Atmos Energy (ATO)2024-11-07 19:53Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $6.83, representing a 12% increase over fiscal '23, marking the 22nd consecutive year of EPS growth [8][20] - Fiscal '24 capital investment exceeded $2.9 billion, with a 5% increase or $131 million compared to the previous year, primarily focused on safety and reliability improvements [9][24] - Consolidated operating and maintenance (O&M) expenses, excluding bad debt, increased by $65 million, driven by higher employee-related costs and increased operational activities [23] Business Line Data and Key Metrics Changes - The Distribution segment saw strong customer growth, adding over 59,000 new residential and commercial customers, with nearly 3,500 new commercial customers, a 19% increase year-over-year [10][12] - The Pipeline & Storage segment experienced a decrease in capital spending by about $191 million, primarily due to the timing of cash payments for completed safety and reliability work [25] Market Data and Key Metrics Changes - The housing market in the DFW Metroplex remains robust, with new home closings reaching a record high, reflecting a nearly 1% increase over the prior year [11] - Texas added approximately 327,000 jobs from September 2023 to September 2024, continuing to outpace national job growth [11] Company Strategy and Development Direction - The company plans to invest approximately $24 billion over the next five years, focusing on system modernization and safety, with over 80% of the investment dedicated to safety and reliability [16][29] - The strategy includes maintaining a strong balance sheet through a mix of equity and long-term debt financing, with a target of 6% to 8% annual EPS growth [27][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook, citing strong operational and financial performance in fiscal '24 as a foundation for sustained success [41] - The company anticipates continued robust demand for natural gas driven by economic growth in its service territories [15][18] Other Important Information - The company completed $1.2 billion of long-term financing, finishing the fiscal year with an equity capitalization of 61% and approximately $4.8 billion in available liquidity [25] - The Board of Directors approved an 8.1% increase in the annual dividend for fiscal '25, bringing it to $3.48 [26] Q&A Session Summary Question: Financing and Capital Program - The company plans to maintain a balance of equity and long-term debt to support its capital program, with an incremental $15 billion financing assumption over the next five years [45][46] Question: CapEx and System Investment - The higher pace of system investment is driven by robust customer growth and the need to meet anticipated winter demands, alongside risk models guiding pipe replacement [50][51] Question: EPS Growth vs. Rate Base Growth - The company maintains a conservative EPS growth outlook of 6% to 8%, despite higher rate base growth, due to various external factors and increased O&M costs [53][54] Question: Interest Costs and Debt Management - The company is comfortable with its current debt-to-capitalization ratio and will consider interest rate hedging to maintain cost stability [47] Question: Bad Debt Expense and Customer Growth - Bad debt expense is expected to normalize, with customer growth assumptions aligned with recent trends in Texas [71][72]