ONE Gas(US:OGS)2019-10-29 19:03Financial Data and Key Metrics Changes - Net income for Q3 2019 was $17.5 million, or $0.33 per diluted share, compared to $16.3 million, or $0.31 per diluted share for the same period last year [5] - Operating costs increased to $114.6 million from $110.5 million year-over-year, primarily due to higher employee-related costs [6] - Interest expense rose due to the refinancing of $400 million of senior notes at a higher interest rate [7] - The company affirmed its 2019 net income guidance of $180 million to $190 million, or approximately $3.39 to $3.57 per diluted share [14] Business Line Data and Key Metrics Changes - The increase in net margin was attributed to new rates and residential customer growth, particularly in Oklahoma and Texas [6] - The authorized rate base as of September 30 was approximately $3.5 billion, with an estimated average rate base for 2019 projected at $3.64 billion [8][10] Market Data and Key Metrics Changes - The company is returning approximately $16 million to customers in Kansas and Oklahoma for excess accumulated deferred income taxes [11] - The company ended the quarter with approximately $304 million of capacity under its commercial paper program [12] Company Strategy and Development Direction - The long-term strategy remains focused on being a 100% regulated natural gas distribution company, emphasizing safety, expense management, and sustainability [24] - The company has successfully removed all sections of cast iron from its system, marking a significant milestone [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the bad debt expense increase was routine and not indicative of local economic weakness [28] - There is no observed pushback on new gas hook-ups, with strong activity in capturing new developments [29] - The next PBRC filing in Oklahoma is expected to result in a rate increase, the first since 2016 [17] Other Important Information - The company plans to finance its needs with approximately one-third being equity, but specific financing methods have not been finalized [12][34] Q&A Session Summary Question: Was the increase in bad debt expense material and indicative of economic weakness? - Management clarified that the increase was routine and related to collection activity fluctuations, not economic weakness [28] Question: What level of customer growth was seen in the quarter, and is there pushback on new gas hook-ups? - Management reported strong customer growth and no pushback on new gas connections, emphasizing strong market activity [29] Question: How much capex is planned to be recovered with the GSRS filing in Kansas? - Management indicated that the GSRS filing is expected to yield about $4.2 million in new revenues, with 90% of capital subject to annual filings [33] Question: Will most of the equity financing be through ADM in 2020 and beyond? - Management stated that while it makes sense to consider ADM, no final decisions on financing methods have been made yet [34]