Transcript: Atmos Energy Q3 2026 Earnings Conference Call

On Thursday, Atmos Energy (NYSE: ATO ) discussed third-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

50. 1 billion, with significant investments aimed at enhancing safety and reliability across its systems. The company experienced substantial customer growth, adding nearly 51,000 new customers over 12 months, primarily in Texas. Major infrastructure projects are underway, such as pipeline expansions and compressor station constructions, aiming to enhance system reliability and capacity.

Atmos Energy is seeking to reflect $160 to $165 million in revenue credits for LDC customers through its Rider REV tariff. 5%, with significant contributions from House Bill 4384 and rate increases in operating segments. The company has implemented $396 million in annualized operating income increases since the fiscal year's start, with ongoing filings seeking additional increases. 6 billion as of June 30, 2026, with no short-term debt outstanding.

Management expressed confidence in achieving guidance targets despite narrowing spreads due to increased takeaway capacity. 2 billion. Full Transcript OPERATOR Hello everyone. Thank you for joining us and welcome to Atmos Energy Corporation's fiscal 2026 third quarter earnings conference call.

After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Dan Mazier, Vice President of Investor Relations and Treasurer.

Dan, please go ahead. Dan Mazier, Vice President of Investor Relations and Treasurer Thank you, Lucas. Good morning, everyone, and thank you for joining our fiscal 2026 third quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsyth, Senior Vice President and Chief Financial Officer.

com under the Investor Relations tab. 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 32 and are more fully described in our SEC filings.

With that, I will turn the call over to Kevin. Kevin Akers, President and Chief Executive Officer Thank you, Dan, and good morning everyone. We appreciate your interest in Atmos Energy. 50.

1 billion, with over 87% of these investments focused on enhancing the safety and reliability of our distribution, transmission, and underground storage systems. Across our service territories, we continue to see steady, diversified customer growth. For the 12 months ending June 30, 2026, we added nearly 51,000 new customers, with nearly 39,000 of those new customers located here in Texas. During the third quarter we added 600 commercial customers and over 2,500 commercial customers fiscal year-to-date.

Additionally, we added 5 new industrial customers during the third quarter and 12 new industrial customers fiscal year-to-date. The 12 new industrial customers are anticipated to use approximately 950,000 MCF per year once they are fully operational. That is volumetrically equivalent to adding 18,000 residential customers. This continued demand from all customer classes demonstrates the value and vital role natural gas plays in economic development across our Atmos Energy service territories.

The Texas Workforce Commission reported that Texas once again added jobs at a faster rate than the nation over the last 12 months ending June 2026, and in 2026, Texas added three Fortune 500 companies, bringing the total number of Fortune 500 companies to 57, the most in the nation and the highest level in Texas since 2010. In APT, we continue to work to enhance the safety, reliability, versatility, and supply diversification of our system, as well as support the continued growth we are seeing in the local distribution companies behind the APT system.

APT is currently working on two separate projects to the southeast of the DFW Metroplex that will install a total of 29 miles of 36-inch pipeline to connect two adjacent compressor stations to our Tri City storage facility. These projects enhance system reliability and capacity for gas transported from the Haynesville and Cotton Valley shale plays to our Bethel and Tri City storage facilities, all to support the growing DFW Metroplex. To the east of the Metroplex, we began construction of a compressor station in Carthage, Texas, that will increase the capacity of our 36-inch Line S2 pipeline.

Finally, we are working on the final phase of the WA Loop project to support growth in the northwestern portion of the Metroplex. This final phase will install 15 miles of 36-inch pipe, and it will complete a 92-mile, 36-inch pipeline loop. All of these projects are currently scheduled to be placed into service by the end of the calendar year. This month, APT will submit its annual Rider REV tariff seeking to reflect $160 to $165 million in revenue credits for LDC customers on the system between November 1, 2026, and October 31, 2027.

If this amount is approved as filed, these customers will have received over $300 million in savings through the Rider REV mechanism from November 2023 through October 2027. Our customer support associates and service technicians continue to provide exceptional customer service, achieving customer satisfaction ratings in excess of 97% for the first nine months of this fiscal year. 2 million in funding assistance. I'll now turn the call over to Chris for his update.

Chris Forsyth, Senior Vice President and Chief Financial Officer Thank you, Kevin, and thank you to everyone for joining us this morning. 5% increase over the prior-year period. 63, from the impact of Texas House Bill 4384. $71 million is recognized in our Distribution segment and the remaining $61 million is recognized at APT.

In addition to the impact of House Bill 4384, I wanted to highlight a few other drivers of our financial performance for the fiscal year-to-date period. Rate increases in both of our operating segments total $227 million. Operating income increased by an additional $41 million due to residential and commercial customer growth and increased customer load. 16.

This increase continues to reflect the significantly higher spreads realized during fiscal 26 compared with fiscal 25 that we've been discussing this entire fiscal year. 77 in the prior-year period, reflecting rising associated gas production, constrained takeaway capacity, and lower demand due to unseasonably warm weather during the past winter heating season. Finally, consolidated O&M decreased $14 million, reflecting higher employee compliance and SAFE-related spending in our Distribution segment and higher maintenance spending at APT, all offset by the impact of the implementation of House Bill 4384.

From a regulatory perspective, since the beginning of the fiscal year we have implemented $396 million in annualized operating income increases. Of this amount, $260 million was implemented during our third and fourth fiscal quarters. Currently we have seven filings in progress seeking nearly $334 million in annualized operating income increases. We expect to implement most of this amount in the first quarter of fiscal 27.

Our equity capitalization as of June 30 was 60% and we do not have any short-term debt outstanding. 6 billion in available liquidity to support our operations. This includes approximately $937 million in net proceeds available under existing forward sale agreements, which is expected to satisfy the remainder of our anticipated fiscal 26 equity needs and a significant portion of our anticipated equity needs for fiscal 27. 50.

APT's through-system business during the third fiscal quarter was in line with our expectations. Beginning in June, spreads have narrowed significantly now that additional takeaway capacity has come online, some sooner than expected. Additionally, O&M spending in fiscal 26 is trending slightly higher. We now expect fiscal 26 O&M, excluding bad debt expense, to be in the range of $875 million to $885 million.

2 billion in capital expenditures for fiscal 26. We appreciate your time this morning and your interest in Atmos Energy. We'll now open up the call for questions. OPERATOR We will now begin the question and answer session.

If you would like to ask a question, press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device.

Please stand by while we compile the Q&A roster. Your first question comes from the line of Constantine Ledneff with Wells Fargo Securities. Constantine, please go ahead. Whitney Mitelamor, Analyst at Wells Fargo Securities Good morning, this is Whitney Mitelamor here for Constantine.

Thanks for taking the questions. Given we’re a quarter short of the year, do you anticipate being at the top end of guidance? Do you anticipate any offsets to the strong year-to-date performance in 4Q? And maybe just a quick question around APT: given where Waha has been trading, are contributions still moving in the same direction, or do you anticipate some narrowing?

Chris Forsyth, Senior Vice President and Chief Financial Officer Well, good morning again. 50. As I mentioned, APT's performance in the third quarter was in line with our expectations. But as I also highlighted, we are seeing significantly narrower spreads beginning in the latter half of the third quarter and continuing through today as a result of additional takeaway capacity coming online, some of which was coming online sooner than expected.

A couple of different pipes were expected to go online in the fourth quarter of the calendar year, and they came on—one in late June and one here in late July—and they’re beginning to ramp up, which has caused a compression of the spread. 50 range for EPS for fiscal 26. And we will see where the fourth quarter takes us in terms of spread opportunities and other operational factors for the remainder of the fiscal year. Whitney Mitelamor, Analyst at Wells Fargo Securities Got it.

Okay. And just to squeeze a tiny question: given the strength in fiscal year 26, do you feel you can carry some flex into fiscal year 27 just from an O&M and cost perspective? That will be all, thank you. Chris Forsyth, Senior Vice President and Chief Financial Officer If I understand your question correctly, if you're talking about APT, we certainly had mentioned before that we will continue to reflect in our base plan that we will roll forward in the fall an amount coming from APT's through-system business in line with the benchmark that we have established at roughly $107 million.

With respect to O&M, in our five-year guidance that we have out there right now, we anticipate a 4% O&M increase per year, and we'll refresh that when we roll forward the five-year plan later this fall. OPERATOR Your next question comes from the line of Richard Sunderland with Truist Securities. Richard, please go ahead. Richard Sunderland, Analyst at Truist Securities Hey, good morning and thanks for the time today.

I want to follow up on some of those APT questions. Just last quarter, I think it was an 8 to 12 cent range for 2H uptick you guys had spoken to. Looks like you captured most of that this quarter. But is 8 to 12 cents still the right range to be thinking about over that period, meaning for the balance of the year on 4Q?

Chris Forsyth, Senior Vice President and Chief Financial Officer Yeah, Rich, thanks for the question this morning. As you mentioned, we did pick up the 8 cents in the third quarter with the tightening of the spreads. I would say that we're probably going to be in the lower end of that range at this point in that 8 to 12. So we'll see—again, we'll have to continue to see what happens with maintenance on some of this takeaway capacity, where the summer heat load is going, or winter cooling load—excuse me.

And we'll just see where we go from that. But I think the lower end of that range is more appropriate. Richard Sunderland, Analyst at Truist Securities Okay, that's helpful context. And then I also wanted to follow up on O&M and ask in a similar way.

You took up the low end of the range $10 million—I realize it's relatively modest—but is that reflective of any activities getting pulled forward into 26 from 27, or is that more around line locates and other external drivers? Just curious to parse that a little bit and think about 26 versus 27 on activity. Chris Forsyth, Senior Vice President and Chief Financial Officer Yeah. As typical at this time of year, it's more related to ongoing activity across the Metroplex and other areas with the growth that we're seeing—line locate activities, ongoing compliance and maintenance activities in that area.

But that's what we normally see around this time of the year. Richard Sunderland, Analyst at Truist Securities Great. I'll leave it there. Thank you.

Chris Forsyth, Senior Vice President and Chief Financial Officer Thank you. OPERATOR Your next question comes from the line of Julian Demoulin-Smith with Jefferies. Julian, please go ahead. Luke Finker, Analyst at Jefferies Hey guys, Luke Finker on for Julian.

Nicely done in the quarter. I just wanted to ask on Rule 77102: you know, just given the benefits we've seen of late, can we expect it to remain a discrete earnings benefit in 27, or does it increasingly roll into Texas recovery from here? Just want to get a sense of how that's trending. Chris Forsyth, Senior Vice President and Chief Financial Officer Yeah, well thanks for the question, Luke.

Good morning. Fiscal 26 is a step-year change as a result of the implementation of 77 102. And as we've said, going forward we expect that year over year to be more in line with what we've experienced in years past with respect to Rule 8209. 50.

So that reflects that it's more of a moderation effect going forward now that we've got a full year's impact of the rule under our belt at this point. Luke Finker, Analyst at Jefferies Awesome. Thank you. And then maybe just wanted to see the latest timing and your confidence level around the Mid-Tex Cities RRM, and maybe how you see yourself positioned on customer bill affordability in Texas more broadly.

Chris Forsyth, Senior Vice President and Chief Financial Officer Yeah, if you look in our deck that's out there—particularly our May investor deck, I think it's Slides 18 through 21 or 22—we have good information out there about affordability, both from a customer bill perspective, where we remain the lowest bill in the house. If you want to look at it on an energy comparison basis, kilowatt to kilowatt, BTU to BTU, across our service territories we range from 2% to 4% lower than electricity on a household basis. Then you're going to look at wallet share, both from a low-income and a median-income perspective.

2% of the wallet, with the electric side ranging at about two to almost three times wallet share. So we think our team continues to do an excellent job of keeping affordability top of mind, focusing on things we can control, and being an efficient provider. Luke Finker, Analyst at Jefferies Awesome. I'll leave it there.

Thanks, guys. All the best. OPERATOR A reminder that if you would like to ask a question, please press star one to raise your hand. Your next question comes from the line of Dylan Lipner with Mizuho.

Dylan, please go ahead. Dylan Lipner, Analyst at Mizuho Hey everybody, congrats on a good quarter here. Just wanted to get back to Waha.