• Full Year Earnings Per Diluted Share: $3.91, exceeding the revised guidance midpoint of $3.90.
• Fourth Quarter GAAP Net Income: $77 million or $0.34 per diluted share.
• Full Year GAAP Net Income: $223 million, compared to $231 million in 2023.
• Fourth Quarter Revenue Increase: $24.6 million from new rates.
• O&M Expenses: Increased approximately 4% for the year, with a 2.4% year-over-year increase in the fourth quarter.
• Depreciation and Amortization Expense: $4.7 million higher year-over-year.
• Interest Expense: $10.4 million higher year-over-year in the fourth quarter.
• Commercial Paper Outstanding: $914.6 million with a weighted average interest rate of 4.77% as of December 31.
• Capital Expenditures and Asset Removal Costs: $762 million for the year, compared to $729 million in 2023.
• Authorized Rate Base: Approximately $5.4 billion as of year-end.
• 2025 Financial Guidance: Net income of $254 million to $261 million; EPS of $4.20 to $4.32; capital expenditures and asset removal costs of approximately $750 million.
• Dividend Increase: Declared a dividend of $0.67 per share, an increase of $0.01 from the prior quarter.
• New Meters Installed in 2024: Over 23,000 new meters.

• Warning! GuruFocus has detected 10 Warning Signs with OGS.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ONE Gas Inc (NYSE:OGS) exceeded the midpoint of its elevated EPS guidance, achieving full-year earnings per diluted share of $3.91.
• The company has consistently met or exceeded the midpoint of its year-ahead EPS guidance for 11 consecutive years.
• Significant strides were made in modernizing and reinforcing the distribution system, including completing the bare steel service line replacement program in Kansas.
• Robust customer growth was reported with 23,000 new meters set across the service territory in 2024.
• The company is exploring opportunities to supply natural gas for power generation, addressing the needs of data centers, industrial applications, and electric providers.

Negative Points

• GAAP net income for the full year decreased to $223 million compared to $231 million in 2023.
• Interest expense in the quarter was $10.4 million higher year-over-year, primarily due to higher rates on long-term debt issuances and higher commercial paper balances.
• Other income net decreased by $4.6 million compared to the same quarter of 2023, primarily due to a decrease in the market value of investments associated with non-qualified employee benefit plans.
• O&M expenses for the year increased by approximately 4%, highlighting cost pressures despite a moderation in the fourth quarter.
• The company did not factor in any rate cuts for 2024 in its forecasts, which could impact financial performance if interest rates do not decrease as hoped.

Q & A Highlights

Q: Can you provide insights on the timeline for data center opportunities and how they fit into your capital plan? A: Robert McAnnally, CEO, highlighted the diverse economic opportunities in Oklahoma and Texas, including data centers. Curtis Dinan, COO, added that the timeline for these opportunities varies, with some being quicker than the typical three-year rule. The focus is on leveraging existing systems and aligning investments with multiple objectives.

Q: How has the colder weather in the first quarter impacted your working capital and commercial paper balance? A: Christopher Sighinolfi, CFO, explained that warmer weather in Q4 led to higher storage inventories, but colder weather in Q1 has aligned storage with plans. This should result in strong cash flow in the first quarter, helping to address the commercial paper balance.

Q: Can you update us on O&M expenses and expectations for 2025? A: Curtis Dinan, COO, noted that O&M expenses came in better than expected in Q4 due to achieving some initiative goals early. However, there are no changes to the 2025 guidance or the five-year plan.

Q: Where do you expect to end the year within your guidance range, and does the high-end target apply to this year? A: Christopher Sighinolfi, CFO, stated that while they aim to achieve at least the midpoint of their guidance, there is no specific target for the high end this year. The focus is on maintaining historical performance consistency.

Q: Does the decision on Texas transmission systems impact your prospects for data center development? A: Curtis Dinan, COO, clarified that the opportunities for providing gas to new generation are independent of the transmission system decisions. The inquiries are focused on providing gas for baseload generation in developed areas.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.