ONE Gas Inc (OGS) 2023 Q4 法說會逐字稿

Good day, and welcome to the ONE Gas fourth quarter and year ended 2023 Earnings Conference Call and Webcast. Today's conference is being recorded. And at this time, I would like to turn the conference over to Chris Sighinolfi. Please go ahead, Mr. Sighinolfi.

美好的一天，歡迎來到 ONE Gas 第四季度和截至 2023 年的收益電話會議和網路廣播。今天的會議正在錄製中。此時，我想將會議交給 Chris Sighinolfi。請繼續，西吉諾爾菲先生。

Good morning, and thank you for joining us on our Fourth Quarter and Year End 2023 earnings conference call. This call is being webcast live, and a replay will be available later today. After our prepared remarks, we are happy to take your questions. A reminder that statements made during this call that might include ONE Gas expectations or predictions should be considered forward-looking statements and are covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities and Exchange Act of 1934 each as amended Actual results could differ materially from those projected in any forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. Joining me on the call this morning are Sid Mac and Ali, President and Chief Executive Officer, and Curtis Dinan, Senior Vice President and Chief Operating Officer. And now I'll turn the call over to Sid.

早安，感謝您參加我們的 2023 年第四季和年終收益電話會議。該電話會議正在進行網路直播，今天晚些時候將進行重播。在我們準備好發言後，我們很樂意回答您的問題。提醒您，本次電話會議期間所做的可能包括ONE Gas 預期或預測的陳述應被視為前瞻性陳述，並受到1995 年《私人證券訴訟改革法案》、《1933 年證券法》和《證券和證券法》的安全港條款的涵蓋。1934 年交易法 各修訂版 實際結果可能與任何前瞻性陳述中的預測有重大差異。有關可能導致實際結果不同的因素的討論，請參閱我們向 SEC 提交的文件。今天早上與我一起參加電話會議的有總裁兼執行長 Sid Mac 和 Ali，以及資深副總裁兼營運長 Curtis Dinan。現在我將把電話轉給 Sid。

Thanks, Chris, and good morning, everyone. This year we celebrate 10 years as an independent company and 118 years since the founding of Oklahoma Natural Gas in 1906. We've experienced remarkable growth in the 10 years since our spinoff from White Oak, including the addition of 230,000 new customer meters, installing over 6,000 miles of new pipe across our system and doubling our earnings per share. We've deployed best practices and lessons learned over our 118 year history to enhance our system support customer growth and reliably deliver natural gas that our customers depend on. We've also invested in our workforce, allowing us to achieve excellence in both capital execution and safety, leading to 6 consecutive years of recognition by the American Gas Association for having the lowest rate of significant injuries amongst our peers with service territories that continue to benefit from population in-migration focused economic development and access to affordable energy. We look forward to building upon our strong track record in the years and decades to come.

謝謝克里斯，大家早安。今年，我們慶祝獨立公司成立 10 週年，也是俄克拉荷馬州天然氣公司 1906 年成立 118 週年。自 White Oak 分拆以來的 10 年間，我們經歷了顯著的增長，包括增加了 230,000 個新客戶儀表、在我們的系統中安裝了超過 6,000 英里的新管道以及每股收益翻了一番。我們採用了 118 年歷史中的最佳實踐和經驗教訓，以增強我們的系統支援客戶成長並可靠地提供客戶所依賴的天然氣。我們也投資於我們的員工隊伍，使我們能夠在資本執行和安全方面實現卓越，從而連續 6 年被美國天然氣協會認可為我們的服務區域中嚴重傷害率最低的同行。受益於以人口移民為重點的經濟發展和獲得負擔得起的能源。我們期待在未來幾年和幾十年繼續鞏固我們良好的業績記錄。

Turning to our fourth quarter results. We again delivered earnings and capital execution as projected in our guidance despite the challenges posed by macro economic conditions. To put this achievement in context, when we became a stand-alone company, 10 years ago, we deployed a total of $262 million in core capital. Last year, we spent over $725 million, almost three times our 1st year total to serve our customers and communities. Our teams also fulfilled our service commitment as we faced a winter storm Jerry last month, despite temperatures being colder than those experienced during Winter Storm Uri. In 2021, our teams kept gas flowing to our $z2.3 million customers. We experienced limited outages affecting only 200 customers with service restored to most within hours and did not have any vehicular accidents or severe injuries. This performance is a testament to the focus of our coworkers and to the investments we've made following winter storm Uri three years ago.

轉向我們第四季的業績。儘管宏觀經濟狀況帶來了挑戰，但我們再次按照我們的指導預測實現了盈利和資本執行。回顧這項成就，10 年前，當我們成為一家獨立公司時，我們部署了總計 2.62 億美元的核心資本。去年，我們花費了超過 7.25 億美元，幾乎是第一年總額的三倍來服務我們的客戶和社區。儘管氣溫比冬季風暴烏裡期間的溫度低，但上個月我們面對冬季風暴傑瑞時，我們的團隊也履行了我們的服務承諾。2021 年，我們的團隊繼續向價值 230 萬美元的客戶供應天然氣。我們經歷了有限的停電，僅影響了 200 名客戶，大部分服務在數小時內恢復，並且沒有發生任何車輛事故或嚴重傷害。這一業績證明了我們同事的專注以及我們在三年前的冬季風暴烏里之後所做的投資。

With that, I'll turn it over to Chris to discuss financial details for the quarter and the year.

這樣，我會將其交給克里斯討論本季和年度的財務細節。

Chris? Thanks, Ed. As Sid noted, we met our net income and EPS targets for the year. Despite volatile macroeconomic conditions, net income for the fourth quarter was $71 million or $1.27 per diluted share compared with $67 million and $1.23 in the same period in 2022 for the full year and net income was $231 million or $4.14 per diluted share compared with $222 million or $4.8 in 2022. Although weather across our service territories in the fourth in the fourth quarter was approximately 17% warmer than the prior year and 13% warmer than normal. The impact of earnings was not material due to our weather normalization mechanisms. Fourth quarter revenues reflect an increase of $15.6 million from new rates and $1.9 million from continued growth in our customer base. Fourth quarter O&M expenses were 6.6% higher than the fourth quarter last year, continuing the moderating trend we experienced throughout 2023 as the benefits of our in-sourcing efforts have begun to bear fruit. We expect this trend to continue. And as a reminder, project operating expenses to grow by approximately 5% per year through 2028, excluding amounts related to KGSS. one.

克里斯？謝謝，艾德。正如 Sid 指出的那樣，我們實現了今年的淨利潤和每股收益目標。儘管宏觀經濟情勢波動，第四季淨利為7,100 萬美元，即稀釋後每股收益1.27 美元，而2022 年同期全年淨利潤為6,700 萬美元，稀釋後每股收益為1.23 美元；淨利潤為2.31 億美元，即稀釋後每股收益4.14 美元，而2022 年同期淨利為2.22 億美元。或 2022 年為 4.8 美元。儘管第四季第四季我們服務區域的天氣比去年同期溫暖約 17%，比正常情況溫暖 13%。由於我們的天氣正常化機制，收入的影響並不重大。第四季營收因新費率增加了 1,560 萬美元，因客戶群持續成長而增加了 190 萬美元。第四季的營運和維護費用比去年第四季高出 6.6%，延續了我們在 2023 年全年經歷的放緩趨勢，因為我們的內包努力已開始取得成果。我們預計這一趨勢將持續下去。需要提醒的是，到 2028 年，專案營運支出每年將成長約 5%，不包括與 KGSS 相關的金額。一。

Depreciation and amortization expense was approximately $6.7 million higher than the prior year, reflecting an increase in net property, plant and equipment. As a result of our higher level of capital investment.

折舊和攤提費用比去年增加約 670 萬美元，反映了淨財產、廠房和設備的增加。由於我們的資本投資水準較高。

Other income net increased $1.5 million compared to the same period last year, primarily due to a $3.2 million increase in the market value of investments associated with our nonqualified employee benefit plans. Excluding the amounts related to KGSS. one.

其他淨收入與去年同期相比增加了 150 萬美元，主要是由於與我們的不合格員工福利計劃相關的投資市場價值增加了 320 萬美元。不包括與 KGSS 相關的金額。一。

Interest expense in the quarter was $1.5 million higher than the same period in 2022, which primarily reflects higher rates on commercial paper balances. We took advantage of the decline in interest rates in December to issued $300 million of 5.1% senior notes due April 2029. We utilized the net proceeds from that offering to repay amounts outstanding under our commercial paper program and for general corporate purposes, in December, we settled approximately 1 million shares of our common stock under forward contracts for net proceeds of $79 million. We also amended the March 2023 forward sale agreement to extend the maturity date of 657,000 shares to December 31st, 2024. As of December 31st, we had $89 million of commercial paper outstanding at a weighted average interest rate of 5.6%. Our capital expenditures and asset removal costs for the fourth quarter were $190 million, bringing our total for the year to $729 million compared to $657 million in 2022. The increase is primarily attributable to system integrity projects and extension of service to new areas. Authorized rate base was approximately $4.9 billion as of year end and we estimate our average rate base for 2024 will be approximately $5.55 billion.

本季的利息支出比 2022 年同期高出 150 萬美元，這主要反映了商業票據餘額利率的上升。我們利用 12 月利率下降的機會發行了 3 億美元、利率為 5.1%、2029 年 4 月到期的優先票據。我們利用此次發行的淨收益來償還商業票據計劃下的未償金額，並出於一般公司目的，12 月份，我們根據遠期合約結算了約 100 萬股普通股，淨收益為 7900 萬美元。我們也修改了2023年3月的遠期銷售協議，將657,000股股票的到期日延長至2024年12月31日。截至 12 月 31 日，我們有 8,900 萬美元的未償商業票據，加權平均利率為 5.6%。我們第四季的資本支出和資產清除成本為 1.9 億美元，使全年總額達到 7.29 億美元，而 2022 年為 6.57 億美元。這一增長主要歸因於系統完整性項目和服務擴展到新領域。截至年底，授權費率基數約為 49 億美元，我們估計 2024 年的平均費率基數約為 55.5 億美元。

Turning to our liquidity, we ended the year with approximately $1.1 billion of capacity under our $1.2 billion commercial paper program and no borrowings under our commercial under our credit facility. In addition, we had forward sale agreements for approximately 3.56 million shares of our common stock with settlement by the end of 2024 at an average price of nearly $77 per share had all forward shares been settled at year end, we would have received net proceeds of approximately $273 million at the end of the year. We also had approximately $225 million of equity available for issuance under our at-the-market equity program. With forward sales executed last year, we have largely satisfied our equity needs for 2024 our balance sheet remained strong. In December, S&P affirmed its A. minus credit rating and stable outlook. And earlier this month, Moody's affirmed its A. three rating and stable outlook in January the ONE Gas Board of Directors declared a dividend of $0.66 per share, an increase of $0.01 from the prior quarter. And lastly, we affirm our 2024 financial guidance, including net income of $214 million to $231 million, earnings per diluted share of $3.70 to $4 and capital expenditures and asset removal costs of approximately $750 million.

談到我們的流動性，年底時，我們 12 億美元的商業票據計劃擁有約 11 億美元的產能，並且我們的信貸安排下沒有商業借款。此外，我們還簽訂了約 356 萬股普通股的遠期銷售協議，將於 2024 年底以每股近 77 美元的平均價格結算，如果所有遠期股票均在年底結算，我們將收到淨收益年底約2.73 億美元。我們還有約 2.25 億美元的股權可供根據我們的市場股權計畫發行。透過去年執行的遠期銷售，我們基本上滿足了 2024 年的股權需求，我們的資產負債表仍然強勁。12 月，標準普爾確認其 A.- 信用評級和穩定展望。本月早些時候，穆迪確認了其 A.3 評級和穩定展望，1 月份 ONE Gas 董事會宣布派發每股 0.66 美元的股息，較上一季增加 0.01 美元。最後，我們確認了 2024 年的財務指引，包括 2.14 億至 2.31 億美元的淨利潤、3.70 至 4 美元的稀釋每股收益以及約 7.5 億美元的資本支出和資產清除成本。

I'd also note that while the market has been engaged in a spirited debate about the pace, timing and magnitude of potential rate cuts from the Federal Reserve and has been reactive to speculation on that front. Our guidance is not predicated on any rate cuts occurring in 2024, while we would be pleased to see interest rates come down this year. Our forecast did not assume that that would happen.

我還想指出的是，儘管市場一直在就聯準會可能降息的速度、時機和幅度進行激烈的辯論，並對這方面的猜測做出反應。我們的指引並不以 2024 年發生任何降息為基礎，但我們很高興看到今年利率下降。我們的預測並沒有假設這種情況會發生。

With that, I'll turn it to Curtis.

有了這個，我會把它交給柯蒂斯。

Thank you, Chris, and good morning, everyone. I'll begin with an update on regulatory activity. In December, the Kansas Corporation Commission issued an order approving Kansas Gas Services request for an $8 million increase pursuant to our gas system reliability surcharge filing. Those rates became effective in December. We have also notified the commission of our intent to file at full rate case. We anticipate making this filing on March first, in June 2023, Texas Gas Service filed a rate case for all customers in the Rio Grande Valley service area based on a 2022 test year. In January, the Railroad Commission approved a settlement reflecting an approximate $5.9 million rate increase based upon a 9.7% authorized ROE and 59.1% equity capital and new rates took effect that month. And finally, Texas Gas Service made a gas reliability infrastructure program filing for all customers in the central Gulf service area in February, requesting a $12.3 million revenue increase to be effective in June.

謝謝你，克里斯，大家早安。我將首先介紹監管活動的最新情況。12 月，堪薩斯公司委員會發布命令，批准堪薩斯天然氣服務公司根據我們的天然氣系統可靠性附加費申請增加 800 萬美元的請求。這些費率於 12 月生效。我們也已通知委員會我們打算全額提交案件。我們預計於 3 月 1 日提交此文件，即 2023 年 6 月，德克薩斯天然氣服務公司根據 2022 年測試年，為裡奧格蘭德河谷服務區的所有客戶提交費率案例。1 月份，鐵路委員會批准了一項和解協議，基於 9.7% 的授權 ROE 和 59.1% 的股本，加價約 590 萬美元，新費率於當月生效。最後，德州天然氣服務公司(Texas Gas Service) 在2 月份為海灣中部服務區的所有客戶提交了一份天然氣可靠性基礎設施計畫備案，要求增加1,230 萬美元的收入，並於6 月份生效。

Switching to an update on commercial activity, we added over 23,000 new connections in 2023, continuing the healthy customer growth we have seen over the past 10 years, we also continued to secure new business and again, ended the year with a solid backlog of future meter sets. As we have discussed on the past several calls, the growth is occurring in staff with economic development in all three states, and we expect it to continue moving on to operations. We finished strong in 2023 with capital execution. We completed over $725 million worth of capital investment projects over the year with approximately $175 million dedicated to serving our growing customer base and $525 million invested in increasing the safety and reliability of our system as Sid mentioned, we were again tested last month when winter storm Uri brought extreme cold snow and ice to our service territories. As with past winter storms, Uri, Laura and Elliot, our system processes and coworkers performed well with no significant service disruptions. The lessons we learned from Uri and the resulting investments we've made in our system, including added storage capacity system reinforcements and diversifying our gas supply portfolio have enhanced our system reliability in the year Century and using Austin. As an example, we strategically invested in 19 system reinforcement projects. The last of which went into service.

轉向商業活動的更新，我們在2023 年增加了23,000 多個新連接，延續了過去10 年來我們所看到的健康客戶增長，我們還繼續確保新業務，並再次以堅實的未來積壓結束了這一年儀表組。正如我們在過去的幾次電話會議中所討論的那樣，隨著這三個州的經濟發展，員工人數正在增加，我們預計這種情況將繼續轉向營運。我們在 2023 年的資本執行方面表現強勁。我們在一年內完成了價值超過7.25 億美元的資本投資項目，其中約1.75 億美元專門用於服務我們不斷增長的客戶群，投資5.25 億美元用於提高我們系統的安全性和可靠性，正如Sid提到的，上個月冬季風暴時我們再次受到考驗烏裡為我們的服務區域帶來了極冷的冰雪。與過去的冬季風暴一樣，Uri、Laura 和 Elliot、我們的系統流程和同事表現良好，沒有重大服務中斷。我們從 Uri 吸取的經驗教訓以及我們對系統的投資，包括增加儲存容量系統加固和使我們的天然氣供應組合多樣化，提高了我們在世紀和奧​​斯汀的系統可靠性。例如，我們策略性投資了19個系統加強專案。最後一個投入使用。

Just before Jerry hit last month to illustrate the performance, we positioned compressed natural gas mobile units along points in our system that were previously stressed by extreme weather, but never had to utilize them because the system performs so well. In fact, we exceeded our previous peak day volumes in the Austin metro area that were established during Winter Storm Uri. I want to sincerely thank our coworkers in the field at our customer service centers and those who support the work they do for their dedication to safety and to ensure that our customers were taken care of throughout the winter storm events.

就在傑瑞上個月來展示性能之前，我們將壓縮天然氣移動裝置沿著系統中以前受到極端天氣壓力的點放置，但從未使用過它們，因為系統性能非常好。事實上，我們超過了奧斯汀都會區之前在冬季風暴烏裡期間建立的高峰日流量。我要真誠地感謝我們客戶服務中心的現場同事以及支持他們工作的人們，感謝他們對安全的奉獻，並確保我們的客戶在整個冬季風暴事件中得到照顧。

And now I'll turn it over to Sid for closing remarks.

現在我將把它交給 Sid 做總結發言。

Thank you, both. In November, we detailed our 2024 and five year financial outlooks. Once again, open handedly discussing how altered macroeconomic conditions would impact our business in the near term and the actions that our Company is taking in response. As Chris noted, we've utilized forward sales to de-risk our equity needs and have maintained a strong balance sheet, giving us flexibility to fund the business.

謝謝你們倆。11 月，我們詳細介紹了 2024 年和五年的財務展望。再次公開討論宏觀經濟條件的變化將如何影響我們的業務在短期內以及我們公司正在採取的應對措施。正如克里斯指出的那樣，我們利用遠期銷售來降低我們的股權需求風險，並保持強勁的資產負債表，使我們能夠靈活地為業務提供資金。

Curtis mentioned the upcoming rate case filing in Kansas. And we've spoken about how we will be diligent in executing regulatory proceedings to ensure that financial realities are appropriately captured in our rates. We are prepared to address near-term challenges posed by external financial conditions while pursuing opportunities to invest in the business. As we enter 2024, we will remain focused on safety, operational execution and long-term value creation for our stakeholders. We are fortunate to operate in a region where people value natural gas desire our services, and we are prepared to meet the demand created by our growing service territory. Our success is made possible by the commitment of each one of our 3,900 coworkers, and I'm grateful for their dedication to serving our customers. It's a privilege to work alongside them every day. Thank you all for joining us this morning. Operator, we're now ready for questions.

柯蒂斯提到即將在堪薩斯州提交的利率案件。我們已經談到了我們將如何勤奮地執行監管程序，以確保我們的利率適當反映財務現實。我們準備好應對外部金融狀況帶來的近期挑戰，同時尋求投資業務的機會。進入 2024 年，我們將繼續關注安全、營運執行和為利害關係人創造長期價值。我們很幸運能夠在一個人們重視天然氣並希望獲得我們服務的地區開展業務，並且我們已準備好滿足不斷增長的服務領域所帶來的需求。我們的成功得益於 3,900 名員工每一位的奉獻，我很感謝他們為客戶服務的奉獻精神。每天與他們一起工作是我的榮幸。感謝大家今天早上加入我們。接線員，我們現在準備好提問了。

Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. But you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment, again, press star one to ask a question. We'll pause for a moment to allow everyone an opportunity to signal for questions.

謝謝。如果您想提問，請按下電話鍵盤上的星號一號。但您使用的是免持電話，請確保您的靜音功能已關閉，以便您的訊號到達我們的裝置，再次按星號一提問。我們將暫停片刻，讓每個人都有機會提出問題。

Our first question comes from Christopher Jeffrey with Mizuho Securities. Your line is open. Please go ahead, everyone.

我們的第一個問題來自瑞穗證券的克里斯多福·傑弗裡。您的線路已開通。請大家繼續。

Thanks for taking my question. Maybe just starting with the Kansas rate case, any early insights into special asks that you'll have and maybe how you are viewing the cap structure, refinancing some of the upcoming debt going into that case?

感謝您提出我的問題。也許只是從堪薩斯州利率案例開始，對您將要提出的特殊要求有任何早期見解，也許您如何看待上限結構，為該案例中即將發生的一些債務進行再融資？

Thanks, Chris. I think you hit on all the key items. We're not prepared to talk about the details of what will be in that filing next week. But the things that you mentioned, certainly, we had given signals that before we completed our most recent long-term debt financing, we wouldn't be prepared to go in for a filing. We completed that, as Chris mentioned earlier, and that was really the last point we needed to cross. And so again, we're preparing to file that next Friday and be able to give up better update at that point.

謝謝，克里斯。我想你已經抓住了所有的關鍵點。我們不准備談論下週提交的文件的詳細內容。但你提到的事情，當然，我們已經發出信號，在我們完成最近的長期債務融資之前，我們不會準備進行備案。正如克里斯之前提到的，我們完成了這一點，這實際上是我們需要跨越的最後一點。因此，我們準備在下週五提交該文件，並能夠在那時放棄更好的更新。

Got it. And then maybe just asking more on specifically on the maturity coming up in March, the four 73 note. Just any expectations on how you guys are looking at refinancing that or whether you might kind of flow through with Conjur turning that in the shoulder season?

知道了。然後也許只是詢問更多關於 3 月到期的 4 張 73 票據的具體情況。只是對你們如何看待再融資有什麼期望，或者你們是否可以透過 Conjur 在平季扭轉這一局面？

Yes, hi, Chris. This is Chris. You are right. We had communicated in the wintertime and it still remains true that we were we anticipate rolling that onto commercial paper initially and then terming that out as we move through the year and there's the prospect, obviously, there rates may come down later in the year based on the pivot by the Federal Reserve in December. And so we look to take advantage of that if it's that PrisXtra.

是的，嗨，克里斯。這是克里斯。你是對的。我們在冬季進行了溝通，我們預計最初會將其轉入商業票據，然後隨著今年的進展而確定，顯然，利率可能會在今年晚些時候下降，這仍然是事實。美聯儲12 月的轉向。因此，如果是 PrisXtra，我們希望利用這一點。

Got it. Thanks, everyone.

知道了。感謝大家。

As a reminder, if you'd like us questions, please press star one on your telephone keypad. Now we have no further questions. I'll now hand back to the management team question on that.

提醒一下，如果您想向我們提問，請按電話鍵盤上的星號一。現在我們沒有其他問題了。我現在將回到管理團隊的問題。

Thank you again for your interest in ONE Gas, and we look forward to seeing many of you in New York in March. Our quiet period for the first quarter starts when we close our books in early April and extends until we release earnings in May. We'll provide details on that conference call at a later date. Have a great day.

再次感謝您對 ONE Gas 的興趣，我們期待三月在紐約見到您。我們第一季的平靜期從四月初結帳時開始，一直持續到五月發布收益為止。我們將在稍後提供有關該電話會議的詳細資訊。祝你有美好的一天。

This concludes the ONE Gas fourth-quarter and year-end 2023 Earnings Conference Call and Webcast. You may now disconnect.

ONE Gas 第四季和 2023 年底收益電話會議和網路廣播到此結束。您現在可以斷開連線。