Thank you for joining us and welcome to Atmos Energy Corporation's Fiscal 2026 Fourth Quarter Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Jennifer Wernicki, Director of Investor Relations and Assistant Treasurer. Please go ahead.

Thank you, Al. Good morning, everyone, and thank you for joining us. 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 atmisenergy.com under the Investor Relations tab. As we review our 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 39 and are more fully described in our SEC filing. I will now turn the call over to Kevin.

Thank you, Jennifer, and good morning, everyone. You heard a new voice to introduce the call today. Jennifer is our Director of Investor Relations and Assistant Treasurer. Recently, Dan Meziere, Vice President, Investor Relations and Treasurer, announced that he will retire in early 2027 after a 25-year career with the company. Richard Thomas, Vice President, Financial Services, has assumed responsibility for our Treasury and Investor Relations activities effective October 1st, and he is joining us on the call today as well. As next Wednesday is Veterans Day, I would like to take this opportunity to thank those who have served in our armed forces and those currently serving. Approximately 300 of our Atlas Energy teammates are a part of the 17 million Americans who bravely served our country. Thank you all for your service. Yesterday, we reported a living earnings per share of $8.49. This marks the 24th consecutive year of earnings per share growth. Fiscal 2026 also represents the 42nd consecutive year of dividend growth. Our fiscal year results reflect the focus and dedication of the entire Atmos Energy team and their continued successful execution of our proven strategy of investing in our natural gas distribution, transmission, and storage systems to safely provide reliable natural gas service to our growing service territory. Their exceptional work has us well positioned for fiscal 27 and beyond. During fiscal 2026, we continue to see steady, diversified customer growth, adding approximately 49,000 residential customers with over 37,000 of those new customers located here in Texas. We also added nearly 3,200 commercial customers and 17 industrial or large load customers during fiscal 2026. When these industrial customers are fully operational, they are anticipated to consume approximately 2 BCF of gas annually. Over the last five years, we've added over 300,000 residential and commercial customers and added 190 industrial or large load customers with an estimated annual load of 54 BCF when fully operational. On a volumetric basis, that is equivalent to adding nearly 1 million residential customers. These large load customers are diversified across several industries including aluminum, steel, EV battery manufacturing, food processing, and power generation. This continued demand from all customer classes demonstrates the value and vital role natural gas plays in economic development across our Atmos Energy Service territory. According to the Texas Workforce Commission for the 12 months ending September 30, The seasonally adjusted number of employed Texans reached 14.5 million. Texas again added jobs at a faster rate than the nation over the last 12 months, growing at a rate of 1.1%. And Texas was recently ranked the best state for business for the 22nd year in a row by Chief Executive Magazine based on their annual survey. Finally, according to recently issued 2025 U.S. Census Bureau information, The Dallas-Fort Worth Metroplex has been the fastest growing major metro area in America since 2020. The Texas population now stands at approximately 32 million people and projections estimate the DFW Metroplex will become the third largest major metropolitan area within a decade. APT continues to prepare for this anticipated growth by enhancing the safety, reliability, versatility, and supply diversification of its system. In fiscal 2026, APT completed nine interconnect projects, adding almost 1.4 BCF of additional natural gas supply to the APT system. These investments further enhance APT's ability to serve the LDC customers behind its city gates. During our fiscal fourth quarter, APT continued work on several projects to enhance system reliability and capacity across its footprint. They completed the installation of 29 miles of 36-inch pipeline to connect two adjacent compressor stations to the Tri-City Storage Facility, construction of a bilateral compressor station in Carthage, Texas, east of the DFW Metroplex that will increase the capacity of our 36-inch line S2. In completion of the final phase of the WA Loop project on the western side of the DFW Metroplex, that will install 15 miles of 36 inch pipe and complete a 36 inch pipeline loop. All of these projects are scheduled to be in service by the end of the calendar year. Additionally, planned integrity work on Cavern 1 at APT's Bethel Salt Dome Storage Facility is expected to be completed in early 2027 and placed in service by the end of calendar 2027. Finally, APT's annual Rider Rev Tariff was filed and approved. As of November 1st, customers will receive $165 million in revenue credit over the 12 months ending October 31st, 2027. With the approval of this filing, customers will have received nearly $317 million in savings through the Rider Rev mechanism from November 2023 through October 2027. Turning to our updated five-year plan through fiscal 2031, while always being mindful of customer affordability, timely recovery of our investments, and maintaining a strong balance sheet, safety and reliability continue to be the focus as we execute on our system modernization strategy. Our robust five-year planning process has identified the need to invest nearly $29 billion with approximately 88% of that plan investment allocated to safety, and reliability. This investment will support the continued modernization of our natural gas distribution, transmission and storage systems and support the growing natural gas demand across our service territory. Approximately $23 billion or 80% of our total planned capital spending is expected to be incurred here in Texas. We believe that successful execution of our strategy will support earnings per share growth at six to eight percent from the midpoint of our fiscal 2027 EPS guidance and we intend to grow the dividend in line with earnings per share growth. I'll now turn the call over to Chris who will provide some additional color on fiscal 2026 and the FY2027 five-year plan. I'll return later with some closing comments. Chris.

Thank you, Kevin, and good morning everyone. We appreciate you joining us this morning. Before getting into some of the details of our FY27 five-year plan, I want to share a few highlights from FY26. As Kevin mentioned, FY26 earnings per share was $8.49. Included in this amount was $175 million in pre-tax deferrals under Rule 77-102. Approximately $100 million is recognized in our distribution business, and the remaining $75 million is recognized as APT. Year-over-year deferrals under Rule 77-102 increased by $149 million. Consolidated capital spending increased 17% to $4.2 billion in line with our expectations. 85% of this spending was dedicated to improving the safety and reliability of our system. This spending increased rate-based by 15% to an estimated $25 billion as of September 30, 2026. With this capital spending, we replaced nearly 1,100 miles of distribution and transmission pipe and over 59,000 service lines. Consolidated O&M was $875 million, which was in line with fiscal 25. Increases in compliance and safety related spending in our distribution segment, maintenance spending of APT, administrative and employee costs were offset by Rule 77-102 deferrals. We had another busy regulatory calendar in fiscal 26, with the implementation of $395 million in annualized operating income increases during the fiscal year. Finally, we completed $2.4 billion in long-term financing. We finished the fiscal year with an equity capitalization of 60% and approximately $3.8 billion of available liquidity, which leaves us well positioned to support our future operations. Included in this amount is $871 million in forward equity proceeds priced through our ATM, This amount satisfies over half of our anticipated fiscal 27 equity needs. Looking forward, we have initiated our fiscal 27 earnings per share guidance in the range of $9.05 to $9.25. And with anticipated 6% to 8% annual earnings per share growth from the midpoint of this guidance range, we anticipate earnings per share in fiscal 2031 to be in the range of $12.35 to $12.55. Additionally, this week, Atmos Energy's board directors approved a 172nd consecutive quarterly cash dividend with an indicated fiscal 27 annual dividend of $4.36, a 9% increase over fiscal 26. This is the 43rd consecutive year of dividend per share growth. We plan to grow our dividend in line with earnings per share growth over the five-year plan. We are anticipating approximately $29 billion of capital spending in the five-year plan, with over 85% of that spending allocated to safety and reliability spending. Capital spending is expected to grow 11% to 13% per year. Approximately $23 billion is currently allocated to Texas. Of this amount, approximately $16 billion is planned in our Texas distribution divisions. Approximately $7 billion is planned in APT as it continues to focus on gas supply reliability and supply diversification while fortifying its system to support the growth of its LDC customers. We believe this level of spending will support rate-based growth of about 12% to 14% per year. By the end of fiscal 21, 2031, we anticipate rate-based increase from approximately $25 billion as of September 30th to approximately $46 billion. Additionally, we are anticipating approximately $700 million in federal and state income tax payments in the five-year plan. Approximately $500 million of this amount relates to the corporate alternative minimum tax which we will begin paying in fiscal 2027. From a revenue perspective, we have assumed normal weather, market conditions, and modest customer growth in both our segments and our five-year plan. Additionally, as expected, spreads and APTs through system business return to more historical norms during our fiscal fourth quarter. We have planned for those market conditions to continue into fiscal 2027. We will also continue to execute our normal regulatory strategy of implementing approximately 20 rate filings per year. We anticipate that over 98% of these planned outcomes in the five-year plan are expected to be achieved through these annual filing mechanisms. Our five-year plans assume we will maintain our existing ROEs, capital structure, and regulatory features. We have not included in the plan the approval of any new regulatory mechanisms or regulatory asset treatment for incurred costs. Since the beginning of fiscal 2027, we have implemented $264 million in annualized operating income increases in our distribution segment. Of this amount, $255 million relates to the implementation for annual rate review mechanisms throughout Texas distribution operations. Additionally, we have assumed 4% annual O&M inflation due to my compliance-based activities that address system safety, system monitoring, and Damage Prevention. As well, we are factoring in increases for employee-related costs. For fiscal 27, we anticipate O&M excluding bad debt expense to range from $870 million to $890 million. Finally, this five-year plan includes approximately $17 billion in incremental long-term financing to support our operations and cash needs. As a reminder, this incremental financing is included in our earnings share guidance for fiscal 2027 through fiscal 2031. We will continue to use a combination of long-term debt and equity to preserve the strength of our balance sheet and minimize the cost of financing for our customers and overall financing risk. Our current weighted average cost of debt is 4.38% and our weighted average maturity is currently 15.4 years. We believe our current maturity profile continues to be very manageable. And we continue to anticipate meeting all of our equity needs through our ATM program. We ended fiscal 26 with about $430 million remaining under existing ATM program. We intend to file for a new $1.7 billion ATM program with the SEC in early fiscal 2027. Thank you for your time this morning. I'll turn the call back over to Devin for some closing remarks.

Thank you, Chris. Our operation on financial performance in fiscal 2026 continues to position as well for sustained success. Our five-year plan reflects our continued commitment to meeting the safety, Reliability and economic development expectations of our customers, communities, regulators, and other key stakeholders across our service territory. The fundamental strengths of Atmos Energy remain the same and will continue to differentiate us. Those being, we operate in diversified and growing communities that are supportive of our natural gas and our investment in natural gas infrastructure to supply their growing economy and energy needs. that 96% of our rate base is situated in six of our eight states that have passed customer choice or all fuels legislation. We operate in regulatory jurisdictions that supports reliability, versatility, abundance, and affordability of natural gas and the modernization of our natural gas distribution, transmission, and storage systems to provide safe and reliable delivery. They have a track record of consistent financial performance that reflects discipline execution of our operating, regulatory, and financial plans. This discipline has supported 24 consecutive years of earnings per share growth and 42 consecutive years of dividend growth. We maintain a strong balance sheet with significant liquidity and significant financial flexibility. The strength of our balance sheet will continue to support a long-term investment. That our residential customers average monthly natural gas bill is again expected to remain the lowest utility bill in the home. Finally, our 5,500 employees proudly serve our customers and communities every day. Their dedication continues to be guided by the enduring values established by our founding chairman, Charles K. Vaughn, of honesty, integrity, and good moral character. Those differentiators will continue to support the vital role we play in every community to safely deliver reliable, affordable, and efficient natural gas to homes, businesses, and industries to fuel our energy needs now and any future. We appreciate your time this morning. We'll now open the call for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Konstantin Lednev with Wells Fargo. Your line is now open. Please go ahead. Hi.

Good morning, team. Congrats on the quarter.

Thank you. Good morning.

maybe just starting off on the new capex plan and associated financing just the proportional increases lower on the incremental capex optically is there anything specific that's driving driving the funding needs lower and is it fair to assume that the plan still maintains the conservative equity capitalization throughout yeah so concentrating on really the the

The capital plan is reflective of the needs of the system, and it's effectively a roll forward of the planning process that we go through every year. And then from there, once we've identified what those capital needs, again, $29 billion over the next five years, we solve for the financing needs, keeping the consideration, the strength of our balance sheet, i.e. our equity capitalization layer. We're very comfortable with it being around 60%. We found that has been very Thank you for joining us today.

Our robust planning processes we talked about in our opening comments reflect the needs of the system. Every year we go through a 1-3-5 tenure and outlook at our system based on population trends, growth, demand across the system, new load coming in. It's backed up by internal engineering analysis, operational subject matter expert support, and then validated by a third party outside engineering expert. to take a look to verify our assumptions for the system and what the system needs on a go-forward basis. Additionally, we do the same thing on the gas supply side of the business as well. So all of this planning, whether it's capital or it's O&M, is on a system need, system demand basis for that period of time that we're looking at.

Thanks for that and maybe just to clarify a fine point just you mentioned kind of the ATM is the preferred kind of funding method for the equity side is there a point at which you kind of scaled beyond that would you look at other options like hybrids just especially as you know we're in a tighter capital markets environment versus probably last year and a couple years before?

Yeah good question Constantine and our treasury team is looking at all the options every day, every month as we think about financing this plan. The ATM has been very effective for us, very cost effective. It's given us a lot of flexibility. And that's why you see us using that ATM to get as far ahead of pricing our future pricing equity needs to have that certainty in place. It certainly helps us from a planning perspective, but we will continue to evaluate that. The options we feel that are the most economic for our customers and for the company continue to be the current strategy of using the ATM complemented with the issuance of long-term debt throughout the year.

Okay, perfect. And just a quick regulatory backdrop question. Obviously, a lot of changes in Texas RRC. Obviously, a lot of data center focus in government. But do you see any shifts that would change your regulatory strategy, either from a timing or affordability standpoint?

Well, Constantine, the short answer is no. Look, Atmos Energy has been around for 43 years, and we've had the privilege of working over that period with various groups, Republicans, Democrats, independents at the city level, the county level, state level, federal level. it doesn't change our mission our vision to be the safest provider of natural gas services it doesn't change the construct we have with our communities to deliver safe and reliable natural gas service to to them or to help and support in economic development so we'll continue as we we do every year year in and year out sometimes on a monthly basis continue to meet with our key stakeholders and help help them understand what we do Why we do it, why we're important to the community, and why natural gas is an important component of an overall energy portfolio.

Excellent. No, appreciate that. Really, thanks for the question.

Thanks for the time.

Thank you. Thank you.

Your next question comes from the line of Julian Dumoulin-Smith with Jefferies. Your line is now open. Please go ahead.

Hey guys, it's actually Luke Fanker on for Julian. Hey, nicely done on the corner. Just wanted to ask really quickly on, you know, how 27 drivers percolate to 28. I mean, clearly FY27 benefits from, you know, Mid-Tex and West Texas going to effect on October 1st. I know it's early, but like, how should we think about, you know, the cadence for 28? Could you see year over year growth maybe a bit lower as that step up lapsed? or does, you know, filing and your capital deployment keep you in that range?

Okay, good questions, Luke. I mean, again, as we talked about just a few minutes ago, we're guiding six to eight percent off the midpoint of the range. And as I also mentioned that the regulatory recovery process, nearly 98 percent of what we anticipate that recovering through regulatory mechanisms is coming through annual filing mechanisms. And we currently don't see the annual filing mechanism cadence calendar, if you will, changing at this point in time. And so that's what the plan is called for. So when you think about the increase in capital from 26 into 2027, the financing or O&M, all that gets factored into what we anticipate those annual filing mechanisms will look like. We model that through the five-year plan and we assume execution on the same timeline year in and year out. Again, with the existing regulatory features, if you will, that we have, you know, rate of return, capital structure, existing deferral mechanisms and that type of thing. So that's why we have confidence in the five-year plan of executing in that 6% to 8% range through 2031.

Got it. Okay, thank you. And then maybe just on Waha, you know, you've talked about Waha spreads tightening as new takeaway comes online. How much more tightening are you assuming in your forecast? I mean, should we think about APT growth like tightening further as spreads kind of narrow a bit, but just getting a sense check on how things have been?

Well, let's reset what APT is. Again, APT exists to serve the LDC customers behind its base, and we just talked about the population growth and trending here in Texas and those LDCs that are behind APT. The way we think about it and we continue to think about it and have communicated on almost all of our calls is that we look at the benchmark. That's what we said every year when we set the budgetary plan out there. We don't have a crystal ball to project where we think the spreads are going or pricing is going. We do know that a lot of this is going to be seasonally based, so I think you take a Wait and see and watch approach right now is how the weather's going to start. Is it going to have a cool start to the year? Is it going to have a warmer start to the year? And then see where we go from there. As we begin this heating season coming up, as you've probably seen in various companies' reports, storage is nearly full or almost full at this point of the year. Pricing appears to be in a good point. So again, I think you look to the benchmark for us, and then we'll watch and see where pricing goes from there. and what we can do with storage as we move throughout the EDC.

Yeah, and Luke, I'll just remind you too, again, under APT's regulatory construct, as Kevin described, 85 to 90% of APT's revenues come through a fixed delivery charge that it charges to its 11 LDC customers. So you're now looking at 10 to 15%, which is outside of that regulatory construct, and over half of that is associated with contracts that we've already had in place that are fixed in nature. So you're only talking about a relatively small portion of AT's revenue streams that come from this free system business which is a daily business and as Kevin said there's a number of factors that are out there so that's why we guide back to the benchmark at the end of the day we certainly had some positive tailwinds this last year as a result of the spread dynamic that we've been talking about that going forward as you alluded to with the three system capacity coming on flying from other pipelines in the vicinity. We anticipate those market conditions to be more in line with historical norm.

Yeah, and Luke, I'll just close that out with ABT and our team there review the maximum daily quantities on an annual basis post-winter every year for each of the LDCs that are behind the system to make sure the usage is in line with the contractual demands that are out there and reset if we need to for those LDCs.

Got it. Okay. Yeah, that's all very helpful. If I could just squeeze one tiny one on O&M, right? I mean, great to see that it's essentially flat year over year into 27. Is that a new run rate that maybe you can carry forward? Or is that maybe a few things that line up to get 27 before costs go back to like that 4% range? I'm just asking if it's structural, or maybe just, you know, this is a one-off.

Now it's more reflective of the 77-102 deferrals that we've been talking about the entire fiscal year. And as I said, we're guiding off of the FY26 levels at a 4% annual increase in this five-year plan.

And I'll add to that, again, as we've talked about on several calls, with growth, with system expansion, particularly here in Texas, if you drive around Texas much, you can see all the new infrastructure that's going in from highways and roads and bridges and other utilities being installed as well. That comes with a portion of O&M cost, if you will. And what I mean by that is line locating services, system monitoring services, those sort of things as well are associated with growth itself at the end of the day. We continue to monitor that, look for opportunities to balance those contracts that are provided by outside services, or what of those things we can bring in-house or spread across our system as well. So we look at that on an annual basis.

Awesome. I'll leave it there. Thanks so much, guys. Nice to be on again.

Thank you. Thank you.

Your next question comes from the line of Richard Sunderland with Truist Securities. Your line is now open. Please go ahead.

Hey, good morning. Can you hear me?

Yeah, good morning.

Great. Thank you for the time. I will start on another kind of 2027 and beyond consideration. The Texas deferrals baked into 27, is that essentially flat to the 175 million pre-tax you called out for 26? I know you've talked in the past about 26 is the full step up, but just thinking about, I guess, budget assumptions versus how the work may actually play out, what are you baking into 27 and how might that actually trend over the course of the year? Thank you.

Okay, yeah, Richie, thanks. Thanks for the question. Yeah, so again, the deferrals, and it's not just the 77102 deferrals. Remember, we have deferrals under AFUDC. We have deferrals under Rule 8209 in Texas, as well as in Tennessee and Louisiana's mechanisms. So we talked about an 11 to 13% capital increase per year over this five year plan. The deferrals or the capital expenditures that qualify those referrals will grow in line. It won't be exactly 11 to 13% because not all of our capital spending are subject to those qualifying deferrals. But that would be a reasonable guide to think about that on an all-in total basis. That's AFEDC, Rule 8209, Rule 77102 as well as the deferrals that we have in Tennessee and Louisiana.

Okay understood so just just to make sure I'm following there's a there's I guess an inflationary elements of the deferral benefit over time as your capex grows but you know in terms of contribution to growth this year over last or I should say on 27 versus 26 you know there there's no sort of outsized you know wave or headwind that you're making into that guidance.

No, no, it's more back to that steady run rate that you saw prior to fiscal 2026 and really the implementation 77. Perfect. We're not going to see $149 million year-over-year increase again.

No, that's helpful, caller. And then just a clarification, your slide disclosures talk about 90% or I guess greater than 90% of annual capex. begins recoveries within six months from the end of a test year. I think that was 95% in your deck a year ago. Is that reflective of any shift in capital composition or other kind of notable plan changes this go-around versus last year? Just curious about the change in that 90% versus 95%.

Yeah, the 95% to 90% shift occurred following the completion of the Mississippi general right case in November about so about a year ago now. So they shifted from a forward look to a historical look in that last regulatory decision. We have challenged that decision with the Mississippi State Supreme Court and we are awaiting the court's ruling on that.

Got it. Very, very helpful. And then I don't know if Dan's on, but if he is, thanks for all the help over the years and best of luck in retirement.

Thank you.

Your next question comes from the line of Dylan Lipner with Mizuo. Your line is now open. Please go ahead.

Hey, congrats on a good quarter, guys. Just kind of want to keep piggybacking off of Richard right there. I also noticed that annual rate-based growth rate kind of dropped from 13%, 15% to 12% to 14%. I want to see what's driving that lower growth, despite a more capital spend going through 2027 through the rest of the plan.

Again, it's as we talked about with the first question on today's call, it's all based off a system need. What we go through our rigorous process again of planning, outside consulting, internal review, where we see population trending, analysis, performance of the system, demand, all those figure in to the needs of the system. And then those projects are laid out over a one, three and five year period as part of that planning process. It's all needs driven on the system. And again, we don't have any back to company projects in there. These are all small projects in nature. The largest we'll have is on APT probably in the 40 to 60 mile range. We don't do 400 to 600 mile type projects. These are all of the nature we can phase in over time. We can execute on in a reasonable time frame to meet the demands and expectations of our customers in our community.

Gotcha, understood. And then second one here. So a bunch of peers in Texas cited inbound interest tied to LNG, CNG, and other large load ops. Are you guys seeing similar inquiries across Atmos? And, you know, what does the pipeline look for large customers right now as we stand going into 27?

As we talked about at the top of my remarks there, we continue to get industrial inquiries across our system, not only in Texas, not only on APT system, but MidTech in Kentucky, Tennessee, Virginia. and Mississippi as well. We get industrial inquiries of the nature that I talked about there. And we continue to have a backlog of projects of several dozen. I won't get into the specifics because we don't talk about those until the contracts are signed and we're ready to start delivery. But we'll have a backlog of projects, economic development projects, individual projects of various types and sizes of interest on our system that we're evaluating from from LOAD perspective, from location perspective, those sort of things. So we continue to have a good interest across the system on large load customer inquiry.

Great. And should we just expect a more maybe fulsome update through 2027 as most of those discussions kind of come more to advancements and contractual obligations?

Yeah, just like we do each quarter, I'll give you an update on growth across the system, which will include industrial or large load customers there as well. And if we have anything of significance where the contract is signed and we're ready to communicate about that, the load is of a short-term nature in starting, we'll certainly update this group or on our calls.

All right, great. I appreciate it, guys. Have a good one.

Thank you.

There are no further questions at this time. I will now turn the call back to Jennifer Wernicki for closing remarks.

We appreciate your interest in Atmos Energy and thank you for joining us. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.