OGS - Earnings call 3 2023

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Operator

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

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

Erin Dailey

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

and expectations and Statements made during safe Act are should XXXX, call Exchange Reform that harbor and Securities the provisions considered statements of by Private the or Securities Act each ONE forward-looking Litigation XXXX, might be covered as predictions include this Securities Gas XXXX the of Act of the of amended.

from could differ projected results statements. Actual forward-looking materially those in any

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

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

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

Robert McAnnally

operational our headwinds on of we financial and industry. performance. Prudent Erin, us joining despite our Thanks, as and have morning, for our good third macroeconomic the strengthening midpoint quarter you guidance, to achieve Thank execution kept discuss affecting XXXX everyone. management track us

year, our to also our As we've dual this the presented leveraging inflation for the us plan show, capital and capital rates interest process met by improvements deployment, our better higher of balance challenges putting results while ahead year.

and We continue to reliability the enhancing safety our while growing of customer prioritizing effectively meet also system. demand,

government to customer converging affordable new support an cost about The Kansas, in are and long to we're of Oklahoma the experiencing region. investments to we're energy of growing technology-based the manufacturing mix needs growth Texas, future. effective access attractive position to well jobs bring spoken living business-friendly economic our us into and I've before making policies, and

of of also industry. of jobs come for variety demand development communities. presents This the type for Economic natural long-dated on our this parts and looking homes, to these become gas development most kind and for as durable strong families and growth it fundamentals. for is of With to rests live places needing growing businesses

interest we remain bullish understandably jump across homebuilding regions. of the and is growth in in our pressured While rates about intermediate pillars long-term the the near-term,

investments. As thoughtful we the right deploy we about making remain capital,

reliably base see So the that growing is our serving increase that come. the we of in today substantial customer capable is to and system growth

priority. As always, our safety remains top

for Now I'll Caron? performance turn it discuss financial the to to our over Caron quarter.

Caron Lawhorn

and Sid, everyone. morning, good Thanks,

rising As Sid had noted, financial interest and the performance we though inflation. sticky quarter by headwinds this solid despite moderating posed rates

job Our teams a control. risks can done have great we managing the

earnings are our earnings on diluted of we share with result, seen also to in projects. be capital now our $X.XX. narrowing per guidance $X.XX execution expected a good range As to We've the

in to guidance. invest approximately up of the our from million XXXX, expect $XXX in original reflected million We $XXX capital

increase same maintenance moment, was compared or $XX.X discuss share in in share $X.XX As attributable reinforcement the diluted $XX.X the million Net income for to and the million with a or $X.XX diluted per system period Curtis will projects. primarily is third XXXX. quarter per

challenges. present quarters, in yield to noted rising previous the interest and curve have inverted I rates continue As

in million quarters on For is increase related year. is amounts attributable first senior perspective, our the $XXX through XXXX. approximately the primarily up Kansas X.XX% expense the to from of last paper August The same X of excluding rising to period the of interest issuance and rates securitization, XX% notes XXXX commercial

of of $XXX $XXX due. in coming we notes XXXX, A notes million of X.X% million have quarter first reminder the that and X.X%

and ratio spreads We interest as rates, multiple debt-to-equity we are to our refinance as look notes. such considering those yield factors,

year operations due $X.X costs in and to expenses expected, third million. benefit our compared As increasing expenses the as with investments workforce labor due employee were to also maintenance last and elevated to planned quarter

continue we million the benefits due $X.X costs realize inflation and our to We as in saw previously we line by and anticipate as of O&M continues internal as of assumptions. supported we a work continue increases work However, with moderate expense lower to ease services will to in-sourcing decrease in-source to contractors. improved outside processes

this We agreements, September XXXX. $XX.XX. greatly September, exposure. settled required additional $XXX agreements by by have at X.XX and into share price be sale covering derisking net be for must million continued X.X of with forward roughly of sale we stock shares million an of settled implying In would X.XX equity approximately total, now December of been enter received our to forward approximately million, all common shares sale shares, market shares the proceeds common have our agreements forward forward executed anticipated by have settlement we stock, which end XX, the XXXX, XX, million had year we which average approximately must settled the end of of per In

we from billion ensure expanded unchanged to taken $X.XX Amid of facility On our the to credit previous our ONE quarter. uncertainty, of as steps continued execute $X.X geopolitical have declared Yesterday, $X the have Gas we Board share, capital plan. per we also from Directors adequate XXth, dividend we October billion. a liquidity

will close on we our as remain serve As customers. out expense management we the focused prudent year, we

I'll Curtis, you. turn over to it

Curtis Dinan

to activities. customers tariff program. morning, infrastructure you, region a for X give request North reliability held judge hearing purchase which the An we renewable gas the no Thank allow all before and Texas, approval voluntary to the in year-end, a filed environmental opportunity of except $X.X municipalities attributes October administrative allowed a it recommending and an RNG. and increase agreement settlement a with take the before filed gas Railroad an Oklahoma, Last will natural effect action. for consolidated Commission tariff law million March. The expected I'll West program on was order in XX. to approved a with In update or us is December, will Caron, A was which implement we unanimous good the on start of for regulatory everyone. our filed

June, outcome of denial Gas the rates appealed X the the Texas in to August, approved the In appeal. appeal the granted municipalities Railroad the Commission Service increase. new the subject and implemented and

to Kansas to Commission, system increase pursuant surcharge Service the Kansas Finally approximately an between in reliability gas on issue an Service August, infrastructure a allows million for to Corporation filings. order. and The Kansas KCC return an rate to the statute, $X to incurred which rate Gas investments adjustment application until qualifying December requesting submitted a recover file earn Gas has of late

operating Turning activities. to commercial and

for planned of in we noted, work project quarter, we pace maintained to us the winter planning with planned surpass along capital to As weather in have Those have execution. the first Caron allowed year. changes year, mild and improved to that improvements, the deployment process due part expect our our this complete more and throughout

the of our management reinforcement Of out projects head puts even evaluation in winter teams operations, completion engineering, we season. are execute as arise of X of us the Storm Yuri. heating Winter to nearing to note, of and our project, the MoPac into our Phase our work The an we project of major last position diligence plan stronger

through in sets homebuilders Looking see mortgage a have deceleration buyers. we in pace matched at continue set our XXXX. of rates meter elevated meter immediate-term growth, the slight decisions to new the September, potential pace sets impact Year-to-date and the of as

an growth to As we moving territories, our ongoing continues for region our economic discussed strong quarter people, housing. on new need enjoy bringing into with employers second and new call, our jobs,

post for meter to month we're despite record X% on new cresting of the a rates month. XX-year fact, pace number sets earlier In of this October mortgage

that remain earlier. in I story We illustrates the of challenges baseline the Sid demand and described growth think development. remain this volatile the conditions both accompanies growing for meet prepared that economic regional forecasting when durability gas the to

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

Robert McAnnally

you the work that both. is foundation the Thank essential workforce High-performing do. we of

our the customers through and winter connection. event the providing and to years, customers' pandemic culture the X a the that to that our team way ultimately in and Over our of The Gas a across challenges, those high our ONE confidence strengthened and customers multiple levels footprint, experience we've we the of another storms, and commitment strengthened through last service X of shared service value serve. to essential service of global come our the maintained reinforce an reliability

the help asset, Resources alongside. deep primary work President to Chief At to brings ONE changing workplace in and Angela look of Gas we and end will and as contribution to the investment to executive people, the developing Human we navigate for people welcomed our Kouplen make Angela September, that us forward Officer, continue Senior company. she we passion experience our our and the a to Vice

we continues Gas be on to where thrive. place and all a focus ensuring contribute, can grow, that we As ONE

joining coworkers to us In delivering our and natural Thank my you I their this and all million customers. X.X thank morning. for of dedication for gas reliable to closing, safe commitment each

now ready questions. for we're Operator,

Operator

with Moreen Mizuho. [Operator comes first Instructions] Gabe question from Our

Gabriel Moreen

X-year Appreciating of you front parts you go you're your EPS your meter that to that about over into the X% growth? -- last the outlook. So that given run since there's you're can given and feeling to and how a plan? probably how issued mean you that the of bit, just a lot X-year last X% the little outlook sets kind it about speak shifts that But O&M, it, just I time all the moderating moving customer growth occurred issued to will I'm refinancing, don't have curious the refreshed feeling

Robert McAnnally

we it's and hear of Gabe, good course, to Well, question. from you, appreciate the

pointed really quarter and this out, year point you at As prior performance. is third call

Caron But today. guidance think cost outside how challenging an done the you of to the to the in-sourcing I manage been the a Curtis year, navigate we look provide performance in-sourcing impact able spoke and way not if we'll the so increasing of services. this looked that of we've company we've that financial And at that's in the at about talked environment

the the way year demonstrates opportunity and looking think that the about likely utilized do the way as borne compete a continue. inside financial and to performed That's think ATM And Caron be and that spoke that has is sales before a that. structure. earlier we the both And think cost block strategy managing way of work also that that have from that's demonstrated and fruit we when a for company this can And to year. to we'll we I opportunistic we by the we've us. about performance the the are in talked our bring the rest standpoint, company fact I the that at we'll

you'd anything add? Caron,

Caron Lawhorn

after given summary. view look with. longer And great for grappling talking the and this next we curve, few which our is guidance the everyone years that's look I continued of of what more forward release the a interest to inversion rates we think higher continued about yield like

Robert McAnnally

rates mortgage only I thing is X the demonstrated prepared that they the that is, the I thing as story. before other where spoke about have growth. passing we by to performance Curtis remarks in in, And our the durability our recent would longer-term Gabe, with are, the mention of confidence

about need and got as for we picture of mechanics to we in to that territory a that. at performance I our process, about We've we've the service into have And think in what is durability significant the growth We our clarity date. we capital factor of to think we've the look preparing amount and see the an underlying that when that growth that that. pretty performance think service of do attention And capital going with a development territory, why economic with you over clear growth we paid comes in our our knock-on important forward. demonstrated

add? Curtis, anything you'd

Curtis Dinan

sets, of seen, of a Sid bit and do to around a positive we We for October see, deceleration our we was builders but have year, territories. a that the bit turn a active activity us. continue in again, developers see just little meter growth in this

temporary a we than I So be think as while long-lasting. pause, more view really may there that

starting show So is the to of maybe October that. signs

Operator

Our next Guggenheim Jamieson Ward with from comes question Partners.

Jamieson Ward

sense slides Just we bit XXXX what's so end they of releasing to be first. the expect? of ask But the ahead want last in came in jumping November would guidance timing, should when I of at Or a to in January, reverting it. we year? you get expect again, you terms like a to annual back

Robert McAnnally

you the be provide has, believe the clarity about we Jamieson, us being more transparent the as try clear answer company able the are and Gabe's to in possible. better ask the and the our to We off future future about that back we to as We off this in opportunities being better ties questions. to are can question.

kind of transparency think good But helpful you that I think policy. we it's we is that past when always behavior the story our particularly a have demonstrates forward have.

worked the opportunity very So we the particularly December thought well meetings because us year. to last it in year cadence forward the speak the to investor gave

year last are we helpful because continue plans we to that our cadence So now, right the to think started it everyone. was

Jamieson Ward

anyone I have later. I have X think great. sooner will I mean rather than rather more. don't That's Perfect. we'd disagree. always just information

specific On earning we be of million to the that in should spending when particular begins well, assuming -- incremental $XX the CapEx, return? that, a

Curtis Dinan

is PBR as filing cadence year past in Curtis. of be we you XXXX, each in whether Texas, our of was same it in or coming we'll our look this Jamieson, the following GSRS for that back filings, the Kansas, in few if GRIP in have And the years. cadence filings Oklahoma

Jamieson Ward

spending So or there. kind all it to have anything could factor was model any specific period the sprinkled bucket a to we clarify that categories else wasn't in? of particular or across that Just nearer-term might recovery

Curtis Dinan

No. No.

most Kansas in into And maintenance type into goes PBR relates year system All filings, the filings into the majority it as and GSRS of capital our the to of GRIP this our capital spending. our filing. of of was spend goes the of increase the goes capital more all

would what that's in well. qualify as So Kansas

Operator

now Instructions] with to turn of America. We Bank [Operator James Tanner

Tanner James

Do the -- but visibility case filings to in formal through rate? you of out plans in recover mentioned the little kind timing and you on about portion for recoverable guys of how should Jamieson, ability answer terming think cadence the And bit a we your of debt? is maturities have your rate that the the your to some then short-term for versus any upcoming

Robert McAnnally

Yes.

can and Let's question, go to to initial to Curtis to then Curtis? rate your speak cadence Caron Tanner. speak

Curtis Dinan

just me state let by So state. go

have And you COSA years case a qualifies cadence look have we then we we a if instead filing. of Tax February March So would sense had in the we filed in and spend capital in rate the have rate cadence that RGV GRIP the And here the Texas case in a we saw year, can in that. spending, of you filing. next to at Tax, Central 'XX, filed in everything we West for prior

the all And Oklahoma, we the did of which that typically In August. of our end February. at June couple the capital in PBR that a filing, recovered months capital XXXX in the ago do Kansas, of filing spent a in has was just of through we've part the of we end through

June X would in -- which every no spending of XX for filing pick capital days, next next majority you And be all in Kansas Kansas. qualifies through for Our the August, XXX GSRS spending sooner our next year spending that all that. will is do than up mechanism, can of capital that that

Caron Lawhorn

now And than all have construct that address really different they impacts and on of the your to where as said that our refinance our are are question I rates refinancing. the factors at balancing I what don't maturity much impacts looking supports at how things things more and comments, profile, structure, that how capital our are add with in we we we're spreads tenors, regulatory all debt. it which looking those to

Robert McAnnally

are that we preparing Yes. we'll prepared and thing face Tanner, going how to to the is for think would have the we add forward. only speak I challenges

the group, our the that early recognizing year, and also rate increase when regulatory the side We the financial you done really of activity last the at capacity that of cadence look same will of started year. last have house. increased We've

that we we've the support think term. term the challenges opportunities capacity So take the built to to in short have long that on continue we the in

Tanner James

do 'XX trajectory customer how here, to with declining build then you And the for upcoming Understood. winter commodities estimate the 'XX?

Curtis Dinan

an XX% And around on we somewhere bill territory. from that. X% Tanner, the we've in see year, average this of year, somewhere seen we maybe decrease $XX month. our range to just per Last across saw average

Tanner James

you And the normalization. in called weather year-to-date press are that that? impact, for the quantify you any Great. the of are out your EPS how do built what Have release, an offsets into net on then And lastly, basis? -- you then guidance there --

Caron Lawhorn

So normalization are mechanism. our year, those the and weather plan big we normal for as protected we weather, we of guidance largely anticipate because swings from

that lot of of because don't of of head, associated So it. I I see have -- on don't impact it's my the top don't with that. protection, volatility EPS a we

Operator

management hand back remarks. our the This I'll to for now team closing concludes Q&A.

Erin Dailey

Thank for in Gas. you your again interest ONE

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

Operator

the Gas and This concludes Conference ONE Quarter XXXX Call Third Earnings Webcast.

You may now disconnect.

ONE Gas (OGS) 31 Oct 232023 Q3 Earnings call transcript