ATMOS ENERGY CORP (ATO) Q2 2025 Earnings Summary

Executive Summary

Atmos Energy raised FY2025 EPS guidance to $7.20–$7.30 (from $7.05–$7.25) on strong H1 performance and better-than-expected APT through-system marketing; liquidity stood at $5.3B and equity capitalization ~61% .
Q2 FY2025 delivered a significant beat versus Wall Street: EPS $3.03 vs consensus $2.88 and revenue $1.95B vs $1.81B; management expects the remaining FY25 contribution to be recognized roughly evenly across Q3–Q4, with O&M modestly higher in H2 due to compliance and maintenance .
O&M (ex-bad debt) guidance was raised to $860–$880M (from $840–$860M), reflecting accelerated compliance work, increased line locating, and summer maintenance ahead of the winter heating season .
Near-term catalysts include Texas Railroad Commission decisions (May 13 for West Texas GRC; June 10 for Mid-Tex settlement and APT GRIP) and progress on APT expansion projects (Line WA Loop Phase 2, Bethel-to-Groesbeck) that underpin customer growth and reliability .

What Went Well and What Went Wrong

What Went Well

Raised FY2025 EPS guidance to $7.20–$7.30; management cites stronger-than-expected APT through-system marketing and lower ad valorem taxes as offsets to higher O&M .
Robust customer and industrial growth: 59K net new customers over last 12 months (46K in Texas); added 20 new industrial customers YTD with ~11 Bcf anticipated annual load; “This growth continues to highlight the value and vital role natural gas plays in economic development” — CEO .
Financing position solid: extended $3.1B of credit facilities; $5.3B available liquidity; equity needs for FY25–FY26 largely pre-funded via ATM program; “our financing strategy hasn’t changed… balanced fashion using a combination of equity and long-term debt” — CFO .

What Went Wrong

O&M pressures drove guidance higher for expenses: employee-related costs (+$27M), bad debt (+$15M), increased compliance activities (+$14M), and APT safety & integrity expense (+$9.4M, margin-neutral) in H1 .
Margins mixed: EBITDA margin dipped vs prior year (Q2’25 42.0% vs Q2’24 43.8%) and net income margin compressed (24.9% vs 26.2%) amid higher O&M and compliance work [GetFinancials*].
Continued market volatility around APT spreads and through-system activity; management is cautious about setting FY2026 expectations until late summer/early fall snapshot of market conditions .

Financial Results

Headline P&L and Margins

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD)	$657.9M*	$1,176.0M	$1,950.5M
Net Income ($USD)	$134.0M*	$351.9M	$485.6M
Diluted EPS ($)	$0.86*	$2.23	$3.03
EBITDA Margin (%)	55.28%*	55.01%*	41.97%*
Net Income Margin (%)	20.37%*	29.92%*	24.89%*

Notes: Values with * retrieved from S&P Global.

YoY Comparison (Q2 2025 vs Q2 2024)

Metric	Q2 2024	Q2 2025	YoY Δ
Revenue ($USD)	$1,647.2M	$1,950.5M	+$303.3M / +18.4%
Net Income ($USD)	$432.0M	$485.6M	+$53.6M / +12.4%
Diluted EPS ($)	$2.85	$3.03	+$0.18 / +6.3%
EBITDA Margin (%)	43.79%*	41.97%*	-1.82 pp
Net Income Margin (%)	26.23%*	24.89%*	-1.34 pp

Notes: Values with * retrieved from S&P Global.

Actuals vs Wall Street Consensus (Q2 2025)

Metric	Consensus	Actual	Surprise
EPS ($)	$2.88*	$3.03	+$0.15 / +5.3%
Revenue ($USD)	$1,811.8M*	$1,950.5M	+$138.7M / +7.7%

Notes: Values marked * retrieved from S&P Global.

KPIs and Segment Drivers (H1 FY2025, unless noted)

KPI / Driver	Value	Context
YTD EPS / Net Income	$5.26 / $837.4M	Press release highlight
Regulatory outcomes implemented	$152.6M annualized	Press release
Customer adds (12 months)	~59,000 (46,000 in TX)	Growth backdrop
New industrial customers	20 YTD (~11 Bcf annual load)	Demand growth
Pipeline & Storage revenue	+$11.4M YoY	+10% volumes; wider spreads
Tariff-based capacity	+$8M	Higher contracted capacity (APT)
Liquidity / Equity cap	$5.3B / ~61%	Balance sheet strength
Capital expenditures (YTD)	$1.73B	~85% safety & reliability

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS (Diluted)	FY2025	$7.05–$7.25	$7.20–$7.30	Raised
Capital Expenditure	FY2025	~$3.7B	~$3.7B	Maintained
O&M (ex-bad debt)	FY2025	$840–$860M	$860–$880M	Raised
Dividend (Quarterly)	FY2025	$0.87/share	$0.87/share; paid Jun 9; record May 27	Maintained

Management also noted FY2025 contribution timing: about half of expected APT through-system contribution already recognized by March 31, with remainder expected somewhat evenly across Q3–Q4 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
APT through-system marketing, Waha spreads	FY2024 beat aided by wider spreads; FY2025 assumes normalization	H1 FY2025 stronger than planned; expecting slightly less than FY2024 total; remainder recognized evenly	Strong H1, normalize into H2
Regulatory progress (TX GRCs, riders)	FY2025 plan includes routine filings; O&M ex-bad debt $840–$860M	West Texas ALJ proposal: 9.8% ROE, actual cap structure, cloud-computing capitalization, SSI tracker; Mid-Tex consolidated case settlement proposed; APT GRIP $77.2M pending	Constructive outcomes pending votes
Compliance/O&M cadence	4% annual O&M inflation expected; SSI rider offsetting	O&M raised to $860–$880M; pull-forward compliance and maintenance; increased line locating	Upward pressure near-term
Financing strategy (ATM, swaps)	$1.4B priced on ATM; balanced equity/debt; hedging saves customers	$1.7B net proceeds available; plan 30-year issuance; strategy unchanged	Stable, pre-funded
Growth/customer additions	~59K adds FY2024; diversified industrial inquiries	~59K adds LTM; +20 industrial YTD, +9 in Q2; strong Texas employment	Continuing strength
Technology/regulatory accounting	SSI mechanism offsets margin; AMLD units increasing monitoring	Cloud computing costs capitalized (West TX proposal); potential replication across jurisdictions	Evolving tools to reduce lag
Tariffs/macro	Monitoring federal tariff impact; limited exposure expected	Ongoing monitoring; tariff actions paused; assessing vendor sourcing	Watchful, low near-term impact

Management Commentary

“Our results for the first half of fiscal 2025 reflect the hard work and dedication of all of our employees… while pursuing our proven strategy” — CEO (press release) .
“We currently expect APT through-system business [to] perform just slightly less than the prior year… timing… different than in fiscal ’24… remaining contribution… somewhat evenly [recognized] by quarter in the back half” — CFO .
“We are not a just-in-time company from an O&M spending perspective… opportunities to further stay ahead of our compliance deadlines… perform additional maintenance in the summer” — CFO .
“Work started on Phase 2 of APT’s Line WA Loop… expected to be completed by end of the calendar year… Bethel to Groesbeck… scheduled to be placed in service late calendar year 2025” — CEO .

Q&A Highlights

Guidance sustainability: Management will reassess FY2026 APT normalization late summer/early fall before issuing guidance; current FY2025 midpoint ($7.25) is a reasonable base for CAGR calculations .
O&M dynamics: Raised FY2025 O&M due to compliance pull-forward and growth-driven line locating; some offsets from lower ad valorem taxes; SSI mechanism remains margin-neutral .
Financing: Balanced equity/debt strategy unchanged; ~$1.7B ATM pre-funded; plan for 30-year issuance with existing swap; liquidity $5.3B .
Regulatory trackers: West Texas proposal includes capitalizing cloud computing costs and SSI tracker; potential replication across other jurisdictions post-votes .
Industrial demand/growth: Continued strong C&I and industrial additions across footprint; pipeline projects aligned with expected capacity needs .

Estimates Context

Q2 FY2025 beat: EPS $3.03 vs consensus $2.88*, revenue $1.95B vs $1.81B*; FY2025 EPS guidance raised to $7.20–$7.30 .
Potential estimate adjustments: Even recognition of H2 contribution, higher O&M run-rate ($860–$880M), and constructive TX regulatory outcomes could sustain mid-to-high end FY2025 EPS trajectory; watch APT spreads normalization and compliance costs for model updates .