Q3 2020 Atmos Energy Corp Earnings Call
<unk> assistance during the conference. Please press star zero water telephone keypad quite sure. That's recession will follow the formal presentation. As a reminder, this conference is being recorded.
Well my pleasure control over to Dabir, Vice President Investor Relations and Treasurer. Please go ahead there.
Thank you very.
Good morning, everyone and thank you for joining us today.
With me. This morning are Kevin acres, President Chief Executive Officer, Chris Fore sight, Senior Vice President Chief Financial Officer.
Our earnings release unconstitutional slide presentation, which we will reference in our prepared remarks are available on atmosphere energy Dot com under the Investor Relations.
Today's presentation also includes references to non-GAAP financial measures you should refer to the information contained in the slides accompanying today's presentation.
Or definitionally information and reconciliations of non-GAAP measures to the closest GAAP financial measure.
As we reviewed these financial results and discuss future expectations. Please keep in mind that some of our discussion may contain forward looking statements within the meaning of the security side and the Securities Exchange Act.
Forward looking statements and projections could differ materially from actual results.
Factors that could cause such material differences are outlined on slide 32, or more fully described in our SCC, which.
I'll now turn the call leverage cap.
Okay.
Thank you Dan and good morning, everyone. We appreciate you joining us today and your interest in Atmos energy.
I Hope you and your families are safe and healthy as we continue to navigate our way through this challenge together.
The safety of our employees, our customers and the safety of our communities remain a focus as we continue to deliver sites and while natural gas service.
Today over 95% of our employees continue to work remotely as we are doing our part to reduce the spread of the virus following the CDC guidelines.
Well, it's following our safety protocols, such as Handwashing crashing social doesn't think and more insights coverage.
So before we were early to transition to remote work and we will be very intentional about returning to our offices.
We continue listening closely to the health experts and following the data as we go about her daily operations.
As I shared last quarter due the outstanding works about risk management of compliance Committee.
Our senior leadership team.
It all 4800 Atmos energy employees.
We were well prepared to transition every facet of our business to our remote work environment in mid March.
That level preparation and agility served us well as we continue executing at the highest levels during the third fiscal quarter.
For example, a customer service agents and service technicians.
When you're providing exceptional customer service as indicated by our customers writing their satisfaction with our agent and technicians at 98%.
Our strategic focus on digital bill delivery and payment options is yielding benefits as the percentage of electronic bills issued as of the ended the third quarter increased to 45%.
And all electronic methods payments received such as bank dress credit cards and online banking.
Increased to 76% of the payments received as of June Thirtyth.
There are these innovative <unk> electronic bill delivery and payment channels.
Much energy and our customers are doing our part to conserve environmental resources for example on an annual basis use of this technology.
Saves approximately 1300 tons of would nearly 6 million pounds of carbon dioxide equivalents.
7 million gallons of water and nearly 400000 pounds of waste.
During the quarter, we deployed mobile wallet.
Nick build delivery platform, enabling customers to abuse and paper Bill and manage their atmos energy accounts from Apple wallet or Google pay.
I also want to highlight the great work of our safety and enterprise services and operations teams, but they are doing in the area damage prevention, especially given we are just five days away from National 811 day.
This work is an integral part about ongoing commitment to safety and our proactive measures to help raise awareness about third party excavation damage, which is one of the greatest threats to the safety of distribution systems.
Our teams have implemented a damage prevention Ambassador program.
They've developed social media alerts and other public awareness campaigns, such as postponing nonfinancial big during the call the 19 pandemic.
All these efforts support the year to date was all of a damage right that is less than the industry average.
Using our safety practices and protocols I mentioned earlier, we have continued executing a proven to best meet strategy.
Right on track to meet our capital spending range of 1.85 Dahlia to $1.95 billion.
Oh safely performing distribution.
The transmission pipeline system work that includes maintenance and compliance activities.
Well I placement.
Locating system inspections.
Fiscal year to date consolidated capital spending grew 17% and $1.4 billion.
With approximately 88% about spending being directed toward safety and reliability all to modernize our system.
Finally, our financial position remains very strong and at the end of June our liquidity was almost $3 billion and our balance sheet continues to be very strong.
Now I'd like to turn the call over to Chris will financial update and I will turn shortly with a few closing remarks, Chris.
Thank you, Kevin and good morning, everyone.
Yesterday, we reported fiscal 2023rd quarter diluted earnings per share of 96 cents compared to a 68 cents in the prior year quarter year to date reported diluted earnings per share $4.37 compared to $3 or 88 cents in the prior year period.
Resorts results for the quarter and you'll get date periods included a onetime noncash income tax benefit of $21 million for 17 cents per diluted share related to a change your state deferred tax rate, resulting from legislation that was passed by the can just legislature in June to eliminate the assessment of state income taxes on regular.
Utilities operating in the state.
As a result in the change in our state deferred tax rate reduce or deferred tax liability by $33 million during the fiscal third quarter.
We established a $12 million regulatory liability for excess deferred taxes that well be returned to Kansas customers and we recognize remaining $21 million as a onetime income tax benefit.
Excluding this nonrecurring benefit diluted earnings per share for the third fiscal quarter was 79 cents and $4.20 year to date.
Consolidated operating income during the nine months ended June Thirtyth Roche over 10% to $723 billion.
Rate increases in both are operating segments, driven by increased safety reliability spending totaled $111 million.
We also experienced a 10 million dollar increase in distribution operating income primarily due to customer growth in our mid Tex vision.
During the 12 months ended June Thirtyth or mid Tex division experienced that customer growth of 1.6%.
Consolidated basis, we experienced that customer growth at 1.3% Oh, it's like period.
The impact of coated 19 did not having material impacting our year to date operating income as we were able to align are only I'm spending with a decline in non residential customer consumption, we experienced during the third quarter.
Through the first nine months of the fiscal year, we earned approximately 85% ever distribution revenues.
Additionally, residential revenues comprised approximately 60% of our distribution revenues during the second half the year.
These bills are out there at their lowest during this time.
Well, we collect a significant portion of our revenues excluding gas cost to the based charge, which partially insulates us from volume metric risk.
For most of our service territories. The base charge represents a large portion of a customer still by the middle of our third fiscal quarter.
For the year to date period.
We experienced a 7 million dollar reduction in operating income due to lower sales and transportation volumes during the third quarter.
We did not identify a meaningful change in residential assumption due to cogan.
However, we did experience a 14% decline that nonresidential consumption.
We also saw a 3 million dollar climbing service or revenue, primarily due to the suspension of collection activities.
Our non residential consumption decline was concentrated in our commercial customer class, which declined 18% during the third quarter compared the prior quarter, we experienced most of the volume metric declining or mid Tex in Louisiana divisions.
During the quarter, we saw commercial consumption climbed by as much as 30% compared to the two year historical average in certain of our states by that May have Shelton placed orders in our service areas impacted their businesses.
However, since that time, we have seen a steady improvement through mid July comercia customer usage was just 11% below the two year average for the same period.
Additionally, we experienced a 12 cents decline or transportation volumes during the third quarter, primarily due to slower and slower economic activity in the automotive and metal sectors.
These declines in operating income were offset by $17 million decrease in Poland and expense, primarily associated with employee cost for overtime standby and other costs lower traveling training cost and a temporary deferral of pipeline maintenance activities.
And our pipeline and storage segment over 80% of ABTS revenues are earned from deliver services to our mid Tex Division in a few other ltcs under a straight fixed variable rate design.
The remainder of ABTS revenues relates to its three system business other ancillary pipeline services as a reminder, ABT only keeps 25% of revenues earned from these activities under its rate design.
During the third quarter, we experienced had net $2.5 million decrease and transportation other revenue in the segment.
<unk> quarter over quarter, three system volumes declined 19% in prices declined by 30% due to reduce associated gas production in the Permian basin.
Year to date transportation other revenue declined less than $1 million.
Slide six and seven provides additional details of crude over three changes to operating income for each for segments.
On the regulatory front to date, we have implemented $123 million, an annual operating income increases.
Additionally, we received approval for the for Texas grip filings that we voluntarily delayed in March $23 million.
These filings will be implemented on September 1st.
Certainly we had $141 billion regulatory filings and progress most of which are scheduled to be implemented during the first quarter fiscal 2021.
Details of these filings can be found in slides 19 to 29.
And other regulatory matters, we have orders in five or eight states and address the impacts of covered 90.
He's always covering more than 85% of or distribution customers and ABT.
Generally these orders allow us to defer net incremental expenses, including bad debt expense and in a few of our safe certain lost revenues due to cover 19.
We're still evaluating these orders therefore, we did not record any regulatory assets are wide bodies related opened 19 as of June thirtyth.
Slide 14 summarizes these orders.
As of June Thirtyth or balance sheet liquidity remains strong our equity capitalization was 58.8%. We finished the quarter with approximately $2.9 billion liquidity, including $750 million in cash between or operating accounts and ATM net proceeds.
During the third quarter, we executed new forward sales arrangements for approximately 2.3 million shares with anticipated net proceeds of $234 million.
Additionally, we sell approximately 1 million shares $100 million through June Thirtyth, we instead of about 3.6 million shares first $359 million and that's what Youve area, we had about $547 million in cash available on your equity forward arrangements.
Yesterday, we reaffirmed our adjusted earnings per share guidance range of $4.58 to $4.73.
They'll have more clarity around how cold it has and continues to affect her business from a customer perspective, and an operational perspective.
So what we understand today, we now believe earnings per share will be at the upper end of the range.
The fourth quarter, we had assume similar nonresidents consumption declines to what we experienced in third quarter.
Several of our states have slowed the tysabri opening their tommy's.
Additionally, we expect fourth quarter going into trend similar to what we experienced during the third quarter.
I just would be in 16 provides additional details around her guidance.
Thanks for your time this morning, I'll now turn the call back over to Kevin for some closing remarks.
Thank you Chris.
Immunity services woven into the fabric of AD and synergies culture, we call at the spirit.
And our 4800 employees take pride in feeling safe and thriving communities each and every day.
During national Hospitality week or hospital week in May we alluded our medical professionals heroic efforts by delivering more than 12000 meals, the health care heroes across or eight states service area.
Regarding our strong partnerships with local restaurant owners and chefs across our 1400 communities, we celebrated takeout Tuesday.
And initiative that brings support local restaurant offering all employees the opportunity to enjoy launch from the favorite neighborhood restaurant.
Along with these enterprise wide efforts to lift each other up during these uncertain times, we're feeling safe and thriving communities in ways, both large and small not working with school districts early childhood programs nonprofits across our service area to improve the reading proficiency by third grade.
And to feed hundred children, so they can learn and thrive.
I'm truly inspired by them anyway, our employees come together to give up there Tom.
And talent to further support those need a helping hand.
As I said earlier, a robust risk management process. It served us extremely well during the spend in making will continue to guide us as we execute that's the highest levels on all facets of our business.
On year to date results were in line with our expectations, our balance sheet and strong and we further enhanced our liquidity.
Our focus remains the same the health and safety of our employees customers and community as we execute our proven investment strategy, we continue delivering safe reliable affordable inefficient natural gas to homes businesses and industry the fuel our energy needs now and in the future with.
I'll open it up for questions.
Thank you would not be conducting a question and answer session, if you'd like to be placing the question could you. Please press star one under a telephone keypad a confirmation tone will indicate your line is in the question Q he'd be press star to if you'd like to remove your question from the Q for participants using speaker equipment, they may be necessary to pick up a headset.
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One moment, please what we pull for questions.
Our first question today is coming from Richard So it really from Bank of America. Your line is alive.
Hey, good morning, guys hope you're doing well.
Good morning regimen.
Thank you Jim do well thanks for taking my question here I'm, just curious given some of the <unk> the deterioration in Bali and we've seen on the nonresidential side and obviously appreciate the confidence for the back half or are the remainder of the year in 2020, but just curious how you're thinking a thing.
Beyond that.
In light of the covert impacts and just really considering the fact that you and really all of your gas LDC peers haven't gotten to experiences through the more meaningful peak winter heating season.
Well Ritchie <unk>. That's a good question you know what the fiscal yearend rapidly come in or close we're deepen our planning cycle right now and we're certainly evaluating what's going on and the economies and the eight states that we serve.
And so we were keeping a close eye on that we're not ready to announce yet what assumptions were going to cut into the fiscal 2021 guidance Juno will roll that out here in the fall in November.
But we are taking a look at that we're also assessing operationally what we're going to be doing to keep our employees safe at the community safe and well have a better picture and more information to provide.
November.
Got it and just follow up on that a little bit if I can just given like the the annual true up mechanisms you have for for your own efforts.
Is there is there any other offsets that you could pursue into next year, if the economic recovery as a bit more prolonged.
I would you say offsets I mean, it's primarily we'll just have to continue to see first and foremost Joe what we can do.
In terms of a of work that need that can be performs to back into it in a way that we can keep our employees safe and keep our community say unless Kevin said at the top the call doing our part to to minimize the spread of the virus in the community. So.
Yeah. We have you seen have compliance work that has to be completed on certain schedules and and timelines and we can't let that slip, but we will be evaluating things, where we do have a little bit of discretion in the event that we knew you do need to align our own have with any potential volume metric and revenue declines.
Due to the pandemic.
All right great. Thanks, that's very helpful. That's all add.
Thank you have a good day.
Thank you are that's question today is coming from I wasn't as gross go from UBI Escalade is alive.
Good morning.
Good morning ongoing doing.
Good how are you.
Great.
How should we think about.
How should we think about your equity needs for 2021, and it's fair to assume that the updated forward equity agreements that will be sufficient.
Should we expect a larger equity offering.
I think we've been pretty consistent now in the last year 50, 12 to 15 mindset. The ATM is our preferred method for raising equity a we've got our financing plan out there and we intend to do you know execute that financing plan and a balance fashion.
With both up long term debt and equity and we'll seek to use out of the ATM to the best for our ability to meet those equity needs for fiscal 2021 and beyond.
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<unk> increased bad debt and how quickly you can recover those costs for the like I said you haven't placed.
So far it really hasn't materially impacted us and that's a couple things to keep in mind around bad debt collection, So first and all of our service territories.
Moratoriums are still in place, but most are service territories out to two prohibit the a disconnect or resumption of collection activities.
We then need to evaluate a what the tone is up from the regulatory environment, what's what's the tone from a you know just the community in terms of those types of activities and once we do begin to collect or Britain resumed collection activities and one that can be several months down the road at the number two.
We won't see the impact of really bad debt until well beyond the resumption dose activities because it takes a certain number of months for it to work through the process the collection before but ultimately what gets written off so right now, it's where we sit here today hasn't had a material impact on our on our bid.
As for fiscal 2020, certainly a watch I didn't ever keeping an eye on fiscal 2021, but we think it's going to be some time before we begin to see that you know that that.
Those bad debts that really begin to rise up and then you have to walk it through the regulatory process them because we do have the the opportunity first stuff to have an annual falling back aneurysm and as I mentioned, we do have the Reg asset orders in five or eight states, which provides us another tool.
To address a those types of costs.
I think it at this point, it's probably just a little bit too soon to tell when exactly we were going to see that rise in bad debt and then number two whenever you all things being reflected in rights.
Yes, Okay. This is.
Kevin I'll, just follow up a little bit on that in addition, our customer service agents in our customer advocacy team that supports those agents have been for several months now reaching out to customers and all classes residential commercial and industrial about different payment options that exist out there formed lie heap.
Local health agency no sort of thing whether those were outbound calls letters. Some some folks allows to have their email address getting in contact with it that way we've been very proactive in reaching out to customers that appeared to be having a tough time paying their bills on what kind of continue to do that as we move forward and head.
Toward the this upcoming heating season.
Thank you for that's all I have last question could you. Please maybe discuss a little more detail what are the components of lower all in and what is short in nature and you could still benefit from that in Fourq and how much of cost savings you're expecting going forward.
Sure Yeah, Hi for work Oh go ahead, Kevin you start.
Well, it's going to talk about the the components and things that we've looked at that we could differ going into the period I'll hand off to Chris to talk to you about the numbers, specifically, but there's such things like this right away coachman clearing trees overhang brush those sort of things.
Clean up around G. I asked data record is just today should those sorts of things.
And where we're ahead on certain inspections on our systems right now those things that we can move out to a different period not do away with not cancel button moved to a different period. Those are sort of only m. things that we have shifted during the last quarter to two quarters and are currently evaluating.
What opportunities do we have maybe to pick back up some of that and what does that counting look like as we head into the end of this fiscal year into next fiscal year.
Hey, Chris.
Yeah, I was just started to add to that to annualize. Yeah. We are still a working remotely. So you know as I mentioned in my prepared remarks, we are still saying Oh lower employee traveling entertainment costs, you know some of the overtime and standby certainly into the third quarter, we expect that to be consistent doesn't isn't at the fourth quarter and.
So again, it's it's basically items that are certainly within our control items that are that we don't have to where there's it's not a compliance deadline related what we have a little bit discretion around the timing of back in in terms of actual dollar sales you know again as we think about.
21 will will provide a little bit more color around our own I'm spending levels.
For 21 in November.
Thank you.
Thank you next question today is coming from Insoo Kim Goldman Sachs. Your line is though.
[noise]. Thank you.
Question on just demand trends that you're seeing on a more geographic basis. I know you know the bulk of your exposures in Texas, but you do have exposure to a lot of different states, just which didn't jurisdictions are performing from DRAM perspective, you know better than what you expected on which are a little bit more concerning.
Well I.
Really the what we're seeing across the board and as I mentioned mid Tex in Louisiana, and the third quarter, we're probably at the.
The hardest hit a volume metric perspective.
And that was and you know all in and around in the 20% range. The other states range anywhere from nine to 17, 18% and as I mentioned too we have seen a steady improvement since since really the the middle part of May kind of when when things tend to do seem to have bottomed out so all in.
Well that when I talked about that 11% diversity your historical average.
It's a bird divisions, now or kind of right in that range, you do see a little bit of a weakness still but it against improving in a bit in Mississippi, and Louisiana, but overall things continue to trend, but in a better way other than what we were seeing in the first the first half of a third quarter.
Yeah, I answered that Kevin to the other thing I'll just add is if you go back and as we did as we're looking at these volume. We also look at the unemployment rate as some of our jurisdictions opened up for the phase three openings and moved into the second or third tier is about as if you will we've noticed a slight improvements in the unemployment rates.
Just about every jurisdictions from a April the Bureau of Labor Statistics average if you look at those so the June numbers almost every one of them has shown some slight improvement we think thats reflected again back in those phase three openings commercial retail some other businesses industrial opening back.
Got bringing folks backend and picking up some of that.
Business there so that was a good indicator for us as well.
Great Thanks for that color.
In terms of cost contingencies, I think you you spoke on it and a couple of people have asked the question is already but I've, given you know a little bit stronger than expected points for this year does it all else being equal give you a little bit more or you know contingencies that you could utilize and and 2021.
Well like I said earlier, yeah, we're still evaluating putting together our fiscal 2021 budgets are well have to obviously see what what's happening with our with our customer behavior.
Particularly on the non residential side here in the here in the fourth quarter before we make a final determination Oh, what Oh hell be aligner only going into 2021. So we'll have more color on that in November.
Got it and finally, just on the technology side I think you mentioned you know things like you know automated customer bill payment somewhat not whether it's not or other technological advancements are you are making or plan to make and on the horizon or.
What type of efficiencies could you realize from those type of work.
At work.
Yeah, I'll talk a little bit about that and there are more.
Data access to data and providing data in a sooner format in a better format a consumable format.
One real time, if you want example that is our R.W.M. our network. We're now working with our vendor to have real time cathartic protection pilots on our system. So now instead of going on having manual reads on our system. We can upload those through our network and get those reading off of our pipeline and I guess.
In addition system in real time, now that yeah, not much from an efficiency standpoint that it provides continuous monitoring of your system and allows you identify where you might have a cathartic protection system down sooner rather than later, we continue to roll out our automated leak detection equipment as well anyway.
Artist talk before about our locus map technology that we are in the final stages of rolling out to some of our crews here in the mid Tex to fit division, which allows us to gather construction material information Geo location position in real time as we're at these sites.
And upload goes right back into our compliance systems.
Got it thank you very much and they say.
Great. Thank you you as well.
Thank you. My next question today is coming from Brian moving from Citi. Your line is alive.
Good morning.
Hi, good morning right.
What's the capacity resistant to handle hydrogen and is that capacity different than the R&D capacity constraints standpoint.
Yeah, Ryan two separate things there we know there's a lot of discussion here lately about hydrogen, particularly with some of the things are going on in Europe, right now and I know some of the a dual fuel companies are talking about projects at particular sites I site specific hi.
Detergent utilization if you will.
So it's a much different look then if you think about some a discussion of blending that's not yet on the near term horizon their studies going on through particular groups Association.
Gee I, even as a group together that studying opportunities around hydrogen at this point so that to say I think it's early.
For us to think about to your question how does that fit into our current distribution system. There's lot of things that need to be worked out from a material standpoint, I supply standpoint, a utilization standpoint at the customer premises. So I think that's further out for us it is separate from our in Gi.
Gee, whether it's comes from landfill its capture to Digesters. One challenge there is the beating you content the quality of the gas, but once you get over that hurdle. It blends riding with the rest of our stream that we're delivering to customers.
As we've talked about before with you where we're doing about five to six Bcf a year of RMG across our system that we're moving and we continue to look for those opportunities near our system today.
Thanks, and then to clarify some of the earlier questions in terms of contingencies in place the extent that covina impacts extend into the winter months.
And my correcting hearing that the key towards that you're looking at our own and cost management and potentially.
Capital market activity or are there other opportunities that you can pursue in order to adapt to market condition.
I. Thank you know I think you hit it on the had its just can't it's the again looking at at the on M. A lot and I don't want them with the revenues that were never expected to get a going into the next fiscal year. We're certainly mindful of the a of the capital markets the opportunities as well.
Well you and you can see in our 10-Q, we have a layered in us and hedges for future financing activities.
Going out for a few years now to help walk in are taking advantage of some of the current interest rate environment.
So that those are couple of opportunities as well. So I think Oh, there was a two very good ones. So keep an eye on and that's something certainly items that we are contemplating as we finalize our fiscal 20, what 21 plants.
And then capital market activity given your regulatory construct.
Would you look to cement those plans in the coming months or could they be they then to over a broader timeframe.
If you were sure I understand your yeah, I'm sure I'm not sure we needed.
We do you need to and repaying that are raised equity.
In to the calendar year and given the it's very kind of second different jurisdictions, there or can you be more patient.
If that adoption that you want it the presale.
I I say, yes, I am really the financing needs, a a corporation or any other their outline.
On the website, it's at five <unk> $5 billion to $6 billion over our the current five year planting window of 2020 to 2024, obviously, we'll update that in the fall as well and ER and those financing needs are really driven just by the primarily by the cash flow needs of the core.
And the spending needs. So I think well, we'll evaluate the timing the execution.
Of the a of the various tools that we have available to us must come from a financing perspective.
But we.
Obviously, oh I mean, what you'd also see we've layered in hedges for the fall.
For an anticipated debt issuance, so so that one.
It's kind of forecasted already in it and it's out there for for policy.
Okay, great. Thank you.
Thank you.
Thank you it as question today is coming from Charles Fishman from Morningstar. Your line is that alive.
Good morning.
You know I had a question on slide eight.
Capital spending or certainly the 17% increases terrific. So you are on target I guess I happened to be in the Dallas area over the July 4th weekend the construction.
Along I 75 is amazing and I was just wondering if you could provide some color is your new construction connections, which I believe is not part of the 88% safety and reliability.
Is that on target as well or has that been impacted.
My coated 19 or at least with respect to your plan and obviously my.
Viewing is just a small pieces all your jurisdictions I wonder if you could maybe provide some color on our new construction in your other.
Jurisdictions, because obviously you don't have as much control over that as you do on the safety and reliability spent.
Right I'll start out with a little color on on the North Texas area. There's you talked about and then on some of our other jurisdictions, but.
Going going into call within particularly now that first month month in the half we did see a bit of things slow down a death. If you will in the housing market in particular, but they quickly rebounded we're doing a virtual tours of homes.
Inventory available homes on the market quickly tightened up and we're seeing a lot of.
Individuals as you know the low interest rate moving to the new construction. So we certainly think that pick up as things started to open back up and we got into these phase three openings. We continue to see good growth in that market here in the North Texas area I think as we said last year, we're expensing somewhere around 1.51 0.6.
Net customer growth on the system, particularly all most of that's going to be hearing that metroplex area. So we continue to see a little bit of law, but now pick up in that residential market and in other areas not quite at scale, but outside of Nash one off Franklin service territory, we continue to see.
I'm good residential growth there as well and then outside of our Kansas City location. There until later that area. We do continue to see some residential growth as well all taking advantage of we believe as we keep a handle on have conversations builders developers and Realtors Association trying to take advantage of this low interest rate environment.
So [laughter]. This we look here. It was we sit here today 2021, do you expect customer growth to still be around the 1.5%.
Yeah, I think that's good indication here as we can't talk to builders and developers so they're continuing to develop property. There continue to have people come in.
Right now we are continuing to see a strong activity in that area and then.
Yeah.
Okay. That's all I have thing Thats.
I was just I'd say the other piece that's driving it too is that you're saying home sales.
Folks that already have homes or are staying in their homes for obvious reasons and so folks that are looking to get out of the apartment environmental maybe out of an urban downtown environment or are now walking into that new home and growth market. So it's you know that's just another piece and that's driving some of that.
On the customer growth.
Okay. That's all I had thank you.
Thank you.
Thank you as a reminder, ladies and gentlemen that star one to be please and the question Q or next question today is coming from Germany taught it from JP Morgan Your line is that a lot.
Hi, everyone on this is actually Peter on her journey I.
I guess kind of a meter I've, a quick and how you doing.
Good.
Yeah, I just I have a quick question on the NPS sensitivities. The update that you gave here is the change each quarter, where at least what we have strictly related to historical demand for each customer class or are there other factors actually kind of think about when you give these.
Yeah. So on slide 13 years, we do have EPA sensitivity that we've updated that for the fourth quarter.
So you can see again up you know and a bomb third a bottom half the page at <unk> the revenue by customer class residential and down the nonresidential sensitivities to the right. So that's that's basically the 1% change relative.
And the customer volumes in the fourth quarter, and what kind of how that news and for us. So in terms of how that compares to the prior year I mean, that's just a 1% change.
For each other's customer classes producers that you know that EPA sensitivity.
Right, Okay, and so that's for the last quarter.
Congrats on a standalone basis, and then just to clarify that's the one that the sensitivity for body.
Your last call that was for just the back half or is that was for on a full year that was that was for the back half the fiscal year yeah. So.
We will probably well update this slide again in November.
To provide a better impact or what brought that 1% looks like.
The full fiscal year basis here in November.
Okay, and then I guess just last one here.
Looking at the sensitivities on you know obviously lower for each class compare to what you should show for the back half last quarter, but should we think about the net impact kind of being the same as we see recovery across all classes where.
Residential skill kinda offsets the same amount.
I got strikes on the other classes on you know like on a relative basis. Unlike what we saw.
And through Q.
Well a couple of comments there in the impacts are smaller here in the fourth quarter, because as I mentioned that my prepared remarks, yeah. The first half of the third quarter, you're still seeing some volume metric.
Influence a across all customer classes are now beginning that being the latter half the may June although the summer were primarily into the into the base charge component only of the Bill God given the summer month. So I mean, what it remains to be seen exactly how customers are going to behave.
We have seen a modest improvement since the lows had been bay, that's something we're watching very closely.
And its its no.
For that reason, we don't have hard for us to predict as we look out, particularly as some of our reopenings have slowed a little bit. So that's why we provided the sensitivity and 13 like that assessment.
Okay, great. Thanks, that's it for me.
Yeah. Thanks Peter.
Thank you we reset of our question answer session I went to turn the floor back over to management for any further or closing comments.
Sorry, we appreciate your interest in Atmos energy and thank you for joining US recording of this call will be available for replay on our website through November 12, 2020 have a good day.
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