Atmos Energy Q4 Earnings Call Highlights

Key Points

• Atmos Energy reported fiscal 2026 diluted EPS of $8.49, its 24th consecutive year of EPS growth, and introduced fiscal 2027 guidance of $9.05–$9.25 per share. The company expects 6%–8% annual earnings growth through fiscal 2031 and raised its indicated fiscal 2027 dividend 9% to $4.36 per share.
• The company plans nearly $29 billion in capital investment through fiscal 2031, with about 88% dedicated to safety and reliability and roughly $23 billion allocated to Texas. The spending is expected to support 12%–14% annual rate-base growth and expand the rate base to about $46 billion by fiscal 2031.
• Atmos expects to fund the plan with approximately $17 billion in incremental long-term financing, using debt and equity raised through its ATM program. Its projections assume current regulatory frameworks remain in place and do not rely on new regulatory mechanisms.

Atmos Energy NYSE: ATO reported fiscal 2026 diluted earnings of $8.49 per share and outlined a nearly $29 billion investment plan through fiscal 2031, as the natural gas utility prepares for customer growth and upgrades its distribution, transmission and storage systems.

The result marked the company’s 24th consecutive year of earnings per share growth, President and CEO Kevin Akers said on the fiscal fourth-quarter earnings call. Atmos initiated fiscal 2027 earnings guidance of $9.05 to $9.25 per share and projected annual earnings growth of 6% to 8% from the midpoint of that range through fiscal 2031.

The board also approved an indicated fiscal 2027 annual dividend of $4.36 per share, up 9% from fiscal 2026, Chief Financial Officer Chris Forsythe said. The increase represents the company’s 43rd consecutive year of dividend-per-share growth. Atmos plans to grow the dividend in line with earnings per share over the five-year plan.

Spending Plan Focuses on Texas and System Reliability

Approximately 88% of the nearly $29 billion capital plan is allocated to safety and reliability, Akers said. About $23 billion is expected to be spent in Texas, including approximately $16 billion in the company’s Texas distribution divisions and $7 billion at Atmos Pipeline-Texas, or APT.

Forsythe said capital spending is expected to grow 11% to 13% annually, supporting rate base growth of about 12% to 14% per year. Atmos projects its rate base will reach approximately $46 billion by the end of fiscal 2031, compared with an estimated $25 billion at the end of fiscal 2026.

The company spent $4.2 billion on capital projects in fiscal 2026, an increase of 17% from the prior year. It replaced nearly 1,100 miles of distribution and transmission pipe and more than 59,000 service lines, Forsythe said.

Atmos added approximately 49,000 residential customers during the year, including more than 37,000 in Texas. It also added nearly 3,200 commercial customers and 17 industrial or large-load customers. The latter group is expected to consume approximately 2 billion cubic feet of gas annually when fully operational, Akers said.

Asked about future large-load demand, Akers said the company has a backlog of several dozen prospective projects across its service territory. He declined to provide specifics before contracts are signed.

Financing and Regulatory Outlook

The five-year plan includes approximately $17 billion in incremental long-term financing. Forsythe said Atmos expects to meet its equity needs through its at-the-market, or ATM, program while also issuing long-term debt. The company intends to file for a new $1.7 billion ATM program with the Securities and Exchange Commission in early fiscal 2027.

Atmos ended fiscal 2026 with approximately $3.8 billion in available liquidity, including $871 million in forward equity proceeds priced through its ATM program. Those proceeds satisfy more than half of the company’s anticipated fiscal 2027 equity needs, Forsythe said. Equity represented 60% of the company’s capitalization at year-end.

“We are very comfortable with it being around 60%,” Forsythe said of equity capitalization, adding that the level has supported economical long-term debt financing and helped the company withstand changing economic conditions.

Atmos implemented $395 million in annualized operating income increases during fiscal 2026. Since the start of fiscal 2027, it has implemented another $264 million in its distribution segment, including $255 million from annual rate review mechanisms in Texas, Forsythe said.

The five-year plan assumes existing returns on equity, capital structure and regulatory features remain in place. It does not assume approval of new regulatory mechanisms or regulatory asset treatment for incurred costs.

Deferrals and Pipeline Operations

Fiscal 2026 earnings included $175 million in pretax deferrals under Rule 7.7102, up $149 million from a year earlier, Forsythe said. Of the total, approximately $100 million was recognized in the distribution business and $75 million at APT.

Consolidated operations and maintenance expense was $875 million, in line with fiscal 2025, as the deferrals offset higher costs in areas including safety, maintenance and employee expenses. Atmos expects fiscal 2027 operations and maintenance expense, excluding bad debt, of $870 million to $890 million and assumes 4% annual inflation in the five-year plan.

During the question-and-answer session, Akers said the company does not expect another $149 million year-over-year increase in Rule 7.7102 deferrals. Forsythe said qualifying capital expenditures and related deferrals across several mechanisms should generally grow alongside the capital plan, although not all spending qualifies.

At APT, spreads in the through-system business returned to more historical levels during the fiscal fourth quarter, and Atmos has planned for those conditions to continue into fiscal 2027, Forsythe said. He noted that 85% to 90% of APT revenue comes from fixed delivery charges to its 11 local distribution company customers.

Akers also said Atmos has challenged a Mississippi regulatory decision that shifted the state’s rate review from a forward-looking to a historical approach. The company is awaiting a ruling from the Mississippi Supreme Court.

About Atmos Energy (NYSE:ATO)

Atmos Energy Corporation NYSE: ATO is a regulated natural gas utility that distributes natural gas to residential, commercial, industrial and agricultural customers. The company also operates natural gas pipeline and storage assets, supporting the transportation and management of gas within its service areas.

Atmos Energy serves more than 3 million distribution customers across eight states, including Texas, Louisiana, Mississippi, Tennessee, Kentucky, Virginia, Kansas and Colorado. Its distribution operations include a large network of natural gas pipelines and related infrastructure, while its pipeline and storage business provides transportation and storage services primarily in Texas and Mississippi.

The company traces its history to 1906 and is headquartered in Dallas, Texas.

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