Atmos Energy Corporation

Slide 17 through 24 summarize these outcomes. And slide 16 outlines our plan filings for the remainder of the fiscal year. To date, we have completed over $1 billion of long-term financing. Following the completion of the $600 million 30-year senior note issuance in October, we executed four sales arrangements under our ATM program for approximately 2.7 million shares for $260 million. And we settled board agreements on 2.7 million shares for approximately $262 million. As of December 31st, we were profiting $295 million in net proceeds available under existing forward sale agreements. As a result of this activity, we have now priced a substantial portion of our fiscal 22 equity needs and anticipate satisfying our remaining equity needs through our ATM program. As a result of this financing activity, our equity capitalization, excluding the $2.2 billion of winter storm financing, was 59% as of December 31st. Additionally, we finished the quarter with approximately $3.1 billion of liquidity. In January, we completed the issuance of $2 million in long-term debt through a TAF of our existing 10-year 2.625% notes due September 2029. The net proceeds were used to pay off our $2 million term loan that was scheduled to mature in April. Following this offering, excluding the interim winter storm financing, our weighted average cost of debt decreased 3.81%, and our weighted average maturity increase at 19.23 years, which further strengthens our financial profile. Additional details for our financing activities, our equity forward arrangements, as well as our financial profile can be found on slides seven through 10. And we continue to make progress on securitization. Yesterday, the Texas Railroad Commission unanimously issued a financing order authorizing the Texas Public Financing Authority to issue custom rate relief bonds to securitize costs associated with Winter Storm URI over a period not to exceed 30 years. We currently anticipate the securitization transaction will be completed by the end of our fiscal year. Upon receipt of the securitization funds, we will repay the $2.2 billion of Winter Storm financing we issued last March. And in Kansas, we started our securitization proceedings with the Kansas Corporation Commission in late January. Based on the current procedural schedule, we are anticipating a financing order by the end of our fiscal third quarter. Our first quarter performance was a solid start to the fiscal year. The execution of our operational, financial, and regulatory plans are on track, which positions us well to achieve our fiscal 22 earnings per share guidance of $5.40 to $5.60. Details around our guidance can be found in slides 12 and 13. Thank you for your time this morning. I will now turn the call over to Kevin for his closing remarks. Kevin?

Thank you, Chris, and good morning, everyone. Before I begin my update today, I want to take just this opportunity to recognize and say thank you to all 4,700 Atmos Energy employees. It is through your dedication, your focus, and effort that we safely provide natural gas service to 3.2 million customers in 1,400 communities across our eight states. Thank you for all you do every day for Atmos Energy. I also want to take this time to thank our hometown heroes. our first responders and emergency responders for their continued dedication and support for all of us. And as you just heard, we're off to a great start. The results Chris summarized reflect the commitment of all 4,700 Atmos Energy employees as we work together to continue modernizing our natural gas distribution, transmission, and storage systems on our journey to be the safest provider of natural gas services. During the first quarter, we achieved several project milestones that further enhance the safety, reliability, versatility, and supply diversification of our system. For example, at APT, we placed into service phase one of a two-phase pipeline integrity project that will replace 125 miles of Line X. As a reminder, Line X runs from Waha to Dallas and is key to providing reliable service to the local distribution companies behind APT's system. Phase 1 replaced 63 miles of 36-inch pipeline. Phase 2 includes an additional 62 miles of 36-inch pipeline and is anticipated to be completed late this calendar year. Additionally, we completed the first of a three-phase project to replace our existing Line S2. This 91-mile, 36-inch project will provide additional supply from the Hainesville and Con Valley shell place to the east side of the growing Dallas-Fort Worth Metroplex. Phase one replaced 21 miles of this line and phase two will replace an additional 18 miles and is expected to be completed late this calendar year. Phase three, which will replace the remaining 52 miles, is expected to be in service in 2023. During the completion of phase one for Line X and phase one for Line S2, our teams used recompression practices to avoid venting or flaring over 70,000 metric tons of carbon dioxide equivalent. This is an excellent example of how Atmos Energy's environmental strategy is being integrated into our daily operations. APT's third salt dome cavern project at Bethel is now approximately 80% complete and remains on track to be placed in service late this calendar year. As a reminder, this project is anticipated to provide an additional 5 to 6 BCF of cavern storage capacity. As I mentioned during our November call, we have started work on a 22-mile, 36-inch line that will connect the southern end of APT's system with the 42-inch Kendra Morgan Permian Highway line that runs from Waha to Katy. This new line will support the forecasted growth and increase supply diversity to the north of Austin in both Williamson and Travis counties in Texas. This line is expected to be in service late December of this year. In addition to those system modernization projects, we continue to make progress in advancing our comprehensive environmental strategy that is focused on reducing scope one, two, and three emissions and reduce our environmental impact from our operations in the following five key areas. Operations, fleet, facility, gas supply, and customers. For example, across our storage facilities, we utilize advanced methane detection technologies, including gas cloud imaging, acoustic monitoring, forward-looking infrared handheld cameras, and laser-based remote methane leak detectors. At APT Storage Fields, we are making progress with the installation of the remaining gas cloud imaging cameras for continuous methane monitoring and anticipate completion by the end of this fiscal year. Our RNG strategy focuses on identifying opportunities to transport RNG for our customers. We currently transport approximately eight BCF a year and anticipate another four projects to come online within the next 12 to 18 months. Those four projects are expected to provide an additional BCF a year of RNG capacity. Furthermore, we are evaluating approximately 20 opportunities that could further expand our RNG transportation. Two zero net energy homes are underway in Texas. One in Taylor and the other in Dallas. The home in Taylor is being developed through our partnership with the Williamson County Habitat for Humanity, and we estimate the home to be completed in late March. And in Dallas, we are working with the Dallas Habitat for Humanity and estimate construction of this zero net energy home to begin mid-March. These homes use high efficiency natural gas appliances, coupled with rooftop solar panels and insulation to minimize the home's carbon footprint. These zero net energy homes demonstrate the value and vital role natural gas plays in helping customers reduce their carbon footprint in an affordable manner. Providing these families with a natural gas home that is environmentally friendly and cost efficient is just one way Adamus Energy fuels safe and thriving communities. And finally, over the next five years, we will invest $13 to $14 billion in capital support to replacement of 5,000 to 6,000 miles of our distribution and transmission pipe, or about six to 8% of our total system. We will also replace 100 to 150 steel service lines, which is expected to reduce our inventory by approximately 20%. This level of replacement work is expected to reduce methane emissions from our system by 15 to 20% over the next five years. Our first quarter activities and initiatives reflect the continued successful execution of our strategy to modernize our natural gas distribution, transmission, and storage systems as we continue our journey to be the safest provider of natural gas services. These efforts, along with the strength of our balance sheet, our strong liquidity, have Atmos Energy well positioned to continue serving the vital role we play in every community. That is delivering safe, reliable, efficient and abundant natural gas to homes, businesses, and industries to fuel our energy needs now and in the future. We appreciate your time and interest this morning. We'll now open the call for questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Richard Sunderland of JP Morgan. Please proceed with your question.