Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. And welcome to the Atmos Energy Corporation Fiscal 2023 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session [Operator Instructions]. This call is being recorded on Wednesday, February 08, 2023.

like President the Treasurer. of now Dan over would Vice Meziere, Investor I to conference turn to And Relations and go ahead, Please sir.

Dan Meziere

joining Forsythe, are Kevin Good thank President Officer. and quarter Michell. everyone. Officer; Akers, President call. our and and Executive for Financial Chris earnings today you, first Vice fiscal me Thank With Chief XXXX Senior morning, you And Chief

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

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

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

now With our Kevin? and CEO. Akers, that, call I Kevin will over to President turn the

Kevin Akers

eight states serving weather customers and communities our everyone. Thank to us morning, during and you, with call effort challenging you Elliott you interest for of very Mara. our their winter storms X,XXX you begin everyone all to I customers by Dan, your and Atmos Atmos today's dedication thanking joining across of and and Energy conditions our all employees want Thank our under that today. our good for exceptional do We Energy every appreciate in day.

Atmos and of heart Energy. the truly soul are You

per or the our we earnings reaffirmed share fiscal share, safest natural Our $X.XX services. net income distribution, we and in Yesterday, we our transmission reported effort, and be XXXX fiscal journey on of diluted first continued of modernizing $X.XX. guidance provider $XXX and per gas results to XXXX quarter storage reflect million natural of range quarter gas that the our dedication as systems $X.XX focus to first

division Pipeline, milestones achieved during several first quarter. Atmos project Texas Our the

third well as working the at additional year. over cavern April gas to Bcf capacity. and this and behind injected provides gas a gas Bethel debriding adds APTs This completed X is Our with support the operations working of of Cushing cavern of and local companies being APT filling date systems the new continue XB APT distribution requirements operations, team currently completion targeted as

of Difficulty] Phase Cotton integrity Fort from shale and of XXX supply Worth X the line plays completed [Technical Dallas we metroplex. as Haynesville our well east XX SX Line final completed SX three mile, growing our Line Valley project, side portion to the of inch as replacement X project. phase brings the the

and miles system of be December drive the added divisions for West of jobs to customers our Commission, months Workforce Tex XX,XXX December ending strong the growth month XX XX XXX,XXX of in a where period. The this the our second APT growth to we the versatility is final will phase XXXX. calendar the system. supply diversification anticipated in These projects enhance of The late inch companies XX ending in XX and new added December. seeing behind state to XX,XXX employment trend the and place are with This reliability, in safety, XX service distribution months project of record continued streak and XX approximately for pipeline our phase Texas the Texas According inch pipeline. employment support local nearly were the continued same continues Mid

strong. for service territory remains demand in gas industrial Additionally, natural our

new of new anticipated annually. anticipated customers of During added industrial operational. The to with use once industrial X annual quarter, largest X XX these Bcf first they're nearly is customers we fully Bcf load approximately the an

modernizing as storage to support transmission sourcing natural job and our capital to systems. procurement we continue continues team distribution, the Our do our needed investment excellent gas an materials

before, said distribution about and of steel as months we have our pipe six needs of maintain our FY for inventory for needs. all XXXX. also ordered We we transmission anticipated And

agencies energy XX,XXX advocacy to customers Our $X customers support million outreach in receive assistance. into over their first their nearly and team funding continue efforts agents customer customer during our the helped Through the work, assistant team quarter.

during nearly our of XXXX, with energy XX As help a their bill. assistance fiscal XX,XXX reminder, receive customers helped monthly teams to funding approximately million

As from you'll known. XXXX Chris hear fiscal are our today, financing costs

needs safe, and Atmos businesses of a and natural We have XXXX, industries energy significant gas abundant to remains to energy strong. fuel balance now is future. the hedged delivering our and and in year well portion sheet needs reliable, financing our efficient beyond and liquidity positioned homes, to our fiscal continue

now to his Chris the I'll for call Chris? update. turn over

Chris Forsythe

Kevin, you you, this and morning. thank us Thank everyone joining for

Kevin our Consolidated share. million first $XXX XX% $XXX first to diluted or $X.XX in net quarter ‘XX operating per fiscal the mentioned, quarter. or As income increased million income was

segments. by by employee the reliability spending capital pipelines system. Consolidated the in XX% improve This to reflects line with drivers in $XX operating $XXX spending and of quarter and maintenance prevention additional performance APT, of the distribution dedicated spending in increased water and other growth activities higher Kevin our by our administrative that both million. primary spreads to APT, and driven both key on performance of income increased partial a by of driven outcomes spending our Slide in million, the first and minutes the an million inspection operating system [three] business summarizes due rate to expense higher $X.X and positive increase spending project party spending, operating takeaway distribution O&M increase in Permian reflects increases million, increased growth safety just Our APT’s at the segment, during planned $X customer totaled Consolidated ago. third system our saw Residential by million industrial safety and a in we segments reliability by million modernization for damage our load continued segments. largely $XXX driven higher key O&M X our some increased higher $XX in increased customer spending for Rate quarter. each XX% discussed of driven system to costs. few offset increased

million We the $XX continue To we XX to annualized execute implemented progress. and outcomes, outlines million outcomes year. those filing XX in have fiscal about Slide for in $XXX filings regulatory reminder the we our regulatory have of and our through XX Slides annual strategy. currently planned summarize date,

the forward term quarter, $XXX October During settled billion and $XXX completed highlighted we completed in long equity financing and $X financing, long by million we of XXXX term million equity agreements. debt over of the debt

portion approximately December 'XX anticipated net and fiscal our needs available As we anticipated fiscal needs. of XXst, sales fully our of significant existing satisfy equity forward million proceeds $XXX will under arrangements 'XX that of have a

interest swaps long associated we financing treasury forward X.X%. ranging debt from to of beyond effectively anticipated a risk portion our mitigate our $X.XX financing cost interest rate X.X% rate at rates currently needs about with to component in of set starting to Finally have of billion term 'XX, fiscal total

gives of this of clear our sight us fiscal of costs financing anticipated beyond All a into costs and a 'XX our of line portion fiscal 'XX

of as excluding storm XXst, of December capitalization the winter billion $X.X financing equity Our was XX%.

the of finished quarter approximately liquidity. we Additionally, $X.X billion with

details through on can as financial profile financing X XX. our Additional activities well Slides be found for as

Board the Texas continue Bond respect outcome securitization. with Public Financing now the to to Texas, Authority for best securitization. Turning Review the to to customers determine In work diligently and

the Commission that gas in other and November legislature Railroad were winter funding the incurred intent XXXX. Uri by prudently costs Texas Additionally, storm incurred deemed Texas January, signaled provide to in during to

with We efforts. support and are continue these encouraged developments to their

the facilities process the combination do interim this of anticipate flexibility currently to completed. not debt receiving once is minimize loan for utilization securitization the matures we a maximum while refinancing financing cash anticipate this funds and March through However, credit securitization the and of term syndicated of customer existing on repay storm cost winter Xth. our to providing debt We bank

until fiscal our to first our quarter intend Railroad Commission, carrying us this incurred the have a an costs start interim the achieve range gas 'XX Xst, order operational, to share defer existing the the year. associated financial be XX process October and closing, and good per In securitization XX. associated guidance and are 'XX and Slides the Corporation costs storm received we complete. on with and Commission our securitize fiscal costs of well effective surrounding pursuant in of financing Additionally, Kansas the the well Kansas, earnings completing can regulatory plans year. execution Details the carrying deferred winter XXXX, issued found financing anticipate to to process fiscal fiscal we positions interim to financing The currently approximately and in during from $XX are to $X.XX. securitization all Uri. other new off the the to we We fiscal guidance $X.XX in refinancing progressing is September we with million by in order our In

this the for for Michelle? you now call Thank questions. open will your I time up morning.

Operator

from comes [Operator Campanella Instructions] question Nick Suisse. of Your Credit first

Nick Campanella

just ask give gas color as move on maybe about some how well. bill or Can should with can all you headroom your I financial that's Clearly, hedging help to us plan your wanted of prices. But recent in the at move on strategies just kind here? just recent it you affecting means? just talk what more the

Kevin Akers

Chris the Difficulty] pick Waha at on still below side, good $X start to $X let the continue rate in number and Nick. supply Yes, Yes, range we little [Technical then up a I'll strong on side bit see and hedging Katy.

in the of the and the to look, $X look forward on handle area particularly the Waha good $X forward So a [indiscernible] being out certainly area basis. go even

some say As helped early storage on. you've with heard of positions our us hedge before, us that

of in I $X.XX. think at all cost average were we an weight storage

good this So this summer good I for producing year. we look curves basin. of there supply continue point to remainder the as out think fall from forward well the look into move next And of continues year. major we're The and positioned the the to at

anything Chris, else add? to So

Chris Forsythe

Nick. Just a of couple things,

in perspective, we remainder also the needs off for in issued the given years. of from needs. what satisfies we financing of next financing math $XXX priced and And I've financing debt our you fiscal equity the as understand our long mentioned year. are equity long terms First five got debt we the where a October term that that already the the on erm over million And anticipated

the from under had that in of XX% for to, of the of that of this sets kind follow storage Kevin's to season. heating in paper have supply Kevin alluded point, ample kind hedging $X.X operating team supply. programs, gas we December to And program. operations supports our We no had finally, we to term credit of access debt commenting the our full support billion so Additionally, do then program, as we XXst, as gas advance winter the locked facilities well between hedging just there heating cost facility, our liquidity hedging And combination in credit commercial winter a just today, program short as of the had on which the season.

the So other, moderate should to the extent XX% impact a gas or the customer say that bill. on so, have for that prices positive

Nick Campanella

of priced And Chris, I derisking kind How you're of kind know 'XX and fully we on that further being here. plan? should about equity needs think opportunistic financial already about the 'XX

Chris Forsythe

of a fiscal 'XX. substantial I our needs our needs mentioned, needs all of a 'XX $XXX -- of of portion Yes, as of all Nick, our portion and our the that satisfies million, for and substantial for needs

program needs towards to very the an for to will, for that additional pricing. eye on pricing, equity ATM the layer continue well utilize So just continues being of with if to us. work you opportunistic in 'XX kind just We'll on

Operator

from Your of Morgan next David Arcaro question Stanley. comes

David Arcaro

some that -- winter of experience? any in And on on the comment actions challenges pursuing investigation the just system the service during initiatives the you Railroad that the Could you're that weather of into your December? back or by experienced the Commission

Kevin Akers

service of themselves, But worked into have hard in our As our going here moved territory X.X have the million, X,XXX customers area X.X team that of in storm limited prepared did service out system. in experienced as very that and some customers prepared winter we this we the approximately residential you know, commercial serve a million the storm have interruptions Texas.

very soon. working them as up we information they hope investigation, work occur with We additional have them and wrap with their the provide to here will commission been which

David Arcaro

elaborate And refinance there process related waiting to floating completed notes the bit just impact just some is here? the refinancing a you to to was could wondering, of get of plans sort for might I just then from you are securitization that coming having winter on that costs? those EPS for the an Uri storm anticipate rate due And

Chris Forsythe

short is The no. answer

asset all our securitization that in the securitization syndicated hybrid of now prepared address we'll regulatory As a mentioned weeks got be term a order asset recovery into then costs regulatory term our I credit commission few the that complete. is -- as in that remarks, that planned the financing of are deferring we've cash. that And rail appropriate and with we the anticipate And as we some next facilities until granted, of loan costs. well commission executing loan, right has utilizing the will those those with here

Operator

Your next of Mizuho question Moreen comes Securities. from Gabe

Gabe Moreen

to talk up on Are just O&M is tracking thoughts your far let can curious that, you this your in about, us expectations speaking, Maybe just I'm there. broadly relative so any you seeing pressures? year. to how

Kevin Akers

and start I'll can Yes, then in. jump Chris

that you As locating remarks, quarter in mean our laid new economic line that perspective. in And the would of locating drives have Chris' see. growth new we routes, out heard is expenses. that we O&M is what in businesses, certainly infrastructure, there. thought certainly It's drove experienced new increased first the with about, roads, the which a we've that what both commercial most new up in we -- we've that range the by already That and we side growth from jurisdictions driven our talked on I

matter the up this addition, a heard almost some of mentioned, I as had pull some COVID APT to up. that fact, XX% number projects activity inspection work some then needed additional of is that slowed case the work pick last And we period, you our that quarter-over-quarter wanted and to year. in in As during load but of line on on Texas pigging that we additional forward back we side the

line of saw locating lot just experiencing. kind quarter Chris, anything growth but during a anticipated the the given more we we're things expense additional? that all So occurring

Chris Forsythe

on Kevin. planning guidance well five parameters that from inflation still in 'XX And the I would our we think inflation on, our an within and basis. that that experiencing I plan to overall spot seeing, that's just add fiscal perspective, outlined year we're it's the an we're

Gabe Moreen

either sort if nearing queue of I you or you standpoint apologies that with your next in larger kind maybe large across what's and Can completion. about a just the system? missed I -- wrapped could couple it, projects And you maybe at have a follow look but up project if got talk just as up of from

Kevin Akers

Well, out that then bring which I and capacity east mentioned, another comes additional an fortifies project line Line west project, integrity and the east. integrity was Dallas Waha projects the and to into to supply in X that is of those runs that SX from

mentioned, monitor So project, we'll at continue per the to have, still same service as at we where also three XXXX that Bethel that cavern into years. the monitor caverns all our to need our capacity probably caverns time. integrity system, behind complete not growth project integrity over on And growth. -- or work a that the in We systems, continue I just for as get back a to XB will it's take to and that's only rules commission have an our those do the reminder, XX us

the larger forward. to our may increasing or continue look fortification move at need at pipe as continue see where storage. that we'll we infrastructure to We'll So look and

Operator

JPMorgan. comes of Your Richard question from next Sunderland

Richard Sunderland

to I your here just of that discussion on weakness. for duration in Any earlier around in follow remain gas price Curious the customer relative your to service outlook the gas mid-'XX. to thoughts dynamics. until see around bills We enter wanted quarter? and depressed the Matterhorn prices the impact duration Waha last probability a on Waha thoughts up

Kevin Akers

think projects producers But us there, handle well our get continues of the you think, close areas for thing to Waha stay the on tests and supply we'll projects new are continue Again, I in work the other tie-in that lines, additional the build bring I of to as keep team to out that as online. to to as to with us that those coming out is opportunity our other opportunity, east head some said, an coming gives on, it well. as that's to those or into additional as processors continue midstream

So the holding, Right you numbers good all believe prices these and the March we good conversations upcoming. forward signs, say, as [Novi] on into look. head we're look really now, you as

things run, and as changing good the next least there. really I see the pricing we now, then out winter in pulling the this on right get to there. ready And we're information continue getting storage don't season, for inject short through So period, looks at

or in As $X I said before, range some so. the

should that for a have our So impact very bills positive for next year.

Operator

[Operator come Instructions] from Citigroup. will question Your Ryan at next Levine

Ryan Levine

Most one. of my questions I but were asked on just to follow want up already,

update Can provide the that proceeding. of DAR an regulatory terms In activity? you Mid Tex around

Chris Forsythe

implementing beginning anticipate So made filing, fiscal year. the early by and We're the rates the end we discovery work the under now that through filing mid-January. we of DAR new DAR the filing in just process, to

Operator

are further There at time. no this questions

I remarks. turn for Meziere Dan the closing will So conference any to back

Dan Meziere

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

Operator

Ladies and conference like gentlemen, this disconnect conclude lines. morning. to ask you would to and your all call We participating you thank for for this does your please

Atmos Energy (ATO) 8 Feb 232023 Q1 Earnings call transcript