Atmos Energy (ATO) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a first-quarter net income of $352 million, translating to$2.23 per diluted share, marking a 7.2% increase over the prior year quarter [4][12] - Consolidated operating income increased by 15% to $459 million in the first quarter [12] - Capital spending for the first fiscal quarter was$891 million, aimed at system modernization and growth [5] Business Line Data and Key Metrics Changes - Rate increases across both operating segments contributed $69 million to operating income [13] - Customer growth included over 59,000 new customers added in the last twelve months, with 46,000 in Texas [5] - APT's through-system revenues increased by$8 million due to higher throughput and spreads [14] Market Data and Key Metrics Changes - The Texas Workforce Commission reported a record high of over 14.3 million employees in Texas, with job growth at a rate of 2% annually [6] - The company added eleven new industrial customers, expected to utilize 2.3 billion cubic feet of gas annually [7] Company Strategy and Development Direction - The company is focused on system modernization and pipeline replacement to support growth [31] - A capital spending plan of $3.7 billion is in place for the fiscal year [24] - The company is pursuing regulatory filings for approximately$126 million in annualized operating income increases [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver reliable natural gas and highlighted the importance of natural gas in economic development [11] - The company is monitoring market conditions and weather impacts on future performance [49] Other Important Information - The company completed over $1 billion in long-term debt and equity financing, with$5.2 billion in available liquidity [22][23] - Customer satisfaction ratings remained high at 98%, and the company was ranked number one in customer satisfaction among mid-sized gas utilities in the Midwest for the third consecutive year [10] Q&A Session Summary Question: Inquiry about higher CapEx plan and rate lags - Management explained that the capital plan reflects growth and modernization strategies, continuing to identify projects across the system [31] Question: Clarification on large-scale industrial and generation projects - Management confirmed solid growth across all sectors, with eleven new industrial customers added [35] Question: Equity modeling for 2025 - Management suggested a range of $600 to$800 million for equity issuance in fiscal 2025 [42] Question: APT spread benefit and guidance - Management noted that spreads returned to normal historical norms and will monitor market conditions moving forward [49] Question: Opportunities from power generation - Management indicated that the new industrial customers are not power facilities but come from diverse industries [55] Question: Rate case challenges in Texas - Management characterized the rate cases as focused on regulatory mechanisms and expressed confidence in completing them by late spring [61] Question: Impact of tariffs on O&M and CapEx - Management stated that any potential impact from tariffs is currently low and they are monitoring the situation with suppliers [78] Question: Recovery mechanisms for potential cost increases - Management confirmed that they have annual mechanisms in place for cost recovery across jurisdictions [81]