ONE Gas(US:OGS)2021-05-08 16:25Financial Data and Key Metrics Changes - Net income for Q1 2021 was $95.6 million or $1.79 per diluted share, compared to $91.7 million or $1.72 per diluted share in Q1 2020, reflecting an increase in net margin of $9.1 million year-over-year [12][14] - Operating costs increased by 6% or $7.2 million compared to the same period last year, primarily due to higher employee-related costs [16] - The company reaffirmed its 2021 financial guidance, including net income of $198 million to $210 million and earnings per diluted share of $3.68 to $3.92 [21] Business Line Data and Key Metrics Changes - Net margin was impacted by weather normalization adjustments, which were $3.1 million lower due to increased sales volumes not fully offsetting the weather effects [12][14] - Sales volumes increased less than 14% despite a 12% to 25% increase in heating degree days across the three states [14] Market Data and Key Metrics Changes - The company deferred approximately $2 billion in extraordinary costs related to Winter Storm Uri, with deferrals of $1.3 billion in Oklahoma, $381 million in Kansas, and $295 million in Texas [8][10] - The authorized rate base as of March 31 was approximately $3.8 billion, with projections for 2021 estimating an average rate base of $4.23 billion [19] Company Strategy and Development Direction - The company is pursuing a renewable natural gas alliance with Vanguard Renewables to develop farm-based RNG projects, enhancing its strategy to transport methane and reduce emissions [34][50] - The company is actively working on regulatory and legislative fronts to secure securitization of deferred costs from the winter storm, which is expected to provide a credit-positive financing vehicle [25][26] Management Comments on Operating Environment and Future Outlook - Management emphasized that the fundamentals of the business remain unchanged despite weather events, and they are focused on mitigating future supply chain risks [21][44] - The company is committed to reaching net zero emissions and is developing a strategy to optimize its gas delivery systems while investing in innovative solutions [46][50] Other Important Information - The company amended its revolving unsecured credit facility to $1 billion, expiring in March 2026, which enhances liquidity [19] - A dividend of $0.58 per share was declared, unchanged from the previous quarter [20] Q&A Session Summary Question: Customer bill impacts from securitization - Management indicated it is premature to determine customer bill impacts until initial filings are made with regulators, but they aim to minimize impacts while ensuring reasonable recovery periods [55] Question: Renewable natural gas (RNG) investment structure - Management stated that the initial phase involves assessing RNG sources across service territories, and all regulatory options for positioning these projects are being considered [56] Question: Impact of COVID-19 in Q1 and future expectations - Management reported no significant impact from COVID-19 in Q1, with bad debt expenses being monitored, and they do not expect material impacts for the rest of the year [60][61] Question: Discussions with regulators regarding gas supply - Management confirmed ongoing discussions with regulators about gas supply, with changes expected as they complete their post-incident review [63][64]