ONE Gas, Inc. (OGS) Q1 2026 Earnings Call Transcript – Image for illustrative purposes only (Image credits: Pixabay)
ONE Gas, Inc. reported stronger-than-expected first-quarter 2026 results, even as unusually mild weather across its service areas curbed natural gas demand. The utility company affirmed its full-year guidance, highlighting operational efficiencies and regulatory wins that offset the weather’s drag. Executives emphasized the firm’s preparedness, including expanded storage that shielded customers from price spikes during a brief cold snap.[1][2]
Weather Challenges Highlight Business Strength
Temperatures in Kansas, Oklahoma, and Texas ranked among the warmest on record, with the region 25% warmer than the prior-year quarter and 20.5% above normal. This marked one of the mildest winters since tracking began in 1895 for some areas. Winter Storm Fern brought temporary cold in January, but overall volumes suffered.[1]
CEO Robert S. McAnnally noted the company’s resilience during the call: “We delivered strong results in the first quarter, with adjusted EPS growing 6% year-over-year, despite one of the warmest winters in the history of our service territory.”[1] Expanded storage capacity, up 20% since Winter Storm Uri, saved $98 million by avoiding spot-market purchases. Weather normalization mechanisms further cushioned the earnings hit, though cash flows felt the pinch from lower gas monetization.
Financial Results Show Gains Across Key Lines
Adjusted net income reached $133.4 million, or $2.11 per diluted share, up from $120.1 million, or $1.99 per share, a year earlier. GAAP net income rose to $128.7 million, or $2.04 per share, from $119.4 million, or $1.98. Revenues dipped to $831.7 million from $935.2 million, reflecting lower volumes, but operating income climbed to $189.6 million from $180.5 million.[2][1]
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Adjusted Net Income | $133.4M | $120.1M | +11.1% |
| Adjusted EPS | $2.11 | $1.99 | +6.0% |
| Revenues | $831.7M | $935.2M | -11.1% |
| Operating Income | $189.6M | $180.5M | +5.0% |
New rates added about $27 million to revenues. Depreciation and amortization fell 6%, while interest expense dropped 9%, aided by Texas legislation and prior rate cuts. Operations and maintenance expenses rose 8.6%, driven by employee costs and higher line-locating activity from fiber builds. Capital investments hit $170 million, matching last year.[1]
Regulatory Progress Supports Steady Growth
Oklahoma Natural Gas filed for a $28.7 million performance-based rate adjustment, effective late June. Texas Gas Service sought $36.9 million via its Gas Reliability Infrastructure Program, targeting July implementation. Kansas Gas Service plans a third-quarter filing under expanded Gas System Reliability Surcharge rules, which now cover broader investments and raise the residential cap to $1.35 monthly.[1]
These moves align with ONE Gas’s strategy to recover infrastructure costs without full rate cases until 2027 in Oklahoma. The firm earned its ninth straight Safety Achievement Award from the American Gas Association for low injury rates. Balance sheet strength persists, with an adjusted cash flow to debt ratio of 19.1% for 2025 and solid credit ratings.
Projects and Capital Deployment on Track
President and COO Curtis Dinan updated on growth initiatives, including the Western Farmers pipeline project – a 43-mile, 24-inch line in southern Oklahoma set for 2028 service. Right-of-way acquisition and design remain on schedule. Full-year capital spending guidance holds at $800 million, with $230 million for customer extensions.[1][2]
Equity issuance under an at-the-market program advanced, with forward sales yielding potential proceeds of $41.5 million if settled. The board maintained its quarterly dividend at $0.68 per share.
Outlook Remains Firm Amid Evolving Conditions
ONE Gas reaffirmed 2026 guidance: adjusted net income of $306 million to $314 million ($4.83 to $4.95 per diluted share) and GAAP net income of $294 million to $302 million ($4.65 to $4.77). Long-term targets include 7-9% net income growth and 5-7% per-share growth. Executives expect O&M growth of 3-4% annually over five years, with storage cash flows normalizing later in the year.[2]
For investors and customers alike, the quarter underscores ONE Gas’s ability to navigate weather volatility through smart infrastructure and regulatory agility. As large-load projects progress, the utility positions itself for sustained expansion in a shifting energy landscape.