Atmos Energy Q1 Earnings Call Highlights

Atmos Energy (NYSE:ATO) reported fiscal 2026 first-quarter net income of $403 million, or $2.44 per diluted share, as management highlighted operational performance during Winter Storm Fern, continued customer growth, and progress on major pipeline and storage projects. The company also reiterated its rebased fiscal 2026 earnings per share guidance of $8.15 to $8.35 following the passage of Texas House Bill 4384.

First-quarter results and key drivers

Senior Vice President and CFO Chris Forsythe said first-quarter diluted EPS of $2.44 represented a 9.4% increase from the prior-year quarter. Results included a $35 million benefit tied to Texas House Bill 4384, equal to 16 cents per share. Forsythe said $20 million of the impact was recognized in the distribution segment, with the remaining $15 million recognized at Atmos Pipeline-Texas (APT).

Management outlined several additional factors affecting quarterly performance:

• $68 million of rate increases across the company’s two operating segments.
• An additional $24 million increase in operating income driven by residential and commercial customer growth and higher customer load.
• APT through-system revenues (net of Rider REV) increased by about $7 million.

Partially offsetting these items was a $23 million increase in consolidated operations and maintenance (O&M) expense. Forsythe attributed this to several components, including a $12 million increase in compliance and safety-related spending associated with increased leak survey work in the distribution segment and the timing of maintenance work at APT. Employee-related costs rose about $5 million due largely to higher headcount to support growth, plus increased overtime and standby costs tied to service work.

Texas House Bill 4384 impact and guidance

Atmos Energy reiterated its rebased fiscal 2026 outlook, which management said reflects Texas House Bill 4384. President and CEO Kevin Akers said the company’s fiscal 2026 EPS guidance remains $8.15 to $8.35. He also noted the company rebased its fiscal 2026 annual dividend to $4 per share, with plans to grow the dividend in line with targeted EPS growth of 6% to 8% annually.

During the Q&A, executives cautioned analysts against assuming the first-quarter House Bill 4384 benefit is a steady quarterly run rate. Forsythe said the deferrals’ impact will be influenced by the timing of spending, project closings, and operational activity. Akers added it would be “dangerous” to simply multiply the quarter’s impact by four, pointing to variability in construction timing, including reduced activity during Winter Storm Fern response.

Operational performance during Winter Storm Fern

Akers opened his remarks by thanking employees and emergency responders for their work during Winter Storm Fern, and said all segments—distribution, transmission, APT, underground storage, gas supply plans, and customer support—performed “very well” and to design expectations.

In response to an analyst question about potential financial impacts, management emphasized the storm was significant but “not nearly as significant as Uri.” Akers said upstream supply performed well, with minimal supply issues that were backfilled with storage to maintain reliable service. He also described a gas supply plan that included baseload and peaking contracts, spot purchases, and storage supply, and said he did not expect impacts comparable to Uri from either an operational or financing perspective related to gas supply costs.

Capital investment, APT project milestones, and spreads

Atmos Energy reported first-quarter capital expenditures of $1 billion. Akers said over 85% of investments were directed toward enhancing safety and reliability across distribution, transmission, and underground storage systems. Forsythe said the company remains on track to execute a $4.2 billion capital spending plan for fiscal 2026 and said first-quarter performance positions the company to achieve its rebased guidance range.

Within APT, Akers detailed several project milestones achieved in the quarter:

• Completed installation of approximately 55 miles of 36-inch pipeline from the APT Bethel Storage Facility to the Groesbeck Compressor Station, intended to add capacity to transport gas from Bethel storage into the Dallas-Fort Worth Metroplex and the Interstate 35 corridor between Waco and Austin.
• Placed 13 miles into service for phase two of APT’s Line WA Loop project, which is designed to install about 44 miles of 36-inch pipeline west of Fort Worth; the remaining 31 miles is expected to enter service in the spring.
• Completed a project that “more than doubles” takeaway capacity at the Bethel Salt Dome storage facility, aimed at increasing peak-day deliverability into the APT system for local distribution company customers.
• Completed two interconnect projects adding 700,000 MCF per day of additional natural gas supply to the APT system.

Forsythe said APT through-system volumes declined about 2 Bcf due to increased maintenance compared with the prior year quarter. However, he noted spreads widened significantly to an average of $3.99 versus $1.56 in the prior-year quarter, citing rising associated gas production, constrained takeaway capacity, and lower demand due to unseasonably warm first-quarter weather. In Q&A, Forsythe said the company attributed about a $7 million operating income increase to those activities.

Customer growth, regulatory activity, and financing

Management reported continued customer growth across the footprint. For the 12 months ended Dec. 31, 2025, Atmos Energy added nearly 54,000 customers, including about 42,000 in Texas. In the first quarter, the company added more than 1,100 commercial customers and three new industrial customers. Akers also cited Texas Workforce Commission data showing seasonally adjusted employment of 14.3 million at the end of December and said Texas added jobs at a faster rate than the nation over the 12 months ending December 2025.

On customer service, Akers said the company achieved 98% customer satisfaction ratings for the quarter and that outreach efforts helped more than 11,000 customers receive nearly $3 million in funding assistance. He also highlighted recognition from J.D. Power and Escalent, including a No. 1 ranking in the J.D. Power 2025 Gas Utility Residential Customer Satisfaction Study in the South and Midwest among large utilities, and being named an Escalent 2025 Utility Customer Champion in both regions.

On the regulatory front, Forsythe said that since the beginning of the fiscal year the company implemented $123 million in annualized operating income increases in the distribution segment. He said there are currently five filings in progress seeking about $81 million in annualized operating income increases, and the company plans an additional filing this fiscal year seeking approximately $400 million in annualized operating income increases.

Discussing Mississippi, Forsythe said the company has been in regular dialogue with the commission to implement a tariff reflecting an order issued late last year, with the tariff filed in early January and a potential decision expected “today.” He said the filing includes requests for deferral-like mechanisms and other opportunities to reduce regulatory lag. Forsythe added that the state now has an annual filing mechanism on a historical test year basis, and Atmos is evaluating the impact of that shift. He also said the company filed a public notice in early January of its intent to appeal the decision to the Mississippi Supreme Court and is working through that process. Management noted Mississippi represents roughly 5% of the business.

On financing and liquidity, Forsythe said Atmos Energy completed more than $1 billion of long-term debt and equity financing during the quarter, including $600 million of long-term debt completed in October 2025, and settled $472 million in equity forward agreements. As of Dec. 31, equity capitalization stood at 60%, with no short-term debt outstanding. Forsythe said the company has $4.6 billion of available liquidity, including approximately $1.1 billion in net proceeds available under existing forward sale agreements, which he said is expected to satisfy the remainder of anticipated fiscal 2026 equity needs and a portion of anticipated fiscal 2027 equity needs.

About Atmos Energy (NYSE:ATO)

Atmos Energy Corporation (NYSE: ATO) is a U.S.-based natural-gas utility that primarily focuses on the regulated distribution of natural gas. Headquartered in Dallas, Texas, the company operates through local distribution systems to deliver natural gas to residential, commercial, industrial and electric generation customers. Atmos’s core activities include pipeline operations, gas distribution, system maintenance and reliability programs designed to ensure safe and continuous service to its customers.

The company’s services encompass gas delivery, system integrity and maintenance, storage and transmission connections, and customer-facing programs such as billing, conservation initiatives and energy-efficiency offerings.