Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Atmos Energy Corporation Fiscal 2025 Third Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Dan Meziere, Vice President of Investor Relations and Treasurer. Dan? Daniel M

Thank you, Greg. Good morning, everyone, and thank you for joining our fiscal 2025 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 Kevin Akers, our President and CEO. Kevin?

Thank you, Dan. Good morning, everyone. Thank you for joining us today. Yesterday, we reported year-to-date fiscal '25 net income of $1 billion or $6.40 per diluted share. And we updated our fiscal '25 earnings per share guidance to a range of $7.35 to $7.45. This performance continues to reflect the commitment, dedication, focus and effort of all Atmos Energy employees to successfully modernize our natural gas distribution, transmission and storage systems, while safely providing reliable natural gas service to 3.4 million customers from 1,400 communities across 8 states. The Texas Workforce Commission reported in July that the seasonally adjusted number of employees reached 14.3 million. Texas again added jobs at a faster rate than the nation over the last 12 months ending June, adding over 198,000 jobs, representing a 1.4% annual growth rate. We also continue to see the value and vital role that natural gas plays in economic development across our service territories. For the 12 months ended June 30, 2025, we added nearly 58,000 new residential customers with almost 45,000 of those new customers located here in Texas. Commercial customer growth remained solid as well with approximately 575 new customers connecting to the system during the second quarter and over 2,500 new customers connecting to the system fiscal year-to-date. Industrial demand for natural gas in our service territories also remained strong. During the third quarter, we added 3 new industrial customers. In fiscal year-to-date, we've added 22 new industrial customers with an anticipated annual load of approximately 3.4 Bcf once they are fully operational. On a volumetric basis, this load is comparable to adding approximately 67,000 residential customers. During the third quarter, APT entered into a contract to transport natural gas to a customer that will generate on-site power to serve a data center in the Abilene area. The data center is expected to be fully operational by end of the calendar year. And at that time, we anticipate APT will provide approximately 30 Bcf of gas annually to support this data center. As a reminder, revenues earned from this contract are included in APT's Rider REV mechanism. Therefore, 75% of this revenue will benefit APT's LDC customers. Our consistent performance reflects the vital role we play in every community that is safely delivering reliable and efficient natural gas to homes, businesses and industries to fuel our energy needs now and in the future. During the third quarter, our customer support associates and service technicians received a 97% satisfaction rating from our customers, reflecting once again the exceptional customer service they provide each and every day. Our customer advocacy team and customer support agents continue their outreach efforts to energy assistance agencies and customers during the first 9 months of the fiscal year. Through those efforts, the team helped over 48,000 customers received nearly $17.5 million in funding assistance. Additionally, Atmos Energy has been named 2025 most Trusted Brands by data analytics and advisory firm, Eskent. Eskent surveyed residential natural gas customers, electric and combination customers of the 148 largest U.S. utility company. Atmos Energy placed first among all 40 utilities in the South region, and received the highest score by any utility in any region nationwide. Before turning the call over to Chris, I want to briefly comment on recent Texas legislation House Bill 4384 that became effective on June 20, 2025. At a high level, this legislation authorizes a gas utility to defer for future recovery as a regulatory asset post in-service carrying costs, depreciation and ad valorem taxes associated with the unrecovered gas gross plan. For non-eligible [ 8.209 ] capital investments such as new customer growth and system expansion. This legislation also instructs the Railroad Commission to adopt rules to implement Section 104.302 of the utilities code as added by this act, no later than 270th day after the effective date of this act. Before the passage of this legislation, approximately 45% of our total capital spending qualified for Rule 8.209 treatment. Applying the language of this legislation means that approximately 80% of our capital spending is eligible for Texas deferral treatment. We believe most of the new capital covered by this legislation is associated with APT. We are currently in the process of updating our fiscal '26 capital budget in a 5-year plan, and we will provide a full update to the 5-year plan during our fourth quarter earnings call in November. As I turn the call over to Chris, I want to share that our hearts and prayers continue to be with our teammates, families and neighbors in the San Angelo, Kerrville, Ingram, Barnett and other communities that were tragically impacted by the floods. No words can fully comfort you and the community for your loss. But please know that we as your teammates, friends and neighbors, stand alongside you in support and are here to lend a helping hand. Chris, over to you.

Thank you, Kevin, and good morning, everyone. Yesterday, we announced fiscal year-to-date diluted earnings per share of $6.40 compared to $6 per diluted share in the prior year period. Our third quarter and fiscal year-to-date financial results continue to be driven by regulatory outcomes reflecting increased safety and reliability spending, customer growth and strong through system revenues at APT. Regulatory outcomes in both of our segments increased operating income by $322 million. Residential customer growth and rising industrial load in our distribution segment increased operating income by an additional $22 million. Revenues in our pipeline and storage segment increased $12.5 million primarily due to increased throughput. Approximately $11 million of this increase was recognized during the first 6 months of the fiscal year. As we discussed during our second quarter call, we expected the contribution from APT's through-system business in fiscal '25 to be comparable to what we experienced in fiscal '24, with most of this contribution realized during the first half of the fiscal year. APT's third quarter was in line with our expectations, and we continue to believe the contribution of APT's through-systems business in fiscal '25 will be in line with fiscal '24. APT also experienced a $12.5 million increase due to higher capacity contracted by tariff-based customers due to their increased peak day demand. Consolidated O&M increased $85 million. This increase is primarily due to higher employee-related costs, increases in line locate pipeline inspection and system monitoring activities and higher bad debt expense. As a reminder, we recognized a $14 million nonrecurring reduction in bad debt expense in the first quarter of fiscal '24, resulting from a regulatory change and how we recover our bad debt expense in Mississippi. As expected, O&M in the third fiscal quarter trended higher than the prior year quarter, but we still expect fiscal '25 O&M, excluding bad debt expense to be in the range of $860 million to $880 million. Assuming the midpoint of this range, we anticipate O&M in our fourth fiscal quarter will trend approximately $10 million lower than the prior year's fourth quarter. Consolidated capital spending increased 22% to $2.6 billion with 86% dedicated to improving the safety and reliability of our system. This increase reflects higher safety and reliability spending and higher spending to support customer growth in both of our segments. We remain on track to spend approximately $3.7 billion this fiscal year. During our third fiscal quarter, we implemented approximately $170 million in annualized regulatory outcomes, including the West Texas general rate case, APT's annual GRIP filings, annual filings for the City of Dallas and Tennessee and the Kentucky general rate case. Fiscal year-to-date, we have implemented $351 million of annualized regulatory outcomes, and currently, we have million $229 million in annualized outcomes in progress. Of this amount, approximately $205 million is associated with our annual RRM filing in Mid-tex and a general rate case in Mississippi. We anticipate implementing new rates from these filings in the first quarter of fiscal '26. Our financial position continues to remain strong. We finished our third fiscal quarter with an equity capitalization of 60% and approximately $5.5 billion of liquidity. This amount includes $1.7 billion of net proceeds available under existing forward sale agreements that fully satisfy our anticipated fiscal '25 and fiscal '26 equity needs and a portion of our fiscal 2027 equity needs. In June, we issued $500 million in 10-year notes with a coupon of 5.2%. As a result, our overall weighted-average cost of debt as of June 30 stands at 4.17% and our debt profile remains very manageable with a weighted-average maturity of approximately 17 years. Turning now to our guidance. We anticipate the impact of adopting the new Texas legislation will increase our expected earnings per share in the fourth quarter of fiscal '25 by approximately $0.10. Additionally, our updated guidance range includes our expectations for APT's through-system business during the fourth quarter and an improvement in our pass-through collections experience. Therefore, as we reported last night, we have updated our fiscal '25 earnings per share guidance to a new range of $7.35 to $7.45 from the prior range of $7.20 to $7.30. Looking forward to '26. As Kevin mentioned, we are still working through our 5-year plan. As of today, we believe earnings per share will continue to grow in a range of 6% to 8% annually. We will continue to -- we will provide a full update to our fiscal 2026 earnings per share guidance and a full update to our 5-year plan during our fiscal fourth quarter earnings call in November. We appreciate your time this morning, and we will now open up the call to questions.

[Operator Instructions] All right. Looks like our first question today comes from the line of Richard Sunderland with JPMorgan. Richard?

I just want to start with that $0.10 increase from the Texas legislation that you called out. Is that essentially a half year's impact of the legislation that you're booking all in 4Q? Or how do we think about that $0.10 relative to the total uplift potential from the legislation?

Yes, this is Chris. So the $0.10 reflects the impact of legislation beginning June 20 when the legislation became effective the end of fiscal 2025. So effectively 1 quarter.

Okay. Okay. Understood. That's helpful. And then I wanted to parse the through system commentary a little bit more. I know you said flat to '24 levels. Could you remind us what you'd originally expected in '25 on that front? I guess I'm just trying to think of the puts and takes of the Texas benefit relative to the through-system activities and how that might impact growth of '26?

As we think about -- on the through-system business, we really didn't -- as we talked about a year ago, we had anticipated spreads that were probably more in line with historical norms. -- obviously, in the first quarter, 1.5 quarters of this fiscal year with some of the takeaway capacity that had been delayed into late last year into early this year, that drove spreads. We also saw some volumes. As we think about fiscal 2026, as you sit here today, we're anticipating probably a more normal operating environment, both from a throughput and a spread perspective, then we'll adjust as we move through the fiscal year based upon what happens with the market.

Yes, I'd just add to that. Again, I think it's a little early to start trying to see out there a crystal ball that '26 is going to be, I think if you look right now. We got to get through the rest of the summer cooling load, see where production continues to be at that point. We'll know more as we get closer to our updated 5-year plan on what that may look like.

[Operator Instructions] All right. Looks like our next question comes from the line of Christopher Jeffrey with Mizuho Securities. Chris?

Just wanted to follow up on the project discussed in the Abilene area with the data center. Just curious if you could kind of size up how big of a capital outlay that would be, whether you're seeing other potential projects like that in -- throughout the system?

Dan, as we said on our previous calls, we continue to get inquiries in almost every state that we have right now, and they continue to go back and forth. Some of them are stand-alone, some of them are grouped together. But again, we'll continue to report on those once we have signed contracts and agreements to deliver natural gas service. But inquiry continues to be strong across the service territory. It's a matter of when those projects actually are signed and ready to break ground on those. As we move into the rest of the calendar year and into next year, we'll see how the load continues to develop on those, that particular project there in Abilene, again, we may have a little bit more additional clarity on growth of that load as we finish up a 5-year plan.

Great. And then maybe just a point of clarification. You mentioned, I think, 45% total spending previously qualified for 209 and that moves up to 80%. Is that just in Texas? Or are you talking about Atmos a whole entity?

Yes, the 80% was Atmos as a whole entity, if you will. And again, as I said in my comments, we believe the majority of that increase is reflected through APT's investment. Again, going back to the growth that we mentioned in the call, I continue to mention quarter- over-quarter, that's showing up and requires system investment inspect -- expansion as well as new supply points, expansion of storage, all those sort of investments on APT side to support the LDCs behind the system.

Got it. I guess just a follow-up on that point. It seems like looking at the change in guidance on Slide 13. Most of the increase is coming from the distribution segment. So is the -- should we think of the increase from the tax benefit at APT or distribution?

When you say the tax benefit, Chris, which benefit are you referring to?

Oh, sorry, the legislation benefit, HB4384.

Yes. I think right now, it's roughly the way the -- we're forecasting our fourth quarter assets placed in the service. It's probably 2/3 distribution, 1/3 APT for the fourth quarter.

And our next question comes from the line of Nick Campanella with Barclays.

This is Fei for today. I just had a quick clarification on the $0.10. So it sounds like we should annualize that. Just Wondering how should we think about that lumping that into the 6% to 8% annual CAGR going to long term?

Yes. It may be a little bit too simple to [indiscernible] just take 10 multiple by 4 because what's predicated on how the -- when the deferral start is when assets are placed into service. So we have to think about what for each 1 of our projects, both in distribution and APT or the time or closings, if you will, placing those assets into service vis-a-vis when they will be all be reflected in the rates. So as we talked about, we're still modeling impact going forward, which is why we are -- we have a full update on FY '26 as well for 1-year plan and the 5-year plan when we roll that update that in November.

Understood. That's helpful. And maybe just a follow-up based off a stronger or more robust operating cash flow. I guess how does that affect your thoughts on financing the future growth, and do you see any possibility to moderate external equity needs? I mean understood you're mostly secured for '25, '26. But just wondering how should we think about that?

Yes, Fei, we'll continue to finance the corporation or operating cash flow needs in a balanced fashion using blended mix of equity and long-term debt. And again, what you see the increase in the operating cash flow, that was something we had anticipated in developing the 5-year plan. And when we established the financing targets in that 5-year plan a year ago, that was contemplated.

[Operator Instructions] There are no further questions. So I will now turn the call back over to Dan Meziere for closing remarks. Dan?

We appreciate your interest in Atmos Energy, and thank you again for joining us this morning. A recording of this call is available for replay on our website. Have a good day.