NYSE:ATO Atmos Energy Q2 2023 Earnings Report $165.18 -0.95 (-0.57%) Closing price 08/15/2025 03:59 PM EasternExtended Trading$165.93 +0.75 (+0.46%) As of 08/15/2025 07:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Atmos Energy EPS ResultsActual EPS$2.48Consensus EPS $2.47Beat/MissBeat by +$0.01One Year Ago EPS$2.37Atmos Energy Revenue ResultsActual Revenue$1.54 billionExpected Revenue$1.73 billionBeat/MissMissed by -$190.25 millionYoY Revenue Growth-6.60%Atmos Energy Announcement DetailsQuarterQ2 2023Date5/4/2023TimeAfter Market ClosesConference Call DateThursday, May 4, 2023Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Atmos Energy Q2 2023 Earnings Call TranscriptProvided by QuartrMay 4, 2023 ShareLink copied to clipboard.Key Takeaways Reported year-to-date net income of $630 million ($4.40/share) and narrowed full-year EPS guidance to $6.00–$6.10, aligning with management’s expectations. Added 65,000 new customers over the past 12 months (49,000 in Texas) and 30 industrial accounts with a combined 15 Bcf of anticipated annual load, underpinning strong volume growth. Completed injection into the third salt-dome cavern adding 6 Bcf of capacity and advanced major pipeline projects (Line S-2 Phase 3 and a Permian Highway tie-in) to boost supply diversity by late 2024. Operating and maintenance expenses increased by $57 million in H1, driven by higher line locates, labor and third-party service costs in Texas, and elevated bad debt from larger customer bills. Capital spending rose 19% to $1.4 billion (86% for safety/reliability), while the balance sheet remains strong with a 60.9% equity ratio, $3.3 billion of liquidity, and $1.6 billion of hedges covering fiscal 2024 debt. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallAtmos Energy Q2 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 4 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by, and welcome to the Atmos Energy Corporation Fiscal 2023 Second Quarter Earnings Conference Call. I would now like to turn the call over to Dan Mazir, Vice President of Investor Relations and Treasurer. Please go ahead. Speaker 100:00:17Thank you, Mandeep. Good morning, everyone, and thank you for joining our fiscal 2023 second quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer and Chris Boresight, 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 atmosenergydot The factors that could cause such material differences are outlined on Slide 32 and more fully described in our SEC filings. With that, I will turn the call over to Kevin Akers, our President and CEO. Speaker 100:01:13Kevin? Speaker 200:01:13Thank you, Dan, and good morning, everyone. We appreciate you joining us today and your interest in Atmos Energy. Yesterday, we reported year to date fiscal 2023 net income of $630,000,000 or $4.40 per diluted share. As you will hear from Chris, results were in line with our expectations and positions us for another successful fiscal year. This performance continues to reflect the commitment, dedication, focus and effort Of all 4,800 Atmos Energy employees to successfully modernize our natural gas distribution, Transmission and storage systems are safely providing reliable natural gas service to our 3,400,000 customers in 1400 Communities across our 8 states. Speaker 200:02:05We also narrowed our fiscal 2023 earnings per share guidance to a range of $6 to $6.10 We continue to experience strong customer growth, driven by robust employment trends in Texas. For the 12 months ended March 31, we added 65,000 new customers Across the company with nearly 49,000 of those new customers located in Texas. And according to the Texas Workforce Commission, The state continued its streak of record employment in March, adding 654,000 jobs since January of 2022 to reach a series high civilian labor force of 14,900,000 people. Industrial demand for natural gas in our service territory also remained strong. During the second quarter, We added 18 new industrial customers with an anticipated annual load of approximately 6 Bcf once they are fully operational. Speaker 200:03:12Fiscal year to date, we've added 30 new industrial customers with an anticipated annual load of approximately 15 Bcf once they are fully operational. On a volumetric basis, that 15 Bcf of anticipated industrial load is equal to adding approximately 200 and 75,000 residential customers. To support that growth that I just summarized, We continue to enhance the safety, reliability, versatility and supply diversification of our system. For example, in our Atmos Pipeline, Texas division, our team completed the injection of working gas and the Bechtel Tavern 1B, our 3rd Salt Dome cavern. This 3rd cavern provides additional support to APT's operations and the local distribution companies behind APT System, as well as adds over 6 Bcf of new working gas capacity. Speaker 200:04:16Work continues on Phase 3 of our Line S-two project, which will replace 67 miles of 14 inches pipeline with 36 inches pipeline. And as a reminder, this project brings supply from the Haynesville and Cotton Valley shale plays to the east side of the growing metroplex. The final phase of this project is anticipated to be in service late 2024. Later this calendar year, we expect to complete the remaining 5 miles of the 22 mile project that will install 36 inches pipeline connecting to the southern end of APT system with the 42 inches Permian Highway line that runs from Waha to Katy. This new line will support the forecasted growth and increased supply diversity to the north of Austin in both Williamson in Travis Counties in Texas. Speaker 200:05:14Avis Energy's comprehensive environmental strategy is focused on reducing our scope 1, 2 and 3 emissions and environmental impact from our operations in the following five key focus areas: Operations, fleet, facilities, gas supply and customers. In the area of operations, Through our system modernization efforts, we are on track to replace 800 to 1000 miles of pipe this fiscal year and between 20000,301,000 steel service lines. And in the gas supply area, during the 1st 6 months of fiscal 2023, We added another RNG facility that will transport renewable natural gas across our system. We now have 7 flowing RNG facilities directly connected to our system. Additionally, we've executed Interconnect agreements with 3 additional RNG projects expected to begin flowing in calendar year 2023. Speaker 200:06:19Once these projects are fully operational, we anticipate to have 8 Bcf to 9 Bcf of RNG flowing across our system annually. Finally, we are evaluating nearly 30 additional opportunities to connect RNG facilities to our system. As I mentioned on previous calls, we are partnering with Habitat for Humanity in Each of our 8 states to build 0 net energy homes for families in need. 0 net energy homes use high efficiency natural gas Rooftop Solar Panels and Installation to produce more energy than they consume at an affordable cost. During the 1st 6 months of fiscal 2023, we completed 2 homes, 1 in Owensboro, Kentucky and 1 in Jackson, Mississippi. Speaker 200:07:13All 8 homes have achieved Home Energy Rating System or HERS scores of less than 0, which means the homes produce more energy than they consume. These 0 net energy homes demonstrate the value and vital role that 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 of the ways Atmos Energy fueled safe and thriving communities. Our customer service organization and technology support team Continue to innovate and look for ways to improve our customer service and offer convenient channels for customers to communicate with us and to make payments. For example, we see continuous growth in our electronic bill delivery channel, when nearly 52% of customers enrolled in eBill And approximately 85% of customers pay electronically with over 33% of them enrolled in recurring auto draft, which is 10% higher than industry averages. Speaker 200:08:25We are also fueling safe and thriving communities through our continued outreach efforts to Energy Assistance Agencies and Customers. During the 1st 6 months of the fiscal year, our customer advocacy team And customer support agents helped over 35,000 customers receive over $14,000,000 in funding assistance. The dedication and focus of our employees was recently recognized in an American Customer Satisfaction Index Energy Utilities Study conducted between January December of last year. According to the recently released study, Atlas Energy finished in 1st place, leading all energy utility providers with the highest Customer Satisfaction Score. We believe our focus, dedication and effort combined with executing our proven investment, Regulatory and financing strategy positions us well to safely deliver reliable, Efficient and abundant natural gas to homes, businesses and industry to fuel our energy needs now and in the future. Speaker 200:09:40I will now turn the call over to Chris for his update. Thank you, Kevin, and thank you Speaker 100:09:44to everyone who joined us this morning. As Puga Smedes mentioned, net income for the 1st 6 months of the fiscal year was $630,000,000 or $4.40 per diluted share. Year to date consolidated operating income increased $744,000,000 or 13%. I'll touch on a few of the highlights of our year to date performance. Fiscal 2022 and 2023 regulatory outcomes increased operating income by $152,000,000 Additionally, residential growth and rising industrial load in our Distribution segment increased operating income by an additional $12,000,000 And we saw a $7,000,000 increase in APTs through system business. Speaker 100:10:25Most of this increase occurred during our 1st fiscal quarter when spreads widened while some of the Key takeaway pipelines in the Permian undergoing maintenance. Consolidated O and M expense increased $57,000,000 Distribution O and M increased $43,000,000 driven largely by supporting our growing service territory in Texas, where we experienced a 10% increase in the number of line locates. We're also seeing higher labor costs for these 3rd party services. Additionally, service orders system wide have increased 11%, largely driven by customer growth, increased service requests driven by higher natural gas prices and increased collection activities. As a result, our internal labor costs have risen to fulfill these orders. Speaker 100:11:11Finally, we experienced higher levels of bad debt expense Due to higher customer bills, most of this increase was recognized during our 2nd fiscal quarter. The remaining $14,000,000 increase is recognized in our Pipeline and Storage Slides 56 summarize the key performance drivers for each of our operating segments for the quarter year to date periods. Consolidated capital spending increased 19 percent or 2 $25,000,000 to $1,400,000,000 with 86% dedicated to improving the safety and reliability of our system. This increase primarily reflects higher spending at APT, the projects that Kevin discussed just a few minutes ago. We continue to execute our annual regulatory filing strategy. Speaker 100:11:59To date, we have implemented $116,000,000 in annualized regulatory outcomes And we have about $298,000,000 annualized outcomes in progress. We anticipate implementing about half of this amount during the second half of our Fiscal year. Slides 20 through 31 summarize these outcomes and Slide 17 outlines our planned filings for the remainder of the fiscal year. Our financial position continues to remain strong. In early March, we executed a $2,000,000,000 term loan to help repay our maturing $2,200,000,000 in senior notes. Speaker 100:12:34Later that month, the Texas Public Financing Authority completed its statewide securitization program and we used the proceeds from that program to pay off the term loan. We no longer have meaningful exposure to floating rate interest debt. We finished our 2nd fiscal quarter with an equity capitalization of 60.9 percent and approximately $3,300,000,000 of liquidity. Included in this amount is $673,000,000 in net proceeds available under existing forward sale agreements that will fully satisfy our anticipated fiscal 'twenty three equity needs And a significant portion of our anticipated fiscal 2024 needs, the strength of our financial profile was recognized by Moody's in March when they reaffirm the credit ratings and outlook. We continue to look for opportunities to mitigate interest rate risk associated with our anticipated long term debt financing needs beyond fiscal In March April of this year, we executed $250,000,000 in forward starting interest rate swaps. Speaker 100:13:34We now have $1,600,000,000 of swaps to effectively hedge portions of the treasury component of our total cost of financing at rates ranging from 1.76 percent to 2.38%. With this activity, a substantial portion of our anticipated fiscal 2024 long term debt needs have now been hedged. Finally, in Kansas, we are still on track to complete our gas cost securitization this fiscal year. Additional details of our financing activities and our financial profile can be found on Slides 9 through 11. Our fiscal year to date performance gives us Confidence to narrow fiscal 'twenty three earnings per share guidance from $5.90 to $6.10 to the new guidance range of $6 to $6.10 We expect the contribution to fiscal 'twenty three earnings to be somewhat ratable by quarter in the back half of the fiscal year. Speaker 100:14:27A few additional thoughts about our updated guidance. The winter heating season is over and approximately 70% of our distribution segment revenue has been recognized. Going into the fiscal year, with elevated commodity costs, we anticipated lower customer consumption primarily due to conservation. However, the consumption we saw during the winter heating season exceeded our expectations. Additionally, the most significant regulatory filings impacting fiscal 2023 As VIMFO will soon be completed, giving us a better line of sight into the regulatory outcomes for the fiscal year. Speaker 100:15:00Regarding O and M, Much of this increase was anticipated as we originally guided to an approximate 5.5% increase over fiscal 2022 levels. However, as I mentioned a few minutes ago, we are experiencing higher than planned spending to support our growing service territories, particularly in Texas. Given what we did during the pandemic, we are working to offset some of these increases. Assuming we achieve the midpoint of our updated guidance, We anticipate O and M for the remaining 6 months of the fiscal year to be in line with their level of spending in the back half of fiscal 'twenty two. Finally, our expected cost of financing is now pretty clear. Speaker 100:15:35Securitization taxes has been resolved and our expected long term debt financing for the fiscal year is now complete. Further, we're anticipating higher than planned AATDC, primarily due to the timing of product closings within the fiscal year and the remaining FY2023 equity needs have been fully priced. Details surrounding our fiscal 'twenty three guidance can be found on Slide 13 and 14. Thank you for your time this morning, and we'll now open up the call for questions. Operator00:16:32Our first question comes from the line of Julien Dumoulin Smith from Bank of America. Please proceed. Speaker 300:16:39Hey, good morning team. Thanks for the time. I appreciate it. Speaker 100:16:42Good morning, Joe. Speaker 300:16:44Hey, good morning. Thank you. Look, nicely done guys. I wanted to maybe kick things off quickly. The Texas legislature looking at potentially using some of their surplus Here, potentially look at paying down some of the securitization here. Speaker 300:17:00Can you comment on that Speaker 100:17:00a little bit here? What are Speaker 300:17:02your expectations? Any nuances there? And then ultimately, I would presume that this would effectively never hit customer bills, but I just want to understand sort of the timing and mechanics as to How it's been collected? How it looks like for you guys specifically? Speaker 200:17:17Yes. From a technical basis, Julien, that is Correct. We continue to follow that as well as other legislation across our entire system. So not going to try and predict or comment too much further on it And that at this point, if there are any questions or anything that comes up from the committees or those that are sponsoring that, obviously, we're Standing by, I'm prepared to answer that for him. But on a system wide basis, on a legislative perspective, things have kind of been On a consistent theme, if you will, this year, that being damage prevention across all of our jurisdictions has been enhanced, as well as some of our jurisdictions looking at energy efficiency programs at the state level as well. Speaker 200:18:01So we're very pleased with that. And additionally, I don't know if you've seen out there, but a couple more states have come on to approve All fuels are customer choice legislation, which provides about 24 states, I think, now across the country that has done that, As well as I think 3 states right now have approved legislation for Freedom to Cook in their particular jurisdiction. So That's a quick recap across our territory on legislative action. Speaker 300:18:34Actually, since you bring it up, maybe I'd love to get your perspective on this. Colorado has had some discussions of late across both the PC and then also in particular the legislative side on, I suppose gas bills broadly. Any perspectives there in on where this could go? I mean, it seems a little bit It lacks specificity, shall we say? Speaker 200:18:59Well, no crystal ball here, Julien. I can tell you that for sure. But with that committee, With ongoing committees there in any legislature, when we're asked, we'll certainly participate. We'll provide testimony. We'll provide feedback or our Expert opinion. Speaker 200:19:16We're going to continue to watch that, stay close to it, but also Work with the PUC, if they come up with any questions, comments or open any dockets, we're certainly available to provide our feedback As well as our gas supply team that does a tremendous job each year in and out to make sure we get access to reliable supply for our customers. Speaker 300:19:41Right. And just going back quickly, a little nuance here, you alluded to it in your remarks. On O and M, I mean, seemingly holding the line fairly well here, despite a consistently inflationary environment. Can you comment a little bit about what you're seeing out there? I mean, obviously, some of your peers had less success in managing their costs here. Speaker 300:19:58Can you comment a little bit about the clarity that you have in the line of sight here and just perhaps what that implies going forward as well? Speaker 100:20:05Sure, Jillian. This is Chris and good morning. Working back closely with our operations teams, just kind of looking really line by line opportunities where we could potentially defer items that are not compliance Safety related or which put the system at risk, similar to what we did during the pandemic, a few levers there that we might be able to pull. Additionally, a lot it just depends on timing of when contracts are executed in terms of locking in costs for a 12 month to 18 month period. We got in some contracts kind of at the early part of our fiscal year. Speaker 100:20:40So at that point, we had locked in some Contracts, we have a better line of sight at least in terms of labor costs with respect to some of these 3rd party services, which leaves the variable Just the number of locates for example that we might have to manage and we did some sensitivity work around that. So those are just a couple of examples of how we're trying to look forward, Manager O and M within what we're capable of doing, while certainly providing a safe and reliable service on the system. Speaker 200:21:09Yes. And I'll just close that, Julien. As Chris has said before and I've said before on these calls, we're not a just in time company when it comes to Integrity work, O and M work, those safety related items on our system, we like to stay well in advance of that And that does provide some additional flexibility for us when we need it, certainly can speed things up or move things from one period to another. That's an additional lever we have. Speaker 300:21:40Excellent. Thank you, team. Best of luck. Speaker 200:21:43Thank you. Operator00:21:47Appreciate it. I would now like to turn the call over to Dan Mazir for closing remarks. Speaker 100:22:12We appreciate your interest in Atmos Energy, and thank you for joining us. A recording of this call is available for replay on our website through June 30, 2023. Have a good day. Operator00:22:24Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Atmos Energy Earnings HeadlinesTop 2 Utilities Stocks You May Want To Dump In AugustAugust 12, 2025 | benzinga.comAtmos Energy Corporation (ATO) Q3 2025 Earnings Call TranscriptAugust 8, 2025 | seekingalpha.comIs Elon's empire crumbling?The Tesla Shock Nobody Sees Coming While headlines scream "Tesla is doomed"... 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Email Address About Atmos EnergyAtmos Energy (NYSE:ATO), together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,645 miles of gas transmission lines. 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There are 4 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by, and welcome to the Atmos Energy Corporation Fiscal 2023 Second Quarter Earnings Conference Call. I would now like to turn the call over to Dan Mazir, Vice President of Investor Relations and Treasurer. Please go ahead. Speaker 100:00:17Thank you, Mandeep. Good morning, everyone, and thank you for joining our fiscal 2023 second quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer and Chris Boresight, 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 atmosenergydot The factors that could cause such material differences are outlined on Slide 32 and more fully described in our SEC filings. With that, I will turn the call over to Kevin Akers, our President and CEO. Speaker 100:01:13Kevin? Speaker 200:01:13Thank you, Dan, and good morning, everyone. We appreciate you joining us today and your interest in Atmos Energy. Yesterday, we reported year to date fiscal 2023 net income of $630,000,000 or $4.40 per diluted share. As you will hear from Chris, results were in line with our expectations and positions us for another successful fiscal year. This performance continues to reflect the commitment, dedication, focus and effort Of all 4,800 Atmos Energy employees to successfully modernize our natural gas distribution, Transmission and storage systems are safely providing reliable natural gas service to our 3,400,000 customers in 1400 Communities across our 8 states. Speaker 200:02:05We also narrowed our fiscal 2023 earnings per share guidance to a range of $6 to $6.10 We continue to experience strong customer growth, driven by robust employment trends in Texas. For the 12 months ended March 31, we added 65,000 new customers Across the company with nearly 49,000 of those new customers located in Texas. And according to the Texas Workforce Commission, The state continued its streak of record employment in March, adding 654,000 jobs since January of 2022 to reach a series high civilian labor force of 14,900,000 people. Industrial demand for natural gas in our service territory also remained strong. During the second quarter, We added 18 new industrial customers with an anticipated annual load of approximately 6 Bcf once they are fully operational. Speaker 200:03:12Fiscal year to date, we've added 30 new industrial customers with an anticipated annual load of approximately 15 Bcf once they are fully operational. On a volumetric basis, that 15 Bcf of anticipated industrial load is equal to adding approximately 200 and 75,000 residential customers. To support that growth that I just summarized, We continue to enhance the safety, reliability, versatility and supply diversification of our system. For example, in our Atmos Pipeline, Texas division, our team completed the injection of working gas and the Bechtel Tavern 1B, our 3rd Salt Dome cavern. This 3rd cavern provides additional support to APT's operations and the local distribution companies behind APT System, as well as adds over 6 Bcf of new working gas capacity. Speaker 200:04:16Work continues on Phase 3 of our Line S-two project, which will replace 67 miles of 14 inches pipeline with 36 inches pipeline. And as a reminder, this project brings supply from the Haynesville and Cotton Valley shale plays to the east side of the growing metroplex. The final phase of this project is anticipated to be in service late 2024. Later this calendar year, we expect to complete the remaining 5 miles of the 22 mile project that will install 36 inches pipeline connecting to the southern end of APT system with the 42 inches Permian Highway line that runs from Waha to Katy. This new line will support the forecasted growth and increased supply diversity to the north of Austin in both Williamson in Travis Counties in Texas. Speaker 200:05:14Avis Energy's comprehensive environmental strategy is focused on reducing our scope 1, 2 and 3 emissions and environmental impact from our operations in the following five key focus areas: Operations, fleet, facilities, gas supply and customers. In the area of operations, Through our system modernization efforts, we are on track to replace 800 to 1000 miles of pipe this fiscal year and between 20000,301,000 steel service lines. And in the gas supply area, during the 1st 6 months of fiscal 2023, We added another RNG facility that will transport renewable natural gas across our system. We now have 7 flowing RNG facilities directly connected to our system. Additionally, we've executed Interconnect agreements with 3 additional RNG projects expected to begin flowing in calendar year 2023. Speaker 200:06:19Once these projects are fully operational, we anticipate to have 8 Bcf to 9 Bcf of RNG flowing across our system annually. Finally, we are evaluating nearly 30 additional opportunities to connect RNG facilities to our system. As I mentioned on previous calls, we are partnering with Habitat for Humanity in Each of our 8 states to build 0 net energy homes for families in need. 0 net energy homes use high efficiency natural gas Rooftop Solar Panels and Installation to produce more energy than they consume at an affordable cost. During the 1st 6 months of fiscal 2023, we completed 2 homes, 1 in Owensboro, Kentucky and 1 in Jackson, Mississippi. Speaker 200:07:13All 8 homes have achieved Home Energy Rating System or HERS scores of less than 0, which means the homes produce more energy than they consume. These 0 net energy homes demonstrate the value and vital role that 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 of the ways Atmos Energy fueled safe and thriving communities. Our customer service organization and technology support team Continue to innovate and look for ways to improve our customer service and offer convenient channels for customers to communicate with us and to make payments. For example, we see continuous growth in our electronic bill delivery channel, when nearly 52% of customers enrolled in eBill And approximately 85% of customers pay electronically with over 33% of them enrolled in recurring auto draft, which is 10% higher than industry averages. Speaker 200:08:25We are also fueling safe and thriving communities through our continued outreach efforts to Energy Assistance Agencies and Customers. During the 1st 6 months of the fiscal year, our customer advocacy team And customer support agents helped over 35,000 customers receive over $14,000,000 in funding assistance. The dedication and focus of our employees was recently recognized in an American Customer Satisfaction Index Energy Utilities Study conducted between January December of last year. According to the recently released study, Atlas Energy finished in 1st place, leading all energy utility providers with the highest Customer Satisfaction Score. We believe our focus, dedication and effort combined with executing our proven investment, Regulatory and financing strategy positions us well to safely deliver reliable, Efficient and abundant natural gas to homes, businesses and industry to fuel our energy needs now and in the future. Speaker 200:09:40I will now turn the call over to Chris for his update. Thank you, Kevin, and thank you Speaker 100:09:44to everyone who joined us this morning. As Puga Smedes mentioned, net income for the 1st 6 months of the fiscal year was $630,000,000 or $4.40 per diluted share. Year to date consolidated operating income increased $744,000,000 or 13%. I'll touch on a few of the highlights of our year to date performance. Fiscal 2022 and 2023 regulatory outcomes increased operating income by $152,000,000 Additionally, residential growth and rising industrial load in our Distribution segment increased operating income by an additional $12,000,000 And we saw a $7,000,000 increase in APTs through system business. Speaker 100:10:25Most of this increase occurred during our 1st fiscal quarter when spreads widened while some of the Key takeaway pipelines in the Permian undergoing maintenance. Consolidated O and M expense increased $57,000,000 Distribution O and M increased $43,000,000 driven largely by supporting our growing service territory in Texas, where we experienced a 10% increase in the number of line locates. We're also seeing higher labor costs for these 3rd party services. Additionally, service orders system wide have increased 11%, largely driven by customer growth, increased service requests driven by higher natural gas prices and increased collection activities. As a result, our internal labor costs have risen to fulfill these orders. Speaker 100:11:11Finally, we experienced higher levels of bad debt expense Due to higher customer bills, most of this increase was recognized during our 2nd fiscal quarter. The remaining $14,000,000 increase is recognized in our Pipeline and Storage Slides 56 summarize the key performance drivers for each of our operating segments for the quarter year to date periods. Consolidated capital spending increased 19 percent or 2 $25,000,000 to $1,400,000,000 with 86% dedicated to improving the safety and reliability of our system. This increase primarily reflects higher spending at APT, the projects that Kevin discussed just a few minutes ago. We continue to execute our annual regulatory filing strategy. Speaker 100:11:59To date, we have implemented $116,000,000 in annualized regulatory outcomes And we have about $298,000,000 annualized outcomes in progress. We anticipate implementing about half of this amount during the second half of our Fiscal year. Slides 20 through 31 summarize these outcomes and Slide 17 outlines our planned filings for the remainder of the fiscal year. Our financial position continues to remain strong. In early March, we executed a $2,000,000,000 term loan to help repay our maturing $2,200,000,000 in senior notes. Speaker 100:12:34Later that month, the Texas Public Financing Authority completed its statewide securitization program and we used the proceeds from that program to pay off the term loan. We no longer have meaningful exposure to floating rate interest debt. We finished our 2nd fiscal quarter with an equity capitalization of 60.9 percent and approximately $3,300,000,000 of liquidity. Included in this amount is $673,000,000 in net proceeds available under existing forward sale agreements that will fully satisfy our anticipated fiscal 'twenty three equity needs And a significant portion of our anticipated fiscal 2024 needs, the strength of our financial profile was recognized by Moody's in March when they reaffirm the credit ratings and outlook. We continue to look for opportunities to mitigate interest rate risk associated with our anticipated long term debt financing needs beyond fiscal In March April of this year, we executed $250,000,000 in forward starting interest rate swaps. Speaker 100:13:34We now have $1,600,000,000 of swaps to effectively hedge portions of the treasury component of our total cost of financing at rates ranging from 1.76 percent to 2.38%. With this activity, a substantial portion of our anticipated fiscal 2024 long term debt needs have now been hedged. Finally, in Kansas, we are still on track to complete our gas cost securitization this fiscal year. Additional details of our financing activities and our financial profile can be found on Slides 9 through 11. Our fiscal year to date performance gives us Confidence to narrow fiscal 'twenty three earnings per share guidance from $5.90 to $6.10 to the new guidance range of $6 to $6.10 We expect the contribution to fiscal 'twenty three earnings to be somewhat ratable by quarter in the back half of the fiscal year. Speaker 100:14:27A few additional thoughts about our updated guidance. The winter heating season is over and approximately 70% of our distribution segment revenue has been recognized. Going into the fiscal year, with elevated commodity costs, we anticipated lower customer consumption primarily due to conservation. However, the consumption we saw during the winter heating season exceeded our expectations. Additionally, the most significant regulatory filings impacting fiscal 2023 As VIMFO will soon be completed, giving us a better line of sight into the regulatory outcomes for the fiscal year. Speaker 100:15:00Regarding O and M, Much of this increase was anticipated as we originally guided to an approximate 5.5% increase over fiscal 2022 levels. However, as I mentioned a few minutes ago, we are experiencing higher than planned spending to support our growing service territories, particularly in Texas. Given what we did during the pandemic, we are working to offset some of these increases. Assuming we achieve the midpoint of our updated guidance, We anticipate O and M for the remaining 6 months of the fiscal year to be in line with their level of spending in the back half of fiscal 'twenty two. Finally, our expected cost of financing is now pretty clear. Speaker 100:15:35Securitization taxes has been resolved and our expected long term debt financing for the fiscal year is now complete. Further, we're anticipating higher than planned AATDC, primarily due to the timing of product closings within the fiscal year and the remaining FY2023 equity needs have been fully priced. Details surrounding our fiscal 'twenty three guidance can be found on Slide 13 and 14. Thank you for your time this morning, and we'll now open up the call for questions. Operator00:16:32Our first question comes from the line of Julien Dumoulin Smith from Bank of America. Please proceed. Speaker 300:16:39Hey, good morning team. Thanks for the time. I appreciate it. Speaker 100:16:42Good morning, Joe. Speaker 300:16:44Hey, good morning. Thank you. Look, nicely done guys. I wanted to maybe kick things off quickly. The Texas legislature looking at potentially using some of their surplus Here, potentially look at paying down some of the securitization here. Speaker 300:17:00Can you comment on that Speaker 100:17:00a little bit here? What are Speaker 300:17:02your expectations? Any nuances there? And then ultimately, I would presume that this would effectively never hit customer bills, but I just want to understand sort of the timing and mechanics as to How it's been collected? How it looks like for you guys specifically? Speaker 200:17:17Yes. From a technical basis, Julien, that is Correct. We continue to follow that as well as other legislation across our entire system. So not going to try and predict or comment too much further on it And that at this point, if there are any questions or anything that comes up from the committees or those that are sponsoring that, obviously, we're Standing by, I'm prepared to answer that for him. But on a system wide basis, on a legislative perspective, things have kind of been On a consistent theme, if you will, this year, that being damage prevention across all of our jurisdictions has been enhanced, as well as some of our jurisdictions looking at energy efficiency programs at the state level as well. Speaker 200:18:01So we're very pleased with that. And additionally, I don't know if you've seen out there, but a couple more states have come on to approve All fuels are customer choice legislation, which provides about 24 states, I think, now across the country that has done that, As well as I think 3 states right now have approved legislation for Freedom to Cook in their particular jurisdiction. So That's a quick recap across our territory on legislative action. Speaker 300:18:34Actually, since you bring it up, maybe I'd love to get your perspective on this. Colorado has had some discussions of late across both the PC and then also in particular the legislative side on, I suppose gas bills broadly. Any perspectives there in on where this could go? I mean, it seems a little bit It lacks specificity, shall we say? Speaker 200:18:59Well, no crystal ball here, Julien. I can tell you that for sure. But with that committee, With ongoing committees there in any legislature, when we're asked, we'll certainly participate. We'll provide testimony. We'll provide feedback or our Expert opinion. Speaker 200:19:16We're going to continue to watch that, stay close to it, but also Work with the PUC, if they come up with any questions, comments or open any dockets, we're certainly available to provide our feedback As well as our gas supply team that does a tremendous job each year in and out to make sure we get access to reliable supply for our customers. Speaker 300:19:41Right. And just going back quickly, a little nuance here, you alluded to it in your remarks. On O and M, I mean, seemingly holding the line fairly well here, despite a consistently inflationary environment. Can you comment a little bit about what you're seeing out there? I mean, obviously, some of your peers had less success in managing their costs here. Speaker 300:19:58Can you comment a little bit about the clarity that you have in the line of sight here and just perhaps what that implies going forward as well? Speaker 100:20:05Sure, Jillian. This is Chris and good morning. Working back closely with our operations teams, just kind of looking really line by line opportunities where we could potentially defer items that are not compliance Safety related or which put the system at risk, similar to what we did during the pandemic, a few levers there that we might be able to pull. Additionally, a lot it just depends on timing of when contracts are executed in terms of locking in costs for a 12 month to 18 month period. We got in some contracts kind of at the early part of our fiscal year. Speaker 100:20:40So at that point, we had locked in some Contracts, we have a better line of sight at least in terms of labor costs with respect to some of these 3rd party services, which leaves the variable Just the number of locates for example that we might have to manage and we did some sensitivity work around that. So those are just a couple of examples of how we're trying to look forward, Manager O and M within what we're capable of doing, while certainly providing a safe and reliable service on the system. Speaker 200:21:09Yes. And I'll just close that, Julien. As Chris has said before and I've said before on these calls, we're not a just in time company when it comes to Integrity work, O and M work, those safety related items on our system, we like to stay well in advance of that And that does provide some additional flexibility for us when we need it, certainly can speed things up or move things from one period to another. That's an additional lever we have. Speaker 300:21:40Excellent. Thank you, team. Best of luck. Speaker 200:21:43Thank you. Operator00:21:47Appreciate it. I would now like to turn the call over to Dan Mazir for closing remarks. Speaker 100:22:12We appreciate your interest in Atmos Energy, and thank you for joining us. A recording of this call is available for replay on our website through June 30, 2023. Have a good day. Operator00:22:24Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by