Group 1 - ONE Gas, Inc. will participate in the American Gas Association Mini-Forum on September 15-16, 2025, in Boston, with senior executives conducting meetings with the investment community [1] - ONE Gas is a 100-percent regulated natural gas utility, trading on the NYSE under the symbol "OGS," and is included in the S&P MidCap 400 Index [2] - The company serves over 2.3 million customers across Kansas, Oklahoma, and Texas, with divisions including Kansas Gas Service, Oklahoma Natural Gas, and Texas Gas Service [3] Group 2 - The board of directors of ONE Gas declared a quarterly dividend of 67 cents per share of common stock, payable on September 3, 2025 [6]

Core Viewpoint - ONE Gas (OGS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Recent Performance of ONE Gas - ONE Gas is expected to earn $4.33 per share for the fiscal year ending December 2025, showing no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for ONE Gas has increased by 1.5%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks generating an average annual return of +25% since 1988 [7]. - The upgrade of ONE Gas to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - ONE Gas, Inc. (OGS) is positioned as a strong investment option in the utility sector due to its 100% regulated operations, customer base expansion, and strategic investments aimed at improving infrastructure and service efficiency [1] Group 1: Growth Projections - The Zacks Consensus Estimate for OGS's 2025 earnings per share (EPS) has risen by nearly 1.2% over the past 90 days to $4.32 [2] - The Zacks Consensus Estimate for 2025 sales is projected at $2.43 billion, reflecting a year-over-year increase of 16.6% [2] - OGS's long-term earnings growth rate is estimated at 5.56% over the next three to five years [2] Group 2: Dividend History - OGS plans to reward shareholders with an average annual dividend increase of 1-2% through 2029, contingent on board approval [3] - The current quarterly dividend stands at 67 cents per share, leading to an annualized dividend of $2.68 [3] - OGS's current dividend yield is 3.57%, significantly higher than the Zacks S&P 500 composite's yield of 1.16% [3] Group 3: Debt Position - OGS's total debt to capital ratio is 40.44%, which is better than the industry average of 51.09% [4] - The time-to-interest earned ratio at the end of Q2 2025 was 3, indicating the company's strong ability to meet future interest obligations [4] Group 4: Systematic Investments & Customer Growth - OGS's capital investment for 2025, including asset removal costs, is expected to be $750 million, with nearly $180 million allocated for customer extensions [5][8] - The ongoing capital expenditures focus on pipeline integrity, service extensions, system capacity increases, and cybersecurity [5] - Since 2015, OGS has consistently increased its customer base, with a 0.8% year-over-year growth in Q2 2025, serving 2,302,000 customers [6][8] - An average annual customer growth of 0.9% is anticipated through 2028 [6][8] Group 5: Price Performance - OGS's stock has increased by 4% over the past six months, outperforming the industry's growth of 2.2% [7]

Core Viewpoint - MDU Resources is currently viewed as a superior value option compared to ONE Gas based on various valuation metrics [7] Valuation Metrics - MDU Resources has a forward P/E ratio of 17.18, while ONE Gas has a forward P/E of 17.45 [5] - MDU's PEG ratio is 2.48, indicating a more favorable expected earnings growth rate compared to ONE Gas's PEG ratio of 3.14 [5] - MDU has a P/B ratio of 1.22, compared to ONE Gas's P/B ratio of 1.42, suggesting MDU is more undervalued relative to its book value [6] Earnings Outlook - Both MDU Resources and ONE Gas have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook [3]

[Part I. Financial Information](index=8&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Consolidated Financial Statements](index=8&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's unaudited statements show increased net income and total assets of $8.36 billion as of June 30, 2025 Consolidated Statements of Income Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Total revenues** | $1,358,931 | $1,112,457 | | **Operating income** | $252,354 | $215,140 | | **Net income** | $151,452 | $126,560 | | **Diluted EPS** | $2.51 | $2.23 | Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $8,359,141 | $8,425,571 | | **Total Liabilities** | $5,174,806 | $5,321,023 | | **Total Equity** | $3,184,335 | $3,104,548 | | **Total Long-Term Debt (net)** | $2,370,863 | $2,385,286 | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Cash from Operating Activities** | $448,809 | $250,926 | | **Cash used in Investing Activities** | $(348,511) | $(341,776) | | **Cash provided by (used in) Financing Activities** | $(136,114) | $83,929 | [Note 2. Revenue](index=15&type=section&id=Note%202.%20Revenue) Total revenues grew to $1.36 billion for the first six months of 2025, driven by higher natural gas sales Disaggregated Revenue (Six Months Ended June 30) | Revenue Source | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Natural gas sales to customers | $1,239,435 | $987,856 | | Transportation revenues | $74,465 | $69,554 | | Securitization customer charges | $24,842 | $23,226 | | Miscellaneous revenues | $13,317 | $12,065 | | **Total revenues from contracts with customers** | **$1,352,059** | **$1,092,701** | [Note 3. Regulatory Assets and Liabilities](index=16&type=section&id=Note%203.%20Regulatory%20Assets%20and%20Liabilities) Net regulatory liabilities increased to $211.3 million by June 30, 2025, due to changes in various regulatory accounts Net Regulatory Assets and Liabilities | Date | Total Regulatory Assets (in thousands) | Total Regulatory Liabilities (in thousands) | Net Position (in thousands) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $310,087 | $(521,417) | $(211,330) | | Dec 31, 2024 | $379,216 | $(490,088) | $(110,872) | - Amortization of regulatory assets, representing recovery through rates, was **$7.4 million** for the six months ended June 30, 2025, compared to **$9.5 million** for the same period in 2024[44](index=44&type=chunk) [Note 4 & 5. Credit Facility and Long-Term Debt](index=17&type=section&id=Note%204%20%26%205.%20Credit%20Facility%20and%20Long-Term%20Debt) The company maintained a total debt-to-capital ratio of 50.7% with $2.40 billion in long-term debt as of June 30, 2025 - The company has a **$1.35 billion** revolving credit facility and a commercial paper program of the same amount, with **$872.4 million** of commercial paper outstanding at June 30, 2025[45](index=45&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) Long-Term Debt Composition (June 30, 2025) | Debt Instrument | Amount (in thousands) | | :--- | :--- | | Total Senior Notes | $2,150,000 | | KGSS-I Securitized Utility Tariff Bonds | $272,798 | | **Total long-term debt, net** | **$2,400,627** | - The company's total debt-to-capital ratio was **50.7%** at June 30, 2025, in compliance with the credit agreement's covenant of no more than 70%[46](index=46&type=chunk) [Note 6. Equity](index=18&type=section&id=Note%206.%20Equity) The company initiated a forward sale agreement for 2.5 million shares and maintained a $225.5 million ATM program - In May 2025, the company entered into a forward sale agreement for **2.5 million shares** of common stock[53](index=53&type=chunk) - As of June 30, 2025, the company had **$225.5 million** of equity available for issuance under its at-the-market (ATM) program[54](index=54&type=chunk) - A dividend of **$0.67 per share** was declared in August 2025, payable in September 2025[55](index=55&type=chunk) [Note 12. Commitments and Contingencies](index=22&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company manages environmental remediation costs for former MGP sites and complies with federal pipeline safety regulations - The company is responsible for environmental conditions at **12 former MGP sites** in Kansas and is governed by a consent agreement with the KDHE for investigation and remediation[72](index=72&type=chunk)[73](index=73&type=chunk) - In July 2025, the KCC approved an increase in the cap for the Accounting Authority Order (AAO) to recover MGP remediation costs to **$32.0 million** from $15.0 million[74](index=74&type=chunk) - The company is subject to federal pipeline safety regulations from PHMSA, and new rules under the PIPES Act could require material expenditures[79](index=79&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income rose to $151.5 million in H1 2025, driven by new rates and customer growth, with robust liquidity and ongoing regulatory activities [Regulatory Activities](index=28&type=section&id=Regulatory%20Activities) The company is actively pursuing and has received approvals for rate increases across Oklahoma, Kansas, and Texas - **Oklahoma:** A settlement for a **$41.1 million** base rate revenue increase was approved by the OCC in July 2025[103](index=103&type=chunk) - **Kansas:** The KCC approved a **$7.2 million** increase related to the Gas System Reliability Surcharge (GSRS), effective August 2025[104](index=104&type=chunk) - **Texas:** Filed a rate case for a **$41.1 million** revenue increase and received approvals for GRIP filings in the West-North and Central-Gulf areas totaling **$23.6 million**[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Financial Results and Operating Information](index=29&type=section&id=Financial%20Results%20and%20Operating%20Information) Operating income increased 17% year-over-year to $252.4 million, driven by new rates and customer growth Selected Financial Results (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $1,359.0 | $1,112.5 | 22% | | Cost of natural gas | $630.4 | $455.0 | 39% | | Operating income | $252.4 | $215.1 | 17% | - The **$37.3 million increase** in six-month operating income was primarily due to an increase of **$73.0 million** from new rates and **$3.9 million** from net customer growth, partially offset by higher expenses[117](index=117&type=chunk)[122](index=122&type=chunk) - The average total number of customers increased by **16,000** to 2,303,000 for the six months ended June 30, 2025, compared to the same period in 2024[124](index=124&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong, supported by operating cash flow and a $1.35 billion credit facility, with 2025 capex projected at $750 million - Primary liquidity sources are operating cash flow and commercial paper, supported by a **$1.35 billion** revolving credit facility[128](index=128&type=chunk)[133](index=133&type=chunk) Credit Ratings (as of June 30, 2025) | Rating Agency | Long-term Rating | Short-term Rating | Outlook | | :--- | :--- | :--- | :--- | | Moody's | A3 | Prime-2 | Stable | | S&P | A- | A-2 | Stable | - Full-year 2025 capital expenditures and asset removal costs are expected to be approximately **$750 million**[123](index=123&type=chunk) [Cash Flow Analysis](index=35&type=section&id=Cash%20Flow%20Analysis) Operating cash flow increased significantly to $448.8 million due to favorable working capital changes Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Operating Cash Flow | $448.8 | $250.9 | | Investing Cash Flow | $(348.5) | $(341.8) | | Financing Cash Flow | $(136.1) | $83.9 | - The increase in operating cash flow was primarily due to working capital changes related to the recovery of regulatory assets[146](index=146&type=chunk) - The increase in cash used in financing activities was primarily due to the repayment of notes payable[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks, including commodity, interest-rate, and credit risk, are actively managed and mitigated - Commodity price risk from natural gas price fluctuations is mitigated by purchased-gas cost adjustment mechanisms, which pass costs to customers without profit[169](index=169&type=chunk) - Interest-rate risk exists from commercial paper borrowings and future debt financing needs, which the company may manage using fixed-rate debt and swaps[171](index=171&type=chunk) - Counterparty credit risk is not material due to a large, diversified customer base of approximately **2.3 million** and tariff provisions for security deposits[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[173](index=173&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[174](index=174&type=chunk) [Part II. Other Information](index=41&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing litigation from normal business operations is not expected to have a material adverse effect on the company's financials - The company states that it is involved in various litigation matters from the normal course of operations, but believes the outcomes will not have a material adverse effect on its financials[175](index=175&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This report references the risk factors disclosed in the company's Annual Report, with no material changes noted - The report directs investors to consider the risks set forth in the company's Annual Report, noting that no material changes have occurred in the risk factors[176](index=176&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including governance documents, underwriting agreements, and officer certifications - Key exhibits filed include an Underwriting Agreement and a Forward Sale Agreement, both dated May 8, 2025, related to a common stock offering[182](index=182&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[182](index=182&type=chunk)

Core Insights - One Gas reported Q2 2025 results with GAAP earnings per share at $0.53, slightly above estimates, while GAAP revenue was $423.7 million, missing expectations by $108 million [1][5] - Net income increased by 17.6% year over year to $32.0 million, driven by regulatory rate increases and cost controls [1][6] - Management raised full-year earnings and net income guidance for 2025, reflecting positive operational execution [1][12] Financial Performance - Q2 2025 EPS was $0.53, matching estimates, and up 10.4% from $0.48 in Q2 2024 [2] - Revenue of $423.7 million fell short of the $531.6 million estimate, but showed a 19.6% increase from $354.2 million in Q2 2024 [2] - Operating income rose to $71.9 million, a 3.7% increase from $69.3 million in Q2 2024 [2] - Capital expenditures were $190.1 million, slightly down from $194.6 million in Q2 2024 [2] Regulatory Developments - The company secured several rate increases totaling $15.4 million and $8.2 million for Texas operations, and $7.2 million for Kansas operations, effective in mid-2025 [7] - Regulatory weather normalization mechanisms helped stabilize earnings despite weather-related demand fluctuations [7] Operational Highlights - Total gas sales volumes increased to 18.9 billion cubic feet, up from 15.9 billion cubic feet in Q2 2024, although transportation volumes declined by 6.9% year over year [5][6] - Operations and maintenance expenses rose by 7.5% year over year, primarily due to higher labor and benefit costs [6] Capital Investments and Sustainability - Capital spending focused on safety, reliability, and growth, with $190.1 million invested in Q2 2025 [8][11] - The company is investing in renewable natural gas facilities to align with sustainability goals and regulatory interests [11] Future Outlook - Full-year net income guidance was raised to $261–267 million, with EPS guidance adjusted to $4.32–4.42 [12] - Capital expenditure guidance remains at approximately $750 million, indicating ongoing investment in system upgrades [12] - Key areas to monitor include the success of closing further rate cases and progress on alternative energy projects [13]

Financial Data and Key Metrics Changes - Net income for the second quarter was $32 million or $0.53 per diluted share, compared to $27.2 million or $0.48 in the same period last year, reflecting a year-over-year increase [4][8] - The company raised its full-year 2025 financial guidance, now expecting net income between $261 million and $267 million and earnings per diluted share between $4.32 and $4.42, both 2.5% above the respective midpoints of the initial guidance ranges [5][7] - Operating and maintenance expenses increased by 7.5% year over year in the second quarter, primarily due to higher labor-related expenses [8] Business Line Data and Key Metrics Changes - Revenues for the second quarter increased by approximately $21.1 million from new rates and $1.5 million from continued customer growth [8] - The company installed nearly 11,400 new meters through the first half of the year, sustaining a momentum of over 9% year-over-year increase in new customer additions [16] Market Data and Key Metrics Changes - The Oklahoma Corporation Commission approved a $41.1 million revenue increase effective in June, and Texas Gas Service filed a rate case requesting a $41.1 million increase [11][12] - The Kansas Corporation Commission approved a $7.2 million increase under the gas system reliability surcharge statute, with new rates taking effect this month [13] Company Strategy and Development Direction - The company is focused on disciplined execution and long-term growth, with a commitment to system integrity and responding to community needs [18][39] - The Austin system reinforcement project is highlighted as a significant capital investment aimed at expanding system capacity to support growing demand [14][40] - The company is pursuing opportunities in data centers, advanced manufacturing, and utility-scale generation, aiming to enhance system resiliency and align with customer needs [17][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong operational and financial results for the first half of the year and the positive impact of Texas House Bill 4,384 on financials [4][5] - The company remains optimistic about growth opportunities in Texas and other jurisdictions, driven by positive migration trends and job creation [39][40] Other Important Information - The company declared a dividend of $0.67 per share, unchanged from the previous quarter [10] - The company completed $190 million in capital projects during the second quarter, in line with the same period last year [14] Q&A Session Summary Question: Impact of House Bill 4,384 on financials - Management explained that the bill extends deferrals and accruals to all capital expenditures in Texas, potentially adding $4 million to $5 million of annual pretax earnings [24][28] Question: Long-term growth rate considerations - Management confirmed that the updated midpoint of guidance for 2025 will be used as the base for the new five-year range [34] Question: Texas capital plans and growth - Management stated that there will be no significant changes to the capital plans due to the bill, but growth in Texas jurisdictions is expected to continue [38] Question: Texas rate case and consolidation benefits - Management highlighted that consolidation will lead to efficiency, reducing administrative costs and benefiting customers [47] Question: Opportunities in power load growth and data centers - Management indicated that there are significant inbound inquiries for data center opportunities, and they are pursuing projects that enhance system resiliency [50]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $32 million or $0.53 per diluted share, compared to $27.2 million or $0.48 in the same period last year, reflecting a year-over-year increase [4][7] - The company raised its full-year 2025 financial guidance, now expecting net income between $261 million and $267 million and earnings per diluted share between $4.32 and $4.42, both 2.5% above the respective midpoints of the initial guidance ranges [5][6] Business Line Data and Key Metrics Changes - Revenues for the second quarter increased by approximately $21.1 million from new rates and $1.5 million from continued customer growth [7] - Operating and maintenance expenses increased by 7.5% year-over-year, primarily due to higher labor-related expenses [7] Market Data and Key Metrics Changes - The Oklahoma Corporation Commission approved a $41.1 million revenue increase effective June, and Texas Gas Service filed a rate case requesting a $41.1 million increase [12][13] - The company installed nearly 11,400 new meters in the first half of the year, with a year-over-year increase of over 9% in new customer additions [16] Company Strategy and Development Direction - The company is focused on disciplined execution and long-term growth, with significant capital investments in system safety and reliability [18] - The Austin system reinforcement project is the largest capital investment since the company's separation from OneOak in 2014, aimed at expanding system capacity to support growing demand [15][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and the positive impact of Texas House Bill 4,384, which supports the recovery of system investments [5][25] - The company remains committed to balancing system needs with customer impact, emphasizing affordability in planning and implementation of rate mechanisms [12][14] Other Important Information - The company completed $190 million in capital projects during the second quarter, consistent with the same period last year [15] - The Board of Directors declared a dividend of $0.67 per share, unchanged from the previous quarter [10] Q&A Session Summary Question: Impact of House Bill 4,384 on financials - Management explained that House Bill 4,384 extends deferrals and accruals to all capital expenditures in Texas, potentially adding $4 million to $5 million of annual pretax earnings [24][25] Question: Long-term growth rate considerations - Management confirmed that the updated midpoint of guidance for 2025 will be used as the base for the new five-year range, consistent with past practices [35] Question: Texas capital plans and growth - Management stated that there will be no significant changes to capital plans due to the favorable bill enactment, but growth in Texas jurisdictions is expected to continue [38][39] Question: Texas rate case and consolidation benefits - Management noted that the consolidation of service areas will lead to efficiency and lower administrative costs, benefiting customers [46] Question: Opportunities in power load growth and data centers - Management highlighted significant inbound inquiries for data center and advanced manufacturing projects, emphasizing a strategic approach to enhance system resiliency [48][49] Question: Timeline for potential projects - Management indicated that some projects could manifest in the near term, while others may take longer depending on the required infrastructure [56]

ONE Gas, Inc. (OGS) reported second-quarter 2025 operating earnings per share (EPS) of 53 cents, which came in line with the Zacks Consensus Estimate. The figure was 10.4% higher than the year-ago quarter's earnings of 48 cents. OGS' Revenues ONE Gas recorded revenues of $423.7 million, which surpassed the Zacks Consensus Estimate of $404 million by 4.9%. The top line also increased 19.7% from $354.1 million in the prior-year quarter. Key Takeaways Total operating expenses were $233.9 million, up 9.9% year ...

Core Insights - ONE Gas (OGS) reported revenue of $423.74 million for the quarter ended June 2025, marking a year-over-year increase of 19.7% and exceeding the Zacks Consensus Estimate of $404.11 million by 4.86% [1] - The earnings per share (EPS) for the same period was $0.53, compared to $0.48 a year ago, aligning with the consensus EPS estimate [1] - The stock has returned +0.8% over the past month, slightly underperforming the Zacks S&P 500 composite's +1% change, and currently holds a Zacks Rank 2 (Buy) [3] Revenue and Earnings Performance - Natural gas sales revenue was reported at $369.5 million, exceeding the two-analyst average estimate of $337.01 million, with a year-over-year change of +20.4% [4] - Transportation revenues reached $31 million, surpassing the two-analyst average estimate of $26.23 million, reflecting a year-over-year increase of +2.3% [4] Volume Metrics - Total natural gas sales volumes delivered were 18,900.00 MMcf, exceeding the three-analyst average estimate of 16,538.68 MMcf [4] - Total volumes delivered were 67,600.00 MMcf, compared to the average estimate of 70,277.42 MMcf [4] - Residential natural gas sales volumes were reported at 12,600.00 MMcf, above the two-analyst average estimate of 11,380.00 MMcf [4] - The average number of customers was reported at 2,302, slightly above the two-analyst average estimate of 2,300 [4]