ONE Gas(US:OGS)2021-08-08 00:39Financial Data and Key Metrics Changes - Net income for Q2 2021 was $30.1 million or $0.56 per diluted share, compared to $25.3 million or $0.48 per diluted share in Q2 2020, reflecting an increase in net margin of $11.1 million driven by new rates and customer growth in Texas and Oklahoma [9][10] - Operating costs increased by $1.2 million year-over-year, primarily due to higher outside services and employee-related costs, but were offset by lower bad debt expense and decreased COVID-19 related expenses [9][10] - The company reaffirmed its 2021 financial guidance, projecting net income between $198 million to $210 million and earnings per diluted share of $3.68 to $3.92 [11] Business Line Data and Key Metrics Changes - The authorized rate base as of June 30 was approximately $4 billion, with projections for the estimated average rate base in 2021 to be around $4.23 billion, distributed as 42% in Oklahoma, 29% in Kansas, and 29% in Texas [10][11] - The company resumed collections activity, leading to a 44% decline in past due balances since March 31, indicating effective management of customer accounts [18] Market Data and Key Metrics Changes - The company reported robust customer growth and opportunities for investment, particularly in markets like Austin, El Paso, Oklahoma City, and Tulsa, which are experiencing high demand for housing and natural gas services [18] Company Strategy and Development Direction - ONE Gas emphasized its commitment to safety, stable cash flow, and a focused business strategy as central to its sustainable business model [7] - The company is actively pursuing renewable natural gas (RNG) initiatives and has requested capital investments for renewable projects as part of its gas supply portfolio [16][19] - Legislative achievements include the passage of energy choice legislation and safety bills aimed at improving service reliability and safety for customers [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing impacts of COVID-19 but noted that year-over-year impacts are moderating, with a focus on executing their strategy despite challenges [9][10] - The leadership transition was described as seamless, with a focus on system modernization, growth, and innovation as key priorities moving forward [22][23] Other Important Information - The company has deferred nearly $2 billion in costs related to Winter Storm Uri, which are included in regulatory assets on the balance sheet [11][12] - The company increased the capacity of its commercial paper program to $1 billion and ended the quarter with $209 million in cash and cash equivalents [11] Q&A Session Summary Question: What happened in the city of El Paso regarding rate increases? - Management explained that the denial of the rate increase was unusual but clarified that the appeal process worked effectively, and new rates were approved [25] Question: What are the results of the RNG survey with Vanguard? - Management indicated that preliminary results are encouraging, and they are exploring opportunities for RNG projects while seeking to inject RNG into their system [26][27] Question: How does the company view the long-term potential of RNG? - Management acknowledged skepticism about the magnitude of RNG but emphasized its environmental benefits and the importance of being prepared for future developments in the sector [30][31] Question: What is the current dialogue with rating agencies? - Management noted that the rating agencies are on a negative outlook but are patient as they monitor the securitization process [43] Question: What feedback has been received regarding the Oklahoma rate case? - Management stated that responsive testimony is due in early September, which will provide insights into the positions of the commission staff and other intervenors [44]