Good day, and welcome to the ONE Gas Fourth Quarter and Yearend 2023 Earnings Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Sighinolfi. Please go ahead, Mr. Sighinolfi.

Good morning, and thank you for joining us on our fourth quarter and yearend 2023 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. 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 Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of 1934, each as 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 SEC filings. Joining me on the call this morning are Sid McAnnally, President and Chief Executive Officer; and Curtis Dinan, Senior Vice President and Chief Operating Officer. And now I'll turn the call over to Sid.

Thanks, Chris, and good morning, everyone. This year, we celebrate 10 years as an independent company and 118 years since the founding of Oklahoma Natural Gas in 1906. We've experienced remarkable growth in the 10 years since our spin-off from ONEOK, including the addition of 230,000 new customer meters, installing over 6,000 miles of new pipe across our system and doubling our earnings per share. We've deployed best practices and lessons learned over our 118-year history to enhance our system, support customer growth and reliably deliver natural gas that our customers depend on. We've also invested in our workforce, allowing us to achieve excellence in both capital execution and safety, leading to six consecutive years of recognition by the American Gas Association for having the lowest rate of significant injuries amongst our peers, with service territories that continue to benefit from population migration, focused economic development and access to affordable energy. We look forward to building upon our strong track record in the years and decades to come. Turning to our fourth quarter results. We again delivered earnings and capital execution as projected in our guidance, despite the challenges posed by macroeconomic conditions. To put this achievement in context, when we became a standalone company 10 years ago, we deployed a total of $262 million in core capital. Last year, we spent over $725 million, almost three times our first-year total to serve our customers and communities. Our teams also fulfilled our service commitment as we faced Winter Storm Gerri last month. Despite temperatures being colder than those experienced during Winter Storm Uri in 2021, our teams kept gas flowing to our 2.3 million customers. We experienced limited outages affecting only 200 customers, with service restored to most within hours, and did not have any vehicular accidents or severe injuries. This performance is a testament to the focus of our coworkers and to the investments we've made following Winter Storm Uri three years ago. With that, I'll turn it over to Chris to discuss financial details for the quarter and the year.

Thanks, Sid. As Sid noted, we met our net income and EPS targets for the year despite volatile macroeconomic conditions. Net income for the fourth quarter was $71 million or $1.27 per diluted share compared with $67 million and $1.23 in the same period in 2022. For the full year, net income was $231 million or $4.14 per diluted share compared with $222 million or $4.08 in 2022. Although weather across our service territories in the fourth quarter was approximately 17% warmer than the prior year and 13% warmer than normal, the impact on earnings was not material due to our weather normalization mechanisms. Fourth quarter revenues reflect an increase of $15.6 million from new rates and $1.9 million from continued growth in our customer base. Fourth quarter O&M expenses were 6.6% higher than the fourth quarter last year, continuing the moderating trend we experienced throughout 2023, as the benefits of our in-sourcing efforts began to bear fruit. We expect this trend to continue, and as a reminder, project operating expenses to grow by approximately 5% per year through 2028. Excluding amounts related to KGSS-I, depreciation and amortization expense was approximately $6.7 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. Other income net increased $1.5 million compared to the same period last year, primarily due to a $3.2 million increase in the market value of investments associated with our non-qualified employee benefit plans. Excluding the amounts related to KGSS-I, interest expense in the quarter was $1.5 million higher than the same period in 2022, which primarily reflects higher rates on commercial paper balances. We took advantage of the decline in interest rates in December to issue $300 million of 5.1% senior notes due April 2029. We utilized the net proceeds from that offering to repay amounts outstanding under our commercial paper program and for general corporate purposes. In December, we settled approximately a million shares of our common stock under forward contracts for net proceeds of $79 million. We also amended the March 2023 forward sale agreement to extend the maturity date of 657,000 shares to December 31, 2024. As of December 31, we had $89 million of commercial paper outstanding at a weighted average interest rate of 5.6%. Our capital expenditures and asset removal costs for the fourth quarter were $190 million, bringing our total for the year to $729 million compared to $657 million in 2022. The increase is primarily attributable to system integrity projects and the extension of service to new areas. Authorized rate base was approximately $4.9 billion as of yearend, and we estimate our average rate base for 2024 will be approximately $5.55 billion. Turning to our liquidity, we ended the year with approximately $1.1 billion of capacity under our $1.2 billion commercial paper program and no borrowings under our credit facility. In addition, we had forward sale agreements for approximately 3.56 million shares of our common stock with settlement by the end of 2024 at an average price of nearly $77 per share. Had all forward shares been settled at yearend, we would have received net proceeds of approximately $273 million. At the end of the year, we also had approximately $225 million of equity available for issuance under our at-the-market equity program. With forward sales executed last year, we have largely satisfied our equity needs for 2024. Our balance sheet remains strong. In December, S&P affirmed its A minus credit rating and stable outlook. And earlier this month, Moody's affirmed its A3 rating and stable outlook. In January, the ONE Gas Board of Directors declared a dividend of $0.66 per share, an increase of $0.01 from the prior quarter. And lastly, we affirm our 2024 financial guidance, including net income of $214 million to $231 million, earnings per diluted share of $3.70 to $4 and capital expenditures and asset removal costs of approximately $750 million. I'd also note that while the market has been engaged in a spirited debate about the pace, timing and magnitude of potential rate cuts from the Federal Reserve and has been reactive to speculation on that front, our guidance is not predicated on any rate cuts occurring in 2024. While we would be pleased to see interest rates come down this year, our forecast did not assume that would happen. With that, I'll turn it to Curtis.

Thank you, Chris, and good morning, everyone. I'll begin with an update on regulatory activity. In December, the Kansas Corporation Commission issued an order approving Kansas Gas Services request for an $8 million increase, pursuant to our gas system reliability surcharge filing. Those rates became effective in December. We have also notified the commission of our intent to file a full rate case. We anticipate making this filing on March 1. In June 2023, Texas Gas Service filed a rate case for all customers in the Rio Grande Valley service area based on a 2022 test year. In January, the Railroad Commission approved a settlement, reflecting an approximate $5.9 million rate increase, based on a 9.7% authorized ROE and 59.1% equity capital, and new rates took effect that month. And finally, Texas Gas Service made a gas reliability infrastructure program filing for all customers in the Central Gulf service area in February, requesting a $12.3 million revenue increase to be effective in June. Switching to an update on commercial activity, we added over 23,000 new connections in 2023, continuing the healthy customer growth we have seen over the past 10 years. We also continued to secure new business and again, ended the year with a solid backlog of future meter sets. As we have discussed on the past several calls, the growth is occurring in step with economic development in all three states, and we expect it to continue. Moving on to operations, we finished strong in 2023 with capital execution. We completed over $725 million worth of capital investment projects over the year with approximately $175 million dedicated to serving our growing customer base and $525 million invested in increasing the safety and reliability of our system. As Sid mentioned, we were again tested last month when Winter Storm Gerri brought extreme cold, snow and ice to our service territories. As with past winter storms Uri, Mara and Elliott, our system, processes and coworkers performed well with no significant service disruptions. The lessons we learned from Uri and the resulting investments we've made in our system, including added storage capacity, system reinforcements and diversifying our gas supply portfolio have enhanced our system reliability. In the years since Uri, and using Austin as an example, we strategically invested in 19 system reinforcement projects, the last of which went into service just before Gerri hit last month. To illustrate the performance, we positioned compressed natural gas mobile units along points in our system that were previously stressed by extreme weather, but never had to utilize them because the system performed so well. In fact, we exceeded our previous peak day volumes in the Austin metro area that were established during Winter Storm Uri. I want to sincerely thank our coworkers in the field, at our customer service centers, and those who support the work they do, for their dedication to safety and to ensure that our customers were taken care of throughout the winter storm event. And now I'll turn it over to Sid for closing remarks.

Thank you both. In November, we detailed our 2024 and five-year financial outlook, once again, openhandedly discussing how altered macroeconomic conditions would impact our business in the near term and the actions our company is taking in response. As Chris noted, we've utilized forward sales to derisk our equity needs and have maintained a strong balance sheet, giving us flexibility to fund the business. Curtis mentioned the upcoming rate case filing in Kansas, and we've spoken about how we will be diligent in executing regulatory proceedings to ensure that financial realities are appropriately captured in our rates. We are prepared to address near-term challenges posed by external financial conditions while pursuing opportunities to invest in the business. As we enter 2024, we will remain focused on safety, operational execution and long-term value creation for our stakeholders. We're fortunate to operate in a region where people value natural gas, desire our services and we are prepared to meet the demand created by our growing service territory. Our success is made possible by the commitment of each one of our 3,900 coworkers, and I'm grateful for their dedication to serving our customers. It's a privilege to work alongside them every day. Thank you all for joining us this morning. Operator, we're now ready for questions.

Thank you. Our first question comes from Christopher Jeffrey with Mizuho Securities. Your line is open. Please go ahead.

Hi, everyone. Thanks for taking my question. Maybe just starting with the Kansas rate case, any early insights into special asks that you'll have, and maybe how you are viewing the capital structure, refinancing some of the upcoming debt going into that case? Thanks.

Hey, Chris, I think you hit on all the key items. We're not prepared to talk about the details of what will be in that filing next week. But the things that you mentioned, certainly, we'd given signals that before we completed our most recent long-term debt financing, we wouldn't be prepared to go in for a filing. We completed that, as Chris mentioned earlier, and that was really the last point we needed to cross. And so again, we're preparing to file that next Friday, and will be able to give a better update at that point.

Got it. And then maybe just asking more specifically on the maturity coming up in March, the $473 million note, just any expectations on how you guys are looking at refinancing that, or whether you might flow through with some short-term debt in the shoulder season?

Hi, Chris. This is Chris. You're right. We had communicated in the wintertime, and it still remains true that we anticipate rolling that onto commercial paper initially and then terming that out as we move through the year. There's the prospect obviously that rates may come down later in the year based on the pivot by the Federal Reserve in December. And so we look to take advantage of that if it proves true.

Got it. Thank you, both.

We have no further questions. I'll now hand back to the management team for closing remarks.

Thank you again for your interest in ONE Gas. We look forward to seeing many of you in New York in March. Our quiet period for the first quarter starts when we close our books in early April and extends until we release earnings in May. We'll provide details on that conference call at a later date. Have a great day.

This concludes the ONE Gas fourth quarter and yearend 2023 earnings conference call and webcast. You may now disconnect.