One Gas, Inc. · NYSE:OGS
One Gas — Investor Presentation (November 2023)
21 slides from One Gas's investor presentation, Nov 29, 2023
Slide 1: 2024 Financial Guidance: Delivering Reliable & Affordable Energy
November 2023 2024 FINANCIAL GUIDANCE Delivering Reliable & Affordable Energy
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS | 2FORWARD LOOKING STATEMENTS | 2 Investor Information Contact Information and 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
Slide 3: Financial Outlook
FINANCIAL OUTLOOK
Slide 4: Five-Year Financial Guidance: 2024 – 2028
FINANCIAL OUTLOOK | 4 Five-Year Financial Guidance: 2024 – 2028 The Company’s outlook remains anchored by proactive investments in system integrity, pipeline replacement, and durable customer growth rooted in regional economic development. The fundamental shifts in baseline economic conditions which
Slide 5: Current Economic Backdrop
FINANCIAL OUTLOOK | 5 Current Economic Backdrop The Federal Reserve has rapidly raised interest rates and is working to shrink its balance sheet to rein in decades-high inflation. In the US, the principal economic tension has been between these Fed actions and a historically tight labor market, ongo
Slide 6: Federal Funds Rate Futures
FINANCIAL OUTLOOK | 6 Federal Funds Rate Futures Consensus rate expectations have moved meaningfully higher this year 11.01.2022 Peak Fed Funds rate of 4.70% expected in March 2023 with cuts in 2H23 producing a 1Q24 rate expectation of roughly 4.00%, declining to 3.00% by 1Q25. 05.01.2023 Peak Fed F
Slide 7: Modeling Assumptions
FINANCIAL OUTLOOK | 7 Modeling Assumptions • A gradual contraction in the Commercial Paper 10-year rate spread over the course of 2024-2025, with parity achieved in 2026. • A contangoed curve reemerging in 2027 as the Fed’s balance sheet returns to pre-COVID levels, allowing its policy rate to be me
Slide 8: Favorable Regional Growth Dynamics
FINANCIAL OUTLOOK | 8 Favorable Regional Growth Dynamics Growing Demand for Natural Gas Provides Long-Term Growth Opportunity Key drivers • Durable residential and commercial development, anchored to economic growth, is driving system expansion • Strong support for natural gas with energy choice leg
Slide 9: Constructing a Foundation for Growth and Long-term Affordability
FINANCIAL OUTLOOK | 9 Constructing a Foundation for Growth and Long-term Affordability Meaningful customer growth positively impacts affordability • Robust backlog of future meter sets • New customer connections have slowed compared to 2022 but are commensurate with 2021 levels • New meter sets for
Slide 10: Regional Focus on Economic Development
FINANCIAL OUTLOOK | 10 Regional Focus on Economic Development Attracting large-scale manufacturing Enel North America (Inola, OK) – Announced May 2023 • $1.0 billion solar cell and panel manufacturing plant, largest economic development project in Oklahoma history • 1,800 construction jobs and 1,000
Slide 11: Financing Requirements
FINANCIAL OUTLOOK | 11 Financing Requirements Dividends and capital investments primarily funded by cash flow from operations of approximately $525 - $575 million1 – Expected 2024 short- and long-term financing need of $350 - $375 million, exclusive of two first-quarter maturities: $300 million of 3
Slide 12: Five-Year Financial Highlights
FINANCIAL OUTLOOK | 12 Five-Year Financial Highlights Capital Investments & Rate Base • Capital investments of approximately $4.25 billion – $3.0 billion investment in system integrity and replacement projects – Growth capital of approximately $1.1 billion • Estimated average 2024 rate base* of $5.5
Slide 13: 2024 Guidance Summary
FINANCIAL OUTLOOK | 13 2024 Guidance Summary* Earnings and Dividends Outlook • Net income for 2024 in a range of $214 - $231 million • EPS range of $3.70 - $4.00 per diluted share • Anticipate dividend growth of 1% to 2% in 2024, subject to board approval • Assumes 57.8 million of diluted shares out
Slide 14: Appendix
Appendix G ONE Gas
Slide 15: Capital Investments
APPENDIX | 15 $360 $383 $449 $525 $552 $135 $138 $177 $175 $172 $20 $21 $32 $25 $26 $191 $202 $216 $234 $252 2020 2021 2022 2023G 2024G CAPITAL INVESTMENTS (MILLIONS) System Integrity Customer Growth Other/IT Depreciation $5151 $542 $658 $7252 ~$750 Well-Defined Capital Investment Plan Investments ~
Slide 16: Average Rate Base by State
APPENDIX | 16 $1.41 billion $2.35 billion $1.79 billion 2024G AVERAGE RATE BASE1 BY STATE TOTAL: $5.55 BILLION Kansas Oklahoma Texas Rate Base ~8% Growth Expected in 2024 $3.91 $4.25 $4.69 $5.15 $5.55 2020 2021 2022 2023G 2024G AVERAGE RATE BASE1 (BILLIONS) 1 See Slide 19 for definition
Slide 17: Capital Investments by State
APPENDIX | 17 Capital Investments $129 $139 $159 $186 $169 $68 $72 $75 $78 $83 2020 2021 2022 2023G 2024G KANSAS 2023G: 2.4X DEPRECIATION $191 $198 $215 $257 $293 $76 $82 $88 $93 $100 2020 2021 2022 2023G 2024G OKLAHOMA Depreciation 2023G: 2.76X DEPRECIATION $188 $188 $242 $253 $288 $44 $48 $53 $63
Slide 18: Authorized Rate Base
APPENDIX | 18 Authorized Rate Base $1,475 $1,616 $1,726 $1,854 $2,067 2019 2020 2021 2022 2023 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 $4.92 billion (effective Dec. 1, 2023) • Includes capital investments authorized in most recent rate cases and interim filings • Excludes any capital investments since last approved rate cases or filings 2024 Estimated Average Rate Base $5.55 b
Slide 20: Non-GAAP Reconciliation: Cash Flow From Operations
APPENDIX | 20 (MILLIONS) 2024 GUIDANCE* Net income $ 223 Depreciation and amortization 267 Deferred taxes 32 Other 23 Cash flow from operations before changes in working capital $ 545 Non-GAAP Reconciliation Cash Flow From Operations Before Changes in Working Capital * Amounts shown are estimated mi
Slide 21: Non-GAAP Information
APPENDIX | 21 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