OGS - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the ONE Gas 2024 Second Quarter Earnings Conference Call and Webcast. Today's conference 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 happy After take our we are prepared your remarks, questions. to

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

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

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

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

Robert McAnnally

with everyone. Thanks, to morning, Erin, second and share good to We're you results. our today quarter be happy

Our year financial is issued half last we expectations November. consistent of when guidance shared the performance and the our plans with first through the we

We entered positive in and will Service Gas with of the the case. of activity unanimous Curtis latest regulatory speak in half our jurisdictions. the activity, the Kansas year all to constructive a momentum agreement second settlement full rate

business. and gas to natural deliver our reliable to effectively continue affordable commitment while managing our We the to fulfill customers,

investments where making to guidance we our of like primarily in-house certain an opportunity execution increase focus outlook line of for average bring locations example wage due there line X-year those efficiencies. increases were project. XXXX, period, over we on our to was our an projected the X% X-year in services One locating When in we locating November is and updated O&M

skills other needed. that line as them as front-end and expected what other employees guidance, areas, seen. those the to replaced hired that is be noted we we as work decrease contractors locating expenses see trained to to O&M in do employees loaded, perform and in only expenses certain exactly In could That increase new also we be to but expected then not we've deployed and

As outside to greater in-sourcing. been cost amount related than the by have costs reduced an related to locating line service

we year-over-year O&M quarter, this those in line While year-over-year the we to increase begin saw investments. expenses other X% benefit locating to just the a total increased realize second as year same and X% of

to Now I'll Chris? discuss Chris turn it the over for to quarter. details financial

Christopher Sighinolfi

share, million continued $X.X contributed million per period customer good $XX.X in Net contributed for per Oklahoma base, in $X.XX morning, and diluted with growth income million. operating Sid, rates our Texas, or was in year-over-year, Thanks, while everyone. compared or income $XX new Revenue from $XX residential primarily the and second and to $X.XX XXXX. commercial same the quarter million share diluted

Although XX% than our our the again territories normal, weather on impact across service weather warmer for second earnings. mitigated quarter mechanisms was the normalization

in operations of Sid to part second which we through X% primarily and maintenance in the expected mitigated employee-related increased insourcing our expenses noted, XXXX, quarter have over As our efforts. increases costs, due

Excluding property, net amortization level increase an to capital our plant reflecting and securitization, $X due the than of higher expenses prior year, higher Kansas and investment. approximately the million in depreciation impact equipment the were of

in coupon primarily $XXX of than the XXXX, the of which were same reflects impact issuance the December lower in which we million March, quarter notes period Excluding and maturity paper. in in notes approximately million the repaid and Kansas the X.X% senior of $XX with February interest expenses securitization, of commercial higher

million Expected million track forecast. remain $XXX million full our second investments with the year compared to asset on capital in XXXX. and expenditures the quarter Our removal capital $XXX approximately $XXX for for costs were

the at that of forward average through by As million year-end we Those equity settlement common cover last per our planned, year. issued shares with we have settlement an agreements X.X stock satisfied of agreements price need XXXX approximately share. $XX our approximately

forward and would reaffirm the per XX, of the quarter. diluted ONE $XXX of And lastly, $X.XX prior On approximately received proceeds to we share, unchanged quarter have Had from of including of $XXX all share $XXX declared million. been end, XXXX of million $X. to net $X.XX we net at financial Gas shares Directors dividend settled guidance, our July income per million, earnings Board a

turn Curtis, you. to I'll it now

Curtis Dinan

Thank and a brief start I'll activities. update our Chris, good with you, morning, on everyone. regulatory

in filed Gas with case week. structure March. Service does general A agreement Corporation the filed a As the that with or a agreement Kansas contain capital all black we box It settlement not reached a Commission stated settlement, Kansas base. is last ROE, unanimous rate was meaning discussed quarter, and parties rate last

Oklahoma, recovered of does a is agreement after The through surcharge $XX.X the to mechanism. in be system settlement change we gas an XXXX October increase. of The net performance-based million million In filed by and million rate $XX application final is include XXth. a rate test February, being reflecting in annual considering and year what total issued approved our the order due increase case $XX reliability seeking already a increase

reflecting supported. staff a judge with reached administrative We $XX.X settlement the the million a law which commission increase,

subject order. to New commission a enters refund until final implemented on X, were rates July the

GRIP, equity XX.XX% Texas, common was equity case Texas $XX.X on rate Infrastructure service June, area, Program, return Central is for customers In Gulf on the requesting of in million. Also increase. million XX.X% in increase ratio. a in a that filed a Gas with into $XX.X based a filing and Gulf all a This rate or Gas Service Central Reliability in February, effect the June filed went

Grande expected Railroad of service rate New Commission. this in denial $X.X March by July, we're went rates in reflecting and take year. area, May, into In towards Gas in end also Commission of a $X.X a the requesting to a Gas denied Service the West-North cities filed Railroad to million the the we Texas appealed and effect the GRIP The have million. filed are increase of Services request, approved was Texas increase. Valley effect Rio the Two GRIP

to New take effect rates expected September. in are

operating Turning to activities. commercial and

Our capital to expanding and remains XXXX base. an customer the plan execution our target complete of needs on meet

We major of underserved of will and complete the of system extension third during to master build-out are phase large expect communities to final These a natural West the service the developments. projects Austin. plan quarter, bringing gas support several

service steady only territory We demand in Austin particular, growth, continued not to meters. Oklahoma new and robust but with El across City also see our experiencing Paso in for

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

Robert McAnnally

on communities, reducing emissions highlights coworkers our employing and recently Thanks, supporting our We sound Curtis report, Chris. and focus published which practices. and XXXX governance sustainability our

risks Our a robust ESG of prime ISS. MSCI due rating from rating in to corporate resulted have disclosures achieving management and AAA climate our safety a and from

Chairperson decades pleased as and Meshri we're in XX share former is will Directors Meshri the on as experience focus Corporation execution we additional significant our business and acumen Chemicals, portfolio brings and July. Yves and energy of investment Chairperson over of excellence. continued Advanced support analyst. Board, governance, new safety launching Regarding energy Siegel Chemical an the welcomed financial to prospective from infrastructure. of strategies that He energy years X operational our and well to Board Thompson as He owner gain managing experience Chairperson Sanjay Holdings. and board Research our new to of of members of has

my each working enjoying to many want that keep I thank closing, provides. natural every In customers our for of the safe to benefits coworkers day gas and

we're Operator, questions. for ready now

Operator

from Jefferies. Instructions] [Operator DanSmith The Julian first question with comes

Julian Smith

articulated given you bring think guys have do and normalizes the that come you want you think meaningful sort in back increases a interest realizing mean, as as it this year? [indiscernible] realized related, the I in-house. about the that kind of to earlier relative of into that this sort a increase? of of quarter something especially that's obviously, X%? described. here the as the saw quarter step year just guys of And the O&M that the through numbers and of into you cadence just as how course to expense the to about a I just, you maybe on you I function next mean, adjacent, understand your well. Look, function And outsized here it basis, clearly, year with mean I kind that multiyear I step is think in

If speak to just you a can that little ex securitization. bit

Robert McAnnally

Sure, Julian.

then try question can speak to specifically Let Curtis that me speak terms and overview in O&M. ask then around been the some O&M implemented And issues an operations strategies that your of you Chris to control to give to is seeing interest. have to

be prepared our contracted our we short you the we've in rather challenge pursue passed, we And knew growth know, if term, the spoken had strategy contracting coming being term. we term. the shorter in of for in As service that specifically not saw as was future would meetings we in the than to territory that to preparing longer

wanting for improving the and of we the activities, our standpoint in serve some availability growth improving provided was vision customers an in that the our service but made dislocation to we that and us So efficiency our housing -- people around where compliance the housing knew believe not short up coming term, levels preparing from the number between also given well we territory. in service staffing in would sense it we the only guidance, fact future,

every quarterly reported of the look 'XX, posted performance on illustrate in So XX.X% we our increase, XXXX and has in X.X%, to we quarter of second quarter since first was quarter around on then the that, quarter at the a X%. if down gone -- you around first O&M, just

for for that way that continue supported it's growth for think our we've we So, and Kansas has of and to us them. to provide and opportunities in the O&M we provide that us service terms those Texas that future the but dividends vision has in serving and strategy that to in paid demonstrated pursuing Oklahoma expense grow a done communities know we'll in

ask care color Curtis, me to. you any to you add let

Curtis Dinan

some additional them other good that or really long a out our thought things one have we the about otherwise some analysis. it other I have We're little enable will bit like teams. we OQs the making be guess did performance that in the of realizing of that I might benefits getting quicker really we're tasks. the that functions, those coworkers that we thing were those And those say do than initial to we as qualifications bets term, is these of of in-sourcing Sid, would have for when we

just the and a example, level same days function the at a isn't that locating, X peaks line happens an week. week. has through It So as valleys

able so in valleys. those And flex work a and roles, workforce of those that for that that to efficiencies types creates in having do of other to other is need by out we

to have be with gain efficiencies gain we the the with not we only those completed. efforts, that So locating compliance other efficiencies line tasks

good think really I operational standpoint. it's So been a from story, an

line locates that around states, And improved of that are requirements from worked each and legislatures just different then locating with call and activity have the subsequently how the required. line changed changes in of the our boards we level or done, second also the follow-up locates has one have

eliminated locate of actually us has to some those we've some efficiency. gain line So that also tickets allowed

of teams an advocacy public So as working a operational in standpoint our couple from well really both there, on. stories have been good as what

Christopher Sighinolfi

Julian, question Chris. up year, expense, planned on the with note, timing. I'm on for had everybody sure regarding be is And follow nuances to to thing consistent of up the One your the it picked how to everything not but we this was interest

a the first mid-February. $XXX in matured we about you we was the quarter, And had prefunded million issuance X.X%, by that think that in December. XX-year done have had so And note if

But X.X% effectively, million about from X.X%. $XXX you're moving to talking

with X.X%. shielded for note part XXX picking were until mature So didn't on And And we of there. quarter. the exposure that then half at March was up points million, replaced that X.X% basis had XX. of But you're $XXX the that you CP

you're up there. of XXX-plus basis picking impact points So

first So impact in the occurred the had from while shielding that some of quarter, total maturities the effects quarter, headwind. interest

into go The that regulatory, to if back year And in some with spring, review. on of starting took think pickup about the warehouse then you Curtis' start The all half revenue you quarter impacts. of effect rates those the filings place in back half. in regulatory have second to the

equity the terming discussed the And the the year. previously and which have paper intend commercial the year, half forwards, the we some by of in sell of to then, as we had of you end know, we back out

the at So bore look second the I maturities sort talked looking you think when you're at impact we of the full in of quarter, the about of winter.

Julian Smith

timing you And there's a element. comments it. Appreciate go Exactly. Curtis, Right. to just maybe back briefly the said clearly, what

the on O&M that overall track correct? remain X-year CAGR, You against on number

Curtis Dinan

That's correct, Julian.

Operator

The next question Ladenburg. comes from Paul Fremont with

Paul Fremont

and I rate Will its they'll it point ratio? settlement. order base, guess a in that? makes question your -- the like final on that silent equity the on the commitment ROE First that, expectation public clarification Kansas will is is of the Or the remain

Curtis Dinan

Paul, those change of items cases, when this is get in and past a you the order, do detail the And black we've detailed final done. a not is settlement, doesn't listed It's or even in requirement Curtis. it. how box rate into revenue reached the in calculation go just identified

Paul Fremont

than sort And O&M Great. of that see a you growth go-forward the you've other that course X%. sort you've of guess of of the identified some over possibility future? -- the in of is the then basis, expectation think of I have coming I better a question progress of do a sort made Does longer-term I on of in given

Robert McAnnally

better We'll efficient our provide We're and come reliable always in that, we we and on focused be to the more to. still entitled service always think customers Paul. can are than strive that safe how

but it's would projects So it you of appropriate. We that of of we lowering updates a kinds come to But the toward number, some to updating possible the disclose quarter that as now, give provide number, that performance right not we'll work sense and and we're performance. the around give that wanted color to continue lead for level that lower. the to X% think we'll in

Paul Fremont

the potential rates end rates. And of year. they is that last I seeing any than have of at you guess on sort question front? With the the I were benefit Okay. interest are of of sort on lower I mean interest sort

Christopher Sighinolfi

Yes, is happen the is Chris. specifically Obviously, pretty There's may this rates. is Fed speculation, to lot with Fed funds Paul, short commercial yes. what of paper answer rate. funds obviously, a the tethered our about rate

was costs its decline this see we happen lower that sympathy Reserve rate, in year. Federal would that. that forecast the that would should borrowing A would we reminder not commercial with expect So policy paper our that

or obviously, there's a change And come that treasury come then in long-term we've in been front. corporate credit issuances, intermediate in. issuances and spreads long-term But view market on seen both rates on

been year, beginning to And at the stood point. favorable things versus so the of your where that's

Operator

David [Operator Instructions] Stanley. Arcaro The from with Morgan following comes

David Arcaro

Could Do the just How are where in you cadence second about accelerate remind you see me of you yields a in window paper financing, mentioned terming -- could out pullback with the you market? the thinking half. the commercial for that? potentially some the in you

Christopher Sighinolfi

couple David, close the Yes. we open this enter That of We until is an quarter. days. Chris. remain books for window here in the a will

year-end. seen for So our equity as that do past, that's is you as settle we've then you've closer one of window credit. And out the at forwards, to look targeted, us those expectation, in the to potential terming

David Arcaro

Any outlook just changes the major Okay. parameters and here. earnings a Got around assumed? it. settlement And the the That's then guess, higher-level you there? would expectations with I helpful. have the current question, what your -- settlement on are Kansas consistent Would versus

Curtis Dinan

we to and we factor There's guidance. within assumed had major in that we this many profile into David, items short the changes answer that, is had fits that what the no provided. our

Operator

question-and-answer the now session. One concludes to I it to That Gas hand for closing would back remarks. like team the

Erin Dailey

Thank interest you Gas. in your all again ONE for

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

Operator

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

now may You disconnect.

ONE Gas (OGS) 6 Aug 242024 Q2 Earnings call transcript