Atmos Energy's Q2 2025: Unpacking Contradictions in Financing, Tariffs, and Growth Expectations

Equity financing strategy, impact of tariffs on operations, guidance and growth expectations, operating and maintenance expenses, and customer growth and demand are the key contradictions discussed in Atmos Energy's latest 2025Q2 earnings call.



Customer Growth and Economic Development:
- Atmos Energy added nearly 59,000 new customers in the last 12 months, with almost 46,000 of them located in Texas.
- This growth is driven by continually favorable employment trends in Texas, with the state adding nearly 192,000 jobs in the last year, representing a 1.4% annual growth rate. Industrial demand for natural gas also remains strong, with 9 new industrial customers added during the second quarter, contributing to an anticipated annual load of approximately 8 Bcf.

APT Expansion and Infrastructure Investments:
- Atmos is investing in APT's Line WA Loop and Bethel to Groesbeck project, installing 44 miles of 36-inch pipe and 55 miles of 36-inch pipe, respectively.
- These projects aim to enhance system safety, reliability, and versatility, supporting the growth of local distribution companies (LDCs) behind the APT system.

Regulatory and Financial Performance:
- Atmos implemented approximately $153 million in annualized regulatory outcomes and has over $389 million in progress.
- The company anticipates implementing between $175 million and $180 million of annualized operating income increases in fiscal '25, with the remainder expected in fiscal '26. This includes a 9.8% return on equity and a capital structure with a 60.97% equity ratio in their West Texas general rate case.

Cost Management and O&M Expenses:
- Consolidated O&M expenses increased by $74 million, primarily due to increased headcount and overtime, bad debt expense, and additional line locating and system monitoring activities.
- Atmos Energy anticipates its O&M expenses, excluding bad debt, to be in the range of $860 million to $880 million, with a significant portion of the year-over-year increase already recognized.

Capital Spending and Equity Financing:
- The company maintains a strong balance sheet with a 61% equity capitalization and no short-term debt outstanding.
- Atmos extended its 4 credit facilities totaling $3.1 billion, providing $5.3 billion in available liquidity, with $1.7 billion of net proceeds from ATM activities available to satisfy equity needs for fiscal '25 and '26.