ONE Gas, Inc.

Good morning and thank you for joining us on our year-end 2021 earnings conference call. This call is being webcast live and a replay will be made available later today. After our prepared remarks, we'll be happy to take your questions.

A reminder that statements made during this call that might include one gas expectations or predictions should be considered forward-looking statements and are covered by the safe harbor provisions of the Private Securities and Litigation Reform Act of 1995, the Securities Act of 1933, and the Securities and Exchange Act of 1934, each amended. Actual results could differ materially from those projected in any forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our OCC filings. Joining us on the call this morning are Sid McAnally, President and Chief Executive Officer, Karen Lawhorn, Senior Vice President and Chief Financial Officer, and Curtis Dinan, Senior Vice President and Chief Operating Officer. And now I'll turn the call over to Karen.

Thanks, Brandon. Good morning, everyone. Net income for the fourth quarter 2021 was $16.5 million, or $1.12 per diluted share, compared with $58.3 million, or $1.09 per diluted share, in the same period 2020. Our fourth quarter results include an increase in revenues of $10 million over the same period last year, which is primarily due to $9.5 million from new rates and $1.8 million in sales from net residential customer growth. Operating costs for the quarter were $7.1 million higher compared to the same period last year. We experienced a $13.3 million increase in employee labor and benefits and outside services. However, our bad debt expense was $5.6 million lower than last year for the quarter and $6.4 million lower for the full year. One of the key drivers for the improvement was the significant increase in energy assistance payments we received from social service agencies and the government on behalf of our customers. Throughout the year, our customer service team worked diligently to inform our customers of assistance that may be available and we implemented an online energy assistance portal to streamline the process for the agencies. These efforts were instrumental to us receiving approximately $30 million for our customers in 2021, compared with about $19 million in 2020, with nearly half of the payments in 2021 collected in the fourth quarter. For the full year 2021, net income was $206.4 million, or $3.85 per diluted share, versus $196.4 million, or $3.68 per diluted share, in 2020. Revenues less the cost of natural gas were up $40.7 million, which includes $32 million from new rates and $8.5 million from residential customer growth. Operating costs for the year were $21.6 million higher than 2020, primarily as the result of increases in outside services and employee labor and benefits. Depreciation expense was $10.6 million higher than the prior year, reflecting an increase in net property, plant, and equipment as a result of our higher level of capital investment. Our capital expenditures and asset removal costs for the fourth quarter were $161 million, bringing our total for the year to $544 million compared to $512 million in 2020. The increase is primarily attributable to system integrity projects and extension of service to new areas. Average rate base for the year was $4.25 billion, with 41% of that in Oklahoma, 29% in Kansas, and 30% in Texas. Authorized rate base, which is rate base reflected in completed regulatory proceedings, including full rate cases and interim rate filings, was approximately $4.16 billion. Looking at our liquidity, we ended the year with $504 million of capacity in our commercial paper program, no borrowings under our credit facility, and $215 million available under our at the market equity program. We have $2.1 billion of outstanding debt associated with the winter storm, and as Curtis will describe in a moment, we are on track to get our winter storm costs securitized. Aside from the winter storm bonds, our next long-term debt maturity is in 2024. I'm also pleased to mention that Moody's recently revised its outlook, moving us from negative to stable, and affirmed our credit ratings. Going forward, Moody's will exclude the cash flow and debt associated with securitization from its analysis of our credit metrics. Last month, we released our financial guidance for 2022 with earnings per diluted share expected to fall in the range of $3.96 to $4.20. Our capital investments for the year are expected to be $650 million which is a $106 million or 20% increase in capital spending over 2021. Investments in system integrity, a key part of our strategy to improve the safety, reliability, and emissions profile of our system, continue to anchor our capital plan, representing about half of the increase in spending expected in 2022. The other half of the increase is for growth as we continue to execute on opportunities to expand our system to reach new customers. Total capital spending for the next five years is anticipated to be $3.5 billion. That's $500 million higher than our previous plan. We also expect higher rate-based growth of 8% to 9%, which is up from 7% to 8%. Our forecasted five-year annual growth rate for net income is expected to be 8% to 10%, up from 6% to 8%, with EPS growing from 6% to 8%, which is up from 5% to 7%. We anticipate net financing needs through 2026 of $1.6 billion, with about 25% of that in the form of equity. We expect average annual dividend growth between 6% to 8% through 2026, with a target payout ratio of 55% to 65% subject to Board approval. In January, the OneGuest Board of Directors declared a dividend of $0.62 per share, an increase of $0.04 or 6.9% from the previous quarter. Now, I'll turn it over to Curtis for an update on the latest from regulatory and commercial.