Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 4, 2026 · Beat 2 of last 4 quarters
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ONE Gas is benefiting from the AI infrastructure buildout through rising demand for natural gas to power data centers and gas-fired generation. The company's large-load pipeline, including a data center project in Oklahoma and a gas-fired generation project for Western Farmers, underscores the growing role of natural gas in supporting AI-driven electricity demand. The regulatory tailwinds in Texas and Kansas further enhance the economics of these investments.
ONE Gas delivered strong second-quarter results, with adjusted EPS of $0.82, up 52% year-over-year, driven by new rates and Texas House Bill 4384 benefits. The company raised its full-year guidance to the upper half of the range, citing continued customer growth and regulatory tailwinds. Regulatory filings progressed, including approval of the Texas GRIP filing and the Oklahoma rate case recommendation. Large-load momentum continued, with three projects under contract and several more in late-stage discussions. O&M expenses rose 6.6% year-over-year, but management expects a meaningful step-down in the back half.
Management raised its full-year 2026 adjusted EPS guidance to the upper half of the range, now $4.89–$4.95 (from $4.83–$4.95), citing strong first-half performance, new rates, and the benefit of Texas House Bill 4384. They expect HB 4384 to contribute approximately $0.42 to full-year adjusted EPS, with the second quarter representing a larger share of the benefit and a smaller contribution in the third quarter. O&M expense growth is expected to moderate meaningfully in the back half of the year, with long-term annual O&M growth still guided at 3%–4%. The company continues to see a broad pipeline of large-load opportunities, with 5 projects in late-stage discussions and 17 in early evaluation, and expects to provide a 2027 outlook later this year.
“Our strong second quarter performance reflects solid execution across the business and the continued strength of our growth strategy.”
on Quarterly performance
“We now expect House Bill 4.38 thousand to contribute approximately $0.42 to full year adjusted EPS.”
on Texas HB 4384 benefit
“By leveraging our existing pipeline network, we can respond quickly to meet customer needs and create value for all customers.”
on Large-load strategy
With improved regulatory constructs, do you see a CapEx shift or pull-forward into better contract constructs with less ROE lag? And is there an accretive opportunity within your current 5%–7% long-term growth?
Curtis Dinan noted that system integrity spending (60–70% of capital) is agnostic to regulatory treatment, while growth capital is driven by customer needs. He acknowledged higher activity in Texas, which benefits from HB 4384. Sid McAnnally added that they remain confident in execution and will provide a 2027 outlook later this year.
Is the large-load customer interest reflective of new inbounds or a continued trend? And how does that feed into the 17 projects in early evaluation?
Curtis Dinan explained that these are longer-lead developments with customers they've been working with for some time, but some projects have moved quickly to secure capacity. He noted a mix across all three states and categories, and they will share more as projects reach final investment decisions.
Can you quantify the benefits from HB 4384 this quarter and how it showed up across D&A and interest expense? And what's the cadence for the rest of the year after the July GRIP reset?
Christopher Sighinolfi said he didn't have the quarterly figure but noted first-half benefits of about $0.28–$0.29 across GAAP and non-GAAP adjustments. He highlighted that the largest Texas project (Austin system reinforcement) took effect in Q3 2025, and no projects of that caliber are planned for the back half of 2026, so the benefit will be lower sequentially.