We reported 2018 net income of $172 million, or $3.25 per diluted share, compared with $163 million, or $3.08 per diluted share, in 2017; and 2018 capital expenditures, including asset removal costs, of $442 million, compared with $418 million in 2017. Our 2019 diluted earnings per share are expected to be within a range of $3.27 to $3.57 per share. Our 2019 capital expenditures, including asset removal costs, are projected to be $450 million

Net margin decreases in 2018 primarily reflected a decrease related to the deferral of potential refund obligations associated with the Tax Cuts and Jobs Act of 2017 and related rate adjustments, offset partially by new rates in Texas and Kansas, higher volumes and a net increase in our average residential customer count in Oklahoma and Texas. The decreases in net margin from tax reform were offset by decreases in income tax expense.

On January 15, 2019, the ONE Gas Board of Directors increased the quarterly dividend by 4 cents per share to 50 cents per share, effective for the first-quarter 2019, resulting in an annualized dividend of $2.00 per share.

Our average annual dividend growth rate is expected to increase 7 to 9 percent between 2018 and 2023 with a target dividend payout ratio of 55 to 65 percent, all subject to board approval.