10-QPeriod: Q3 FY2021

ONEOK INC /NEW/ Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 3, 2021For Securities:OKE

Summary

ONEOK Inc. reported strong financial results for the nine months ended September 30, 2021, with net income increasing significantly year-over-year, driven by robust performance across its business segments. The company saw substantial revenue growth, particularly in commodity sales, reflecting higher volumes and increased producer activity, especially in the Rocky Mountain region. This growth was further supported by higher commodity prices and increased ethane production. The company's operational efficiency and fee-based business model, with approximately 90% of earnings expected to be fee-based in 2021, have helped mitigate direct commodity price volatility. ONEOK successfully navigated challenges such as Winter Storm Uri, which, despite some volume impacts, ultimately resulted in a net positive financial outcome due to the critical nature of its services. The company continues to focus on strategic growth projects, sustainability initiatives, and maintaining a strong balance sheet, demonstrating resilience and a forward-looking approach.

Financial Highlights

49 data points
Beta

Revenue

$4.54B

24.0% Gross Margin

Net Income

$392.02M

8.6% Net Margin

EPS (Diluted)

$0.88

Total Assets

$23.87B

Cash & Equivalents

$224.34M

Free Cash Flow

$246.97M

Financial Statements
Beta
Revenue$4.54B
Cost of Revenue$3.45B
Gross Profit$1.09B
Operating Income$667.86M
Interest Expense$184.05M
Net Income$392.02M
EPS (Basic)$0.88
EPS (Diluted)$0.88
Shares Outstanding (Basic)446.63M
Shares Outstanding (Diluted)447.63M

Key Highlights

  • 1Net income available to common shareholders for the nine months ended September 30, 2021, was $1.119 billion, a significant increase from $303.9 million in the prior year period.
  • 2Total revenues for the nine months ended September 30, 2021, reached $11.12 billion, more than doubling the $5.97 billion reported for the same period in 2020.
  • 3Adjusted EBITDA for the nine months ended September 30, 2021, was $2.53 billion, up from $1.98 billion in the prior year, indicating strong operational profitability.
  • 4Capital expenditures for the nine months ended September 30, 2021, were $490.3 million, a substantial decrease from $1.92 billion in the prior year, reflecting the completion of major growth projects and pausing of others.
  • 5The company maintained its quarterly common stock dividend at $0.935 per share, demonstrating a commitment to shareholder returns.
  • 6ONEOK announced a 30% absolute greenhouse gas emissions reduction target for Scope 1 and 2 emissions by 2030 compared to 2019 levels, aligning with sustainability goals.
  • 7Debt levels remain significant but manageable, with total long-term debt (excluding current maturities) at $13.64 billion as of September 30, 2021. The company maintained compliance with its credit agreement covenants.

Frequently Asked Questions

ONEOK experienced significant revenue growth primarily driven by higher commodity sales, which more than doubled year-over-year for the nine months ended September 30, 2021. This increase was attributed to higher volumes, increased producer activity in key regions like the Rocky Mountains, rising commodity prices, and increased ethane production across the company's system.

Winter Storm Uri had a net positive impact on ONEOK's financial results, primarily in the first quarter of 2021. While producer wellhead freeze-offs reduced volumes in the Natural Gas Gathering and Processing and Natural Gas Liquids segments, the company's ability to meet increased demand for natural gas and provide critical services through its storage and pipeline assets offset these impacts and improved financial results.

ONEOK has invested in significant capital-growth projects across its segments. For the nine months ended September 30, 2021, capital expenditures decreased substantially compared to the prior year, reflecting the completion of major projects and the pausing of others. The company expects to benefit from future supply growth with existing capacity and is focusing on projects that connect diversified supply basins to demand centers. Sustainability initiatives and exploring renewable energy opportunities are also key strategic areas.

ONEOK maintains a significant but manageable debt load, with total long-term debt (excluding current maturities) at $13.64 billion as of September 30, 2021. The company remains compliant with its credit agreement covenants, which include maintaining a ratio of indebtedness to adjusted EBITDA of no more than 5.0 to 1. They also successfully redeemed a portion of their senior notes and are committed to managing their liquidity and capital resources to meet operational needs, capital expenditures, and shareholder dividends.