2015 Net Income Guidance Increased
Five-year Financial and Dividend Growth Rates Updated
ONE Gas, Inc. (OGS) today announced that its 2016 net income is expected to be in the range of $127 million to $137 million, or approximately $2.40 to $2.60 per diluted share. The midpoint for ONE Gas’ 2016 net income guidance is $132 million, or $2.50 per diluted share.
ONE Gas expects 2015 net income to be in the range of $118 million to $120 million due primarily to lower operating expenses. The previous guidance range of $113 million to $118 million was provided on Oct. 28, 2015.
ONE Gas’ 2016 earnings guidance primarily reflects the benefit of new rates and residential customer growth in Texas and Oklahoma. These benefits are offset partially by higher employee-related costs and higher depreciation expense due to capital investments.
Capital expenditures are expected to be $305 million in 2016. More than 70 percent of these expenditures are targeted for system integrity and replacement projects.
Guidance estimates may be impacted by the variables listed in the forward-looking statements below. Additional information is available in the guidance table on the ONE Gas website.
FIVE-YEAR GROWTH FORECAST UPDATED
ONE Gas expects net income and earnings per share to increase by an average of 5 to 8 percent annually between 2015 and 2020. ONE Gas’ rate base is expected to grow an average of approximately 5 percent per year between 2015 and 2020. The impact of bonus depreciation from the recently enacted federal legislation has been reflected in this guidance.
Capital expenditures are expected to be in the range of $305 million to $325 million per year between 2016 and 2020.
ONE Gas is increasing its expected average annual dividend growth rate to 8 to 10 percent between 2015 and 2020, compared with the previous estimated range of 6 to 8 percent between 2014 and 2019, with a target dividend payout ratio of 55 to 65 percent of net income, all subject to its board of directors’ approval.
LINK TO GUIDANCE TABLE
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES
ONE Gas has disclosed in the guidance table 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. Cash flow from operations before changes in working capital is defined as net income adjusted for depreciation and amortization, deferred income taxes and certain other noncash items.
The non-GAAP financial measure described above is useful to investors as an indicator of financial performance of the company’s investments to generate cash flows sufficient to support our capital expenditure programs and pay dividends to our investors. ONE Gas cash flow from operations before changes in working capital should not be considered in isolation or as a substitute for net income or any other measure of financial performance presented in accordance with GAAP.
This non-GAAP financial measure excludes some, but not all, items that affect net income. Additionally, this calculation may not be comparable with similarly titled measures of other companies. A reconciliation of cash flow from operations before changes in working capital is included in the guidance table.
ONE Gas, Inc. (OGS) is a natural gas distribution company and the successor to the company founded in 1906 as Oklahoma Natural Gas Company, which became ONEOK, Inc. (OKE) in 1980. On Jan. 31, 2014, ONE Gas officially separated from ONEOK into a stand-alone, 100 percent regulated, publicly traded natural gas utility.
ONE Gas trades on the New York Stock Exchange under the symbol “OGS,” and is included in the S&P MidCap 400 Index.
ONE Gas provides natural gas distribution services to more than 2 million customers in Oklahoma, Kansas and Texas. ONE Gas is one of the largest publicly traded, 100 percent regulated, natural gas utilities in the United States.
ONE Gas is headquartered in Tulsa, Okla., and its companies include the largest natural gas distributor in Oklahoma and Kansas, and the third largest in Texas, in terms of customers.
Its largest natural gas distribution markets by customer count are Oklahoma City and Tulsa, Okla.; Kansas City, Wichita and Topeka, Kan.; and Austin and El Paso, Texas. ONE Gas serves residential, commercial, industrial, transportation and wholesale customers in all three states.