OGE Energy Corp

Good day and thank you for standing by. Welcome to the Q4 2021 OGE Energy Corp earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star 0. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations.

Please go ahead. Thank you, Dennis, and good morning, everyone, and welcome to OGE Energy Corp's fourth quarter 2021 earnings call. With me today, I have Sean Trosky, our Chairman, President, and CEO, and Brian Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Brian of financial results, and finally, as always, we will answer your questions. I'd like to remind you that this conference is being webcast and you may follow along on our website at OGE.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the Safe Harbor Statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results but this is our best estimate to date. I'll now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. You know, before we begin, I do want to acknowledge the sad and disturbing news out of Ukraine this morning and share our thoughts for a peaceful resolution. With that in mind, thank you for joining us today. It's certainly great to be with you. Before I get into the specifics of 2021, I do want to mention a few items at the outset. Some of you may recall that over the last five years, I've shared with you how we were changing our operational paradigm with an intentional focus on reliability, resiliency, and affordability to really drive load in customer growth. And we pushed to change how we engage our customers, concentrate economic development efforts to grow our communities, operate the business with excellence, and creating the sustainable business model we have today. This effort was very intentional. And this focus led to the tremendous load growth we are experiencing today. And we're not done. I'm incredibly proud of every single employee for their exceptional performance and how they've adapted to create a brighter future for OGE Energy. We are well positioned for future growth. And I have confidence in our team, and I have confidence in our business, and I have confidence in our company. With that, let's take a look at 2021 results. This morning, we reported earnings of $1.80 per share for the utility and a holding company loss of $0.04 per share, and also included is $1.92 per share from natural gas midstream, including a gain associated with the enable merger transaction. In total, consolidated earnings total $3.68 for the year, and Brian will provide more details shortly. Turning to operations. Every employee in this company took the opportunities in front of them to deliver outstanding results, and they did so across all metrics. We are celebrating two key operational performance indicators this year. 2021 was our second-best safety year on record, making each of the last six years the safest in company history. And for the second time in four years, we delivered a number one ranking in the Southeast Electric Exchange, or SCE, for safety. Additionally, Escalant recognized OG&E as a business customer champion for 2022, and thanks for all of our efforts on delivering a great customer experience. Again, as I mentioned at the outset, this is confirmation of our intentional focus. We continue to make investments in the grid to benefit our customers and communities in both Arkansas and Oklahoma. The impact of our grid investments is real. Last May, a windstorm swept through Fort Smith, and our data shows that 20,000 fewer customers experienced a sustained outage, and the power restoration process was reduced by 50%, thanks to those grid modernization efforts in that state. The Oklahoma grid enhancement program kicked off in 2020, and we expect to see similar results in the future. In 2021, we invested approximately $232 million in the grid, including work on 104 distribution circuits, 64 distribution substations, four technology platforms, three communication systems, and these investments improve service to more than 175,000 customers, or nearly 20% of our customer base. For 2022, we plan to continue these investments, improving reliability and resiliency for an additional 145,000 customers. Combined, the two program investments ensure a better customer experience by reducing and eliminating outages. We continue to expand our solar offerings, Underway, we have another 5 megawatt solar farm supporting our customer subscription programs. And we will provide you an update on our utility scale solar RFP that we have underway later this year. Our regulatory calendar continues to be steady. In December, we obtained the securitization order in Oklahoma to cover nearly all the fuel and purchase power costs associated with winter storm Yuri. We are awaiting the Oklahoma Supreme Court to certify those bonds. In Arkansas, We reached a settlement in our fourth formula rate evaluation report, which we filed in October. We expect an order soon, with rates going into effect in April. At the same time, we also filed for a five-year extension of the formula rate plan. We filed a rate review in Oklahoma at the end of the year. First and foremost, this rate review is about recovering the capital investment we've made for our customers in 2019, 2020, and 2021. Additional elements of the review include the continuation of the Oklahoma Grid Enhancement Program and the established recovery mechanism. Also in the review is an option for the Oklahoma Corporation Commission to consider a performance-based rate plan like those used by the natural gas utilities in Oklahoma. The review also includes updating the depreciation schedule to reflect the useful life of assets in service, and these new rates would likely become effective in July. The customer impact of the review is an increase of approximately 9% to the current rates of residential customer. We are sensitive to the financial impact on our customers and are committed to continue our long track record of affordable rates and program offerings to help customers manage both their monthly bill and energy usage. Turning to economic development activities, we ended 2021 on target with 2.4% load growth and customer growth of 1.4% outpaced our customer growth projection. Strong growth like this means the combination of our highly affordable rates and ability to serve as commercial expansion in our markets drives results for OG&E and the communities we serve. We expect continued low growth in the 3.5% to 5% range for 2022. This tremendous growth reflects our economic and business development efforts designed to support existing business expansion with new growth in health care, defense contracting, and other industries in our service area. We ended 2021 with 201 megawatts of new connections, landing right on target with the estimate I shared with you last quarter. Oklahoma and Arkansas' key economic indicators are strong, with unemployment rates lower than the national average, reflecting a competitive business environment. Additionally, Oklahoma City was recently listed as the 12th best place for startups in the U.S., thanks to an affordable cost of living and business-friendly environment. So as we look to the future, we intend to grow our utility OG&E earnings by 5% to 7% over our forecast period, underpinned by the reliability and resiliency investments as a result of our growing service area. Additionally, we expect to grow the dividends. targeting a dividend payout ratio of 65% to 70% based on utility earnings. Over the next several years, we expect our earnings per share growth to exceed the dividend growth rates to help achieve this target. Regarding our energy transfer units, our plans are consistent to exit a majority of the position by the end of the calendar year, and we will update you quarterly on the progress we've made. Before I hand the call over to Brian, I want to recap a few Important points. First, the economies in our service area are strong, driving economic development that leads to growth and capital investment that fuels our business. Second is our regulatory agenda. We're delivering on our customer commitments and look forward to constructive regulatory outcomes and rate reviews and finalizing securitization in both jurisdictions. Third, our balance sheet is among the strongest in the industry, and we're on a path to becoming a pure play utility, plans include grid and generation infrastructure that add value for customers and support our growing service area. And finally, at the end of the day, it's about our people. Our employees told us through a survey last fall that they feel a higher sense of purpose in working for OG&E, and our customer experience is the result of our employees' dedication to what we believe is our noble purpose to energize life. So with that, thank you, and I'll now turn the call over to Brian. Brian?