Q2 2024 Atmos Energy Corp Earnings Call
Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by at this time I would like to welcome everyone to the Atmos Energy Corporation fiscal 2024 second quarter earnings Conference call.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. Once again, star 1. And if you would like to withdraw your questions, simply press star 1 again. I would now like to turn the call over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan, please go ahead.
Daniel M. Meziere: Lines have been placed on mute to prevent any background noise.
Daniel M. Meziere: After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star one on your telephone keypad once again star one.
Daniel M. Meziere: And if you would like to withdraw your question simply press Star one again, thank you.
Daniel M. Meziere: I would now like to turn the call over to Dan <unk>, Vice President of Investor Relations and Treasurer, Dan. Please go ahead.
Daniel M. Meziere: Thank you, Greg. Good morning, everyone, and thank you for joining our fiscal 2024 second quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer. Our earnings release and conference call slide presentation, which we will reference in our prepared remarks, are available at atmosenergy.com under the Investor Relations tab. As we review these financial results and discuss future expectations, please keep in mind that some of our discussion might contain forward-looking statements within the meaning of the Securities Act and the Securities Exchange. Such forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 30 and more fully described in our SEC filings.
Daniel M. Meziere: Thank you Greg Good morning, everyone and thank you for joining our fiscal 2024 second quarter earnings call with me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer.
Daniel M. Meziere: Our earnings release and conference call Slide presentation, which we will reference in our prepared remarks are available at Atmos energy Dot com under the Investor Relations tab.
Daniel M. Meziere: As we review these financial results and discuss future expectations.
Daniel M. Meziere: Please keep in mind that some of our discussion might contain forward looking statements within the meaning of the Securities Act and the Securities Exchange Act.
Daniel M. Meziere: Our forward looking statements and projections could differ materially from actual results the.
Daniel M. Meziere: The factors that could cause such material differences are outlined on slide 30, and more fully described in our SEC filings with that I will turn the call over to Kevin Akers, our president and CEO Kevin.
Daniel M. Meziere: With that, I will turn the call over to Kevin Akers, our President and CEO. Kevin Akers?
John Kevin Akers: Thank you, Dan, and good morning, everyone. We appreciate your interest in Atmos Energy. Yesterday, we reported year-to-date fiscal 24 net income of $743 million, or $4.93 per diluted share. And we updated our fiscal 24 earnings per share guidance to a range of $6.70 to $6.80.
John Kevin Akers: Thank you Dan and good morning, everyone. We appreciate your interest in Atmos energy.
John Kevin Akers: Yesterday, we reported year to date fiscal 'twenty, four net income of $743 million or $4 93 per diluted share.
John Kevin Akers: We updated our fiscal 'twenty four earnings per share guidance to a range of $6 70 to.
John Kevin Akers: $6 80.
John Kevin Akers: This performance continues to reflect the commitment, dedication, focus, and effort of all 5,000 Atmos Energy employees to successfully modernize our natural gas distribution, transmission, and storage systems while safely providing reliable natural gas service to 3.4 million customers in 1,400 communities across our eight states. For the quarter, we continue to experience robust customer growth driven by continuing favorable employment trends in tech, along with a strong new housing market in the North Texas area.
John Kevin Akers: This performance continues to reflect the commitment dedication focus and effort of all 5000, Atmos energy employees to successfully modernize our natural gas.
John Kevin Akers: Distribution.
John Kevin Akers: <unk> mentioned and storage systems.
John Kevin Akers: Safely, providing reliable natural gas service to three 4 million customers.
John Kevin Akers: <unk> hundred communities across our eight states.
John Kevin Akers: For the quarter, we continued to experience robust customer growth driven by continuing favorable employment trends in Texas.
John Kevin Akers: Along with a strong new housing market in the North Texas area for the 12 months ended March 31, 2024, we added over 56000, new customers with more than 43000 of those new customers located in Texas.
John Kevin Akers: For the 12 months ended March 31st, 2024, we added over 56,000 new customers, with more than 43,000 of those new customers located in Texas. New home starts in North Texas were up 44.7% during the first calendar quarter of 2024 compared to the first quarter of 2023. As a result, the annual new home start rate is now at the highest pace since mid-2022. The Texas Workforce Commission reported in April that the seasonally adjusted number of employees reached a new record high of over 14.1 million.
John Kevin Akers: New home starts in North, Texas were up 44, 7% during the first calendar quarter of 'twenty four compared to the first quarter of 2023.
John Kevin Akers: As a result, the annual new home start rate is now at the highest pace since mid 2022.
John Kevin Akers: The Texas Workforce Commission reported in April that the seasonally adjusted number of employed reached a new record high.
John Kevin Akers: Over $14 1 million.
John Kevin Akers: Texas again added jobs at a faster rate than the nation over the last 12 months ending March, adding nearly 271,000 jobs, representing a 2% annual growth rate. Industrial demand for natural gas in our service territories also remains strong. During the second quarter, we added 11 new industrial customers with an anticipated annual load of approximately 1 BCF once they are fully operational. Fiscal year to date, we've added 22 new industrial customers with an anticipated annual load of approximately 4 BCF once they are fully operational.
John Kevin Akers: Texas again added jobs at a faster rate than the nation over the last 12 months ending March.
John Kevin Akers: Adding nearly 271000 jobs, representing a 2% annual growth rate.
John Kevin Akers: Industrial demand for natural gas in our service territories also remained strong during the second quarter. We added 11, new industrial customers with an anticipated annual load of approximately one bcf once they are fully operational.
John Kevin Akers: Fiscal year to date, we've added 22, new industrial customers with an anticipated annual load of approximately four bcf once they are fully operational on a volumetric basis. This is equal to adding approximately 68000 residential customers to our system.
John Kevin Akers: On a volumetric basis, this is equal to adding approximately 68,000 residential customers to our system. Commercial customer growth remains solid as well, with over 900 customers connecting to the system during the second quarter and over 2,000 customers connecting to the system this fiscal year to date.
John Kevin Akers: Commercial customer growth remained solid as well with over 900 customers connecting to the system during the second quarter.
John Kevin Akers: Over 2000 customers connecting to the system fiscal year to date.
John Kevin Akers: This growth continues to highlight the value and vital role natural gas plays in economic development across our service territory. At APT, we continue our work on several projects that will enhance the safety, reliability, versatility, and supply diversification of our system, as well as support the continued growth we are seeing in the local distribution companies behind APT systems. Work continues on the fourth and final phase of our Line S2 project. This phase will replace the existing 14-inch and 20-inch pipelines with 40 miles of 36-inch pipelines.
John Kevin Akers: This growth continues to highlight the value and vital role natural gas plays in economic development across our service territories.
John Kevin Akers: In <unk>, we continue our work on several projects that will enhance the safety.
John Kevin Akers: A liability versatility and supply diversification of our system as well as support the continued growth we're seeing in our local distribution companies behind Apt's system.
John Kevin Akers: Work continues on our fourth and final phase of our line as two project.
John Kevin Akers: This phase will replace the existing 14 inch and 20 inch pipelines with 40 miles of 36 inch pipeline. As a reminder, this project brings supply from the Haynesville and Cotton Valley shale plays to the east side of the growing DFW metroplex.
John Kevin Akers: As a reminder, this project brings supply from the Haynesville and Cotton Valley Shale Plains to the east side of the growing DFW metro. This phase of the project is anticipated to be in service by the end of this calendar year. To the south of the DFW Metroplex, we have a project underway that will provide additional pipeline capacity to transport gas from our Bethel Storage Facility into the growing DFW Metroplex and the growth corridor along Interstate 35 in Waco, Temple, and the Austin area.
John Kevin Akers: This phase of the project is anticipated to be in service by the end of this calendar year.
John Kevin Akers: To the south of the DFW Metroplex, we have a project underway that will provide additional pipeline capacity to transport gas from our Bethel storage facility into.
John Kevin Akers: And to the growing DFW metroplex, and our growth corridor, along Interstate 35 in Waco.
John Kevin Akers: Temple and the Austin areas.
John Kevin Akers: This project is scheduled to be placed into service late in calendar year 2025. During the second quarter, our Customer Support Associates and Service Technicians once again received a 98% satisfaction rating from our customers, reflecting the exceptional customer service they provide each and every day. Our customer advocacy team and customer support agents continued their outreach efforts to energy assistance agencies and customers during the first six months of the fiscal year. Through their efforts, the team helped nearly 34,000 customers receive over $12 million in funding assistance.
John Kevin Akers: This project is scheduled to be placed into service late in calendar year 2025.
John Kevin Akers: During the second quarter, our customer support associates and service technicians. Once again received a 98% satisfaction rating from our customers, reflecting the exceptional customer service they provide each and every day.
John Kevin Akers: Our customer advocacy team and customer support agents continued their outreach efforts to energy assistance agency and customers during the first six months of fiscal year.
John Kevin Akers: Further efforts the team helped nearly 34000 customers receive over $12 million in funding assistance.
John Kevin Akers: Recently, the American Customer Satisfaction Index ranked Atmos Energy first in customer satisfaction. This is the second consecutive year we have reached this rank, and for the second year in a row, as well as recognition on Newsweek's list of the most trustworthy companies in America. And we also appeared in the first Newsweek Excellence 1000 Index, which identifies models of corporate responsibility across more than 25 industries. Finally, for the fourth consecutive year, we were named on the Forbes list of America's best mid-sized employers.
John Kevin Akers: Recently, the American customer satisfaction index ranked Atmos energy first in customer satisfaction.
John Kevin Akers: This is the second consecutive year, we have reached this ranking.
John Kevin Akers: For the second year in a row as well the recognition on Newsweek's list of most trustworthy companies in America.
John Kevin Akers: And we also appeared in the first Newsweek excellent 1000 index, which identifies models of corporate responsibility across more than 25 industries.
John Kevin Akers: Finally for the fourth consecutive year, we were named on the Forbes list of America's Best Midsized employers and this year. We are ranked <unk> among all companies in the utility industry.
John Kevin Akers: And this year, we were ranked first among all companies in the utility industry. This recognition demonstrates how our dedicated employees continue to be guided by the simple values of honesty, integrity, and good moral character. The core values laid out by our founding chairman, Charles K. Vaughan. These values, combined with our employees' laser focus on our vision to be the safest provider of natural gas services, continue to benefit our customers and the communities we serve. I will now turn the call over to Chris for his update.
Chris: This recognition demonstrates how our dedicated employees continue to be guided by the simple values of honesty integrity and good moral character the core values laid out by our founding chairman Charles K Vaughan.
Chris: These values combined with our employees laser focus on our vision to be the safest provider of natural gas services continue to benefit our customers and the communities we serve.
John Kevin Akers: I will now turn the call over to Chris for his update thank.
Christopher T. Forsythe: Thank you, Kevin. And thank you to everyone for joining us this morning.
Chris: Thank you Kevin and thank you to everyone for joining us. This morning, as Kevin mentioned earnings per share for the first six months of the fiscal year was $4 93.
Chris: Which represents a 12% increase over the $4 40 per share reported in the prior year period.
Chris: Operating income increased to $950 million or 28% for the first six months of fiscal year <unk>.
Christopher T. Forsythe: As Kevin mentioned, earnings per share for the first six months of the fiscal year were $4.93, which represents a 12% increase over the $4.40 per share reported in the prior year period. Operating income increased to $950 million, or 28%, for the first six months of the fiscal year. I'll highlight a few key drivers of financial performance.
Chris: Highlighting a few key drivers for our financial performance.
Christopher T. Forsythe: Rate increases in both of our operating segments totaled $192 million; residential commercial customer growth in our distribution segment combined with higher industrial load increased operating income by an additional 12 million dollars. Revenues in our pipeline and storage segment increased $8 million period over period due to wider spreads between the Waha header on the western end of the APT system and delivery points on the eastern and southern ends of its system. Consolidated O&M expense decreased $13 million, primarily driven by the one-time bad debt adjustment we recorded in Mississippi in the first quarter.
Christopher T. Forsythe: Rate increases in both of our operating segments totaled $192 million.
Christopher T. Forsythe: Residential commercial customer growth in our distribution segment.
Christopher T. Forsythe: And with higher industrial load increased operating income by an additional $12 million.
Christopher T. Forsythe: Revenues in our pipeline and storage segment increased $8 million period over period due to wider spreads between the Oaxaca header on the western end of ADT system and delivery points in the eastern and southern ends of its system.
Christopher T. Forsythe: Consolidated O&M expense decreased $13 million, primarily driven by the onetime bad debt adjustment, we recorded in Mississippi in the first quarter.
Christopher T. Forsythe: Considering this impact, O&M is essentially flat period over period. Finally, operating income was favorably impacted by approximately $15 million from the legislative change in Texas to reduce property tax expenses that we discussed last quarter. This amount approximates $0.07.
Christopher T. Forsythe: Excluding this impact O&M is essentially flat period over period.
Christopher T. Forsythe: Finally, operating income was favorably impacted by approximately $15 million from the legislative change in Texas to reduce property tax expenses that we discussed last quarter. This amount approximate seven.
Christopher T. Forsythe: From a regulatory perspective, fiscal year-to-date, we have implemented approximately $170 million in annualized regulatory outcomes, and we currently have over $350 million in progress. Of this amount, we anticipate implementing $170 to $180 million in Fiscal 24, with the remainder in the first quarter of Fiscal 25. Our balance sheet and financial position remain strong. Our equity capitalization as of March 31st was 61%, and we did not have any short-term debt outstanding.
Christopher T. Forsythe: From a regulatory perspective fiscal year to date, we have implemented approximately $170 million annualized regulatory outcomes.
Christopher T. Forsythe: Can be currently have over $350 million in progress.
Christopher T. Forsythe: This amount, we anticipate implementing $170 million to $180 million in fiscal 'twenty four with remainder in the first quarter of fiscal 'twenty five.
Christopher T. Forsythe: Our balance sheet and financial position remains strong.
Christopher T. Forsythe: Our equity capitalization as of March 31 was 61% and we do not have any short term debt outstanding.
Christopher T. Forsythe: During the second quarter, we expanded our available liquidity through the renewal of our four-credit facility. We now have $3.1 billion available from these facilities, a $600 million increase over what was provided by our former credit facility. At quarter end, we had $4.2 billion in available liquidity to support our operation. Included in this amount is $890 million in net proceeds available from our ATN activities, which is expected to satisfy the remainder of anticipated FYSWA 24 equity needs and a significant portion of our anticipated equity needs for FYSWA 25. And as we mentioned before, the ATM will continue to be our preferred method to issue money at... To support that strategy, yesterday we launched a new $1 billion ATM program.
Christopher T. Forsythe: During the second quarter, we expanded our available liquidity for the renewal of our four credit facilities.
Christopher T. Forsythe: We now have $3 1 billion available from these facilities a $600 million increase over what was provided by our former credit facilities.
Christopher T. Forsythe: At quarter end, we had $4 2 billion of available liquidity disorder operations.
Christopher T. Forsythe: Included in this amount is $890 million in net proceeds available from our ATM activities, which.
Christopher T. Forsythe: Which is expected to SaaS by the remainder of our anticipated fiscal 'twenty for equity needs.
Christopher T. Forsythe: Significant portion of our anticipated equity needs for fiscal 'twenty five.
Christopher T. Forsythe: And as we mentioned before the ATM will continue to be our preferred method to issue equity to support that strategy yesterday, we registered a new $1 billion ATM program.
Christopher T. Forsythe: Our fiscal year-to-date performance gives us confidence to increase our fiscal 24 earnings for shared guidance from a range of $6.45 to $6.65 to a new range of $6.70 to $6.85, which leaves us well positioned to grow earnings per share for the 22nd consecutive year. We expect the remaining contribution to FYSB 24 earnings per share to be recognized somewhat evenly by quarter in the back half of the fiscal year. This updated guiding range includes approximately $0.10 to $0.11 for the one-time Texas Property Tax Benefit and approximately $0.07 for the one-time Mississippi Bad Debt Adjustment.
Christopher T. Forsythe: Our fiscal year to date performance gives us confidence to increase our fiscal 'twenty four earnings per share guidance from a range of $6 45 to $6 65 to a new range of $6 70 to $6 80.
Christopher T. Forsythe: Which leaves us well positioned to grow earnings per share from 20 <unk> consecutive year.
Christopher T. Forsythe: We expect the remaining contribution to fiscal 'twenty four earnings per share to be recognized somewhat evenly by quarter in the back half of the fiscal year.
Christopher T. Forsythe: This updated guided range includes approximately 10 to 11 for onetime Texas property tax benefit approximately seven with onetime Mississippi bad debt adjustment.
Christopher T. Forsythe: When we initiate our Fiscal 25 Earnings-for-Share Guidance in November, we will exclude the effect of both non-recurring items, and we anticipate 6% to 8% earnings per share growth from this adjusted earnings per share amount. In addition to the one-time tax, property tax, and bad debt expense adjustments, I'd like to highlight a few additional items reflected in our revised guidance. From a revenue perspective, the winter heating season is over, and approximately 70% of our distribution-severant revenue has been recognized. Additionally, the most significant regulatory filings impacting Fiscal 24 have been or will soon be completed.
Christopher T. Forsythe: When we initiate our fiscal 25 earnings per share guidance in November we will exclude the effect of both nonrecurring items and.
Christopher T. Forsythe: And we anticipate 6% to 8% earnings per share growth from this adjusted earnings per share amount.
Christopher T. Forsythe: In addition to the onetime tax property tax and bad debt expense adjustments slides I'll highlight a few additional items reflected in our revised guidance.
Christopher T. Forsythe: From a revenue perspective, the winter heating season is over and approximately 70% of our distribution segment revenue has been recognized. Additionally, the most significant regulatory filings impacting fiscal 'twenty four has been or will soon be completed biscuits.
Christopher T. Forsythe: This gives us a better line of sight into our revenues for the remainder of the fiscal year. Additionally, we are anticipating higher-than-planned customer growth and consumption for the fiscal year. Going into the fiscal year, we anticipated residential customer growth to slow somewhat due to higher mortgage rates. However, that trend was not as pronounced as we had anticipated.
Christopher T. Forsythe: This gets us better line of sight into our revenues for the remainder of the fiscal year.
Christopher T. Forsythe: Additionally, we are anticipating higher than planned customer growth in consumption for the fiscal year going.
Christopher T. Forsythe: Going into the fiscal year, we anticipated residential customer growth to slow somewhat due to higher mortgage rates.
Christopher T. Forsythe: That trend was not as pronounced as we had anticipated.
Christopher T. Forsythe: Finally, we are anticipating higher throughput revenues at APT net of the Rider-Rove benchmark as spreads are expected to remain higher than we had originally anticipated. Partially offsetting these positive trends, we have increased our O&M range from $780 million to $800 million to a new range of $820 million, inclusive of the Mississippi FAD debt expense adjustment. As we said before, we are not a just-in-time compliance company, but we intend to stay ahead of our compliance work in the second half of the fiscal year to further enhance the safety and reliability of our system.
Christopher T. Forsythe: Finally, we are anticipating higher throughput revenues at ATT net other rider Rev. Benchmark as spreads are expect to remain higher than we had originally anticipated.
Christopher T. Forsythe: Partially offsetting these positive trends, we have increased our O&M range from $780 million to $800 million to.
Christopher T. Forsythe: To a new range of $800 million to $820 million inclusive of the Mississippi bad debt expense adjustment.
Christopher T. Forsythe: As we've said before we're not a just in time compliance company, but we intend to stay ahead of our compliance work in the second half of fiscal year to further enhance the safety and reliability of our system.
Christopher T. Forsythe: We'll also perform some additional maintenance this summer to prepare for the upcoming winter heating season. Since most of the spending will be incurred in the back half of the fiscal year, we anticipate O&M for the 3rd and fiscal 4th quarters to trend higher than the prior year's 3rd and fiscal 4th quarters. Also included in this revised range is approximately $7 million for amortization of some regulatory assets after they are approved in the APT case in December.
Christopher T. Forsythe: We will also perform some additional maintenance summer to prepare for the upcoming winter heating season.
Christopher T. Forsythe: Since most of the spending will be incurred in the back half of fiscal year, we anticipate O&M for the third in fiscal fourth quarters to trend higher than the prior year's third fiscal fourth quarters.
Christopher T. Forsythe: Also included in this revised range is approximately $7 million of amortization of some regulatory assets. After they're approved and the ATT case in December this increased amortization expense does not impact operating income as we reflecting an offsetting amount through rates.
Christopher T. Forsythe: This increased amortization expense does not impact operating income as we are reflecting an offsetting amount through rates. In addition to upgrading our earnings per share guidance, we have increased our capital spending guidance from approximately $2.9 billion to approximately $3.1 billion. Based on our ongoing assessment of our distribution and transmission systems, we've identified some additional system fortifications that will be completed in advance of the next winter heating season. Additionally, the robust New Hesley market in North Texas that Kevin mentioned has modestly increased our gross spend. We appreciate your time this morning and your interest in Atmos Energy. We'll now open up the call to questions.
Christopher T. Forsythe: In addition to operating earnings per share guidance, we have increased our capital spending guidance for from approximately $2 9 billion to approximately $3 1 billion base.
Christopher T. Forsythe: Based on our ongoing assessment of our distribution and transmission systems. We have identified some additional system fortification that will be completed in advance of the next winter heating season.
Christopher T. Forsythe: Additionally, the robust new has the market in North, Texas that Kevin mentioned has modestly increased our growth spending.
Speaker Change: We appreciate your time this morning, and your interest in Atmos Energy, we will now open up the call for questions.
Operator: Thank you. And at this time, I would like to remind everyone that in order to ask a question, again, press star one on your telephone keypad. Once again, star one. And we will pause just a moment to compile the Q&A roster. All right, looks like our first question comes from the line of Richard Sunderland with J.P. Morgan. Richard, please go ahead.
Speaker Change: Thank you and at this time I would like to remind everyone that in order to ask a question again press star one on your telephone keypad. Once again star one and we will pause just a moment to compile the Q&A roster.
Operator: Alright, it looks like our first question comes from the line of Richard Sunderland with Jpmorgan. Richard Please go ahead.
Richard Wallace Sunderland: Hi, good morning. Can you hear me?
Richard Wallace Sunderland: Hi, Good morning can you hear me.
Unnamed: Sure can. Good morning.
Richard Wallace Sunderland: Sure Ken good morning.
Unnamed: Great, thank you for your time and thanks for all the clarifications around guidance and the changes there. I did just want to circle back to that, and particularly the language around the roll forward of the growth rate at year end, X those non-recurring items. Just for the sake of clarity, can you quantify again what those items are? And so, just to be clear, those two items would then be removed from your year-end results for the purposes of calculating the growth rate on a four basis? Am I summarizing that correctly?
Richard Wallace Sunderland: Great. Thank you for the time and thanks for all the clarifications around guidance and the changes there.
Unnamed: Just want to circle back to that and particularly the language around the roll forward of the growth rate at year end ex those nonrecurring items just for the sake of clarity can you quantify again, what those items are and so just to be clear those two items would then be removed from you.
Unnamed: Your year end results for the purposes of calculating the growth rate on a forward basis.
Speaker Change: Summarizing that correctly.
Christopher T. Forsythe: You are, so just to kind of re-emphasize, on the Texas property tax adjustment, we're anticipating that impact will be 10 to 11 cents. Additionally, the Mississippi Bidentic Adjustment was about seven. So when we initiate our fiscal 25 guidance, wherever we land on a gap-based basis, we will back off the $0.10 to $0.11 and the $0.07, and that will be the rebased or adjusted earnings per share from which we will launch our fiscal 25 guidance. And as I mentioned, we're anticipating 6% to 8% growth off of that adjusted amount.
Unnamed: So just to kind of re emphasized on the Texas property tax adjustment, we are anticipating that impact to be 10% to 11.
Christopher T. Forsythe: Additionally, the Mississippi bad debt et cetera adjustments was about seven.
Christopher T. Forsythe: So when we initiate our fiscal 'twenty five guidance wherever we land on a on a GAAP basis, we'll back off the 10 to 11.
Christopher T. Forsythe: And <unk>.
Christopher T. Forsythe: And that will be the rebased <unk> or adjusted earnings per share from which we will launch our fiscal 'twenty five guidance and as I mentioned, we are anticipating 6% to 8% growth off of that adjusted amount.
Richard Wallace Sunderland: Okay, I got it. Very helpful there. And then just to parse the 24 guidance changes a little more finely, if I recall correctly from last quarter, you had said Mississippi was in the prior range, and then Texas property taxes, there had been a little uncertainty about whether it was all incremental or not. And now we're obviously getting that update today. So what is the balance of the change relative to the 10 to 11 cents on the Texas side?
Speaker Change: Okay got it very helpful. There. Thank you.
Richard Wallace Sunderland: And then just to parse the 24 guidance changes a little more finely.
Richard Wallace Sunderland: Recalling correctly from last quarter, you had said Mississippi was in the prior range and then Texas property taxes, there had been a little uncertainty about whether it was all incremental or not and now we're obviously getting the update today.
Richard Wallace Sunderland: Is the balance of the change relative to the 10 to 11 on the Texas side is it the customer growth in consumption in the <unk>.
Richard Wallace Sunderland: Is it customer growth and consumption in the APT spreads that you referenced in the script? Or are there any other key things we should think about in terms of trends into 25 that you're kind of illuminating today?
Richard Wallace Sunderland: <unk> spreads that you referenced in the script or.
Richard Wallace Sunderland: Are there are there any other key things, we should think about in terms of trends in the 25.
Richard Wallace Sunderland: Youre kind of illuminating today.
Christopher T. Forsythe: Okay, so lots of impact there. So I think, again, on the $0.10 to $0.11 on the Texas property tax, that was really related to, you know, we're receiving the final valuations in our property tax valuations here in this quarter, and our team is working through what those final valuations will be for tax purposes. So that's why there's a range there. On the Mississippi bad debt expense, as we articulated last quarter, that was a one-time expense. And so, again, going forward, that impact will no longer be reflected in our P&L, but the catch-up, if you will, related to primarily prior year periods because the adjustment dated back from April 2022 all the way through the end of calendar 23.
Richard Wallace Sunderland: Okay. So lots of impact there. So I think again on the 10 to 11 on the Texas property tax that was really related to receiving the final valuations in our property tax valuations here in this quarter.
Christopher T. Forsythe: Our team is working through what those final evaluations will be for taxation purposes. So that's why there's a range there on the Mississippi Bad debt expense was we articulated last quarter that was a onetime event as a result of a regulatory change in how we recover those costs.
Christopher T. Forsythe: And so again that will going forward.
Christopher T. Forsythe: That impact will no longer be reflected in our in our P&L that the catch up if you will are related to primarily prior year periods because the adjustment dated back from April 2022, all the way through the end of calendar 'twenty three so we had effectively recognize bad debt expense.
Christopher T. Forsythe: So we had effectively recognized that at expense in the past that we were then allowed to reallocate back to our over under our GCA recovery balances on the balance sheet. So that was the reason for the pickups, and that's why it's a one-time only. And going forward in terms of trends, we will update our fiscal 25 guidance here in the fall, and we'll see what happens this summer with spreads, with customer growth, mortgage interest rates, and all that will be fully reflected in our fiscal 25 guidance, which we will launch later this fiscal year or later this calendar year.
Christopher T. Forsythe: In the past that we were then allowed to reallocate back to our over under our GCI recovery our balances on the balance sheet. So that was the reason for the pickups and Thats why its a onetime event.
Christopher T. Forsythe: And going forward in terms of trends, we will we will update.
Christopher T. Forsythe: Our fiscal 'twenty five guidance here in the fall and we'll see what happens this summer with spreads with customer growth mortgage interest rates.
Christopher T. Forsythe: All of that will be fully reflected in our 25 guidance, which we will launch out later this fiscal year or later this calendar year.
Christopher T. Forsythe: Okay.
Richard Wallace Sunderland: Okay, got it. Well, thanks for running through all of that. I'll leave it there. Thank you.
Speaker Change: Okay got it well thanks for running through all of that I'll leave it there. Thank you.
Speaker Change: Thank you Richard.
Speaker Change: Thank you Richard.
Operator: And our next question comes from the line of Christopher, excuse me, Christopher Jeffrey with Mizzou Hope. Christopher, please go ahead.
Richard Wallace Sunderland: And our next question comes from the line of Christopher Excuse me Christopher Jeffrey with Mizuho. Christopher Please go ahead.
Christopher T. Forsythe: Hi, everyone. Thanks. Maybe picking up on one of the other guidance items that was updated. I think the CapEx guidance went up about $200 million, and apologies if you touched on it in the call already, but any kind of color there as to what kind of spread between distribution or pipeline or whatever you call it.
Christopher T. Forsythe: Hi, everyone. Thanks, maybe thinking.
Christopher T. Forsythe: Yes.
Christopher T. Forsythe: Guidance.
Christopher T. Forsythe: That was that's needed.
Christopher T. Forsythe: The Capex guidance.
Christopher T. Forsythe: While we will continue to evident.
Christopher T. Forsythe: Alrighty.
Christopher T. Forsythe: Any kind of color there.
Christopher T. Forsythe: The spread between distribute formal quite volatile.
John Kevin Akers: Yeah, it's a little hard to understand your question there, but I think, Dr. Jean, you're asking about the spreads on the pipeline. Obviously, at different times throughout the year, there'll be maintenance on various other takeaway capacity. That's what we've seen over the last few weeks and months, and we anticipate several other pipelines to have additional maintenance, which is driving some negative spreads coming out of Oahu. I believe this morning's cash prices were negative $2.30.
Speaker Change: Yes, it's a little hard to understand your question there, but I think Jan you were asking about the spreads on the pipeline.
John Kevin Akers: Obviously, a different times throughout the year there'll be maintenance on various other takeaway capacity. That's what we've seen over the last few weeks and months and anticipate several other pipelines to have additional maintenance, which is driving some negative spreads coming out of what I believe this morning.
John Kevin Akers: A couple pipelines have, again, announced further maintenance into this month, maybe into the following month as well, which will continue to show those wider spreads for the next few weeks, and Chris mentioned that in his remarks as well. So, we expect that to clear up later toward the summer period.
John Kevin Akers: Todays cash prices were a negative $2 30.
John Kevin Akers: Couple of pipelines have again announced further maintenance and to this month maybe into the following month as well, which will continue to show those wider spreads for.
John Kevin Akers: For the next few week period, and Chris mentioned those in his remarks as well. So we expect that to clear up later toward the summer period.
Christopher T. Forsythe: Thank you, Kevin. So, one of my questions was about spreads on the pipeline, but maybe to clarify my last question, the CapEx guide for 2024 increased from the last update. I was just hoping for color on what's driving the increase and which businesses.
Speaker Change: Alright. Thank you Kevin one of my question was about.
Speaker Change: Pipeline, maybe you clarify my last question the Capex guidance of 24.
Christopher T. Forsythe: Yes.
Speaker Change: From the last update I was just hoping for some color on.
Speaker Change: What's driving the increase.
John Kevin Akers: As we normally do, what drives our CAPEX is our safety and reliability investment. And again, Chris mentioned in his remarks that we had identified several projects before heading into the heating season that we would like to complete for reliability measures that are out there. And our team continues to evaluate safety projects that are out there for pipe programs across our various jurisdictions. We'll further identify those as we head toward our update near the October-November timeframe in 2025.
Speaker Change: Yes, as we normally do what drives our Capex is our safety and reliability investment and again, Chris mentioned in his remarks that we had identified several projects before heading into the heating season that we would like to complete for reliability measures that are out there and our.
John Kevin Akers: Our team continues to evaluate.
John Kevin Akers: Safety projects that are out there.
John Kevin Akers: For Pi programs across our various jurisdictions will further identify those as we head toward our update near the October November timeframe on 2025.
Christopher T. Forsythe: Okay, great. Thank you. All right, thank you.
Speaker Change: Okay, great. Thank you.
Speaker Change: Alright, thank you.
Operator: And one last call for questions. Again, if you would like to ask a question, press 1 on your telephone keypad. Once again, press 1. And it looks like there are no further questions. So at this point, I will turn the call back over to Dan Meziere for closing remarks.
Christopher T. Forsythe: And one last call for questions again, if you would like to ask a question star one on your telephone keypad once again star one.
Daniel M. Meziere: And it looks like there are no further questions. So at this point I will turn the call back over to Dan <unk> for closing remarks, Dan.
Daniel M. Meziere: We appreciate your interest in Atmos Energy and thank you again for joining us this morning. A recording of this call will be available for replay on our website through June 30th. Have a great day.
Daniel M. Meziere: We appreciate your interest in Atmos energy and thank you again for joining US. This morning, a recording of this call is available for replay on our website through June 30th.
Daniel M. Meziere: Great day.
Operator: Thanks, Dan. And again, ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.
Daniel M. Meziere: Thanks, Dan and again, ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.
Operator: Okay.
Operator: Yes.
Operator: Yeah.
Operator: Okay.
Operator: Yes.
Operator: Okay.
Operator: Yeah.
Operator: Yes.
Operator: [music].
Operator: Okay.