Atmos Energy (US:ATO)2025-11-14 22:06Financial Performance - Atmos Energy recorded a net income of $1,198.8 million for fiscal 2025, an increase of $155.9 million from $1,042.9 million in fiscal 2024, reflecting positive rate outcomes driven by safety and reliability spending [138]. - Operating revenues for the fiscal year ended September 30, 2025, increased to $4,425,397, a rise of 13.0% compared to $3,915,141 in 2024 [149]. - Net income for the fiscal year ended September 30, 2025, was $746,781, reflecting a 11.2% increase from $671,413 in 2024 [149]. - Operating income for the distribution segment rose by 12.8% to $963,390 in 2025, driven by a $184.1 million increase in rate adjustments and $26.7 million from residential customer growth [150][153]. - The pipeline and storage segment's operating income increased by 19.1% to $596,581 in 2025, supported by a $100.5 million rise in Mid-Tex/Affiliate transportation revenue [163]. - Total operating revenues for the pipeline and storage segment reached $1,065,300 in 2025, up from $938,029 in 2024, marking a 13.6% increase [162]. Capital Expenditures - The company anticipates capital expenditures of approximately $26 billion between fiscal years 2026 and 2030, with over 80% dedicated to safety and reliability [133]. - Capital expenditures for fiscal 2025 were $3.6 billion, with approximately 87% invested to improve safety and reliability of distribution and transportation systems [142]. - Capital expenditures for the fiscal year ended September 30, 2025, totaled $3.6 billion, up from $2.9 billion in 2024, with a significant increase in distribution segment spending of $413.4 million [175]. Debt and Financing - The company completed approximately $1.8 billion of long-term debt and equity financing during fiscal 2025, maintaining an equity capitalization of 60.3% [143]. - As of September 30, 2025, long-term debt was $8,918.9 million, representing 39.7% of total capitalization, while shareholders' equity was $13,558.9 million, accounting for 60.3% [169]. - The company issued approximately $1.8 billion in net proceeds from long-term debt and equity during the fiscal year ended September 30, 2025 [177]. - Financing activities provided $1,406.8 million in cash for fiscal year 2025, a decrease from $1,478.6 million in 2024 [176]. Liquidity and Cash Flow - As of September 30, 2025, Atmos Energy had approximately $4.9 billion in total liquidity, including $202.7 million in cash and cash equivalents [143]. - For the fiscal year ended September 30, 2025, cash flow from operating activities was $2,049.5 million, an increase of 18.2% compared to $1,733.7 million in 2024 [173]. - The company has a $1.5 billion commercial paper program and $3.1 billion in total availability from revolving credit facilities to support liquidity [166]. Regulatory and Legislative Impact - Texas legislation effective in Q3 of fiscal 2025 positively impacted results by $26.2 million, contributing to the overall net income increase [139]. - Ratemaking regulatory actions implemented during fiscal 2025 resulted in an increase in annual operating income of $333.6 million, excluding the impact of tax refunds [140]. - The distribution segment achieved a $256.4 million increase in annual operating income due to completed regulatory proceedings, with total fiscal 2025 annualized rate outcomes of $245.6 million [145]. Market and Operational Factors - The distribution segment's performance is influenced by the ability to earn authorized rates of return and competitive factors in the energy industry [144]. - Consolidated distribution sales volumes were 289,065 MMcf in 2025, a slight increase from 283,977 MMcf in 2024 [149]. - The average cost of gas sold per Mcf increased to $6.41 in 2025, up from $5.71 in 2024, representing a 12.3% rise [149]. Risk Management - The company is exposed to commodity price risk, but distribution operations have limited exposure due to cost recovery mechanisms [194]. - Short-term interest rate risk is managed through a sensitivity analysis, indicating that a hypothetical 1% increase in interest rates would not materially increase interest expenses in 2025 [195]. - The company employs risk management strategies in its distribution segment to mitigate natural gas price volatility during the winter heating season [193]. Financial Instruments and Fair Value - The fair value of financial instruments decreased from $88,651,000 at September 30, 2024, to $3,412,000 at September 30, 2025, reflecting a significant decline [188]. - Contracts realized/settled amounted to $(130,755,000), while new contracts contributed $5,181,000 to the fair value [188]. - The total fair value of contracts at September 30, 2025, included $(1,036,000) for contracts maturing in less than 1 year and $4,448,000 for contracts maturing in 1-3 years [188]. - The fair value of contracts at September 30, 2025, was primarily based on actively quoted prices, with no contributions from models or other valuation methods [188]. Compliance and Ratings - The company's credit ratings are A- from S&P and A2 from Moody's, with a stable outlook from both agencies [181]. - The company maintained compliance with all debt covenants as of September 30, 2025 [183]. Other Financial Obligations - Total contractual obligations as of September 30, 2025, amounted to $17,689.3 million, with $537.4 million due within one year [185]. - The company was committed to purchase 73.4 Bcf of gas within one year and 114.9 Bcf within two to three years under indexed contracts as of September 30, 2025 [186]. - Cash dividends increased due to an 8.1% rise in the dividend rate and an increase in shares outstanding during fiscal year 2025 [177]. Accounting Developments - Recent accounting developments have been documented in Note 2 of the consolidated financial statements, impacting financial position and cash flows [189]. - The company has liabilities associated with uncertain tax positions, which do not include potential interest and penalties [191]. - Interest charges related to finance lease payments totaled $15.8 million, while operating lease payments included interest of $68.2 million [191].