Atmos Energy FY2026 EPS Rises, $29 Billion Capital Plan Set Through 2031

Atmos Energy Corp. (NYSE: ATO) reported higher fiscal 2026 earnings as rate adjustments and infrastructure-cost deferrals lifted both operating segments, while outlining a five-year plan centered on about $29 billion of capital investment. The natural gas utility expects diluted earnings per share of $9.05 to $9.25 in fiscal 2027 and is targeting annual EPS growth of 6% to 8% through fiscal 2031.

Net income for the year ended September 30 rose to $1.43 billion from $1.20 billion, while diluted EPS increased to $8.49 from $7.46. Atmos said fiscal 2026 marked its 24th consecutive year of EPS growth. Full-year operating income advanced by $299.3 million to $1.86 billion.

In the fiscal fourth quarter, net income increased to $199 million from $175 million a year earlier. Diluted EPS was $1.17, compared with $1.07, as quarterly operating income rose by $39.8 million to $259.3 million.

Rate adjustments support both segments

Distribution segment net income increased to $868 million for fiscal 2026 from $747 million. Its operating income rose by $147.3 million to $1.11 billion, supported by a $189 million net benefit from rate adjustments and $60.3 million of infrastructure-related cost deferrals. Residential customer growth and increased industrial load added $20.6 million, while consumption net of weather normalization adjustments contributed $12 million. Higher collection rates reduced bad-debt expense by $10.3 million.

Those gains were partly offset by a $92.8 million increase in depreciation, amortization and property taxes, along with higher administrative, employee and compliance-related spending.

Pipeline and Storage net income climbed to $559 million from $452 million, with operating income rising by $152 million to $748.6 million. Rate adjustments associated primarily with Texas Gas Reliability Infrastructure Program filings contributed $100 million, while infrastructure-cost deferrals added $48.7 million. Higher spreads increased through-system activity income by $29.4 million, and greater peak-day demand raised contracted capacity among tariff-based customers, contributing another $16.9 million. Depreciation, amortization and property taxes increased by $30.3 million.

Atmos implemented $395.4 million of annualized operating income increases during fiscal 2026. A further $264 million was implemented in the first quarter of fiscal 2027, led by a $244.4 million Mid-Tex Cities rate review mechanism. Another $41.7 million of regulatory increases was in progress as of November 4.

Capital program expands through 2031

Fiscal 2026 capital spending reached $4.17 billion, up from $3.56 billion. About 88% was directed to safety and reliability, including pipeline repair and replacement, service-line replacement, system fortification, measurement and regulation equipment, and storage and compression projects.

For fiscal 2027, Atmos plans approximately $4.5 billion of capital spending. Its fiscal 2027-2031 plan includes about $29 billion of investment, comprising roughly $22 billion for distribution systems and $7 billion for transmission systems. More than 85% of the five-year total is allocated to safety, and the company said more than 90% of annual capital expenditure begins to be recovered within six months from the end of the relevant test year.

Atmos expects the investment program to expand rate base to between $45 billion and $47 billion by fiscal 2031, from $24.7 billion in fiscal 2026, representing planned annual growth of 12% to 14%.

Fiscal 2027 outlook

The company forecast fiscal 2027 net income of $1.61 billion to $1.63 billion. Distribution net income is expected to be between $1.03 billion and $1.04 billion, while Pipeline and Storage is projected to contribute $580 million to $590 million. The diluted EPS outlook of $9.05 to $9.25 assumes average diluted shares of 176 million to 178 million, compared with 168 million in fiscal 2026.

For fiscal 2031, management expects diluted EPS of $12.35 to $12.55, consistent with its planned 6% to 8% annual growth range. Atmos also indicated a fiscal 2027 dividend of $4.36 per share, a 9% increase that would mark its 43rd consecutive fiscal year of dividend growth.

Operating and maintenance expense excluding bad debt is projected at $870 million to $890 million in fiscal 2027, compared with $875 million in fiscal 2026. Depreciation and amortization are expected to rise to $900 million to $910 million, while interest expense is forecast at $210 million to $220 million, up from $153 million.

The five-year plan incorporates about $17 billion of incremental long-term financing through a combination of debt and equity. Atmos ended fiscal 2026 with 60% equity capitalization and approximately $3.8 billion of available liquidity. Its senior unsecured debt carried A2 and A- ratings from Moody’s and S&P, respectively, with stable outlooks as of the presentation date.

Atmos cautioned that its outlook remains exposed to regulatory decisions, capital-project execution and cost recovery, access to debt and equity markets, commodity prices, interest rates, weather, cybersecurity threats and pipeline safety liabilities. The company also identified the concentration of its operations in Texas, changes in natural gas prices and availability, competition from alternative energy sources, and greenhouse-gas or fossil-fuel legislation as material uncertainties. Management noted that unforeseen events could cause fiscal 2027 earnings to differ significantly from its guidance.