ONE Gas(OGS) - 2025 Q2 - Quarterly Results

Financial Highlights ONE Gas reported strong Q2 2025 results with increased net income and diluted EPS, raising full-year guidance and declaring a $0.67 quarterly dividend Q2 & YTD 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $32.0 million | $27.2 million | $151.5 million | $126.6 million | | Diluted EPS | $0.53 | $0.48 | $2.51 | $2.23 | - The company increased its 2025 diluted earnings per share guidance from a range of $4.20 - $4.32 to a new range of $4.32 - $4.42[2] - The board of directors declared a quarterly dividend of $0.67 per share, which is $2.68 on an annualized basis[2] - In May 2025, the company executed a forward sale agreement for 2.5 million shares of common stock at a net price of $78.47 per share, with settlement by December 31, 2026[2] Financial Performance Analysis Operating income increased in Q2 and YTD due to new rates, partially offset by higher operating expenses, while capital expenditures remained stable Second Quarter 2025 Performance Q2 2025 operating income increased to $71.9 million, driven by new rates and sales volumes, despite higher expenses, with capital expenditures at $190.1 million Q2 2025 Operating Income Drivers (vs Q2 2024) | Driver | Impact (in millions) | | :--- | :--- | | Increases | | | New Rates | +$21.1 | | Higher Sales Volumes (net) | +$2.1 | | Residential Customer Growth | +$1.5 | | Offsets | | | Depreciation & Amortization | -$6.8 | | Employee-related Costs | -$5.7 | | Ad Valorem Taxes | -$5.0 | | Bad Debt Expense | -$1.6 | | Customer Refund | -$2.9 | - Capital expenditures and asset removal costs were $190.1 million in Q2 2025, slightly down from $194.6 million in Q2 2024[5] - Weather was 19% warmer than normal but 45% colder than Q2 2024, with the impact on operating income largely mitigated by regulatory weather normalization mechanisms[3] Year-to-Date 2025 Performance YTD 2025 operating income rose to $252.4 million, primarily from new rates, with capital expenditures totaling $367.8 million YTD 2025 Operating Income Drivers (vs YTD 2024) | Driver | Impact (in millions) | | :--- | :--- | | Increases | | | New Rates | +$73.0 | | Residential Customer Growth | +$3.9 | | Offsets | | | Depreciation & Amortization | -$11.9 | | Ad Valorem Taxes | -$9.7 | | Employee-related Costs | -$9.0 | | Bad Debt Expense | -$2.3 | | Insurance Expense | -$1.7 | | Customer Refund | -$2.9 | - Capital expenditures and asset removal costs for the six-month period were $367.8 million, compared to $374.0 million in the same period last year[10] - Weather for the six-month period was 3% colder than normal and 18% colder than the same period in 2024, with the financial impact largely tempered by regulatory mechanisms[8] Regulatory Activities Update The company is actively engaged in regulatory proceedings, including rate case filings in Texas, approved increases in Kansas and Texas, and a settled increase in Oklahoma - Texas: Texas Gas Service filed a rate case in June 2025 for a $41.1 million revenue increase, with new rates expected in Q1 2026. Separately, Gas Reliability Infrastructure Program (GRIP) filings resulted in approved rate increases effective June 2025[11][15] - Kansas: Kansas Gas Service received approval for a $7.2 million increase related to its Gas System Reliability Surcharge, effective August 2025[12] - Oklahoma: Oklahoma Natural Gas reached a settlement for its Performance-Based Rate Change application, resulting in a $41.1 million base rate revenue increase. Interim rates were implemented in June 2025, with final approval in July 2025[14] 2025 Financial Guidance ONE Gas increased its 2025 financial guidance for net income and diluted EPS, while capital expenditure guidance remains at $750 million Updated 2025 Financial Guidance | Metric | Previous Guidance | Increased Guidance | | :--- | :--- | :--- | | Net Income | $254M - $261M | $261M - $267M | | Diluted EPS | $4.20 - $4.32 | $4.32 - $4.42 | | EPS Midpoint | $4.26 | $4.37 | - Capital expenditures, including asset removal costs, are still expected to be approximately $750 million in 2025[17] Conference Call Information An earnings conference call and webcast for Q2 2025 results will be held on August 6, 2025, with replay options available - Event: Earnings Conference Call and Webcast[18] - Date and Time: Wednesday, August 6, 2025, at 11 a.m. EDT (10 a.m. CDT)[18] - Access: Dial 833-470-1428 (passcode 734834) or log on to the company's investor relations website[18] - A replay will be available on the website for 30 days and by phone for seven days[19] Forward-Looking Statements This report includes forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The forward-looking statements are based on current expectations and are subject to known and unknown risks, uncertainties, and other factors[22][24] - Key risk factors include, but are not limited to: * Ability to recover costs through regulated rates * Cyber-attacks and breaches of technology systems * Changes in regulation in Oklahoma, Kansas, and Texas * Competition from alternative energy sources * Adverse weather conditions and climate change * Availability of and access to capital markets[24][27] Appendix: Financial Statements and Supplementary Data The appendix provides detailed unaudited financial statements, including income, balance, and cash flow statements, along with KGSS-I securitization and operational metrics Consolidated Statements of Income Total revenues increased to $423.7 million for Q2 and $1.36 billion YTD, with net income reaching $32.0 million for the quarter and $151.5 million YTD Income Statement Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $423,741 | $354,137 | $1,358,931 | $1,112,457 | | Operating Income | $71,855 | $69,280 | $252,354 | $215,140 | | Net Income | $32,033 | $27,243 | $151,452 | $126,560 | | Diluted EPS | $0.53 | $0.48 | $2.51 | $2.23 | Consolidated Balance Sheets As of June 30, 2025, total assets were $8.36 billion, total equity increased to $3.18 billion, and long-term debt remained stable Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,359,141 | $8,425,571 | | Net Property, Plant & Equipment | $6,872,091 | $6,645,873 | | Total Liabilities | $5,174,806 | $5,321,023 | | Total Equity | $3,184,335 | $3,104,548 | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $448.8 million, while investing activities used $348.5 million and financing activities used $136.1 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $448,809 | $250,926 | | Cash used in Investing Activities | ($348,511) | ($341,776) | | Cash from (used in) Financing Activities | ($136,114) | $83,929 | | Change in Cash | ($35,816) | ($6,921) | KGSS-I Securitization KGSS-I contributed $13.2 million in Q2 and $24.8 million YTD revenue, with a negligible net income impact due to offsetting expenses Income Statement Impact of KGSS-I (in thousands) | Metric | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Operating Revenues | $13,205 | $24,842 | | Total Expenses | ($13,282) | ($24,770) | | Net Income | $29 | $72 | Information at a Glance Key operational data shows total delivered gas volumes increased to 212.2 Bcf, average customers grew to 2.303 million, and weather was colder than normal Key Operating Metrics - Six Months Ended June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Volumes Delivered (Bcf) | 212.2 | 202.1 | | Average Number of Customers (thousands) | 2,303 | 2,287 | - Weather for the six-month period was 3% colder than normal, compared to 13% warmer than normal in the same period of 2024[43]