Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Atmos Energy Corp (ATO, Financial) reported a year-to-date fiscal '25 net income of $837 million, or $5.26 per diluted share, reflecting a 6.7% increase over the prior year period.
• The company updated its fiscal '25 earnings per share guidance to a range of $7.20 to $7.30, indicating strong financial performance.
• Atmos Energy Corp (ATO) experienced robust customer growth, adding nearly 59,000 new customers in the past 12 months, with a significant portion in Texas.
• The company is actively working on infrastructure projects, such as the APT's Line WA Loop and Bethel to Groesbeck project, to enhance system safety, reliability, and support growth.
• Customer satisfaction remains high, with a 98% satisfaction rating for customer support associates and service technicians.

Negative Points

• Consolidated O&M expenses increased by $74 million, driven by higher employee-related costs, bad debt expenses, and increased line locating and system monitoring activities.
• The company faced a $15 million increase in bad debt expense, partly due to a regulatory change in how bad debt expenses are recovered.
• Atmos Energy Corp (ATO) anticipates higher O&M spending in the back half of fiscal '25, which could impact future financial performance.
• The company is dealing with regulatory challenges, including ongoing rate cases and the need for regulatory asset trackers to manage costs.
• There is uncertainty regarding future market conditions and their impact on the company's financial performance, particularly in the APT through-system business.

Q & A Highlights

Q: Is the higher guidance for 2025 a fair base to think about growth going forward, or does some normalization need to be factored in for growth for 2026 and beyond? A: Christopher Forsythe, CFO, stated that they are still evaluating market conditions, which are currently volatile. They will set fiscal 2026 plans based on a snapshot of market conditions in late summer or early fall before releasing fiscal 2026 guidance and an updated 5-year plan.

Q: How are you thinking about the higher O&M this year and any efforts to de-risk 2026 on that front? A: Forsythe explained that the higher O&M is partly due to pulling forward some expenses and staying ahead of compliance deadlines. John Akers, CEO, added that increased line locating expenses due to growth also contribute to higher O&M.

Q: Can you update us on the equity financing for the rest of the year and the strategy for managing costs? A: Forsythe confirmed that their financing strategy remains unchanged, using a combination of equity and long-term debt. They have $1.7 billion priced to meet equity needs for fiscal 2025 and 2026, and they plan to issue a 30-year debt in the fall.

Q: Could you discuss the gas demand growth in Texas and any pipeline projects or backlog? A: Akers mentioned ongoing projects like the WA Loop and Bethel to Groesbeck, with no specific backlog. They plan projects based on reliability, supply versatility, and safety concerns, with 85% of capital investment focused on safety and reliability.

Q: What are some key legislative bills being monitored, and do they carry potential benefits for your business? A: Akers stated they are monitoring legislative sessions across their eight states. While some bills are of interest, they need to go through the legislative process and potentially be acted upon by regulatory commissions before any impact is determined.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.