Good day, and thank you for joining us. Welcome to the OGE Energy Corp First Quarter 2023 Earnings Conference Call. Please note that today's call is being recorded. I will now turn the call over to Jason Bailey, Director of Investor Relations. Please proceed, Jason.

Thank you, Hope, and good morning, everyone. And welcome to the call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Bryan Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Bryan 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 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 will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Good morning, everyone. Thank you for joining us on today's call. We're off to a really strong start for the year. As you know, the first quarter typically represents less than 10% of the electric company's earnings. However, this quarter does provide momentum for the year, and I really like what I see. Earlier this morning, we reported consolidated earnings for the quarter of $0.19 per share with $0.20 per share from OG&E and holding company loss of a penny. I'm pleased with the overall performance of our electric company, with results up year-over-year, and Bryan will discuss our financial results in more detail shortly. Our plan for the future is strong when you consider increased demand for electricity to support our growing communities. Business expansion is broad, representing many sectors, including manufacturing, defense, tribal enterprises, and healthcare in both Arkansas and Oklahoma. Some of these expansions include significant job growth, including 900 new military personnel who will be stationed at Ebbing Air National Guard Base in Fort Smith, Arkansas, along with Pratt and Whitney's announcement last month of the new sustainment center associated with its operations near Tinker Air Force Base in Oklahoma. Our customer initiatives have gained steam, particularly in the digital experience. One quarter after launching our new mobile app, more than 10% of our customer base has downloaded the app, and more importantly, they're using it for bill payment and outage reporting. We're making it easier for customers to self-serve online and rolling out programs and services that help them manage their energy usage and monthly bill. These efforts pay off in a multitude of ways, from improving our customer experience to driving costs out of our business. Our grid and weather hardening investments are also paying off for customers and helping us achieve strong operational performance. Something that's really important when you know that Oklahoma is a top five state for federally declared storms. These investments are eliminating and reducing outages during severe weather. Two weeks ago, severe storms hit our service area with two communities highly impacted: Shawnee and Cole, Oklahoma. That night, there were 18 tornadoes, and what struck Shawnee left over a mile-wide path of destruction and people without power. And yet, within 48 hours, 75% of our customers were back online, and by Monday, that number was 95%. The total customer impact to our system on the night of the storms was less than half of one percent of our customer base. You just don't see those results following severe storms in other parts of the country. The folks in those towns have a long road ahead to rebuild, and we'll be right there with them all along the way. I'm proud to work alongside our team every day, and it's times like these that I'm in awe of the dedicated men and women who understand our obligation to serve and don't stop until the work is done. We continue to invest in the grid, improving distribution circuits, substations, and structural resiliency to mitigate the impact of severe weather like the storms I mentioned earlier. We're excited about the opportunities through the IIJA to advance our reliability and resiliency work for our customers, while grounding our work in affordability with a 50% cost share through federal grants. Supporting a growing customer base and thriving communities translates to a growing need for generation capacity. As you know, we're actively working through multiple RFPs to meet our capacity needs, and we're progressing on finalizing agreements, and we plan to file for approval this summer. Not all the RFP responses deliver the value we were looking for, so we will be issuing a new IRP later this year with updated planning assumptions, as well as exploring how opportunities in the IIJA and IRA to advance clean energy for the future might fit into the overall plan. Our goal is to implement a generation plan that supports our customers and the business, smoothing investments in a steady incremental way without large spikes or bumps. We'll address all of these factors in the most cost-effective way, ensuring we lead with affordability. And I've mentioned IIJA a couple of times, and we continue to pursue opportunities through the application, with two full proposals under review: one for grid resiliency and one for storm protection. Last month, we also submitted two concept papers under the Energy Improvements in Rural or Remote Areas program. With three-quarters of our service area considered disadvantaged or tribal communities, we will relentlessly pursue every opportunity to improve reliability and resiliency for those customers. Along with these programs, we're excited to be part of the HALO Hydrogen Hub, a three-state partnership between Arkansas, Louisiana, and Oklahoma, which is applying for the regional clean hydrogen hubs program allocated through the IIJA. The full application is for $1.25 billion in federal funding and was submitted just last month. We were also pleased that the Oklahoma Corporation Commission approved our 2021 fuel prudency audit last month. And given the robust growth of our communities and the capital investments required to ensure reliable and resilient electricity, we're evaluating the timing of our next rate review, which could be filed during the second half of this year. In March, the Arkansas Public Service Commission approved a settlement in the annual formula rate plan review, and new rates went into effect on April 1st. We'll follow the last formula rate plan update later this year. And as I close, I want to share a few thoughts on where we're headed. This is an exciting time to be part of this industry and work at this company, especially when you do business in the service area that is growing. We are truly in an opportunity-rich environment. Our significant investment opportunities correlate directly to our economic development engine that drives community growth and business expansion in our service area. This widens the competitive advantage we have in adding customers to the cities and towns we serve. As we ground our plans in affordability for our customers and maintain our low rates, the future of OGE Energy is bright. Our investments are delivering results with a 99.96% uptime, our service area is thriving, our customer base is growing, our business fundamentals are excellent, and I think our team is the very best in the business, focused on delivering premium electric company results. So we're operating from a strong base and are confident in delivering our commitments to you and our customers. Now I’ll turn the call over to Bryan. Bryan?

Thank you, Sean. Thank you, Jason, and good morning, everyone. Let's start on Slide 5 and discuss first quarter 2023 results. On a consolidated basis, first-quarter net income was $38 million or $0.19 per diluted share compared to $280 million or $1.39 per share in the same period 2022. Earnings for the first quarter of last year included $1.15 per share from natural gas midstream operations, which we fully exited in 2022 through the sale of our energy transfer units. The electric company achieved net income of $40 million or $0.20 per diluted share in the first quarter compared to $39 million or $0.19 per share in the same period in 2022. The increase in electric company net income was primarily due to increased recoveries of capital investments and strong load growth, partially offset by higher operating and maintenance costs and favorable weather, and increased appreciation on a growing asset base. Other operations, including our holding company, reported a loss of $1.5 million or a penny loss per diluted share in the first quarter compared to net income of $10 million or $0.05 per share in the same period in 2022. The decrease in net income was primarily due to a consolidating interim tax benefit of $12 million in the first quarter of 2022 related to OG&E's investment in energy transfer that reversed over the course of the year. Turning to customer growth and load results on Slide 6. Our customers grew at a rate of approximately 1%, and weather normalized load grew at a rate of 3.9% compared to the first quarter of 2022. This trend of strong growth in customers and load is a testament to the vibrancy of the economies in Oklahoma and Arkansas and our sustainable business model of economic and business development enabled by OG&E's low customer rates. While residential load was lower as more of our customers returned to the office, oilfield and public authority had very solid growth, and the commercial sector turned in its third straight quarter of double-digit year-over-year increases in weather-normalized load. As Sean alluded to, the pipeline of prospective business expansions continues to be as robust as the company has seen in many years, coming from data mining, manufacturing, defense, healthcare, and travel enterprises, among others. The economic situation in Oklahoma and Arkansas is outstanding, and for the full year, we continue to forecast total weather-normalized load growth of 4% to 5% compared to 2022. Now let's move to Slide 7 for an update on our 2023 financing plan. As you know, OGE Energy is fortified by one of the strongest balance sheets in the industry, with no need to issue equity for our current capital forecast. Furthermore, our projection of funds from operations to debt metrics of 17.5% to 18% throughout the five-year forecast period is one of the best in the industry. At the electric company, we issued $350 million of 5.6% notes in April and have now completed our planned long-term debt issuances for the year. Later this month, we will pay off the $500 million of senior notes at the electric company and $500 million of senior notes at the holding company that were issued in 2021 after winter storm Uri. With these repayments, we will be in a short-term position at the holding company and expect to end the year with a balance of approximately $300 million. Accordingly, our relative holding company debt position will be one of the lowest in the industry at well less than 10% of consolidated debt. As a reminder, we have no additional fixed-rate maturities through 2026. Before transitioning to our final slide, let me provide an update on our fuel under-recovery status. At the end of March, our fuel under-recovery balance was approximately $370 million, a reduction of $145 million since year-end. While we still have several months before we will catch up on the recovery of last year's fuel costs, we're hopeful these fuel price trends continue and ultimately lead to lower bills for our customers. Let's wrap up on Slide 8. In summary, our first-quarter EPS came in as expected, and I have great confidence in our employees’ ability to execute on our plan for the full year 2023 and to deliver financial results consistent with our earnings guidance. Simply said, I really like where we stand for 2023, and that allows us to focus on achieving our longer-term commitments to customers, communities, employees, and shareholders. As Sean mentioned, the fundamentals of OG&E's business are encouraging, including strong economic, infrastructure, and load growth, with a foundation of a solid balance sheet, all of which underpin our confidence in a 5% to 7% long-term earnings per share growth rate at the electric company. We believe this projected earnings trajectory, coupled with an expected stable and growing dividend, offers our investors an attractive total return proposition. With that, we will open the line for your questions.

Our first question comes from Shahriar Pourreza with Guggenheim Partners.

Hi, good morning Jason and team. Congrats on a great quarter. It’s actually Constantine here for Shahriar. Starting off on the quarter, obviously, weather was unfavorable. Can you talk about some of the offsets that you're embedding in the reiterated guidance? I think the slides are showing some strong normalized load growth. So how much is that contributing to the expectations for the remainder of the year or any other offsetting factors?

You're right, the quarter had about a $0.01 to $0.02 negative impact compared to normal when it comes to margins and the mild weather. Constantine, I would just point you to the fact we have so many tailwinds for this company this year sprinkled all throughout, I guess, in the revenue areas when you think about load growth, sales mix, and various items. So we're really bullish on 2023, and we're in a position where we can manage the weather, the mild weather. So we're in really good shape for 2023.

Regarding financing, as you noted, our balance sheet is in great shape and we've effectively completed our funding for this year. In the near term, could you share your thoughts on the potential use of cash convertible debt that some competitors have utilized for short-term advantages while also addressing your five-year funding needs? Additionally, with interest rates having decreased slightly this year, particularly at the longer end, does this provide you with some flexibility concerning your long-term guidance?

You're correct, we have completed our debt issuance plans for this year. We are definitely monitoring what other utilities and holding companies have issued. I think the latest term maybe for this hybrid interest instrument you're mentioning is cash convertible debt, and that's something we'll study. We don't have a holding company debt issuance need in the near term, but we'll continue to evaluate it. As far as interest rates, we do plan conservatively as we look out to future years on interest rates, and we're certainly optimistic that short-term rates, especially, will turn down in years ahead, which will just be overall beneficial to our company.

So is that something that's already embedded in the kind of five to seven…

No, we're using that 5% plus expectation on short-term rates this year and into the future. So that's not embedded yet.

Our next question comes from Julien Dumoulin-Smith with Bank of America.

This is Heidi Hauch, on for Julian. Just first question is can you provide more details on your commentary on the latest round of solar RFPs and why the RFP fell short of your expectations, or your watermarks moved forward there? And then also what changes or developments will you need to see to move forward more meaningfully on utility-scale solar procurements?

As you know, we had several RFPs, specifically three distinct processes underway. We're currently in active negotiations, and the situation is quite fluid. We're working to finalize these negotiations and ensure we don't encounter significant issues. While we haven't indicated that we lack bids for a particular RFP, we plan to expand our generation capacity. Our goal is to manage this smoothly without major disruptions. In the future, I expect that meeting our capacity needs will involve a mix of gas and solar, and potentially batteries if they become more cost-effective. These negotiations will heavily depend on costs, timing, deliverability, and availability, which are all crucial factors. Additionally, we need to consider the usual terms regarding risk, including what we are willing to accept and what we are not. Although this process is taking longer than I had expected, we plan to submit our results this summer. We will also undergo another integrated resource planning process to ensure we take advantage of the benefits from the IIJA and IRA opportunities, and we hope to see some relief from the inflationary pressures and timelines that we are currently facing.

And then just a quick follow-up. So given that kind of summer timeframe for filing the new RFPs, I believe you mentioned. Can you confirm what solar CapEx is included or embedded in the near-term plan, if any? That would be helpful.

We do not have any solar-specific planned CapEx in our plans or gas.

And then secondly, the latest 4% to 5% load growth forecast is very strong. How do you perceive the sustainability of that 4% to 5% load growth trajectory into 2024 and beyond?

I think that's a great question, and obviously, 4% to 5% is robust. We've been discussing this for a while, and that's on top of what we did the prior year. The challenge is it's very difficult to pinpoint whether growth in the subsequent years is going to be 4.5%, 3.5%, or 6.5%; it's very difficult to forecast beyond 12 months because it depends a lot on what happens in the current year and then the timing of in-service dates for some of those developments. So we will lay that out as we move forward, but we are very bullish. I think you've heard it from Brian, you've heard it from me that we've built something here that this engine is really moving down the track. We intend to keep it going for many, many years. It's truly the foundation of our company that we're going to continue to see logos and customers come to us; we're going to keep increasing the capital to support them, and we're going to spread that over more customers, thereby widening our competitive advantage in economic development. So again, we think this engine is going to go for many years.

And then, lastly, can you provide an update on your efforts in terms of complying with the latest iteration of EPA’s good neighbor rule, and maybe just an overall update on how this policy should impact your portfolio prospectively?

I think, between the good neighbor rule and we've seen that, and we certainly expect the GHG rules to be out shortly. We've been through this before, and this will go through many iterations—it'll probably get litigated. I think that's always been factored into our longer-term planning and how we think about our generation mix. And none of that is in our plans today because the rules aren't finalized yet, so we'll evaluate those and make the right decision for our customers.

Our next question comes from Alex Mortimer with Mizuho.

I was hoping, can you provide any color on if there's any timeline or internal thoughts on when we may get the EPS CAGR on a consolidated basis and not just at the utility?

Yes, I think it's our intention to do that in February. The logic there was, we are very bullish on our utility. As we were exiting the midstream business and Brian mentioned the retirement of some debt there from winter storm Uri, we're letting all that work itself out, and then we'll provide a consolidated growth rate when we get to February.

And then I know you're obviously very bullish on load growth, but a lot of it is tied to commercial, as well as it looks like some oilfield. With oil prices kind of declining in recent weeks and a potential economic slowdown expected in the second half of this year, how do you think of your exposure to both of these factors?

Certainly, we've seen the tailwind from the oilfield. But if you go back a year ago, it wasn't a tailwind, and load growth was still robust. Bryan alluded to this, and I referenced it in my remarks; the growth is pretty diverse and not just in oilfield but you look at a lot of what we're seeing around the defense industry, which is really growing. And what sneaks up on you quickly there are the residential numbers. There's just a lot of residential customers. But, as you see these new industries come in and you're adding 90, 100 people at a time, that adds residential accounts too. So, I think there's a solid base there for that continued growth, and we're not necessarily tied to a particular industry.

And then, just to round out load growth. Is there any good way to quantify your impact of load growth on earnings? For example, for every 10 basis points of load growth, is that worth a cent of EPS? Or is there something along those lines that we should be thinking about?

I think we're all smiling here because we'd love to be able to do that. It really has a lot to do with the segment itself; each has a margin contribution that's different based on the segment. The other thing that's important too is when those new load-serving entities come on the system, whether it's at the end of the year, the middle of the year, or the beginning of the year. And so that has a different impact from year to year as well. We're keenly focused on the sensitivity there, but we haven't come up with a good way to express a 10 basis point sensitivity that we could clearly provide.

Our next question comes from Aditya Gandhi with Wolfe Research.

My first question is just on the outstanding RFPs. Could you clarify the timeline? So you're going to file for approval sometime in the summer, and then what milestones should we be watching? To the extent that you can address, can you give us some sense of what percentage of your generation need would be fulfilled from this current round of RFPs versus your next IRP or RFPs?

So we're going to file this summer in both states. In Oklahoma, under the provisions there, you have up to 240 days to receive approval for that, so that would be one milestone. I also mentioned that we are going to start the integrated resource plan; we’re going to reissue that again to incorporate IIJA and IRA opportunities. But also, Bryan spent a lot of time talking about load growth. So our load growth projections are changing as well. In terms of what percentages and what we're going to file for, while we're still in negotiations, we're probably not in a position to comment on that right now.

Moving on to sort of the timing for your next rate review. You mentioned it could potentially be filed in the latter half of this year. When we're thinking about the level of the rate increase, given the high fuel costs last year, how are you thinking about the level of the rate increase? And could you also comment on whether the next rate review could potentially include recovery for the generation investments, or if that's going to be through a separate process?

So we're going to file in Oklahoma through a separate process. For the approval mechanism we have in statute here, we're going to go through that for the generation. In terms of the rate review, your point is spot on. I mean, we are focused on affordability—that's the key pillar of our growth engine. We've got to keep our rates attractive so we can continue this growth story. Since this is not a large rate case, we have a goal of staying current and making sure that everything is timely. Our customers have communicated to us that they like the smoothing effect that we're trying to ensure, and no one wants to see any big spikes, and we don't intend to see that going forward.

Just one last question, if I may. Bryan, I just wanted to clarify. After you pay off the billion dollars of Uri-related debt, $500 million each at the utility and holdco, you mentioned that would be your short-term debt balance at the holdco and that would be around the $300 million range by the end of the year. That's consistent with your messaging from the prior quarter?

Yes, that's right. I just want to reiterate, when you think about our company in totality, as Sean mentioned in the fourth quarter call, and we both discussed today, we're really bullish on utilities, growth prospects with a lot of tailwinds from load growth, emerging investments in the grid and generation. So we feel really good about the utility over the next five years. And as the utility grows, that means the holding company has to pay less and less of the dividend going forward. So when you think about that, that should give you some comfort that our holding company interest costs, as that grows each year, will grow less and less—just to add a little more color to my comments from the last call.

Our last question comes from Shahriar Pourreza with Guggenheim Partners.

I just had a couple of quick follow-ups, just to confirm on the RFPs. You mentioned that there's no near-term CapEx affected by just thinking about if there's some delays in magnitude versus the original thinking. Are you planning to offset or flex somewhere else in the CapEx plan?

Constantine, is your question—make sure I understand it correctly? But is your question about where is the capital expenditures associated with these RFPs?

Yes. And if the delays in the refiling of the IRP would impact the existing capital plan at all?

No. I think what we said is we have a lot of opportunities; this is opportunity rich, and we're allocating capital and just really fueling this growth engine we have. The timing of these RFPs and the results and that sort of thing doesn't really impact or change our plans, because we have tremendous opportunities to invest and continue to grow our company.

You mentioned that some of the outcomes and the economics that you've seen weren't necessarily palatable to your original request. Just curious if you can share how has the commodity volatility in both directions, especially on the positive side this year, impacted your thinking on preferred mix?

So we're certainly pleased that we've seen a pullback in natural gas prices that certainly helped relieve some of the pressure from fuel costs to our customers, so we like that. When we're evaluating this and making our decisions, while we're cognizant of the current commodity price environment, we're taking a long-term view and we're factoring in a long-term view of prices and potential regulations, as well as what the EPA projects. So it's a very thorough analysis.

At this time, I would now like to turn it back to Sean for closing remarks.

Thank you, Hope. Thank you, everybody, for joining us this morning. Thank you for your interest in the company, and I hope everyone has a wonderful day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.