Atmos Energy (US:ATO)2023-11-09 19:43Financial Data and Key Metrics Changes - The company reported earnings per share of $6.10 for fiscal '23, marking an 8.9% increase from fiscal '22 and the 21st consecutive year of earnings per share growth [4][13] - Consolidated operating and maintenance (O&M) expenses increased by $55 million to $765 million, primarily due to higher service orders and increased headcount [14] - Capital spending for fiscal '23 was over $2.8 billion, a 15% increase from the previous fiscal year, with 85% dedicated to improving safety and reliability [14] Business Line Data and Key Metrics Changes - The company added nearly 61,000 new customers in fiscal '23, with over 46,000 located in Texas [7] - Industrial demand remained strong, with the addition of 55 new industrial customers expected to contribute approximately 19 billion cubic feet (Bcf) of annual load [8] - Customer satisfaction remained high, with a 98% satisfaction rating reported [10] Market Data and Key Metrics Changes - Texas continued to experience record employment, adding nearly 436,000 jobs from September 2022 to September 2023, contributing to the company's customer growth [7] - The Dallas-Fort Worth Metroplex is projected to add over 674,000 people by 2028, indicating strong market growth potential [7] Company Strategy and Development Direction - The company focuses on system modernization through disciplined capital spending and timely recovery of costs via regulatory mechanisms [15] - A capital spending plan of approximately $17 billion over the next five years is anticipated to support rate base growth of about 11% to 13% per year [16] - The company aims for 6% to 8% annual growth in earnings per share and dividends per share [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of their strategy, which supports continued modernization and economic development in service territories [20] - The company anticipates becoming a material federal cash taxpayer within the next three years due to the Inflation Reduction Act [17] - The effective tax rate is expected to rise to 22% to 23% in the near future, with recoverability strategies being developed [45] Other Important Information - The company completed $1.6 billion in long-term financing and ended the fiscal year with an equity capitalization of 61.5% [14] - The company has hedged 50% of its winter supply needs at a weighted average cost of $3.31 [24] - The company is on track to complete significant pipeline projects, enhancing supply diversity and supporting growth [9][22] Q&A Session Summary Question: Future equity issuances and capital plan - Management remains confident in using the ATM program to fund equity needs, considering the current liquidity in the market [27] Question: APT settlement impact on guidance - The current settlement outcome has been reflected in the guidance provided [28] Question: Target equity capitalization - The company is comfortable maintaining an equity capitalization in the range of 50% to 60% [31] Question: O&M trends and outlook - Management is confident in the projected O&M range of $780 million to $800 million for fiscal '24, despite some moderation in costs [33] Question: Long-term O&M guidance - The long-term O&M guidance has been nudged up slightly due to compliance costs and inflation considerations [35] Question: Becoming a cash taxpayer - The company anticipates becoming a cash taxpayer due to the expiration of NOL shields and the corporate minimum tax [39] Question: Effective tax rate expectations - The effective tax rate is expected to increase to 22% to 23% in the near future, with recoverability strategies being developed [45] Question: O&M seasonality - O&M management is conducted on a full fiscal year basis, making it difficult to predict seasonality [54]