The operator introduces the Atmos Energy Corporation Fourth Quarter Earnings Conference Call and turns it over to Vice President of Investor Relations and Treasurer, Dan Meziere. Meziere thanks everyone for joining and introduces President and CEO Kevin Akers and Senior Vice President and CFO Chris Forsythe. Akers thanks the men and women who have served in the Armed Forces and reports the company's earnings per share of $6.10 for fiscal year 2023. He also mentions upcoming pipeline projects and shares thoughts on fiscal year 2024.

Atmos Energy recently celebrated its 40th anniversary and continues to focus on the future while being guided by its core values of honesty, integrity, and good moral character. The company's success is attributed to its dedicated employees and its strategy of investing in modernizing its natural gas systems. This investment has also supported economic development and job growth in its service territories, particularly in Texas where the state has seen record employment and job growth.

A study projects significant population growth in the Dallas-Fort Worth and Austin Round Rock Georgetown areas, leading to an increase in commercial and industrial demand for natural gas. The company has completed several projects to enhance the safety and reliability of their system and is on track to complete a new line that will support current demand and future growth.

In paragraph 4, it is mentioned that the customer support and service technicians received a high satisfaction rating from customers and helped many customers receive energy assistance funds. The company's employees also made a difference in their communities by supporting schools, healthcare workers, and those in need. The company also completed two new Zero Net Energy Homes and plans to complete 12 more by the end of fiscal '24. The paragraph concludes by stating that the company's fiscal '23 earnings per share increased by 8.9%.

The company's performance in fiscal '23 was successful due to their operating, regulatory, and financing strategies. They saw an increase in operating income and customer growth, and also invested in improving the safety and reliability of their system. The company completed long-term financing and has a strong balance sheet and available liquidity. Their future strategy is focused on system modernization, disciplined capital spending, timely cost recovery, and balanced financing to support annual earnings and dividend growth.

Atmos Energy anticipates a strong financial performance for fiscal years '24 and '28, with expected earnings per share of $6.45 to $6.65 and $8.35 to $8.75 respectively. The company's Board of Directors has approved a 160th consecutive quarterly cash dividend, representing an 8.8% increase over the previous year. The company plans to invest approximately $17 billion in capital spending to support rate base growth of 11% to 13% per year, reaching an estimated rate base of $29 billion in fiscal '28. A significant portion of cash will also be used for taxes, including a refund of $300 million in excess deferred tax liabilities over the next 5 years. O&M spending will focus on compliance-based activities for system safety, with an expected inflation rate of 3.5% annually. The company's financing strategy includes a manageable debt maturity schedule and minimal exposure to floating interest rates.

In order to mitigate interest rate risk, the company has implemented forward starting interest rate swaps and plans to continue using their ATM program for equity financing. They have also implemented operating income increases and have a comprehensive settlement agreement in progress with the Texas Railroad Commission. The company remains confident in their strategy and its ability to support modernization and economic development. They anticipate continued competitive pricing for their customers.

APT, as part of their capital spending plan, will continue to focus on improving the safety, reliability, versatility, and supply diversification of their system. They have ongoing projects, such as the Line S-2 and Line WA Loop, which are expected to be completed by 2024 and 2026 respectively. APT will also begin construction on a new pipeline in Central Texas, expected to be completed by the end of 2025. Their gas supply team has hedged 50% of their winter supply needs at a competitive cost. Overall, APT is confident in their safety-driven strategy and expects 6-8% earnings per share growth, supported by a strong financial profile.

The company operates in a supportive jurisdiction for natural gas infrastructure and has a long-term plan for $17 billion in capital spending. They have already hedged their financing needs for fiscal 2024 and have a strong balance sheet to support their operations. The company plans to continue issuing equity through their ATM program to fund their capital needs.

The company is considering various factors, such as customer cost and balance sheet strength, to determine the best financing options. The recent APT settlement has been factored into their 6-8% guidance. The company aims for a 50-60% equity capitalization range and expects O&M to moderate in the second half of the year, with a projection of 3-3.5% for the next few years.

The speaker explains that they have used different strategies to manage O&M costs in the past and are confident about their projected costs for 2024. They also mention a decrease in line locates costs and compliance costs in some areas, leading to a slight increase in their long-term O&M guidance. They are still committed to their 3-5 year plan for O&M and compliance work, despite increasing regulations.

The company is expecting slightly higher inflation in the coming years, but they have mechanisms in place to recover the costs. They also anticipate becoming a cash taxpayer in the next few years, but are looking into tax planning strategies to mitigate the impact. The company's plan has accounted for this potential increase in taxes.

The company has conservatively estimated their cash tax payer status in the middle of their 5-year plan. They have also reflected current market conditions in their interest rate costs and have $900 million in hedges. However, given the current interest rate environment, it may not be as attractive to lock in more hedges. The plan also takes into account the company becoming a full cash taxpayer in the next 3 years. There will be an uptick in the effective income tax rate, but it will eventually be subsumed into the regulated cost structure.

The company's effective tax rate has increased in the past few years due to deferred tax liabilities, but they believe these costs are recoverable and are working on a regulatory strategy to address them. The company is not overly concerned about a potential lag in 2025 and 2026 as they approach a more normalized tax rate. On the operations and maintenance side, the company is constantly evaluating their contracts and labor strategies to manage costs and potentially in-source work to offset expenses.

The company is constantly evaluating its options for O&M expenses and is comfortable with the range they have set. They have factored in growth, population trends, current contracts, and labor rates into their plan. The 3.5% annual increase is based on FY '23 levels. There is some seasonality in O&M expenses, but it is difficult to predict.

The company makes operating decisions based on what is best for the company and their customers. They manage their expenses on a full fiscal year basis and are currently ahead of their compliance deadlines. They may have to adjust their work schedule based on the economic growth in their service territory and projects from jurisdictions. There is discussion about consolidating jurisdictions within Texas, but the company is still evaluating this possibility.

The speaker acknowledges that they are aware of what others are attempting to do currently. The operator then announces that there are no more questions and hands the call over to Dan Meziere for closing remarks. Meziere thanks the listeners for joining and mentions that the call will be available for replay on the company's website. The operator then concludes the call.

This summary was generated with AI and may contain some inaccuracies.