ONE Gas Announces Fourth Quarter and Full Year 2022 Financial Results
ONE Gas, Inc. (NYSE: OGS) announced its fourth quarter and full year 2022 financial results, reporting diluted earnings per share of $1.23 and $4.08, respectively. Net income for Q4 2022 was $67.0 million, an increase from $60.5 million in Q4 2021. For the full year, net income rose to $221.7 million from $206.4 million in 2021. Capital expenditures reached $656.5 million, up from $544.3 million in the prior year. NOTABLE MOVES include a 3-cent dividend increase to 65 cents per share, effective March 10, 2023. The company also provided 2023 guidance, anticipating net income between $224 million and $238 million.
- Q4 2022 net income of $67.0 million, up 8.9% year-over-year.
- Full year 2022 net income increased to $221.7 million from $206.4 million.
- Dividend increased by 3 cents to 65 cents per share, reflecting shareholder value focus.
- Capital expenditures for 2022 were $656.5 million, supporting growth initiatives.
- Interest expense rose $17.2 million due to higher rates on commercial paper and new debt issuances.
- Increased depreciation expense by $14.1 million due to capital expenditures.
Analysts' call and webcast scheduled tomorrow,
"Despite a dynamic macroeconomic environment in 2022, we ended the year squarely on plan," said
2022 FINANCIAL RESULTS & HIGHLIGHTS
- Fourth quarter 2022 net income was
$67.0 million $1.23 $60.5 million $1.12 - Full year 2022 net income was
$221.7 million $4.08 $206.4 million $3.85 - During the year, the Company issued and sold 403,792 shares of common stock for
$35 million Dec. 30, 2022 , the Company settled forward sales agreements with respect to 1,162,071 shares of common stock with net proceeds of$93.8 million $21.7 million - Full year 2022 capital expenditures and asset removal costs were
$656.5 million $544.3 million - On
Jan. 24, 2023 ,ONE Gas increased the dividend for the first quarter 2023 by3 cents to65 cents per share, or$2.60 March 10, 2023 , to shareholders of record at the close of business onFeb. 24, 2023 .
FOURTH QUARTER 2022 FINANCIAL PERFORMANCE
- an increase of
$13.6 million - an increase of
$1.6 million Oklahoma andTexas ; and - a decrease of
$2.1 million
These increases were offset partially by:
- an increase of
$1.0 million - an increase of
$1.1 million - an increase of
$3.6 million
Income tax expense includes a credit for amortization of the regulatory liability associated with excess accumulated deferred income taxes (EDIT) of
Capital expenditures and asset removal costs were
FULL YEAR 2022 FINANCIAL PERFORMANCE
Full year 2022 operating income was
- an increase of
$58.7 million - an increase of
$7.0 million - a decrease of
$3.1 million
These increases were offset partially by:
- an increase of
$15.4 million - an increase of
$14.1 million - an increase of
$3.2 million
For the twelve-month 2022 period, other expense, net, increased
Interest expense increased
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of
Full year 2022 capital expenditures and asset removal costs were
For the years ended
REGULATORY ACTIVITIES UPDATE
Securitization
The following updates reflect recent activity in
In
The following table summarizes the impact of KGSS-I on the consolidated balance sheets:
2022 | |
(Thousands of dollars) | |
Restricted cash and cash equivalents | $ 8,446 |
Accounts receivable | 4,862 |
Securitized intangible asset, net | 323,838 |
Current maturities of securitized utility tariff bonds | 20,716 |
Accounts payable | 3,204 |
Accrued interest | 2,202 |
Securitized utility tariff bonds, excluding current maturities, net of issuance costs | 309,343 |
Equity | $ 1,681 |
The following table summarizes the impact of KGSS-I on the consolidated statements of income:
Year ended | |
2022 | |
(Thousands of dollars) | |
Operating revenues | $ 5,769 |
Operating expense | (52) |
Amortization expense | (3,521) |
Interest income | 6 |
Interest expense | (2,202) |
Income before income taxes | $ — |
In
In
Other Regulatory Updates
In
In
In
In
In
2023 FINANCIAL GUIDANCE
On
Capital expenditures, including asset removal costs, are expected to be approximately
EARNINGS CONFERENCE CALL AND WEBCAST
The
To participate in the telephone conference call, dial 844-200-6205, passcode 931735, or log on to www.onegas.com/investors and select Events and Presentations.
If you are unable to participate in the conference call or the webcast, a replay will be available on the
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Headquartered in Tulsa,
For more information and the latest news about
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:
- our ability to recover costs (including operating costs and increased commodity costs related to Winter Storm Uri in
February 2021 ), income taxes and amounts equivalent to the cost of property, plant and equipment, regulatory assets and our allowed rate of return in our regulated rates or other recovery mechanisms; - cyber-attacks, which, according to experts, have increased in volume and sophistication since the beginning of the COVID-19 pandemic, or breaches of technology systems that could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee or Company information; further, increased remote working arrangements as a result of the pandemic have required enhancements and modifications to our IT infrastructure (e.g. Internet, Virtual Private Network, remote collaboration systems, etc.), and any failures of the technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct ordinary operations or expose us to increased risk or effect of an attack;
- our ability to manage our operations and maintenance costs;
- the concentration of our operations in
Kansas, Oklahoma , andTexas ; - changes in regulation of natural gas distribution services, particularly those in
Oklahoma ,Kansas andTexas ; - the economic climate and, particularly, its effect on the natural gas requirements of our residential and commercial customers;
- the length and severity of a pandemic or other health crisis, such as the outbreak of COVID-19, including the impact to our operations, customers, contractors, vendors and employees, the effectiveness of vaccine campaigns (including the COVID-19 vaccine campaign) on our workforce and customers and the effect of other measures or mandates that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address the pandemic or other health crisis, which could (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period;
- competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels;
- adverse weather conditions and variations in weather, including seasonal effects on demand and/or supply, the occurrence of severe storms in the territories in which we operate, and climate change, and the related effects on supply, demand, and costs;
- indebtedness could make us more vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantage compared with competitors;
- our ability to secure reliable, competitively priced and flexible natural gas transportation and supply, including decisions by natural gas producers to reduce production or shut-in producing natural gas wells and expiration of existing supply and transportation and storage arrangements that are not replaced with contracts with similar terms and pricing;
- our ability to complete necessary or desirable expansion or infrastructure development projects, which may delay or prevent us from serving our customers or expanding our business;
- operational and mechanical hazards or interruptions;
- adverse labor relations;
- the effectiveness of our strategies to reduce earnings lag, revenue protection strategies and risk mitigation strategies, which may be affected by risks beyond our control such as commodity price volatility, counterparty performance or creditworthiness and interest rate risk;
- the capital-intensive nature of our business, and the availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets and other sources of liquidity;
- our ability to obtain capital on commercially reasonable terms, or on terms acceptable to us, or at all;
- limitations on our operating flexibility, earnings and cash flows due to restrictions in our financing arrangements;
- cross-default provisions in our borrowing arrangements, which may lead to our inability to satisfy all of our outstanding obligations in the event of a default on our part;
- changes in the financial markets during the periods covered by the forward-looking statements, particularly those affecting the availability of capital and our ability to refinance existing debt and fund investments and acquisitions to execute our business strategy;
- actions of rating agencies, including the ratings of debt, general corporate ratings and changes in the rating agencies' ratings criteria;
- changes in inflation and interest rates;
- our ability to recover the costs of natural gas purchased for our customers, including those related to Winter Storm Uri and any related financing required to support our purchase of natural gas supply, including the securitized financings currently contemplated in
Texas ; - impact of potential impairment charges;
- volatility and changes in markets for natural gas and our ability to secure additional and sufficient liquidity on reasonable commercial terms to cover costs associated with such volatility;
- possible loss of local distribution company franchises or other adverse effects caused by the actions of municipalities;
- payment and performance by counterparties and customers as contracted and when due, including our counterparties maintaining ordinary course terms of supply and payments;
- changes in existing or the addition of new environmental, safety, tax and other laws to which we and our subsidiaries are subject, including those that may require significant expenditures, significant increases in operating costs or, in the case of noncompliance, substantial fines or penalties;
- the effectiveness of our risk-management policies and procedures, and employees violating our risk-management policies;
- the uncertainty of estimates, including accruals and costs of environmental remediation;
- advances in technology, including technologies that increase efficiency or that improve electricity's competitive position relative to natural gas;
- population growth rates and changes in the demographic patterns of the markets we serve, and economic conditions in these areas' housing markets;
- acts of nature and the potential effects of threatened or actual terrorism and war, including recent events in
Europe ; - the sufficiency of insurance coverage to cover losses;
- the effects of our strategies to reduce tax payments;
- the effects of litigation and regulatory investigations, proceedings, including our rate cases, or inquiries and the requirements of our regulators as a result of the Tax Cuts and Jobs Act of 2017;
- changes in accounting standards;
- changes in corporate governance standards;
- existence of material weaknesses in our internal controls;
- our ability to comply with all covenants in our indentures and the ONE Gas Credit Agreement, a violation of which, if not cured in a timely manner, could trigger a default of our obligations;
- our ability to attract and retain talented employees, management and directors, or a shortage of skilled labor;
- unexpected increases in the costs of providing health care benefits, along with pension and postemployment health care benefits, as well as declines in the discount rates on, declines in the market value of the debt and equity securities of, and increases in funding requirements for, our defined benefit plans; and
- our ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture.
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.
APPENDIX | ||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
Three Months Ended | Year Ended | |||||||
(Unaudited) | 2022 | 2021 | 2022 | 2021 | ||||
(Thousands of dollars, except per share amounts) | ||||||||
Total revenues | $ 818,208 | $ 593,735 | $ 2,578,005 | $ 1,808,597 | ||||
Cost of natural gas | 504,693 | 307,837 | 1,459,087 | 775,006 | ||||
Operating expenses | ||||||||
Operations and maintenance | 132,759 | 129,524 | 472,265 | 449,676 | ||||
Depreciation and amortization | 61,065 | 52,945 | 228,479 | 207,233 | ||||
General taxes | 16,112 | 16,425 | 68,217 | 66,424 | ||||
Total operating expenses | 209,936 | 198,894 | 768,961 | 723,333 | ||||
Operating income | 103,579 | 87,004 | 349,957 | 310,258 | ||||
Other income (expense), net | 3,152 | (1,449) | (4,183) | (3,207) | ||||
Interest expense, net | (26,040) | (14,473) | (77,506) | (60,301) | ||||
Income before income taxes | 80,691 | 71,082 | 268,268 | 246,750 | ||||
Income taxes | (13,659) | (10,570) | (46,526) | (40,316) | ||||
Net income | $ 67,032 | $ 60,512 | $ 221,742 | $ 206,434 | ||||
Earnings per share | ||||||||
Basic | $ 1.23 | $ 1.13 | $ 4.09 | $ 3.85 | ||||
Diluted | $ 1.23 | $ 1.12 | $ 4.08 | $ 3.85 | ||||
Average shares (thousands) | ||||||||
Basic | 54,337 | 53,753 | 54,207 | 53,575 | ||||
Diluted | 54,504 | 53,841 | 54,338 | 53,674 | ||||
Dividends declared per share of stock | $ 0.62 | $ 0.58 | $ 2.48 | $ 2.32 | ||||
APPENDIX | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(Unaudited) | 2022 | 2021 | ||
Assets | (Thousands of dollars) | |||
Property, plant and equipment | ||||
Property, plant and equipment | $ 7,834,557 | $ 7,274,268 | ||
Accumulated depreciation and amortization | 2,205,717 | 2,083,433 | ||
Net property, plant and equipment | 5,628,840 | 5,190,835 | ||
Current assets | ||||
Cash and cash equivalents | 9,681 | 8,852 | ||
Restricted cash and cash equivalents | 8,446 | — | ||
Total cash, cash equivalents and restricted cash and cash equivalents | 18,127 | 8,852 | ||
Accounts receivable, net | 553,834 | 341,756 | ||
Materials and supplies | 70,873 | 54,892 | ||
Natural gas in storage | 269,205 | 179,646 | ||
Regulatory assets | 275,572 | 1,611,676 | ||
Other current assets | 29,997 | 27,742 | ||
Total current assets | 1,217,608 | 2,224,564 | ||
Regulatory assets | 330,831 | 724,862 | ||
Securitized intangible asset, net | 323,838 | — | ||
157,953 | 157,953 | |||
Other assets | 117,326 | 103,906 | ||
Total goodwill and other assets | 929,948 | 986,721 | ||
Total assets | $ 7,776,396 | $ 8,402,120 | ||
APPENDIX | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(Continued) | ||||
(Unaudited) | 2022 | 2021 | ||
Equity and Liabilities | (Thousands of dollars) | |||
Equity and long-term debt | ||||
Common stock, authorized 250,000,000 shares; issued and outstanding 55,349,954 shares at | $ 553 | $ 536 | ||
Paid-in capital | 1,932,714 | 1,790,362 | ||
Retained earnings | 651,863 | 565,161 | ||
Accumulated other comprehensive loss | (704) | (6,527) | ||
Total equity | 2,584,426 | 2,349,532 | ||
Other long-term debt, excluding current maturities, net of issuance costs | 2,352,400 | 3,683,378 | ||
Securitized utility tariff bonds, excluding current maturities, net of issuance costs | 309,343 | — | ||
Total-long term debt, excluding current maturities, net of issuance costs | 2,661,743 | 3,683,378 | ||
Total equity and long-term debt | 5,246,169 | 6,032,910 | ||
Current liabilities | ||||
Current maturities of securitized utility tariff bonds | 20,716 | — | ||
Notes payable | 552,000 | 494,000 | ||
Accounts payable | 360,493 | 258,554 | ||
Accrued taxes other than income | 78,352 | 67,035 | ||
Regulatory liabilities | 47,867 | 8,090 | ||
Customer deposits | 57,854 | 62,454 | ||
Other current liabilities | 72,137 | 90,360 | ||
Total current liabilities | 1,189,419 | 980,493 | ||
Deferred credits and other liabilities | ||||
Deferred income taxes | 698,456 | 695,284 | ||
Regulatory liabilities | 529,441 | 552,928 | ||
Employee benefit obligations | 19,587 | 35,226 | ||
Other deferred credits | 93,324 | 105,279 | ||
Total deferred credits and other liabilities | 1,340,808 | 1,388,717 | ||
Commitments and contingencies | ||||
Total liabilities and equity | $ 7,776,396 | $ 8,402,120 | ||
APPENDIX | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Year Ended | ||||
(Unaudited) | 2022 | 2021 | ||
(Thousands of dollars) | ||||
Operating activities | ||||
Net income | $ 221,742 | $ 206,434 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 228,479 | 207,233 | ||
Deferred income taxes | (22,034) | 43,449 | ||
Share-based compensation expense | 10,741 | 10,498 | ||
Provision for doubtful accounts | 6,003 | 9,131 | ||
Proceeds from government securitization of winter weather event costs | 1,330,582 | — | ||
Changes in assets and liabilities: | ||||
Accounts receivable | (213,656) | (57,902) | ||
Materials and supplies | (15,981) | (2,126) | ||
Natural gas in storage | (89,559) | (85,700) | ||
Asset removal costs | (47,032) | (49,029) | ||
Accounts payable | 85,915 | 107,207 | ||
Accrued taxes other than income | 11,317 | 3,235 | ||
Customer deposits | (4,600) | (5,574) | ||
Regulatory assets and liabilities - current | 52,417 | (1,562,574) | ||
Regulatory assets and liabilities - noncurrent | 53,992 | (367,210) | ||
Other assets and liabilities - current | (23,377) | 18,461 | ||
Other assets and liabilities - noncurrent | (14,107) | (11,190) | ||
Cash provided by (used in) operating activities | 1,570,842 | (1,535,657) | ||
Investing activities | ||||
Capital expenditures | (609,486) | (495,246) | ||
Other investing expenditures | (8,632) | (7,554) | ||
Other investing receipts | 4,008 | 1,717 | ||
Cash used in investing activities | (614,110) | (501,083) | ||
Financing activities | ||||
Borrowings (repayments) on notes payable, net | 58,000 | 75,775 | ||
Issuance of other long-term debt, net of discounts | 297,591 | 2,498,895 | ||
Issuance of securitized utility tariff bonds, net of discounts | 335,931 | — | ||
Long-term debt financing costs | (8,567) | (35,110) | ||
Issuance of common stock | 133,711 | 26,662 | ||
Repayment of other long-term debt | (1,627,000) | (400,000) | ||
Dividends paid | (133,954) | (123,912) | ||
Tax withholdings related to net share settlements of stock compensation | (3,169) | (4,711) | ||
Cash provided by (used in) financing activities | (947,457) | 2,037,599 | ||
Change in cash, cash equivalents, restricted cash and restricted cash equivalents | 9,275 | 859 | ||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 8,852 | 7,993 | ||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 18,127 | $ 8,852 | ||
Supplemental cash flow information: | ||||
Cash paid for interest, net of amounts capitalized | $ 84,871 | $ 70,066 | ||
Cash paid (received) for income taxes, net | $ 67,421 | $ (10,809) | ||
APPENDIX | |||||||||||
INFORMATION AT A GLANCE | |||||||||||
Three Months Ended | Year Ended | ||||||||||
(Unaudited) | 2022 | 2021 | 2022 | 2021 | |||||||
(Millions of dollars) | |||||||||||
Natural gas sales | $ | 775.6 | $ | 555.0 | $ | 2,418.7 | $ | 1,661.7 | |||
Transportation revenues | $ | 33.7 | $ | 31.2 | $ | 126.5 | $ | 119.0 | |||
Other revenues | $ | 8.9 | $ | 7.5 | $ | 32.8 | $ | 27.9 | |||
Total revenues | $ | 818.2 | $ | 593.7 | $ | 2,578.0 | $ | 1,808.6 | |||
Cost of natural gas | $ | 504.7 | $ | 307.8 | $ | 1,459.1 | $ | 775.0 | |||
Operating costs | $ | 148.8 | $ | 146.0 | $ | 540.4 | $ | 516.1 | |||
Depreciation and amortization | $ | 61.1 | $ | 52.9 | $ | 228.5 | $ | 207.2 | |||
Operating income | $ | 103.6 | $ | 87.0 | $ | 350.0 | $ | 310.3 | |||
Net income | $ | 67.0 | $ | 60.5 | $ | 221.7 | $ | 206.4 | |||
Capital expenditures and asset removal costs | $ | 209.6 | $ | 161.4 | $ | 656.5 | $ | 544.3 | |||
Volumes (Bcf) | |||||||||||
Natural gas sales | |||||||||||
Residential | 43.4 | 33.3 | 125.3 | 117.8 | |||||||
Commercial and industrial | 13.4 | 10.0 | 43.2 | 37.6 | |||||||
Other | 0.9 | 0.7 | 2.7 | 2.5 | |||||||
Total sales volumes delivered | 57.7 | 43.9 | 171.2 | 157.9 | |||||||
Transportation | 58.9 | 55.5 | 230.1 | 229.9 | |||||||
Total volumes delivered | 116.6 | 99.4 | 401.3 | 387.8 | |||||||
Average number of customers (in thousands) | |||||||||||
Residential | 2,077 | 2,063 | 2,079 | 2,065 | |||||||
Commercial and industrial | 162 | 160 | 161 | 160 | |||||||
Other | 3 | 3 | 4 | 3 | |||||||
Transportation | 12 | 13 | 12 | 13 | |||||||
Total customers | 2,254 | 2,239 | 2,256 | 2,241 | |||||||
Heating Degree Days | |||||||||||
Actual degree days | 4,002 | 2,667 | 10,350 | 9,025 | |||||||
Normal degree days | 3,854 | 3,798 | 9,832 | 9,717 | |||||||
Percent colder (warmer) than normal weather | 3.7 % | (29.8) % | 5.0 % | (7.1) % | |||||||
Statistics by State | |||||||||||
Average number of customers (in thousands) | 913 | 905 | 913 | 905 | |||||||
Actual degree days | 1,417 | 905 | 3,621 | 3,224 | |||||||
Normal degree days | 1,318 | 1,261 | 3,346 | 3,229 | |||||||
Percent colder (warmer) than normal weather | 7.0 % | (28.2) % | 7.6 % | (0.2) % | |||||||
Average number of customers (in thousands) | 646 | 645 | 648 | 647 | |||||||
Actual degree days | 1,834 | 1,339 | 4,779 | 4,251 | |||||||
Normal degree days | 1,821 | 1,821 | 4,722 | 4,722 | |||||||
Percent colder (warmer) than normal weather | 0.7 % | (26.5) % | 1.2 % | (10.0) % | |||||||
Average number of customers (in thousands) | 695 | 689 | 695 | 689 | |||||||
Actual degree days | 751 | 423 | 1,950 | 1,550 | |||||||
Normal degree days | 715 | 716 | 1,764 | 1,766 | |||||||
Percent colder (warmer) than normal weather | 4.8 % | (40.9) % | 9.5 % | (12.2) % | |||||||
Analyst Contact: | 918-947-7472 |
Media Contact: | 918-947-7123 |
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