ATMOS ENERGY CORP Q2 FY2025 earnings call

• Added nearly 59,000 new customers in the 12 months ended March 31, 2025, with almost 46,000 in Texas; commercial and industrial growth strong.
• APT work: Phase 2 of Line WA Loop started, Bethel to Groesbeck project ongoing, 2 interconnect projects completed, over 1 Bcf of additional gas supplies added.
• Customer satisfaction: 98% satisfaction rating for associates and service technicians; customer advocacy team helped ~32,000 customers get over $10M in funding.
• Regulatory: Implemented ~$153M annualized regulatory outcomes, over $389M in progress; West Texas GRC proposal, Mid-Tex consolidated case, Kentucky rate case ongoing.

The distribution segment saw residential commercial customer growth and higher industrial load contribute to operating income. The Pipeline and Storage segment had revenues increase $11.4 million due to a 10% increase in volumes transported, wider spreads, and higher capacity contracted by tariff-based customers. Rate increases in both operating segments totaled $185 million. Residential commercial customer growth in the distribution segment, combined with higher industrial load, increased operating income by an additional $14.4 million. APT also experienced an $8 million increase due to higher capacity contracted by tariff-based customers.

• Updated fiscal '2025 EPS guidance to $7.20 to $7.30 from $7.05 to $7.25.
• Capital spending guidance on track to be approximately $3.7 billion.
• O&M expense expected to be in the range of $860 million to $880 million, with back half of fiscal '2025 slightly higher than prior year.

• Market volatility affecting APT through-system business.
• Regulatory changes potentially impacting outcomes.
• Increase in O&M due to line locating, pipeline inspection, system monitoring, and bad debt.
• Uncertainty in legislative processes affecting utility operations.

Q: Regarding guidance, is the higher guidance for 2025 a fair base to think about growth going forward and how normalization for '26 and beyond factors in?

A: Chris Forsythe said they'll look at summer conditions and set fiscal '26 plans late summer/early fall.

Q: On O&M, is higher O&M for '25 a pull forward from '26 and how to derisk '26?

A: Chris Forsythe said it's a mix of opportunistic spending and pulling forward, Kevin Akers added growth leads to increased line locating expense.

Q: On Texas GRCs and reg asset tracker, clarity on retroactive component and upside vs '25 guidance?

A: Chris Forsythe said they reflected expectations for O&M in guidance including cloud computing and SSI current guidance.

Q: On financing, update on equity financing for rest of year and cost management?

A: Chris Forsythe said financing strategy is balanced with equity via ATM and long-term debt, $1.7 billion in equity for fiscal '25 and '26.

Q: On economic development and pipeline projects backlog?

A: Kevin Akers mentioned no backlog per se, but high-priority projects like Line WA Loop and Bethel to Groesbeck, and third salt-dome cavern work.

Q: On Colorado rate case timing and West Texas cloud computing costs?

A: Kevin Akers said timing of Colorado case is ongoing; Chris Forsythe said cloud computing costs start in West Texas and may replicate in other states.

Q: On APT expansion projects growth assumptions and refresh post-winter?

A: Kevin Akers said it's based on city models and demand, review ongoing and reset prior to next heating season if needed