Susan Giles - Vice President of Investor Relations Kim R. Cocklin - Chief Executive Officer, President and Director Bret J.

Eckert - Chief Financial Officer and Senior Vice President

Spencer E. Joyce - Hilliard Lyons, Research Division

Good morning, everyone, and thank you for joining us. Our speakers this morning are Kim Cocklin, President and CEO; and Bret Eckert, Senior Vice President and CFO.

There are other members of our leadership team here to assist with questions as needed. Our earnings release, conference call slide presentation and our 10-Q, as filed last night, are available on our website at atmosenergy.com.

We will refer to just a few of the slides during this live call, but we will take questions on any of them at the end of our prepared remarks. 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.

Please see Slide 22 for more information regarding the risks and uncertainties we consider in making these forward-looking statements and where to go to get more information on such risks and uncertainties. Now I'd like to turn the call over to Kim Cocklin.

Kim?

Thank you very much, Susan, and good morning, everyone. I hope you're all having a good day.

We certainly appreciate you joining us and your continued interest in Atmos Energy. Yesterday, we reported third quarter earnings of $0.45 per diluted share compared to $0.42 per share 1 year ago.

We continue to hit on all cylinders this quarter and took full advantage of the improved weather this quarter to remain on time and on budget with our planned capital projects. Our solid results from the third quarter, coupled with record earnings for the first 6 months, generated year-to-date reported earnings per diluted share of $2.76, up from $2.57 for the prior 9-month period, despite the absence of the financial contribution from the Georgia assets that were sold last April 1 and the issuance of 9.2 million additional shares in our February offering.

Our strategy to grow by investing in the safety and reliability of our regulated infrastructure, which we began in fiscal 2012, has generated exceptional operational and financial results. We continue to demonstrate our commitment to execute on our capital plan by spending between $850 million and $950 million annually to fortify our system, while growing regulated rate base by 9% to 10% each year, and improve rate designs with more fixed cost recovered in customer base charges that provided the stability, predictability and reliability of our revenue.

Also, the rate design changes at Mid-Tex last year have resulted in a much more ratable distribution in margin spread throughout the year. Our debt-to-capital ratio at June 30 was 44%, with no short-term debt outstanding.

And our liquidity remained very strong with over $1 billion of available capacity from our short-term credit facilities. We remain steadfastly committed to increasing shareholder value.

As a result, our Board of Directors declared our 123rd consecutive quarterly cash dividend. The indicated annual dividend rate for fiscal '14 was $1.48, representing a 5.7% increase over the '13 annual dividend rate.

With that, I'll turn the call over to our CFO, Bret Eckert. Bret?

Thank you, Kim, and good morning, everyone. Slides 2 and 3 give you a comparison for both reported net income and net income, excluding unrealized margin for the 3- and 9-month periods of 2014 and 2013.

Earnings per diluted share for the current 3 months were $0.45 compared with $0.42 last year when you exclude unrealized margins and the gain on the Georgia sale from prior year results. For the current 9 months, earnings per diluted share increased 12% year-over-year to $2.69 compared to $2.40 last year.

Consolidated results for the current 9 month were favorably impacted by weather that was 20% colder than last year, which drove higher throughput across all segments of our business and created natural gas price volatility. This drove consolidated year-to-date gross profit higher by about $43 million in the current 9 months.

Slide 4 outlines gross profit in our regulated distribution business, and Slide 5 details gross profit for our regulated intrastate pipeline, APT, for the 3- and 9-month periods. Increased customer consumption in our LDC and higher throughput in related margins at APT contributed about $18 million of this increase year-to-date.

Rate increases also had a positive effect during the year, lifting distribution gross profit by $9.2 million in the quarter and $24.5 million for the current 9 months. In addition, increases from APT's annual GRIP filing increased rates by $12.2 million in the quarter and $26.3 million for the 9 months.

As previously discussed, we anticipate annual operating income increases of between $110 million and $130 million from approved rate outcomes in fiscal '14. As of August 4, about $128 million in operating income increases on an annual basis have been implemented, and rate actions filed and pending total about $18 million.

Slides 7 through 15 provide more detail on our rate filings. Realized gross profit in our nonregulated operations increased $2.5 million in the quarter and $25.3 million for the current 9 months.

Slides 16 and 17 provide the details for our nonregulated segments. AEM's delivered gas business drove the quarter-over-quarter increase in gross profit as higher per unit margins offset a 2% decrease in sales volumes.

Year-to-date, sales volumes increased about 11%, primarily due to the colder weather experienced earlier in the year. The delivered gas business remains AEM's core focus.

However, AEM was opportunistic during the volatile natural gas price environment earlier in the year and generated about $24 million in incremental gross profit by accelerating physical gas withdrawal into the second quarter. Shifting now to the expense side of the income statement.

The period-over-period increase in O&M expenses was primarily due to the timing and increased levels of pipeline maintenance activities that were undertaken in the current quarter, coupled with the timing of the recognition of higher variable incentive compensation expense earlier in the fiscal year as a result of increased operating results. Earlier this year, the distribution segment also experienced increased standby and overtime costs as our employees were focused on ensuring the safety and reliability of our distribution system during the cold weather.

As previously discussed, 2 legal matters related to the nonregulated segment were resolved during the 9 months, resulting in lower O&M for that segment. Moving now to our earnings guidance for fiscal 2014.

Based on strong year-to-date earnings performance through our third fiscal quarter, we are reaffirming the fiscal 2014 guidance range of $2.80 to $2.90 per diluted share, excluding unrealized margins. Slide 19 details our net income and expense projections.

We project regulated operations to generate net income in the range of $256 million to $267 million. Our nonregulated business is expected to generate net income of $17 million to $19 million in fiscal 2014.

We continue our focus on strategic infrastructure capital spending to enhance the safety and reliability of our systems. While timing differences exist through the third quarter, our budget range of $830 million to $850 million has not changed for fiscal 2014.

Thank you for your time. And now, I'll had the call back over to Kim.

Thank you very much, Bret, a stellar report. Exceptional results, if I must say so myself.

Now as we look forward to the remainder of the fiscal year and begin to plan for the next heating season, there are a few observations worth noting. We have experienced a reduction in gas prices, which is very positive news for our customers.

There's an increased emphasis on refilling storage at these lower prices, which bodes very well for future gas prices as we hedge out our expected needs for next winter. Generally speaking, a lower gas price environment, which we're seeing now, helps alleviate rate pressure associated with our increased capital spending program.

We operate in very constructive regulatory environments with regulators who recognize that safety is greatly enhanced with infrastructure investment, which is encouraged by favorable rate mechanisms that reduce lag. In June, the Public Utility Commission in Louisiana voted to modify the existing rate stabilization cost and authorized an infrastructure mechanism very similar to the Rule 8.209 in Texas, authorizing deferral treatment.

With this action, the commission is encouraging increased capital spending in Louisiana to enhance system safety and reliability for all customers and reducing the lag for recovery of this investment. Last week, we submitted our annual Kentucky Pipe Replacement Program filing for $4.3 million.

This filing to increase rates should go into effect on October 1, 2014. Other enhanced infrastructure replacement mechanisms exist in our Virginia and Mississippi jurisdictions.

We plan to submit a couple of more rate filings by the end of our fiscal year in September, seeking increases in operating income of $10 million to $15 million. Lastly, our $33 million Mid-Tex Rate Review Mechanism filing was appealed to the Texas Railroad Commission on May 30.

The issue on appeal is whether our filing conforms to the terms of the established Rate Review Mechanism tariff with the city's. The filed rates became effective subject to refund June 1, and the appeal is scheduled for hearing in early September.

We've stayed the course, and we continue to believe that investing in the safety and reliability of our system is the highest and best use for our capital. We are committed to delivering dependable, consistent and long-term shareholder value.

We're projecting transparent, above-average 9% to 10% annual rate base growth and 6% to 8% annual earnings growth in fiscal 2018. Coupled with the dividend yield, total annual return is expected to be in the 9% to 11% range through fiscal 2018.

That, in a nutshell, is the investment proposition for Atmos Energy. We do appreciate your time, and we're now ready to take any questions.

Melissa?

Sorry, I had to jump on a little late this morning, so if you all covered this, I do apologize. But just one quick one for me, Bret, could you perhaps talk about the gross margin upside we saw on the nonregulated side this quarter?

Was some of that still attributable to weather factors we saw this year?

I think it's that and falling gas prices a little bit. As you know, as we run through this, we do anticipate a slight loss in the fourth quarter largely due on the net settlement of the financial positions we executed during the first half of the year.

We accelerated physical withdrawals into the first half to capture the incremental margin. The loss, as we expected on the back half, were coming in a little bit smaller than we had previously estimated and that was really driven by the falling prices, gas prices during the last few months.

We do expect to see a slight increase in transportation costs associated with seasonal storage injections, Spencer, as we refill storage in anticipation of the upcoming season, but a lot of it is just timing. We still expect nonregulated earnings to be in the $17 million, $19 million range as previously communicated.

Great. Thank you, Melissa.

Just to remind you all, there is a replay on our website through February 5. I'm around all day, if you have any questions, and we appreciate your interest in Atmos Energy.

Thank you so much. Bye.