Atmos Energy’s Earnings Call Highlights Growth and Challenges

Atmos Energy ((ATO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Atmos Energy’s recent earnings call conveyed a generally positive sentiment, highlighting consistent growth in earnings per share and dividends over multiple years. The company showcased strong customer growth and a robust capital investment strategy, primarily focusing on safety and reliability. However, challenges such as rising operating costs and volatile gas prices were acknowledged.

23rd Consecutive Year of Earnings Per Share Growth

Atmos Energy reported a diluted earnings per share of $7.46 for fiscal year 2025, marking an impressive 23rd consecutive year of earnings per share growth. This milestone underscores the company’s consistent financial performance and ability to deliver value to its shareholders.

41st Consecutive Year of Dividend Growth

Fiscal year 2025 also marked the 41st consecutive year of dividend growth for Atmos Energy. The company continues to reward its investors with increasing dividends, reflecting its strong financial health and commitment to shareholder returns.

Strong Customer Growth

Atmos Energy experienced significant customer growth in fiscal 2025, adding approximately 57,000 residential customers, nearly 3,200 commercial customers, and 29 industrial customers. This expansion highlights the company’s ability to attract and retain a diverse customer base.

Capital Investment Plan

The company has outlined an ambitious capital investment plan, intending to invest $26 billion through fiscal 2030. With about 85% of this investment focused on safety and reliability, and 80% allocated to Texas, Atmos Energy is prioritizing infrastructure improvements to enhance service quality.

Passage of Texas House Bill 4384

The passage of Texas House Bill 4384 is a significant regulatory development for Atmos Energy. This legislation allows for the deferral of costs, supporting an anticipated earnings per share growth of 6% to 8% from the midpoint of rebased fiscal 2026 EPS guidance.

Higher Operating Costs

Atmos Energy reported consolidated operating and maintenance expenses reaching $874 million, driven by increased employee-related expenses and system monitoring. These rising costs present a challenge that the company needs to manage effectively.

Negative Waha Gas Prices Impact

Volatile Waha gas prices have impacted potential revenues, necessitating close monitoring by Atmos Energy. This volatility poses a risk to the company’s financial performance, requiring strategic management to mitigate adverse effects.

Forward-Looking Guidance

Looking ahead, Atmos Energy has set a fiscal 2026 earnings per share guidance range of $8.15 to $8.35, with an expected annual EPS growth of 6% to 8% from the midpoint of this guidance. The company plans to continue its $26 billion capital investment through fiscal 2030, with a strong focus on safety and reliability. The board has approved a fiscal 2026 annual dividend of $4, a 15% increase over fiscal 2025, aligning with the rebased EPS guidance.

In summary, Atmos Energy’s earnings call presented a positive outlook with consistent growth in earnings and dividends. The company is committed to expanding its customer base and investing heavily in infrastructure to ensure safety and reliability. Despite challenges such as rising operating costs and volatile gas prices, Atmos Energy remains optimistic about its future growth prospects.