Atmos Energy Reaffirms Guidance as Texas Growth Offsets Narrowing APT Spreads
The natural gas utility reported strong year-to-date performance driven by customer additions and regulatory benefits, but expects moderating gains from pipeline trading operations.
Strong Nine-Month Performance
Atmos Energy Corporation reaffirmed its fiscal 2026 earnings per share guidance of $8.40 to $8.50 after reporting year-to-date net income of $1.2 billion, or $7.33 per diluted share, representing a 14.5% increase over the prior year period (earnings call, 2026-08-06).
The Dallas-based natural gas utility's performance was bolstered by Texas House Bill 4384, which contributed $132 million or $0.63 per share—$71 million in the distribution segment and $61 million at its Atmos Pipeline-Texas (APT) division. Rate increases across operating segments totaled $227 million, while residential and commercial customer growth added $41 million in operating income.
Robust Customer Growth Continues
The company added nearly 51,000 new customers in the 12 months ending June 30, 2026, with approximately 39,000 in Texas alone. Notably, Atmos added 12 industrial customers fiscal year-to-date, which are expected to consume approximately 950,000 Mcf per year once fully operational—"volumetrically equivalent to adding 18,000 residential customers," according to CEO Kevin Akers (earnings call, 2026-08-06).
The expansion reflects broader economic momentum in Texas, which "added jobs at a faster rate than the nation" and gained 30 Fortune 500 companies in 2026, bringing its total to 57, the highest in the state since 2010 (earnings call, 2026-08-06).
APT Spreads Narrow as Capacity Expands
While APT's through-system revenues net of Rider REV increased $34 million or $0.16 year-to-date, spreads have compressed significantly. For the first nine months of fiscal 2026, spreads averaged $4.66 compared with $1.77 in the prior year period. However, CFO Chris Forsythe noted that "beginning in June, spreads have narrowed significantly now that additional takeaway capacity has come online, some sooner than expected" (earnings call, 2026-08-06).
Two pipelines expected to launch in the fourth calendar quarter came online in late June and late July, compressing spreads. Forsythe indicated the company would likely achieve "the lower end" of its previously stated $0.08 to $0.12 range for second-half APT contributions (earnings call, 2026-08-06).
Infrastructure Investment and Customer Savings
Atmos deployed $3.1 billion in capital expenditures year-to-date, with over 87% focused on safety and reliability. The company remains on track to spend approximately $4.2 billion for the full fiscal year. Major APT projects underway include 29 miles of 36-inch pipeline connecting compressor stations to the Tri-City storage facility and a bilateral compressor station in Carthage, Texas, all scheduled for completion by year-end.
APT will submit its annual Rider REV tariff this month seeking $160 million to $165 million in revenue credits for local distribution customers. If approved, these customers will have received over $300 million in savings through the mechanism from November 2023 through October 2027 (earnings call, 2026-08-06).
Financial Position and Outlook
The company maintained a 60% equity capitalization ratio with no short-term debt outstanding and $4.6 billion in available liquidity. Operating and maintenance spending is expected to range between $875 million and $885 million for fiscal 2026, slightly higher than previous expectations.
Looking ahead, Forsythe indicated the company anticipates "launching a 6% to 8% earnings per share growth" off the current guidance range, reflecting a moderation from the step-change impact of House Bill 4384 in fiscal 2026 (earnings call, 2026-08-06).
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.