Atmos Energy Corporation

Ladies and gentlemen, thank you for standing by. My name is Aaron and I will be your conference operator for today. At this time, I would like to welcome everyone to the Atmos Energy Corporation fiscal third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. 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. If you would like to withdraw your question, press star followed by one again. Thank you. I would now like to turn our call over to Dan Mazur. Dan, please go ahead.

Thank you, Aaron. Good morning, everyone, and thank you for joining our fiscal 2023 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 34 and are more fully described in our SEC filings. With that, I will turn the call over to Chris Forsyth, our Senior Vice President and CFO. Chris?

Thank you, Dan, and good morning, everyone. We appreciate you joining us and your interest in ATNAS Energy. Yesterday, we announced fiscal year-to-date diluted earnings per share of $5.33 compared to $5.12 per diluted share in the prior year period. Our third quarter and fiscal year-to-date financial results were in line with our expectations and continued to be driven by three key themes. Regulatory outcomes reflecting increased safety and reliability spending, continued strong customer growth, and higher O&M spending. Fiscal 22 and 23 regulatory outcomes in both of our segments increased operating income by approximately $204 million. And higher consumption, residential customer growth, and rising industrial load in our distribution segment increased operating income by an additional $27 million. These increases were partially offset by a $70 million increase in consolidated O&M. Year-to-date, distribution O&M increased $48 million, or 12.6%. However, during the third fiscal quarter, the rate of O&M increase in this segment moderated somewhat, with O&M increasing approximately 3.5% quarter over quarter. The higher level of O&M spending continues to be largely driven by higher levels of service orders to support our growing service territory, primarily in Texas. Fiscal year-to-date, we experienced an 8% increase in the number of blind locations in Texas, and we continue to see higher labor costs for these third-party services. Additionally, service orders increased 10%, largely driven by customer growth and increased customer collection activities. The remaining $22 million in fiscal year-to-date increase in consolidated O&M incurred in our pipeline and storage segment, primarily driven by the timing of in-line inspection work for this segment. In the prior fiscal year, most of that work was concentrated in the fourth quarter. In this fiscal year, this work was incurred more readily throughout the fiscal year. Consolidated capital spending increased 21%, or $358 million to $2.1 billion, with 86% dedicated to improving the safety and reliability of our system. This increase primarily reflects higher spending of APT for our Line S2 and Line PC projects designed to enhance the safety, reliability, versatility, and supply diversification of our system. Spending in our distribution segment has increased due to higher safety and reliability spending and higher spending to support customer growth. During our third fiscal quarter, we implemented $122 million in annualized regulatory outcomes. Year-to-date, we have now completed $263 million in annualized regulatory outcomes, and we currently have an additional $263 million in annualized outcomes in progress, including $107 million related to our APT general rate case that we filed in May of this year. We currently expect to finalize that case in December of 2023. Our financial position continues to remain strong. We finished our third fiscal quarter with an equity capitalization of 61.8%, and approximately $3.1 billion of liquidity. This amount includes $590 million in net proceeds available under existing forward sale agreements that will fully satisfy our anticipated fiscal 23 equity needs and a significant portion of our anticipated fiscal 24 needs. Additionally, during our third fiscal quarter, we completed our $95 million securitization process in Kansas and began including the securitization charge on customer bills effective July 1st. As I previously mentioned, our third quarter and fiscal year-to-date results were in line with our expectations, which gives us the confidence to reaffirm our fiscal 2023 guidance in the range of $6 to $6.10. Additionally, we now expect capital spending to approximate $2.8 billion, largely reflecting higher spending for system expansion in our distribution segment. Thank you for your time today, and I will turn the call over to Kevin for his update and some closing remarks. Kevin?