ONE Gas, Inc. announced its fourth quarter and full year 2019 financial results, which included diluted earnings per share of $0.96 and $3.51, respectively.
Highlights include:
- Fourth quarter 2019 net income was $51.2 million, or $0.96 per diluted share, compared with $44.7 million, or $0.84 per diluted share, in the fourth quarter 2018;
- Full year 2019 net income increased to $186.7 million, or $3.51 per diluted share, compared with $172.2 million, or $3.25 per diluted share, in 2018;
- Full year 2019 capital expenditures and asset removal costs were $465.1 million, compared with $447.4 million in 2018; and
- On Jan. 21, 2020, the company increased its quarterly dividend 4 cents to 54 cents per share, or $2.16 per share on an annualized basis, payable on March 6, 2020, to shareholders of record at close of business Feb. 21, 2020.
“We are pleased to close out the decade with a year of strong financial results,” said Pierce H. Norton II, president and chief executive officer. “As we move into a new decade, we will continue to focus on modernizing and expanding our pipelines while providing a safe, reliable and affordable energy choice for our customers.”
FOURTH QUARTER 2019 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $82.0 million in the fourth quarter 2019, compared with $80.8 million in the fourth quarter 2018.
Net margin, which is comprised of total revenues less cost of natural gas, increased by $16.3 million compared with fourth quarter 2018, which primarily reflects:
- A $14.6 million increase from new rates; and
- A $1.7 million increase attributed to net residential customer growth in Oklahoma and Texas.
Fourth quarter 2019 operating costs were $133.9 million, compared with $123.8 million in the fourth quarter 2018, which primarily reflects:
- A $6.2 million increase in employee-related expenses; and
- A $3.7 million increase in bad debt expense.
Fourth quarter 2019 depreciation and amortization expense was $46.1 million, compared with $41.1 million in the fourth quarter 2018, due primarily to an increase in depreciation expense from capital investments placed in service.
Capital expenditures and asset removal costs were $121.2 million for the fourth quarter 2019, compared with $128.9 million in the fourth quarter 2018, due primarily to increased information technology costs in December 2018.
Fourth Quarter 2019 Key Statistics: More detailed information is listed in the tables located in the Appendix.
- Actual heating degree days across the company’s service areas were 4,078 in the fourth quarter 2019, 6% colder than normal and 6% warmer than the same period last year;
- Actual heating degree days in the Oklahoma service area were 1,451 in the fourth quarter 2019, 12% colder than normal and 7% warmer than the same period last year;
- Actual heating degree days in the Kansas service area were 1,878 in the fourth quarter 2019, 3% colder than normal and 6% warmer than the same period last year;
- Actual heating degree days in the Texas service area were 749 in the fourth quarter 2019, 5% colder than normal and 6% warmer than the same period last year;
- Residential natural gas sales volumes were 41.8 billion cubic feet (Bcf) in the fourth quarter 2019, down 6% compared with the same period last year;
- Total natural gas sales volumes were 55.0 Bcf in the fourth quarter 2019, down 6% compared with the same period last year;
- Natural gas transportation volumes were 59.4 Bcf in the fourth quarter 2019, up 2% compared with the same period last year; and
- Total natural gas volumes delivered were 114.4 Bcf in the fourth quarter 2019, down 2% compared with the same period last year.
FULL YEAR 2019 FINANCIAL PERFORMANCE
Full year 2019 operating income was $295.3 million, compared with $288.4 million in 2018.
Net margin, which is comprised of total revenues less cost of natural gas, increased $45.7 million compared with last year, which primarily reflects:
- A $36.2 million increase from new rates;
- A $6.5 million increase attributed to net residential customer growth in Oklahoma and Texas;
- A $1.9 million increase due to higher transportation volumes in Kansas; and
- A $1.2 million increase due to higher sales volumes, net of weather normalization, in Texas; offset by
- A $0.9 million decrease due to a compressed natural gas excise tax credit.
Full year 2019 operating costs were $489.1 million, compared with $470.6 million in 2018, which primarily reflects:
- A $10.1 million increase in employee-related expenses;
- A $2.6 million increase in outside services costs;
- A $1.8 million increase in materials for pipeline repair and maintenance activities;
- A $1.5 million increase in bad debt expense;
- A $1.3 million increase in fleet costs; and
- A $1.1 million increase in legal-related expenses.
Full year 2019 depreciation and amortization expense was $180.4 million, compared with $160.1 million in 2018, due primarily to an increase in depreciation expense from capital investments placed in service, higher depreciation rates in Kansas and an increase in amortization of the ad-valorem surcharge rider in Kansas.
Full year 2019 other expense, net, decreased $8.4 million due primarily to earnings on investments associated with nonqualified employee benefit plans, which offset the increase in costs for the plans included in operating costs.
Interest expense increased $11.4 million for the full year 2019 compared with the same period last year, resulting primarily from the refinancing of the company’s $300 million senior notes, at a 2.07% interest rate, with $400 million senior notes, at a 4.50% interest rate, due November 2048.
Income tax expense for the full year 2019 includes amortization of excess accumulated deferred income taxes of $12.8 million, which is offset in revenues.
Full year 2019 capital expenditures and asset removal costs were $465.1 million, compared with $447.4 million in 2018, due primarily to increased system integrity activities and extending service to new areas.
The company ended the fourth quarter 2019 with $17.9 million of cash and cash equivalents, $516.5 million of commercial paper outstanding and $698.8 million of remaining credit available under its $700 million credit facility. The total debt-to-capitalization ratio at Dec. 31, 2019, was 46%, and the ratio of long-term debt-to-capitalization was 38%.
Source: ONE Gas release