Detailed Narrative
Strong Financial Performance and Updated Guidance
Atmos Energy reported year-to-date fiscal '25 net income of $1 billion, translating to $6.40 per diluted share. The company updated its fiscal '25 EPS guidance to a range of $7.35 to $7.45, up from the previous $7.20 to $7.30. This upward revision incorporates a $0.10 benefit in Q4 FY25 from new Texas legislation and improved pass-through collections. For fiscal '26, the company anticipates EPS to grow in a range of 6% to 8% annually, with a full update to the 5-year plan expected in November.
Impact of Texas House Bill 4384
New Texas legislation, House Bill 4384, effective June 20, 2025, significantly enhances Atmos Energy's ability to defer capital investments for future recovery. This bill authorizes gas utilities to defer post-in-service carrying costs, depreciation, and ad valorem taxes for unrecovered gas gross plant associated with new customer growth and system expansion. Previously, approximately 45% of total capital spending qualified for Rule 8.209 treatment; with HB 4384, this increases to approximately 80%, with the majority of the new eligible capital associated with APT.
Robust Customer Growth and Economic Development
The company continues to experience strong customer growth across its service territories, particularly in Texas. For the 12 months ended June 30, 2025, Atmos Energy added nearly 58,000 new residential customers, with 45,000 in Texas. Commercial customer growth remained solid with over 2,500 new connections fiscal year-to-date. Additionally, 22 new industrial customers were added fiscal year-to-date, bringing an anticipated annual load of approximately 3.4 Bcf once fully operational, comparable to adding 67,000 residential customers.
Emerging Data Center Demand
Atmos Energy is actively engaging with the growing demand from large-load customers, including data centers. During the third quarter, APT secured a contract to transport natural gas to a customer generating on-site power for a data center in the Abilene area. This data center is expected to be fully operational by the end of the calendar year, with APT anticipating providing approximately 30 Bcf of gas annually. Revenues from this contract are included in APT's Rider REV mechanism, benefiting LDC customers.
Regulatory Success and Capital Investment
The company's financial results were significantly bolstered by regulatory outcomes, contributing $322 million to operating income. Fiscal year-to-date, $351 million in annualized regulatory outcomes have been implemented, with an additional $229 million in progress, expected to be implemented in Q1 FY26. Consolidated capital spending increased 22% to $2.6 billion year-to-date, with a full-year target of $3.7 billion, 86% of which is dedicated to enhancing system safety and reliability.
Operational Efficiency and Customer Focus
While consolidated O&M increased by $85 million, primarily due to employee-related costs and system activities, the company expects fiscal '25 O&M (excluding bad debt) to remain within the $860 million to $880 million range. Atmos Energy maintains a strong focus on customer satisfaction, evidenced by a 97% satisfaction rating and significant outreach efforts that helped 48,000 customers receive $17.5 million in funding assistance. The company was also recognized as a 2025 Most Trusted Brand.