Release Date: November 07, 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 earnings per share of $6.83, marking the 22nd consecutive year of earnings per share growth.
- The company achieved its 40th consecutive year of dividend growth, reflecting strong financial performance.
- Atmos Energy Corp (ATO) added over 59,000 new residential and commercial customers in fiscal 2024, with significant growth in Texas.
- The company completed significant infrastructure projects, including the modernization of natural gas distribution and transmission systems.
- Atmos Energy Corp (ATO) has a strong balance sheet with approximately $4.8 billion of available liquidity, supporting future operations and growth.
Negative Points
- The company faces increased operational and maintenance costs, driven by higher employee-related expenses and system monitoring activities.
- Atmos Energy Corp (ATO) anticipates a 4% annual increase in operational and maintenance expenses, which could impact future profitability.
- The company is exposed to market conditions that could affect pricing and spreads, as seen with unplanned maintenance impacting fiscal 2024 results.
- There is uncertainty regarding future regulatory changes and their potential impact on the company's operations and financial performance.
- The company plans significant capital investments, which may require substantial financing and could impact debt levels and interest expenses.
Q & A Highlights
Q: Can you provide clarity on your financing strategy, particularly regarding the $8 billion shelf registration and $1.7 billion ATM program?
A: Christopher Forsythe, CFO, explained that Atmos Energy plans to maintain a balanced approach with 50% equity and 50% long-term debt to support their $15 billion financing needs over the next five years. The ATM program will be used to meet equity needs, while long-term debt will help preserve the balance sheet's strength.
Q: How should we think about interest costs and maintaining the debt-to-capitalization ratio in the five-year plan?
A: Forsythe noted that the company is comfortable with its current debt-to-capitalization ratio and will continue to use interest rate hedging to lock in costs when market conditions are favorable. This strategy has been successful in saving money for customers.
Q: What factors are driving the increased pace of system investment in your five-year plan?
A: Kevin Akers, CEO, highlighted robust customer growth, particularly in Texas, as a key driver. The company is investing in infrastructure to meet growing demand and ensure safety and reliability. This includes projects like the completion of Line S2 and the WA Loop.
Q: With a 13-15% rate base growth, why is the EPS growth guidance only 6-8%?
A: Akers stated that the company takes a conservative approach to its guidance, considering global and economic uncertainties. Forsythe added that increased O&M costs, now projected at 4% annually, also impact EPS growth relative to rate base growth.
Q: How are you approaching the Waha spread benefits in your 2025 guidance?
A: Akers mentioned that the company expects spreads to normalize and will approach future operations on a normalized basis, focusing on off-peak periods for additional opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
