Natural gas distributor, ONE Gas Inc (OGS 3.37%), reported its first-quarter results last Wednesday. The early 2014 spin-off of ONEOK, (OKE 2.25%) reported a remarkably steady quarter as its earnings were flat from last year. The company also reiterated its 2015 guidance as its fairly predictable business put it on pace to meet its expectations.

A look at the numbers
ONE Gas reported first-quarter net income of $60.4 million, or $1.13 per share, which was in-line with analysts' consensus estimates. Overall, net income was up ever so slightly from last year's first-quarter when the company generated $59.1 million in net income, which worked out to that same $1.13 per share. Driving that stability was the weather, which in the company's core Midwest operating area was 4% colder than normal, though about 8% warmer than it was in the previous year. Overall, it was still cold enough that ONE Gas customers kept consuming natural gas to keep warm.

In addition to the weather there were a few other factors that drove the slight improvement in net income. Overall, net margins increased $3.2 million year-over-year due to an $8.7 million increase from new rates primarily in Oklahoma and Texas. In addition to that, the company saw a $1.3 million increase due to residential customer growth in Oklahoma. These increases helped to offset a $2.5 million decrease in rider and surcharge recoveries in Kansas and Oklahoma and $3.3 million in lower sales values due to the slightly warmer weather. The company also saw higher costs, which is why net income barely budged, due to some higher employee-related expenses as well as an increase in information technology expenses.

Turning to its balance sheet, ONE Gas ended the quarter with $142.5 million of cash and equivalents and no borrowings under its credit facility. When combined with its long-term debt ONE Gas had a total debt-to-capitalization of 40%. Overall, that's a fairly solid balance sheet for a utility, and strong enough to give the company the confidence to keep its dividend stable.

A look ahead
ONE Gas expects its predictable earnings stream to continue as it has reiterated its full-year guidance. The company expects its net income to be in a range of $108 million to $118 million for 2015.

The company also expects to spend about $300 million on capital expenditures in 2015. However, more than 70% of that money will be spent on system integrity and replacement projects. This means that the money will be more geared toward maintaining its assets as opposed to growing its asset base, which suggests earnings should continue to be predictable, but aren't likely to grow all that much.

Investor takeaway
ONE Gas continues to deliver results that are a lot more predictable than the weather as another cold winter in the Midwest led to very stable first-quarter earnings. Given that the first-quarter is its peak, the company is on pace to deliver on its full-year guidance as natural gas demand the rest of the year tends to be even more predictable as the weather is less of a factor.