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Edited Transcript of ATO earnings conference call or presentation 8-Aug-19 2:00pm GMT

Q3 2019 Atmos Energy Corp Earnings Call

DALLAS Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Atmos Energy Corp earnings conference call or presentation Thursday, August 8, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher T. Forsythe

Atmos Energy Corporation - Senior VP & CFO

* Jennifer P. Hills

Atmos Energy Corporation - VP of IR

* John Kevin Akers

Atmos Energy Corporation - EVP of Safety & Enterprise Services

* Michael E. Haefner

Atmos Energy Corporation - President, CEO & Director

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Conference Call Participants

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* Christopher James Turnure

JP Morgan Chase & Co, Research Division - Analyst

* Dennis Paul Coleman

BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD

* Ryan Michael Levine

Citigroup Inc, Research Division - Equity Analyst

* Stephen Calder Byrd

Morgan Stanley, Research Division - MD and Head of North American Research for the Power & Utilities and Clean Energy

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Presentation

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Operator [1]

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Greetings, and welcome to the Atmos Energy third quarter earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Jennifer Hills, Vice President of Investor Relations. Thank you. You may begin.

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Jennifer P. Hills, Atmos Energy Corporation - VP of IR [2]

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Thank you, Diego. Good morning, everyone. This is Jennifer Hills, Vice President, Investor Relations, and thank you for joining us. This morning, I'm joined by Mike Haefner, President and CEO; Kevin Akers, Executive Vice President; Chris Forsythe, Senior Vice President and CFO; and Kim Cocklin, Executive Chairman. This call is being webcast live on the Internet, and our earnings release and conference call slide presentation are available on our website at atmosenergy.com, under Our Company and Investor Relations.

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 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 27 and are more fully described in our SEC filings.

Our first speaker is Mike Haefner, President and CEO of Atmos Energy. Mike?

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [3]

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Thank you, Jennifer, and good morning, everyone. And happy birthday, Jennifer. In Investor Relations, nothing says happy birthday more than hosting an earnings call. So congratulations.

Yesterday, we reported our fiscal 2019 third quarter results, and I'm pleased to report that we're on track to meet our fiscal 2019 earnings per share guidance of $4.25 to $4.35 and increase earnings per share for the 17th consecutive year. Capital spending increased 10% during the first 9 months of the fiscal year, which demonstrates our commitment to modernizing our system. Approximately, 87% of this spending is focused on safety and reliability investments as we continue to execute our risk-based capital spending program to modernize our distribution and transmission systems.

Through June 30, 2019, we completed to $2.1 billion of financing, which has supported our fiscal 2019 capital spending, further strengthened our balance sheet, lowered the cost of financing for our customers and leaves us very well-positioned to maintain our credit ratings for the long term.

We continue to invest in technology, our people and processes to achieve operating excellence and scale our capabilities to sustain our safety-driven strategies. With the team we have in place, we're extremely well-positioned for continued success into the future.

Yesterday, we announced that I'll step down from my role as President and Chief Executive Officer effective September 30 to focus on my health. I'll remain with the company to the end of the calendar year to support the transition, and I'll retire from the company and plan to step down from the Board effective January 1 of 2020. Also announced yesterday is that Kevin Akers, currently Executive Vice President, has been appointed by the Board to succeed me as President and CEO and become a member of the Board effective October 1 of this year. Kim Cocklin will continue as Executive Chairman. This was a very difficult decision for me, but it's the right decision for the company, for me and for my family. I've been facing a recent health issue that to this point has alluded a definitive diagnosis. I'm extremely optimistic this will resolve itself favorably in the long run, however, it's requiring an increasing amount of my time and it necessitates me pulling back on my commitments.

This decision was made much, much easier for me by the fact that Kevin Akers is ready to assume the role of President and Chief Executive Officer. Kevin is a proven leader with broad company and industry experience, the majority of the nearly 29 years with the company has been in senior leadership position. He has deep operating experience, having previously served for over 9 years as President of our Kentucky/Mid-States Division, 5 years as President of our Mississippi Division, and more recently, took on responsibility for the company's pipeline and storage operations.

For the past several years, Kevin also oversaw our pipeline safety, supply chain and customer service functions. And he's been instrumental in driving the process improvement and technology initiatives that have enabled the company to scale its operations to sustain our success. Many of you already know Kevin from our Analyst Day the past 2 years as well as the AGA Financial Forum and other investor conferences this year. Kevin is surrounded by a very seasoned senior leadership team. Chris and the rest of our management committee will continue in their current roles. They worked closely together for many, many years and even prior to being on the management committee. Not only are they respected colleagues, but they're also friends. And Kevin has the full support of our 4,700 employees.

One of our Board's most important responsibilities is succession planning, and they've done that masterfully over our 36 years as an independent public company. This succession plan has been in place for several years. And just as with prior transitions from our founder, Charles Vaughan, to Bob Best, to Kim Cocklin, to me, the transition to Kevin will be completely seamless. As I mentioned earlier, Kim will continue in the role of Executive Chairman. I'll be forever grateful to him as a great leader, as a mentor and a friend. His continued involvement in the company as Chairman as well as adviser to Kevin and the rest of the management committee will provide further assurance of the company's continued success.

And lastly, before I turn the call over to Chris for the financial update, I'd like to thank the investors and analysts I've had the distinct pleasure to get to know over the past 4 years. Your support in investment and time and capital has been so critical for the success of our safety investment strategy. Your insights and challenging questions, it made us a better company and it made me a better leader.

I'd also like to thank our 4,700 employees for their continued outstanding efforts to improve every day to deliver safe, reliable, affordable and exceptional natural gas service to the 3.3 million customers we serve in over 1,400 communities in our 8-state footprint. They come to work every single day focused on safety while providing excellent customer service and executing our capital spending program focused on modernizing our system. It's been my greatest honor to serve alongside them for the past 11 years. They are the reason that Atmos Energy will continue to be successful for the long term.

Chris, over to you.

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [4]

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Thank you, Mike, and good morning, everyone. Yesterday, we reported 2019 third quarter net income of $80 million or $0.68 per diluted share compared with $71 million or $0.64 per diluted share in the prior year third quarter. Year-to-date, net income was $453 million or $3.88 per diluted share compared with $564 million or $5.09 per diluted share in the prior year period. Fiscal 2018 year-to-date result included $166 million or $1.49 per diluted share nonrecurring income tax benefit from tax reform. Excluding the tax benefit, adjusted net income was $398 million or $3.60 per diluted share. Our third quarter results were in line with our expectations. It made the drivers' underlying outperformance during the first half of the year continuing into the third quarter.

Slides 5 and 6 provide details for our quarter and year-to-date results. I will touch a few of the highlights. In our distribution segment, operating income increased $14.4 million to $48.7 million in the third quarter as the modest increase in contribution margin was offset by our higher operating expenses. Contribution margin increased to $1 million quarter-over-quarter. We experienced a $7 million increase from new rates and a nearly $3 million increase from customer growth. In the 12 months ended June 30, 2019, we added a net 35,000 customers, which represents 1.1% net customer growth. We are on track to exceed 1% net customer growth for the third consecutive year.

These increases were offset by a $4 million decrease in customer consumption primarily due to warmer weather in the third quarter compared to prior year. As a reminder, most of our weather normalization mechanisms end in April, so our contribution margin was not covered for most of the quarter.

Operating expenses rose approximately 6% quarter-over-quarter, reflecting higher depreciation expense associated with increased capital spending and planned 10% increase in O&M expense. As we discussed last quarter, we increased service-led headcount in our Mid-Tex Division to support the growth in our DFW market. Additionally, we experienced a 7% quarter-over-quarter increase in line locates as many of our communities in which we operate continue to experience strong growth.

We continue to roll out new leak survey technology into our operations. This technology is 1,000 times more expensive than traditional leak survey technology. Therefore, we are finding more potential leak indications. We strive to meet, to hire and attract the people to evaluate and assess these indications. While the deployment of this technology will increase O&M expense in the near term, it plays an important role in our ability to identify and mitigate risk. For example, during the quarter, we already used this technology in several of our jurisdictions that were hit by heavy storms to assess if there's been super damage.

The performance in our pipeline and storage segment substantially offset the operating income decrease in our distribution segment. Operating income increased $12 million, driven by strong growth in contribution margin, partially offset by higher operating expenses. Contribution margin increased $22 million as a result of APT's GRIP filings in 2018 and 2019, combined with the $4.5 million quarter-over-quarter rise in APT's through-system revenue as a result of the ongoing supply-and-demand dynamics set in the Permian Basin.

The activity we experienced in the quarter was higher than anticipated due to 2 unexpected force majeure events on other pipelines, which drove higher-than-expected volumes into our system. However, as a new purchased pipeline comes online starting late this summer, we expect the Waha and Katy spread to narrow. Offsetting the growth in contribution margin was a $10 million increase in operating expenses as a result of higher depreciation related to increased capital expenditures in a planned recent pipeline integrity work.

Year-to-date consolidated capital spending was 10% -- or increased 10% to $1.2 billion, which is in line with our plan. We continue to focus our spending and improving the safety and reliability of our spending -- of our system -- or reliability of our systems spending with 87% focused on safety and reliability. Based on work completed year-to-date and planned spending for the remainder of the fiscal year, we continue to expect our fiscal 2019 capital spending to be between $1.65 billion and $1.75 billion.

From a regulatory perspective, to date, we have completed 21 filings. We should add approximately $110 million of annualized operating income over fiscal 2019 and fiscal 2020. And we have 6 filings pending about -- seeking about $87 million in an annualized operating income. We are on track to complete several of these filings during the fourth quarter with rates taking effect in the first quarter of fiscal 2020. Assuming these proceedings are resolved in line with our expectations, we remain on track to meet our target of completing $160 million to $180 million in annualized operating outcomes.

Our balance sheet continues to remain strong and supports our capital spending program. As of June 30, equity to total capitalization was 60%, and we had approximately $2 billion we're putting under our credit facilities into equity forward agreements.

Slide 9 summarizes our fiscal 2019 financing activities. Year-to-date, we have completed $2.1 billion of financing, including the issuance of $1.1 billion in long-term debt and $1 billion of equity. During the quarter, we continue to utilize forward agreements under our ATM to help meet our fiscal 2020 needs. We issued 1.1 million shares at an average price of $101.11. Additionally, we settled the forward agreements with 1.1 million shares with net proceeds of approximately $100 million. As of June 30, we had about $410 million remaining under our forward agreements. Details of our equity forward activities could also be found on Slide 9.

As Mike mentioned in his opening remarks, we are well-positioned to meet our fiscal 2019 earnings guidance range of $4.25 to $4.35 per diluted share. However, given the higher-than-expected Permian Basin activity we saw during third quarter, we now expect to be at the higher end of this range. Slides 12 and 13 provide selected information underlying our fiscal 2019 guidance. And we are well-positioned to meet our 5-year annual EPS growth target of 6% to 8% through fiscal 2023. We'll be rolling forward our 5-year plan through fiscal 2024 on our fiscal year-end earnings call in November.

Thank you for your time this morning. I will now turn the call over to Kevin for some closing remarks.

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John Kevin Akers, Atmos Energy Corporation - EVP of Safety & Enterprise Services [5]

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Thank you, Chris, and good morning, everyone. Mike, thank you for those kind remarks. We are deeply indebted to you for your leadership, your vision and unwavering dedication and support for Atmos Energy and every one of our 4,700 employees. I'm very excited about the future of Atmos Energy, and I look forward to continuing the execution of the successful strategy that Kim and Mike have put in place as we maintain our focus on our vision of being the nation's safest provider of natural gas services.

A key to achieving that vision is to continue the evolution and refinement of our strategy by making investments in safety and reliability while modernizing our business to sustain our company for the long term. This straight-forward focused improvement strategy benefits all stakeholders as we strive to safely provide excellent customer service in an environmentally responsible manner.

As we've discussed before, increasing our spending 9% to 10% per year through fiscal 2023 requires that we also invest in our people and technology. I'm proud to report that during the third quarter, we crossed over the 1 million hour mark for total cumulative hours of training provided our state-of-the-art Charles K. Vaughan Center, which opened in 2010. This training is essential for our employees to become highly qualified gas professionals.

We continue to roll out our Locus Map digital asset data collection solution through the first 9 months of this fiscal year. We've had approximately 35% of our company and contract construction crews trained on using this important technology. And we continue to systematically roll out our advanced mobile leak detection technology that will enhance our ability to take the operator system, as Chris mentioned earlier.

Implementing a safety management system is another strategic focus. While we have had components of a safety management system, including procedures, policies and practices for many years, the safety management systems formalizes what we are doing and is an integral part supporting our vision of being the safest provider of natural gas services. We've completed our pipeline safety management system assessment and plan to have our high-level road map developed for addressing gas later this fall. These are just a few of the examples of how our investments in training and technology position us for sustained success in the future.

In closing, I would like to thank our 4,700 employees, their dedication to safely operating our system while providing excellent customer service and giving back to the communities where they work and live. That is the biggest reasons Atmos Energy will be successful for the long term.

We appreciate your time this morning, and now we'll take any questions you may have.

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Jennifer P. Hills, Atmos Energy Corporation - VP of IR [6]

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Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Christopher Turnure with JPMorgan.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [2]

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I'm very sorry to hear the news, Mike. Best wishes to you and your family.

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [3]

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Thank you, Chris.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [4]

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As we look forward to fourth quarter earnings and potentially an Analyst Day again this year, how can we think about the outlook for beyond the current plan kind of 2024 and beyond anything potentially changing there, especially given the acceleration of CapEx that we saw out of you guys last year?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [5]

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Yes. Chris, this is Chris Forsythe. Our intent this fall was to not have an Analyst Day, but we'll have an extended fiscal year-end earnings call. We will cover off the remainder of fiscal '19 and then really focus on where we're going to be going into fiscal 2020. And really, the story and the strategy remains the same. As we've talked about with you and others on the call, we have a long backlog of work to do, if you will, and just a lot of work to get down in terms of pipe replacement. So we will be just rolling it forward another year. You'll expect to see just an increase in line with the increase in the capital spending that you've seen from us over the last several years. Financing strategies can be pretty consistent with what you've seen as well. We'll update and freshen those numbers on that call. But I think the key takeaway today is that the strategy is the same and will just be a roll-forward of what we've demonstrated through 2023 at this point.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [6]

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Okay. And Chris, that kind of all sounds great, obviously. And do you feel like there's no customer bill pressures or even kind of balance sheet constraints despite the strength of your balance sheet right now that would come into play in that time frame that would perhaps slow the rate base growth trend?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [7]

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We're not seeing anything from a customer bill perspective. You can go back to our charts that we've shown. And our bill is by far the lowest bill in the household from a utility perspective. And you know the strength of our balance sheet, and we're committed to maintain the strength of that balance sheet going forward.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [8]

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Okay. Great. And then my second question is around near-term financing. As you mentioned in the remarks and I think the Q as well, you priced around 1 million shares this quarter and then you also pulled down around 1 million shares as well from, I guess, one of the earlier ATMs. So given your prior commentary on not -- I think it was not meeting any more equity this year from the ATM programs, was there something that changed there or caused you to tap that equity during the quarter?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [9]

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No. No. I think what we were indicating is that we were -- yes, and we didn't have any discrete equity needs. In our last quarter call, we said we had no discrete equity issuances planned through the end of fiscal 2020. We did have the proceeds available to us just on the forward arrangements, which, as you know, expire. Some of the -- most of the proceeds right now expire at the end of March. That's about a little over $100 million expiring at the end of September. So we're needing to utilize these proceeds, so we'd intended all along to draw it down on those proceeds as capital needs arise or our cash needs arise in that period. So all of that again is baked into our fiscal '19 guidance. It's baked into our 5-year plan, the $5.40 to $5.80. And as we look forward, we stated -- in the current 5-year plan, we have published a $5 billion to $6 billion incremental financing need. And we intend to finance that in a balanced fashion, using both long-term debt and equity. So again, we'll -- that strategy is going to look very similar when we roll that forward in November. But again, the financing that we did in the third quarter is not to satisfy FY '19 equity needs. It will satisfy our FY 2020 needs and beyond.

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Operator [10]

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Our next question comes from Dennis Coleman with Bank of America.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [11]

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And let me add my thoughts, Mike. Never news that anyone likes to get, so certainly, best wishes as you pursue your health. And thoughts with your family as well. And that aside...

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [12]

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Thank you so much, Dennis. I certainly will miss all the opportunities we've -- and the talk in the past. And I'll miss seeing all you guys in the future. But again, as I mentioned in my comments, I'm very optimistic that if I gear down a gear or 2, I'll have the opportunity to find a good solution for this.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [13]

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Great. I hope that's the case. Congratulations also to you, Kevin. Best of luck with the new role and responsibilities. Big shoes to fill, but great company to work with.

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John Kevin Akers, Atmos Energy Corporation - EVP of Safety & Enterprise Services [14]

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Absolutely. Thank you.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [15]

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So a question -- a couple of questions for me. I guess first, on the expense side, expenses did run up certainly a little more than we thought. Can you just talk about sort of, I guess, the roll-forward on the expense side? Some of it seems a bit transient, but any help you can give there, Chris, would certainly be appreciated.

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [16]

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Yes. Sure, Dennis. I mean like I mentioned in the prepared remarks, it's really a continuation of what we've been experiencing and what we've been trying to accomplish from a risk-based perspective and what we talked about in the second quarter rolling into the third quarter. So that was continuing to roll out the AMLD technology that Kevin commented on. We are -- because it's new to us the indications that came in just require a little bit more assessment. A lot of work is going in. But over time, we expect that as we gain proficiency that, that should come back in the line with the 2.5% to 3.5% guideline that we established for the 5-year plan last fall.

Additionally, we talked about low-pressure assessments and when you get an opportunity with increases in margins, we're always looking to take risk off the table from an O&M perspective. So we've been increasing our, I guess, risk-based O&M works. That's in-line inspection. That's right-away maintenance. That's low-pressure system assessments, anything we can do to reduce risk in the current period that will benefit for future periods. So that's the type of work that you're seeing in the O&M line item, and we'll just continue to manage that going forward as needs arise and as opportunities arise as well.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [17]

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Okay. Okay. And then, I guess, on the leak detection technology, obviously, a fair amount said there. I guess -- I thought I heard you say you've rolled it out to additional markets. I think last quarter, it was just mostly Texas-based. But can you talk about -- has it -- have you rolled it out in all markets now?

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John Kevin Akers, Atmos Energy Corporation - EVP of Safety & Enterprise Services [18]

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Not in -- this is Kevin. Not in all of our markets. We currently have 11 units here. We rolled additional one out here with plans the next fiscal year to roll some additional units out to our West Texas area. We have an existing unit in Louisiana and one in Mississippi as well. So that was the market that we're talking about there.

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Operator [19]

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Our next question comes from Ryan Levine with Citi.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [20]

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I wanted to also echo some of the previous comments. Mike, sorry hear about this development, but best of luck to you and your family.

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [21]

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Thanks, Ryan.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [22]

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And then I guess in that lies a question. Can you just speak to the transition process and if it's sort of sudden? And what are the steps over the next few quarters as Kevin takes the CEO seat?

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [23]

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Sure. This is Mike, Ryan. And this is a -- as I mentioned in my comments, this succession plan has been in place for quite a while. And even prior to that, the way we operate, I've worked very closely with Kevin, and our entire leadership team works very closely together. Over the last 2.5 years, our management committee meets for half a day and then informally, several days a week. So we're completely in lockstep. And Kevin and I work side-by-side in all of the initiatives that he's been driving for scale and scope. So in a nutshell, the transition is going to be extremely smooth and uneventful internally since we've been working so closely together all along, as was mentioned. And he and I are working more closely now.

But as I mentioned earlier, he'll assume the President and CEO position on October 1. I will be still around and available to him and meet with him on a regular basis through the end of the calendar year. And also as I mentioned, Kim will continue as Executive Chairman, and he's always been tremendously helpful to all of us as an adviser.

So I know it's not similar to many other companies. But at Atmos, everybody's in the same -- we're in the same bullpen and dugout every single day of the week. So it's a -- and the strategy, as Chris said, is not going to change. It's a matter of scaling, sustaining our success and just executing well, taking care of our employees in the process, making sure they've development opportunities, the training they need, we remain in compliance. And all of the things that we've talked about regularly, Kevin's had the responsibility for it for the last couple of years, obviously executed by our division leadership and shared services leadership, but he's got a firm hand on the tiller right now. So it will be a non-event.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [24]

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Okay. And then the couple more specific questions. In terms of the O&M cost inflation. Over what period of time do you think there will be some type of elevated level as the more sensitive sensors detect additional opportunity for an improvement?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [25]

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Ryan, I think we're already seeing some improvements in the productivity of the crews. And I would just say that we're going to the back in line with the 2.5% to 3.5% O&M -- our target O&M increase over the 5-year plan through 2023, and then we'll roll that forward in November through 2024.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [26]

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Okay. And what was the impact of the Waha basis differentials to your business this past quarter? I think you disclosed some numbers in the previous quarters, so I'm curious what the update is.

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [27]

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Yes. The impact quarter-over-quarter is about $4.5 million.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [28]

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In income?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [29]

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In the third quarter. Quarter-over-quarter in revenue. And it's the contribution margin, which is effectively revenue for us. So...

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Operator [30]

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(Operator Instructions) Our next question comes from Stephen Byrd with Morgan Stanley.

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Stephen Calder Byrd, Morgan Stanley, Research Division - MD and Head of North American Research for the Power & Utilities and Clean Energy [31]

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Mike, I just want to say you'll be dearly missed. You're a great executive and a great person. You're just great to interact with. So we'll all rooting for to address this health issue successfully, and we really wish you and your family all the best. I can't thank you enough for all your help over the years, and you will be missed.

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Michael E. Haefner, Atmos Energy Corporation - President, CEO & Director [32]

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Well, thank you so much for everything you've done as well, Stephen. Appreciate it.

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Stephen Calder Byrd, Morgan Stanley, Research Division - MD and Head of North American Research for the Power & Utilities and Clean Energy [33]

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And Kevin, look forward to working with you in your new role.

Most of my questions have been addressed. I thought I'd just check really on the financing plan. I think your financing plan is very clear. But just given the -- just the very low interest rate environment that we're in, I just thought I'd double-check in terms of just additional opportunistic ways to kind of lock in lower cost of debt over a long period of time. I think your average duration is already pretty long at 22 years. But I just thought I'd check if there is just anything else that might be possible?

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Christopher T. Forsythe, Atmos Energy Corporation - Senior VP & CFO [34]

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Yes. That's a good question, Stephen. That's something that we're evaluating right now. We're mindful of where the markets have gone certainly here in the last weeks or so. You've pointed out our average duration is about 22 years. But all-in average, our weighted average cost of debt right now is 4.55% after we effectuated the 2 debt offerings that we've done in this fiscal year. So as we look forward, we're certainly evaluating opportunities to further drive the overall cost of debt down, but nothing specific that I can comment at this point.

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Operator [35]

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Thank you. There are no further questions at this time. I'll turn it back to Jennifer Hills for closing remarks. Thanks.

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Jennifer P. Hills, Atmos Energy Corporation - VP of IR [36]

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Great. Thank you for joining us today. As a reminder, a recording of this call is available for replay on our website through November 6, 2019. We appreciate your interest in Atmos Energy, and thank you for joining us. Goodbye.

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Operator [37]

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Thank you. This concludes the conference. All parties may disconnect. Have a great day.