Thank you for standing by. My name is Krista, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Atmos Energy Corporation Fiscal 2024 Third Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan, you may begin.

All right. Thank you, Krista. Good morning, everyone, and thank you for joining our fiscal 2024 third quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, 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 atmosenergy.com under the Investor Relations tab. As we review these financial results and discuss future expectations, please keep in mind that some of our discussion might contain forward-looking statements within the meaning of the Securities Act and the Securities Exchange Act. Our forward looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on slide 32, and are more fully described in our SEC filings. With that, I will turn the call over to Chris Forsythe, our Senior Vice President and CFO. Chris?

Thank you, Dan, and good morning, everyone. We appreciate your joining us and your interest in Atmos Energy. Yesterday, we announced fiscal year to date diluted earnings per share of $6 compared to $5.33 per diluted share in the prior year period. Our third quarter and fiscal year to date results continued to be driven by two things: regulatory outcomes reflecting increased safety and reliability spending and customer growth. Additionally, strong through system revenues of APT, particularly during the third fiscal quarter, contribute to our performance. Regulatory outcomes in both of our segments increased operating income by $238 million and residential customer growth and rising industrial load and our distribution segment increased operating income by an additional $18 million. Our pipeline and storage segment increased $19 million period over period. $11 million of this amount [Technical Difficulty] mechanism was realized during our third fiscal quarter. Several of pipelines coming out of the Permian experienced planned and unplanned maintenance. This reduction takeaway capacity of a robust associated natural gas production, while the spreads between the water heater on the western end of APT system and deliver points to the eastern and southern ends of system. We expect credit spreads remain elevated through the end of our fiscal year. Excluding the $14 million of one-time bad debt adjustment we report in Mississippi in the first quarter, consolidated O&M increase in net $16 million or about 3%. This increase is primarily due to higher employee-related costs, insurance premiums, IT software maintenance costs, partially offset by $15 million decrease in O&M and our pipeline and storage segment, primarily due to the timing of in-line inspection work. As expected, O&M in the third fiscal quarter trended higher than the prior-year quarter, and we anticipate O&M spending in the fourth fiscal quarter of trend higher as…

Thank you, Chris. Good morning, everyone, and thank you for joining us today. We continue to benefit from solid economic growth in our service territory. For the 12 months ended June 30, we added 57,000 new customers, with nearly 45,000 of those new customers located in Texas. So Texas Workforce Commission reported in July that the seasonally adjusted number of employed reached 14.2 million. Texas again added jobs at a faster rate than the nation over the last 12 months ending June; adding over 267,000 jobs, representing a 1.9% annual growth rate. Industrial demand for natural gas and service territories also remained strong. During the third quarter, we added 10 new industrial customers with an anticipated annual load of approximately 2 Bcf, once they are fully operational. Fiscal year to date, we have added 32 new industrial customers with an anticipated annual load of approximately 6 Bcf once they are fully operational. On a volumetric basis, the 6 Bcf of anticipated industrial load is equal to adding approximately 110,000 residential customers. And during the first nine months of the fiscal year, our customer support agents and customer advocacy team continued their outreach efforts to energy assistance agencies and customers, helping over 47,000 customers received nearly $19 million in funding assistance. Our consistent performance reflects the vital role we play in every community: safely delivering reliable and efficient natural gas to homes, businesses, and industries to fuel our energy needs now, and in the future. We appreciate your time this morning, and we will now open the call to questions.

[Operator Instructions]. Your first question comes from the line of Nicholas Campanella with Barclays.

I just wanted to first quickly touch on financing. Could you just further discuss the equity needs for '25? And definitely, given '25 largely done with all our instruments and the recent renewal of ATM, just how does that better facilitate the equity needs in 2025? Thanks.

Yeah. Well, this is Chris. Good morning and thanks for joining us. We typically issue between $600 million and $800 million a year in equity through the ATM program that we have seen. As I mentioned a few minutes ago, we had $551 million of price at the end of June, which that amount will basically mostly satisfy our fiscal 2025 needs. So I think that hopefully that will give you enough color to update your models.

That's great. Thanks for the colors. Very helpful. Maybe just quickly turning to O&M execution for '25, you raised the midpoint guidance by $20 million last quarter. And I guess things are on track for this year. Could you talk about going forward, what are some of the key items you're focusing on O&M execution? And how are you benchmarking with a 3.5% annual increase guidance? Thanks.

Yeah, this is Kevin. Good morning. Glad to have you join us today. Again, we're working through the remainder of fiscal '24 right now and anticipate it will be the same items as we move into '25. And we'll have additional detail and color as we get to our November call on 25. But again, the drivers around O&M continue to be hydrostatic testing, line locating, integrity regulations, markable placement on difficult, hard to locate lines. So all sort of things. And then looking for opportunities as we move forward to enhance those or pull things forward when we had the ability to do that. So again, the same items that we're focused on this year, we anticipate seeing again in '25.

Yeah -- and I'll add to that, too, is that no, as I said at the end of my prepared remarks, we're still anticipating 6% to 80% EPS growth off of the adjusted EPS and now for fiscal '24. So that's the overall theme to take away from. We will have some puts and takes in the O&M. As Kevin mentioned, we're still guiding to that 6% to 8% growth target.

Your next question comes from the line of Richard Sunderland with JPMorgan.

Looking at '24 results, you've called out the $0.17 of one-offs. I'm curious how we should think about the rest of the business into '25 -- everything else continuing to '25 other than APT spread benefit, meaning take to succeed in your top and less $0.17 and maybe back out another roughly $0.10 for the spread pickup?

Yeah. I think you're on target there, Richard, backing out the $0.17 off of whatever you want to assume for the outcome for fiscal '24 APT, we will have some spread activity next year, but we just can't predict it. So I wouldn't necessarily discount too far off of what you have -- the two one-time items when you're starting your 7% or 8% or 9%, whatever you want to do on the growth target for fiscal 2025, as we will have some activity. It is just this time this year, and particularly in the third quarter, we saw some elevated spreads. And as you commented, it is expected to revert back to the mean, which means we'll still have some activity there.

Okay, great. That's really helpful. And I guess one quick follow-up on that spread opportunity. I know you referenced in the script kind of a continuation into 4Q. Is that already contemplated in the higher end guidance language or is that potential upside depending on how that materializes?

No, that's all contemplated in the guidance that we've updated here this morning.

[Operator Instructions]. Your next question comes from the line of Ryan Levine with Citi.

To follow-up on the APT spread dynamics. What are you assuming for the Matterhorn in-service date with the current '24 guidance? Are you assuming that the spread means right for the remaining portion of your fiscal year?

Yeah. As Chris said, again, we don't anticipate any further maintenance this year on the upstream segments of APT there that would impact the spreads right now. They've mitigated from the highs we've seen over the last quarter somewhat. And look, going forward, definitely Matterhorn will be coming on, I think, if you read some of the documentation from the upstream folks sometime in September, October, early fall, that will be coming on. We just have to watch and see what that does for the dynamics out there. And then as we normally get into the in winter period, demand will drive it further from there on the spread impact. But again, I'd like to remind here why APT adjusts and that's to serve the customers behind it, the LDCs behind it, and then when we have opportunity, we will move that gas across our system. So right now, again, we don't anticipate any further maintenance upstream that would impact the spreads any further than what we're currently seeing today at this point.

Okay. And then a follow-up on that. Given the strong performance this fiscal year on APT, does that have any implications for resetting the bar which you get the sharing mechanism in future time periods?

No, that's said in the rate case itself on a go forward, so the next time that a potential be looked at would be in the next five years -- in the next required filing?

Yeah. So as a reminder, that bar was set at $106.9 million. And so that's the benchmark we got to achieve to begin sharing over and above that amount. And of course, it works the other way too if we fall short, but $106.9 million is the target we're looking at.

Okay. And last question for me. To the extent that there is new gas generation or infrastructure built in your service territory, do you see any opportunities on the LDC side to maybe build some infrastructure to support the movement of gas associated some of the gas generation that may be coming?

Yeah. As we talked about on previous calls, there's always that opportunity out there. But let's remember the power generators that we currently have behind APT system, we're one of several suppliers to them, so they can move or flex between suppliers at their will out there. So we wouldn't be a sole supplier. So we'll just continue to keep an eye on that over the next few years and see how that develops. But again, we would be one of several of suppliers or inputs into those facilities.

And that concludes our question and answer session. And I will now turn the conference back over to Dan for closing remarks.

Thanks. We appreciate your interest in Atmos Energy, and thank you again for joining us today. And a reminder, a recording of this call is available for replay on our website. Have a great day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.