Greetings, and welcome to the ATO Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dan Meziere, Vice President of Investor Relations and Treasurer. Please go ahead, sir.

Thank you, Maria. Good morning, everyone, and thank you for joining us today. With me this morning 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. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of non-GAAP measures to the closest GAAP financial measure. 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 29, and are more fully described in our SEC filings. With that, I will turn the call over to our President and CEO, Kevin Akers.

Thank you, Dan, and good morning, everyone. Before I turn the call over to Chris, I wanted to comment on the NTSB preliminary report issued Monday regarding a worksite accident that occurred in Farmersville, Texas, on June 28. I want to begin by thanking the first responders and emergency responders for their support and assistance. As indicated in the report, parties to the investigation include the Railroad Commission of Texas, the Pipeline and Hazardous Materials Safety Administration, Collin County, and the City of Farmersville Law Enforcement, Bobcat Contracting, Fesco, and Atmos Energy. All parties to the investigation are working closely with the NTSB to help determine causal factors at this time. As a party to the investigation, we cannot provide any additional comments on this matter, and we're not going to comment on any pending litigation. Finally, and most importantly, I want to say that our hearts, our thoughts, and our prayers have been and will continue to be with those that were injured and the families of the deceased. I will now turn the call over to Chris, and rejoin you shortly for some closing comments.

Thank you, Kevin, and good morning, everybody. Last night, we reported fiscal 2021 third quarter net income of $102 million or $0.78 per diluted share, compared to adjusted earnings of $97 million or $0.39 per diluted share in the prior year quarter. Year-to-date, earnings were $617 million or $4.77 per diluted share, compared with adjusted earnings of $515 million or $4.20 per diluted share in the prior year period. Adjusted earnings in both prior year periods excluded $21 million or $0.17 non-cash income tax benefit recognized in the third quarter of fiscal 2020 due to the enactment of new tax legislation in Kansas. Our third quarter and year-to-date performance reflects the continued execution of our strategy and was in line with our expectations outlined in our last quarterly call. Additionally, our results for the nine months ended June 30 continue to reflect the impact of refunding excess deferred tax liabilities to our customers. As a reminder, last quarter, we received authorization to refund excess deferred tax liabilities to APT's customers and distribution customers in Tennessee over a three-year period. During the third quarter, and in July, we received authorization to begin refunding excess deferred tax liabilities to distribution customers in Louisiana, Virginia, and for certain of our customers in our West Texas division over a three-year period. The refund of excess deferred taxes is recognized as a reduction in revenue and a reduction to income tax expense. However, there is a timing difference between the recognition of the income tax benefit, which is recognized in our annual effective tax rate when the regulatory orders are approved, and the corresponding reduction in revenue which is recognized over time as it is billed to customers. This timing difference resulted in a $0.06 benefit during the nine months ended June 30. We anticipate that most of this timing difference will reverse during the fourth quarter. Taking a closer look at the performance, consolidated operating income increased about 13% to $814 million during the nine months ending June 30. Slides four and five summarize the key performance drivers for each of our operating segments. Rate increases in both our operating segments totaled $170 million. Customer growth in our Distribution segment contributed an incremental $15 million as we are continuing to benefit from strong population growth in virtually all of our service territories. New customer connections increased 1.68% over the last 12 months, and net customer growth over the same period was 1.82%. Sales volumes for commercial customers continue to trend in a favorable direction. Third quarter sales volumes increased 25% over the prior year quarter and were consistent with what we experienced before the pandemic. Year-over-year, commercial sales volumes were 6% higher. We experienced an $8.5 million decline in service order revenues in our Distribution segment primarily due to the temporary suspension of collection activities and waiver of our customer service fees for disconnections and reconnections. Additionally, our bad debt expense has increased about $22 million year-over-year. We focused on keeping our customers connected to our system by offering more flexible payment arrangements and helping our customers find financial assistance to help with their bills. During the third quarter, we resumed collection activities, focusing first on the largest past-due balances, which are typically the oldest. Additionally, we continue to remain in close contact with our regulators about our customer outreach efforts. And we believe this bad debt expense will be recovered over time. Consolidated O&M expense excluding bad debt increased $8 million year-over-year and $22 million quarter-over-quarter as we increased pipeline maintenance activities in each of our segments and in-line inspection work at APT. Additionally, we experienced a 12.5% quarter-over-quarter increase in line locate requests as a result of increased economic activity and the effects of our third-party damage prevention efforts. The O&M spending we experienced during the third quarter was in line with our expectations we outlined during the second quarter call and is expected to continue into the fourth quarter. Consolidated capital spending decreased 3% to $1.36 billion, with 80% of our spending directed towards safety and reliability to modernize our system. The slight year-over-year decrease primarily reflects the timing of spending in our distribution segment. We remain on track to spend $2 billion to $2.2 billion in capital expenditures this fiscal year to modernize our distribution and transmission network to further enhance its safety and reliability while reducing methane emissions. From a regulatory perspective, we've completed all the filings that will impact fiscal 2021. We are now focused on filings that will impact fiscal '22. To date, we've completed $186 million in annualized regulatory outcomes. As a reminder, many of these regulatory outcomes reflect the lower revenues due to the refund of excess deferred tax liabilities. However, this amount does not include the corresponding reduction in income tax expense. We currently have about $53 million in progress, most of which is expected to be implemented during the first quarter of fiscal 2022. Slides 13 through 28 provide additional details. From a financing perspective, the third quarter was relatively quiet. During the quarter, we executed forward sales arrangements under our ATM program for approximately 1 million shares for $100 million. As of June 30, we had approximately $213 million in net proceeds available under existing forward sales agreements. We have now priced all of our fiscal 2021 equity needs as well as a portion of our fiscal 2022 equity needs. As we said before, using our ATM equity sales program is our preferred method to meet our planned equity needs. During the third quarter, we issued a new $5 million self-registration statement and a new $1 billion ATM equity sales program. The new shelf and ATM program positions us well to meet our future financing needs while maintaining the strength of our balance sheet. Securitization is also another tool that will help preserve the strength of our balance sheet. On June 16, Governor Abbott signed HB 1520 Texas Statewide Securitization Program to address the extraordinary gas costs incurred by natural gas utilities during the winter storm. Last week, we filed our application to participate in the program seeking to recover $2 billion. We are currently awaiting a formal procedure schedule from the Texas Railroad Commission. We are also making progress with our securitization application in Kansas, anticipating making a filing before the end of the fiscal year. As of June 30, our equity capitalization was 60.2% excluding the $2.2 billion of storm-related financing issued during the second quarter. We finished the quarter with approximately $3.2 billion of liquidity. Details of our financing activities and our financial profile can be found in slides seven through 10. Yesterday, we reaffirmed our fiscal 2021 earnings per share guidance in the range of $4.90 to $5.10 per diluted share. Based on our third quarter performance and what we were anticipating for the fourth quarter, we continue to believe earnings per share will be at the upper end of this range. We anticipate the fourth quarter activities will mirror what we experienced during the third quarter with sales volumes consistent with seasonal norms and O&M spending that we will continue to focus on system maintenance and compliance. Slides 11 through 12 provide additional details around our guidance. Thank you for your time today. And I'll now turn the call over to Kevin for his closing remarks.

Thank you, Chris. I appreciate that financial update for everybody. Over the last year, we have highlighted the progress we are making in the five key areas of our environmental strategy, which is focused on reducing our carbon footprint and environmental impact in areas of gas supply operations, fleet facilities, and customers. One element of the strategy has been to evaluate opportunities to expand the amount of RNG re-transport across our system to help customers reduce their carbon emissions. During the third quarter, our largest RNG suppliers announced plans to expand and modernize their facilities beginning in early calendar 2022. Once completed, their RNG production is expected to grow by approximately one BCF a year. Additionally, an RNG location here in the Dallas Fort Worth area recently indicated they will soon have the ability to add approximately one BCF a year in RNG transport to our system. So currently, we have almost seven BCF of RNG on our system, and once these new projects are fully online, we anticipate this to increase to approximately nine BCF or 3% of our distribution sales volumes. I am extremely proud of our gas supply and marketing teams for their continued effort and work to grow opportunities for Atmos Energy customers to utilize RNG. In support of our environmental strategy, we recently joined the Low Carbon Resource Initiative in June. This initiative currently has over 45 member companies participating in their five-year initiative to bring industry stakeholders together to accelerate the development and demonstration of low and zero carbon energy technologies through clean energy research and development. We're proud to be a sponsor of the Low Carbon Research Initiative and have worked to identify cost-effective, reliable, and diverse solutions on the path to a clean energy future. Alongside our goal of reducing methane emissions by 50% from 2017 to 2035, our demonstrated investment in technologies like renewable natural gas and combined heat and power supporting the low carbon research initiative further reinforces our commitment to the environment through a global platform of collaboration and innovation. As you just heard, the continued successful execution of our strategy and our strong balance sheet position have us well positioned to continue safely delivering reliable, affordable, efficient, and abundant natural gas to homes, businesses, and industries to fuel our energy needs now and in the future. We'll take this closing opportunity to thank all 4,700 Atmos Energy employees for their exceptional dedication and commitment, providing safe and reliable natural gas service to 1,400 communities and 3.2 million customers. Their efforts continue to be recognized by our customers with an outstanding satisfaction rating for our agents, as well as our service technicians in excess of 98% job well done. I will now turn the call back over to Dan and open it up for questions.

At this time, we will be conducting a question-and-answer session. Our first question is from Insoo Kim with Goldman Sachs. Please proceed with your question.

Thank you. My first question, maybe for Chris, just on the financials, great year-to-date results, the upper end of guidance you reiterated, I think that's great. I think when we think about the timing of the asset refunds, that'll get screwed up in the fourth quarter, even excluding that, it seems like the way that your run rate is, you could potentially have a result in 2021 that's better than that high end. Just trying to think about as you prepare for 2022, are there certain things like O&M into 2021 or other items that you're doing to increase the flexibility as you try to achieve another good year in 2022?

Yes. So, Insoo, so really 2022, we're still working through that right now. So, I'm not really going to comment on that today, but we'll update everybody on that come November. But again, what we're trying to accomplish right now for 2021 is to focus on the system maintenance, some of which we were able to safely defer over the last first six months of the fiscal year, as you waited to see what our customer counts are going to do in commercial sales volumes and so on and so forth. So, really the focus right now is to kind of get back to a more normalized O&M run rate. As we see now, that's the pandemic at least at this moment isn't impacting our top line revenues in a material way and remain focused on that, system maintenance that's in the inline inspection work. Again, we're also seeing a lot of economic activity, which is driving the line locates. And as I mentioned, we had a 12.5% quarter-over-quarter increase. We're up 10% year-over-year. So it's a busy time right now, certainly here in the Dallas Fort Worth area and our focus will be to continue executing on the strategy as we get to the end of the fiscal year.

Got it. That makes sense. Definitely appreciate all the fluidity here as we continue to move through this crazy environment. Second question for Kevin, you mentioned on the growth in the flow through of our junior system. We were just talking with another company where Minnesota passed legislation that could potentially give the gas utilities a way to increase investment in RNG while getting some type of regulated rate of return. Although I think there's still some negotiations that need to be had on exactly that process. I think our conversations in the past pointed to in your jurisdictions; you continue to have conversations with the various stakeholders on advancing something like that. Are there any updates or any progress that you've made on that front for your states?

It's pretty much the same story. Insoo, I appreciate the question. We continue to talk to all key stakeholders about these opportunities. As you've seen here, we talked about the increases that we just recently observed on our system. We continue to share with them the opportunities we're seeing out there. And we continue to work with our legislators and regulators in Colorado as they're probably the closest to most on putting legislation on the books right now. So I think for us, this fits nicely into our overall environmental strategy and the focus areas that we'll have. We'll keep an eye on these projects as they come to fruition. We'll certainly share those with our regulators and legislators and keep them abreast of the opportunities, but for now that has been our focus and making sure we get those opportunities available to customers across our system.

Understood. That's all I had. Thank you so much.

Thank you.

Our next question is with Ryan Levine with Citi. Please proceed with your question.

Good morning. I was hoping that you'd be able to speak to if you're seeing any disruptions in your suppliers around high density polyethylene and how that may impact your business?

Ryan, short answer is no. At this point, our procurement team does an exceptional job of working with multiple suppliers and vendors, as well as our operations units to make sure we stay ahead of projects. That's part of our risk management profiles to lay these projects out in front early. So we know what our materials needs are going to be. And then our procurement team goes to work in laying those out, having them stay so we can have access to that material when it's needed. We also try to keep a significant amount of supply on hand and ready as well. So I think at this point, we're in really good shape. I just checked with our procurement. It's a timely question, checked with our procurement team last week, and I feel like we are in pretty good shape. I know there are some issues around the semiconductor and technology side across the world right now, but we are not seeing any constraints or issues on our supply.

If the disruption in the industry were to persist, is there a point in time when it could be more impactful for your outlook?

I'm not going to speculate, Ryan, on what could be out there. As I said, we're not seeing or having any supply issues on any material at this point. So we continue to be in really good shape. And as far as an IT perspective, our team there said they have all the equipment that they need at this point, and we're in good shape going forward.

Okay. Appreciate it. Thanks for taking my questions.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back over to Dan Meziere for closing remarks.

Thank you. We appreciate your interest in Atmos Energy. And thank you again for joining us. Recording of this call will be available for replay on our website through September 30, 2021. Have a good day.