Q3 2024 Atmos Energy Corp Earnings Call

August 8, 2024

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Atmos Energy Conference.

Operator: today. At this time, I would like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and 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 followed by the number 1 on your telephone keypad. And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer.

Operator: Today, at this time, I would like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 third quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: Corporation fiscal 2024 third quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: And 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 followed by the number one on your telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer.

Operator: And 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, followed by the number one on the telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you.

Operator: And after the speaker's remarks, there will be a question and answer session.

Operator: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Operator: And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan, you may begin.

Dan Meziere: I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan, you may begin.

Dan Meziere: Great. Thank you, Krista. Good morning, everyone, and thank you for joining our Fiscal 2024 Third 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 Act.

Dan Meziere: All right. Thank you, Krista.

Dan Meziere: Good morning, everyone. And thank you for joining our fiscal 2024 third quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsyte, Senior Vice President and Chief Financial Officer. Our earnings release and conference call slide presentation, which we will reference and are 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 Act. Our forward-looking statements and projections could differ materially from actual results.

Dan Meziere: Thank you, Krista. Good morning, everyone, and thank you for joining our Fiscal 2024 Third Quarter Earnings Call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer. 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 Act. Our forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 32 and are more fully described in our SEC filing.

Dan Meziere: Thank you, Christa. Good morning, everyone, and thank you for joining our fiscal 2024 third quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer.

Dan Meziere: 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.

Dan Meziere: Our forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 32 and are more fully described in our SEC filing. With that, I will turn the call over to Chris Forsythe, our Senior Vice President and CFO. Thank you, Dan, and good morning everyone.

Dan Meziere: The factors that could cause such material differences are outlined on slide 32 and are more fully described in our SEC filing.

Chris Forsyte: With that, I will turn the call over to Chris Forsyte, our Senior Vice President and CFO. Chris. Thank you, Dan, and good morning, everyone. We appreciate you joining us, and your interest in Atmos Energy.

Chris Forsythe: With that, I will turn the call over to Chris Forsythe, our Senior Vice President and CFO, and Customer Growth. Additionally, strong through system revenues of APT, particularly during the third fiscal quarter, contributed to our performance. Residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $18 million was realized during our third fiscal quarter. There will be pipelines coming out of the Permian experience, planned and unplanned, excluding the $14 million one-time VAT debt adjustment we reported in Mississippi in the first quarter.

Chris Forsythe: With that, I will turn the call over to Chris Forsythe, our Senior Vice President and CFO .

Chris Forsythe: We appreciate you joining us and your interest in Atmos Energy. Yesterday, we announced fiscal year-to-date diluted earnings per share of $6, compared to $5.33 per diluted share in the prior year period. Our third quarter and fiscal year-to-date results continue to be driven by... Regulatory Outcomes Requesting Increased Safety and Reliability, and Customer Growth. Additionally, strong through-system revenues of APT, particularly during the third fiscal quarter, contributed to our performance. Regulatory outcomes in both first segments increased operating income by $238 million.

Chris Forsythe: Thank you, Dan, and good morning, everyone. We appreciate you joining us and your interest in Atmos Energy.

Chris Forsyte: Yesterday, we announced fiscal year-to-date diluted earnings for share of $6 compared to $5.33 per division share in the prior year period. Our third quarter and fiscal year-to-date results continue to be driven by two things. Regulatory outcomes reflecting increased safety and reliability spending and customer growth. Additionally, strong through-system revenues of APT, particularly during the third fiscal quarter, contributed to our performance. Regulatory outcomes in both first segments increased offering income by $238 million, and residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $18 million. revenues of our pipeline storage segment increased $19 million per year period.

Speaker Change: Yesterday, we announced fiscal year-to-date diluted earnings per share of $6 compared to $5.33 per diluted share in the prior year period.

Chris Forsythe: Our third quarter and fiscal year-to-date results continue to be driven by two themes. Regulatory outcomes reflecting increased safety and reliability spending, and customer growth. Additionally, strong through-system revenues of APT, particularly during the third fiscal quarter, contributed to our performance.

Chris Forsythe: Regulatory outcomes in both first segments increased operating income by $238 million. And residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $18 million.

Chris Forsythe: And residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $18 billion. Additionally, revenues in our pipeline storage segment increased $19 million period over period. $11 million of this amount, the Denver Ride-Around Mechanism, was realized during our third fiscal quarter. There will be pipelines coming out of the Permian experience, planned and unplanned. This reduction in take-away capacity, coupled with robust associated natural gas production, widened the spreads between the Waja header on the western end of the APT system and delivery points on the eastern and southern ends of the system.

Chris Forsythe: Revenues in our pipeline storage segment increased $19 million period over period. $11 million of this amount, Denver Rider Road Mechanism, was realized during our third fiscal quarter.

Chris Forsyte: $11 million of this amount, and variety of ethnicism, was realized during our third fiscal quarter. There were the pipelines coming out of the premium experience, planned and unplanned maintenance. This reduction take a capacity of what robust associated with natural gas production, why this spreads between the wild header on the western end of APT system and deliver points in the eastern end and southern end of the system. We expect spread to remain elevated through the end of our fiscal year. Excluding the $14 million one-time bad debt adjustment, reporting the Mississippi in the first quarter, consolidated ONN increase in net $16 million or about 3 percent.

Chris Forsythe: There will be pipelines coming out of the Permian experience, planned and unplanned maintenance.

Speaker Change: this reduction take away acity up with robust associated natural gas production w this spreads between the bond header on the wes tern and of p t system and deliver points in the eastern and other ends system

Chris Forsythe: We expect spreads to remain elevated through the end of our fiscal year, excluding the $14 million one-time VAT debt adjustment we reported in Mississippi in the first quarter. Consolidated O&M increased a net $16 million, or about 3%. This increase is primarily due to higher import-related costs, insurance premiums, and IT software maintenance costs, partially offset by a $15 million decrease in O&M in our pipeline and storage segment, primarily due to the timing of in-line inspection work.

Speaker Change: We expect spreads to remain elevated through the end of our fiscal year.

Chris Forsythe: Excluding the $14 million one-time VAT debt adjustment we reported in Mississippi in the first quarter.

Chris Forsythe: Consolidated O&M increase at net $16 million, or about 3%. This increase is primarily due to higher employability costs, insurance premiums, and IT software maintenance costs, partially offset by a $15 million decrease in O&M in our pipeline and storage segment, primarily due to the timing of in-line inspection work. As expected, O&M spending in the third fiscal quarter trended higher than the prior quarter, and we anticipate O&M spending in the fourth fiscal quarter to trend higher as well, as we continue to focus our spending on compliance, maintenance, and system monitoring. We remain on track to spend approximately $3.1 billion this fiscal year.

Chris Forsythe: Consolidated O&M increased a net $16 million, or about 3%.

Chris Forsyte: This increase is primarily due to high-reported related costs, insurance premiums, IT software maintenance costs, or should offset by $15 million decrease in ONN at our pipeline storage. in the second segment, primarily due to the timing of inline inspection work. As expected, O&M in the third fiscal quarter trended higher than the prior quarter, and we anticipate O&M spending in the fourth fiscal quarter to trend higher as well, as continues to focus our spending of compliance, maintenance, and system monitoring. We still expect this with 24 O&M to be in the range of 800 million to 820 million dollars.

Chris Forsythe: This increase is primarily due to higher employability costs, insurance premiums, IT software maintenance costs, partially offset by a $15 million decrease in O&M in our pipeline and storage segment, primarily due to the timing of in-line inspection work.

Chris Forsythe: As expected, O&M spending in the third fiscal quarter trended higher than the prior quarter, and we anticipate O&M spending in the fourth fiscal quarter to trend higher as well, as we continue to focus our spending on compliance, maintenance, and system monitoring. We still expect Fiscal 24 O&M to be in the range of $800 million to $820 million, and consolidated capital spending to increase to $2.1 billion, 80% plus dedicated to improving the safety and reliability of our system.

Chris Forsythe: As expected, O&M in the third fiscal quarter trended higher than the prior quarter, and we anticipate O&M spending in the fourth fiscal quarter to trend higher as well, as we continue to focus our spending on compliance, maintenance, and system monitoring.

Chris Forsythe: We still expect Fiscal 24 O&M to be in the range of $800 million to $820 million.

Chris Forsyte: Our consolidated capital spending increased to 2.1 billion dollars, with 8% plus dedicated to improving the safety and reliability of our system. Spending our distribution segment has increased due to higher safety and reliability spending in higher spending to support customer growth. Being in our pipeline and storage segment is lower than the prior year due to timing. We remain on track to spend approximately 3.1 billion dollars this fiscal year. Since the end of our second fiscal quarter, we implemented about $213 billion in annualized regulatory outcomes, including all of this year's Texas script filings, and we're annual filings for the City of Dallas, Louisiana, and Tennessee.

Chris Forsythe: Consolidated capital spending increased to $2.1 billion, with 80% plus dedicated to improving the safety and reliability of our system.

Chris Forsythe: Spending on our distribution segment has increased due to higher safety and liability spending and higher spending to support customer growth, while spending in our pipeline and storage segment is lower than the prior year due to timing. We remain on track to spend approximately $3.1 billion this fiscal year.

Chris Forsythe: Spending in our distribution segment has increased due to higher safety and liability spending and higher spending to support customer growth. Spending in our pipeline and storage segment is lower than the prior year due to timing. We remain on track to spend approximately $3.1 billion this fiscal year.

Chris Forsythe: Since the end of our second fiscal quarter, we implemented about $213 billion in annualized regulatory outcomes, including all of this year's Texas GRIP filings and our annual filings for the city of Dallas, Louisiana, and Tennessee. Year-to-date, we have completed $380 million in annualized regulatory outcomes. Currently, we have an additional $182 million in annualized outcomes in progress. Additionally, we made our first filing under APT's new system safety and integrity mechanism, seeking a $19 million increase in revenue.

Chris Forsythe: Since the end of our second fiscal quarter, we implemented about $213 million in annualized regulatory outcomes, including all of this year's Texas GRIP filings and our annual filings for the City of Dallas, Louisiana, and Tennessee. Year-to-date, we have completed $380 million in annualized regulatory outcomes.

Chris Forsyte: Here today, we have completed $380 million in annualized regulatory outcomes. Currently, we have an additional $108 million in annualized outcomes in progress. Additionally, we made our first filing under APT's new system safety and integrity mechanism, seeking a $19 million increase in revenues. This new mechanism was approved in APT's last year in the rate case, as they've closed the mechanism for costs incurred to address new federal and state safety-related regulations, meaning we will recognize the revenue and related O&M costs after reviewing approval by the Texas Federal Commission, resulting in no impact to operating income. Our financial position continues to remain strong.

Chris Forsythe: Currently, we have an additional $182 million in annualized outcomes in progress.

Speaker Change: additionally we made our first filing under ap s new excessand safety in integrity mechanism seeking a nineteen milliondollar increase in revenues

Chris Forsythe: This new mechanism was approved in APT's last General Rate case as a floating mechanism for costs incurred to address new federal and state safety-related regulations. Meaning, we will recognize the revenue and related O&M costs after review and approval by the Texas Federal Commission, resulting in no impact on operating costs.

Chris Forsythe: This new mechanism was approved in APT's last GEMMA rate case as a floating mechanism for costs incurred to address new federal and state safety-related regulations.

Chris Forsythe: Meaning we will recognize the revenue and related O&M costs after review and approval by the Texas Federal Commission, resulting in no impact on operating costs. This amount includes $551 million in net proceeds available under existing forward sale agreements that will fully satisfy our anticipated FYSB 24 equity needs, and most are anticipated for FYSB 25. As we head into the fourth quarter of the fiscal year, we now believe our Fiscal 24 Earnings for Share guidance will be at the higher end of our reaffirmed Earnings for Share guidance range of $6.70 to $6.80. As a reminder, our guidance range includes two items totaling $0.17 that we will exclude when we initiate our Fiscal 25 guidance in November.

Chris Forsythe: Meaning we will recognize the revenue and related O&M costs after review and approval by the Texas Federal Commission, resulting in no impact to operating income.

Chris Forsythe: Our financial position continues to remain strong. We finished our third fiscal quarter with an equity capitalization of 61% and approximately $4.3 billion in liquidity. This amount includes $551 million in net proceeds available under existing forward sale agreements that will fully satisfy our anticipated Fiscal 24 equity needs and most are anticipated for Fiscal 25. In June, we completed a $325 million Senior Unscrewed Debt Offering, capping our existing 10-year 5.9% senior note. As a result, our overall weighted average cost of debt as of June 30th stands at 4.1%, and our debt profile remains very manageable with a weighted average maturity of approximately 17%.

Chris Forsyte: We've finished our preferred fiscal quarter with an equity capitalization of 61 percent and approximately $4.3 billion liquidity. This amount includes $551 million in net proceeds available under existing Ford Celebration, that will fully satisfy or anticipate its fiscal 24 equity means, and most are anticipated fiscal 25 needs. In June, we completed a $325 million senior unscored debt offering after our existing 10-year 5.9% senior notes. As a result, our overall weighted average cost of debt as of June 30 stands at 4.1 percent, and our debt profile remains very manageable with the weighted average maturity of approximately 17 years.

Chris Forsythe: Our financial position continues to remain strong. We finished our third fiscal quarter with an equity capitalization of 61% and approximately $4.3 billion in liquidity.

Speaker Change: this amount includes five hundred centand fifty one million dollars net curproceeds available under reexisting forward celebrments that were fully satisfyer anticipated this was twenty four equityymean and most or anticipated this was twenty-five names

Chris Forsythe: In June , we completed a $325 million Senior Unscrewed Debt Offering, tapping our existing 10-year 5.9% senior notes.

Chris Forsythe: As a result, our overall weighted average cost of debt as of June 30th stands at 4.1%, and our debt profile remains very manageable with a weighted average maturity of approximately 17 years.

Chris Forsythe: As we head into the fourth quarter of the fiscal year, we now believe our Fiscal 24 Earnings for Share guidance will be at the higher end of our reaffirmed Earnings for Share guidance range of $6.70 to $6.80. Our assisted financing plan for fiscal 24 is complete. All regulatory outcomes that can impact fiscal 24 have been answered.

Chris Forsyte: As we head into the fourth quarter of the fiscal year, we now believe that fiscal 24 earnings for shared guidance will be at the higher end of our reaffirm earnings for shared guidance range of $6.7 to $6.80. Our anticipated financing plan for fiscal 24 is complete. All regulatory outcomes that can impact Fiscal 24 have been implemented. As I mentioned ago, we anticipate spreads for APTs through system business will remain elevated, which will might also contribute to our Q4 results. And we have a reason and clear line of sight in the system compliance, maintenance, and monitoring; we will perform in the fourth quarter.

Speaker Change: ouricit has been asking planif that's twenty four completealregulatory outcomes that can impact this cal twenty four has been pleitted

Chris Forsythe: As I mentioned earlier, we anticipate spreads for APTs through the systems business will remain elevated, which will modestly contribute to our Q4 results. And we have a reasonably clear line of sight on the system compliance, maintenance, and monitoring we will be performing in the fourth quarter. As a reminder, our guidance range includes two items totaling $0.17 that we will exclude when we initiate our FYSB 25 guidance in November. The first item is the Texas Property Tax Benefit that we've been discussing all fiscal year, which would favorably impact Fiscal 24 results by 10 cents. Additionally, the one-time Mississippi FAD date adjustment represented seven. We continue to anticipate 6% to 8% earnings per share growth from this adjusted EPS amount through fiscal 28.

Chris Forsythe: As I mentioned ago, we anticipate spreads for APTs through system business will remain elevated, which will modestly contribute to our Q4 results, and we have a reasonably clear line of sight in the system compliance, maintenance, and monitoring we will be performing in the fourth quarter.

Chris Forsyte: As a reminder, our guidance range includes two items, totaling 17 cents that we will exclude when we initiate our fiscal 25 guidance in November. The first item is the Texas Coffee Tax benefit that we've been discussing all those who year, which would favorably impact this with 24 results by 10 cents. Additionally, the one time Mississippi Fed did adjustment for We continue to anticipate 6-8% earnings for shared growth from the suggested ETS and mouth through this with 28.

Chris Forsythe: As a reminder, our guidance range includes two items totaling $0.17 that we will exclude when we initiate our FYSB 25 guidance in November .

Chris Forsythe: The first item is the Texas Property Tax Benefit that we have been discussing all fiscal year, which would favorably impact Fiscal 24 results by 10 cents.

Chris Forsythe: Additionally, the one-time Mississippi FAD date adjustment represented 7 cents.

Chris Forsythe: We continue to anticipate 6-8% earnings-for-sure growth from this adjusted EPS amount through fiscal 28.

Kevin Akers: Thank you for your time today, and I will turn the call over to Kevin for his update and some closing remarks. Kevin? Thank you, Gris.

Dan Meziere: Thank you for your time today, and I will turn the call over to Kevin for his update and some closing remarks. Kevin? Thank you, Chris. Good morning, everyone, and thank you for joining us.

Kevin Akers: Thank you for your time today, and I will turn the call over to Kevin for his update and some closing remarks. Kevin? Thank you, Chris. Good morning, everyone, and thank you for joining us.

Kevin: thank youfor your time today and i'll turn to callover to cvin for update and some clo marks

Kevin Akers: Thank you, Chris. Good morning, everyone, and thank you for joining us today. We continue to benefit from solid economic growth in our service territory. For the 12 months ended June 30th, we added 57,000 new customers, with nearly 45,000 of those new customers located in Texas. The Texas Workforce Commission reported in July that the seasonally adjusted number of employees reached 14.2 million. Texas again added jobs at a faster rate than the nation over the last 12 months, ending June, adding over 267,000 jobs, representing a 1.9 percent annual growth.

Kevin Akers: Good morning, everyone, and thank you for joining us today. We continue to benefit from solid economic growth in our service territory. For the 12 months in June 30th, we added 57,000 new customers, with nearly 45,000 of those new customers located in Texas. The Texas Workforce Commission reported in July that the seasonally adjusted number of employees reached 14.2 million. Texas, again, added jobs at a faster rate than the nation over the last 12 months ending June, adding over 267,000 jobs, representing a 1.9% annual growth rate. Industrial demand for natural gas and service territories also remains strong.

Kevin: Thank you, Chris. Good morning, everyone, and thank you for joining us today.

Kevin: We continue to benefit from solid economic growth in our service territory. For the 12 months into June 30th, we added 57,000 new customers with nearly 45,000 of those new customers located in Texas.

Kevin Akers: For the 12 months ended June 30th, we added 57,000 new customers, with nearly 45,000 of those new customers located in Texas. Industrial demand for natural gas in our service territories also remains strong. Fiscal year to date, we have added 32 new industrial customers with an anticipated annual load of approximately 6 BCF once they are fully operational. On a volumetric basis, the 6 B.C.F.

Speaker Change: The Texas Workforce Commission reported in July that the seasonally adjusted number of employed reached 14.2 million.

Speaker Change: Texas, again, added jobs at a faster rate than the nation over the last 12 months ending June , adding over 267,000 jobs, representing a 1.9% annual growth rate.

Kevin Akers: Industrial demand for natural gas in our service territories also remains strong. During the third quarter, we added 10 new industrial customers with an anticipated annual load of approximately 2 BCF once they are fully operational. Fiscal year to date, we have added 32 new industrial customers with an anticipated annual load of approximately 6 BCF once they are fully operational. On a volumetric basis, the 6 BCF is

Kevin Akers: During the third quarter, we added 10 new industrial customers with an anticipated annual load of approximately two BCFs once they are fully operational. On a biometric basis, the 6 BCF of anticipated industrial load is equal to adding approximately 110,000 residential customers. During the first nine months of the fiscal year, our customer support agents and customer advocacy teams continued their outreach efforts to energy assistance agencies and customers, helping over 47,000 customers receive nearly 19 million dollars in funding assistance. Our consistent performance reflects the vital role we play in every community, safely delivering reliable and efficient natural gas to homes, businesses, and industries to fuel our energy needs now and in the future.

Kevin Akers: Fiscal year to date, we have added 32 new industrial customers with an anticipated annual load of approximately 6 BCF once they are fully operational.

Kevin Akers: of anticipated industrial load is equal to adding approximately 110,000 residential customers. Additionally, during the first nine months of the fiscal year, our customer support agents and customer advocacy teams continued their outreach efforts to energy assistance agencies and customers, helping over 47,000 customers receive nearly $19 million in funding assistance. Our consistent performance reflects the vital role we play in every community, safely delivering reliable and efficient natural gas to homes, businesses, and industries to fuel our energy needs now and in the future. We appreciate your time this morning, and we will now open the call to questions.

Kevin Akers: On a volumetric basis, the 6 B.C.F. of anticipated industrial load is equal to adding approximately 110,000 residential customers.

Kevin Akers: of anticipated industrial load is equal to adding approximately 110,000 residential customers. And during the first nine months of the fiscal year, our customer support agents and customer advocacy teams continued their outreach efforts to energy assistance agencies and customers. We appreciate your time this morning, and we will now open the call to questions.

Kevin Akers: And during the first nine months of the fiscal year, our customer support agents and customer advocacy teams continued their outreach efforts to energy assistance agencies and customers.

Kevin Akers: helping over 47,000 customers receive nearly $19 million in funding assistance.

Kevin Akers: Our consistent performance reflects the vital role we play in every community, safely delivering reliable and efficient natural gas to homes, businesses, and industries to fuel our energy needs now and in the future.

Operator: We appreciate your time this morning, and we will now open the call to questions. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again, press star 1.

Kevin Akers: we appreciate your time this morning and we 'll now open the call to quest

Operator: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again, press star 1. Your first question comes from the line of, say, she, with Barclays. Please go ahead.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again press star 1. Your first question comes from the line of Say She with Barclays. Please go ahead.

Say She: Your first question comes from the line of Say She with Barclays, please go ahead. Hi, good morning, team. Thanks for taking my questions.

Questioner: Hi, good morning team. Thanks for taking my questions. I just want to first quickly touch on financing. Could you just further discuss the equity needs for 25 and, definitely, given 25 is largely done with forward instruments and the recent renewal of ATM, just how does that better facilitate the equity needs in 2025? Thanks.

Chris Forsyte: I just want to first quickly touch on financing. Could you just further discuss the equity needs for 25 and definitely given 25 largely done with 12-hour instruments and the recent renewal on ATM? Just how does that better facilitate the equity needs in 2025? Thanks.

Speaker Change: Hi, good morning team. Thanks for taking my questions. I just want to first quickly touch on financing. Could you just further discuss the equity needs for 2025?

Questioner: Definitely, given 25 is largely done with forward instruments and the recent renewal of ATM, just how does that better facilitate the equity needs in 2025? Thanks.

Speaker Change: Definitely given 25 largely done with forward instruments and the recent renewal on ATM, just how does that better facilitate the equity needs in 2025? Thanks.

Chris Forsythe: This is Chris saying good morning and thanks for joining us. We typically issue between $600 and $800 million a year in equity through the ATM program that we have. And as I mentioned a few minutes ago, we have $551 million priced at the end of June, of which that amount will basically mostly satisfy our fiscal 2025 needs. So I think that hopefully that will give you enough color to update your model.

Chris Forsyte: Well, this is Chris saying good morning and thanks for joining us. We typically issue between $6 and $800 million a year in equity through the ATM program that we have. And as I mentioned a few minutes ago, we have $551 million of Christ at the end of June, of which that amount will basically mostly satisfy, or this was 2025 needs. So I think that hopefully that will give you enough color to update your month. That's great. Thanks for the colors. Very helpful.

Questioner: This is Chris, and good morning and thanks for joining us. We typically issue between $600 and $800 million a year in equity through the ATM program that we have, and as I mentioned a few minutes ago, we have $551 million priced at the end of June.

Speaker Change: of which that amount will basically mostly satisfy our business two thousand and twenty-five needs so i think that hopefully that when you' enough color to de patr models

Chris Forsythe: That's great. That's great. Thanks for the colors.

Kevin Akers: Maybe just quickly turning to own them execution for 25. You raised the midpoint guidance by 20 million last quarter. And I guess things are on track for this year. Could you talk about going forward with some of the key items you're focusing on, own them execution? And how are you benchmarking with a 3.5% annual increased guidance? Thanks.

Speaker Change: That's great. That's great. Thanks for the colors. Very helpful.

Speaker Change: Maybe just quickly turning to O&M, execution for 25. You raised the midpoint guidance by 20 million last quarter.

Questioner: Very helpful. Maybe just quickly turning to O&M Execution for 2025. You raised the midpoint guidance by $20 million last quarter, and I guess things are on track for this year. Could you talk about going forward, what are some of the key items you're focusing on with O&M Execution, and how are you benchmarking with the 3.5% annual increase guidance? Thanks.

Speaker Change: And I guess things are on track for this year, could you talk about going forward, what are some of the key items you're focusing on O&M execution, and how are you benchmarking with the 3.5% annual increase guidance? Thanks.

Kevin Akers: Yeah, this is Kevin. Good morning. Glad to have you join us today.

Kevin Akers: Yeah, this is Kevin. Good morning. Glad to have you join us today. Again, we're working through the remainder of fiscal 24 right now, and anticipators will be the same items as we move into 25. And we'll have additional detail and color as we get to our November call on the 25. But again, the drivers around on and continue to be hydrostatic testing, line locating, integrity regulations, markable placement on difficult or hard to locate lines, those sort of things. And then looking for opportunities as we move forward to enhance those or pull things forward when we have the ability to do that.

Questioner: Yeah, this is Kevin. Good morning. Glad to have you join us today. Again, we're working through the remainder of fiscal 24 right now and anticipate it will be the same items as we move into 25. And we'll have additional...

Kevin Akers: Again, we're working through the remainder of fiscal 24 right now and anticipate it'll be the same items as we move into 25. And we'll have additional detail and color as we get to our November call on 25. But again, the drivers around O&M continue to be hydrostatic testing, line locating, integrity regulations, marker ball placement on difficult or hard-to-locate lines, those sort of things, and then looking for opportunities as we move forward to enhance those or pull things forward when we have the ability to do that. So again, the same items that we're focused on this year, we anticipate seeing again in 25.

Speaker Change: detail and color as we get to our November call on 25. But again, the drivers around O&M continue to be hydrostatic testing, line locating.

Speaker Change: Integrity regulations, marker ball placement on difficult or hard to locate lines, those sort of things, and then looking for opportunities as we move forward.

Speaker Change: to enhance those are full things forward when we have the ability to do that so again the same items that we're focused on this year we anticipate seeing again in twenty-five

Chris Forsyte: So again, the same items that were focused on this year, we anticipate seeing again in 25. Yeah, and I'll add to that too, as I said at the end of my prepared remarks, we're still anticipating 6 to 8% EPS growth off of the adjusted EPS amount for fiscal 24. So that's the overall theme to take away from. We'll have some puts and takes on the on, and this Kevin mentioned that there were still got into that 6 to 8% growth target. Great, that's very helpful. Thanks for the colors. I'll leave it there.

Chris Forsythe: I'll add to that too, as I said at the end of my prepared remarks, we're still anticipating 6-8% EPS growth off of the adjusted EPS amount for FISL-24, so that's the overall theme to take away. We'll have some puts and takes on the O&M, as Kevin mentioned, but we're still guiding to that 6-8% growth target.

Chris Forsythe: I'll add to that too, as I said at the end of my prepared remarks, we're still anticipating 6-8% EPS growth off of the adjusted EPS amount for Fiscal 24. So that's the overall theme to take away. We'll have some puts and takes on the O&M, as Kevin mentioned, but we're still guiding to that 6-8% growth target.

Chris Forsythe: I'll add to that too, as I said at the end of my prepared remarks, we're still anticipating 6-8% EPS growth off of the adjusted EPS amount for Fiscal 24. So that's the overall theme to take away from. We'll have some puts and takes on the O&M as Kevin mentioned.

Operator: Operator today.

Operator: At this time, I would like to welcome everyone to the Atmos Energy Corporation fiscal 2024 third quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Chris Forsythe: but they were still guiding to that six to eight percent growth target.

Questioner: Great. That's very helpful. Thanks for the colors. I'll leave it there.

Operator: And 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, followed by the number one on telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you.

Speaker Change: Great, that's very helpful. Thanks for the color, so I'll leave it there.

Richard Asanderson: You are next. Question comes from the line of Richard Asanderson with the JP Morgan. Please go ahead.

Operator: Your next question comes from the line of Richard Saunderson with J.P. Morgan. Please go ahead.

Speaker Change: your next question dums from the line of a richard asassandunders than with a jp morgan please go ahead

Operator: Hi, good morning. Thank you for your time today. Good morning.

Richard Asanderson: I Good morning, thank you for the time today.

Chris Forsyte: Morning, good morning. Looking at 24 results, you've called out the 17th sense of one-offs. I'm curious how we should think about the rest of the business into 25. If there's everything else continuing to 25 other than APT spread benefit, meaning take the 680 top end less 17th sense and maybe back out another roughly 10 cents for the spread pickup. Yeah, I think you're on target; there, Rich is backing out the 17 cents off of whatever you want to assume for the outcome for fiscal 24, you know, APT. We will have some spray activity next year, but we just can't predict it.

Chris Forsythe: Looking at 24 results, you've called out the $0.17 of one-offs. I'm curious how we should think about the rest of the business into $0.25. Does everything else continue into $0.25 other than the APT spread benefit, meaning take the $0.68 top end, less $0.17, and maybe back out another roughly $0.10 for the spread pickup?

Speaker Change: Hi, good morning. Thank you for the time today.

Dan Meziere: I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan, you may begin. All right. Thank you, Krista. Good morning, everyone. And thank you for joining our fiscal 2024 third quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer and Chris Forsyte, Senior Vice President and Chief Financial Officer. Our earnings release and conference call slide presentation, which we will reference and are prepared remarks, are available at Atmos Energy.com under the Investor Relations tab.

Questioner: Looking at 24 results, you've called out the $0.17 of one-offs. I'm curious how we should think about the rest of the business into $0.25. Does everything else continue into $0.25 other than the APT spread benefit, meaning take the $0.68 top end, less $0.17, and maybe back out another roughly $0.10 for the spread pickup?

Speaker Change: Morning. Good morning.

Questioner: looking at twenty four results you've called out the seventeen cents of one off i'm herearing how we should think about the rest of the business into twenty five it does everything else continued to twenty five other than a p t spread benefit meaning take the six eighty top and less seventeen cents and maybe back out another roughly ten cents for the spread dick up

Chris Forsythe: Yeah, I think you're on target there, you know, Rich is, you know, backing out the 17 cents off of whatever you want to assume for the outcome for fiscal 24. You know, APT, you know, we will have some spray activity next year, but we just can't predict it. And so it goes. I wouldn't necessarily discount too far off the two one-time items when you're starting your 7% or 8% or 9% or whatever you want to do on the growth target for fiscal 2025 because we will have some activity. It's just this year, particularly in the third quarter, we saw some elevated spreads and, as you commented, it's expected to revert back to the mean, which means we'll still have some activity there.

Dan Meziere: 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 Act. Our forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 32 and are more fully described in our SEC violence.

Chris Forsyte: And so I wouldn't necessarily discount too far off of what the two one-time items when you're starting your 7%, or 8%, or 9%, whatever you want to do on the growth target for fiscal 25, because we will have some activity. It's just this time this year, particularly in the third quarter, we saw some elevated spreads. And, as you commented, you know, it expected reverse back to the mean, which means we'll still have some activity there. Okay, great. That's really helpful.

Chris Forsythe: iwouldn't necessarily discount

Speaker Change: Thank you very much.

Chris Forsythe: Growth Target for fiscal 2025.

Chris Forsythe: With that, I will turn the call over to Chris Forsyte, our Senior Vice President and CFO. Chris. Thank you, Dan and good morning, everyone. We appreciate you joining us, and your interest in Atmos Energy.

Chris Forsythe: Okay, great. That's really helpful. And I guess one quick follow-up on that spread opportunity. I know you referenced in the script kind of a continuation into 4Q. Is that already contemplated in the higher-end guidance language, or is that not?

Questioner: Okay, great. That's really helpful. And I guess one quick follow-up on that spread opportunity. I know you referenced in the script kind of a continuation into 4Q. Is that already contemplated in the higher end guidance language, or is that potentially?

Chris Forsyte: And I guess one quick follow-up on that spread opportunity. I know you referenced in the script kind of a continuation into 4Q. Is that already contemplated in the higher-end guidance language, or is that potential upside, depending on how that materializes? No, that's all contemplated in the guidance that we've updated here this morning. Great, very clear and very helpful.

Questioner: Okay great that's really helpful and I guess one quick follow-up on that spread opportunity I know you referenced in the script kind of a continuation into 4Q is that already contemplated in the higher-end guidance language or is that potential upside depending on how that materializes?

Chris Forsythe: Yesterday, we announced fiscal year-to-date diluted earnings for share of $6 compared to $5.33 per division share in the prior year period. Our third quarter and fiscal year-to-date results continue to be driven by two things. Regulatory outcomes reflecting increased safety and reliability spending and customer growth. Additionally, strong through-system revenues of APT, particularly during the third fiscal quarter, contributed to our performance. Regulatory outcomes in both first segments increased offering income by $238 million, and residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $18 million, revenues of our pipeline storage segment increased $19 million per year period.

Chris Forsythe: Now, that's all contemplated in the guidance.

Speaker Change: Now, that's all contemplated in the guidance that we've updated here this morning.

Chris Forsythe: Great. Very clear and very helpful. Thank you for your time.

Richard Asanderson: Thank you for the time. Thank you.

Speaker Change: Great, very clear and very helpful. Thank you for the time. Thank you.

Ryan Levine: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Ryan Levine with City. Please go ahead.

Operator: As a reminder, if you would like to ask a question, please press.

Speaker Change: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Ryan Levine with Citi. Please go ahead.

Questioner: Good morning. To follow up on the APT spread dynamics, what are you assuming for the Matterhorn in-service date with the current 24 guidance? And are you assuming that the spread remains wide for the remaining portion of your fiscal year?

Chris Forsyte: Good morning. Hi everybody. To follow up on the APT spread dynamics, what are you assuming for the Matterhorn in service state with the current 24 guidance? And are you assuming that the spread remains wide for the remaining portion of your fiscal year? Yes, Chris said, again, we don't anticipate any further maintenance this year on the upstream segments of APT there that would impact the spreads right now. They've mitigated from the highs we've seen over the last quarter somewhat. And going forward, you know, definitely Matterhorn will be coming on. I think we read some of the documentation from the upstream folks sometime in September, October, early fall.

Speaker Change: Good morning. To follow up on the APT spread dynamics, what are you assuming for the Matterhorn in service date with the current 24 guidance?

Chris Forsythe: $11 million of this amount, and variety of ethnicism, was realized during our third fiscal quarter. There were the pipelines coming out of the premium experience planned and unplanned maintenance. This reduction take a capacity of what robust associated with natural gas production, why this spreads between the wild header on the western end of APT system and deliver points in the eastern end and southern end of the system. We expect spread to remain elevated through the end of our fiscal year.

Speaker Change: Are you assuming that the spread remains wide for the remaining portion of your fiscal year?

Chris Forsythe: Yeah, as Chris said, you know, again, we don't anticipate any further maintenance this year on the upstream segments of APT there that would impact the spreads right now. They've mitigated from the highs we've seen over the last quarter somewhat.

Chris Forsythe: Yes, as Chris said, again, we don't anticipate any further maintenance this year on the upstream segments.

Chris Forsythe: of APT there that would impact the spreads right now. They've mitigated from the highs we've seen over the last quarter somewhat.

Chris Forsythe: And look, going forward, you know, definitely Matterhorn will be coming on, I think, if you read some of the documentation from the upstream folks, sometime in September, October, early fall, that'll be coming on. We'll just have to watch and see what that does for the dynamics out there. Then, as we normally get into the shoulder much in the winter period, demand will drive it further from there on the spread impact. But again, I always like to remind you why APT exists, and that's to serve the customers behind it, the LDCs behind it. And then when we have the opportunity, we'll move that gas across our system. So right now, again, we don't anticipate any further maintenance upstream that would impact the spread any further than what we're currently seeing today.

Chris Forsythe: And look, going forward, you know, definitely Matterhorn will be coming on, I think, if you read some of the documentation from the upstream folks, sometime in September, October, early fall, that'll be coming on. We'll just have to watch and see what that does for the dynamics out there. Then, as we normally get into the shoulder motion winter period, demand will drive it further from there on the spread impact. But again, I always like to remind you why APT exists, and that's to serve the customers behind it, the LDCs behind it. And then when we have the opportunity, we'll move that gas across our system. So right now, again, we don't anticipate any further maintenance upstream that would impact the spread any further than what we're currently seeing today.

Chris Forsythe: Excluding the $14 million one-time bad debt adjustment, reporting the Mississippi in the first quarter, consolidated ONN increase in net $16 million or about 3 percent. This increase is primarily due to high-reported related costs, insurance premiums, IT software maintenance costs, or should offset by $15 million decrease in ONN at our pipeline storage, in the second segment, primarily due to the timing of inline inspection work. As expected, O&M in the third fiscal quarter trended higher than the prior quarter, and we anticipate O&M spending in the fourth fiscal quarter to trend higher as well, as continues to focus our spending of compliance, maintenance, and system monitoring.

Chris Forsythe: And look, going forward, you know, definitely Matterhorn will be coming on, I think if you read some of the documentation from the upstream folks, sometime in September , October , early fall, that'll be coming on. We'll just have to watch and see what that does for the dynamics out there.

Chris Forsyte: That'll be coming on. We just have to watch and see what that does for the dynamics out there. Then, as we normally get into the shoulder, much winter period demand will drive it further from there on the spread impact. Again, I always like to remind here why APT exists, and that's to serve the customers behind it, the LDCs behind it. And then, when we have opportunity, we'll move that gas across our system. So right now, again, we don't anticipate any further maintenance upstream that would impact the spreads any further than what we're currently seeing today at this point.

Chris Forsythe: then as we normally get into the shoulder march winter period demand will drive it further from their

Chris Forsythe: on the spread impact again

Chris Forsythe: I'd like to remind here why APT exists, and that's to serve the customers.

Chris Forsythe: behind the ltdc s behind it and then when we have opportunity will move that gas across our system so right now again we don't anticipate any further maintenance upstream that would impact the spreads any further than what we're currently seeing today at this point

Chris Forsythe: We still expect this with 24 O&M to be in the range of 800 million to 820 million dollars. Our consolidated capital spending increased to 2.1 billion dollars, with 8% plus dedicated to improving the safety and reliability of our system. Spending our distribution segment has increased due to higher safety and reliability spending in higher spending to support customer growth. Being in our pipeline and storage segment is lower than the prior year due to timing.

Chris Forsyte: Okay. And then a follow-up on that, given the strong performance this fiscal year on APT, does that have any implications for resetting the bar, which you get the sharing mechanism in future time rates? No, that's that's said in the rate case itself on a go forward. So the next time that'll potentially be looked at would be in the next about five years. About five years in the next required filing. Yeah. So, as reminded that bar, we said it 106.9 million. And so that's the benchmark we have to achieve to begin sharing over about that amount.

Questioner: Okay, and then a follow-up on that. Given the strong performance this fiscal year on APT, does that have any implications for resetting the bar on which you set the sharing mechanism?

Speaker Change: Okay and then a follow-up on that, given the strong performance this fiscal year on APT, does that have any implications for resetting the bar on which you get the sharing mechanism in future time periods?

Chris Forsythe: No, that's set in the rate case itself on a go-forward basis, so the next time that will potentially be looked at would be in the next five years, in the next required filing. So as a reminder, that bar was set at $106.9 million, and so that's the benchmark we have to achieve to begin sharing over and above that amount. And, of course, it works the other way too if we fall short, but $106.9 is the target.

Speaker Change: no that's that's said in the rate case itself on to go forward so the next time that potential be looked at would be in the next about five years about five years in the next required filing

Chris Forsythe: We remain on track to spend approximately 3.1 billion dollars this fiscal year. Since the end of our second fiscal quarter, we implemented about $213 billion in annualized regulatory outcomes, including all of this year's Texas script filings, and we're annual filings for the City of Dallas, Louisiana, and Tennessee. Here today, we have completed $380 million in annualized regulatory outcomes. Currently, we have an additional $108 million in annualized outcomes in progress. Additionally, we made our first filing under APT's new system safety and integrity mechanism, seeking a $19 million increase in revenues.

Speaker Change: Yeah, so as a reminder, that bar was set at $106.9 million. And so that's the benchmark we have to achieve to begin sharing over and above that amount. And of course, it works the other way, too, if we fall short. But $106.9 is the target we're looking at.

Chris Forsyte: And of course, it works the other way too; if we fall short, but in 106.9 is the target that we're looking at.

Operator: Okay.

Questioner: Okay, and last question for me. To the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to maybe build some infrastructure to support the movement of gas associated with some of the gas generation that may be coming? Yeah, as we've talked about on

Kevin Akers: Okay, and last question for me: to the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to maybe build some infrastructure to support the movement of gas associated with some of the gas generation that may be coming?

Kevin Akers: And last question for me, to the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to maybe build some infrastructure to support the movement of gas associated with some of the gas generation that may become. Yeah. As we talked about on the previous call, there's always that opportunity out there, but let's remember the power generators that we currently have on the APT system. We're one of several suppliers to them, so they can move or flex between suppliers at their will out there, so we wouldn't be a sole supplier.

Kevin Akers: Okay, and last question for me. To the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to

Chris Forsythe: This new mechanism was approved in APT's last year in the rate case, as they've closed the mechanism for costs incurred to address new federal and state safety-related regulations, meaning we will recognize the revenue and related O&M costs after reviewing approval by the Texas Federal Commission, resulting in no impact to operating income. Our financial position continues to remain strong. We've finished our preferred fiscal quarter with an equity capitalization of 61 percent and approximately $4.3 billion liquidity.

Speaker Change: maybe build some infrastructure to support the movement of gas associated with some of the gas generation that may be coming.

Chris Forsythe: As we talked about on previous calls, there's always that opportunity out there, but let's remember the power generators that we currently have behind the APT system; we're one of several suppliers to them, so they can move or flex between suppliers at their will out there, so we wouldn't be a sole supplier. We'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several suppliers or inputs into those facilities.

Kevin Akers: Yeah, as we talked about on previous calls, there's always that opportunity out there, but let's remember the power generators that we currently have behind the APT system; we're one of several suppliers to them, so they can move or flex between suppliers at their will out there, so we wouldn't be a sole supplier. And we'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several suppliers or inputs into those.

Kevin Akers: Yeah, as we've talked about on previous calls, there's always that opportunity out there, but let's remember the power generators that we currently have behind the APT system, we're one of several suppliers to them so they can...

Kevin Akers: move or flex between suppliers at their will out there so we wouldn't be a sole supplier.

Kevin Akers: And we'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several suppliers or inputs into those facilities.

Chris Forsythe: This amount includes $551 million in net proceeds available under existing Ford Celebration, that will fully satisfy or anticipate its fiscal 24 equity means, and most are anticipated fiscal 25 needs. In June, we completed a $325 million senior unscored debt offering after our existing 10-year 5.9% senior notes. As a result, our overall weighted average cost of debt as a June 30 stands at 4.1 percent, and our debt profile remains very manageable with the weighted average maturity of approximately 17 years.

Kevin Akers: And we'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several suppliers or inputs into those facilities.

Ryan Levine: Thank you for the time. Thank you.

Dan Meziere: In that concludes our question-and-answer session, and I will now turn the conference back over to Dan for closing remarks. Thanks. We appreciate your interest in Atmos Energy and thank you again for joining us today.

Operator: And that concludes our question and answer session, and I will now turn the conference over to you.

Operator: And that concludes our question and answer session, and I will now turn the conference back over to Dan for his closing remarks.

Dan Meziere: Thank you for the time.

Speaker Change: thank ay

Operator: and that concludes our question-and-answer session and i will now turn the conference back over to dan for closing remarks

Dan Meziere: We appreciate your interest in Atmos Energy and thank you again for joining us today. A reminder, a recording of this call is available for replay on our website. Have a great day.

Dan Meziere: The reminder of recording of this call is available for reply on our website.

Operator: Have a great day.

Chris Forsythe: As we head into the fourth quarter of the fiscal year, we now believe that fiscal 24 earnings for shared guidance will be at the higher end of our reaffirm earnings for shared guidance range of $6.7 to $6.80. Our anticipated financing plan for fiscal 24 is complete. All regulatory outcomes that can impact fiscal 24 have been implemented. As I mentioned ago, we anticipate spreads for APTs through system business will remain elevated, which will might also contribute to our Q4 results.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect. Thank you.

Dan Meziere: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Chris Forsythe: And we have a reason and clear line of side in the system compliance, maintenance, and monitoring, we will perform in the fourth quarter. As a reminder, our guidance range includes two items, totaling 17 cents that we will exclude, when we initiate our fiscal 25 guidance in November. The first item is the Texas Coffee Tax benefit that we've been discussing all those who year, which would favorally impact this with 24 results by 10 cents. Additionally, the one time Mississippi Fed did adjustment for We continue to anticipate 6-8% earnings for shared growth from the suggested ETS and mouth through this with 28.

Kevin Akers: Thank you for your time today, and I will turn the call over to Kevin for his update and some closing remarks. Kevin?

Kevin Akers: Thank you, Gris.

Kevin Akers: Good morning, everyone, and thank you for joining us today. We continue to benefit from solid economic growth in our service territory. For the 12 months in June 30th, we added 57,000 new customers with nearly 45,000 of those new customers located in Texas. The Texas Workforce Commission reported in July that the seasonally adjusted number of employees reached 14.2 million. Texas, again, added jobs at a faster rate than the nation over the last 12 months ending June, adding over 267,000 jobs representing a 1.9% annual growth rate.

Kevin Akers: Industrial demand for natural gas and service territories also remains strong. During the third quarter, we added 10 new industrial customers with an anticipated annual load of approximately two BCFs once they are fully operational. On a biometric basis, the 6 BCF of anticipated industrial load is equal to adding approximately 110,000 residential customers. During the first nine months of the fiscal year, our customer support agents and customer advocacy teams continued their outreach efforts to energy assistance agencies and customers, helping over 47,000 customers receive nearly 19 million dollars in funding assistance. Our consistent performance reflects the vital role we play in every community, safely delivering reliable and efficient natural gas to homes, businesses and industries to fuel our energy needs now and in the future.

Operator: We appreciate your time this morning and we will now open the call to questions. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw that question, again, press star 1.

Ryan Levine: Your first question comes from the line of say she with Barclays, please go ahead. Hi, good morning, team. Thanks for taking my questions.

Chris Forsythe: I just want to first quickly touch on financing. Could you just further discuss the equity needs for 25 and definitely given 25 largely done with 12-hour instruments and the recent renewal on ATM? Just how does that better facilitate the equity needs in 2025? Thanks.

Chris Forsythe: Well, this is Chris saying good morning and thanks for joining us. We typically issue between $6 and $800 million a year in equity through the ATM program that we have. And as I mentioned a few minutes ago, we have $551 million of Christ at the end of June of which that amount will basically mostly satisfy or this was 2025 needs. So I think that hopefully that will give you enough color to update your month. That's great. Thanks for the colors. Very helpful.

Kevin Akers: Maybe just quickly turning to own them execution for 25. You raised the midpoint guidance by 20 million last quarter. And I guess things are on track for this year.

Kevin Akers: Could you talk about going forward with some of the key items you're focusing on own them execution? And how are you benchmarking with a 3.5% annual increased guidance? Thanks.

Chris Forsythe: Yeah, this is Kevin. Good morning. Glad to have you join us today. Again, we're working through the remainder of fiscal 24 right now and anticipators will be the same items as we move into 25. And we'll have additional detail and color as we get to our November call on 25. But again, the drivers around on and continue to be hydrostatic testing, line locating, integrity regulations, markable placement on difficult or hard to locate lines, those sort of things.

Chris Forsythe: And then looking for opportunities as we move forward to enhance those or pull things forward when we have the ability to do that. So again, the same items that were focused on this year, we anticipate seeing again in 25. Yeah, and I'll add to that too, as I said at the end of my prepared remarks, we're still anticipating 6 to 8% EPS growth off of the adjusted EPS amount for fiscal 24.

Chris Forsythe: So that's the the overall theme to take away from. We'll have some puts and takes on the on and this Kevin mentioned that there were still got into that 6 to 8% growth target. Great, that's very helpful. Thanks for the colors.

Speaker: I'll leave it there.

Richard Asanderson: You are next. Question comes from the line of Richard Asanderson with the JP Morgan. Please go ahead.

Chris Forsythe: I good morning, thank you for the time today. Morning, good morning. Looking at 24 results, you've called out the 17th sense of one-offs. I'm curious how we should think about the rest of the business into 25. If there's everything else continuing to 25 other than APT spread benefit, meaning take the 680 top end less 17th sense and maybe back out another roughly 10 cents for the spread pickup. Yeah, I think your on target, there Rich is backing out the 17 cents off of whatever you want to assume for the outcome for fiscal 24, you know, APT.

Chris Forsythe: We will have some spray activity next year, but we just can't predict it. And so I wouldn't necessarily discount too far off of what the two one-time items when you're starting your 7%, or 8%, or 9%, whatever you want to do on the growth target for fiscal 25, because we will have some activity. It's just this time this year, particularly in the third quarter, we saw some elevated spreads. And as you commented, you know, it expected reverse back to the mean, which means we'll still have some activity there.

Speaker: Okay, great, that's really helpful.

Chris Forsythe: And I guess one quick follow-up on that spread opportunity. I know you referenced in the script kind of a continuation into 4Q. Is that already contemplated in the higher-end guidance language, or is that potential upside, depending on how that materializes?

Speaker: No, that's all contemplated in the guidance that we've updated here this morning. Great, very clear and very helpful.

Speaker: Thank you for the time. Thank you.

Operator: As a reminder, if you would like to ask a question, please press star one on your telephone keypad.

Ryan Levine: Your next question comes from the line of Ryan Levine with City. Please go ahead. Good morning. Hi everybody. To follow up on the APT spread dynamics, what are you assuming for the Matterhorn in service state with the current 24 guidance? And are you assuming that the spread remains wide for the remaining portion of your fiscal year? Yes, Chris said, again, we don't anticipate any further maintenance this year on the upstream segments of APT there that would impact the spreads right now.

Ryan Levine: They've mitigated from the highs we've seen over the last quarter somewhat. And going forward, you know, definitely Matterhorn will be coming on. I think we read some of the documentation from the upstream folks sometime in September, October, early fall. That'll be coming on. We just have to watch and see what that does for the dynamics out there. Then as we normally get into the shoulder, much winter period demand will drive it further from there on the spread impact.

Ryan Levine: Again, I always like to remind here why APT exists and that's to serve the customers behind it, the LDCs behind it. And then when we have opportunity, we'll move that gas across our system. So right now, again, we don't anticipate any further maintenance upstream that would impact the spreads any further than what we're currently seeing today at this point.

Kevin Akers: Okay. And then a followup on that, given the strong performance this fiscal year on APT, does that have any implications for resetting the bar, which you get the sharing mechanism in future time rates? No, that's that's said in the rate case itself on a go forward. So the next time that'll potentially be looked at would be in the next about five years. About five years in the next required filing. Yeah. So as reminded that bar, we said it 106.9 million.

Kevin Akers: And so that's the the benchmark we have to achieve to begin sharing over about that amount. And of course, it works the other way too, if we fall short, but in 106.9 is the target that we're looking at.

Kevin Akers: Okay. And last question for me, to the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to maybe build some some infrastructure to support the movement of gas associated with some of the gas generation that may become. Yeah. As we talked about on previous call, there's always that opportunity out there, but let's remember the power generators that we currently have on APT system.

Kevin Akers: We're one of several suppliers to them so they can move or flex between suppliers at their will out there so we wouldn't be a sole supplier. And we'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several suppliers or inputs into those facilities.

Speaker: Thank you for the time.

Speaker: Thank you.

Dan Meziere: In that concludes our question and answer session, and I will now turn the conference back over to Dan for closing remarks. Thanks. We appreciate your interest in Atmos Energy and thank you again for joining us today.

Speaker: The reminder of recording of this call is available for reply on our website. Have a great day.

Operator: This concludes today's conference call. Thank you for your participation and you may now disconnect. Thank you.

Q3 2024 Atmos Energy Corp Earnings Call

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