What are the preliminary financial impacts on the balance sheet and earnings from Winter Storm Fern?

Management clarified that Winter Storm Fern was not as significant as Uri. Upstream supply performed very well with minimal issues, which were backfilled by storage. They do not expect a significant financial impact from gas supply costs related to this storm. “I don't think you're going to see the impact as you did in Uri, both on the operational nor a financing from gas supply cost related to Winter Storm Fern.”

Are affordability pressures migrating into the gas LDC space, and what is the political sentiment regarding natural gas costs?

Management stated that affordability is always a top-of-mind topic with commissions. They refer to their deck (Slides 15-17) for metrics. Regulators understand the need for investment to maintain reliability and safety, especially after events like Winter Storm Fern. The company is not receiving negative feedback from regulators on this issue. “We're not getting any sort of negative feedback or impression from our regulators at this point as they understand the need to maintain reliability and safety across the system.”

Is the company seeing an inflection in gas power projects or on-site natural gas usage for data centers?

Management confirmed they continue to receive inquiries regarding large loads, including data centers and additional power generation. They are investigating these opportunities and will report signed contracts when available. APT already serves some power generation facilities. “We'll share more about those once we have a signed contract. We don't want to get out in front and have to walk any of that sort of load back at this point.”

ATO

Atmos Energy (ATO) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q1 FY26)· Utilities· Feb 4, 2026

Source: earnings call transcript

Executive summary

Atmos Energy Corporation Q1 FY26 — Strong Start with Reaffirmed Guidance and System Modernization Progress

Atmos Energy delivered a strong Q1 FY26, exceeding prior-year earnings and reaffirming its full-year EPS guidance. The company successfully managed Winter Storm Fern, demonstrating system resilience and effective gas supply planning. Strategic capital investments continue to drive safety and reliability enhancements, supporting ongoing customer growth and regulatory rate increases across its service territories.

Highlights

Reported Q1 FY26 net income of $403 million or $2.44 per diluted share, a 9.4% increase over the prior year quarter.
Reaffirmed fiscal 2026 EPS guidance in the range of $8.15 to $8.35 per share.
Successfully navigated Winter Storm Fern with all business segments performing well and minimal supply issues.
Implemented $123 million in annualized operating income increases in the distribution segment since the fiscal year began.
Achieved 98% customer satisfaction ratings and recognized by J.D. Power and Escalent for customer service.

Concerns

Consolidated O&M expense increased by $23 million, driven by $12 million in compliance and safety-related spending and $5 million in employee-related costs.
APT's through system volumes declined approximately 2 Bcf due to increased maintenance during the quarter.
Mississippi rate case outcome is being appealed to the State Supreme Court, though Mississippi represents only ~5% of the business.

Guidance & targets

Category	Target	Timeline	Confidence
Fiscal 2026 Earnings Per Share	$8.15 to $8.35 per share high materiality	FY26 · 2026	High
Fiscal 2026 Annual Dividend	$4 per share high materiality	FY26 · 2026	High
Annual Dividend Growth Rate	6% to 8% annually high materiality	Annually	High
Capital Spending Plan	$4.2 billion high materiality	FY26 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Atmos Pipeline-Texas (APT) APT's through system revenues net of Rider REV increased by $7 million. Through system volumes declined approximately 2 Bcf due to increased maintenance. Spreads widened significantly to an average of $3.99 compared to $1.56 in the prior year quarter, driven by rising associated gas production, constrained takeaway capacity, and lower demand due to unseasonably warm weather. Through system volumes: declined ~2 BcfAverage spreads: $3.99Prior year average spreads: $1.56	—	—	—	$7 million increase in operating income

ATO operating KPIs by quarter

ATO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q2 FY25	Jun 2025 Q3 FY25	Change vs prior quarter
Customers	3.4M 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 3.4 million customers across 1,400 communities in 8 states. Source: earnings call transcript	3.4M 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 3.4 million customers from 1,400 communities across 8 states. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Capital programs

Fiscal 2026 Capital Spending Plan underway $4.2 billion

Period spend: $1 billion

Spent to date: $1 billion

Start: FY26

Benefit:Enhancing safety and reliability of distribution, transmission, and underground storage systems

Reaffirmed plan for the fiscal year. Over 85% of Q1 spend focused on safety and reliability.

APT Bethel to Groesbeck Pipeline completed

Benefit:55 miles of 36-inch pipeline, additional capacity to transport gas into DFW Metroplex and I-35 corridor

Completed installation during the first quarter.

APT Line WA Loop Project Phase 2 underway

Spent to date: 13 miles placed in service

Benefit:44 miles of 36-inch pipeline to support growth west of Fort Worth

13 miles placed in service, remaining 31 miles expected in spring.

Bethel Salt Dome Storage Facility Takeaway Capacity Expansion completed

Benefit:More than doubled takeaway capacity, providing additional peak day deliverability into APT system

Completed during the first quarter.

APT Interconnect Projects completed

Benefit:Added 700,000 Mcf per day of additional natural gas supply to the APT system

Completion of 2 interconnect projects enhanced supply optionality, reliability, and system versatility.

Risks & headwinds

Mississippi Rate Case Appeal Ongoing

Mississippi represents approximately 5% of the business.

Mitigation:Engaging in dialogue with the commission, evaluating tariff implementation, and appealing the decision to the State Supreme Court. The company believes it has the ability to absorb potential outcomes due to the small percentage of business in Mississippi.

O&M Expense Increases Q1 FY26

$23 million consolidated O&M increase, including $12 million for compliance/safety and $5 million for employee costs.

Mitigation:Increased spending is associated with necessary leak survey work, maintenance timing, and increased headcount to support company growth and service work.

APT Through System Volume Decline Q1 FY26

Approximately 2 Bcf decline in through system volumes.

Mitigation:Decline attributed to increased maintenance performed during the quarter compared to the prior year. This was partially offset by significantly widened spreads.

Q&A highlights

How should the $35 million Q1 benefit from HB 4384 be annualized, given the $0.40 original guide?

Management stated the Q1 benefit was $0.16 per share, not $0.21 as suggested by the analyst. They cautioned against annualizing the $35 million benefit by simply multiplying it by four, as the impact is influenced by the timing of capital expenditures and operational activities. They noted that construction activities were temporarily reduced during Winter Storm Fern.

“I think it would be dangerous to say take 35 and multiply it by 4. As a reminder, year-over-year, we did have the impact of the House Bill 4384 in the fourth quarter last year. So I would probably steer clear of just going too strong at this point and just saying 35 times 4 moving forward.”

asked by Julien Dumoulin-Smith · answered by Christopher Forsythe

2 min read 6 chapters

Detailed narrative

Winter Storm Fern Performance and System Resilience

Atmos Energy's entire business, including Distribution, Transmission, Atmos Pipeline Texas (APT), underground storage, and gas supply, performed to design expectations during Winter Storm Fern. The company reported minimal supply issues, effectively backfilling with storage to maintain reliable natural gas service. Management highlighted that the storm's impact was not as significant as Winter Storm Uri, and no material financial impact from gas supply costs is anticipated.

Strategic Infrastructure Investments and Milestones

The company continues to execute its system modernization strategy, with over 85% of Q1 capital expenditures focused on enhancing safety and reliability. Key APT project milestones include the completion of 55 miles of 36-inch pipeline from Bethel storage to Groesbeck, and 13 miles of Phase 2 Line WA Loop.

Additionally, APT doubled takeaway capacity at its Bethel Salt Dome storage facility and added 700,000 Mcf per day of natural gas supply through two interconnect projects, significantly enhancing supply optionality and reliability.

Customer Growth and Satisfaction

Atmos Energy continues to experience steady customer growth, adding nearly 54,000 new customers in the 12 months ending December 31, 2025, with 42,000 of those in Texas. The company also added over 1,100 commercial and 3 new industrial customers in Q1.

Customer satisfaction remains high at 98%, with the company recognized by J.D. Power and Escalent as a leader in customer satisfaction in the South and Midwest regions, where over 96% of its customers are located.

Regulatory Progress and Affordability

Since the beginning of the fiscal year, Atmos Energy has implemented $123 million in annualized operating income increases in its distribution segment. The company has 5 filings in progress seeking an additional $81 million and plans another filing for approximately $400 million in annualized increases.

Management actively engages with regulators on affordability, emphasizing the necessity of investments for system reliability and safety, and reports no negative feedback on this front.

Financing Activities and Liquidity

During the quarter, Atmos Energy completed over $1 billion in long-term debt and equity financing, including a $600 million long-term debt financing and the settlement of $472 million in equity forward agreements. The company maintains a strong financial position with 60% equity capitalization as of December 31, no short-term debt outstanding, and $4.6 billion in available liquidity.

Approximately $1.1 billion in net proceeds from existing forward sale agreements are expected to cover remaining FY26 and a portion of FY27 equity needs.

Mississippi Rate Case Update

Regarding the Mississippi rate case, the company is in dialogue with the commission to implement the tariff reflecting the late 2025 order, with a decision on the tariff and deferral mechanisms expected soon. Atmos Energy is also evaluating the impact of shifting to a historical test basis for its annual filing mechanism and has filed a public notice of intent to appeal the decision to the State Supreme Court.

Mississippi constitutes approximately 5% of the company's business.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.