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ONE Gas (OGS) Q1 Earnings Miss Estimates, Warm Weather Hurts

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ONE Gas Inc. (OGS - Free Report) reported first-quarter 2020 earnings of $1.72 per share, lagging the Zacks Consensus Estimate of $1.78 by 3.4%.

The figure also declined 2.3% from the year-ago earnings, primarily due to warmer weather in its service territories, which in turn adversely impacted demand for natural gas.

Total Revenues

The company recorded total revenues of $528 million in the first quarter, which missed the Zacks Consensus Estimate of $632 million by 16.5%. Revenues also declined 20.1% from the year-ago level.

ONE Gas, Inc. Price, Consensus and EPS Surprise

ONE Gas, Inc. Price, Consensus and EPS Surprise

ONE Gas, Inc. price-consensus-eps-surprise-chart | ONE Gas, Inc. Quote

Quarterly Highlights

Natural gas sales volume of 72.6 billion cubic feet (Bcf) in the reported quarter was down 16% year over year, primarily due to warmer weather. Total volumes delivered at the end of the quarter were 138 Bcf, down 9% from the year ago period.

Total operating expenses in the reported quarter were marginally up 0.3% from the year-ago figure to $168.8 million.

Operating income in the reported quarter increased 4.4% year over year to $133.2 million. The improvement was attributed to residential customer growth, and new rates in Kansas and Texas. At the end of the first quarter, the company’s customer base rose 0.8% from the year-ago quarter.  
The company incurred interest expenses of $15.7 million, down 0.6% from the prior-year figure.

Financial Highlights

As of Mar 31, 2020, ONE Gas had cash and cash equivalents of $11.1 million compared with $17.9 million at the end of 2019.

Long-term debt (excluding current maturities) was $1,286.1 million as of Mar 31, 2020, in line with the 2019-end figure.

The company’s cash flow from operating activities in first-quarter 2020 was $182.7 million compared with $122.9 million in the year-ago period.

Guidance

ONE Gas reiterated its 2020 guidance for net income in the range of $186-$198 million. Its earnings per share guidance are projected in the range of $3.44-$3.68. The midpoint of management’s 2020 EPS guidance is $3.56, lower than the current Zacks Consensus Estimate of $3.60 for the period.

The company expects a negative impact on earnings from lower revenues and net incremental expenses, including bad debt costs associated with the COVID-19 pandemic.

Zacks Rank

Currently, ONE Gas carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Sempra Energy (SRE - Free Report) is slated to release first-quarter 2020 earnings on May 4. The Zacks Consensus Estimate for earnings per share for the to-be-reported quarter is pegged at $1.94.

Atmos Energy Corporation (ATO - Free Report) is scheduled to release second-quarter fiscal 2020 results on May 6. The Zacks Consensus Estimate for earnings per share for the to-be-reported quarter is pegged at $1.94.

National Fuel Gas Company (NFG - Free Report) is set to release second-quarter fiscal 2020 results on May 7. The Zacks Consensus Estimate for earnings per share for the to-be-reported quarter is pegged at 98 cents.

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