ONE Gas(OGS) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The updated financial guidance for 2021 projects net income in the range of $204 million to $209 million and earnings per diluted share between $3.80 and $3.90 [8] - Actual net income for Q3 2021 was $20.3 million or $0.38 per diluted share, compared to $21.1 million or $0.39 per diluted share in Q3 2020 [9] - Operating costs increased by $6.1 million year-over-year, primarily due to higher outside services, employee-related costs, and bad debt expense [10] Business Line Data and Key Metrics Changes - The net margin increased by $10.4 million year-over-year, mainly due to $7 million from new rates and $2.1 million from net residential customer growth [9] - Capital expenditures and asset removal costs were $20.6 million higher quarter-over-quarter, with a total capital plan of $540 million for the year [8][11] Market Data and Key Metrics Changes - The authorized rate base is approximately $4 billion as of September 30, with projections for the average rate base in 2021 to be around $4.34 billion, distributed as 41% in Oklahoma, 29% in Kansas, and 30% in Texas [12] Company Strategy and Development Direction - The company is focused on enhancing winter preparedness capabilities, including increased storage capacity and transportation capacity to improve system reliability [29] - The company is actively pursuing renewable natural gas (RNG) projects, with four biogas development agreements executed, expected to produce up to 700,000 MMBTU of RNG per year [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the role of natural gas in a cleaner energy future, supported by organic growth and a resilient system [37] - The company has achieved a 93% customer satisfaction score and is committed to improving employee safety and diversity [38][39] Other Important Information - The company declared a dividend of $0.58 per share, unchanged from the previous quarter [15] - The securitization process is progressing across all three states, with hearings scheduled to approve financing orders [17][20] Q&A Session Summary Question: Inquiry on ESG report and carbon reduction targets - Management acknowledged the importance of ESG and indicated that they align with industry peers on emissions reduction goals, emphasizing the need for clear pathways to achieve these targets [46][48] Question: Clarification on securitization revenue and CapEx management - Management explained that securitization will be off-balance sheet in most areas, with specific recovery periods outlined for customer impacts, while maintaining a focus on system integrity and growth [59][62]