ONE Gas Inc ((OGS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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ONE Gas Inc. recently held its earnings call, where the sentiment was largely optimistic, buoyed by achievements like surpassing EPS guidance, robust customer growth, and effective capital investments. However, the company acknowledged operational and financial challenges, such as a decline in net income, increased interest expenses, and weather-related impacts. While strategic growth initiatives underscore a positive outlook, these were tempered by certain hurdles faced during the year.
Exceeded EPS Guidance
ONE Gas proudly announced that it surpassed the midpoint of its elevated EPS guidance for 2024, achieving a full-year earnings per diluted share of $3.91. This marks the 11th consecutive year that the company has met or exceeded the midpoint of year-ahead EPS guidance, underscoring its consistent financial performance.
Robust Customer Growth
In 2024, ONE Gas experienced significant customer expansion by setting 23,000 new meters across its service areas, including major metro regions in Kansas, Oklahoma, and Texas. This growth reflects the company’s effective expansion strategies and its success in tapping into new markets.
Capital Investment and System Improvements
The company completed over $750 million worth of capital investment projects in 2024. Highlights include a 50% reduction in leak-related emissions since 2005 and the completion of a major bare steel service line replacement program in Kansas, showcasing ONE Gas’s commitment to sustainability and infrastructure improvements.
Strong Financial Position
ONE Gas maintained a robust financial standing, with credit ratings affirmed by S&P and Moody’s at A minus and A3, respectively, both with stable outlooks. This reflects the company’s prudent financial management and stability in the market.
Net Income Decline
The earnings call noted a decline in GAAP net income for the full year, which was $223 million, down from $231 million in 2023. This decrease highlights some financial challenges faced by the company despite other positive financial metrics.
Increased Interest Expense
The company reported that interest expenses increased by $10.4 million year-over-year. This rise was primarily due to higher rates on long-term debt issuances and increased commercial paper balances, indicating an area of financial pressure.
Weather Impact on Operations
Operations were impacted by the fourth quarter being approximately 24% warmer than normal. Despite this, the impact on earnings was mitigated by weather normalization mechanisms, illustrating the company’s resilience to adverse weather conditions.
Forward-Looking Guidance
Looking ahead, ONE Gas has provided financial guidance for 2025, projecting net income between $254 million and $261 million and earnings per diluted share ranging from $4.20 to $4.32. Capital expenditures and asset removal costs are anticipated to remain at approximately $750 million. The company also plans to continue exploring opportunities to supply natural gas for power generation across various sectors.
In summary, ONE Gas’s earnings call revealed a company that is navigating both achievements and challenges effectively. While the sentiment was positive, driven by strong customer growth and strategic investments, the company remains vigilant of the financial and operational challenges it faces. Looking forward, ONE Gas appears poised for continued growth, underpinned by its robust financial outlook and targeted strategic initiatives.
