ONE Gas(US:OGS)2019-07-30 19:23Financial Data and Key Metrics Changes - Net income for Q2 2019 was $24.5 million or $0.46 per diluted share, compared to $20.4 million or $0.39 per diluted share for the same period last year, reflecting an increase in profitability [6] - Operating costs decreased to $116.1 million from $117.6 million in the same period last year, primarily due to a decrease in employee-related costs [7] - Cash provided by operating activities was approximately $240 million through June 2019, impacted by tax reform [8] - Updated 2019 earnings per share guidance is now in the range of $3.39 to $3.57, up from the previous range of $3.27 to $3.57 [11] Business Line Data and Key Metrics Changes - The company experienced lower sales volumes net of weather normalization in Kansas, but residential customer growth was noted in Oklahoma and Texas [6] - In Oklahoma, base rates were lowered by $11.3 million, and in Kansas, $16.6 million was refinanced for over-collection of taxes [9] Market Data and Key Metrics Changes - Authorized rate base as of June 30 was approximately $3.38 billion, with an estimated average rate base projected at $3.61 billion, distributed as 42% in Oklahoma, 29% in Kansas, and 29% in Texas [12][13] Company Strategy and Development Direction - The company aims to maintain a competitive advantage by focusing on safe operations and managing expenses, with a targeted annual dividend increase of 7% to 9% between 2018 and 2023 [10][21] - The company is also looking for opportunities to improve processes and efficiencies, particularly through technology advancements [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the overall performance to date has been positive, leading to an increase in the midpoint of earnings per share guidance [18] - The company expects to return excess accumulated deferred income taxes to customers, which will help stabilize cash flows moving forward [9][25] Other Important Information - The Board of Directors declared a dividend of $0.50 per share, consistent with the previous quarter [10] - The company ended the quarter with approximately $406 million of capacity under its commercial paper program and does not anticipate any equity or capital market needs in 2019 [14] Q&A Session Summary Question: Should we look at the clean operating cash performance of the business net of all Tax Cuts and Jobs Act impacts commencing in the second half of next year? - Curtis Dinan confirmed that this is the right way to look at it, as the impacts will be fully recognized after the upcoming approvals [25] Question: How should we calibrate our model for the environment regarding uses of cash going into year-end? - Curtis Dinan acknowledged the fluctuations in cash flow and indicated that the company is in a consistent cadence for addressing accumulated deferred income taxes [27] Question: Can you provide more color on the movement in other income related to employee benefit plans? - Caron Lawhorn explained that the guidance reflects a flat market, and fluctuations in plan assets are offsetting operating expenses [30] Question: What is the expectation for O&M growth beyond 2019? - Curtis Dinan indicated a general guidance of a 2% to 3% annual increase in O&M expenses, which aligns with the recent increase [33] Question: Was ONE Gas impacted by flooding in Oklahoma? - Sid McAnnally stated that while there was significant flooding, it did not have a material impact on the company's system or O&M, although some additional overtime costs were incurred [35]