Atmos Energy NYSE: ATO reaffirmed its fiscal 2026 earnings guidance after reporting net income of $1.2 billion, or $7.33 per diluted share, for the first nine months of the fiscal year. Earnings per share rose 14.5% from the prior-year period, according to management.
The company maintained its fiscal 2026 guidance range of $8.40 to $8.50 per share. Chief Financial Officer Chris Forsythe said third-quarter performance at Atmos Pipeline–Texas, or APT, was in line with expectations, though natural-gas price spreads narrowed beginning in June as additional pipeline takeaway capacity entered service earlier than expected.
Financial drivers and regulatory activity
Forsythe said year-to-date results included a $132 million, or $0.63-per-share, impact from Texas House Bill 4384. Of that amount, $71 million was recognized in the distribution segment and $61 million was recognized at APT.
Other contributors to year-to-date performance included $227 million of rate increases across the company’s operating segments, as well as a $41 million operating-income increase tied to residential and commercial customer additions and higher customer load. APT’s through-system revenue, net of the Rider REV mechanism, increased about $34 million, or $0.16 per share.
APT captured average spreads of $4.66 during the first nine months of fiscal 2026, compared with $1.77 in the comparable prior-year period. Forsythe attributed the higher spreads to rising associated-gas production, constrained takeaway capacity and lower demand during an unseasonably warm winter heating season.
However, management said those conditions have changed. Forsythe said new takeaway capacity that had been expected to enter service later in the calendar year came online in late June and late July, contributing to compressed spreads. Chief Executive Officer Kevin Akers said the company now expects APT’s second-half earnings contribution to land near the lower end of a previously discussed $0.08-to-$0.12 range.
Since the start of the fiscal year, Atmos Energy has implemented $396 million of annualized operating-income increases, including $260 million implemented during the fiscal third and fourth quarters, Forsythe said. The company has seven regulatory filings in progress seeking nearly $334 million in annualized operating-income increases, with most of that amount expected to be implemented in the first quarter of fiscal 2027.
Capital spending targets safety, reliability and growth
Akers said the company’s fiscal-year capital expenditures total $3.1 billion, with more than 87% directed toward safety and reliability improvements for its distribution, transmission and underground-storage systems. Forsythe later said the company remains on track to spend approximately $4.2 billion in capital expenditures during fiscal 2026.
At APT, the company is developing several projects around the Dallas-Fort Worth Metroplex. Two projects southeast of the metroplex would install a combined 29 miles of 36-inch pipeline connecting adjacent compressor stations with the Tri-City storage facility. The projects are intended to enhance reliability and capacity for gas transported from the Haynesville and Cotton Valley shale plays to the Bethel and Tri-City storage facilities.
Atmos Energy also began construction on a bilateral compressor station in Carthage, Texas, intended to increase capacity on its 36-inch Line S-2 pipeline. In addition, it is completing the final phase of the WA Loop Project, which would add 15 miles of 36-inch pipe and complete a 92-mile pipeline loop serving the northwestern portion of the metroplex. Management said all of those projects are scheduled to enter service by the end of the calendar year.
APT also plans to submit its annual Rider REV tariff this month, seeking to provide $160 million to $165 million in revenue credits to local distribution company customers between Nov. 1, 2026, and Oct. 31, 2027. If approved as filed, Akers said customers would receive more than $300 million in savings through the Rider REV mechanism between November 2023 and October 2027.
Customer additions and operating costs
Atmos Energy added nearly 51,000 customers during the 12 months ended June 30, including nearly 39,000 customers in Texas. The company added 600 commercial customers during the third quarter and more than 2,500 curb commercial customers year to date.
The company also added five industrial customers in the third quarter and 12 industrial customers year to date. Those 12 customers are expected to consume approximately 950,000 Mcf annually once fully operational, which Akers said is volumetrically equivalent to about 18,000 residential customers.
Consolidated operations and maintenance expense declined $14 million year to date, Forsythe said, reflecting the effects of House Bill 4384 deferrals that offset higher employee compliance and safety spending in the distribution segment and increased maintenance spending at APT. Still, the company raised its fiscal 2026 O&M outlook, excluding bad-debt expense, to a range of $875 million to $885 million.
Akers said the higher spending reflects ongoing activity in the company’s service territories, including customer growth, line-locate work, compliance requirements and maintenance activity.
Balance sheet and outlook
Atmos Energy ended June with an equity capitalization ratio of 60%, no short-term debt outstanding and $4.6 billion of available liquidity. That liquidity includes approximately $937 million in net proceeds available under existing forward-sale agreements, which Forsythe said should meet the company’s remaining fiscal 2026 equity needs and a significant portion of anticipated fiscal 2027 needs.
Looking ahead, Akers said the company expects earnings-per-share growth of 6% to 8% from the current fiscal 2026 guidance range as it moves into fiscal 2027. Management said it will refresh its five-year plan later in the fall, including its outlook for operating and maintenance cost growth.
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.
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