ONE Gas (OGS) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $27.3 million ($0.48 per diluted share), down from $32.7 million ($0.58 per share) in Q2 2023; six-month net income was $126.6 million ($2.23 per share), down from $135.3 million ($2.42 per share) year-over-year.

• Total revenues for Q2 2024 were $354.2 million, an 11% decrease from $398.1 million in Q2 2023; six-month revenues were $1.11 billion, down 22% from $1.43 billion year-over-year.

• Operating income increased by $5.4 million for Q2 2024, driven by new rates and customer growth, offset by higher depreciation, employee costs, and lower sales volumes.

• Constructive regulatory activity across all jurisdictions, including a unanimous settlement in the Kansas Gas Service rate case.

• Continued focus on delivering affordable, reliable natural gas and operational efficiencies, notably through insourcing line locating services.

Financial highlights

• Cost of natural gas fell 45% in Q2 2024 to $72.0 million, reflecting lower commodity prices.

• O&M expenses increased 3% year-over-year, a deceleration from prior quarters due to realized insourcing benefits.

• Depreciation and amortization rose by $5 million, reflecting higher capital investment.

• Interest expense (excluding Kansas securitization) increased by $10 million in Q2 2024, mainly due to refinancing at higher rates.

• Capital expenditures and asset removal costs for Q2 2024 were $194.6 million, up from $190.2 million in Q2 2023.

Outlook and guidance

• 2024 financial guidance reaffirmed: net income of $214–$231 million and EPS of $3.70–$4.00.

• Full-year capital investment forecast remains at $750 million.

• O&M CAGR target of 5% over five years remains on track, with potential for further improvement.

• Customer growth continues, with 5,300 new connections in Q2 and 10,500 in the first half of 2024.

• New rates implemented in Oklahoma, Kansas, and Texas are expected to support future revenue growth, pending regulatory approvals.