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OGS ONE Gas

Participants
Curtis Dinan Senior Vice President, Chief Financial Officer and Treasurer
Pierce Norton President, Chief Executive Officer
Call transcript
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Operator

Good day, everyone. And welcome to the ONE Gas fourth quarter year-end earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Curtis Dinan. sir. ahead, go Please

Curtis Dinan

the made thank year-end joining This XXXX live to will being and we prepared fourth be would call on quarter webcast happy be replay a and take earnings Harbor are or and After Acts this be predictions Securities you morning, that your considered our us remarks, for that provision covered include might forward-looking during A made our reminder and is by should Safe the ONE available. Good conference of questions. statements Gap]. [Audio statements call call. Gas of expectations

Pierce Norton

we Good year invested we since a gas toward were natural our of $X.X industry publically each and became in improve XXXX expenditures reliability. capital traded integrity XX% of spent Gas, safety asset than of dollars to case morning and our have everyone. the and these the more systems. billion spends The In company billions ONE safety of

pleased allows that Job Act We This other same regulated and reduction infrastructure by of solution tax recognition the a the exist business through benefit taxes to and in customer passing of that two non-regulated being created of of XXXX in model model. investing federal Cuts there models authors utility a the a acknowledgment are the U.S., while reform a continue Tax time of that to the one targeted the was critical being an the at lower collected. cost the

lower review his reform. reform to the has year the Curtis, our continue our will questions to remarks. our customers' plus ONE plans. I'll in Gas elaborate financials on We working you discuss asset with Curtis final, tax look the to it for ensure turn tax our the reform of over XX and replacement impact with to regulators is back realize and legislation that from tax generated we’ll course to to rate and tax we the Now stay benefits forward

Curtis Dinan

income share financial Thanks with rates, period for million Pierce. our impacted diluted Beginning positively our new Kansas $X.XX the Texas or transportation customers year. the increased Kansas which with $XX higher with $XX.X are last period net diluted recent compared fourth $X.XX volumes decreased cost same and effect $X.X include period rate results, the capital per Oklahoma. of Results and filings the million per last by million or the same fourth for with in and compared was year. last $XX.X quarter, in Operating compared from quarter in and year, the same million expenditures share

For $X.XX full income share share $XXX $X.XX diluted or for XXXX. was million year compared net with XXXX, or $XXX million per diluted per

to of that and in Excluding release, quantified our the reform the earnings lower authority would been one-time in adoption items tax compensation share $X.XX have accounting earnings Kansas order or reported standard, results. XXXX our than our diluted accounting related share based $X.XX we per

the predominantly from of XXXX, transportation more systems our In XXXX, increase with which residential from focused Our years. Oklahoma capital growth and XX new than XX,XXX X.X% and customers over of of reliability XXXX and normal is have remained volumes increased expenditures Kansas million capital offset compared safety and with year; an is this normalization Oklahoma; with the approximately Texas, on in results weather which experienced past and maintaining compared warmer weather we averaged customer customers comparable we impact XXXX. benefited Kansas; the full in year mechanisms, higher and Texas the our in $XX.X and growth rates in spending

increase dividend of technology share. of efficiencies of Gas $X.XX in Last declared growth make X.X% share, Directors month capital investments spend Board and manage to and ONE per with $X.XX an the continued also of previous customer dividend We or a support cost. to improve $X.XX compared to per

which We expect Also guidance contribution the to expected from to we with XXXX. share, the share in a announced standard and ROE X% our three XXXX January, relates XXXX, be of per an of adopted based the share we to in $X.XX accounting average targeted primarily XXXX includes income. in between dividend in earnings XX% decrease XXXX $X.XX X% to XX% $X.XX per annual increase XXXX earned in With X.X%, share earned factors. per net to dividend to of the payout X.X% expected ROE of of ratio X.X%

than years, As have our rates less from in we investments. previous we we capital regulatory impact new previously incremental in from XXXX resulting to have experienced expect indicated, lag

Additionally, will and expect experience base reform. the capital slightly in our spending as tax of we higher increase effects rate XXXX

Finally, greater. tax in regulatory after increases lag reform expenses as tax cost included service impact is net investments and not of that of actually the our are

will filings, and our XXXX current rate base changes ROE our capital XXXX, five as With We from investments proceedings, over At our our Considering tax base billion. in rate regulatory interim other occurred XXXX in and rate expect of in regulatory approximately we to through base next years we XX, cases to base normalize components XXXX. future our in authorized base of filings, additional December improve to reform expenditures X.X% that forecast as $X.X the full the system including billion. project reform, we approximately defined the rate years the that grow rate annually since rate and our filings. of our that X% impacts average regulatory the latest will for established $X.X in have expectations impact our rate those was our tax

bonus $XX back XXXX, deductibility forecast income Jobs loss of not tax impact to expensing capital discussing cash like of be tax to approximately in will to tax a few I'd provisions to applicable the of million will tax the Tax interest start to expense we the accelerate the operating the lower timing to spend be In After us. The our the limitation call collect depreciation tax reflect rate. impact the rates as cash Pierce begin Longer when regulated term, reduce taxes. Cuts does rate regulatory will are components Before by the our cost to carry of net we update, we provide a XXX% will minutes the over company. our the of taxes lower. Act customers increasing of new turning flows XXXX. Being our $XX of utilizing XXXX, as our XXXX. the of of approximately financial act million profile benefit cash federal our and new entity, forwards, The will our accelerated growth customers not from paying loss our reform XX% long-term service and federal

federal in tax our customers. resulted rate to accumulated reduction the a that of in our XX% revaluation deferred income Additionally, the benefit also will taxes

XXXX that working $XXX million. be our years. of XX that the to recorded liabilities will needs these combined $XXX anticipate We tax return estimated with our operating each cash approximately to approximately flows the increase liabilities determine reduction in customers through return to are amounts to over but regulatory $XXX financing year, the the refunded in expect will XX with of by reform next We million million conjunction to regulatory

XX%, December with ratio incremental is as and financing term support need. well sheet this to XXst balance of can long positioned a Our of debt equity

lower, the be of lead growth taxes faster will flows cash to regulatory customers the these in return rate as reduction to five year liabilities our in based guidance. indicated and deferred will While our

XXXX. needs and financing portion include may are committed do credit of We the level projected any forecast rating We for to a A not have maintaining needs our equity. equity

not we continuing million anticipate I'll buyback And back turn program. share to Pierce. it annual However, do now $XX our over

Pierce Norton

regulatory general like I'd change starting by a summary annual reform base of with regulatory standpoint, case Curtis. the XXXX. In second we to approved you update a file tax from a on performance Thanks to in that rate Oklahoma. mid-March application, was rate followed January since the give plan brief so

tax of As filings, performance reform update mechanism with of cost base The We will also the and impact be that our amounts. in process to annual allow rate completed rate summer. us this based prior will anticipate to service later incorporate rates. the our we

Services’ the Corporation Rates under effective Surcharge Kansas relief million. November, became In Now Gas rate interim onto $X.X for the Gas for Also, rider December. Reliability Kansas. Kansas in System request the Commission approved authority order November, accounting of a approved plant with Commission associated sites. Corporation Kansas agreement in settlement cost at an seeking approval regarding its incurred application manufactured the KGS's gas former XX

a our file We file rate be impacts cost our are XXXX, by reform test in general on XXXX of based The year. of Kansas service. will through expecting reflected to tax July case next

drafted staff. In were Kansas by scope Commission is expected passed bill response full of to Turning Committee legislation its Senate proposes capital form, Gas System be in Xth, Senate the the by Gas Bill XXX heard Kansas matters. and Utilities investments related Corporation of current The amended feedback regarding that the the the to the expand February amendments Reliability safety an senate under Bill qualify GRS to version Utilities Senate today. mechanism On statute. out of Kansas Surcharge Kansas the to to from XXX

Act reform, ensure the our addition, month residential Concerning In efforts customer receive on $X.XX. our per to tax from the cap per utility increased we of be impact the with reform. would areas, our to surcharge supported our benefits Tax $X.XX regulator’s customers each working in currently tax to and address to Job rates the of on our of rates. the service Cuts In are changes due we regulators our

reduction calculated us in tax be tax offset separate revenues in statutory by this of have return each our amounts, We in amounts been for and these have receive period of income accounting the our timing jurisdictions. of the received XX% a determined establishment orders rate reduction statutory rate. our regulatory based rates the our the The establish by regulators income to a or regulatory in a will taxes, new tax our to on first customers XX% including and in quarter will result liability expect income beginning to difference XXXX, of The our to that expenses. liability requiring

business Curtis flows investment of change plans. reduce our will the this tax or reform As capital results but not will cash described, our strategy

would We've XXXX. million approach XXXX, will being replacement expenditures $XXX gas beyond, pipe gas natural like We more be continue capital spend analyzing on we’ll I cost million projects. and investing to reached spent between on deliver customers. of spend prudently that natural safest and and to and for most X.X focus we to our our reliable the believe X,XXX Operator, to targeted capital our to hard In distribution company expect. deliver million we in more top controlling on make over regulators premier and by as reliable customers past now to year are integrity priority customers. expect we risk gas more ready natural a efficiencies. to to the In we maintain our systems and and systems spend $XXX focus XXXX million for questions. system and their safely a continue will thank achievements In XXXX to system X.X to more through year and expect than and We our they than XX% our than safety million our per to based $XXX continue employees closing, to work than safe our

Curtis Dinan

you joining this Thank morning. for us

Our quiet April Have the early our great we first day. call details a in later a early provide until we and rest books quarter starts of the period on close May. your date. release for We'll at in conference earnings when extends

Operator

for today's presentation. your disconnect. conclude that do We Ladies everyone participation. And does now you thank and may gentlemen,