EX-99.1 2 ogsq22019earningsreleasene.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1


logoletterheada99.jpg
July 29, 2019
 
Analyst Contact:
Brandon Lohse
918-947-7472
 
 
Media Contact:
Leah Harper
918-947-7123
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

TULSA, Okla. - July 29, 2019 - ONE Gas, Inc. (NYSE: OGS) today announced its second-quarter 2019 financial results and updated its 2019 financial guidance.

Highlights include:

•
Second-quarter 2019 net income was $24.5 million, or $0.46 per diluted share, compared with $20.4 million, or $0.39 per diluted share, in the second quarter 2018;
•
Year-to-date 2019 net income was $118.1 million, or $2.22 per diluted share, compared with $111.3 million, or $2.10 per diluted share, in the same period last year;
•
Updated 2019 net income guidance to the range of $180 million to $190 million, compared with the previous guidance range of $174 million to $190 million;
•
Actual heating degree days across the company's service areas were 581 in the second quarter 2019, 9% warmer than normal and 32% warmer than the same period last year; and
•
A quarterly dividend of $0.50 per share, or $2.00 per share on an annualized basis, was declared on July 22, 2019, payable Sept. 3, 2019, to shareholders of record at the close of business on Aug. 12, 2019.

"In the second quarter, we continued to see the positive impact of new rates on our net margin as a result of capital expenditures on system integrity and expansion, somewhat offset by overall warmer weather,” said Pierce H. Norton II, president and chief executive officer. "In addition, operating costs were slightly lower than the same period last year, as we maintain our focus on managing expenses while safely and reliably serving our customers."

SECOND-QUARTER 2019 FINANCIAL PERFORMANCE

ONE Gas reported operating income of $46.9 million in the second quarter 2019, compared with $41.0 million in the second quarter 2018.

Net margin, which is comprised of total revenues less cost of natural gas, increased by $9.6 million compared with second quarter 2018, which primarily reflects:

•
A $10.4 million increase from new rates; and
•
A $1.5 million increase attributed to net residential customer growth in Oklahoma and Texas; offset by

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 2

•
A $2.0 million decrease due to lower sales volumes, net of weather normalization, primarily in Kansas.

Second-quarter 2019 operating costs were $116.1 million, compared with $117.6 million in the second quarter 2018, due primarily to a $2.7 million decrease in employee-related expenses.

Depreciation and amortization expense for the second-quarter 2019 was $45.0 million, compared with $39.8 million in the second 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.

For the second-quarter 2019, other expense, net, decreased $1.3 million compared with the same period last year, due primarily to earnings on investments associated with nonqualified employee benefit plans, which offset the increase in costs for the plans included in operating costs.

Second-quarter 2019 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, with $400 million Senior Notes, at a 4.50% interest rate, due November 2048.

Income tax expense for the second-quarter 2019 includes amortization of excess accumulated deferred income taxes (ADIT) of $2.1 million, which is offset in revenues.

Capital expenditures and asset removal costs increased $6.6 million for the second-quarter 2019 compared with the same period last year, due primarily to increased system integrity activities and extending service to new areas.

Key Statistics: More detailed information is listed on page 12 in the tables.

•
Actual heating degree days across the company’s service areas were 581 in the second quarter 2019, 9% warmer than normal and 32% warmer than the same period last year;
•
Actual heating degree days in the Oklahoma service area were 188 in the second quarter 2019, 2% warmer than normal and 44% warmer than the same period last year;
•
Actual heating degree days in the Kansas service area were 342 in the second quarter 2019, 14% warmer than normal and 30% warmer than the same period last year;
•
Actual heating degree days in the Texas service area were 51 in the second quarter 2019, 2% warmer than normal and 46% colder than the same period last year;
•
Residential natural gas sales volumes were 13.4 billion cubic feet (Bcf) in the second quarter 2019, down 14% compared with the same period last year;
•
Total natural gas sales volumes were 18.9 Bcf in the second quarter 2019, down 13% compared with the same period last year;
•
Natural gas transportation volumes were 51.4 Bcf in the second quarter 2019, down 1% compared with the same period last year; and

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 3

•
Total natural gas volumes delivered were 70.3 Bcf in the second quarter 2019, down 4% compared with the same period last year.

YEAR-TO-DATE 2019 FINANCIAL PERFORMANCE

Operating income for the six-month 2019 period was $174.5 million, compared with $171.3 million for the same period last year.

Net margin increased by $17.5 million compared with the same period last year, which primarily reflects:

•
A $14.3 million increase from new rates in Kansas and Texas;
•
A $2.9 million increase attributed to net residential customer growth in Oklahoma and Texas; and
•
A $1.3 million increase due to higher sales volumes, net of weather normalization, in Texas; offset by
•
A $0.9 million decrease due to a compressed natural gas federal excise tax credit that was enacted in February 2018 and retroactive to 2017.

Operating costs for the six-month 2019 period were $240.6 million, compared with $236.4 million for the same period last year, which primarily reflects:

•
A $1.9 million increase in legal-related expenses; and
•
A $1.6 million increase in employee-related expenses.

Depreciation and amortization expense for the six-month 2019 period was $88.8 million, compared with $78.7 million for the same period last year, 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.

For the six-month 2019 period, other expense, net, decreased $3.9 million compared with the same period last year, due primarily to 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 $6.8 million for the six-month 2019 period 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, with $400 million Senior Notes, at a 4.50% interest rate, due November 2048.

Income tax expense for the six-month 2019 period includes amortization of excess ADIT of $8.9 million, which is offset in revenues.


-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 4

Capital expenditures and asset removal costs increased $7.0 million for the six-month 2019 period compared with the same period last year, due primarily to increased system integrity activities and extending service to new areas.

The company ended the second quarter 2019 with $11.1 million of cash and cash equivalents, $293.0 million of commercial paper outstanding and $698.8 million of remaining credit available under its $700 million credit facility. The long-term debt-to-capitalization ratio at June 30, 2019, was 38%, and the ratio of total debt-to-capitalization was 43%.

> View earnings 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. This filing was made in compliance with the January 2019 Oklahoma Corporation Commission (OCC) order settling tax issues resulting from the Tax Cuts and Jobs Act of 2017. This order requires that all earnings, including amounts attributable to tax savings, occurring in the 2018 calendar year that are above the authorized return on equity of 9.5% be returned to customers, with interest at the cost of capital rate. A settlement was reached, and a joint stipulation has been filed. This stipulation includes a PBRC credit of $15.6 million to be spread over a 12-month period and a credit of $12.7 million associated with excess ADIT. In June 2019, the Administrative Law Judge recommended that the OCC approve the joint stipulation. An order from the OCC is expected in the third quarter 2019.

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.

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. The Texas Railroad Commission (RRC) and the cities agreed to an increase of $4.1 million, and new rates became 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. The RRC and the cities agreed to an increase of $5.5 million, and new rates became effective in June 2019.
    

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 5

2019 FINANCIAL GUIDANCE UPDATED

ONE Gas updated its 2019 financial guidance, with net income expected to be in the range of $180 million to $190 million, compared with its previously announced range of $174 million to $190 million. Earnings per diluted share is expected to be approximately $3.39 to $3.57, compared with its previously announced range of $3.27 to $3.57 per diluted share.

Capital expenditures, including asset removal costs, are still expected to be approximately $450 million in 2019, with about 70% of these expenditures targeted for system integrity and replacement projects.

Additional information is available in the guidance table on the ONE Gas website.

EARNINGS CONFERENCE CALL AND WEBCAST

The ONE Gas executive management team will conduct a conference call on Tuesday, July 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 888-208-1711, pass code 1661802, 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 1661802.

LINK TO EARNINGS TABLES

http://www.onegas.com/~/media/OGS/Earnings/2019/Q2_2019_OGS_Mm32_o982Cfg_2dF.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

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 6

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:

•
our ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our regulated rates;
•
our ability to manage our operations and maintenance costs;
•
changes in regulation of natural gas distribution services, particularly those in Oklahoma, Kansas and Texas;
•
the economic climate and, particularly, its effect on the natural gas requirements of our residential and commercial industrial customers;
•
competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels;
•
conservation and energy storage efforts of our customers;
•
variations in weather, including seasonal effects on demand, the occurrence of storms and disasters, and climate change;
•
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;
•
the mechanical integrity of facilities operated;
•
operational hazards and unforeseen operational interruptions;
•
adverse labor relations;

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 7

•
the effectiveness of our strategies to reduce earnings lag, margin protection strategies and risk mitigation strategies, which may be affected by risks beyond our control such as commodity price volatility and counterparty creditworthiness;
•
our ability to generate sufficient cash flows to meet all our liquidity needs;
•
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;
•
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;
•
impact of potential impairment charges;
•
volatility and changes in markets for natural gas;
•
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;
•
changes in existing or the addition of new environmental, safety, tax and other laws to which we and our subsidiaries are subject;
•
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;
•
acts of nature and the potential effects of threatened or actual terrorism and war;
•
cyber attacks 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;
•
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;
•
discovery 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;
•
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;
•
the 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;
•
the final resolutions or outcomes with respect to our contingent and other corporate liabilities related to the natural gas distribution business and any related actions for indemnification made pursuant to the Separation and Distribution Agreement with ONEOK, Inc.; and
•
the costs associated with increased regulation and enhanced disclosure and corporate governance requirements pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

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.

###

-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 8

ONE Gas, Inc.
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(Unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
(Thousands of dollars, except per share amounts)
 
 
 
 
 
 
 
 
 
Total revenues
 
$
290,560

 
$
292,521

 
$
951,560

 
$
930,985

 
 
 
 
 
 
 
 
 
Cost of natural gas
 
82,588

 
94,159

 
447,664

 
444,578

 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
Operations and maintenance
 
101,482

 
102,995

 
209,757

 
205,660

Depreciation and amortization
 
44,943

 
39,757

 
88,789

 
78,647

General taxes
 
14,656

 
14,567

 
30,840

 
30,767

Total operating expenses
 
161,081

 
157,319

 
329,386

 
315,074

Operating income
 
46,891

 
41,043


174,510


171,333

Other expense, net
 
(865
)
 
(2,194
)
 
(436
)
 
(4,358
)
Interest expense, net
 
(15,399
)
 
(12,003
)
 
(31,185
)
 
(24,355
)
Income before income taxes
 
30,627

 
26,846


142,889


142,620

Income taxes
 
(6,157
)
 
(6,427
)
 
(24,759
)
 
(31,366
)
Net income
 
$
24,470

 
$
20,419


$
118,130


$
111,254

 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
Basic
 
$
0.46

 
$
0.39

 
$
2.23

 
$
2.11

Diluted
 
$
0.46

 
$
0.39

 
$
2.22

 
$
2.10

 
 
 
 
 
 
 
 
 
Average shares (thousands)
 
 
 
 
 
 
 
 
Basic
 
52,890

 
52,692

 
52,858

 
52,648

Diluted
 
53,215

 
52,899

 
53,210

 
52,898

Dividends declared per share of stock
 
$
0.50

 
$
0.46

 
$
1.00

 
$
0.92



-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 9

ONE Gas, Inc.
 
 
 
 
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
(Unaudited)
 
2019
 
2018
Assets
 
(Thousands of dollars)
Property, plant and equipment
 
 

 
 

Property, plant and equipment
 
$
6,241,105

 
$
6,073,143

Accumulated depreciation and amortization
 
1,840,457

 
1,789,431

Net property, plant and equipment
 
4,400,648

 
4,283,712

Current assets
 
 
 
 
Cash and cash equivalents
 
11,114

 
21,323

Accounts receivable, net
 
169,801

 
295,421

Materials and supplies
 
50,344

 
44,333

Natural gas in storage
 
88,235

 
107,295

Regulatory assets
 
38,372

 
54,420

Other current assets
 
18,946

 
20,495

Total current assets
 
376,812

 
543,287

Goodwill and other assets
 
 

 
 

Regulatory assets
 
424,304

 
437,479

Goodwill
 
157,953

 
157,953

Other assets
 
86,889

 
46,211

Total goodwill and other assets
 
669,146

 
641,643

Total assets
 
$
5,446,606

 
$
5,468,642

 
 
 
 
 
 
 
 
 
 



-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 10

ONE Gas, Inc.
 
 
 
 
CONSOLIDATED BALANCE SHEETS
 
 
 
 
(Continued)
 
 
 
 
 
 
June 30,
 
December 31,
(Unaudited)
 
2019
 
2018
Equity and Liabilities
 
(Thousands of dollars)
Equity and long-term debt
 
 
 
 
Common stock, $0.01 par value:
authorized 250,000,000 shares; issued and outstanding 52,734,222 shares at June 30, 2019; issued
   52,598,005 and outstanding 52,564,902 shares at December 31, 2018
 
$
527

 
$
526

Paid-in capital
 
1,725,843

 
1,727,492

Retained earnings
 
387,077

 
320,869

Accumulated other comprehensive loss
 
(4,984
)
 
(4,086
)
Treasury stock, at cost: 33,103 shares at December 31, 2018
 
—

 
(2,145
)
   Total equity
 
2,108,463

 
2,042,656

Long-term debt, excluding current maturities, and net of issuance costs of $11,159 and $11,457, respectively
 
1,285,811

 
1,285,483

Total equity and long-term debt
 
3,394,274

 
3,328,139

Current liabilities
 
 
 
 
Notes payable
 
293,000

 
299,500

Accounts payable
 
67,578

 
174,510

Accrued taxes other than income
 
37,312

 
47,640

Regulatory liabilities
 
46,534

 
48,394

Customer deposits
 
58,831

 
61,183

Other current liabilities
 
75,098

 
67,664

Total current liabilities
 
578,353

 
698,891

Deferred credits and other liabilities
 
 

 
 

Deferred income taxes
 
673,939

 
652,426

Regulatory liabilities
 
508,877

 
520,866

Employee benefit obligations
 
168,387

 
178,720

Other deferred credits
 
122,776

 
89,600

Total deferred credits and other liabilities
 
1,473,979

 
1,441,612

Commitments and contingencies
 
 
 
 
Total liabilities and equity
 
$
5,446,606

 
$
5,468,642



-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 11

ONE Gas, Inc.
 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
Six Months Ended
 
 
June 30,
(Unaudited)
 
2019
 
2018
 
 
(Thousands of dollars)
Operating activities
 
 
 
 
Net income
 
$
118,130

 
$
111,254

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
88,789

 
78,647

Deferred income taxes
 
9,401

 
30,546

Share-based compensation expense
 
4,911

 
4,080

Provision for doubtful accounts
 
3,557

 
4,071

Changes in assets and liabilities:
 
 
 
 

Accounts receivable
 
122,063

 
130,730

Materials and supplies
 
(6,011
)
 
3,548

Natural gas in storage
 
19,060

 
49,672

Asset removal costs
 
(24,324
)
 
(25,774
)
Accounts payable
 
(109,340
)
 
(68,428
)
Accrued taxes other than income
 
(10,328
)
 
(6,393
)
Customer deposits
 
(2,352
)
 
438

Regulatory assets and liabilities
 
25,948

 
105,967

Other assets and liabilities
 
1,667

 
(18,401
)
Cash provided by operating activities
 
241,171

 
399,957

Investing activities
 
 
 
 
Capital expenditures
 
(184,349
)
 
(175,834
)
Other investing expenditures
 
(3,583
)
 
—

Other investing receipts
 
598

 
—

Cash used in investing activities
 
(187,334
)
 
(175,834
)
Financing activities
 
 

 
 

Repayments of notes payable, net
 
(6,500
)
 
(172,215
)
Issuance of common stock
 
2,536

 
2,390

Dividends paid
 
(52,687
)
 
(48,272
)
Tax withholdings related to net share settlements of stock compensation
 
(7,395
)
 
(7,859
)
Cash used in financing activities
 
(64,046
)
 
(225,956
)
Change in cash and cash equivalents
 
(10,209
)
 
(1,833
)
Cash and cash equivalents at beginning of period
 
21,323

 
14,413

Cash and cash equivalents at end of period
 
$
11,114

 
$
12,580



-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 12

ONE Gas, Inc.
 
 
 
 
 
 
 
 
 
 
 
INFORMATION AT A GLANCE
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(Unaudited)
2019
 
2018
 
2019
 
2018
 
 
 
 
Financial (in millions)
 
 
 
 
 
 
 
 
 
 
 
Net margin
$
208.0

 
$
198.4

 
$
503.9

 
$
486.4

Operating costs
$
116.1

 
$
117.6

 
$
240.6

 
$
236.4

Depreciation and amortization
$
45.0

 
$
39.8

 
$
88.8

 
$
78.7

Operating income
$
46.9

 
$
41.0

 
$
174.5

 
$
171.3

Capital expenditures
$
101.0

 
$
89.2

 
$
184.3

 
$
175.8

Asset removal costs
$
13.2

 
$
18.4

 
$
24.3

 
$
25.8

 
 
 
 
 
 
 
 
 
 
 
 
Net margin on natural gas sales
$
176.1

 
$
166.0

 
$
429.6

 
$
411.6

Transportation revenues
$
24.1

 
$
24.1

 
$
59.1

 
$
57.6

Other revenues
$
7.8

 
$
8.3

 
$
15.2

 
$
17.2

 
 
 
 
 
 
 
 
 
 
 
 
Volumes (Bcf)
 
 
 
 
 
 
 
 
 
 
 
Natural gas sales
 
 
 
 
 
 
 
 
 
 
 
Residential
 
13.4

 
 
15.6

 
 
79.1

 
 
76.6

Commercial and industrial
 
5.1

 
 
5.9

 
 
24.4

 
 
23.9

Wholesale and public authority
 
0.4

 
 
0.4

 
 
1.5

 
 
1.2

Total sales volumes delivered
 
18.9

 
 
21.8

 
 
105.0

 
 
101.7

Transportation
 
51.4

 
 
51.8

 
 
117.0

 
 
116.7

Total volumes delivered
 
70.3

 
 
73.6

 
 
222.0

 
 
218.4

 
 
 
 
 
 
 
 
 
 
 
 
Average number of customers (in thousands)
 
 
 
 
 
 
 
 
 
 
 
Residential
 
2,022

 
 
2,008

 
 
2,024

 
 
2,013

Commercial and industrial
 
160

 
 
159

 
 
161

 
 
159

Wholesale and public authority
 
3

 
 
3

 
 
3

 
 
3

Transportation
 
12

 
 
12

 
 
12

 
 
12

Total customers
 
2,197

 
 
2,182

 
 
2,200

 
 
2,187

 
 
 
 
 
 
 
 
 
 
 
 
Heating Degree Days
 
 
 
 
 
 
 
 
 
 
 
Actual degree days
 
581

 
 
858

 
 
6,412

 
 
6,120

Normal degree days
 
639

 
 
664

 
 
5,948

 
 
5,975

Percent colder (warmer) than normal weather
 
(9.1
)%
 
 
29.2
 %
 
 
7.8
 %
 
 
2.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Statistics by State
 
 
 
 
 
 
 
 
 
 
 
Oklahoma
 
 
 
 
 
 
 
 
 
 
 
Average number of customers (in thousands)
 
885

 
 
877

 
 
886

 
 
880

Actual degree days
 
188

 
 
337

 
 
2,265

 
 
2,207

Normal degree days
 
191

 
 
191

 
 
1,966

 
 
1,966

Percent colder (warmer) than normal weather
 
(1.6
)%


76.4
 %


15.2
 %


12.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Kansas
 
 
 
 
 
 
 
 
 
 
 
Average number of customers (in thousands)
 
641

 
 
642

 
 
644

 
 
644

Actual degree days
 
342

 
 
486

 
 
3,093

 
 
2,975

Normal degree days
 
396

 
 
419

 
 
2,924

 
 
2,947

Percent colder (warmer) than normal weather
 
(13.6
)%


16.0
 %
 
 
5.8
 %
 
 
1.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
Texas
 
 
 
 
 
 
 
 
 
 
 
Average number of customers (in thousands)
 
671

 
 
663

 
 
670

 
 
663

Actual degree days
 
51

 
 
35

 
 
1,054

 
 
938

Normal degree days
 
52

 
 
54

 
 
1,058

 
 
1,062

Percent colder (warmer) than normal weather
 
(1.9
)%


(35.2
)%
 
 
(0.4
)%
 
 
(11.7
)%


-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 13




RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of total revenues to net margin (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(Unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
(Thousands of dollars)
Total revenues
 
$
290,560

 
$
292,521

 
$
951,560

 
$
930,985

Cost of natural gas
 
82,588

 
94,159

 
447,664

 
444,578

Net margin
 
$
207,972

 
$
198,362


$
503,896


$
486,407

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


-more-
 
ONE Gas Announces Second-quarter 2019 Financial Results;
Updates 2019 Financial Guidance

July 29, 2019

Page 14

ONE Gas, Inc.
 
 
 
 
 
EARNINGS GUIDANCE
 
 
 
 
 
 
Updated
 
Previous
 
 
 
2019
 
2019
 
 
(Unaudited)
Guidance
 
Guidance
 
Change
 
(Millions of dollars, except per share amounts)
Total revenues
$
1,656

 
$
1,588

 
$
68

Cost of natural gas
694

 
643

 
51

Operating expenses
 
 
 
 

   Operations and maintenance
425

 
413

 
12

   Depreciation and amortization
182

 
182

 
—

   General taxes
60

 
60

 
—

Total operating expenses
667

 
655

 
12

Operating income
295

 
290

 
5

Other income (expense), net
(6
)
 
(9
)
 
3

Interest expense
(65
)
 
(65
)
 
—

Income before income taxes
224

 
216

 
8

Income taxes
(39
)
 
(34
)
 
(5
)
Net income*
$
185

 
$
182

 
$
3

Earnings per share, diluted*
$
3.48

 
$
3.42

 
$
0.06

*Represents midpoint of guidance range.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of total revenues to net margin (non-GAAP)
 
 
 
 
 
 
Updated
 
Previous
 
 
 
2019
 
2019
 
 
(Unaudited)
Guidance
 
Guidance
 
Change
 
(Millions of dollars)
Total revenues
$
1,656

 
$
1,588

 
$
68

Cost of natural gas
694

 
643

 
51

Net margin
962

 
945

 
17