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Busy regulatory year setting Atmos up for future growth

Like many of its fellow gas-focused utilities, Atmos Energy Corp.'s fiscal third-quarter earnings took a hit from the federal tax changes, but the utility sees deferred benefits coming up from its numerous regulatory filings and infrastructure investments.

In the third quarter, Atmos said its distribution segment results were impacted by a $12 million decrease in contribution margin because of federal tax changes, while its pipeline and storage segment took an $8 million hit for the same reason. Atmos defines contribution margin as operating revenues minus the cost of purchased gas.

Overall, distribution contribution margin increased by $8.3 million year over year to $304.6 million for the quarter, while pipeline and storage contribution margin increased $11.1 million year over year to $127.1 million for the period.

Atmos said that although its operating expenses increased, overall capital spending will stay in line with expectations. Atmos' fiscal 2018 capital spending is expected to reach $1.4 billion, 85% of which would be funneled into system modernization efforts. "[B]etween fiscal '18 and fiscal 2022, we plan to spend an additional $8 billion with the rate of capital investment growing at approximately 11% per year on average," said Michael Haefner, president and CEO of Atmos.

On the regulatory side, Atmos completed a total of 19 filings to date that are anticipated to add about $81 million of annualized operating income over fiscal 2018 and 2019, CFO Christopher Forsythe said.

Atmos reported net income of $71.2 million, or 64 cents per share, in the fiscal third quarter, compared with the $70.8 million, or 67 cents per share, reported in the prior-year period.