10-QPeriod: Q3 FY2024

ONEOK INC /NEW/ Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 30, 2024For Securities:OKE

Summary

ONEOK, Inc. reported a strong third quarter and first nine months of 2024, demonstrating significant growth driven by strategic acquisitions and robust operational performance across its segments. Total revenues increased substantially year-over-year, reflecting higher commodity sales and services. The company successfully integrated the Magellan Acquisition and is progressing with the significant EnLink and Medallion acquisitions, which are expected to further enhance its scale and market position, particularly in the Permian Basin. While interest expenses have risen due to increased debt financing for these acquisitions, net income and diluted earnings per share have shown positive trends for the quarter, although the year-to-date EPS was impacted by a large insurance settlement in the prior year. ONEOK continues to focus on its fee-based business model, with over 85% of its consolidated earnings expected to be fee-based in 2024, providing a degree of insulation from commodity price volatility. The company also reiterated its commitment to returning capital to shareholders through dividends and a new share repurchase program.

Financial Highlights

51 data points
Beta

Revenue

$5.02B

39.7% Gross Margin

Net Income

$692.00M

13.8% Net Margin

EPS (Diluted)

$1.18

Total Assets

$51.05B

Cash & Equivalents

$6.46B

Free Cash Flow

$783.00M

Financial Statements
Beta
Revenue$5.02B
Cost of Revenue$3.03B
Gross Profit$2.00B
Operating Income$1.13B
Net Income$692.00M
EPS (Basic)$1.18
EPS (Diluted)$1.18
Shares Outstanding (Basic)584.80M
Shares Outstanding (Diluted)586.70M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2024, increased to $14.7 billion from $12.4 billion in the prior year period, driven by growth across all segments.
  • 2The company completed the EnLink Controlling Interest Acquisition on October 15, 2024, and expects to close the Medallion Acquisition in Q4 2024, significantly expanding its midstream infrastructure.
  • 3Net income for the nine months ended September 30, 2024, was $2.11 billion, an increase from $1.97 billion in the prior year, despite higher interest expenses.
  • 4Diluted EPS for the three months ended September 30, 2024, improved to $1.18 from $0.99 in the prior year, though the nine-month EPS decreased due to a prior year insurance settlement.
  • 5Adjusted EBITDA for the nine months ended September 30, 2024, reached $4.61 billion, up from $3.73 billion in the prior year, reflecting strong operational performance and acquisition contributions.
  • 6ONEOK raised approximately $6.9 billion in net proceeds from a senior unsecured notes offering in September 2024 to fund its major acquisitions.
  • 7The company declared a common stock dividend of $0.99 per share for the quarter, continuing its track record of returning capital to shareholders.

Frequently Asked Questions

Revenue growth in the third quarter of 2024 was primarily driven by contributions from the Refined Products and Crude segment, higher NGL and natural gas processing volumes in the Rocky Mountain region, and increased transportation services in the Natural Gas Pipelines segment. The company also benefited from its primarily fee-based revenue model.

The acquisitions of EnLink and Medallion are expected to significantly increase ONEOK's scale and integrated value chain, particularly in the Permian Basin. They expand the company's asset bases and are anticipated to generate substantial synergies by combining complementary infrastructure. These acquisitions are strategic moves to enhance market position and long-term growth.

ONEOK issued $7.0 billion in senior unsecured notes to fund its acquisitions, leading to higher interest expenses. However, the company's strong operating cash flow and its fee-based business model are expected to manage this increased debt. Its leverage ratio was 3.7 to 1 as of September 30, 2024, and it remains in compliance with its credit agreement covenants. The company's credit ratings remain investment grade.

ONEOK structures its business to minimize direct exposure to commodity price volatility. Over 85% of its consolidated earnings are expected to be fee-based in 2024. The company also utilizes commodity derivative instruments and hedging strategies, particularly in its Natural Gas Gathering and Processing segment, to manage price risks.