all or to the with million no $X.X the the denied Paso while $XX other the effect it West-North take March region municipalities and and with other Gas Reliability action. recover of $X.X million capital approved an seeking Commission increase associated in two investments. requested costs Texas, we million Railroad municipalities

implemented February first subject billing a X the Texas during of with the Gas grip Service XXXX, rates of into for the to new outcome appeal. rate municipalities million. in filed went effect denied the and Central-Gulf cycle that June the request on in June, all increase The appealed was $XX.X

In a increase. for Rio customers the Valley case requesting June a all Service million Texas Gas service XXXX, filed in rate area, Grande $X.X

for Also expand early effect expected New the in Commission. late take to a efficiency XXXX. our allow throughout utilities gas be establishing legislation Railroad signed or to efficiency will will in programs energy rates program overseen in This energy service XXXX Service its Texas. territory legislation that Gas Governor Abbott are Texas, Texas by statewide

Turning and serve us to amount a commercial the year. execution activities. deploy of to first a capital internal permitted record improvements work customer we operating an to half as and process base, of in the expanding remains focus Capital

pace elevated amid XXXX. had quarter sets rising new accelerated and for slightly the meter interest expected rates, to the of we compared As second

ended months customer set XXXX, XX, XX,XXX year-over-year. is new June we which X% However, the approximately in higher XX connections,

gas projects. We continue demand and to robust a of for natural future a see strong backlog

lifted now saw an with compared at practices normal this debt million with unwind is in to traditional counts. place, reported activities COVID-related our resume would had disconnection average that impact $X.X our serving of of inflate moratoria first expected As XXXX, fully in in our additional the operating customer the outset us while across year and half noted expense and had count our the in COVID such of resumption reminder, a territories, same impacts. We be We period line allowing affect to moratoria, bad customer have that the expectations. the year to elevated those

our we addressing While One disciplined affecting was such discussed to costs material, impacts begin these example to our practices. line activities, industry, previously and are as operating see field continue labor management locating. decision we resource supply through certain we've inflation in-sourcing and prudent across

are While enhanced Caron the anticipated and decision, workforce to upfront costs we improved to beginning has related of this the efficiency see noted benefits investment flexibility.

company. these a reintroduced In efforts entry-level have in-sourcing pipeline reestablishing for workforce addition, meaningful the important positions, field

closing And Sid to over now, for it remarks. turn I'll

Sid McAnnally

you, Thank Curtis. Caron and

the former as of that appointed performance, to XX National that governance brings Chief share maintaining Hersman's to Board of June Directors. forward are Executive Chair our We the all from gain have to is addition and Transportation experience Good and and look Ms. on expertise. National includes and Board the essential Board a high we safety-related service was will Council. Officer recent Hersman our to to Safety that Safety deep of we pleased insight we the Deborah

our Oklahoma, Safety values of faced the quarter. storms our those Shawnee and and we service in values, and from recovered and two Tulsa, exemplified core as are during coworkers

caused damage. near-hurricane While significant in winds weekend Day property service the tornado and Shawnee April experience on in of force widespread interruptions, Tulsa we did Father's not

service Our respond my core gas each storms for our to benefits customers safe backup keep as teams to their had were natural for caused, thank I disruption our were that quick people every and safe work gas dedication these homes, ensuring generators. want to day we and that reliable enjoying of and businesses the to coworkers values the their to living provides.

for questions. you joining this for morning. ready we're Thank now all us Operator,

Operator

Instructions] line question the Shahriar comes from And Partners. from our today Guggenheim first of [Operator Pourreza

go ahead. line Your now open. is Please

Jamieson Ward

you? for Hi are on How Shar. guys. Jamieson It's Ward

Sid McAnnally

from to morning. good and hear James, well, you Really this

Jamieson Ward

first. for Macro Terrific. you question

As we service move a you're as level, seeing see could see your compares touch we at you territories? are Or inflation continue timeline that what a still inflation roughly XXXX? could on pressures X% how you follow-up, to that by up? in to national And cool expecting

Sid McAnnally

impact to the speak then to Curtis? Curtis from commercial the speak Caron me let and we're inflation that seeing the So ask to forecast. to side,

Curtis Dinan

Yes.

say would So in of we're you're what's I price nationally. off with a based lot CPI, of national our it at contracts line happening if so looking

not average. our that abnormality in again, territories, So an it's from, national

Caron Lawhorn

With news respect to seen inflation, bit. The that it coming is continues encouraging sticky. down be to a it we've

I'm timeline about into and be bit think optimistic our able a to 'XX us and I the impact elongated, 'XX. to may manage but expenses going the O&M being

Jamieson Ward

you. Got

you ability So forward lower-than-expected much do to cost this would just year have Or mostly bottom continue to on pull line? pressures that the note, O&M? fall

Caron Lawhorn

have We a huge don't really opportunity.

work We of got highly lot are a year. every get compliant a to done got business. We've that's

so And easier for efficiencies to that. that's get stable to our have a is approach workflow from our employees, doing steady, manage,

try a don't do either. it, have don't of and opportunity we to that we So really to manipulate lot

Jamieson Ward

would year your final current it, all versus expecting to you next a to per And range EPS put question, were when you back that inflation Got CPI if in where your X% X% by in growth was what November slides you. been as say had let's else X.X%. equal, thank normalize

Sid McAnnally

that because speaking fact we the that impact capital So would us recall Jamieson, our of were structure. short-term you'll rates to dislocation of

you that tested believe forward. and us? appropriate going our from has to true ONEOK, we've the you back we be And for at, think spin served that looked the if to we is will XXXX, approach and that go so And our structure stakeholders see continue most really that well,

of to continue aware We'll to short-term continue and and have development take normalize advantage the of, we that inflow service the as our to territory exposure we of opportunity but like our people into really to opportunities rates, rates economic have positioning. you're

continue to term, short expect focus really to term the you value creation. So but on manage us can

Jamieson Ward

Thank you very much.

Sid McAnnally

you. Thank

Operator

open. line Jeffrey is next of from Mizuho. Instructions] your is of the question line our And [Operator Christopher, Christopher today

Christopher Jeffrey

remarks. Thanks quickly just on Curtis program the his mentioned efficiency energy for taking my Maybe in questions. that

Texas? wondering of for of kind that in Just the takes and Gas puts ONE

Curtis Dinan

expect term Central near in that working the will So programs Grande Valley. we're service the out, I that commission roll to industry territory the how that working others Rio in commission, of the Rio in but currently part with We and the how with it. are and we'll the Texas have our that have statute to Grande, as and more around clarity in currently apply

each area appropriate for because the areas, doing would not programs service that same thing where They're service envision the that to done. we're we term. of area they're gets already program similar that's in fairly type to and And near and again, same what of expect tailored we've on that through a more working to tailored to specific what a those that's have

Christopher Jeffrey

Great. And ATM the program of quarter. addition last shares maybe the then Thanks. just the from through XXX,XXX

thinking and of about that wondering how how how kind Just of more we forward expect And maybe compared thinking the much can agreements? you're financing you're future XXXX? with about for cadence

Caron Lawhorn

XXXX. for we are our good XXXX done remarks, my in what -- got the on said I we've into feel and about well as So

As feel the we have top the ATM be on like need, always, to opportunistic. starting are price, and added the like that. just flexibility us gives When we we're the we of forwards the flexibility

I conditions specific warrant. just So We'll don't market as have continue to a monitor update.

Christopher Jeffrey

maybe as Or proving that seen, on in cases rate And jurisdictions should in just some of that pressures? then any far full the just general we've we up an timing expect, those as anything Great. gain? for that cost rate increases update

Curtis Dinan

we the Yes, at service than nothing just case Grande this time. in the rate Rio area other highlight to filed Valley

Christopher Jeffrey

Great. Thank you, Erin.

Operator

closing Ms. And Thank be questions for to any queue the at to further back no time, pleasure we this so remarks. Dailey it'd you. hand have my in

Erin Dailey

for in again ONE all your you Thank interest Gas.

quiet earnings at date. for starts a call we early Have when October books release third day. and We'll our great in extends a October. Our the quarter close details provide late period until later the we in conference on

Operator

This conference quarter second concludes the webcast. call ONE and Gas earnings XXXX

disconnect. now may You

ONE Gas (OGS) 1 Aug 232023 Q2 Earnings call transcript