Atmos Energy (US:ATO)2026-02-03 22:00Financial Performance - For the three months ended December 31, 2025, the company recorded net income of $403.0 million, or $2.44 per diluted share, representing a 15% year-over-year increase from $351.9 million, or $2.23 per diluted share in the same period of 2024 [109][110]. - The increase in net income was primarily driven by positive rate outcomes from safety and reliability spending, along with a $35.2 million impact from Texas legislation related to infrastructure spending [110]. - Operating revenues for the three months ended December 31, 2025, increased to $1,258,826,000 from $1,109,335,000 in 2024, representing a change of $149,491,000 or 13.5% [121]. - Operating income for the distribution segment increased by 10.5%, with total operating income reaching $349,238,000 compared to $316,048,000 in the previous year, an increase of $33,190,000 [122]. - Net income for the three months ended December 31, 2025, was $133.7 million, reflecting a 19.8% increase from $111.6 million in the prior year [141]. Capital Expenditures and Financing - Capital expenditures for the three months ended December 31, 2025, totaled $1,033.3 million, with over 85% allocated to improving safety and reliability of distribution and transportation systems [112]. - The company anticipates spending approximately $26 billion on capital expenditures between fiscal years 2026 and 2030, with over 80% dedicated to safety and reliability [106]. - The company completed approximately $1.1 billion of long-term debt and equity financing during the same period, with an equity capitalization of 59.9% as of December 31, 2025 [113]. - The company has a shelf registration statement allowing for the issuance of up to $8.0 billion in common stock and/or debt securities, with $5.2 billion available as of December 31, 2025 [143]. - The company issued approximately $1.1 billion in net proceeds from long-term debt and equity during the three months ended December 31, 2025 [154]. Regulatory and Rate Adjustments - Ratemaking regulatory actions implemented or approved during the three months resulted in an increase in annual operating income of $122.5 million, with additional efforts in progress seeking a total increase of $34.0 million [111]. - A $122.5 million increase in annual operating income was achieved through regulatory proceedings, including a $145,676,000 increase from annual formula rate mechanisms [125]. - Rate adjustments contributed an increase of $47.7 million, primarily in the Mid-Tex Division, and residential customer growth added $5.8 million [127]. - The company is pursuing $34.0 million in increased annual operating income through ongoing rate actions in the Colorado-Kansas division [128]. - The company implemented regulatory mechanisms to reduce lag, allowing for annual rate adjustments without formal rate cases in several states [130]. Liquidity and Financial Position - As of December 31, 2025, the company had approximately $4.6 billion in total liquidity, including $367.0 million in cash and cash equivalents [113]. - The carrying amount of the company's long-term debt as of December 31, 2025, was $9,525.0 million, with a fair value of $8,772.2 million [94]. - As of December 31, 2025, total long-term debt was $9.6 billion, representing 40.1% of total capitalization, while shareholders' equity was $14.3 billion, or 59.9% [146]. - The company maintains a $1.5 billion commercial paper program and $3.1 billion in committed revolving credit facilities to support liquidity needs [142]. - Credit ratings from S&P and Moody's remain investment grade, with senior unsecured long-term debt rated A- and A2, respectively [158]. Market and Sales Performance - Consolidated distribution sales volumes rose to 75,133 MMcf, up from 71,924 MMcf, reflecting an increase of 3,209 MMcf or 4.5% [121]. - The average cost of gas per Mcf sold increased to $6.62 from $5.88, a rise of $0.74 or 12.6% [121]. - Total operating revenues for the three months ended December 31, 2025, increased to $286.6 million, up 12.2% from $255.4 million in the same period of 2024 [141]. - Operating income rose by 15.4% to $165.5 million, driven by a $20.2 million increase from rate adjustments and a $3.8 million increase due to higher capacity contracted by tariff-based customers [141][144]. - Cash flow from operating activities increased to $308.1 million, up from $282.0 million, primarily due to successful rate case outcomes [149]. Risk Management - The effective tax rates for the three months ended December 31, 2025, and 2024 were 20.0% and 18.4%, respectively, differing from the federal statutory tax rate of 21% due to various adjustments [71]. - The company manages interest rate risk by entering into financial instruments to fix the Treasury yield component of anticipated financings [77]. - The company utilizes a combination of physical storage, fixed-price forward contracts, and financial instruments to manage exposure to volatile natural gas prices [75]. - There were no material changes in the company's concentration of credit risk during the three months ended December 31, 2025 [95]. - The company reported no material changes in quantitative and qualitative disclosures about market risk during the three months ended December 31, 2025 [166].