ONE Gas (NYSE:OGS), in its third quarter earnings call of 2023, reported a robust financial performance despite the economic headwinds of rising interest rates and moderating inflation. The company anticipates earnings per diluted share to fall between $4.06 and $4.22 for the full year. In addition, the firm has raised its capital investment plan for 2023 to approximately $725 million, primarily to fund system maintenance and reinforcement projects.
Key takeaways from the call include:
- ONE Gas has increased its capital investment plan for 2023 to around $725 million, largely for system maintenance and reinforcement.
- The company expects earnings per diluted share to be in the range of $4.06 to $4.22 for the full year.
- Regulatory activities were discussed, including a Voluntary Renewable Natural Gas Tariff in Oklahoma and rate adjustments in Texas and Kansas.
- The company remains optimistic about long-term growth in their service territories due to economic development and increasing demand for natural gas.
- The firm is considering refinancing its debt, taking into account factors such as interest rates, spreads, tenors, and their impact on the company's maturity profile and capital structure.
- Customer bills are expected to decrease by 8-10% from last year's average due to declining commodity prices.
During the call, ONE Gas executives expressed confidence in the company's ability to navigate challenges and manage costs through in-sourcing work and utilizing financial structures like ATM and block sales. They also highlighted the company's long-term growth prospects, driven by clarity in service territory growth and economic development.
In terms of capital spending, the executives stated that all expenditures are included in GRIP filings in Texas, PBR filings in Oklahoma, and GSRS filings in Kansas. The company is also considering refinancing its debt, evaluating factors such as interest rates, spreads, tenors, and their potential impact on the firm's maturity profile and capital structure.
On the customer front, executives anticipate a decrease in bills by around 8% to 10% from last year's average due to declining commodity prices. They also expect normal weather conditions in their guidance and have implemented weather normalization mechanisms to guard against volatility.
The call concluded with the management team announcing the start of the quiet period for the fourth quarter and providing details for the next earnings conference call.
InvestingPro Insights
InvestingPro's real-time data and expert tips provide additional insights into ONE Gas's financial performance and future prospects. According to InvestingPro, ONE Gas has a market capitalization of $3350M and a P/E Ratio of 14.7 as of Q3 2023. The company's Revenue Growth for the same period is 9.8%, despite a quarterly decrease of 6.55%.
InvestingPro Tips highlight the firm's strong earnings, which should enable continued dividend payments, a key consideration for income-focused investors. The company has also consistently increased earnings per share, reinforcing its financial strength. However, it's worth noting that the company's stock is currently in oversold territory, according to the RSI, which might suggest a potential buying opportunity for investors.
InvestingPro offers numerous additional tips and data points for ONE Gas, making it a valuable resource for investors seeking to understand the company's performance and potential.
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