Atmos Energy Corporation

Greetings and welcome to the Atmos Energy's first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dan Mezuri, Vice President of Investor Relations and Treasurer.

Thank you, Brock. Good morning, everyone, and thank you for joining us this morning. With me this morning are Kevin Akers, President and Chief Executive Officer, and Chris Forsyth, 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. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slide accompanying today's presentation for definitional information and reconciliations of non-GAAP measures to the closest GAAP financial measure. As we review these financial results and discuss future expectations, please keep in mind that some of our discussions 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 25 and are more fully described in our SEC filings. Our first speaker today is Chris Forsyth, Senior Vice President and CFO of Atmos Energy. Chris?

Thank you, Dan, and good morning, everyone. We appreciate you joining us and your interest in Atmos Energy. we are off to a solid start to the fiscal year. Yesterday, we reported fiscal 2021 first quarter net income of $218 million, or $1.71 per diluted share. Our first quarter performance largely reflects positive rate count and outcomes driven by system modernization spending, customer growth in our distribution segment, and lower O&M spending, largely due to the timing of such spending in both of our segments. Consolidated operating income increased by 18%, to $299 million in the first quarter. Slide four summarizes the key performance drivers for each of our operating segments. Rate outcomes provided an incremental $50 million in operating income. Customer growth in our distribution segment contributed an incremental $6 million as we continue to benefit from strong population growth in several of our service areas, most notably in our North Texas distribution business. For the 12 months into December 31st, We experienced 1.7% net customer growth in our North Texas distribution business and 1.4% net growth across our eight-state footprint. The ongoing effects of the pandemic reduced consolidated operating income by approximately $9 million this quarter, primarily in our distribution segment. Quarter over quarter, operating income fell approximately $2.5 million due to lower commercial demand attributable to the effect of the pandemic on the economy. Additionally, we experienced a $4.5 million decline in service order revenues, primarily due to the temporary suspension of collection activities. And bad debt expense increased about $2 million quarter over quarter. Consolidated O&M expense, excluding bad debt, decreased $16 million. During the quarter, we deferred non-compliant spending into later in the fiscal year as we evaluated our customer load. O&M in our distribution segment was about $8 million lower than the prior year, reflecting lower employee, travel, and training costs. O&M in our pipeline and storage segment was approximately $8 million lower than the prior year, primarily due to non-recurring low integrity costs incurred in the prior year combined with O&M management during the first quarter of this year. Consolidated capital spending decreased approximately 14% to $457 million with 87% of our spending directed towards safety and reliability spending to modernize our system. This decrease largely reflects the timing of product spending in our distribution segment. We remain on track to spend between $2 and $2.2 billion in capital expenditures this fiscal year, with more than 80% of the spending focused on modernizing our distribution and transmission network while reducing methane emissions. We continue to execute our well-established regulatory strategy focused on annual filing mechanisms, which mitigate the incremental impact of customer bills while reducing lag. To date, we have implemented $110 million in annualized regulatory outcomes. And currently, we have about $32 million in progress. Slides 18 through 24 summarize these outcomes. And slide 17 outlines our planned filings for the remainder of the fiscal year. During the first quarter, we completed over $700 million of long-term financing. We remained focused on balancing the need to finance our capital expenditure program in a cost-effective manner with maintaining the strength of our balance sheet. Following the completion of our $600 million 10-year note issuance in October, we reduced our weighted average cost of debt to 3.99% and achieved a weighted average maturity of approximately 19 years. We also executed forward sales arrangements under our ATM for approximately 1.2 million shares for $122 million. And we settled forward agreements on 2.1 million shares for approximately $216 million in net proceeds during the quarter. As of December 31st, we have approximately $247 million in net proceeds available under existing forward sales agreements that we will utilize by the end of the fiscal year. We have now priced a substantial portion of our fiscal 2021 equity needs and anticipate satisfying our remaining fiscal 2021 equity needs through our ATM program. As a result of this financing activity, our equity capitalization was 58.5% as of December 31st, and we finished the quarter with approximately $2.9 billion of liquidity under our credit facilities and equity forward agreements. The strength of our balance sheet and our five-year plan continues to be recognized by the credit rating agencies. During the first quarter, Moody's and S&P maintained their ratings with a stable outlook. Details of our financing activities and our financial profile can be found on slides six through nine. So to summarize, our first quarter performance, our financing activities and regulatory activities were in line with our expectations. As we continue through the winter heating season, we continue to remain cautious given the unpredictable nature of the pandemic. However, with yesterday's reaffirmation, We remain confident in our fiscal 2021 earnings per share guidance from $4.90 to $5.10. Thank you for your time this morning. I will now turn the call over to Kevin for his remarks. Kevin?