• Net Income: $352 million or $2.23 per diluted share for the first quarter.
• Capital Spending: $891 million in the first fiscal quarter.
• Customer Growth: Added over 59,000 new customers in the past 12 months, with over 46,000 in Texas.
• Commercial Customer Growth: Nearly 1,100 new commercial customers connected in the first quarter.
• Industrial Customer Growth: Added 11 new industrial customers, utilizing 2.3 Bcf of gas annually.
• Diluted Earnings Per Share Growth: 7.2% increase over the prior year quarter.
• Consolidated Operating Income: Increased 15% to $459 million in the first quarter.
• Rate Increases: Totaled $69 million across operating segments.
• Operating Income from Customer Growth: Increased by $10 million due to residential and commercial growth.
• APT Through-System Revenues: Increased by $8 million.
• Consolidated O&M Expenses: Increased by $41 million.
• Bad Debt Expense: Increased by $15 million.
• Employee-Related Costs: Increased by $11 million.
• Compliance and Safety-Related Spending: Increased by $8 million.
• APT System Safety & Integrity Expense: Increased by $5 million, offset by revenue increase.
• Annualized Operating Income Increases: $152 million implemented in the distribution segment.
• Long-Term Debt and Equity Financing: Over $1 billion completed, including $650 million long-term debt and $380 million equity forward agreements.
• Equity Capitalization: 60% as of December 31.
• Available Liquidity: $5.2 billion, including $1.5 billion from forward sales agreements.
• Fiscal '25 Earnings Per Share Guidance: $7.05 to $7.25.
• Capital Spending Plan: $3.7 billion for fiscal '25.

• Warning! GuruFocus has detected 8 Warning Signs with ATO.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Atmos Energy Corp (NYSE:ATO) reported a strong first quarter net income of $352 million, or $2.23 per diluted share, marking a 7.2% increase over the prior year.
• The company added over 59,000 new customers in the past 12 months, with significant growth in Texas, demonstrating robust customer growth.
• Atmos Energy Corp (NYSE:ATO) completed several projects to enhance system safety, reliability, and supply diversification, including the final phase of the 36-inch Line S-2 project.
• The company achieved high customer satisfaction ratings, with 98% satisfaction among customer support associates and service technicians.
• Atmos Energy Corp (NYSE:ATO) is well-positioned to achieve fiscal 2025 earnings per share in the range of $7.05 to $7.25, supported by a strong start to the fiscal year and a solid capital spending plan of $3.7 billion.

Negative Points

• Consolidated operating and maintenance expenses increased by $41 million, driven by higher bad debt expense and employee-related costs.
• The company experienced a $15 million increase in bad debt expense, partly due to a nonrecurring reduction in the prior year.
• Employee-related costs rose by approximately $11 million, primarily due to increased headcount and higher overtime costs.
• Atmos Energy Corp (NYSE:ATO) faces regulatory challenges with several rate cases in progress, seeking approximately $126 million in annualized operating income increases.
• The company is on a negative outlook from Moody's, which could potentially impact its credit rating and financing costs.

Q & A Highlights

Q: Can you provide more color on the higher CapEx plan announced last quarter, particularly regarding rate lags and earned ROE trajectory? A: Kevin Akers, President and CEO, explained that the capital plan reflects growth across the system and supports system modernization and pipeline replacement programs. The strategy is a continuation of previous years, focusing on identifying projects and growth areas that require modernization.

Q: Could you elaborate on customer growth targets, especially regarding large-scale industrial and generation projects? A: Kevin Akers noted that growth is strong across all sectors, with 11 new industrial customers added this quarter. While there are prospects for further growth, specific details will be shared once agreements are finalized. The overall economic outlook remains positive across the service territory.

Q: How much equity should be modeled for 2025, and should we assume that ATM is ratable? A: Christopher Forsythe, CFO, stated that equity issuance is expected to be in the $600 million to $800 million range for fiscal 2025. The drawdown will depend on cash flow needs and balance sheet status throughout the year.

Q: Are any of the 11 new industrial customers power plants, and are there more opportunities from power generation? A: Kevin Akers clarified that the new industrial customers are not power plants but include a variety of industries. While there are inquiries from power generation, specifics will be shared once contracts are signed.

Q: Could you comment on the Moody's rating outlook and how higher equity issuance affects the FFO debt metric? A: Christopher Forsythe mentioned that Moody's is expected to update their outlook by March or April. The company is comfortable with its current equity capitalization and has factored in various scenarios in its planning cycle, anticipating minimal impact on financing costs even with a potential downgrade.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.