ONE Gas — Second Quarter 2026 Earnings Summary

Financial Performance

• Second quarter 2026 adjusted net income was $52.1 million ($0.82 per diluted share), compared to $32.7 million ($0.54 per diluted share) in the same period in 2025.
• Year-to-date 2026 adjusted net income was $185.5 million ($2.94 per diluted share), compared to $152.8 million ($2.53 per diluted share) in 2025.
• Second quarter 2026 GAAP net income was $46.8 million ($0.74 per diluted share), compared to $32.0 million ($0.53 per diluted share) in 2025.
• Year-to-date 2026 GAAP net income was $175.5 million ($2.78 per diluted share), compared to $151.5 million ($2.51 per diluted share) in 2025.
• Second quarter 2026 total revenues were $411.6 million, compared to $423.7 million in 2025.
• Year-to-date 2026 total revenues were $1,243.4 million, compared to $1,358.9 million in 2025.
• Second quarter 2026 operating income was $82.7 million, compared to $71.9 million in 2025.
• Year-to-date 2026 operating income was $272.3 million, compared to $252.4 million in 2025.
• Second quarter 2026 capital expenditures and asset removal costs were $188.3 million, compared to $190.1 million in 2025.
• Year-to-date 2026 capital expenditures and asset removal costs were $357.9 million, compared to $367.8 million in 2025.
• Net interest expense (excluding KGSS-I securitized bonds) decreased $3.8 million in Q2 2026 and $6.7 million year-to-date 2026 compared to the prior year periods.
• Total assets were $8,812.2 million as of June 30, 2026, compared to $8,853.1 million as of December 31, 2025.
• Total long-term debt was $2,340.8 million as of June 30, 2026, compared to $2,356.0 million as of December 31, 2025.
• Total equity was $3,537.9 million as of June 30, 2026, compared to $3,440.1 million as of December 31, 2025.
• Cash provided by operating activities for the six months ended June 30, 2026, was $387.3 million, compared to $448.8 million in 2025.

Guidance and Future Outlook

• Raised 2026 adjusted net income expectations to the upper half of the range, now $306 million to $314 million.
• Raised 2026 adjusted net income per diluted share expectations to the upper half of the range, now $4.83 to $4.95.
• 2026 capital investments, including asset removal costs, are expected to be approximately $800 million.
• Capital investments for extensions to new customers are expected to be approximately $230 million of the total $800 million.

Business Segments and Product Lines

• Revenue increases in Q2 2026 included $16.4 million from new rates, $1.4 million from residential sales growth in Oklahoma and Texas, and $1.3 million from line extension revenue in Oklahoma.
• Revenue increases year-to-date 2026 included $43.7 million from new rates, $3.2 million from residential sales growth in Oklahoma and Texas, and $1.8 million from released transportation capacity in Kansas.
• Revenue decreases year-to-date 2026 included $10.6 million due to lower sales and transport volumes, net of weather normalization mechanisms.
• Operating expense increases in Q2 2026 included $7.4 million in employee-related costs, $1.1 million in outside services, and $1.1 million in fleet expense.
• Operating expense increases year-to-date 2026 included $13.2 million in employee-related costs, $3.4 million in outside services, and $1.3 million in fleet expense.
• Weather was 42 percent warmer than normal and 28 percent warmer than the prior year in Q2 2026; 23 percent warmer than normal and 25 percent warmer than the prior year year-to-date 2026.
• Weather impacts on operating income were mitigated by weather normalization mechanisms.
• Income tax expense included credits for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $3.3 million in Q2 2026 and $12.8 million year-to-date 2026.

Market and Competitive Landscape

• ONE Gas serves more than 2.3 million customers in Kansas, Oklahoma, and Texas.
• Kansas Gas Service is the largest natural gas distributor in Kansas.
• Oklahoma Natural Gas is the largest natural gas distributor in Oklahoma.
• Texas Gas Service is the third largest natural gas distributor in Texas.
• The company operates in constructive jurisdictions and focuses on reliability and affordability.

Risks and Challenges

• Risks include the ability to recover costs and allowed rates of return in regulated rates.
• Cyber-attacks and technology system breaches could disrupt operations.
• Changes in regulation of natural gas distribution services in Oklahoma, Kansas, and Texas.
• Economic climate effects on residential and commercial customer gas requirements.
• Competition from alternative energy forms including electricity, solar, wind, geothermal, and biofuels.
• Adverse weather conditions, severe storms, and climate change effects on supply and demand.
• Indebtedness vulnerability to adverse economic conditions and borrowing limitations.
• Capital-intensive nature of the business and access to funds for debt obligations and capital expenditures.
• Operational and mechanical hazards or interruptions.
• Adverse labor relations and skilled labor shortages.
• Potential impairment charges and commodity price volatility.

Management Commentary and Tone

• Robert S. McAnnally, CEO, stated that strong second quarter and first-half results reflect continued execution of the growth strategy and benefits of operating in constructive jurisdictions.
• Management expressed confidence to raise adjusted earnings expectations for the full year based on strong performance.
• Management emphasized maintaining focus on reliability, affordability for customers, and creating long-term value for shareholders.

Other Key Points

• The board of directors declared a quarterly dividend of $0.68 per share ($2.72 annualized), payable on August 31, 2026, to shareholders of record on August 17, 2026.
• Kansas Gas Service submitted an application to the Kansas Corporation Commission in July 2026 for a $14.3 million Gas System Reliability Surcharge increase effective October 2026.
• Texas Gas Service received approval from the Texas Railroad Commission in June 2026 for a $36.9 million revenue increase effective July 2026.
• Oklahoma Natural Gas filed a PBRC application in February 2026 requesting a $28.7 million base rate revenue increase; an administrative law judge recommended approval in June 2026, with interim rates implemented on June 26, 2026.
• KGSS-I securitized bonds impact on Q2 2026 revenues was $10.9 million, with $7.5 million in operating/amortization expense and $3.4 million in interest expense.
• KGSS-I securitized bonds impact on year-to-date 2026 revenues was $21.9 million, with $15.0 million in operating/amortization expense and $6.8 million in interest expense.
• Adjusted net income is a non-GAAP measure calculated as GAAP net income plus the deferral of an equity portion of a carrying cost attributable to shareholders' investment capitalized for regulatory purposes.