Atmos Energy Corp

NYSE:ATO

Earnings Call Transcript 2021-Q1

[Operator]

Greetings. And welcome to the Atmos Energy’s First 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. [Operator Instructions]

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.

[Dan Meziere, Vice President, Investor Relations and Treasurer]

Thank you, Bob. Good morning, everyone, and thank you for joining us this morning. 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 25 and are more fully described in our SEC filings.

Our first speaker today is Chris Forsythe, Senior Vice President and CFO of Atmos Energy. Chris?

[Chris Forsythe, Senior Vice President and CFO]

Thank you, Dan, and good morning, everyone. We appreciate you joining us and your interest in Atmos Energy. We’re off to a solid start to the fiscal year. Yesterday we reported fiscal 2021 first quarter net income of $218 million or $1.71 per diluted share. Our first quarter performance largely reflects positive rate count outcomes driven by system modernization spending, customer growth in our distribution segment and lower O&M spending largely due to the timing of such spending in both of our segments.

Consolidated operating income increased by 18% to $299 million in the first quarter. Slide four summarizes the key performance drivers for each of our operating segments. Rate outcomes provide an incremental $15 million in operating income.

Customer growth in our distribution segment contributed an incremental $6 million, as we continue to benefit from strong population growth in some of our service areas, most notably in North -- in our North Texas Distribution business.

For the 12 months ended December 31st, we experienced 1.7% net customer growth in our North Texas Distribution business and 1.4% net growth across our 8-state footprint. The ongoing effects of the pandemic reduce consolidated operating income by approximately $9 million this quarter, primarily in our distribution segments. Quarter-over-quarter operating income fell approximately $2.5 million due to global commercial demand attributable to the effects of the pandemic on the economy.

Additionally, we experienced a $4.5 million decline in service order revenues, primarily due to the temporary suspension of collection activities. And bad debt expense increased about $2 million quarter-over-quarter.

Consolidated O&M expense excluding bad debt decreased $16 million. During the quarter, we deferred non-compliance spending into late in the fiscal year as we evaluated our customer load. O&M in our r distribution segment was about $8 million lower than the prior year, reflecting lower employee, travel and training costs.

O&M in our pipeline and storage segment was approximately $8 million lower than prior year, primarily due to non-recurring low integrity costs incurred in the prior year combined with O&M management during the first quarter of this year.

Consolidated capital spending decreased approximately 14% to $457 million, but 87% of our spending directed towards safety and reliability spending to modernize our system. This decrease largely reflects the timing of product spending in our distribution segment.

We remain on track to spend between $2 billion and $2.2 billion in capital expenditures this fiscal year with more than 80% of spending focused on modernizing our distribution and transmission network, while reducing methane emissions.

We continue to execute a well-established regulatory strategy focused on annual filing mechanisms, which mitigate the incremental impact of customer bills while reducing lag. To-date, we have implemented $110 million in annualized regulatory outcomes, and currently, we have about $32 million in progress. Slides 18 to 24 summarize these outcomes and slide 17 outlines our planned fillings for the remainder of the fiscal year.

During the first quarter, we completed over $700 million of long-term financing. We remain focused on balancing the need to finance our capital expenditure program in a cost effective manner with maintaining the strength of a balance sheet.

Following the completion of our $600 million 10-year note issuance in October, we reduced our weighted average cost of debt to 3.99% and achieve the weighted average maturity of approximately 19 years.

We also executed forward sales arrangements under our ATM for approximately 1.2 million shares for $122 million. And we settled forward arrangements on 2.1 million shares for approximately $216 million in net proceeds during the quarter.

As of December 31st, we have approximately $247 million net proceeds available under existing forward sales agreements that we will utilize by the end of the fiscal year. We have now priced a substantial portion of our fiscal 2021 equity needs and anticipate satisfying our remaining fiscal ‘21 activities through our ATM program.

As a result of this financing activity, our equity capitalization was 58.5% as of December 31st, and we finished the quarter with approximately $2.9 billion liquidity under our credit facilities equity forward agreements.

The strength of our balance sheet and our five-year plan continues to be recognized by the credit rating agencies. During the first quarter, Moody’s and S&P maintain their ratings with the stable outlook. Details of our financing activities and our financial profile can be found on slide six through nine.

So to summarize, our first quarter performance, our financing activities and regular -- regulatory activities were in line with our expectations. As we continue to the winter heating season, we continue to remain cautious given the unpredictable nature of that pandemic. However, with yesterday’s reaffirmation, we remain confident in our fiscal 2021 earnings per share guidance of $4.90 to $5.10.

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

[Kevin Akers, President and CEO]

Thank you, Chris. As you can see, from our first quarter results, we are off to a good start. We remain focused on executing our proven investment strategy of operating safely and reliably, while we modernize our natural gas distribution, transmission and storage systems.

We are continuing our investments in people, processes and technologies that will enable Atmos Energy to scale and efficiently and safely invest $11 billion to $12 billion over the next five years.

Working to achieve our vision to be the safest provider of natural gas services, we provide safety messaging to our customers and our communities, innovate and advance employee training, and invest in the modernization of our system.

Over the last 10 years we’ve invested more than $11 billion company-wide to modernize our pipeline infrastructure. Over 80% of which was allocated to safety and over the next five years we anticipate spending $11 billion to $12 billion as we replace approximately 5,000 miles to 6,000 miles of our distribution and transmission pipe, including the replacement of the remaining cast iron [ph] by the end of 2021.

To build upon our continuous improvement efforts, in 2016, we started the process of implementing a pipeline safety management system following the American Petroleum Institute 2015 publication of the voluntary recommended practice. This voluntary measure encourages continuous improvement by reviewing practices, policies and procedures, as we learn from our experiences and from those of others in the industry.

This quarter the National Transportation Safety Board held a public meeting on January 12th, related to the incident that occurred at Dallas, Texas residents in February 2018. The field and gas investigation and lab reports confirmed that unrecorded third-party excavation damage on mechanical equipment caused a major crack and leak. We are currently reviewing the complete findings and recommendations released after the meeting and expect to receive the final report soon.

Because third-party damage remains one of the greatest threats to natural gas distribution systems, we have been and will continue to be a champion for damage prevention, through such efforts as auditing our third-party line locating services, to empowering our employees to proactively stop by excavation sites, to provide damage prevention materials and ensure to corporate on notification. We have seen our third-party damage rate continue to outperform the industry average.

We continue to undertake numerous safety and other continuous improvement actions, such as updating our leak survey and leak investigation procedures to include mandatory 911 notification when a probable or existing hazardous condition is discovered if first responders are not already on site.

As I’ve discussed before, we’ve enhanced our technical training program to provide a virtual format coupled with hands on experience for our employees. In this virtual training environment, we have been able to reduce class sizes and duration to improve the training experience all without sacrificing quality. These are only a few of the improvements that Atmos Energy has been making towards achieving our vision to be the safest provider of natural gas services.

You may recall on our FY 2020 fourth quarter earnings call, we announced five focus areas in our environmental strategy all designed to reduce our carbon footprint in combination with our pipe replacement efforts. These five focus areas our gas supply, operations, fleet, facilities and customers. I also discuss the progress made in minimizing our carbon footprint, as well as our water and land impact at some of our offices and service centers.

Today I want to highlight another focus area for you, gas supply. We are working to increase the amount of RNG that we have on our system to help customers reduce their carbon emissions. Annually, we move nearly 5.5 BCF of RNG across our system, which represents approximately 2% of our distribution sales volumes. We are currently assessing over 20 RNG opportunities adjacent to our system in several states for additional supplies.

During the first quarter, we initiated a project in Colorado with a dairy to connect RNG from their facility to our system. Although, it’s too soon to commit to how much RNG we can ultimately transport across our system, please know we will be working with regulators and all stakeholders to help develop the framework for commercially viable RNG solutions to support our customers and improve the environment.

Finally, during the first quarter, we continued to enhance our sustainability reporting, as we published our third Corporate Responsibility and Sustainability report, as well as our Methane Emissions report. Both of these can be found in the Corporate Responsibility section of our website.

These reports paired with our Corporate Responsibility section of our website, allow us to tell our story and keep stakeholders informed about what we are doing to support the communities where we live and work.

As you can see from the highlighted continuous improvement efforts, we remain focused on the long-term sustainability of Atmos Energy and the foundation of that long-term sustainability is the 4,700 men and women who are dedicated to safely operating our system, providing exceptional customer service and giving back to the communities where we live and work every day. They are successfully executing a proven strategy that is focused on modernizing our system to safely deliver reliable and affordable natural gas in an environmentally responsible manner.

The long-term fundamentals of this strategy remain the same. They’re supported by the fact that we operate in constructive jurisdictions for several of our markets continue to have strong long-term growth potential, most notably the DFW Metroplex, which is the fourth largest metropolitan area in the country. Additionally, these jurisdictions recognize the value that natural gas provides to their economies in an environmentally responsible manner.

The successful execution of our strategy, the strength of our balance sheet and our strong liquidity leaves us well-positioned to continue to safely deliver reliable, affordable, efficient and abundant natural gas to homes, businesses and industries to fuel our industry need -- energy needs now and in the future.

I appreciate your time this morning and thank you for your interest in Atmos Energy. And we’ll take any questions that you may have and I’ll turn it back over to the Operator.

[Operator]

Thank you, sir. [Operator Instructions] Our first question today is from Jeremy Tonet of JPMorgan. Please proceed with your question.

[Jeremy Tonet, JPMorgan]

Hi. Good morning.

[Chris Forsythe, Senior Vice President and CFO]

Good morning, Jeremy.

[Kevin Akers, President and CEO]

Hey. Good morning, Jeremy.

[Jeremy Tonet, JPMorgan]

Thanks for taking my questions. Just want to start off, there was a lot of concerns in the market, obviously, last March when COVID hit and this was the first heating season where you guys get to see the full impact there. I am just wondering if you could expand a bit on, can you speak to the COVID impacts on the quarter versus your expectations and are you seeing impacts kind of consistent going forward into 2021 with your expectations overall?

[Chris Forsythe, Senior Vice President and CFO]

Sure, Jeremy. I’ll start here and Kevin feel free to jump in as well. As I mentioned earlier, we had about a $9 million quarter-over-quarter impact that we’ve attributed to COVID between commercial load loss, the decline in service order revenues and a little bit of bad debt expense.

On the commercial load loss, that is certainly well within the planning scenarios that we had developed over the summer and into the fall as we established our earnings per share guidance. So from that perspective, we’re pleased to see that that the commercial load loss is in line with those expectations.

We’ll continue to monitor that as we moved through the second quarter. We got a still another two months or three months left in our winter heating season, which by the end of winter heating season, we’ll have about 70% of our distribution revenues booked for the fiscal year and we’ll have some more clarity around what the impact of the margin line item will be.

Same thing with the service order revenues, a lot will be contingent upon when we resumed full collection activities and we’re working with our regulators on that keeping you abreast of what we’re doing there and but, again, that is completely in line with our expectation.

[Kevin Akers, President and CEO]

Yeah. Jeremy, the only thing I’ll add to that, as you’ve heard us say many times before, our team, our risk management compliance team, our operations team, our shared service group, continue to adhere and follow to our practices and protocols are in place, again, allowing us to continue to execute at the highest level on all fronts.

Even though we’ve seen an increase in some parts of our territory in a number of cases, we are glad to see the vaccine start to be rolling out across our service territory as well. But we believe with those practices, protocols and things we’ve been able to have in place over the last few months w will continue to execute on a go-forward basis at a very high level.

[Jeremy Tonet, JPMorgan]

That’s very helpful. Thanks. And maybe just kind of turning over to O&M, given the O&M tailwinds you have realized already. What are the main drivers and timing of your expected O&M growth over the course of the year?

[Chris Forsythe, Senior Vice President and CFO]

Yeah. So in the O&M, as we talked about last quarter, we’ve assumed kind of a full O&M budget, if you will, our full compliance program. So our strategy going into the first quarter was to defer some spending that we didn’t need to do in the first quarter to kind of see how the new customer load loss was materializing. In fact, we’ve got a better handle on that now. And as you saw in some of the details around the guidance, we’re still reaffirming the O&M range that we initially put out last fall.

So, again, a lot of that will be focused on compliance activities, as well as other activities designed to mitigate risk. As you heard, Kevin talked about, third-party damage, we’ll continue to step up our efforts in that particular area, as well as just other system maintenance activities that are not necessarily compliance oriented, but we certainly want to be performing to maintain the system the way that we like to maintain it.

You’ve heard us talk before, we certainly assume in our O&M plan, not just what we need to meet compliance purposes just to meet just in time, but we’re also keeping an eye towards what our requirements are further down the line later in a fiscal year or into next year, so that we are well ahead of those compliance requirements so that we can meet those dead time -- deadlines without having to wait to the last minute.

[Jeremy Tonet, JPMorgan]

Got it. That’s helpful. Thanks. And you touched on this a bit in your commentary, but I was hoping you could expand a bit more, it seems for the -- in the marketplace for the LDC space as a whole, there’s some concern with regards to new laws that could impact, new gas hookups, effectively banning that. Just wondering, I guess, how you guys see that risk for you in your service territories and how I guess it compares for Atmos versus other LDC peers and difference that you see there?

[Kevin Akers, President and CEO]

Yeah. Jeremy, I’ll start with that. As again, as I’ve said, we have very constructive rate jurisdictions and we continue to see growth, as Chris talked about across our service territory. We haven’t seen any bans, whether they’re on hookups or usage or those sort of things across our service territory.

We stay in close contact through our stakeholder engagement strategy, our local public affairs and operating teams with our jurist -- city jurisdictions or state legislators as well. The -- keeping them informed of what value natural gas brings, what Atmos Energy is doing in their communities.

So we stay in touch with them to keep them up to-date on an ongoing basis and haven’t really seen any even come up at the legislative level or through discussions regarding gas bans or clients hookups at this point.

[Jeremy Tonet, JPMorgan]

Got it. And I think we might have seen some legislation and some states that were -- at the state level that would ban or stop these types of bans. Have you guys seen anything like that in your service stories or have any expectations for that?

[Kevin Akers, President and CEO]

Yeah. We’re working with associations and peer companies in all of our jurisdictions to keep an eye on bills that are being filed at the state level. These are called all fuels bills, if you will, you may recall that last year, there was one approved in Tennessee and one approved in Louisiana and we’re very encouraged by those bills.

I think it highlights the value that natural gas continues to bring and the value of customer choice and choosing an affordable energy opportunity across our footprint. So we’re aware of those. We’re working with different associations. We’re working with our peer companies as well to make sure that their customers have that choice of fuel going forward.

[Jeremy Tonet, JPMorgan]

Got it. I’ll stop there. Thank you very much.

[Kevin Akers, President and CEO]

Thank you, Jeremy.

[Operator]

The next question is from Richie Ciciarelli of Bank of America. Please proceed with your question.

[Richie Ciciarelli, Bank of America]

Hey. Good morning.

[Chris Forsythe, Senior Vice President and CFO]

Good morning, Richie.

[Kevin Akers, President and CEO]

Good morning.

[Richie Ciciarelli, Bank of America]

Hey. Thanks for taking my question. Just on the customer growth side, so obviously pretty impressive this quarter. Just can you provide any more color on what you’re seeing from the customer classes and more on the residential side with new customer hookups? And how is that kind of progressed into fiscal 2Q, thus far with, potentially more immigration into the State of Texas there?

[Chris Forsythe, Senior Vice President and CFO]

Yeah. I’ll start and Kevin, you can certainly help out as well. Yeah. As I said, we’ve got 1.4% across the 8-state footprint, 1.7% here in North Texas and a lot of that is new residential growth. And it’s a trend that we started what we’ve really been seeing now for quite some time, but it’s continued throughout this pandemic.

I think the stories are reading. You see more and more folks that are interested and maybe moving into the suburbs, looking for either a first home or getting a different type of home as they’re accommodating their work-from-home protocols and strategies. So that’s what’s driving a lot of growth.

Certainly here in the North Texas area, we continue to see robust economic -- underlying economic activity in terms of companies evaluating the Dallas Fort Worth market and in terms of relocating in this area, and we continue to see how we come to Dallas there. There are cranes and construction everywhere.

So I think we’re still seeing that underlying activity and a lot of that’s being driven by the residential class and that’s consistent to across our footprint and really in our first quarter, the number of hookups that we had from a residential perspective was one among the highest that we’ve seen in a number of years and we are grateful to see that not only in North Texas, but across most of our service territory.

[Kevin Akers, President and CEO]

Yeah. Chris, I just quickly add to that. In addition in some of our other states, Mississippi, Kentucky, we’re seeing industrial expansion as well, which is a good sign in this economy, as well as new industrial customers coming into those locations as well. So we see it, as Chris said, with residential commercial starting move in the Metroplex, but again, good opportunity on the industrial side and our other footprint as well.

[Richie Ciciarelli, Bank of America]

Got it. That’s very helpful. And then just on your equity needs, obviously, you mentioned you price a good portion of forward and then the remaining is through the ATM this year. But just as you think about kind of your long-term plan, keeping that cap structure towards the 60% level given you can an actual cap structure in Texas. I mean and just given where your multiple is, could you look at other forms, whether it’s portfolio optimization to kind of recycled capital or creating a whole cost structure. Just curious how you guys are thinking about that, just given where your multiple is today?

[Chris Forsythe, Senior Vice President and CFO]

Sure. I mean, we certainly we go put together our strategic plan every year, refresh it, if you will. I mean, these are things that we’re certainly thinking about. I’ll just remind everybody that when we put together our most recent five-year plan consistent with what we’ve done the last several years, all of our equity financing is already assumed in that five-year plan.

So when you look at the 6% to 8% earnings and dividends per share growth, the projected share price that we put out, or sorry, earnings per share out in the out years that has assumed a wide variety of potential stock prices. And we put we put that guidance out after we’ve gone through that rigorous assessment.

So we feel right now the current financing strategy is one -- that is one been successful for us in the past. We continue to believe that will be successful for us in the future. And but we will continue to evaluate certainly different structures. And we’ve talked about before in terms of asset dispositions, our 8-state footprint, we’re very, very comfortable with.

We’ve got good jurisdictions, very constructive jurisdictions that we are very familiar with these jurisdictions and as this -- again, we always consider it but that’s not a key part of our strategy and we don’t need that type of activity to achieve the 6% to 8% earnings per share growth over the next five years.

[Richie Ciciarelli, Bank of America]

Got it. That’s helpful. And just one more if I can flip in on the RNG front, you mentioned you’re looking over, I guess, 20 different RNG opportunities. Are you seeing this coming from new outlets or what’s kind of driving this demand? Is it more on the dairy farm side or landfills? Just curious what kind of customer base you’re looking at over there?

[Kevin Akers, President and CEO]

Yeah. You hit the answer there with the last two. It’s the dairy industry itself and its landfill projects at this point probably have the majority of those approximately 20 projects that we’re looking at and it’s scattered across our footprint.

As we mentioned in their opening remarks, we just closed out a supply project with a firm there in Colorado and we continue to work on several others across Kentucky and other parts of our jurisdiction as well. But there are in that area. There are in the dairy side and the landfill side at this point.

[Richie Ciciarelli, Bank of America]

All right. Great. That’s all I had. Thanks for all the time.

[Chris Forsythe, Senior Vice President and CFO]

Thank you, Richie.

[Operator]

The next question is from Insoo Kim of Goldman Sachs. Please proceed with your question.

[Insoo Kim, Goldman Sachs]

Thank you. My first question is a follow-up to the customer growth one. When you look -- when we look at what’s embedded in your five-year growth plan, what’s the range of customer growth across your jurisdiction that you’re assuming?

[Kevin Akers, President and CEO]

Yeah. Well, we put together the plan. We’re pretty conservative on that growth estimate. It’s difficult to estimate when exactly it will materialize. So we basically just assume that the same customer count or customer base that we have at the time that we published the plan and that -- and just let that growth be a bit of an upside for us as it materializes. Again, primarily, because it’s very difficult to forecast in which period that growth may occur.

[Insoo Kim, Goldman Sachs]

Got it. So I guess when we look at the capital spend and the rate base growth, it’s not -- the bulk of it, again, is just infrastructure replacement and modernization as opposed to new customer line hookups.

[Kevin Akers, President and CEO]

Right. As I mentioned…

[Chris Forsythe, Senior Vice President and CFO]

Exactly. You can get a lot more here.

[Kevin Akers, President and CEO]

Yeah.

[Insoo Kim, Goldman Sachs]

Right.

[Chris Forsythe, Senior Vice President and CFO]

Over 80% of the folks there.

[Insoo Kim, Goldman Sachs]

Yeah. Got it. My other question is, to your comments on kind of safety improvement initiatives and actions that you’ve taken already and following up on the NTSB recommendations, when given the report that had come out about a month ago. Do you -- what do you see from either an O&M perspective or I guess, a capital perspective that could be elevated versus your plan or is that already embedded in the growth plan that you’ve laid out?

[Kevin Akers, President and CEO]

Yeah. Because we continually evaluate our practices and our protocols and adopted several the recommendations already into practices, you’ll find that on our website. We don’t believe that implementing the recommendations that have been laid forward will have a material impact on capital or O&M at this point.

[Insoo Kim, Goldman Sachs]

Got it. That’s it for me. Thank you.

[Kevin Akers, President and CEO]

Thank you.

[Operator]

[Operator Instructions] Our next question is from Charles Fishman of Morningstar. Please proceed with your question.

[Charles Fishman, Morningstar]

Good morning. Just another follow up on the NTSB report, so at this point, we’re just waiting on the final report. You’re waiting on the final report. Is there anything else that’s triggered by that final report? I mean, is there any -- is the Railroad Commission waiting on that report to issue some kind of final -- their final report, any of your city regulatory bodies, any insurance claims, any legal issues? I mean, is there anything else that’s out there besides this final NTSB report?

[Kevin Akers, President and CEO]

There’s a lot packed in there. Let me see if I can cover all those for you. The final report itself from our understanding, Charles, is merely just corrections or edits to the abstract and other information that you’ve seen out there already. And again, we anticipate that coming out really soon.

And the Railroad Commission was a party to the investigation just as we were and they paused their investigation until the NTSB was complete. So we anticipate them to pick up their investigation sometime here soon. As you saw on the recommendations, they’ll be partnering with SAMSA [ph] to do an audit of our integrity management programs. So we anticipate them to pick their investigation backup and close it out relatively soon. I think on your other question, there is no open litigation related to the incident.

[Charles Fishman, Morningstar]

Okay. And looking at the preliminary reporter on virtual meeting last month, it appears the Railroad Commission and Pipeline and Hazardous Materials Administration. They have to do this too. So, I guess, I mean, their report will include the things they have to do?

[Kevin Akers, President and CEO]

Yeah. We will all receive -- in that NTSB report, those recommendations, as you pointed out, were directed to several of the parties to the investigation, will all have responses back to the NTSB. And it’s my understanding that our initial responses will have a timeframe of about 90 days or so to get our initial response back once we received that final report.

[Charles Fishman, Morningstar]

Okay. And then just one other almost a housekeeping question, slide 13, footnote two, where you have no regulatory assets or liabilities related to COVID-19 at this point? Yet, it’s my understanding you have received approval to record regulatory assets in just about all your service territory. So the decision not to record any regulatory asset at this point based on COVID-19. Was your decision -- driven by the fact that you were able to control your expenses at this point that they were reduced enough that you didn’t feel a need to record any Reg assets? Is that a fair assessment of that?

[Chris Forsythe, Senior Vice President and CFO]

Yeah. It’s pretty close. I mean, as you mentioned, Charles, we’ve got the orders that cover about 90% of our customer base right now. We’re evaluating the language in those orders. They were sufficiently broad and so we’re interpreting and how best to evaluate that order vis-à-vis our filings talking with our regulators and we anticipate by the end of the fiscal year that we will establish some form of regulatory asset. It’s just a matter of timing in this fiscal year when we establish that, but we are closely evaluating that right now and that’s been factored into the guidance for the remainder of the fiscal year.

[Charles Fishman, Morningstar]

Got it. Okay. So it’s more timing that you didn’t have anything in the first quarter. Got it. That’s all I have. Thank you.

[Chris Forsythe, Senior Vice President and CFO]

Thank you, Charles.

[Operator]

There are no additional questions at this time.

[Dan Meziere, Vice President, Investor Relations and Treasurer]

We appreciate your interest in Atmos Energy and thank you for joining us. The recording of this call will be available for replay on our website through March 31, 2021. Have a good day.