Core Points - ONE Gas, Inc. will release its third quarter 2025 financial results on November 3, 2025, after market close [1] - The conference call to discuss these results will take place on November 4, 2025, at 11 a.m. Eastern Standard Time [2] - ONE Gas is a regulated natural gas utility and is included in the S&P MidCap 400 Index, serving over 2.3 million customers across Kansas, Oklahoma, and Texas [3][4] Company Overview - ONE Gas operates divisions including Kansas Gas Service, Oklahoma Natural Gas, and Texas Gas Service, making it one of the largest natural gas utilities in the U.S. [3][4] - The company is headquartered in Tulsa, Oklahoma, and provides reliable and affordable energy choices [4]

Core Viewpoint - ONE Gas (OGS) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that may lead to increased stock prices [1][3]. Earnings Estimates and Stock Price Movement - Changes in a company's future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [4]. - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, influencing their buying and selling decisions, which in turn affects stock prices [4]. ONE Gas Earnings Outlook - For the fiscal year ending December 2025, ONE Gas is expected to earn $4.34 per share, which remains unchanged from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for ONE Gas has increased by 1.4%, indicating a positive trend in earnings estimates [8]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks generating an average annual return of +25% since 1988 [7]. - The upgrade of ONE Gas to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Industry Overview - Natural gas distribution companies transport natural gas from production regions to consumers across the U.S., with a significant underground pipeline network of 2.6 million miles [2] - The shale revolution has increased natural gas production, leading to higher demand due to its clean-burning nature [2] - The U.S. has 3,353 trillion cubic feet of natural gas, and the industry faces challenges such as aging infrastructure and rising investment costs due to interest rate hikes [2] Future Outlook - The U.S. Energy Information Administration (EIA) projects that domestic dry natural gas production will increase in 2025, particularly in the Permian Basin [3] - EIA expects U.S. liquefied natural gas (LNG) export volumes to rise by 25% year-over-year in 2025 and by 6.7% in 2026, highlighting the importance of gas pipelines for transportation to export terminals [3] Interest Rate Impact - The Federal Reserve's recent interest rate cut of 100 basis points to a range of 4.25-4.5% is expected to benefit capital-intensive utilities, allowing for easier access to financing for infrastructure upgrades [4] - Further rate cuts are anticipated in 2026, which would positively impact utility operators planning large investments [4] Competitive Landscape - Natural gas faces increasing competition from renewable energy sources, which are becoming cheaper and more reliable due to advancements in technology and battery storage [5] - The rise of on-site generation reduces reliance on long-distance infrastructure, posing economic risks for new pipeline investments [5] Industry Performance - The Zacks Utility Gas Distribution industry currently ranks 190, placing it in the bottom 22% of the 245 Zacks industries, indicating weak near-term prospects [6] - Earnings estimates for the industry have decreased by 20.9% since September 31, 2024, reflecting a negative outlook [7] Stock Market Performance - Over the past year, the Gas Distribution industry has gained 6.5%, outperforming the Utility sector's growth of 5.4% but lagging behind the Zacks S&P 500 composite's 19.9% increase [9] Valuation Metrics - The industry is trading at a trailing 12-month EV/EBITDA ratio of 11.28X, compared to 18.35X for the Zacks S&P Composite 500 and 15.06X for the sector [12] - Historical trading ranges for the industry have been between 9.55X and 12.4X, with a median of 10.9X over the past five years [12] Company Highlights - **Sempra Energy (SRE)**: Plans to invest $56 billion from 2025-2029, with a current dividend yield of 3.09% and long-term earnings growth projected at 7.01% [18][19] - **Atmos Energy (ATO)**: Invested $2.94 billion in fiscal 2024 and plans to invest $3.7 billion in fiscal 2025, with a current dividend yield of 2.1% and long-term growth of 7.32% [22][23] - **New Jersey Resources (NJR)**: Aims to invest $650-$770 million in fiscal 2025 and $655-$835 million in fiscal 2026, with a current dividend yield of 3.82% [26][27] - **ONE Gas Inc. (OGS)**: Plans to invest $4 billion through 2029, with a current dividend yield of 3.53% and long-term growth projected at 5.56% [30][31]

Core Viewpoint - ONE Gas, Inc. (OGS) is positioned as a strong investment option in the utility sector due to its expanding customer base and strategic investments aimed at improving infrastructure and service efficiency [1] Growth Forecasts for OGS - The Zacks Consensus Estimate for 2025 earnings per share (EPS) has increased by nearly 1.4% to $4.34 [2] - The Zacks Consensus Estimate for 2025 sales is projected at $2.44 billion, reflecting a year-over-year increase of 17% [2] - OGS' long-term earnings growth rate is estimated at 5.56% over the next three to five years [2] Debt Position of OGS - OGS has a total debt to capital ratio of 40.44%, which is better than the industry average of 51.09% [3] - The time-to-interest earned ratio at the end of Q2 2025 was 3, indicating the company's strong ability to meet future interest obligations [3] OGS Benefits From Systematic Investments - The company plans a capital investment of $750 million in 2025, focusing on pipeline integrity, service extension, system capacity increase, and cybersecurity [4] - OGS anticipates EPS growth of 4-6% annually through 2029 [4] OGS' Expanding Customer Base - Since 2015, OGS has consistently increased its customer base, with an expected average annual growth of 0.9% through 2028 [5] - As of Q2 2025, OGS served 2,302,000 customers, marking a 0.8% year-over-year increase [5] - The 2025 capital investments include approximately $180 million dedicated to customer growth [5] OGS' Dividend History - OGS is expected to provide an average annual dividend increase of 1-2% through 2029, contingent on board approval [6] - The current quarterly dividend is 67 cents per share, leading to an annualized dividend of $2.68, with a current dividend yield of 3.53% [6] OGS' Stock Price Performance - In the past month, OGS stock has risen by 2.7%, compared to the industry's growth of 2.5% [9]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing their offerings in this area [1] - The publication of thousands of quarterly earnings calls per quarter suggests a significant volume of content being generated and shared with readers [1] - The ongoing growth and expansion of coverage highlight the company's strategic direction towards increasing its market presence and service offerings in transcript-related services [1]

Group 1 - ONE Gas, Inc. will participate in the American Gas Association Mini-Forum on September 15-16, 2025, in Boston, with senior executives conducting meetings with the investment community [1] - ONE Gas is a 100-percent regulated natural gas utility, trading on the NYSE under the symbol "OGS," and is included in the S&P MidCap 400 Index [2] - The company serves over 2.3 million customers across Kansas, Oklahoma, and Texas, with divisions including Kansas Gas Service, Oklahoma Natural Gas, and Texas Gas Service [3] Group 2 - The board of directors of ONE Gas declared a quarterly dividend of 67 cents per share of common stock, payable on September 3, 2025 [6]

Core Viewpoint - ONE Gas (OGS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Recent Performance of ONE Gas - ONE Gas is expected to earn $4.33 per share for the fiscal year ending December 2025, showing no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for ONE Gas has increased by 1.5%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks generating an average annual return of +25% since 1988 [7]. - The upgrade of ONE Gas to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - ONE Gas, Inc. (OGS) is positioned as a strong investment option in the utility sector due to its 100% regulated operations, customer base expansion, and strategic investments aimed at improving infrastructure and service efficiency [1] Group 1: Growth Projections - The Zacks Consensus Estimate for OGS's 2025 earnings per share (EPS) has risen by nearly 1.2% over the past 90 days to $4.32 [2] - The Zacks Consensus Estimate for 2025 sales is projected at $2.43 billion, reflecting a year-over-year increase of 16.6% [2] - OGS's long-term earnings growth rate is estimated at 5.56% over the next three to five years [2] Group 2: Dividend History - OGS plans to reward shareholders with an average annual dividend increase of 1-2% through 2029, contingent on board approval [3] - The current quarterly dividend stands at 67 cents per share, leading to an annualized dividend of $2.68 [3] - OGS's current dividend yield is 3.57%, significantly higher than the Zacks S&P 500 composite's yield of 1.16% [3] Group 3: Debt Position - OGS's total debt to capital ratio is 40.44%, which is better than the industry average of 51.09% [4] - The time-to-interest earned ratio at the end of Q2 2025 was 3, indicating the company's strong ability to meet future interest obligations [4] Group 4: Systematic Investments & Customer Growth - OGS's capital investment for 2025, including asset removal costs, is expected to be $750 million, with nearly $180 million allocated for customer extensions [5][8] - The ongoing capital expenditures focus on pipeline integrity, service extensions, system capacity increases, and cybersecurity [5] - Since 2015, OGS has consistently increased its customer base, with a 0.8% year-over-year growth in Q2 2025, serving 2,302,000 customers [6][8] - An average annual customer growth of 0.9% is anticipated through 2028 [6][8] Group 5: Price Performance - OGS's stock has increased by 4% over the past six months, outperforming the industry's growth of 2.2% [7]

Core Viewpoint - MDU Resources is currently viewed as a superior value option compared to ONE Gas based on various valuation metrics [7] Valuation Metrics - MDU Resources has a forward P/E ratio of 17.18, while ONE Gas has a forward P/E of 17.45 [5] - MDU's PEG ratio is 2.48, indicating a more favorable expected earnings growth rate compared to ONE Gas's PEG ratio of 3.14 [5] - MDU has a P/B ratio of 1.22, compared to ONE Gas's P/B ratio of 1.42, suggesting MDU is more undervalued relative to its book value [6] Earnings Outlook - Both MDU Resources and ONE Gas have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook [3]

[Part I. Financial Information](index=8&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Consolidated Financial Statements](index=8&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's unaudited statements show increased net income and total assets of $8.36 billion as of June 30, 2025 Consolidated Statements of Income Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Total revenues** | $1,358,931 | $1,112,457 | | **Operating income** | $252,354 | $215,140 | | **Net income** | $151,452 | $126,560 | | **Diluted EPS** | $2.51 | $2.23 | Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $8,359,141 | $8,425,571 | | **Total Liabilities** | $5,174,806 | $5,321,023 | | **Total Equity** | $3,184,335 | $3,104,548 | | **Total Long-Term Debt (net)** | $2,370,863 | $2,385,286 | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Cash from Operating Activities** | $448,809 | $250,926 | | **Cash used in Investing Activities** | $(348,511) | $(341,776) | | **Cash provided by (used in) Financing Activities** | $(136,114) | $83,929 | [Note 2. Revenue](index=15&type=section&id=Note%202.%20Revenue) Total revenues grew to $1.36 billion for the first six months of 2025, driven by higher natural gas sales Disaggregated Revenue (Six Months Ended June 30) | Revenue Source | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Natural gas sales to customers | $1,239,435 | $987,856 | | Transportation revenues | $74,465 | $69,554 | | Securitization customer charges | $24,842 | $23,226 | | Miscellaneous revenues | $13,317 | $12,065 | | **Total revenues from contracts with customers** | **$1,352,059** | **$1,092,701** | [Note 3. Regulatory Assets and Liabilities](index=16&type=section&id=Note%203.%20Regulatory%20Assets%20and%20Liabilities) Net regulatory liabilities increased to $211.3 million by June 30, 2025, due to changes in various regulatory accounts Net Regulatory Assets and Liabilities | Date | Total Regulatory Assets (in thousands) | Total Regulatory Liabilities (in thousands) | Net Position (in thousands) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $310,087 | $(521,417) | $(211,330) | | Dec 31, 2024 | $379,216 | $(490,088) | $(110,872) | - Amortization of regulatory assets, representing recovery through rates, was **$7.4 million** for the six months ended June 30, 2025, compared to **$9.5 million** for the same period in 2024[44](index=44&type=chunk) [Note 4 & 5. Credit Facility and Long-Term Debt](index=17&type=section&id=Note%204%20%26%205.%20Credit%20Facility%20and%20Long-Term%20Debt) The company maintained a total debt-to-capital ratio of 50.7% with $2.40 billion in long-term debt as of June 30, 2025 - The company has a **$1.35 billion** revolving credit facility and a commercial paper program of the same amount, with **$872.4 million** of commercial paper outstanding at June 30, 2025[45](index=45&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) Long-Term Debt Composition (June 30, 2025) | Debt Instrument | Amount (in thousands) | | :--- | :--- | | Total Senior Notes | $2,150,000 | | KGSS-I Securitized Utility Tariff Bonds | $272,798 | | **Total long-term debt, net** | **$2,400,627** | - The company's total debt-to-capital ratio was **50.7%** at June 30, 2025, in compliance with the credit agreement's covenant of no more than 70%[46](index=46&type=chunk) [Note 6. Equity](index=18&type=section&id=Note%206.%20Equity) The company initiated a forward sale agreement for 2.5 million shares and maintained a $225.5 million ATM program - In May 2025, the company entered into a forward sale agreement for **2.5 million shares** of common stock[53](index=53&type=chunk) - As of June 30, 2025, the company had **$225.5 million** of equity available for issuance under its at-the-market (ATM) program[54](index=54&type=chunk) - A dividend of **$0.67 per share** was declared in August 2025, payable in September 2025[55](index=55&type=chunk) [Note 12. Commitments and Contingencies](index=22&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company manages environmental remediation costs for former MGP sites and complies with federal pipeline safety regulations - The company is responsible for environmental conditions at **12 former MGP sites** in Kansas and is governed by a consent agreement with the KDHE for investigation and remediation[72](index=72&type=chunk)[73](index=73&type=chunk) - In July 2025, the KCC approved an increase in the cap for the Accounting Authority Order (AAO) to recover MGP remediation costs to **$32.0 million** from $15.0 million[74](index=74&type=chunk) - The company is subject to federal pipeline safety regulations from PHMSA, and new rules under the PIPES Act could require material expenditures[79](index=79&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income rose to $151.5 million in H1 2025, driven by new rates and customer growth, with robust liquidity and ongoing regulatory activities [Regulatory Activities](index=28&type=section&id=Regulatory%20Activities) The company is actively pursuing and has received approvals for rate increases across Oklahoma, Kansas, and Texas - **Oklahoma:** A settlement for a **$41.1 million** base rate revenue increase was approved by the OCC in July 2025[103](index=103&type=chunk) - **Kansas:** The KCC approved a **$7.2 million** increase related to the Gas System Reliability Surcharge (GSRS), effective August 2025[104](index=104&type=chunk) - **Texas:** Filed a rate case for a **$41.1 million** revenue increase and received approvals for GRIP filings in the West-North and Central-Gulf areas totaling **$23.6 million**[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Financial Results and Operating Information](index=29&type=section&id=Financial%20Results%20and%20Operating%20Information) Operating income increased 17% year-over-year to $252.4 million, driven by new rates and customer growth Selected Financial Results (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $1,359.0 | $1,112.5 | 22% | | Cost of natural gas | $630.4 | $455.0 | 39% | | Operating income | $252.4 | $215.1 | 17% | - The **$37.3 million increase** in six-month operating income was primarily due to an increase of **$73.0 million** from new rates and **$3.9 million** from net customer growth, partially offset by higher expenses[117](index=117&type=chunk)[122](index=122&type=chunk) - The average total number of customers increased by **16,000** to 2,303,000 for the six months ended June 30, 2025, compared to the same period in 2024[124](index=124&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong, supported by operating cash flow and a $1.35 billion credit facility, with 2025 capex projected at $750 million - Primary liquidity sources are operating cash flow and commercial paper, supported by a **$1.35 billion** revolving credit facility[128](index=128&type=chunk)[133](index=133&type=chunk) Credit Ratings (as of June 30, 2025) | Rating Agency | Long-term Rating | Short-term Rating | Outlook | | :--- | :--- | :--- | :--- | | Moody's | A3 | Prime-2 | Stable | | S&P | A- | A-2 | Stable | - Full-year 2025 capital expenditures and asset removal costs are expected to be approximately **$750 million**[123](index=123&type=chunk) [Cash Flow Analysis](index=35&type=section&id=Cash%20Flow%20Analysis) Operating cash flow increased significantly to $448.8 million due to favorable working capital changes Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Operating Cash Flow | $448.8 | $250.9 | | Investing Cash Flow | $(348.5) | $(341.8) | | Financing Cash Flow | $(136.1) | $83.9 | - The increase in operating cash flow was primarily due to working capital changes related to the recovery of regulatory assets[146](index=146&type=chunk) - The increase in cash used in financing activities was primarily due to the repayment of notes payable[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks, including commodity, interest-rate, and credit risk, are actively managed and mitigated - Commodity price risk from natural gas price fluctuations is mitigated by purchased-gas cost adjustment mechanisms, which pass costs to customers without profit[169](index=169&type=chunk) - Interest-rate risk exists from commercial paper borrowings and future debt financing needs, which the company may manage using fixed-rate debt and swaps[171](index=171&type=chunk) - Counterparty credit risk is not material due to a large, diversified customer base of approximately **2.3 million** and tariff provisions for security deposits[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[173](index=173&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[174](index=174&type=chunk) [Part II. Other Information](index=41&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing litigation from normal business operations is not expected to have a material adverse effect on the company's financials - The company states that it is involved in various litigation matters from the normal course of operations, but believes the outcomes will not have a material adverse effect on its financials[175](index=175&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This report references the risk factors disclosed in the company's Annual Report, with no material changes noted - The report directs investors to consider the risks set forth in the company's Annual Report, noting that no material changes have occurred in the risk factors[176](index=176&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including governance documents, underwriting agreements, and officer certifications - Key exhibits filed include an Underwriting Agreement and a Forward Sale Agreement, both dated May 8, 2025, related to a common stock offering[182](index=182&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[182](index=182&type=chunk)