One Gas, Inc. · NYSE:OGS
One Gas — BofA Securities Power, Gas and Solar Leaders Conference 2021
25 slides from One Gas's conference presentation, Mar 2, 2021
Slide 1: Investor Update March 2021
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Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this presentation that include company expectations or predictions should be considered forward-looking statements that are covered by the safe harbor provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934. It is import
Slide 3: February 2021 Winter Weather Event
FEBRUARY 2021 WINTER WEATHER EVENT
Slide 4: Winter Weather Event - Overview
Winter Weather Event - Overview What Happened Company Response • Extreme record cold temperatures led to a surge in demand for • Deployed Pressure & Measurement technicians to critical natural gas, both from residential customers and electric generation, locations at the same time “freeze-offs” at m
Slide 5: Financial Impact & Response
Financial Impact & Response Additional Liquidity Secured Impact on Natural Gas Purchases Sources of Liquidity As of Feb. 24, 2021 • The combination of reduced supply and increased demand led to unforeseeable and unprecedented market pricing for natural • Term Loan gas in OK, TX and KS. For example,
Slide 6: Regulatory Response
Regulatory Response KANSAS OKLAHOMA TEXAS Kansas Corporation Commission (KCC) Oklahoma Corporation Commission (OCC) Texas Railroad Commission (RRC) Emergency order issued allowing state utilities Oklahoma Natural Gas filed a motion to seek the Emergency order issued authorizing LDCs to who incurred
Slide 7: Financial Guidance
FINANCIAL GUIDANCE G ONE Gas
Slide 8: Five-Year Financial Outlook
Five-Year Financial Outlook For the five years ending Dec. 31, 2025 Expected average annual growth rates: (2020 base year) • 7 – 8% Rate base • 6 – 8% Net income • 5 – 7% Earnings per diluted share • 6 – 8% Dividend • ~3% Operations & maintenance expenses $3 billion in total capital investments • ~6
Slide 9: 2021 Guidance Summary
2021 Guidance Summary Initiated Jan. 19, 2021 • Net income range of $198 ‒ $210 DILUTED EPS & NET INCOME million $3.80** • EPS range of $3.68 ‒ $3.92 per $3.68 diluted share $3.51 • Estimated average rate base* of $3.25 $4.23 billion $3.08 $204** $196 – Includes $540 million in capital investments $
Slide 10: Growing Dividends
Growing Dividends Building Shareholder Value Quarterly Dividend* DIVIDENDS & PAYOUT RATIO • 58 cents per share in 2021 $2.32* $2.16 $2.00 $1.84 Target annual payout ratio $1.68 61%** 59% • 55 – 65% of net income 57% 57% 55% 2017 2018 2019 2020 2021G 7.4% increase over 2020 * Subject to board approva
Slide 11: Financing Requirements
Financing Requirements Before Impact of February 2021 Winter Weather Event $665 $665 Dividends and capital investments primarily funded by cash flow from Financing Financing requirements requirements operations $174 $210 Capital expenditures and (MILLIONS) asset removal costs ~$1 billion net financi
Slide 12: Return on Equity
Return on Equity Before Impact of February 2021 Winter Weather Event Continue to minimize the gap Earned ROE between allowed and actual returns 8.6% 8.1% 8.3% 8.1%* 7.9% Authorized ROE by state: • Oklahoma ‒ 9% to 10% band, with a 9.5% midpoint • Texas ‒ ~ 9.5% weighted average • Kansas ‒ Not stated
Slide 13: Capital Investments & Rate Base
CAPITAL INVESTMENTS & RATE BASE
Slide 14: Well-Defined Capital Investment Plan
Well-Defined Capital Investment Plan CAPITAL INVESTMENTS 2021G CAPITAL INVESTMENTS BY STATE (MILLIONS) (MILLIONS) ~$540 $515 $19 $470 $20 $442 $418 $21 $151 $26 $135 $32 $110 Kansas $80 $99 $135 $360 $370 Texas $339 $306 $317 $201 $191 $201 $178 $151 $158 Oklahoma $204 2017 2018 2019 2020 2021G Syst
Slide 15: Capital Expenditures with Asset Removal Costs
Capital Expenditures with Asset Removal Costs KANSAS OKLAHOMA TEXAS 2021: 1.9X DEPRECIATION 2021: 2.5X DEPRECIATION 2021: 4.2X DEPRECIATION $198 $204 $201 $191 $188 $180 $173 $156 $135 $136 $123 $126 $123 $129 $122 (MILLIONS) $76 $81 $68 $72 $69 $74 $64 $67 $50 $52 $44 $48 $34 $37 $40 2017 2018 2019
Slide 16: Rate Base Growth
Rate Base Growth AVERAGE RATE BASE* 2021 ESTIMATED AVERAGE RATE BASE* (BILLIONS) TOTAL: $4.23 BILLION $4.23 $3.91 $3.62 $3.18 $3.36 $1.16 billion $1.32 billion $1.75 billion 2017 2018 2019 2020 2021G Kansas Oklahoma Texas * For definition of average rate base, see Appendix Expected 8% growth from 20
Slide 17: Regulatory Timeline
REGULATORY TIMELINE G ONE Gas
Slide 18: Filing Timeline
Filing Timeline Oklahoma & Kansas General rate case application filing on or before June 30, 2021, with new rates effective early 2022, if applicable 2020 2021 2022 2023 2024 2025 PBRC filing approved July 2020, PBRC filing in March 2023 PBRC filing in March 2024 $9.7 million increase; new rates eff
Slide 19: Texas – 2021
Texas – 2021 Central-Gulf Service Area Borger / Skellytown • $10.7 million GRIP filed in February 2021; new rates expected to be effective in the third quarter 2021 North Texas West Texas (El Paso) West Texas Service Area • GRIP expected to be filed March 2021 Central- Gulf Central-Gulf (Austin) Rem
Slide 20: Appendix
APPENDIX G ONE Gas
Slide 21: COVID-19 Update
COVID-19 Update EMPLOYEES CUSTOMERS • COVID-19 related employee absences have not • Currently, customer disconnections temporarily significantly impacted operations suspended in OK, KS and TX • Cross-functional task force supporting COVID-19 • In 2020, ONE Gas experienced higher bad debt response ex
Slide 22: Authorized Rate Base
Authorized Rate Base KANSAS1 OKLAHOMA2 $1,616 TEXAS2 3 $1,475 $1,407 $1,202 $1,257 $1,133 $1,033 $1,068 $986 $1,047 $925 $947 $895 $822 $745 (MILLIONS) 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 1 KGS’ most recent rate case, approved in February 2019, was settled with
Slide 23: Rate Base Definition
Rate Base Definition Authorized Rate Base $3.80 billion (as of Dec. 31, 2020) • Includes capital investments authorized in most recent rate cases and interim filings • Excludes any capital investments since last approved rate cases or filings 2021 Estimated Average Rate Base $4.23 billion • Average
Slide 24: Non-GAAP Information
Non-GAAP Information ONE Gas has disclosed in this presentation cash flow from operations before changes in working capital, which is a non-GAAP financial measure. Cash flow from operations before changes in working capital is used as a measure of the company's financial performance. Cash flow from
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Cash Flow From Operations Before Changes in Working Capital 2021 (MILLIONS) GUIDANCE* Net Income $ 204 Depreciation and amortization 206 Deferred taxes 35 Other 10 Cash flow from operations before changes in working capital $ 455 * Amounts shown are estimated midpoints as con
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