Atmos Energy Corporation

Greetings, and welcome to Atmos Energy's third quarter 2022 conference 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 Mazur, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Brock. Good morning, everyone, and thank you for joining our fiscal 2022 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. Our forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 33 and are more fully described in our SEC filings. With that, I will turn the call over to Chris Forsyth, our Senior VP and CFO.

Chris? Thanks, Dan, and good morning, everyone. We appreciate you joining us and your interest in Atmos Energy. Fiscal 22 third quarter net income increased $129 million, or $0.92 per diluted share, to $102 million, or $0.78 per diluted share, in the prior year quarter. And fiscal year-to-date net income was $703 million, or $5.12 per diluted share, compared with net income of $617 million, or $4.77 per diluted share in the prior period. Slides 5 and 6 provide operating income highlights for each of our segments for the three and nine months ended June 30th. I will focus on some of the more significant drivers underlying our fiscal year-to-date performance. Rate increases in both of our operating segments totaled $172 million, primarily driven by increased safety and reliability spending in system expansion. Approximately 71% of these rate adjustments were recognized in our distribution segment. We continue to see robust customer growth in our distribution segment, which increased operating income by an additional $13 million. This growth offset a $13 million decrease in consumption, most of which occurred during the second fiscal quarter. We did not see the same trend continuing into the third fiscal quarter, as consumption increased at about $3 million quarter over quarter. Additionally, we experienced a $25 million increase in consolidated O&M expense, primarily driven by increased pipeline maintenance activities and employee-related costs compared with the prior year, all show set by lowered bad debt expense. Finally, reductions in fiscal 22 revenue associated with the refund of excess deferred tax liabilities reduced operating income by $103 million. This reduction was substantially offset by lower income tax expense. Consolidated capital spending increased 27%, or $368 million, to $1.7 billion, with 87% dedicated to improving the safety and reliability of our system. This increase primarily reflects increased system modernization, system integrity, and system extension spending to meet the growing natural gas demand in our service territories. remain on track to spend $2.4 to $2.5 billion in capital expenditures this fiscal year. On the regulatory front, we have completed approximately $216 million in annualized regulatory outcomes, including refunds of excess deferred tax liabilities. Of this amount, we have implemented $202 million, and we will implement the remainder on September 1st. Additionally, we have about $127 million in progress. Slides 15 through 32 provide additional detail around our regulatory activities. Our fiscal third quarter financing activities were focused on pricing our fiscal 23 equity needs. During the quarter, we executed four sales agreements under our ATM program for approximately 2.9 million shares for $337 million, and we settled agreements on 731,000 shares for approximately $81 million in net proceeds. As of June 30th, we have approximately $700 million in net proceeds available under existing forward sale agreements which satisfies substantially all of our anticipated equity needs through fiscal 23. We finished the third quarter with an equity capitalization of 61.7%, excluding the $2.2 billion in interim winter storm financing, and with total liquidity of approximately $3.5 billion. Additional details for our financing activities, including our equity forward arrangement, as well as our financial profile, can be found on slides 8 through 11. Turning now to securitization, during the third quarter, we continue to make progress on that front, In Texas, the Texas Public Financing Authority continues its work on the statewide securitization program, and we believe it is on track to be completed within the next few months. As a reminder, once we receive the securitization funds, we will fully retire the $2.2 billion in interim winter storm financing. In Kansas, during the third quarter, we file our application for a financing order. Based on the approved procedural schedule, we anticipate receiving the financing order during our fiscal 23 first quarter. In closing, our fiscal year-to-date performance was in line with our expectations and supports the reaffirmation of our fiscal 22 earnings per share guidance in the range of $5.50 to $5.60 per dividend share. Slides 13 and 14 provide additional details around our guidance. The ranges included in those pages have not changed since the last quarter. However, we do anticipate our O&M and interest expense to be at the higher end of the ranges provided. Thank you for your time today. I will now turn the call over to Kevin for his update and some closing remarks. Kevin?