ONE Gas(US:OGS)2026-02-19 17:02Financial Data and Key Metrics Changes - For the full year 2025, net income totaled $264 million, or $4.37 per diluted share, compared to $223 million and $3.91 in 2024, representing a year-over-year increase of approximately 18.4% in net income and 11.8% in EPS [6][10] - Adjusted net income for the fourth quarter was $90 million, or $1.48 per diluted share, compared with $78 million and $1.35 in the same period in 2024, indicating a 15.4% increase in adjusted net income and 9.6% in adjusted EPS [9][10] - Capital expenditures totaled $760 million for the year, reflecting the company's commitment to growth and infrastructure investment [6][15] Business Line Data and Key Metrics Changes - The company completed $760 million worth of capital investment projects during 2025, with $170 million dedicated to serving its growing customer base [15] - O&M expenses for the full year were up approximately 5% over 2024, slightly above the 4% CAGR guidance [11] Market Data and Key Metrics Changes - The company serves approximately 2.3 million customers, with a consistent addition of about 23,000 new residential customers each year [4][16] - Over 80% of the gas supply needed during Winter Storm Fern was shielded from temporary price increases, demonstrating the effectiveness of the company's supply strategies [5] Company Strategy and Development Direction - The company is focused on enhancing reliability and reducing the impact of price fluctuations on customers through increased storage capacity and diversified gas supply [4][5] - The introduction of non-GAAP adjustments to financial reports aims to provide a clearer view of performance within the Texas regulatory model [6][9] - The company plans to leverage its competitive advantages in regulatory transparency and existing assets to secure new projects [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting or surpassing EPS guidance for the 12th consecutive year, with a long-term adjusted net income growth expectation of 7%-9% and adjusted EPS growth of 5%-7% [5][10] - The company anticipates a $12 million variance in adjusted net income due to the impact of Texas House Bill 4384, which will be reflected in future financial reports [9] Other Important Information - The Texas Railroad Commission approved a $14.4 million revenue increase and a 9.8% return on equity, consolidating the company's Texas jurisdictions into a single statewide division [14] - The company has maintained strong credit ratings, with S&P affirming its A- credit rating and Moody's affirming its A3 rating [12] Q&A Session Summary Question: Inquiry about non-GAAP adjustments and their impact on capital structure - Management explained that the adjustments were introduced following the finalization of Texas legislation and do not significantly impact capital market plans initially, as they are more related to earnings than cash flow [24][26] Question: Discussion on growth opportunities and competitive landscape - Management highlighted the importance of having a competitive advantage in serving new facilities and emphasized regulatory transparency as a key differentiator [27][28] Question: Clarification on potential benefits from proposed Kansas legislation - Management noted that the proposed legislation would expand the types of capital included in filings, potentially increasing customer impact from $0.80 to $1.35 per month [34][35] Question: Confirmation of guidance assumptions based on Texas rate case outcome - Management confirmed that the guidance for adjusted EPS does incorporate the latest Texas rate case outcome [45] Question: Inquiry about cash recovery related to regulatory adjustments - Management clarified that while the accrual and deferral do not directly translate to cash, once included in the GRIP filing, it will result in larger cash flow items [46]