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PRNewswire 29-Apr-2019 4:15 PM
TULSA, Okla., April 29, 2019 /PRNewswire/ -- ONE Gas, Inc. (NYSE:OGS) today announced its first-quarter 2019 financial results; declared its quarterly dividend; and affirmed its 2019 financial guidance.
Highlights include:
"Our first-quarter results were supported by new rates, colder weather and customer growth," said Pierce H. Norton II, president and chief executive officer. "We continue to focus on successful execution of our capital plan, which includes significant investments in safety and reliability, and on efficient operations."
FIRST-QUARTER 2019 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $127.6 million in the first quarter 2019, compared with $130.3 million in the first quarter 2018.
Net margin, which is comprised of total revenues less cost of natural gas, increased by $7.9 million compared with first quarter 2018, which primarily reflects:
First-quarter 2019 operating costs were $124.5 million, compared with $118.8 million in the first quarter 2018, which primarily reflects:
First-quarter 2019 depreciation and amortization expense was $43.8 million, compared with $38.9 million in the first quarter 2018, due primarily to an increase in depreciation expense from capital investments placed in service, higher depreciation rates in Kansas and an increase in the amortization of the ad-valorem surcharge rider in Kansas.
First-quarter 2019 other income, net, increased $2.6 million compared with the same period last year, due primarily to change in earnings on investments associated with nonqualified employee benefit plans, which offset the increase in costs for the plans included in operating costs.
Interest expense increased $3.4 million compared with the same period last year, resulting primarily from the refinancing of the company's $300 million Senior Notes, at a 2.07% interest rate, due February 2019 with $400 million Senior Notes, at a 4.50% interest rate, due November 2048.
First-quarter 2019 income tax expense was $18.6 million, compared with $24.9 million in the first quarter 2018, due primarily to the amortization of the excess accumulated deferred income taxes credited to customers, which is offset in revenues.
Capital expenditures were $83.3 million for the first quarter 2019, compared with $86.6 million in the first quarter 2018, due primarily to the timing of cash expenditures for system integrity and extending service to new areas.
The company ended the first quarter 2019 with $19.6 million of cash and cash equivalents, $295.5 million of commercial paper outstanding and $698.8 of remaining credit available under its $700 million credit facility. The total debt-to-capitalization ratio at March 31, 2019, was 43%, and the ratio of long-term debt-to-capitalization was 38%.
Key Statistics: More detailed information is listed in the tables.
REGULATORY UPDATE
Oklahoma
In March 2019, Oklahoma Natural Gas filed its third annual Performance-Based Rate Change (PBRC) application following the general rate case that was approved in January 2016. The filing was based on a calendar test year of 2018 and includes two proposed customer credits. Oklahoma Natural Gas has proposed a PBRC credit of $15.4 million to be spread over a 12- month period and a credit of $12.7 million associated with excess accumulated deferred income taxes (ADIT).
As required, PBRC filings are made annually on or before March 15, until the next general rate case, which is required to be filed on or before June 30, 2021, based on a calendar 2020 test year.
Kansas
In February 2019, the Kansas Corporation Commission (KCC) issued an order that included a net base rate increase of $18.6 million. Kansas Gas Service was already recovering $2.9 million from customers through the GSRS, therefore, this order represents a total base rate increase of $21.5 million. The increase in base rates reflects an amortization credit for the refund of excess ADIT over a period in compliance with the tax normalization rules for the portions stipulated by the Internal Revenue Code of 1986, as amended, and five years for all other components of excess ADIT. In a separate order issued in February 2019, the KCC required Kansas Gas Service to refund the tax reform liability for the portion of its revenue representing the decrease in the federal corporate income tax rate in 2018 through the date new rates went into effect in February 2019. A refund of $16.6 million will be issued through a bill credit in the second quarter 2019.
Texas
West Texas Service Area
In March 2019, Texas Gas Service made Gas Reliability Infrastructure Program (GRIP) filings for all customers in the West Texas service area requesting an increase of $4.1 million to be effective in July 2019.
Central Texas Service Area
In March 2019, Texas Gas Service made GRIP filings for all customers in the Central Texas service area requesting an increase of $5.5 million to be effective in July 2019.
2019 FINANCIAL GUIDANCE
ONE Gas affirmed its 2019 financial guidance, with net income expected to be in the range of $174 million to $190 million, or approximately $3.27 to $3.57 per diluted share.
Capital expenditures, including asset removal costs, are expected to be $450 million in 2019, with approximately 70% of these expenditures targeted for system integrity and replacement projects.
Rate base in 2019 is expected to average $3.6 billion, with 42% in Oklahoma, 29% in Kansas and 29% in Texas. ONE Gas expects to achieve an 8.3% return on equity in 2019, which is calculated consistent with utility ratemaking in each jurisdiction.
EARNINGS CONFERENCE CALL AND WEBCAST
The ONE Gas executive management team will conduct a conference call on Tuesday, April 30, 2019, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call also will be carried live on the ONE Gas website.
To participate in the telephone conference call, dial 800-458-4121, pass code 7833051, or log on to www.onegas.com.
If you are unable to participate in the conference call or the webcast, a replay will be available on the ONE Gas website, www.onegas.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass code 7833051.
LINK TO EARNINGS TABLES
http://www.onegas.com/~/media/OGS/Earnings/2019/Q1_2019_OGS_9173ScSSthZwd0P9.pdf
NON-GAAP INFORMATION
ONE Gas has disclosed net margin in this news release, which is considered a non-GAAP financial metric used to measure the company's financial performance. Net margin is comprised of total revenues less cost of natural gas. Cost of natural gas includes commodity purchases, fuel, storage, transportation and other gas purchase costs recovered through our cost of natural gas regulatory mechanisms, and does not include an allocation of general operating costs or depreciation and amortization. In addition, these regulatory mechanisms provide a method of recovering natural gas costs on an ongoing basis without a profit. Therefore, although our revenues will fluctuate with the cost of natural gas that we pass through to our customers, net margin is not affected by fluctuations in the cost of natural gas. Accordingly, we routinely use net margin in the analysis of our financial performance. We believe that net margin provides investors a more relevant and useful measure to analyze our financial performance as a 100% regulated natural gas utility than total revenues because the change in the cost of natural gas from period to period does not impact our operating income. A reconciliation of net margin to the most directly comparable GAAP measure is included as a table at the end of the earnings tables accompanying this release.
ONE Gas, Inc. (NYSE:OGS) is a 100% regulated natural gas utility, and trades on the New York Stock Exchange under the symbol "OGS." ONE Gas is included in the S&P MidCap 400 Index and is one of the largest natural gas utilities in the United States.
ONE Gas, headquartered in Tulsa, Oklahoma, provides natural gas distribution services to more than 2 million customers in Kansas, Oklahoma and Texas. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.
For more information, visit the website at www.onegas.com.
Some of the statements contained and incorporated in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The forward-looking statements relate to our anticipated financial performance, liquidity, management's plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "should," "goal," "forecast," "guidance," "could," "may," "continue," "might," "potential," "scheduled," "likely," and other words and terms of similar meaning.
One should not place undue reliance on forward-looking statements, which are applicable only as of the date of this news release. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward- looking statement include, among others, the following:
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Part 1, Item 1A, Risk Factors, in our Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
Analyst Contact: |
Brandon Lohse |
918-947-7472 |
|
Media Contact: |
Leah Harper |
918-947-7123 |
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SOURCE ONE Gas, Inc.