Atmos Energy (ATO) 7 Nov 242024 Q4 Earnings call transcript

Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 Fourth Quarter Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the call over to Dan Meziere, Vice President, Investor Relations and Treasurer.

begin. may You

and Good us. Amy. and and you Vice thank Executive Thank me morning, today joining President Senior Forsythe, With and President Financial are for Officer. Officer; you, Chris everyone, Chief Kevin Chief Akers,

call release at we available will presentation, earnings the under Investor our Our slide remarks, in prepared which conference and are atmosenergy.com reference Relations tab.

the that contain review future Act Securities expectations, in within mind discuss forward-looking Securities financial might please discussion and some of results our our and As Exchange we of the Act. meaning statements keep the

Our from fully cause more forward-looking factors Slide statements such and results. could are projections and described could in on differ that outlined XX actual materially our material SEC are differences The filings.

to over I Kevin. will now the turn call

everyone. and your you, appreciate Energy. good interest Atmos Thank morning, We in Dan,

part like our Veterans service, Monday to Approximately those our who is and As armed who this for bravely Energy served currently great to I Atmos thank country. XXX serving XX teammates the thank served Thank your nation. those Day, forces. take opportunity you our a more in than of have million of Americans you this to would are

our moral Atmos and here Chairman, customers as integrity company. an anniversary XXth X,XXX of Founding Charles to be serve honesty, All continue we K. of good simple us marked as of and the 'XX at Fiscal values proudly Energy's Energy communities Vaughan, Atmos independent our character. our by guided

of represents per XXnd growth. represents share the consecutive we also per Yesterday, $X.XX, dividend year consecutive Fiscal reported earnings growth. earnings of of year the share 'XX which XXth

storage their strategy successful Atmos focus modernize safely and reliably of execution natural while transmission Energy reflect of results team of dedication year and proven distribution, the the gas fiscal our and systems. we operating our entire continued and Our

XX,XXX more through pipe replacement capital of replacement 'XX of and over of over transmission distribution of lines. modernization and the XXX service of fiscal our the than billion investment $X.X supported systems miles Our

the to base Metroplex. integrity service to Dome gas Salt PC APT inspections the Additionally, the S-X and working X east we caverns be of Phase Line to we gas as end and reliability, Dome Worth the season. the winter Loop diversification completed southern and continue our as X X expect DFW completed our WA Line Line the enhance safety, system versatility supply of And # the availability west Phase Fort Salt into and on for of on well APT X, for injections of X of we all placing well by of system month, cavern the providing next to Bethel this of

and capital residential service our Texas. investment across fuel new supported development we service we the added with commercial new to located over XX,XXX 'XX, over also customers to gas of those XX,XXX continue territories. natural see fiscal economic In customers strong Our in

in market DFW housing remains Metroplex strong. the The

Texas Workforce the strength For XX, new state XX-month according Texas of record to closings by streak employment. Commission, of prior September X% its with the over the economy. high the driven period, the record nearly home a set a XX the increase And months continued ended

from months, faster For the added the September September a reached the XXXX. rate XX.X over XX million. of jobs September, XX nearly through record high over adding new XXX,XXX Texas months seasonally XXXX nation adjusted at ended number last the at employees again a than jobs

XX% adding solid usage of over customer volumetric equivalent the commercial we fiscal approximately on basis. increase to is fiscal gas annually. this customers added customers, saw customers, to addition fully residential In XX consume which anticipated industrial are XXX,XXX when a a prior nearly added robust Bcf industrial we commercial growth, X,XXX to In This operational year. over X.X growth. And we residential 'XX, new and

we XX nearly XXX years, when estimated million the industrial X load commercial last to with adding customers fully basis, last of have we residential an Over added annual And customers. X.X Bcf XXX,XXX residential a nearly and X the equivalent is customers. operational. years, over added on this volumetric Again,

the all This economic from service growing has customer our natural classes territories. demand continues gas natural to role vital demonstrate across development gas in

funding. And assistance million associates fiscal continue exceptional a assisted Our over our in our and energy customer our XX,XXX customer again customer year, received support They $XX our advocacy almost best to in and service through trust XX% their rating be at from inspire service. their in customers once with during technicians customers. the team customers receiving and satisfaction communities

I'm fiscal and work has for accomplishments very beyond. fiscal us positioned well exceptional team our and Atmos proud their in many Energy of 'XX. Their 'XX

diversified you demand. know, and of in we the is service energy gas investment and growing infrastructure in to and gas natural a supportive supply economy natural meet growing that operate territory As the growing our

passed XX% choice. As support reminder, states legislation a have is in energy of X base X of our that located of in our rate

modernization that safety of our our our well policymakers expectations X-year growing and across as reliability. gas the will continued That our meet plan capital regulators, over natural our support as support the transmission communities, with distribution, investment of demand systems billion of storage $XX the contemplates focused To investment customers, jurisdictions, XX% and on natural investment. of gas and

the gas to of the Bethel Texas. project to DFW move Metroplex towards continuation final east west This DFW safety, system facility we from growth the Salt support Line reliability, diversification fortifying the our while versatility of at WA the to behind the S-X our adding located to Central of And phase includes the project our Metroplex, on of will and Loop our Line completion remain APT, Dome LDCs additional of of the focused the and supply pipeline. capacity

future. balance and community support of homes, the into liquidity sheet, and our role available businesses regulatory needs now fuel industries mechanisms strength every of our to we to delivering continue natural The vital will play gas reliable efficient energy safely and to in and the

additional guidance and plan to 'XX fiscal X-year results, turn updated then we fiscal I 'XX and the call 'XX, call Chris? for our the open color some questions. financial now our through will our Chris will fiscal for over around

and everyone. morning, good Kevin, you, Thank

share fiscal of earnings XX% over fiscal Our 'XX. per increased 'XX $X.XX

a these $X.XX property accounts. we resulting debt include onetime reduction Texas a Mississippi unplanned change tax lower-than-planned in discussed benefits expense As in in regulatory the reminder, we bad uncollectible from from an previously, and results recover how have

these share Excluding increased per earnings in items, onetime fiscal 'XX. X.X%

in segment income over strategies. to These income fiscal and continues our received performance and rising In peak with load outcomes, additional demand an operating million, $XXX a increased Our customers customer operating 'XX, Strong increases. combined million. industrial income. annualized regulatory requirements increase in rising of with in reflect $XX by income growth, million successful $XXX combined we operating, in the execution 'XX, million operating APT's day increased implemented outcomes financing fiscal $XX operating LDC our from in distribution resulting

half Finally, activities. our was we saw from quarter. recognized this fiscal APT's fourth a About during of $XX increase through-system million increase

spreads had guidance primary During were XX% maintenance caused this negative and certain to was online, delays the time, more in were new Waha conditions range results pipelines our coming These the of quarter 'XX why fourth in we pricing market driven capacity updated anticipated. which of days. by August. reason provided than exceeded takeaway trading fiscal we the widen unplanned for conditions These on primarily market both

higher debt growth line associated headcount driven and monitoring, to costs employee-related Consolidated administrative O&M, and increased to costs. million. This locating with support bad excluding system due $XX increase costs higher increased expense, additional is training by activities, largely

by XX. in rate capital million Storage system. base during or the about $XXX in $X.X that This X% the as our with an segment $XXX system $XXX $XX improving reliability increased primarily in timing our million, a billion, spending Consolidated fiscal dedicated of result and Capital spending spending for cash safety and September system customer our and to Pipeline Distribution billion primarily and modernization estimated due decreased increased of approximately increased had million, been completed year. work of reliability spending. Texas of to Capital segment the to XX% as payments and increased safety pipeline growth spending XX% to

of future fiscal billion and an $X.X long-term us We of well XX% completed we our operations. positioned leaves liquidity, $X.X the approximately available in support Finally, finished with equity which billion year to capitalization financing.

$X.XX share of we earnings forward, fiscal Looking range our per have 'XX initiated $X.XX. to guidance

range, of growth share, this earnings mentioned And implies item. spending excluding onetime we $X.X the guidance guidance of X.X% approximately per in the have this billion. capital 'XX fiscal 'XX previously Assuming midpoint fiscal initiated

Additionally, 'XX fiscal Board quarterly a of XXXth annual dividend approved increase over indicated Atmos X.X% Energy's with Directors cash an $X.XX, fiscal 'XX. of dividend

'XX. X-year Finally, forward we to rolled plan fiscal our

unchanged. remains strategy Our

through anticipate continue long-term share We anticipate in regulatory our various range X% system of by to balance support financing annual on seek We will execution sheet recovery per balance earnings a of in mechanisms timely this to and modernization growth per 'XX operations annual of disciplined X-year the capital fiscal $X.XX the maintain a We debt. strong share and our per will using through costs dividends focus be to equity and continue to $X.XX. share to plan X% earnings of growth. spending,

to fiscal As of $XX X-year $XX end billion XX% the base This anticipate 'XX. billion current approximately base today in plan. 'XX, about level approximately included Kevin rate our year. is we rate spending $XX per increase mentioned, have By fiscal support we in billion approximately to of of expected growth to from XX% to

filings implementing approximately perspective, our year. strategy to continue of From a execute revenue we regulatory rate normal XX per

assumed we this ROEs implementation changes to the new in no mechanisms plan. cost assumed nor have of mechanism X-year or have We recovery our regulatory

for of Since in filing mechanisms million related have implemented annual a the million in annualized This implementation Texas Distribution all Included we Texas we increases X this filings West operating segment, annual reached our rate XXXX. on in related to rate is $XX a rate implementation our West of Currently, division a in based X and about of fiscal affecting review income $XX customers approximately the our Mississippi. $XXX the in amount in pending $XX settlement required the system-wide beginning is general X $XXX our million million. case seeking of our to filed related million have year, to Texas filings we distribution. in

of for Mid-Tex through in our costs following filings recover cities refresh quarter our Additionally, we X are Texas our to of We division. GRIP. similar [indiscernible] GRIP anticipate will portions our our cases first filing required West during rates X years division

cases anticipate filed these in rate have of Kentucky, rate case approximately We seeking late general of we $XX general spring Additionally, XXXX. all in million. completing a

we conditions in our perspective, margin this a market both in have plan. and assumed X-year normal growth also modest From customer of segments weather,

and a costs. in have we gas X% due to by storage costs, lower Additionally, oil transportation offset customer higher costs partially assumed the the in included decrease primarily commodity bill, and

APT's we levels. assumed from Finally, business fiscal contribution 'XX normalize the to have through-system from

we capacity benchmark and moderate effect in have takeaway the higher now wider the spreads, will full revenue is Additional which year rev in APT's should place, of mechanism.

assumed X% by activities bad debt have we assumption increased system for inflation side, spending This annual O&M is cost driven employee monitoring costs. address inflation, safety, the system On excluding expense. compliance-based and that

not have as compliance look compliance-related the will or discussed are arise. and X-year company, conditions dictate just-in-time we we As that work we a opportunities plan to within other before, accelerate system

For expense, mechanism. debt from million. fiscal bad to Approximately million integrity to anticipate of of O&M, system million the to $XXX increase amortization excluding range the $XX and 'XX, relates we $XXX APT's safety year-over-year

income. As to approved revenue this impact the by recognize address costs was resulting APT's in the meaning for incurred new mechanism and operating costs and we general no Texas regulations, review the Railroad after in a and federal case to flow-through Commission, mechanism state approval last safety O&M rate reminder, new related and

APT a made O&M filing approximately November SSI was recover its X XX-month year, costs. SSI and in approved $XX this This adjusted October of over seeking filing in to and first million were effective period. eligible these costs earlier calendar revenues recovery

minimum -- financing our expected our plan. in financing incremental the to approximately corporate tax corporate billion support of operations This and needs, tax plan $XX impact including beginning minimum now Turning to fiscal of 'XX. cash X-year includes long-term the income

preserve customers of will overall equity our long-term and to continue the sheet cost financing of and of and the We risk. financing a strength balance debt use combination for minimize to our

guide fiscal share fiscal 'XX. a for included incremental our is financing As 'XX in per reminder, this through earnings

next issuance weighted our October, not of the material of million our Following X.X% refinancing is long-term cost June our weighted completion average our XXXX. debt debt until was and maturity in with scheduled XX.X of $XXX average years

equity ATM of an all through we anticipate our needs From meeting our program. perspective,

equity our XX, satisfies September priced new needs $X ATM we file our billion, new to $X.X recent and regulatory fiscal X-year a and financing billion program. support we of statement exhausted receive Once the anticipated reduced of our existing 'XX we As agreement substantially has necessary equity and portion intend ATM a our fiscal a our needs. shelf billion fully for 'XX to approvals, have financing significant which program This $X.X shelf anticipated needs. registration activity

excited Energy. I Kevin, like closing, for In am Atmos outlook for the very long-term

has per for will Our of customers' to X% growth financial while successful our earnings operational fully regulated 'XX service financial fiscal fiscal The territories. to needs and growth beyond. into foundation the maintaining performance dividends and laid in continue share in sustained our this share 'XX a support execution success plan and growing our of profile, which per commensurate meet all ability expectations to supports and strong X%

We appreciate questions. open now this will the morning, for time your and we call up

Your Instructions] with comes question the Barclays. Fei line from of [Operator She first

execution. on of Congrats another strong year

support ATM previously, financing, further you to $XXX touch First, for capital million I program. year recall to $XXX through quickly target wanted on to I If just million some your clarity. a

$X $X.X the you renewing. you're billion registration, ATM you have file So billion shelf plan and to now

about how could about higher I just should ATM how going little financing forward? you also, this outside should First, run guess, plan discuss we bit And we the of a rate the program? capital about think think

Okay. you. Well, thank

So incremental maintain to want the billion financing current sheet. an Again, this X-year again, our plan. of have assumption balance we $XX in strength we

it beyond. XX% 'XX is our If in XX% about 'XX. as a is continued And this well broader as do how the that's that debt years, the perspective. little able of a we equity, ramp be need ratably of to assumption. assume equity then will up lower believe through debt in the financing, CapEx issuance long-term that the the preserve to equity and terms you modeling you think to we you what Be bit bit in maintain program, sheet. think and a X just long-term from I about that's XX% strength of It And over want be. will will next little the ATM in needs can balance and program generally, order But fiscal take increased satisfy

I interest we That's rate capitalization helpful. plan, side think great. kind quickly -- touch 'XX, that X-year interest into should deeper doing regarding you just financing as roll covered of And guess, and million going year. for we cost plan? the the debt for I $XXX if fiscal the and ratio to how about can of forward swaps the Really equation to on forward obviously, current And maintaining more in the

Yes.

for and hedges And X-year benefit lot the cost in continue comfortable second saved to question team cost provide to debt appropriate terms to last in in will So to us of maintain our a the very to money. going proven in And capitalization. It where customers. capitalization I'll customers to also on be it's several and for with this in has point take very that rate we is lock that in debt the that stability for of going the and time to Dan hedging, opportunities look We're point, a plan first successful think it where at at forward. forward interest the lock years. we his of to intend

something again, just conditions continue it's market to we evolve. -- consider So we'll as doing as

next with question comes line Sunderland Richard Your JPMorgan. the of from

what that you. gave rates, starting can some level on of else X-year can Just here I on high color have and growth, in a higher the sort system little the bit curious parse investment? pretty anything it's XX% around if change pace specificity side, know higher safety for reliability, I'm give CapEx level? you a staggering more driving to underpinning a But replacement given some factors the you you of your of raise at plan,

earlier, That's we this fiscal talked years. XX,XXX fiscal about customers point I I'll appreciate past close almost over you your around last pretty the new year. back been to Yes. particularly what question. the several

industrial seeing So again, to and robust on and growth we're happen That year commercial out. year the residential, in side. continues

the talked Texas year look our continues housing the demand to the continue in about to out that system. We highlighting stability the growth occur with year market as the we Texas, on in all That's at driving here. here Workforce employment and Commission starts,

in to fueling that have of need out front those we and be demand place well. winter industrial growth, the it again, commercial in needs anticipated and for as So

driving So it, on us is driven a by growth again, part tells that part But factor pipe risk our what's the of are of fortification. risk those models our other go-forward with what program. replacement or

as That's of as expectations to look on well. just to we've through where meeting whether replace rolled distribution the well there we're as system those X-year the along APT So it's the done years, us when previous with in demand models on to out pipe. to what's guide and going and as growth, plan to

X there we're plan the storage, of Groesbeck investment talked we've WA in as of heard doing as completing before that to work about or Loop, some the laid X on projects You this about out. well Bethel S-X, we talked Line that all we've capital

Great. base And be or update, Very top imply numbers then to numbers curious EPS of your growth XX% Is of dilution, there keeping the I'm the or comparing the some X% to be top again clear. you rate earnings versus any guidance, to at to end the this XX% at CAGR in to seem turning the should realize equity at what X% above reason but end there's the X%. not higher? should I you is the X% growth range.

of And upon executed that's over very take today, a as as us. comfortable look we where There world as the very continue But on to decision believe last again, election, just there. for forward we out things, basis move comfortable we an thinking think the on sit lot years. go-forward you our know, going we've we'll that a at we eye. are our again, several and what's a plan in given range still our with conservative we Well, coming of around that's

from I'll to Yes. the we've CAGR, also will, also X%. increased to O&M you that, add if X.X%

effect a earnings So of the the growth kind rate that's on base vis-a-vis modifying also per growth. share

The next Jeffrey Securities. question comes line from of Mizuho with Christopher the

XXXX. guide for on the 'XX one of just me of Maybe off kind

your comments about the from You'd in Waha benefits mentioned the strong spread.

you're Just level. versus of year-over-year kind of year's kind about thinking that this and how

We'll from we've did summer to all of look earlier summer period. in million affects normalize rider on to a and APT on approximately Spreads year. there. is new as will for rev LDC said a got comments, out benchmark And certain Yes. extent $XXX Again, on we approach look it there, that. his saw period. go-forward Again, out we or that's things to coming customers what this going that demand somewhat go-forward, into of how see pipes on for most behind out are normalized Chris But that the mitigate of continue weather how a is this that's a a basis. we that more the the

have So there. we'll when anything on do period to the through maintenance will off-peak isn't summer or be out occurring

So again to a we'll look basis. back that normalized on

it. Chris, the mentioned taking from you to about then, O&M X.X% And Got X%.

what all maybe that's backloaded at Is to APT? or at consistent? front-loaded, the of And is related rider SSI maybe that you're any there there. if curious Just seeing of cadence kind kind

system roughly $X and flow-through We But the looking 'XX. Yes. step-up line an 'XX, $XX real-time million we'll million it's SSI we're a in or million have item. monitoring because We're the spending, had system margin just for Certainly, of fiscal increased between monitoring, 'XX planning in $X to in Again, just offset closer the million rider. $XX more of survey, XXXX. system. compliance-related for also to

You've AMLD talk heard our units. about us

now that then XX all more the lot have And monitor our in employee on system a states of our system cost. X we're are to using just that we We have closely.

-- to needs. we're and population to As growth like sure add to those make continues, customer our we'll serving properly continue technicians the service have our growing

in continue line in add as drive the the continue that I'll region, is with of there have the driving needs locates out and we here by we that, thing infrastructure this protect fiber, I for as us with do mean locates as rest all assets infrastructure go our to well. line Additionally, the that as being growing And is and the well to number base, of population, growing particularly grow to of locate those put what our water locate. you Texas

comes Jefferies. Your from next Paul the with of Zimbardo line question

I of a small. had couple one big, one questions,

new gas combined I'll has about, one. Entergy very with potential Louisiana. customer there. cycle, that looks local first, gigawatts utility gas The start the natural of bigger like large you're like X.X a It talked in There's Northern the

potential, some would broader development to it's of you you're about Just across way these any activities be how just related And economic could whether the thinking that? lumpier kind capital or footprint local helpful. needs of you're tracking your frame

best distribution benefit inquiries. years located what continue for a way. our with about Commerce timing them, industrial see local point customers, on any development either have specifics share over siting ramping to the general, work customer we'll for usage their to may don't is on period that large with customer. this up of time, their group, over a I assets. that work could And then we But anticipate we we of at and state what our But Louisiana Chambers we period Yes, how communities natural both and transmission these when gas, loads in demand the economic of steady or sourcing of particular as talked they energy it's on

growth aspects continue quarter industrial from on it's As health you've metals, care, various whether heard it's described sector, of the to whether the quarter drive it's industrial side. as the after factors whether various distilling,

Okay. be Northern of that Great. within should something of the your guidance plan? we scope out? could kind Or Louisiana, customer you the about That capital in put that that to potential think is upside

not that those discuss looking at And and ready-to-serve obligations, about around point, on don't can that needs, process. certainty now, we have right aren't of daily territory We have particulars until of across we're we Yes. siting those sort things. where at any state Again, of talk we basis. customers lot generally a this a our a at contractual point

guidance one, looks just XXXX smaller is ticks up. interest, versus little the a weighted is it in balance up. terms it the down then like And of bit of cost The and debt Understood. Okay.

a paper? of there any short-term other lower of? rates dynamics cognizant Just is function Just should we be that on commercial

It's influence or interest. AFUDC really capitalized the of

As capitalized than again, all-in very net up of we it's have do of the weighted And relatively our cost with is component, I bit. interest down you've a interest. slightly, or spending expense got goes portion less X XX basis increased a ticked mean, an points up, And capitalized average the higher then X.X% year-over-year, driving interest which flat.

next with Your question comes Citigroup. from the line Levine of Ryan

debt that the And What's accounted that for the lumpiness guide? that's your there assumption like looks bad changes excluded expense? being impact the O&M some to was of It how for? how outlook? And does that X% to with from is any

No. the how expense. terms our It's that uncollectible with changes Mississippi. It going function them to We're with we obviously, customers to a we flat anticipate in bad of bit. energy pre-pandemic debt But the comprehensive not strategy work in collection and little this of the in offering anticipated. change X-year rise collect assistance, of to working plan. up state skewed like, just kind going be our always a as plans, levelized Really only a in bit of around a a of installment normalize was billing bit record accounts more no fairly continue into to year, that revenue -- our year-over-year we as beginning

And outlook sensitive growth growth forecast? the your Texas population customer Okay. or count particular? that to And is then in in you for are how assuming market what

in say the over line what we've would assumed we've here years. growth I that Yes. a rate of is last couple experienced with

perspective, the impact. in earlier about commercial talk continued then call certainly the Kevin growth heard a You but just knock-on residential from

this that trends X-year basically continue assumed just we've forward So in will plan. recent going

question. And last then

O&M the X% that? Are color that Or share? there any period? is terms guidance, how lumpy throughout that and others time than are are forecast you that lower higher the In could of that than periods

No.

I think say, fairly to I year-over-year, year. be, would going gradual, every X% it's

the a operational work within on so address constraints, as so might You forth. little move around bit to of and quarters needs, we have system lumpiness

So that -- expect per level be year-over-year, we at to fairly but X% year.

Mr. questions further Meziere, the to are I you. There no over time. at back turn call this

thank Have in morning. great through appreciate December this day. for replay available Energy, us recording you and a joining A We interest website on of for Atmos this your call XX. again our is

Thank you. conference today's This concludes call.

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