Atmos Energy (ATO) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal 2022 third quarter net income increased by $129 million to $0.92 per diluted share compared to $0.78 per diluted share in the prior year quarter [4] - Year-to-date net income reached $703 million or $5.12 per diluted share, up from $617 million or $4.77 per diluted share in the prior year period [4] Business Line Data and Key Metrics Changes - Rate increases in operating segments totaled $172 million, with 71% recognized in the distribution segment [5] - Customer growth in the distribution segment contributed an additional $13 million to operating income, offsetting a $13 million decrease in consumption [5] - Consolidated capital spending increased by 27% to $1.7 billion, with 87% dedicated to safety and reliability improvements [6] Market Data and Key Metrics Changes - The company added nearly 59,000 new residential customers, representing a 1.8% increase, and 28 new industrial customers with an expected annual natural gas usage of 10 Bcf [11] Company Strategy and Development Direction - The company aims to grow earnings per share and dividends by 6% to 8% annually through fiscal 2026, focusing on safety and reliability investment strategies [10] - The company is actively involved in community projects, such as the Zero Net Energy Homes initiative, to enhance its environmental and social governance strategy [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting fiscal year guidance of $5.50 to $5.60 per diluted share, citing year-to-date performance in line with expectations [9] - The company is monitoring inflation impacts on O&M budgets and capital plans, with strategies in place to mitigate potential challenges [20][22] Other Important Information - The company has approximately $700 million of net proceeds available under existing forward sale agreements, satisfying anticipated equity needs through fiscal 2023 [8] - The Texas Public Financing Authority is progressing on a statewide securitization program, expected to be completed soon [8] Q&A Session Summary Question: Main drivers for the remainder of the year - Management highlighted compliance work, system integrity projects, and monitoring bad debt expense as key drivers for the remainder of the fiscal year [15][17] Question: Impact of inflation on O&M budget and capital plan - Management discussed strategies to maintain inventory levels and manage procurement to mitigate inflation impacts [19][20] Question: Details on industrial customer additions - Management provided insights into the diverse mix of industrial customers, including hydroponic facilities and EV battery manufacturing plants, contributing to local economic growth [25][26] Question: Thoughts on the Inflation Reduction Act - Management is reviewing the bill and its potential impacts, emphasizing the importance of a diversified energy portfolio that includes natural gas [28][30]