Atmos Energy Q2 2025 Earnings Report

Atmos Energy EPS Results

• Actual EPS: $3.03
• Consensus EPS: $2.92
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $2.85

Atmos Energy Revenue Results

• Actual Revenue: $1.95 billion
• Expected Revenue: $1.82 billion
• Beat/Miss: Beat by +$129.95 million
• YoY Revenue Growth: +18.40%

Atmos Energy Announcement Details

• Quarter: Q2 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 10:00AM ET

Atmos Energy (NYSE:ATO), together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,645 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.

Atmos Energy Q2 2025 Earnings Call Transcript

Key Takeaways

• Reported year-to-date net income of $837 million ($5.26 per share) and raised fiscal 2025 EPS guidance to $7.20–$7.30.
• Added nearly 59,000 new customers in the past 12 months (including 46,000 in Texas), plus ~2,000 commercial and 20 industrial customers YTD adding about 11 Bcf of annual load.
• Launched Phase 2 of the 44-mile Line WA Loop and progressed the 55-mile Bethel-to-Grow project, while completing interconnects that added over 1 Bcf of new supply capacity YTD.
• Implemented $153 million of annualized rate increases and have $389 million in regulatory outcomes in progress, expecting $175–$180 million more in FY 2025; a West Texas ALJ PFD recommends a 9.8% ROE on a $1.2 billion rate base for a $30.6 million operating income boost.
• Maintained a strong balance sheet with $5.3 billion of available liquidity, 61% equity capitalization, and capital spending on track at approximately $3.7 billion for the year.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Atmos Energy Corporation Fiscal twenty twenty five Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, today's call is being recorded. I will now hand today's call over to Dan Mezir, Vice President of Investor Relations and Treasurer.

[Operator]

Please go ahead, sir.

[Daniel Meziere, VP of Investor Relations & Treasurer at Atmos Energy]

Thank you, Tamika. Good morning, everyone, and thank you for joining our fiscal twenty twenty five second quarter earnings call. With me today are Kevin Akers, President and Chief Executive Officer and Chris Forsyth, Senior Vice President and Chief Financial Officer. Our earnings release and conference call slide presentation, which we will reference in our prepared remarks, are available at atmosenergy.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.

[Daniel Meziere, VP of Investor Relations & Treasurer at Atmos Energy]

Our forward looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on Slide 29 and are more fully described in our SEC filings. With that, I will turn the call over to Kevin Akers, our President and CEO. Kevin?

[Kevin Akers, President and CEO at Atmos Energy]

Thank you, Dan, and good morning, everyone. We appreciate your interest in Atmos Energy. Yesterday, we reported year to date fiscal twenty twenty five net income of $837,000,000 or $5.26 per diluted share. We updated our fiscal twenty twenty five earnings per share guidance to a range of $7.2 to $7.3 This performance continues to reflect the commitment, dedication, focus and effort of all Atmos Energy employees to successfully modernize our natural gas distribution, transmission and storage systems while safely providing reliable natural gas service to 3,400,000 customers across 1,400 communities in eight states. For the quarter, we continue to experience robust growth driven by continually favorable employment trends in Texas.

[Kevin Akers, President and CEO at Atmos Energy]

For the twelve months ended 03/31/2025, we added nearly 59,000 new customers with almost 46,000 of those new customers located in Texas. The Texas Workforce Commission reported in April that seasonally adjusted number of employed reached a new record high at over 14,300,000. Texas again added jobs at a faster rate than the nation over the last twelve months ending March, adding nearly 192,000 jobs representing a 1.4 annual growth rate. Commercial customer growth remained solid as well with approximately eight fifty customers connecting to the system during the second quarter and nearly 2,000 customers connecting to the system fiscal year to date. Industrial demand for natural gas in our service territories also remained strong.

[Kevin Akers, President and CEO at Atmos Energy]

During the second quarter, we added nine new industrial customers with an anticipated annual load of approximately eight Bcf once they are fully operational. Fiscal year to date, we've added 20 new industrial customers with an anticipated annual load of approximately 11 Bcf once they are fully operational. On a volumetric basis, that is equivalent to adding approximately 204,000 residential customers. This growth continues to highlight the value and vital role natural gas plays in economic development across our service territories. In APT, we continue our work on several projects that will 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 APT system.

[Kevin Akers, President and CEO at Atmos Energy]

During the quarter, work started on Phase two of APT's Line WA loop. This project will install approximately 44 miles of 36 inches pipe to the West of Fort Worth to support growth in the Northwestern portion of the DFW Metroplex. This phase is expected to be completed by the end of the calendar year. Work continues on APT's Bethel to Grow spec project as well. As a reminder, this project will install approximately 55 miles of 36 inches pipe from our Bethel storage facility to our Grow Spec compressor station to provide additional pipeline capacity to the growing DFW Metroplex and to the Interstate 35 corridor.

[Kevin Akers, President and CEO at Atmos Energy]

This project is scheduled to be placed in service late calendar year 2025. APT completed two more interconnect projects during the quarter. Fiscal year to date, APT has added over one Bcf of additional gas supply that will enhance supply reliability and versatility to support APT's LDC customers. During the second quarter, our customer support associates and service technicians once again received a 98% satisfaction rating from our customers, reflecting the exceptional customer service they provide each and every day. Our customer advocacy team and customer support agents continued their outreach efforts to energy assistance agencies and customers during the first six months of the fiscal year.

[Kevin Akers, President and CEO at Atmos Energy]

Through those efforts, the team helped nearly 32,000 customers receive over $10,000,000 in funding assistance. Our results for the first half of fiscal twenty five reflect the hard work and dedication of all Atmos Energy employees as we continue to safely deliver reliable and efficient natural gas to homes, businesses and industries to fuel our energy needs now and in the future. I will now turn the call over to Chris for his update.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Thank you, Kevin, and good morning, everyone. Thank you for joining us today. As Kevin mentioned, diluted earnings per share for the first six months of the fiscal year was $5.26 which represents a 6.7% increase over the prior year period. Operating income increased to $1,100,000,000 or 14.6% for the first six months of the fiscal year. I'll highlight a few key drivers for our financial performance.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Rate increases in both of our operating segments totaled $185,000,000 Residential commercial customer growth in our Distribution segment combined with higher industrial load increased operating income by an additional $14,400,000 Revenues in our Pipeline and Storage segment increased $11,400,000 reflecting a 10% increase in volumes transported across our system combined with wider spreads between the Waha header and the western end of APT system and delivery points on the eastern end and southern end of its system. APT also experienced an $8,000,000 increase due to higher capacity contracted by tariff based customers due to their growing peak day demand. Consolidated O and M expense increased $74,000,000 This increase is driven by several factors. Employee related costs increased approximately $27,000,000 primarily due to increased headcount and overtime to support company growth. Additionally, bad debt expense increased $15,000,000 As a reminder, we recognized a $14,000,000 non recurring reduction in bad debt expense last fiscal year resulting from a regulatory change in how we recover our bad debt expense in Mississippi.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

We also experienced a $14,000,000 increase in O and M associated with higher levels of line locating, pipeline inspection and system monitoring activities. Finally, experienced a $9,400,000 increase in APT system safety and integrity expense which is offset by a corresponding increase in revenue resulting in no impact operating income. From a regulatory perspective, we have implemented approximately $153,000,000 in annualized regulatory outcomes and we currently have over $389,000,000 in progress. Of this amount, we anticipate implementing between 175,000,000 and $180,000,000 of annualized operating income increases in fiscal twenty twenty five with remainder expected to be implemented in the first quarter of fiscal twenty twenty six. Included in this amount is $39,200,000 requested in our West Texas general rate case.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

On April 25, administrative law judge issued a proposal for decision with the following key recommendations: a 9.8% return on equity actual capital structure which reflects a 60.97% equity layer approval of a rate base totaling 1,200,000,000 approval of capitalized cloud computing costs of fixed assets recovered over a fifteen year period, which effectively treats these costs as a capital expenditure rather than O and M line item and the authorization of two regulatory asset trackers. The first is the system safety integrity regulatory asset that will allow us to defer O and M incurred after 06/30/2024 in excess of $3,500,000 related to system safety integrity regulations adopted by the Rail Commission and VENSA. These costs will be considered for recovery in a future rate filing. The second provides for regulatory asset or liability treatment to capture the effects of changes in federal and state income taxes including the corporate alternative minimum tax. The proposal for decision is scheduled to be considered by the Railroad Commission on May 13.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

If approved as filed, the settlement would result in a $30,600,000 increase in annual operating income. In our mid tax division, the two general rate cases we filed last fall for the ATM Cities Coalition and our Environs customers were consolidated into one general rate case during our second fiscal quarter. As a reminder, this consolidated case represents approximately 15% of the Mid Tex division's customer base. On April 30, we filed with the administrative law judge a proposed settlement on this consolidated case. The key terms of the proposed settlement ROE, ample structure and the accounting treatments I just described are the same as what is included in the West Texas proposal decision.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Additionally, the recommendation includes approval of rate base allocable to these customers of approximately $1,100,000,000 If the administrative law judge recommends a settlement for approval, we anticipate the settlement will be scheduled for consideration by the Railroad Commission on June 10. If approved as filed, the settlement will result in a $6,700,000 increase in annual operating income. Additionally, we expect the Railroad Commission will also consider APT's twenty twenty four GRIP filing for $77,200,000 at its June 10 meeting. Finally, in Kentucky, we completed a hearing this week before the Public Service Commission regarding our general rate case. We anticipate a final order during our fiscal fourth quarter.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Our balance sheet and financial position continue to remain strong. Our equity capitalization as of March 31 was 61% and we did not have any short term debt outstanding. During the second quarter we extended our four credit facilities totaling $3,100,000,000 At quarter end, we had $5,300,000,000 in available liquidity to support our operations. Included in this amount is $1,700,000,000 of net proceeds available from our ATM activities, which is expected to satisfy the remainder of our anticipated fiscal twenty twenty five equity needs and all of our anticipated equity needs for fiscal twenty twenty six. Our fiscal year to date performance gives us confidence to increase our fiscal twenty twenty five earnings per share guidance from a range of $7.05 to 7.25 to a new range of $7.2 to $7.3 We expect the remaining contribution to fiscal twenty twenty five earnings per share to be recognized somewhat evenly by quarter in the back half of the fiscal year.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

The increase in our guidance largely reflects the strength of APT's three system business during the first half of the fiscal year and our expectations for this part of APT's business for the remainder of the fiscal year. As a reminder, following a strong fiscal twenty twenty four performance, we entered fiscal twenty twenty five assuming a return to more normalized three system marketing conditions as a result of increased takeaway capacity in the Permian Basin. Now we currently expect APT's three system business to perform just slightly less than in the prior year. However, the timing of these revenues in fiscal twenty twenty five is expected to be different than in fiscal twenty twenty four. Through March 31, about half of the expected contribution from fiscal twenty twenty five from this portion of APT's business has already been recognized.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

In the prior year, 80% of APT's through system business was recognized in the second half of the fiscal year. Additionally, anticipate our ad valorem taxes to be lower than planned and have increased our O and M spending to stay ahead of compliance work to further enhance safety and reliability of our system. We have also performed some additional maintenance this summer to prepare for the upcoming winter heating season. We now anticipate our O and M, excluding bad debt expense, to be in the range of $860,000,000 to $880,000,000 A significant portion of the year over year increase has already been recognized. We anticipate O and M in the back half of fiscal twenty twenty five to be just slightly higher than in the same period in the prior year.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Finally, capital guidance capital spending guidance remains on track to be approximately $3,700,000,000 We appreciate your time this morning and your interest in Atmos Energy. We'll now open up the call for questions.

[Operator]

Your first question is from the line of Richard Sutherland with JPMorgan.

[Richard Sunderland, Analyst at JPMorgan Chase]

Hey, good morning. Thank you for the time today.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Good morning.

[Kevin Akers, President and CEO at Atmos Energy]

Good morning.

[Richard Sunderland, Analyst at JPMorgan Chase]

Appreciate all the commentary here. Wanted to start with guidance. It sounds like APT through system activity certainly contributing to some of the upside here. Is the higher guidance for 2025 a fair base to think about growth going forward? Or does some of that normalization that you had originally anticipated for 2025 need to be factored in for growth for 2026 and beyond?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Yes. It's a good question, Richie. So we'll still figure, looking at what will happen for the rest of the summer. As you know, conditions are very volatile in the market right now. And, as we set our fiscal twenty twenty six plans, we'll take a snapshot of market conditions probably late summer, early fall, prior to us releasing our fiscal twenty twenty six guidance and updated five year plan to really reflect what we think will be truly reflective of that business set for the next fiscal year.

[Richard Sunderland, Analyst at JPMorgan Chase]

Okay. Got it. Sounds like more to come. Again, similarly on the O and M, it seemed like some of the higher O and M for '25 is a pull forward from '26. Is that a fair characterization?

[Richard Sunderland, Analyst at JPMorgan Chase]

How are you thinking about the higher O and M this year and any efforts to derisk 2026 on that front?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Yes. A couple of things. There's certainly an opportunity to pull forward as I described with the lower than planned and the lower expense, at least to be our expectations. Also, we've talked many, many times, we are not a just in time company from an O and M for spending perspective. So if we have opportunities to further stay ahead of our compliance deadlines or if we see opportunities coming out of the winter heating season this last six months, need get ready for the next six months, we'll perform some additional maintenance in the summer months when our crews and folks are available.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

So it's a little of both. It's just kind of opportunistic based on the operating conditions of the system at this point in time as well as taking advantage of opportunities to pull forward a little bit from future periods.

[Kevin Akers, President and CEO at Atmos Energy]

Yeah. The only thing I'll add to that is that, again, with the blessing we have of being in growth properties right now, we had an increase in the number of line locates from the previous year. And we'll continue to see that probably going forward just given the economic conditions that I discussed earlier in my remarks. So that's the other part of

[Kevin Akers, President and CEO at Atmos Energy]

that O and M, if

[Kevin Akers, President and CEO at Atmos Energy]

you will, is sometimes with growth, people don't see that you'll have the increased line locating expense as well.

[Richard Sunderland, Analyst at JPMorgan Chase]

Got it. That's very helpful. Just a quick follow-up on the O and M discussion there. It sounded like in the Texas GRCs that there is some retroactive component to the reg asset tracker you were referencing. I may not be understanding all the puts and takes here, but just wanted to clarify if you get the final orders in line with settlement, is that upside from that retroactive component and I mean upside versus 25 guidance to be clear?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

At this point, we've reflected in our guidance our expectations for O and M both the cloud computing and treatments as well as the SSI in our current guidance.

[Richard Sunderland, Analyst at JPMorgan Chase]

Great. Thank you so much for the time.

[Kevin Akers, President and CEO at Atmos Energy]

Thank you.

[Operator]

Your next question comes from the line of Nick Caponella with Barclays.

[Nicholas Campanella, Director at Barclays]

Hi. Good morning, team. This is actually for Nick today and thanks for taking my question. I just want to quickly follow-up on financing. It seems like year to date equity issuance is slightly higher than year to date 2024.

[Nicholas Campanella, Director at Barclays]

Again, think with higher capital plan, higher rate base growth, can you update us on the equity financing for the rest of the year, if there is any changes from the messaging from last quarter? And also kind of seeing the interest rate swap to be in a similar spot as last quarter. Just generally, can you speak to the strategy managing the costs over there as well? Thanks.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Sure. This is Chris Fay. So I mean our financing strategy hasn't changed since prior quarter or really for the last several years. We'll continue to finance the corporation in a balanced fashion using a combination of equity long term debt with equity coming through the ATM. We talked about it had a 1,700,000,000.0 on the page now that's been priced to reflect our equity needs, our anticipated equity needs for fiscal twenty twenty five as well as 2026.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

And we'll draw that down as the cash needs of the corporation you know, dictate, when we need to use that. You know, additionally, from a long term debt perspective, you know, the swap that we have in place, that's, again, tied to our anticipated debt issuance in default, for anticipating a thirty year issuance at this point in time. So at this point, we don't see, any changes, in executing, that particular debt transaction, and utilizing, that swap for the benefit of our customers.

[Nicholas Campanella, Director at Barclays]

Got it. That's very helpful. And I just want to follow-up on economic development and seeing the tremendous growth in Texas driven by D and I customers. Could you talk about, first of all, definitely generally need gas need in the region and obviously you're adding large quantity of new gas demand each quarter. I guess at this point, is there any pipeline of projects you're working on or if there's any quantifiable backlog that you can discuss?

[Nicholas Campanella, Director at Barclays]

I'll leave it there.

[Kevin Akers, President and CEO at Atmos Energy]

Yes. I'm not sure about your question about backlog. We don't have a backlog per se. I talked about the two high priority projects for APT, the WA Loop and Bethel to grow spec project right now. Additionally, we're finishing up work on our third Salt Dome Cavern that's part of a integrity maintenance program.

[Kevin Akers, President and CEO at Atmos Energy]

We anticipate that to to be wrapping up sometime in the next nine to twelve month period that's out there. Everything else is all scheduled work that we have lined out on a one, three, and five year basis according to either reliability, supply, versatility and or our risk model safety concerns or direction that way. As we have in our slide deck, we point to 85% investment on capital for safety and reliability for the fiscal year to date period.

[Nicholas Campanella, Director at Barclays]

Understood. Understood. That's helpful color. Thanks again.

[Kevin Akers, President and CEO at Atmos Energy]

Thank you.

[Operator]

Your next question is from the line of Julien Dumoulin Smith with Jefferies.

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

Just really quick legislatively, I'm just wondering what are some of the key bills you guys are monitoring and what potential benefits

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

or implications do they carry for your business? Like, for example, we noticed there's HB four thousand

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

eighty four regarding the standalone depreciation tracker for gas LDCs. Do you see that as a potential benefit for your business? Just any color on that front would be helpful. Thank you.

[Kevin Akers, President and CEO at Atmos Energy]

Yeah. We we continue to monitor all the sessions across our eight states. We have two that are currently closed or concluded their session, Mississippi and Kentucky. Don't wanna get too far ahead of the work that's continued to go on going on across our legislative bodies right now, but we do see some bills out there that have our interest right now, but we think it needs to go through the final steps of the legislative process. And then if they're related to the utility side of the business, they'd have to go to that particular jurisdiction's commission to see how it falls into either tariffs or rules or action upon for that company.

[Kevin Akers, President and CEO at Atmos Energy]

So don't wanna get too far out in front of what the legislate legislature's gonna do for the remaining session. But, again, we're keeping an eye on everything that's out there.

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

Thank you. That's very clear. And maybe just another housekeeping question. So since you raised the FY '25 EPS guidance, so the new guidance midpoint is now $7.07 25 $7.25. Should we use the new EPS guidance midpoint as the new EPS base?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Okay. When you say new p EPS base, what what do you mean there?

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

It's for calculating the five year CAGR.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

At this point, think that's a pretty safe assumption.

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

Got it. Thank you.

[Operator]

Your next question is from the line of Paul Fremont

[Paul Fremont, Managing Director at Ladenburg Thalmann]

Thank you very much. Congratulations on a strong quarter and my question has been answered. Thank you.

[Kevin Akers, President and CEO at Atmos Energy]

Thank you.

[Operator]

Your next question is from the line of Christopher Jeffers Jeffrey with Mizuho Securities.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Hi, everyone. Congrats on the quarter.

[Kevin Akers, President and CEO at Atmos Energy]

We can't hear you on this end.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Sorry. Is that better?

[Kevin Akers, President and CEO at Atmos Energy]

That's better. Thank you.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Okay. So just a couple quick ones from me. I just noticed the the timing for the Colorado rate case expectation got pushed back a bit. Just any kind of thoughts on timing there and expectations for when you get to that case.

[Kevin Akers, President and CEO at Atmos Energy]

No. That's that's something we're always looking at, what we have going on in the jurisdiction, what we have going on in other jurisdictions, ongoing conversation with our regulatory jurisdictions. So I wouldn't read a lot into that at this point.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great. And then maybe just on the West Texas, the cap the the cloud computing costs that you mentioned, Kevin, in in the opening remarks, just kind of expectations for that to be implemented more wholesale across Texas or any other states. Does that kind of change how you're approaching, you know, thinking about those types of costs within rate base?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

I would just kind of view this as a continuation of our ongoing regulatory strategy of seeking to reduce lag where we can. Oftentimes, you know, we'll start with an individual jurisdiction who will, include something into their regulatory construct. We then try to seek to replicate that in other states to the best of our ability. So, we'll, we'll see where the road commission's vote comes down next next week. And then after that, for the May 13 for West Texas and again for Mid Tex, on June 10.

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

And then we'll see if, if it makes sense for us to to bring that to other jurisdictions, within the enterprise.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Got it. Thanks. And just to clarify, so that would be the first jurisdiction that that type of cost is included?

[Christopher Forsythe, Senior VP & CFO at Atmos Energy]

Correct.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great. Alright. Well, thanks again. Have a great day.

[Kevin Akers, President and CEO at Atmos Energy]

Thank you.

[Operator]

Your next question is from the line of Ryan Levine with Citigroup.

[Ryan Levine, Analyst at Citigroup]

Good morning, everybody.

[Kevin Akers, President and CEO at Atmos Energy]

Hi,

[Ryan Levine, Analyst at Citigroup]

Hi. Just a quick one. In terms of APT expansion projects, the business continues to grow pretty materially. What are the underlying growth assumptions that embed the expansion projects that you have underway? And what conditions would merit further expansion or upside to your existing plan?

[Kevin Akers, President and CEO at Atmos Energy]

It's all part of our planning process. Again, it it's based on what the city models are and what what they're seeing for growth of population increases across the service territories. What we're seeing for demand anticipated capacity requirements off of that growth, we put those in our models, then try and forecast out when we expect that demand to show up and make sure we have the pipe and the supply already there to meet those anticipated demands. That's something we go through several times a year and then reaffirm again with our customers what their MDQs are as we head into winter. Then post winter on APT, we'll review what actual MDQs they achieved and will reset the go forward basis.

[Kevin Akers, President and CEO at Atmos Energy]

That drives our modeling for the next several years.

[Ryan Levine, Analyst at Citigroup]

So given the winter is largely behind us, you know, has that that refresh already occurred for this calendar year, so that we wouldn't expect any material changes until a review post winter twenty twenty six of of expansion opportunities?

[Kevin Akers, President and CEO at Atmos Energy]

The review is ongoing at this point. We continue to have conversations with those LDCs behind our our city gate there on APT, and we'll look to make sure those are reset prior to heading into next heating season, if any adjustments at all are required.

[Ryan Levine, Analyst at Citigroup]

Okay. Great. Thanks for taking my questions.

[Kevin Akers, President and CEO at Atmos Energy]

Sure.

[Operator]

At this time, there are no further questions. I will now hand today's call back over to the presenters for closing remarks.

[Daniel Meziere, VP of Investor Relations & Treasurer at Atmos Energy]

We appreciate your interest in Atmos Energy, and thank you again for joining us today. A recording of this call is available for replay on our website through June 30. Have a good day.

[Operator]

This does conclude today's call. Thank you for joining. You may now disconnect your lines.

Participants

Executives

• Daniel Meziere, VP of Investor Relations & Treasurer
• Kevin Akers, President and CEO
• Christopher Forsythe, Senior VP & CFO

Analysts

• Richard Sunderland, Analyst at JPMorgan Chase
• Nicholas Campanella, Director at Barclays
• Julien Dumoulin-Smith, Analyst at Jefferies Financial Group
• Paul Fremont, Managing Director at Ladenburg Thalmann
• Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities
• Ryan Levine, Analyst at Citigroup