EX-99.1 2 ogs3312025earningsrelease.htm EX-99.1 Document

Exhibit 99.1

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May 5, 2025Analyst Contact:Erin Dailey
918-947-7411
Media Contact:Leah Harper
918-947-7123

ONE Gas Announces First Quarter 2025 Financial Results;
Expects to Achieve the Upper Half of 2025 Financial Guidance;
Declares Second Quarter Dividend

Analyst call and webcast scheduled tomorrow, May 6 at 11 a.m. EST

TULSA, Okla. - May 5, 2025 - ONE Gas, Inc. (NYSE: OGS) today announced its first quarter financial results, said that it expects to achieve the upper half of its previously announced 2025 financial guidance and declared its quarterly dividend.

“We achieved strong financial results in the first quarter due to our effective regulatory strategy and a disciplined approach to managing expenses,” said Robert S. McAnnally, president and chief executive officer. “Safety remains our top priority as we serve our customers and meet the growing demand for natural gas across our service territory.”

FIRST QUARTER 2025 FINANCIAL RESULTS & HIGHLIGHTS
    
•First quarter 2025 net income was $119.4 million, or $1.98 per diluted share, compared with $99.3 million, or $1.75 per diluted share, in the first quarter 2024;
•While weather across the Company's service areas was 5 percent colder than normal and 16 percent colder than the first quarter last year, the impact on operating income was largely tempered by regulatory weather normalization mechanisms; and
•The board of directors declared a quarterly dividend of $0.67 per share ($2.68 annualized), payable on June 3, 2025, to shareholders of record at the close of business on May 19, 2025.






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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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FIRST QUARTER 2025 FINANCIAL PERFORMANCE

ONE Gas reported operating income of $180.5 million in the first quarter, compared with $145.9 million in the first quarter 2024, which primarily reflects:

•an increase of $51.9 million from new rates; and
•an increase of $2.3 million in residential sales due primarily to net customer growth in Oklahoma and Texas.

The increase was partially offset by:

•an increase of $5.1 million in depreciation and amortization expense from additional capital investment;
•an increase of $4.7 million in ad valorem taxes, primarily due to regulatory outcomes which took effect during the quarter;
•an increase of $3.2 million in employee-related costs, due primarily to strategic investments in the Company’s workforce and ongoing in-sourcing efforts, which have strengthened operational oversight and improved overall expense management; and
•a net decrease of $6.5 million due to the impact of weather normalization mechanisms, largely offset by higher sales volumes.

Excluding interest related to KGSS-I securitized bonds, net interest expense increased $4.7 million for the three months ending March 31, 2025. The increase in interest expense is due primarily to the reopening of the outstanding 5.10 percent senior notes in August 2024 to issue an additional $250 million and higher average commercial paper balances.

Income tax expense reflects credits for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $8.1 million and $10.1 million for the three months ended March 31, 2025, and 2024, respectively.

Capital expenditures and asset removal costs were $177.7 million for the first quarter 2025 compared with $179.4 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.

REGULATORY ACTIVITIES UPDATE

In April 2025, Kansas Gas Service submitted an application to the Kansas Corporation Commission (KCC) requesting an increase of approximately $7.2 million related to its Gas System Reliability Surcharge. The KCC has until August 2025 to issue an order.

In April 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for all customers in the Rio Grande Valley service area, requesting a $3.2 million increase to be effective in September 2025.

In February 2025, Oklahoma Natural Gas filed its annual Performance-Based Rate Change application for the test year ended December 2024. The filing includes a requested $41.5 million
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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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base rate revenue increase, $2.4 million energy efficiency incentive and $13.2 million of EDIT to be credited to customers in 2026. A hearing is scheduled for June 12, 2025.

In February 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for customers in each of the Central-Gulf and West-North service areas, requesting increases of $15.4 million and $8.2 million, respectively, to be effective in June 2025.

2025 FINANCIAL GUIDANCE

The company expects to achieve the upper half of the 2025 financial guidance shared on Dec. 5, 2024, which provided for net income in the range of $254 million to $261 million and earnings per diluted share of $4.20 to $4.32.

Capital investments, including asset removal costs, are expected to be approximately $750 million in 2025, primarily targeted for system integrity and replacement projects. Capital investments for extensions to new customers are expected to be approximately $180 million.

EARNINGS CONFERENCE CALL AND WEBCAST

The ONE Gas executive management team will host a conference call on Tuesday, May 6, 2025, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call also will be carried live on the ONE Gas website.

To participate in the telephone conference call, dial 833-470-1428, passcode 583185, or log on to www.onegas.com/investors and select Events and Presentations.

If you are unable to participate in the conference call or the webcast, a replay will be available on the ONE Gas website, www.onegas.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 866-813-9403, passcode 983295.
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ONE Gas, Inc. (NYSE: OGS) is a 100% regulated natural gas utility, and trades on the New York Stock Exchange under the symbol “OGS.” ONE Gas is included in the S&P MidCap 400 Index and is one of the largest natural gas utilities in the United States.

Headquartered in Tulsa, Oklahoma, ONE Gas provides a reliable and affordable energy choice to more than 2.3 million customers in Kansas, Oklahoma and Texas. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.

For more information and the latest news about ONE Gas, visit onegas.com and follow its social channels: @ONEGas, Facebook, LinkedIn and YouTube.

Some of the statements contained and incorporated in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The forward-looking statements relate to our anticipated financial performance, liquidity, management’s plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "should," "goal," "forecast," "guidance," "could," "may," "continue," "might," "potential," "scheduled," "likely," and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements, which are applicable only as of the date of this news release. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, costs, liquidity, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

•our ability to recover costs, income taxes and amounts equivalent to the cost of property, plant and equipment, regulatory assets and our allowed rate of return in our regulated rates or other recovery mechanisms;
•cyber-attacks, which, according to experts, continue to increase in volume and sophistication, or breaches of technology systems that could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee, vendor, counterparty, or Company information; further, increased remote working arrangements have required enhancements and modifications to our information technology infrastructure (e.g. Internet, Virtual Private Network, remote collaboration systems, etc.), and any failures of the technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct ordinary operations or expose us to increased risk or effect of an attack;
•our ability to manage our operations and maintenance costs;
•changes in regulation of natural gas distribution services, particularly those in Oklahoma, Kansas and Texas;
•the economic climate and, particularly, its effect on the natural gas requirements of our residential and commercial customers;
•the length and severity of a pandemic or other health crisis which could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period;
•competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels;
•adverse weather conditions and variations in weather, including seasonal effects on demand and/or supply, the occurrence of severe storms in the territories in which we operate, and climate change, and the related effects on supply, demand, and costs;
•indebtedness could make us more vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantage compared with competitors;
•our ability to secure reliable, competitively priced and flexible natural gas transportation and supply, including decisions by natural gas producers to reduce production or shut-in producing natural gas wells and expiration of existing supply and transportation and storage arrangements that are not replaced with contracts with similar terms and pricing;
•our ability to complete necessary or desirable expansion or infrastructure development projects, which may delay or prevent us from serving our customers or expanding our business;
•operational and mechanical hazards or interruptions;
•adverse labor relations;
•the effectiveness of our strategies to reduce earnings lag, revenue protection strategies and risk mitigation strategies, which may be affected by risks beyond our control such as commodity price volatility, counterparty performance or creditworthiness and interest rate risk;
•the capital-intensive nature of our business, and the availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets and other sources of liquidity;
•our ability to obtain capital on commercially reasonable terms, or on terms acceptable to us, or at all;
•limitations on our operating flexibility, earnings and cash flows due to restrictions in our financing arrangements;
•cross-default provisions in our borrowing arrangements, which may lead to our inability to satisfy all of our outstanding obligations in the event of a default on our part;
•changes in the financial markets during the periods covered by the forward-looking statements, particularly those affecting the availability of capital and our ability to refinance existing debt and fund investments and acquisitions to execute our business strategy;
•actions of rating agencies, including the ratings of debt, general corporate ratings and changes in the rating agencies’ ratings criteria;
•changes in inflation and interest rates;
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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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•our ability to recover the costs of natural gas purchased for our customers and any related financing required to support our purchase of natural gas supply;
•impact of potential impairment charges;
•volatility and changes in markets for natural gas and our ability to secure additional and sufficient liquidity on reasonable commercial terms to cover costs associated with such volatility;
•possible loss of local distribution company franchises or other adverse effects caused by the actions of municipalities;
•payment and performance by counterparties and customers as contracted and when due, including our counterparties maintaining ordinary course terms of supply and payments;
•changes in existing or the addition of new environmental, safety, tax, cybersecurity and other laws or regulations to which we and our subsidiaries are subject, including those that may require significant expenditures, significant increases in operating costs or, in the case of noncompliance, substantial fines or penalties;
•the effectiveness of our risk-management policies and procedures, and employees violating our risk-management policies;
•the uncertainty of estimates, including accruals and costs of environmental remediation;
•advances in technology, including technologies that increase efficiency or that improve electricity’s competitive position relative to natural gas;
•population growth rates and changes in the demographic patterns of the markets we serve in Oklahoma, Kansas and Texas, and economic conditions in these areas;
•acts of nature and naturally occurring disasters;
•political unrest and the potential effects of threatened or actual terrorism and war;
•the sufficiency of insurance coverage to cover losses;
•the effects of our strategies to reduce tax payments;
•changes in accounting standards;
•changes in corporate governance standards;
•existence of material weaknesses in our internal controls;
•our ability to comply with all covenants in our indentures and the ONE Gas Credit Agreement, a violation of which, if not cured in a timely manner, could trigger a default of our obligations;
•our ability to attract and retain talented employees, management and directors, and shortage of skilled-labor;
•unexpected increases in the costs of providing health care benefits, along with pension and postemployment health care benefits, as well as declines in the discount rates on, declines in the market value of the debt and equity securities of, and increases in funding requirements for, our defined benefit plans; and
•our ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Part 1, Item 1A, Risk Factors, in our Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX

ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
 March 31,
(Unaudited)20252024
(Thousands of dollars, except per share amounts)
Total revenues$935,190 $758,320 
Cost of natural gas512,462 383,003 
Operating expenses
Operations and maintenance135,295 132,783 
Depreciation and amortization81,704 76,572 
General taxes25,230 20,102 
Total operating expenses242,229 229,457 
Operating income180,499 145,860 
Other income, net
518 3,508 
Interest expense, net(35,697)(31,357)
Income before income taxes145,320 118,011 
Income taxes(25,901)(18,694)
Net income
$119,419 $99,317 
Earnings per share
Basic$1.99 $1.75 
Diluted$1.98 $1.75 
Average shares (thousands)
Basic60,077 56,729 
Diluted60,266 56,800 
Dividends declared per share of stock$0.67 $0.66 

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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX

ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
 March 31,December 31,
(Unaudited)20252024
Assets
(Thousands of dollars)
Property, plant and equipment  
Property, plant and equipment$9,231,791 $9,124,134 
Accumulated depreciation and amortization2,493,171 2,478,261 
Net property, plant and equipment6,738,620 6,645,873 
Current assets  
Cash and cash equivalents19,305 57,995 
Restricted cash and cash equivalents8,883 20,542 
Total cash, cash equivalents and restricted cash and cash equivalents28,188 78,537 
Accounts receivable, net446,807 408,448 
Materials and supplies87,981 91,662 
Income tax receivable53,624 53,624 
Natural gas in storage68,686 161,184 
Regulatory assets36,538 101,210 
Other current assets34,414 35,216 
Total current assets756,238 929,881 
Goodwill and other assets  
Regulatory assets268,581 278,006 
Securitized intangible asset, net258,257 265,951 
Goodwill157,953 157,953 
Pension and other postemployment benefits44,366 42,882 
Other assets103,225 105,025 
Total goodwill and other assets832,382 849,817 
Total assets$8,327,240 $8,425,571 



















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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX

ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
(Continued)
 March 31,December 31,
(Unaudited)20252024
Equity and Liabilities
(Thousands of dollars)
Equity and long-term debt
Common stock, $0.01 par value:
authorized 250,000,000 shares; issued and outstanding 59,929,090 shares at March 31, 2025; issued and outstanding 59,876,861 shares at December 31, 2024
$599 $599 
Paid-in capital2,295,989 2,294,469 
Retained earnings888,449 809,606 
Accumulated other comprehensive loss(2)(126)
Total equity3,185,035 3,104,548 
Other long-term debt, excluding current maturities, net of issuance costs2,132,039 2,131,718 
Securitized utility tariff bonds, excluding current maturities, net of issuance costs238,363 253,568 
Total long-term debt, excluding current maturities, net of issuance costs2,370,402 2,385,286 
Total equity and long-term debt5,555,437 5,489,834 
Current liabilities  
Current maturities of other long-term debt14 14 
Current maturities of securitized utility tariff bonds29,750 28,956 
Notes payable811,900 914,600 
Accounts payable175,898 261,321 
Accrued taxes other than income77,853 75,608 
Regulatory liabilities39,665 22,525 
Customer deposits54,923 56,243 
Other current liabilities87,395 99,009 
Total current liabilities1,277,398 1,458,276 
Deferred credits and other liabilities  
Deferred income taxes921,360 891,738 
Regulatory liabilities457,126 467,563 
Other deferred credits115,919 118,160 
Total deferred credits and other liabilities1,494,405 1,477,461 
Commitments and contingencies
Total liabilities and equity$8,327,240 $8,425,571 
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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX
ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(Unaudited)20252024
 
(Thousands of dollars)
Operating activities  
Net income$119,419 $99,317 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization81,704 76,572 
Deferred income taxes19,146 16,247 
Share-based compensation expense3,656 3,117 
Provision for doubtful accounts2,331 1,675 
Changes in assets and liabilities:
Accounts receivable(40,690)21,684 
Materials and supplies3,681 (2,700)
Natural gas in storage92,498 76,646 
Asset removal costs(11,089)(12,621)
Accounts payable(72,871)(68,117)
Accrued taxes other than income2,245 (4,388)
Customer deposits(1,320)(4,123)
Regulatory assets and liabilities - current73,872 (58,520)
Regulatory assets and liabilities - noncurrent9,425 2,520 
Other assets and liabilities - current(11,650)(39,312)
Other assets and liabilities - noncurrent7,102 265 
Cash provided by operating activities
277,459 108,262 
Investing activities  
Capital expenditures(166,597)(166,751)
Other investing expenditures(2,427)(1,259)
Other investing receipts1,179 2,029 
Cash used in investing activities
(167,845)(165,981)
Financing activities  
Borrowings (repayments) of notes payable, net
(102,700)864,900 
Repayment of other long-term debt(4)(773,000)
Repayment of securitized utility tariff bonds(14,547)(13,780)
Dividends paid(40,153)(37,336)
Tax withholdings related to net share settlements of stock compensation(2,559)(980)
Cash provided by (used in) financing activities
(159,963)39,804 
Change in cash, cash equivalents, restricted cash and restricted cash equivalents(50,349)(17,915)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period78,537 39,387 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period$28,188 $21,472 
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized
$36,268 $41,497 
Cash paid (received) for state income taxes
$— $(2,797)
Cash paid (received) for federal income taxes
$— $— 
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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX

ONE Gas, Inc.
KGSS-I SECURITIZATION

In November 2022, Kansas Gas Service Securitization I, L.L.C. (KGSS-I) issued $336 million of securitized utility tariff bonds. KGSS-I used the proceeds from the issuance to purchase the Securitized Utility Tariff Property from Kansas Gas Service, pay for debt issuance costs, and reimburse Kansas Gas Service for upfront securitization costs paid on behalf of KGSS-I.

Revenues for the three months ended March 31, 2025, include $11.6 million associated with KGSS-I, which is offset by $7.8 million in operating and amortization expense and $3.8 million in net interest expense. Revenues were in line compared to the same period last year, which was offset by a $0.3 million increase in operating and amortization expense and a $0.3 million decrease in net interest expense.

The following table summarizes the impact of KGSS-I on the consolidated balance sheets, for the periods indicated:

March 31,March 31,
20252024
(Thousands of dollars)
Restricted cash and cash equivalents$8,883 $20,542 
Accounts receivable5,341 4,659 
Securitized intangible asset, net258,257 265,951 
Total assets$272,487 $291,152 
Current maturities of securitized utility tariff bonds29,750 28,956 
Accounts payable169 319 
Accrued interest2,494 6,568 
Securitized utility tariff bonds, excluding current maturities, net of discounts and issuance costs $4.7 million and $4.8 million, as of March 31, 2025 and December 31, 2024, respectively238,363 253,568 
Paid-in capital 1,680 1,681 
Retained earnings31 60 
Total liabilities and equity$272,487 $291,152 

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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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The following table summarizes the impact of KGSS-I on the consolidated statements of income, for the periods indicated:

Three Months Ended
March 31,
20252024
(Thousands of dollars)
Operating revenues$11,637 $11,671 
Operating expense(110)(111)
Amortization expense(7,694)(7,385)
Interest income148 188 
Interest expense(3,944)(4,327)
Income before income taxes37 36 
Income taxes6 — 
Net income$43 $36 


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ONE Gas Announces First Quarter 2025 Financial Results; Declares Second Quarter Dividend
May 5, 2025
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APPENDIX
ONE Gas, Inc.
INFORMATION AT A GLANCE
Three Months Ended
March 31,
(Unaudited)
20252024
 (Millions of dollars)
Natural gas sales $870.4$694.1
Transportation revenues43.840.4
Securitization customer charges11.611.7
Other revenues9.412.1
Total revenues935.2758.3
Cost of natural gas512.5383.0
Operating costs 160.5152.8
Depreciation and amortization81.776.6
Operating income $180.5$145.9
Net income$119.4$99.3
Capital expenditures and asset removal costs$177.7$179.4
Volumes (Bcf)
Natural gas sales
Residential58.952.4
Commercial and industrial19.217.0
Other1.21.1
Total sales volumes delivered79.370.5
Transportation65.363.4
Total volumes delivered144.6133.9
Average number of customers (in thousands)
Residential2,1252,110
Commercial and industrial165165
Other33
Transportation1212
Total customers2,3052,290
Heating Degree Days
Actual degree days5,5134,741
Normal degree days5,2315,219
Percent colder (warmer) than normal weather5 %(9)%
Statistics by State
Oklahoma
Average number of customers (in thousands)
934928
Actual degree days
1,9161,681
Normal degree days
1,7971,800
Percent colder (warmer) than normal weather
7 %(7)%
Kansas
Average number of customers (in thousands)
659656
Actual degree days
2,6102,201
Normal degree days
2,4862,460
Percent colder (warmer) than normal weather
5 %(11)%
Texas
Average number of customers (in thousands)
712706
Actual degree days
987859
Normal degree days
948959
Percent colder (warmer) than normal weather
4 %(10)%
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