One Gas, Inc. · NYSE:OGS
One Gas — Investor Presentation (November 2022)
21 slides from One Gas's investor presentation, Nov 30, 2022
Slide 1: 2023 Financial Guidance
November 30, 2022 2023 FINANCIAL GUIDANCE
Slide 2: Forward-Looking Statements
FORWARD LOOKING STATEMENTS | 2FORWARD LOOKIN ST TE ENTS | 2 Forward-Looking Statements Statements contained in this presentation that include or refer to Company expectations, our business outlook, our future plans or predictions relating to any matters should be considered forward-looking statement
Slide 3: Financial Outlook
FINANCIAL OUTLOOK eS ONE Gas
Slide 4: Five-Year Financial Guidance: 2023 – 2027
FINANCIAL OUTLOOK| 4 Five-Year Financial Guidance: 2023 – 2027 The Company’s outlook remains anchored by ongoing investments in system integrity and pipeline replacement, and supported by strong customer growth and regional economic development. However, fundamental shifts in baseline economic condi
Slide 5: Macro Environment – Nov. 2021 vs. Nov. 2022
FINANCIAL OUTLOOK| 5 Macro Environment – Nov. 2021 vs. Nov. 2022 A Fundamental Shift in Baseline Economic Conditions Type Metric Nov 1, 2021 Nov 1, 2022 Year-over-Year Change 10-Yr Avg. Change vs. 10-Yr Avg. In te re st R at es 90-Day LIBOR 0.14% 4.46% 31.9x 0.99% 4.5x 2-Year US Treasury 0.50% 4.54%
Slide 6: Favorable Regional Growth Dynamics
FINANCIAL OUTLOOK| 6 Favorable Regional Growth Dynamics Growing Demand for Natural Gas Key drivers • Residential and commercial development, particularly in Austin and Oklahoma City metro areas, driving system expansion • Projecting five-year compound annual customer growth of 1.0% across our servic
Slide 7: Constructing a Foundation for Growth and Long-term Affordability
FINANCIAL OUTLOOK| 7 Constructing a Foundation for Growth and Long-term Affordability Operating investments support business expansion • Increasing operating capacities and capabilities • Addressing labor pressures through competitive market wage adjustments • Inflationary pressures impact 3rd party
Slide 8: Five-Year Financial Highlights
FINANCIAL OUTLOOK| 8 Five-Year Financial Highlights Capital Investments & Rate Base • Capital investments of approximately $3.6 billion – $2.5 billion investment in system integrity and replacement projects – Growth capital of approximately $1.0 billion • Average annual rate base growth of 7 – 9% 20
Slide 9: Five-year Financing Requirements
FINANCIAL OUTLOOK| 9 Five-year Financing Requirements • Dividends and capital investments primarily funded by cash flow from operations of approximately $500 - $550 million1 – Expected 2023 short- and long-term financing need of $275 - $300 million • ~$1.8 billion net long-term financing needs throu
Slide 10: 2023 Guidance Summary
FINANCIAL OUTLOOK| 10 ** Represents midpoint of guidance range as of Nov. 30, 2022 * For definition of average rate base, see Appendix 2023 Guidance Summary • Net income range of $224 ‒ $238 million • EPS range of $4.02 ‒ $4.26 per diluted share • Estimated average rate base* of $5.15 billion – Incl
Slide 11: Growing Dividends
FINANCIAL OUTLOOK| 11 Growing Dividends • Annual Dividend – 4% to 6% average annual growth • Target annual payout ratio – 55% to 65% of net income Building Shareholder Value $2.00 $2.16 $2.32 $2.48 2019 2020 2021 2022G DIVIDENDS & PAYOUT RATIO 57% 59% 60% 61% ~10% CAGR since spin from ONEOK
Slide 12: Capital Investments & Rate Base
CAPITAL INVESTMENTS & RATE BASE
Slide 13: Capital Investments
CAPITAL INVESTMENTS | 13 $339 $360 $383 $435 $465 $110 $135 $138 $182 $185 $21 $20 $21 $33 $25 $178 $191 $202 $213 $232 2019 2020 2021 2022G 2023G CAPITAL INVESTMENTS (MILLIONS) System Integrity Customer Growth Other/IT Depreciation $470 $515 $542 $6501 ~$675 Well-Defined Capital Investment Plan Inv
Slide 14: Capital Investments: Average Rate Base
CAPITAL INVESTMENTS | 14 $1.34 billion $2.16 billion $1.65 billion 2023G AVERAGE RATE BASE* BY STATE TOTAL: $5.15 BILLION Kansas Oklahoma Texas Rate Base $3.62 $3.91 $4.25 $4.80 $5.15 2019 2020 2021 2022G 2023G AVERAGE RATE BASE* (BILLIONS) * See Appendix for definition Over 7% growth from 2022 to 2
Slide 15: Appendix
APPENDIX G OnE Gas
Slide 16: Average Annual Residential Customer Bill
APPENDIX | 16 Average Annual Residential Customer Bill • Natural gas costs represent a majority of customer bills in 2022, while non-commodity costs remain tightly controlled • Customers began to see impact of federal tax reform in 2018 and elimination of Kansas state income taxes in 2020 *Assumes ~
Slide 17: Capital Investments by State
APPENDIX | 17 Capital Investments $123 $129 $139 $160 1 $176 $64 $68 $72 $75 $79 2019 2020 2021 2022G 2023G KANSAS 2022: 1.9X DEPRECIATION $191 $198 $215 $243 1 $242 $74 $76 $82 $87 $92 2019 2020 2021 2022G 2023G OKLAHOMA Depreciation 2022: 2.9X DEPRECIATION $156 $188 $188 $247 1 $257 $40 $44 $48 $5
Slide 18: Authorized Rate Base
APPENDIX | 18 Authorized Rate Base $1,407 $1,475 $1,616 $1,726 $1,854 2018 2019 2020 2021 2022 OKLAHOMA2 1 Kansas Gas Service’s most recent rate case, approved in February 2019, was settled without a determination of rate base and reflects Kansas Gas Service’s estimate of rate base contained within
Slide 19: Rate Base Definition
APPENDIX | 19 Rate Base Definition Authorized Rate Base $4.48 billion (as of Nov. 30, 2022) • Includes capital investments authorized in most recent rate cases and interim filings • Excludes any capital investments since last approved rate cases or filings 2023 Estimated Average Rate Base $5.15 bill
Slide 20: Non-GAAP Information
APPENDIX | 20 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. C
Slide 21: Non-GAAP Reconciliation: Cash Flow From Operations Before Changes in Working Capital
APPENDIX | 21 (MILLIONS) 2023 GUIDANCE* Net income $ 231 Depreciation and amortization 242 Deferred taxes 36 Other 21 Cash flow from operations before changes in working capital $ 530 Non-GAAP Reconciliation Cash Flow From Operations Before Changes in Working Capital * Amounts shown are estimated mi