ONE Gas, Inc. reported a continuation of increased net income in the third quarter of the year, showing net income of $25.2 million or 45 cents a share.
The total compared to $23.7 million and 44 cents a share in the third quarter of 2022, according to the company’s release of quarterly earnings made after Monday’s close of trading.
ONE Gas reported operating income of $57.2 million in the third quarter 2023, compared with $47.1 million in the third quarter 2022, which primarily reflects:
- an increase of $14.6 million from new rates; and
- an increase of $2.3 million due to lower outside service costs.
These increases were offset by an increase of $7.5 million in labor and benefit costs.
“Our third quarter results reflect prudent financial management and the continued execution of our strategy,” said Robert S. McAnnally, president and chief executive officer. “As we enter the winter heating season, we remain committed to safely serving our 2.3 million customers.”
- Year-to-date 2023 net income was $160.5 million, or $2.87 per diluted share, compared with $154.7 million, or $2.85 per diluted share, in the same period last year;
- In September 2023, the Company executed forward sale agreements for 1.38 million shares of common stock, at an initial price of $73.67 per share, with settlement by Dec. 31, 2024;
- In October 2023, the Company entered into an agreement to increase capacity of the ONE Gas Credit Agreement to $1.2 billion from $1.0 billion; and
- The board of directors declared a quarterly dividend of $0.65 per share ($2.60 annualized), payable on Dec. 1, 2023, to shareholders of record at the close of business on Nov. 15, 2023.
Net income for the three months ended Sept. 30, 2023, includes an increase in interest expense of $8.4 million, including $4.5 million in interest expense related to the securitized bonds in Kansas. Interest expense also increased due to a higher weighted average interest rate on commercial paper borrowings and the issuance of $300 million of 4.25 percent senior notes in August 2022.
Income tax expense includes a credit for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $2.5 million and $1.6 million for the three months ended Sept. 30, 2023, and 2022, respectively.
Capital expenditures and asset removal costs were $9.4 million higher for the third quarter 2023 compared with the same period last year, due primarily to expenditures for system integrity and extension of service to new areas.
YEAR-TO-DATE 2023 FINANCIAL PERFORMANCE
Operating income for the nine-onth 2023 period was $270.5 million, compared with $246.4 million in 2022, which primarily reflects:
- an increase of $46.0 million from new rates; and
- an increase of $4.4 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
These increases were offset by:
- an increase of $18.3 million in labor and benefits costs;
- an increase of $3.3 million in bad debt expense;
- a decrease of $2.5 million due to lower sales volumes, net of the impact of weather normalization mechanisms; and
- an increase of $2.3 million in materials expense.
Weather across the service territories for the nine-month 2023 period was 8 percent warmer than normal and 14 percent warmer than the same period last year. The impact on operating income was mitigated by weather normalization mechanisms.
For the nine-month 2023 period, other income, net increased $12.1 million compared with the same period last year, due primarily to a $10.9 million higher return on investments associated with the nonqualified employee benefit plans.
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of $15.5 million and $12.5 million for the nine months ended Sept. 30, 2023, and 2022, respectively.
Interest expense increased $34.1 million for the nine months ended Sept. 30, 2023, which includes an increase of $14.1 million related to the securitized bonds in Kansas. Interest expense was also impacted by a higher weighted average interest rate on commercial paper borrowings and the issuance of $300 million of 4.25 percent senior notes in August 2022.
Capital expenditures and asset removal costs were $539.1 million for the nine-month 2023 period compared with $446.9 million in the same period last year. The increase was due primarily to expenditures for system integrity and extension of service to new areas.
For the nine months ended Sept. 30, 2023, the Company executed forward sale agreements for shares of its common stock through an underwritten offering and its at-the-market equity program. No shares of common stock have been settled under these forward sale agreements. Had all shares been settled as of Sept. 30, 2023, it would have generated net proceeds of $351.2 million, as detailed below: