Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atmos Energy Corp (ATO, Financial) reported a significant increase in diluted earnings per share, rising from $5.33 to $6 year-over-year.
- Regulatory outcomes and customer growth have driven an increase in operating income by $238 million.
- The company added 57,000 new customers over the past year, with a significant portion in Texas, indicating strong market expansion.
- Atmos Energy Corp (ATO) has a strong financial position with an equity capitalization of 61% and approximately $4.3 billion in liquidity.
- The company anticipates its fiscal 2024 earnings per share guidance to be at the higher end of the $6.70 to $6.80 range, reflecting strong financial performance.
Negative Points
- Operating and maintenance (O&M) expenses increased by $16 million, primarily due to higher employee-related costs and insurance premiums.
- The company experienced planned and unplanned maintenance on several pipelines, affecting takeaway capacity and potentially impacting future spreads.
- Capital spending increased to $2.1 billion, which, while aimed at improving safety and reliability, represents a significant expenditure.
- Atmos Energy Corp (ATO) faces potential challenges with regulatory outcomes, as $182 million in annualized outcomes are still in progress.
- The company anticipates continued higher O&M spending in the fourth fiscal quarter, which could impact overall profitability.
Q & A Highlights
Q: Could you discuss the equity needs for 2025 and how the recent renewal of the ATM program facilitates these needs?
A: Christopher Forsythe, CFO, explained that Atmos Energy typically issues between $600 million and $800 million annually through the ATM program. As of June, $551 million was priced, which will mostly satisfy fiscal 2025 needs.
Q: What are the key items you're focusing on for O&M execution in 2025, and how are you benchmarking with a 3.5% annual increase guidance?
A: John Akers, CEO, stated that the focus remains on hydrostatic testing, line locating, integrity regulations, and markable placement on difficult lines. These will continue to be priorities into 2025, with opportunities to enhance or advance these initiatives.
Q: How should we think about the rest of the business into 2025, considering the $0.17 of one-offs in 2024?
A: Christopher Forsythe noted that while some spread activity is expected next year, the $0.17 one-time items should be backed out when considering growth targets for fiscal 2025.
Q: Is the continuation of APT spread benefits into Q4 already contemplated in the higher end guidance?
A: Yes, Christopher Forsythe confirmed that the guidance update already includes the anticipated spread benefits for Q4.
Q: What are you assuming for the Matterhorn in-service date with the current 2024 guidance?
A: John Akers mentioned that no further maintenance is anticipated this year on upstream segments impacting spreads. Matterhorn is expected to come online in early fall, and its impact will be monitored.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
