ONE Gas(US:OGS)2022-08-02 22:59Financial Data and Key Metrics Changes - Net income for Q2 2022 was $32.1 million or $0.59 per diluted share, compared to $30.1 million or $0.56 per diluted share in Q2 2021, reflecting a year-over-year increase [11] - Operating income increased by $7.5 million or 15% over the same period last year, driven by new rates and residential customer growth [11][12] - Operating costs rose by $7.1 million compared to Q2 2021, with outside services accounting for $5.8 million of the increase [13] Business Line Data and Key Metrics Changes - The increase in operating income was primarily due to $14.4 million from new rates, largely resulting from regulatory filings completed in the previous year [12] - Continued residential customer growth in Oklahoma and Texas contributed an additional $1.5 million to operating income [12] Market Data and Key Metrics Changes - The authorized rate base was approximately $4.28 billion as of June 30, with an estimated average rate base of approximately $4.8 billion for 2022 [16] - The company added over 12,000 new customer connections in the first half of 2022, surpassing the approximately 11,000 added in the same period last year [33] Company Strategy and Development Direction - The company is focused on three targets: a strong safety culture, excellent customer service, and building capacity to respond to organic growth [6] - A stronger emphasis on ESG opportunities has been added to the company's commitments, with renewable natural gas (RNG) being integral to its emissions reduction strategy [8][34] - The company is actively managing costs and focusing on customer affordability amid rising inflation and gas prices [9][10] Management's Comments on Operating Environment and Future Outlook - Management expects economic conditions to remain challenging for the remainder of the year but is confident in the guidance range due to solid performance in the first half [24] - The company is committed to managing costs and executing its capital plan while addressing external factors like interest rates and inflation [24] Other Important Information - The Board of Directors declared a dividend of $0.62 per share, unchanged from the previous quarter [20] - The company is utilizing its at-the-market equity program to address future liquidity needs, having executed forward sale agreements for approximately 592,000 shares [18][19] Q&A Session Summary Question: Can you provide more color on the 2022 EPS guidance considering the nonqualified benefit plan and pension impacts? - Management clarified that the mark-to-market adjustments for nonqualified plans are not included in guidance, and the pension plan remeasurement will have a fixed impact of about $7 million for the remainder of the year [48][49] Question: What are the implications of El Paso's denial for the group rate increase? - Management indicated that the rates were allowed to take effect as the Commission deemed the filing proper, and the appeal process is ongoing [58] Question: Have inflation expectations changed, and how is O&M tracking? - Management stated that they have not gained more visibility on inflation but are focused on recognizing savings without compromising customer service [60][61] Question: How will one-time items be treated in the guidance? - Management noted that the impacts of mark-to-market and remeasurement for 2022 largely negate each other, and they do not plan to provide a non-GAAP earnings number [72]