OGS

It has been about a month since the last earnings report for ONE Gas (OGS). Shares have added about 0.9% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is ONE Gas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. OGS Q2 Earnings Surpass Estimates on Higher Rates, Sales DeclineONE Gas, Inc. reported second-quarter 2026 adjusted earnings of 82 cents per share, beating the Zacks Consensus Estimate of 65 cents by 26.2%. The bottom line surged 51.9% from 54 cents in the year-ago quarter, aided by higher revenues from new rates and lower net interest expense. ONE Gas recorded revenues of $411.64 million, which missed the Zacks Consensus Estimate of $440 million by 6.5%. The top line also decreased 2.9% from $423.74 million in the prior-year quarter. Natural gas sales were $357.8 million, down 3.2% from $369.5 million in the second quarter of 2025. Transportation revenues increased 2.6% to $31.8 million, while other revenues rose 11% to $11.1 million. Securitization customer charges declined 17.4% to $10.9 million.The company generated $16.4 million of incremental revenues from new rates, $1.4 million from higher residential sales, primarily reflecting customer growth in Oklahoma and Texas, and $1.3 million from increased line-extension revenues in Oklahoma. Total natural gas volumes delivered were 66.6 billion cubic feet, down 1.5% on a year-over-year basis. OGS served 2,308,000 customers, up 0.3% year over year. Sales volumes fell 15.9% to 15.9 billion cubic feet, while transportation volumes increased 4.1% to 50.7 billion cubic feet.Total operating expenses were $238.7 million, up 2% year over year. The increase was due to higher operations and maintenance expenses, which rose 6.6% to $139.6 million, reflecting higher employee-related costs, outside services and fleet expenses.Operating income totaled $82.7 million, up 15% from $71.9 million recorded in the year-ago quarter.Net interest expense declined 11.8% to $31.1 million, primarily due to lower-rate commercial paper borrowings and the implementation of Texas House Bill 4384. These factors supported the sharp year-over-year improvement in adjusted earnings.Texas Gas Service received approval for a $36.9 million revenue increase under its Gas Reliability Infrastructure Program. The new rates became effective in July 2026, supporting the recovery of investments in system reliability. Cash and cash equivalents were $7.9 million at June 30, 2026 and $10.6 million at Dec. 31, 2025. Total cash, cash equivalents and restricted cash and cash equivalents were $30.6 million and $33.7 million, respectivelyAs of June 30, 2026, total long-term debt (excluding current maturities) was $2.34 billion, down from $2.36 billion as of Dec. 31, 2025.Cash provided by operating activities totaled $387.3 million during the first six months of 2026, down from $448.8 million in the comparable 2025 period. Capital expenditures totaled $330 million compared with $347.1 million a year ago. OGS expects its 2026 adjusted net income in the range of $306-$314 million. The company projects 2026 adjusted earnings of $4.83-$4.95 per share, with management now expecting results to fall within the upper half of this range. The Zacks Consensus Estimate for EPS is pegged at $4.91, which is slightly above the midpoint of the company’s guided range.In 2026, OGS plans to make capital investments, including asset removal costs, of $800 million and nearly $230 million for new customer extensions. Investors have witnessed a upward trend in fresh estimates over the past two months. At this time, ONE Gas has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. ONE Gas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ONE Gas, Inc. (OGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

MDU Resources MDU benefits from strategic capital investments that strengthen its regulated utility and pipeline infrastructure, support rising customer demand and improve system reliability. These investments also strengthen rate-base growth, support timely regulatory recovery and drive revenue growth.The company plans capital investments of nearly $3.1 billion through 2030, including about $1.1 billion in electric, $1.4 billion in natural gas distribution and $0.64 billion in pipeline investments. These projects are aimed at upgrading and modernizing infrastructure, meeting rising customer demand and supporting system reliability.MDU also has significant pipeline growth opportunities. The proposed Bakken East Pipeline has nearly 1.2 billion cubic feet (Bcf) per day of contracted capacity and could require $2.7-$3.2 billion in additional investment if approved. The project would expand MDU’s pipeline footprint, strengthen long-term growth prospects and support earnings growth.MDU expects its customer base to grow 1-2% annually and has more than 1 gigawatt of data center load under signed electric service agreements. Its capital investments are expected to drive long-term earnings growth of 6-8%.Overall, capital investments can expand MDU’s regulated rate base, while regulatory mechanisms can support the timely recovery of eligible costs and returns on approved investments. This creates a foundation for revenues, cash flow and long-term earnings growth. Regulated gas distribution companies are increasing capital investments to replace aging pipelines, expand distribution networks and enhance system reliability as customer demand grows. These investments can expand the regulated rate base and support long-term earnings growth through approved regulatory recovery.ONE Gas OGS plans to invest approximately $4.3 billion through 2030 in system integrity, pipeline replacements and customer extensions, supporting 7-9% annual rate-base growth and earnings.Southwest Gas Holdings SWX aims to invest $6.3 billion during 2026-2030, focused on safety, new business and system upgrades, supporting a 9.5-11.5% rate-base compound annual growth rate and customer expansion. The Zacks Consensus Estimate for 2026 and 2027 EPS indicates a year-over-year increase of 5.38% and 7.91%, respectively. Image Source: Zacks Investment Research MDU's debt-to-capital ratio currently stands at 46.82%, lower than the gas distribution industry’s 54.52%. Image Source: Zacks Investment Research In the past year, the company’s shares have risen 23.6% compared with the industry’s 7.2% growth. Image Source: Zacks Investment Research MDU Resources currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report Southwest Gas Corporation (SWX) : Free Stock Analysis Report ONE Gas, Inc. (OGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

In recent days, analysts highlighted that Atmos Energy, ONE Gas, and MDU Resources are set to benefit from rising natural gas demand and ongoing infrastructure investments, supported by disciplined capital spending plans and modest upgrades to earnings estimates. This renewed focus on sector-wide infrastructure investment and a firmer earnings outlook has reinforced investor confidence in ONE Gas despite aging networks and competition from renewables. Now we’ll examine how this improved earnings outlook tied to infrastructure spending could reshape ONE Gas’s broader investment narrative for investors. Find 49 companies with promising cash flow potential yet trading below their fair value. To own ONE Gas, you need to believe regulated natural gas distribution across its core regions can justify sustained infrastructure spending and support stable earnings over time. The recent analyst upgrades to earnings estimates appear supportive but do not materially change the near term balance between the key catalyst of constructive infrastructure-driven earnings and the ongoing risk that high capital needs outpace timely regulatory recovery. The most relevant recent announcement alongside this sector news is ONE Gas’s Q2 2026 result, where net income and EPS increased year over year despite lower sales. For many investors, that combination of earnings resilience and continuing capital investment is central to the thesis that infrastructure spending can still translate into acceptable returns, provided regulators remain supportive and cost pressures are contained. But investors should also be aware that if capital spending for safety and growth keeps rising faster than regulators allow recovery, then ... Read the full narrative on ONE Gas (it's free!) ONE Gas’ narrative projects $2.6 billion revenue and $354.9 million earnings by 2029. Uncover how ONE Gas' forecasts yield a $90.22 fair value, a 12% upside to its current price. Simply Wall St Community members currently offer just one fair value estimate of US$68.09 per share, reminding you that individual views can differ sharply from market pricing. You can weigh that against the sector’s improved earnings outlook tied to infrastructure investment and consider how sustained high capital expenditure needs might ultimately affect ONE Gas’s ability to convert that spending into shareholder value. Explore another fair value estimate on ONE Gas - why the stock might be worth 15% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your ONE Gas research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Our free ONE Gas research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate ONE Gas' overall financial health at a glance. Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay: AI is about to change healthcare. These 40 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Uncover the next big thing with 22 elite penny stocks that balance risk and reward. We've uncovered the 12 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include OGS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 11 a.m. ET chief executive officer - Robert S. McAnnally senior vice president and chief financial officer - Christopher Paul Sighinolfi president and chief operating officer - Curtis L. Dinan Operator: Good day and welcome to the 1 Gas Second Quarter Earnings Conference Call and Webcast. Today's conference is being recorded. Erin Dailey: At this time, I would like to turn the conference over to Erin Dailey. Please go ahead, ma'am. Operator: Good morning, everyone, and thank you for joining us on our second quarter 2026 earnings conference call. This call is being webcast live and a replay will be available later today. After our prepared remarks, we are happy to take your questions. Erin Dailey: A reminder that statements made during this call that might include 1 Gas' expectations or predictions should be considered forward looking statements and are covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 2000 the Securities Act of 1.93 thousand and the Securities and Exchange Act of 1.93 thousand each as amended. Actual results could differ materially from those projected in any forward looking statement. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. This call will include financial results and guidance with respect to adjusted net income and adjusted net income per share which are non-GAAP financial measures as defined by the SEC. A reconciliation of the company's GAAP net income and GAAP earnings per share to adjusted net income and adjusted net income per share along with additional disclosures required by Regulation G are available in the earnings release that we issued yesterday. Joining us this morning are Sid McAnnally, chief executive officer Christopher Paul Sighinolfi, senior vice president and chief financial officer and Curtis Dinan, president and chief operating officer. And now I will turn the call over to Sid. Robert S. McAnnally: Thanks, Erin, and good morning, everyone. Our strong second quarter performance reflects solid execution across the business and the continued strength of our growth strategy. Supported by constructive jurisdictions. Adjusted EPS was $0.82 for the quarter, compared to $0.54 in the same period last year. Through the first half of the year, we have grown adjusted EPS by 16% over last year. Despite weather that was 25% warmer. Importantly, we delivered these results while keeping the average customer bill flat year over year and increasing our dividend. This balanced approach to operating a 100% regulated company is intentional. Our strategy is to strengthen our delivery system and grow the business through disciplined investment. While keeping our long term customer bill growth in line with inflation. Combined with the legislative and regulatory framework that supports investment, and economic development, We are able to deliver growth that is both durable and sustainable. The opportunity to serve large load customers continues to broaden across our service territory. Rising demand is being driven by ongoing electric load growth and the need for reliable, dispatchable energy. Interest from gas fired generation, data centers, and advanced manufacturing has grown meaningfully creating additional avenues for sustainable long term growth. We expect the factors driving our strong performance in the first half of this year to continue, and we now expect to achieve adjusted earnings within the upper half of our 2026 guidance range. We are confident in our outlook, which is supported by new rates taking effect, and continued customer growth along with ongoing benefits from constructive legislative developments in Kansas and Texas. I will turn it over to Christopher to discuss the details of our financial performance and regulatory activities. Christopher? Christopher Paul Sighinolfi: Thanks, Sid, and good morning, everyone. Adjusted net income for the second quarter $52.1 million $0.82 per diluted share, compared with $32.7 million or $0.54 in the same period last year. A 52% increase. On a GAAP basis, EPS $0.74 compared with $0.53 last year. A nearly 40% increase. These results were supported by approximately $16 million of new revenue from new rates and greater than anticipated benefits from Texas House Bill 4.38 thousand. As we have discussed previously, the Texas House Bill supports economic development by allowing natural gas utilities to defer depreciation expense and ad valorem taxes and accrue a carrying cost on capital expenditures between the time of project in service and its inclusion in rates. The impact will fluctuate by quarter based on the timing and amount of eligible capital placed into service. Given the cadence of our annual Grip filing, we generally expect the second quarter to represent a larger share of the annual benefit with a smaller contribution in the third quarter. This timing reflects how eligible investments are accrued before the annual GRIP filing takes effect. Once the filing is reflected in customer rates, the amount recognized through accruals declines in the third quarter before building again. With first half 2026 results complete, we now expect House Bill 84 to contribute approximately $0.42 to full year adjusted EPS. This expectation along with new rates and ongoing cost discipline, gives us confidence in raising our financial expectations for the full year. As I noted on our last quarter call, the warm winter weather created some positive offsets which we expected to see play out later in the year. And that has proven true. We consumed less gas for storage this winter, than we would have under normal conditions. Finishing the first quarter with inventory levels about 25% higher than we had planned. Higher spring storage balances mean we have less to inject this refill season. Creating the opportunity for capacity release in Kansas. The revenues from which we share 50/50 with customers. Net to our interests, we recognized about $900 thousand in related revenue during the second quarter and have realized a total of $2.8 million in capacity release revenues year to date. We believe an incremental $1.2 million in capacity release opportunities remain through the injection season. Second quarter O&M expenses increased approximately 6.6% year over year. Moderating from the first quarter increase. Line locating tickets largely related to fiber installation activity remain elevated, reflecting continued construction and economic activity across our service territories. We have also experienced increased fuel costs for from our fleet due to geopolitical unrest. We are not changing our 3% to 4% long-term guidance for annual O&M increases, however, and expect the sequential growth in overall O&M expenses to move meaningfully lower over the back half of this year. Excluding amounts related to KGSS January interest expense decreased by $3.8 million compared with the prior year. Due in part to lower commercial paper rates. Turning to equity. We have forward sale agreements in place which total $41.5 million. Roughly half our need for this year. We will continue to be opportunistic about issuing equity as we meet our remaining needs which given our trading liquidity, can easily be funded through our ATM program. Yesterday, the 1 Gas board of directors declared a dividend of $0.68 per share, unchanged from the previous quarter. Our financial guidance for the year remains adjusted net income of $306 million to $314 million and adjusted EPS of $4.83 to $4.95 but with strong first half performance, and the impact of the Texas legislation, we expect to achieve adjusted earnings within the upper half of these ranges. Or $310 million to $314 million and $4.89 to $4.95. Now I will turn to regulatory activity. Oklahoma Natural Gas filed its annual performance based rate change application in February, seeking a $28.7 million rate increase. At the hearing in June, the administrative law judge recommended approval of the application as filed. Interim rates subject to refund were implemented in late June. Texas Gas Service made its gas reliability infrastructure program filing in March requesting a $36.9 million revenue increase. In June, the Texas Railroad Commission approved the requested increase. And new rates became effective in July. This was our first statewide Grip filing, and the first to reflect the expanded benefits of Texas House Bill 4.38 thousand. Kansas Gas Service filed an application under the gas reliability surcharge statute in July. Seeking an approximately $14.3 million increase, with rates expected to take effect in October. The filing reflects the expanded recovery provisions under House Bill 35 which broadened eligible investments to all direct capital investments in Kansas, increase the maximum residential monthly surcharge to $1.35, from $0.80 and shorten the review period to 90 days from 120 days. We do not have any full rate cases planned, until we file the Oklahoma rate case in 2027 as required by tariff. And now, Curtis, I will turn things to you. Curtis L. Dinan: Thank you, Christopher, and good morning, everyone. I will start with an update on growth and capital deployment. We completed $188 million worth of capital projects this quarter, relatively in line with the same period last year. Growth across our service territory remains broad based, Through July, we installed 11 thousand new meters led by Oklahoma City and El Paso. Beyond this ongoing residential growth, we are advancing large load opportunities and currently have 3 high volume projects under contract. Together, they represent roughly $15 million of incremental annual revenue and $175 million of associated capital within service dates spanning the second half of 2026 through 2020. 1 of these projects is the Western Farmers Gas Fired Generation Project, which was announced late last year. We are preparing to bid the construction contract and expect to begin in installation early in 2027. The project remains on track for a Q3 2028 in-service date. It includes the construction of a 43-mile, 24-inch pipeline in Southern Oklahoma. The other 2 contracted projects are already in construction or commissioning. 1 of the projects is in El Paso to serve an advanced manufacturing facility and the other will serve a data center in Oklahoma. Both are expected to be placed in service this quarter. On our last earnings call, we noted 6 additional projects in late stage discussions that in aggregate, could support approximately 3 gigawatts of generation and up to 1 BCF per day of demand across Kansas, Oklahoma, and Texas. 1 of those 6 projects is the Oklahoma data center that I just mentioned, which is now not only under contract, but expected to be in service this quarter. This project highlights 1 of our strategies in pursuing large load opportunities. By leveraging our existing pipeline network, we can respond quickly to meet customer needs and create value for all customers. The remaining 5 projects are in late stage discussions and project scoping and represent our highest conviction prospects. We have 17 additional opportunities in early stages of evaluation and will provide updates as the projects advance. Turning to O&M. Our coworkers continue to drive improvements in workforce efficiency and safety. Second quarter line locating activity increased approximately 7% year over year while damages declined 6%. This highlights the operational benefits of bringing certain work in house. In addition to the insourcing prod progress on our line locating function, we have also in sourced 40% of the watch and protect function in Oklahoma and are on track to have that fully in sourced by year end. This initiative further demonstrates our focus on operational excellence, by enhancing safety and system integrity while driving more effective management of O&M expenses. And now I will turn it back over to Sid for closing remarks. Robert S. McAnnally: Thanks, Curtis. We operate in a region that continues to experience residential growth, driven by economic development. Kansas, Oklahoma, and Texas have business friendly policies regulatory frameworks that attract investment, and support growth. Our states also enjoy abundant natural gas resources. And extensive infrastructure, creating an attractive environment for large load customers. We are well positioned to serve this growing demand driving sustainable growth and shareholder value all while maintaining our commitment to safety, and affordability. Our performance over the first half of the year reflects the strength of our strategy, the quality of our execution, and our ability to capitalize on the opportunities before us. The disciplined focus of our coworkers and their commitment to safety and operational excellence continues to drive our success. I want to thank each of them for their contributions and dedication to serving our customers, and our communities. As we look forward, we continue to see a clear runway for growth and remain focused on serving our customers while generating attractive returns for our investors. With that, we will open the call for questions. Operator: Thank you. If you would like to ask a question, please press star 1. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will pause for a moment to allow everyone an opportunity to signal for questions. And your first question is from the line of Konstantin Lednev with Wells Fargo. Please go ahead. Alex: Hey, good morning. it is actually Alex on for Konstantin. Thanks for taking our questions. Just in terms of the capital allocation strategy on a go forward basis, with some of the improved regulatory constructs you have highlighted, do you see maybe a CapEx shift or pull forward of capital into better contract constructs with less ROE lag? And maybe just to frame that would you provide sort of a accretive opportunity within your current 5% to 7% longer-term? Curtis L. Dinan: Yeah. Alex, this is Curtis. And let me just talk first a little bit about how we think about capital in general. So the first thing capital focuses on is our system integrity spending, and that typically represents about 60% to 70% of our capital budget. So that is agnostic to regulatory treatment in any of our jurisdictions. that is purely driven by the needs of our system and the replacements we need to make. In terms of allocating other capital, our growth capital, that is driven mostly by what customer needs are and where those growth opportunities are taking place. We are seeing that in all 3 of our states and across the different types of projects that I mentioned in my comments and Sid also mentioned in his, whether that is utility scale generation, it is advanced manufacturing, or it is data center opportunities, Again, that exists in all 3 states. We are seeing a little bit higher level of activity with customers in the state of Texas, which as your question suggests, that is beneficial to us because of the legislation that we talked about earlier. So, where there is the opportunity where the greater opportunities are in Texas. That, again, is driven a lot by what the customer needs are and being able to respond to what is in the marketplace. Robert S. McAnnally: Alex, to your second question, you can expect us to continue to be very open handed in the reports that we offer the street relative to the capital projects in front of us. We have a great deal of confidence. In our execution going through the remainder of this year but we do not see limitations, in the years to come Your question about our 5 to 7, we offered that guidance in December 2025. And we will continue to execute this plan and look forward to the opportunity to speak to the investment community about 2027 later this year. Alex: Got it. That makes sense. And then just touching on the dividend policy, it is been credit supportive. So does the current policy of 1% to 2% growth still make sense with the improving cash flow metrics? And sort of where do you want to be over the longer term relative to your peers? Christopher Paul Sighinolfi: Alex, this is Christopher. You know, we that is a board decision. it is a discussion with them on a quarterly basis. But the 5 year plan that we communicated last December, the same plan Sid just referenced, did contemplate a 1% to 2% growth rate in the dividend annually through the duration of that plan, so through 2030. We think about it in a cash flow modeled basis. And a 100% regulated company as we are where we have actual capital structure, in our rate designs in all 3 states. We believe the best return on investment and the fastest earnings per share growth rates can be achieved as we self fund a greater percentage of our capital investments. And so the strategy around the dividend, the deceleration in dividend growth, which we put in place 3 years ago, was really driven to pivot our funding structure to be more self funded. From an equity perspective. You have seen the payout ratio. fall from 68% a couple of years ago an implied 57% on a GAAP basis this year. That will continue to moderate as our plan runs through. And the point of liftoff in terms of when are we satisfied that we have internally funded the gross strategy of the business and when can elevated levels of dividend growth be offered. that is gonna be an active conversation as we come into the planning process this fall. Alex: Great. I will leave it there. Thank you. Operator: Thanks for your questions, Alex. Next question is from the line of Richard Sunderland with Truist Securities. Richard Sunderland: Hey. Good morning, and thank you for the time today. I wanted to go back to the start of the script and that opportunity around the large load customers. You talked about interest across a number of avenues and growth there. Is reflective of kind of new inbounds you are seeing across generation, data centers, advanced manufacturing, or is this a continued trend that you have been speaking to for several quarters now? Just trying to get a sense of the customer side and maybe how that feeds into the 17 projects in other stages of evaluation also offered in the script. Curtis L. Dinan: Hey, Richard. This is Curtis. And these are normally kind of longer lead type of developments. So these are customers that we have been working with for a period of time. Developing the projects, trying to understand what their needs are. And as they go through their investment decision process, we are supporting them to think about options and how to how to approach the different opportunities. There are other projects in that mix of 17 that have come up much more quickly. Have gone very quick to we know that there is limited capacity in this area and we wanna secure that supply as we continue to finalize their investment decisions. So it is a mix of those. And, again, that is across all 3 states in each of those different categories that I was describing earlier. We continue to make progress on them. And as I have said in my comments, we will share more once, additional projects reach final investment decisions, and they are under contract with us. Richard Sunderland: Understood. that is that is helpful there. Thanks for running through that. And then just on the numbers themselves and I guess some of the O&M commentary in particular, You spoke to 1H versus 2H dynamics. Could you parse that a little bit more in terms of the O&M trajectory on a 2H basis that you are expecting? And is there any kind of knock on effects into 2027 on how you are staging some of that activity this year versus next? Robert S. McAnnally: Yeah. Richard, let me offer just a little bit of context and then ask Christopher to go into detail in responding to your question. We started some years ago. Looking at the opportunities that we had to in source certain work. And as we piloted those programs, we realized that not only could we match or beat the cost that we were experiencing externally, we saw a significant step up in the quality of the work that was being done. So over the last few years, we have been fairly aggressive in sourcing line locating and we are coming to a point in that project where we are finding the balance. That we saw a few years ago when we started. As Curtis said, we have shifted that over now to watch and protect. that is where we send folks out to watch our system when we know that there is construction around critical areas of the system. We are seeing the same level of performance there. So as we signal both in our first quarter call and in this call, we knew that we would see escalated O&M related in part to increased in sourcing. We continue to recognize the efficiencies of that as we go through the remainder of the year. So the shape of O&M through the year is something that we have attempted to signal all along. And we continue to be committed to the fact that we are gonna see a pretty significant reduction in the second half. Christopher? Christopher Paul Sighinolfi: Yeah. Hey, Richard. How are you? To follow on from Sid's comment, I mentioned in the prepared remarks that we expected, as you look at a sequential growth in O&M from the prior period to the current period. To see a meaningful step down in the back half. We were 8-plus percent in the first quarter and 6.6% in change in the second quarter. Should your expectation should be meaningfully below that in the third and fourth quarters. There are external factors. Curtis mentioned line locate activity up 7% year over year. So there is a lot of economic growth going on in our territories. that is a cost that we bear that we have to respond to locate our assets on behalf of others who are digging? I mentioned in my prepared remarks fuel cost You know, we are paying close attention to what refined product inventories look like and the dynamics associated with that. We travel about 10 million miles a quarter in customer in company owned vehicles. So, you know, you think about the $9-ish million of additional O&M expense this quarter versus last year in the second quarter. About 15% of that was fuel. Elevated fuel year over year. So we have baked all of that in to the expectations that I am offering you. As you think about Cascade in the future, you know, we talked about a 3% to 4% long-term O&M growth rate. We do so as you think about it, it will cascade to lower levels of annual O&M growth future periods. Some of that is driven by the benefits of the insourcing effort that Curtis has noted. Primarily line locating, but now watch and protect, and they continue to explore other functions that are worthwhile for insourcing. Richard Sunderland: Great. Thank you for running through all of that, and thanks for the time. Christopher Paul Sighinolfi: You bet, Richard. Thanks for the question. Operator: Your next question is from the line of Julien Dumoulin-Smith with Jefferies. Please go ahead. Luke Finker: Hey, guys. Nice quarter. This is Luke Fitterer on for Julien. I just wanted to ask if you could quantify the benefits from HB 4.38 thousand this quarter and how that showed up across D&A and interest expense? And if not, maybe color on how we should think about cadence for the rest of the year after the July GRIP reset would be helpful. Thanks. Christopher Paul Sighinolfi: Hey, Luke. This is Christopher. I do not have it for the quarter. If you thought about it maybe in the first half of the year, across both the elements included in GAAP and then the non-GAAP adjustment, which reflects the equity return. it is about $0.28 to $0.29. Just think about the back half. 1 thing to note is the benefits, the accrual benefits, I spoke about this in my prepared commentary, is driven by capital in service in Texas. So a reminder, the largest project that we have completed as a company was the Austin system reinforcement project, which was in Austin as the name implies and was placed into service in the third quarter of last year. So the first full quarter for which this legislative benefit was available our largest project took effect. We do not have projects in Texas of that caliber planned for the back half of this year. And so as you think about sequentially back half last year to back half this year, I would just note to you that we had a very large project take effect in the third quarter that we do not see. This year. I did note a $0.42 full-year impact anticipated given what we now know from first half performance. Got it. Yeah. That helps. And then maybe you previously discussed evaluating, low-cost rate protection including a sofa collar for commercial paper Can you update us on where the evaluation stands and whether you expect to put any hedge structures in place this year just given expectations for rising rates? Thanks. Yeah. Thanks, Luke. We did explore that, you are right to raise it. And we are not of the mind to pursue it at the moment. it is something that is available to us. But as we thought about the cost of that structure, and some of the complexities around it, mainly some of the volatility that it may introduce to our earnings reports on a quarterly basis. We did not feel like it presented the value that we maybe initially thought it might. As in addition, as we thought about the voting members of the FOMC, And, yes, the markets focus a lot on is the next move a 25-basis point hike or how many hikes might we have through the balance of the year. The expectations were for 3 rate cuts at the beginning of the year, and now the market expectation is for 2 rate hikes. But if you if you watch the dot plot and think about where each of the FOMC voting members is positioned for future expectations, they all see a lower Fed funds rate as you scroll out through 2027 and the 2028 and 2029. They all represent the current level of fed funds rate as restrictive relative to a broadly 3% neutral rate. So with all of those factors, it is not something that we have decided to take action on today, but it still represents an option to us. Got it. Makes total sense. Thanks so much, Christopher. I will leave it there. Operator: Next question is from the line of David Arcaro with Morgan Stanley. Please go ahead. Amanda: Hi. This is Amanda on for David. Thanks so much for taking our questions. Maybe just on the expectation raise, anything that you could speak to in terms of specific aspects that give you confidence to land in that upper half? I know, Christopher, you mentioned the Texas House Bill contribution. Just wondering if there are any other specific moving pieces that you would point to for the raise. Christopher Paul Sighinolfi: Hi, Amanda. Well, that is 1 of them. Another is some of the solidification of some of the projects that Curtis mentioned. I mean, he mentioned 1 that had moved from sort of prospect to in service this quarter, that will start contributing in a way that we were not totally certain about before. And then as I talked about O&M and a real focus internally coming off the winter, we had spent some time on last quarter's call about levers we thought were available to us that could help us moderate from a cost standpoint and overcome some of the margin hit that we took in the first quarter with the weakness in the weather dynamics. As we walk through that with teams throughout the company, we have a greater level of confidence and cost discipline to the back half of the year. Robert S. McAnnally: And Amanda, this is Sid. I would just add that the capacity release program has been a real success. And credit to our gas supply team for the way that they have taken advantage of what was excess supply coming out of a relatively warm winter with the exception of 1 significant storm. I also wanna point back to a question in Christopher's comment. When you think about the way that these projects come into service, they come in a way that we have some visibility around, but not perfect visibility around. But the funnel that Curtis speaks to is 1 that will allow us to have ongoing projects. And so we do have forward visibility into what the marketplace looks like in terms of projects and the probability of those projects. We have been very intentional in building a funnel that allows us to evaluate opportunities and to take advantage of those that we think are beneficial not only to our investors, but also to our customers in the way that they are positively impacted by some of the projects that we have already talked about and projects that we are working for the future. So the Austin system reinforcement project came online last year. And there are other projects of scale in addition to Western Farmers They are just, to Curtis's point, not to the point that we want to talk about them publicly because we do not talk about project publicly until we have contracts in place and a high level of certainty. Amanda: Great. Thanks so much for the color. To the extent that you can, maybe just a follow-up on that in terms of maybe, like, timing of those large load opportunities between generation data centers and manufacturing. I guess, you pulled 1 of the projects forward, but kind of what does that look like for the remaining 5 projects in late stage and the 17 in the early stage? Curtis L. Dinan: I think I made the comment on the last call, Amanda. This is Curtis. About the ones that we put in the late stage, we thought there was a decent probability that those would move into a contracted stage. Here in fiscal 2026, and in fact, 1 of those did. We are still working on the other projects, and we could be in a position where they are signed and announced before the end of the year. If not, it would likely be in the first part of 2027. In terms of the other 17 that I mentioned, those are, again, a little bit earlier stages of evaluation, work with the customers to figure out exactly what their needs are and what their timing is going to be. And so that is really what will drive getting to a final point where we speak publicly about them specifically. Amanda: Great. Thanks so much. Operator: Thank you. Your next question is from the line of David Paz with Wolfe Research. Please go ahead. David Paz: Good morning. Looking out to the back half of the plan, have the better results this year pushed you to the upper half of that 5% to 7%? Say, like, in 2029, 2030 off your current 2025 base, Yes, David. Robert S. McAnnally: Thank you for the question. We as you heard in our prepared remarks, we were confident moving into the upper half of the range given performance in the first half. And we have a fairly high degree of confidence as we go into the first half and are engaged in our planning for 2027. So we look forward to coming back to you at the appropriate time with more insight into what 2027 looks like in the forward 5 year Anything you would add, Christopher? Christopher Paul Sighinolfi: No, I think that is right. David, if you think about we have had some developments this year that we did not anticipate in the plan last year. The expansion of our GSRS mechanism in Kansas is 1 we have talked with you and others about. The conversion of some of the large load, and I some of the maturation of what exists in the funnel and continues to be added to the funnel is additive in a way different than we thought about you know, 9 months ago, 12 months ago. So those are those are supportive functions. That I think you are wise to pay attention to. David Paz: Got it. And just following up with when you do get your update this fall, I believe, will you be do you expect to rebase it off of new year? Should we assume till 2025 given 2026 and 2027 are-- I do not know if you want to say abnormal, but they are not in that 5% to 7% range. Christopher Paul Sighinolfi: No. You should expect from us a consistency where we would use as the base. The current guidance at that time for 2026. That has been our practice since we separated from OneOak. And 1 of the things that you kind of understand if you backtest is that, you know, if we achieve what we aim to achieve, which is the upper half of this range, and you look at where we started in 2014, you will see a compound annual growth rate of adjusted EPS that is north of 7%, yet we never really guided at that level. And so the consistent outperformance that we have generated has kind of gotten baked into the historical performance in a way that maybe does not get fully captured by the forward guidance. We ratchet forward every year, which means outperformance, like this year or we outperformed last year and we outperformed in 24. Sometimes gets overlooked by forward guidance in a way you compare it to the peer set. I think they would just focus your attention on that. Okay. David Paz: Alright. Thank you. Operator: That concludes the question and answer session. I would now like to hand it back to the 1 Gas team for closing remarks. Erin Dailey: Thank you again to everyone for your interest in 1 Gas. Our quiet period for the third quarter starts when we close our books in early October and extends until we release earnings on November 2nd. We will provide details about the conference call at a later date. Have a great day. Operator: This concludes the 1 Gas second Quarter Earnings Conference Call and Webcast. You may now disconnect. Before you buy stock in One Gas, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and One Gas wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* Now, it’s worth noting Stock Advisor’s total average return is 965% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. ONE Gas (OGS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in ONE Gas, Inc.? Here are five stocks we like better. ONE Gas reported stronger second-quarter results, with adjusted EPS rising to $0.82 from $0.54 a year earlier despite weather that was 25% warmer. The company maintained its $4.83–$4.95 full-year adjusted EPS guidance but now expects results in the upper half of that range. Improved outlook reflects approximately $16 million in new-rate revenue, expanded benefits from Texas House Bill 4384, customer growth and capacity-release revenue. The company estimates the Texas legislation will contribute about $0.42 to full-year adjusted EPS. ONE Gas is advancing growth projects, including an El Paso manufacturing facility and an Oklahoma data center expected to enter service this quarter, while three contracted high-volume projects represent roughly $15 million in annual revenue and $175 million in capital. Regulatory rate increases are also progressing in Oklahoma, Texas and Kansas. ONE Gas (NYSE:OGS) reported higher second-quarter earnings and said it now expects full-year adjusted results to fall within the upper half of its previously issued 2026 guidance range, supported by new rates, Texas regulatory benefits, customer growth and cost discipline. Adjusted net income for the second quarter was $52.1 million, or $0.82 per diluted share, compared with $32.7 million, or $0.54 per share, a year earlier. GAAP earnings per share rose to $0.74 from $0.53. Chief Executive Officer Sid McAnnally said adjusted earnings per share grew 16% in the first half from the prior-year period despite weather that was 25% warmer. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling McAnnally said the company maintained average customer bills flat year over year while increasing its dividend. The board declared a quarterly dividend of $0.68 per share, unchanged from the prior quarter. The company maintained its full-year adjusted net income guidance of $306 million to $314 million and adjusted EPS guidance of $4.83 to $4.95. However, Chief Financial Officer Chris Sighinolfi said ONE Gas now expects adjusted net income of $310 million to $314 million and adjusted EPS of $4.89 to $4.95. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Sighinolfi attributed the outlook in part to approximately $16 million of revenue from new rates during the quarter and greater-than-expected benefits from Texas House Bill 4384. The Texas law allows gas utilities to defer depreciation expense and ad valorem taxes, while accruing carrying costs on eligible capital projects between their in-service dates and inclusion in customer rates. ONE Gas now expects House Bill 4384 to contribute about $0.42 to full-year adjusted EPS. Sighinolfi said the benefit can fluctuate quarterly based on the timing and amount of eligible capital placed into service. He said the second quarter generally represents a larger share of the annual benefit due to the cadence of the company’s annual Gas Reliability Infrastructure Program, or GRIP, filing. → No Hangover: Revisiting Microsoft One Week After Earnings The company also benefited from capacity-release revenue after warm winter weather reduced gas storage withdrawals. ONE Gas ended the first quarter with storage inventory about 25% above plan, allowing it to release capacity during the refill season. The company recognized about $900,000 of related revenue during the second quarter and $2.8 million year to date, with an estimated additional $1.2 million opportunity through the injection season. Oklahoma Natural Gas filed a performance-based rate change application in February seeking a $28.7 million increase. An administrative law judge recommended approval as filed following a June hearing, and interim rates subject to refund began in late June. Texas Gas Service requested a $36.9 million revenue increase in its March GRIP filing. The Texas Railroad Commission approved the request in June, and the resulting rates became effective in July. Sighinolfi said the filing was the company’s first statewide GRIP filing and the first to reflect expanded House Bill 4384 provisions. Meanwhile, Kansas Gas Service filed in July for an approximately $14.3 million increase under the state’s Gas System Reliability Surcharge statute. Rates are expected to take effect in October. The filing reflects provisions of Kansas House Bill 2435, which expanded eligible investments, raised the maximum residential monthly surcharge to $1.35 from $0.80 and reduced the review period to 90 days from 120 days. The company said it does not plan to file a full rate case until its Oklahoma filing in 2027, as required by tariff. President and Chief Operating Officer Curtis Dinan said ONE Gas completed $188 million of capital projects in the quarter, roughly in line with the same period last year. Through July, the company had installed 11,000 new meters, led by activity in Oklahoma City and El Paso. The company has three high-volume projects under contract that collectively represent about $15 million in incremental annual revenue and $175 million of associated capital. Their in-service dates range from the second half of 2026 through 2028. A Western Farmers gas-fired generation project in southern Oklahoma remains on track for third-quarter 2028 service. The project includes a 43-mile, 24-inch pipeline, with installation expected to begin in early 2027. An El Paso project serving an advanced manufacturing facility is in construction or commissioning and is expected to enter service during the current quarter. An Oklahoma data-center project is also expected to enter service during the current quarter. Dinan said the data-center project had previously been among six late-stage opportunities discussed by the company. The five remaining late-stage prospects span Kansas, Oklahoma and Texas and could support approximately 3 gigawatts of generation and as much as 1 billion cubic feet per day of demand. ONE Gas also has 17 additional opportunities in earlier stages of evaluation. Management said some of the remaining late-stage projects could be contracted before year-end, while others could move into 2027. Second-quarter operations and maintenance expense increased about 6.6% from a year earlier, moderating from an increase of more than 8% in the first quarter. The company cited elevated line-locating work related largely to fiber installation, as well as higher fleet fuel costs tied to geopolitical unrest. Still, ONE Gas maintained its long-term expectation for annual O&M growth of 3% to 4%. Sighinolfi said the company expects year-over-year O&M growth to move “meaningfully” lower in the third and fourth quarters as it realizes efficiencies from bringing more work in-house. Line-locating activity increased about 7% year over year in the quarter, while damages declined 6%, Dinan said. The company has also insourced 40% of its watch-and-protect function in Oklahoma and expects to complete that transition by year-end. Excluding amounts related to KGSS-I, interest expense fell $3.8 million from the prior-year quarter, partly due to lower commercial-paper rates. ONE Gas has forward-sale equity agreements totaling about $41.5 million, representing roughly half of its equity need for the year, according to Sighinolfi. Management said its current five-year plan contemplates annual dividend growth of 1% to 2% through 2030, while the company seeks to fund a greater share of capital investments internally. Sighinolfi said the board will continue to evaluate dividend policy as part of its planning process. ONE Gas, Inc is a publicly traded natural gas utility company focused on the regulated distribution of natural gas to residential, commercial and industrial customers. Headquartered in Tulsa, Oklahoma, the company owns and operates an integrated system of transmission and distribution pipelines, storage facilities and compressor stations designed to deliver safe, reliable energy to end users. Its operations are governed by state utility commissions, which set rates and service standards in the markets the company serves. The company's service territory spans three states: Oklahoma, Kansas and the Texas Panhandle. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ONE Gas Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

ONE Gas, Inc. OGS reported second-quarter 2026 adjusted earnings of 82 cents per share, beating the Zacks Consensus Estimate of 65 cents by 26.15%. The bottom line surged 51.9% from 54 cents in the year-ago quarter, aided by higher revenues from new rates and lower net interest expense. ONE Gas recorded revenues of $411.64 million, which missed the Zacks Consensus Estimate of $440 million by 6.45%. The top line also decreased 2.9% from $423.74 million in the prior-year quarter. ONE Gas, Inc. price-consensus-eps-surprise-chart | ONE Gas, Inc. Quote Natural gas sales were $357.8 million, down 3.2% from $369.5 million in the second quarter of 2025. Transportation revenues increased 2.6% to $31.8 million, while other revenues rose 11% to $11.1 million. Securitization customer charges declined 17.4% to $10.9 million. The company generated $16.4 million of incremental revenues from new rates, $1.4 million from higher residential sales, primarily reflecting customer growth in Oklahoma and Texas, and $1.3 million from increased line-extension revenues in Oklahoma. Total natural gas volumes delivered were 66.6 billion cubic feet, down 1.48% on a year-over-year basis. OGS served 2,308,000 customers, up 0.26% year over year. Sales volumes fell 15.9% to 15.9 billion cubic feet, while transportation volumes increased 4.1% to 50.7 billion cubic feet.Total operating expenses were $238.7 million, up 2% year over year. The increase was due to higher operations and maintenance expenses, which rose 6.6% to $139.6 million, reflecting higher employee-related costs, outside services and fleet expenses.Operating income totaled $82.7 million, up 15% from $71.9 million recorded in the year-ago quarter.Net interest expense declined 11.8% to $31.1 million, primarily due to lower-rate commercial paper borrowings and the implementation of Texas House Bill 4384. These factors supported the sharp year-over-year improvement in adjusted earnings.Texas Gas Service received approval for a $36.9 million revenue increase under its Gas Reliability Infrastructure Program. The new rates became effective in July 2026, supporting the recovery of investments in system reliability. Cash and cash equivalents amounted to $30.6 million as of June 30, 2026, compared with $33.7 million as of Dec. 31, 2025.As of June 30, 2026, total long-term debt (excluding current maturities) was $2.34 billion, down from $2.36 billion as of Dec. 31, 2025.Cash provided by operating activities totaled $387.3 million during the first six months of 2026, down from $448.8 million in the comparable 2025 period. Capital expenditures totaled $330 million compared with $347.1 million a year ago. OGS expects its 2026 adjusted net income in the range of $306-$314 million.The company projects 2026 adjusted earnings in the range of $4.83 to $4.95 per share. The Zacks Consensus Estimate for EPS is pegged at $4.88, which is slightly below the midpoint of the company’s guided range.In 2026, OGS plans to make capital investments, including asset removal costs, of $800 million and nearly $230 million for new customer extensions. 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. Consolidated Edison ED is slated to report second-quarter 2026 results on Aug. 6, after market close. The Zacks Consensus Estimate for earnings is pegged at 74 cents per share, which implies a year-over-year increase of 10.45%.ED’s long-term (three to five years) earnings growth rate is 6.32%. The Zacks Consensus Estimate for second-quarter sales is pinned at $3.74 billion, which suggests year-over-year growth of 4.17%.MDU Resources Group, Inc. MDU is scheduled to report second-quarter 2026 results on Aug. 6. The Zacks Consensus Estimate for EPS is pegged at 8 cents, inidicating an increase of 14.29% from the prior-year figure.MDU’s long-term earnings growth rate is 5.54%. The Zacks Consensus Estimate for second-quarter sales is pinned at $398 million, which suggests year-over-year growth of 13.32%.PPL Corporation PPL is scheduled to report second-quarter results on Aug. 7, before the market opens. The Zacks Consensus Estimate for earnings is pegged at 35 cents per share, which implies year-over-year growth of 9.38%.PPL’s long-term earnings growth rate is 7.52%. The Zacks Consensus Estimate for second-quarter sales is pinned at $2.18 billion, which suggests year-over-year growth of 7.50%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ONE Gas, Inc. (OGS) : Free Stock Analysis Report PPL Corporation (PPL) : Free Stock Analysis Report Consolidated Edison Inc (ED) : Free Stock Analysis Report MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Adjusted EPS: $0.82 for Q2 2026, up from $0.54 in the prior-year quarter, a 52% increase. Adjusted Net Income: $52.1 million for Q2 2026, compared with $32.7 million in the same period last year. GAAP EPS: $0.74 for Q2 2026, up from $0.53 in the prior-year quarter, a nearly 40% increase. O&M Expenses: Increased approximately 6.6% year over year in Q2 2026, moderating from the first quarter increase. Interest Expense: Decreased by $3.8 million year over year, excluding amounts related to KGS 12th quarter, due in part to lower commercial paper rates. Capital Projects: Completed $188 million worth of capital projects in Q2 2026, relatively in line with the same period last year. New Meters: Installed 11,000 new meters through July, led by Oklahoma City and El Paso. Dividend: Declared a dividend of $0.68 per share, unchanged from the previous quarter. Full-Year 2026 Guidance: Adjusted net income of $310 million to $314 million and adjusted EPS of $4.89 to $4.95, within the upper half of the original guidance range. Warning! GuruFocus has detected 4 Warning Signs with OGS. Is OGS fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Adjusted EPS for Q2 2026 was $0.82, a 52% increase year-over-year, with first-half adjusted EPS growing 16% despite 25% warmer weather. The company raised its full-year 2026 adjusted EPS guidance to the upper half of the range ($4.89-$4.95), driven by strong performance and Texas House Bill 4384 benefits. Texas House Bill 4384 is expected to contribute approximately $0.42 to full-year EPS, providing a significant tailwind from deferred depreciation and ad valorem taxes. Regulatory successes include approval of a $28.7 million rate increase in Oklahoma, a $36.9 million GRIP filing in Texas, and a $14.3 million Kansas surcharge filing, all supporting revenue growth. Large load opportunities are expanding, with three high-volume projects under contract (including a gas-fired generation project and a data center) representing $15 million in incremental annual revenue and $175 million in capital, plus a robust pipeline of additional prospects. The company maintains a balanced approach, keeping average customer bills flat year-over-year while increasing the dividend, and expects to achieve adjusted earnings in the upper half of guidance. Operational efficiency improvements, such as in-sourcing line locating and watch-and-protect functions, have reduced damages by 6% and are expected to moderate O&M expense growth in the second half. Capacity release revenues from higher-than-planned storage balances have generated $2.8 million year-to-date, with an additional $1.2 million expected, providing a positive offset to weather impacts. O&M expenses increased 6.6% year-over-year in Q2, driven by elevated line locating activity (up 7%) and higher fuel costs due to geopolitical unrest, though expected to moderate in the back half. Weather was 25% warmer than normal in the first half, negatively impacting demand and requiring cost discipline to offset margin pressures. The company faces uncertainty in the timing and amount of Texas House Bill 4384 benefits, with a larger share recognized in Q2 and a smaller contribution expected in Q3, creating quarterly volatility. Interest expense increased by $3.8 million year-over-year (excluding KGS), partly due to higher commercial paper rates, though partially offset by lower rates. The company has forward sale agreements for equity issuance, which could dilute existing shareholders, and plans to be opportunistic about issuing equity to meet remaining needs. No full rate cases are planned until 2027 (Oklahoma), limiting near-term opportunities for rate base recovery outside of annual filings. The dividend growth rate is decelerated to 1%-2% annually, which may be less attractive to income-focused investors compared to peers. The company's 5%-7% long-term EPS growth guidance may be conservative, as historical outperformance has been ratcheted forward, potentially understating future growth potential. Q: Can you provide an update on the capital allocation strategy and whether improved regulatory constructs, particularly in Texas, could lead to a shift or pull-forward of capital expenditures? Additionally, does this create an accretive opportunity within the current 5% to 7% long-term growth guidance?A: Curtis Dinan (COO) explained that capital allocation is primarily driven by system integrity needs, which account for 60% to 70% of the budget and are agnostic to regulatory treatment. Growth capital is allocated based on customer demand, which is currently strong across all three states, with a higher level of activity in Texas due to the benefits of House Bill 4384. CEO Sid McAnnally added that the company remains confident in its execution and will provide updated 2027 guidance later this year, noting that the 5% to 7% growth guidance offered in December 2025 remains intact. Q: Given the strong first-half performance, what specific factors give you confidence to raise expectations to the upper half of the 2026 adjusted EPS guidance range?A: CFO Chris Sighinolfi cited the greater-than-anticipated benefits from Texas House Bill 4384, the solidification of large load projects moving from prospects to contracted and in-service status, and a higher level of confidence in cost discipline through the back half of the year. CEO Sid McAnnally added that the success of the capacity release program and the visibility into the project funnel, which includes projects of scale beyond the Western Farmers project, provide additional confidence in the outlook. Q: Can you quantify the benefits from Texas House Bill 4384 in the second quarter and how it showed up across D&A and interest expense? How should we think about the rest of the year after the July GRIP reset?A: CFO Chris Sighinolfi noted that for the first half of the year, the combined impact across GAAP and non-GAAP adjustments is approximately $0.28 to $0.29 per share. He cautioned that the back half of 2026 will not see the same level of benefit as the prior year, as the largest project eligible for the benefit, the Austin System Reinforcement Project, was placed into service in Q3 2025. The full-year impact is now expected to be approximately $0.42 per share. Q: Can you provide more detail on the O&M expense trajectory for the second half of the year, and are there any knock-on effects into 2027 from how activity is being staged this year?A: CFO Chris Sighinolfi stated that sequential O&M growth should step down meaningfully in Q3 and Q4, following an 8% increase in Q1 and a 6.6% increase in Q2. External factors like elevated line-locating activity and higher fuel costs are being managed, and the company remains committed to its 3% to 4% long-term O&M growth guidance. CEO Sid McAnnally added that the in-sourcing initiatives, particularly in line locating and watch-and-protect functions, are driving efficiencies that will contribute to lower O&M growth in future periods. Q: Can you update us on the status of the large load opportunities, specifically the timing for the remaining five late-stage projects and the 17 early-stage opportunities?A: COO Curtis Dinan noted that one of the six late-stage projects, an Oklahoma data center, has already moved to a contracted status and is expected to be in service this quarter. The remaining five projects are still in late-stage discussions, with potential for announcements before the end of 2026 or in early 2027. The 17 early-stage opportunities are in earlier evaluation phases, with timing driven by customer needs and investment decisions. Q: Does the current dividend policy of 1% to 2% growth still make sense given the improving cash flow metrics, and where do you want to be relative to peers over the long term?A: CFO Chris Sighinolfi explained that the dividend policy is a Board decision, but the 5-year plan communicated in December 2025 contemplates 1% to 2% annual dividend growth through 2030. The strategy is to self-fund a greater percentage of capital investments, which has reduced the payout ratio from 68% a couple of years ago to an implied 57% on a GAAP basis this year. The conversation about when elevated dividend growth can be offered will be active during the fall planning process. Q: Is the increased interest from large load customers across generation, data centers, and advanced manufacturing a new trend or a continuation of what you've been seeing? How does this feed into the 17 projects in early-stage evaluation?A: COO Curtis Dinan stated that these are typically longer-lead developments, with customers working through investment decisions over time. However, some projects have moved quickly as customers seek to secure limited capacity. The mix of projects spans all three states and various categories, and the company will share more details as projects reach final investment decisions and contracts are signed. Q: Can you provide an update on the evaluation of low-cost rate protection, including a swap collar for commercial paper, and whether you expect to put any hedge structures in place this year?A: CFO Chris Sighinolfi stated that the company explored the option but decided not to pursue it at the moment due to the cost of the structure and the potential volatility it could introduce to quarterly earnings. He noted that while market expectations have shifted from rate cuts to potential hikes, the FOMC dot plot suggests all voting members see a lower Fed funds rate in 2027-2029, with the current level considered restrictive relative to a 3% neutral rate. The option remains available for future consideration. Q: Looking out to the back half of your plan, do the better results this year push you to the upper half of the 5% to 7% growth range for 2029-2030 off the current 2025 base?A: CEO Sid McAnnally confirmed confidence in achieving the upper half of the 2026 range and noted the company is engaged in planning for 2027, with more insight to come at the appropriate time. CFO Chris Sighinolfi added that developments this year, including the expansion of the Kansas GSRS mechanism and the maturation of the large load funnel, are additive in ways not anticipated when the plan was set 9-12 months ago. Q: When you provide the updated guidance this fall, will you rebase off a new year, and should we assume the base remains For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by solid execution across regulated jurisdictions, with adjusted EPS growing 16% in the first half of the year despite weather being 25% warmer than normal. Management attributed the strong results to approximately $16 million in new revenue from rate updates and significant benefits from Texas House Bill 4384, which allows for the deferral of depreciation and ad-valorem taxes. Strategic positioning is focused on maintaining customer affordability, keeping average bills flat year-over-year while investing in system integrity and growth. The company is seeing a broadening opportunity to serve large load customers, specifically driven by rising demand for gas-fired generation, data centers, and advanced manufacturing. Operational efficiency improved through the strategic in-sourcing of line locating and 'Watch and Protect' functions, which enhanced safety and system integrity while managing O&M costs. Management highlighted the regional advantage of operating in Kansas, Oklahoma, and Texas, citing business-friendly policies and abundant natural gas resources as key drivers for industrial investment. Management raised expectations for full-year 2026 adjusted earnings to the upper half of the guidance range, specifically targeting $310 million to $314 million in adjusted net income. The outlook assumes continued benefits from Texas House Bill 4384, which is expected to contribute approximately $0.42 to full-year adjusted EPS. Guidance for O&M expense growth remains at 3% to 4% long-term, with management expecting sequential growth to move meaningfully lower in the second half of the year as in-sourcing efficiencies materialize. The company has three high-volume large load projects under contract representing $175 million in capital, with in-service dates spanning from late 2026 through 2028. Equity needs for the remainder of the year are expected to be met opportunistically through the ATM program, with forward sale agreements already covering roughly half of the annual requirement. Texas House Bill 4384 benefits will fluctuate quarterly based on capital placement; the second quarter represented a larger share of the annual benefit due to the timing of GRIP filings. Warm winter weather resulted in storage inventory levels 25% higher than planned, creating a capacity release revenue opportunity shared 50-50 with customers. Kansas Gas Service filed for a $14.3 million increase under expanded recovery provisions that shortened the review period and increased eligible investment categories. Elevated O&M expenses in the first half were partially driven by increased line locating tickets from fiber installation activity and higher fleet fuel costs due to geopolitical unrest. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that 60% to 70% of capital is dedicated to system integrity regardless of regulatory treatment, while growth capital is prioritized based on customer needs. Texas is seeing higher activity levels due to legislative benefits, but the company remains focused on responding to demand across all three states without current limitations on execution. The current 1% to 2% annual dividend growth target through 2030 is designed to pivot the funding structure toward being more self-funded from an equity perspective. The payout ratio has moderated from 68% to an implied 57%, and management will evaluate the potential for elevated dividend growth once they are satisfied with internal funding levels. One of the six previously identified late-stage projects (an Oklahoma data center) is now under contract and expected to be in service this quarter. The remaining five high-conviction projects are in late-stage scoping and could reach final investment decisions by the end of 2026 or early 2027. Management decided not to pursue low-cost rate protection or collars for commercial paper due to the cost, complexity, and potential earnings volatility. The decision was also influenced by FOMC projections suggesting a lower Fed funds rate in the long term, viewing current rates as restrictive.

ONE Gas (OGS) came out with quarterly earnings of $0.82 per share, beating the Zacks Consensus Estimate of $0.65 per share. This compares to earnings of $0.53 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +26.15%. A quarter ago, it was expected that this natural gas distribution would post earnings of $2.13 per share when it actually produced earnings of $2.11, delivering a surprise of -0.94%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. ONE Gas, which belongs to the Zacks Utility - Gas Distribution industry, posted revenues of $411.64 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 6.49%. This compares to year-ago revenues of $423.74 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. ONE Gas shares have added about 1.5% since the beginning of the year versus the S&P 500's gain of 11%. While ONE Gas has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for ONE Gas was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.50 on $405.46 million in revenues for the coming quarter and $4.88 on $2.4 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Utility - Gas Distribution is currently in the bottom 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Southwest Gas (SWX), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This natural gas company is expected to post quarterly earnings of $0.47 per share in its upcoming report, which represents a year-over-year change of -11.3%. The consensus EPS estimate for the quarter has been revised 3% higher over the last 30 days to the current level. Southwest Gas' revenues are expected to be $406.58 million, down 63.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ONE Gas, Inc. (OGS) : Free Stock Analysis Report Southwest Gas Corporation (SWX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research