Atmos Energy Corporation (NYSE:ATO) Q4 2019 Earnings Conference Call Transcript
Nov 07, 2019 • 10:00 am ET
Greetings and welcome to the Atmos Energy Fourth Quarter Earnings Conference Call. [Operator Instructions]
It is now my pleasure to introduce your host, Jennifer Hills, Vice President of Investor Relations. Thank you. You may begin.
Thank you, Jessie. Good morning everyone and thank you for joining us. This call is being webcast live on the Internet. Our earnings release and conference call slide presentation, which we will reference in our prepared remarks are available at atmosenergy.com under the Investor Relations tab. As we review these financial results and discuss future expectations, please keep in mind that some of our discussion might contain forward-looking statements within the meaning of the Securities Act and the Securities Exchange Act.
Our forward-looking statements and projections could differ materially from actual results. The factors that could cause such material differences are outlined on Slide 54 and are more fully described in our SEC filings.
Our first speaker is Christ Forsythe, Senior Vice President and CFO of Atmos Energy. Chris?
Christopher T. Forsythe
Thank you, Jennifer, and good morning everyone. We appreciate you joining us and your interest in Atmos Energy. Yesterday, we reported fiscal 2019 net income of $511 million or $4.35 per diluted share. This represents the 17th consecutive year of rising earnings per share. Slide 6 and 7, provide details of the year-over-year changes to operating income for each of our segments. I will touch on a few of the fiscal year highlights. Consolidated contribution margin rose about 5% or about $95 million. Rate increases driven by increased safety and reliability capital spending provided an incremental $80 million. Virtually all of these increases were in our Texas, Louisiana, and Mississippi jurisdictions.
As we've discussed over the last couple of quarters, our pipeline and storage segment benefited from the supply and demand dynamics that have impacted pricing in the Permian Basin over the last 12 to 18 months. We were able to capture a portion of the widened Waha and Katy spread, resulting in a $12 million increase over fiscal 2018. However, as expected, a new merchant pipeline came online mid-summer and we saw narrower spread opportunities in the back half of the fourth quarter.
Finally our distribution segment continuing to experience solid customer growth. Over the last 12 months, our distribution segment added a net 37,000 customers a 1.2% increase over the last year. Consolidated operating expenses rose approximately 6%, reflecting higher depreciation expense associated with increased capital spending and higher O&M spending, attributed to increased pipeline integrity and maintenance activities and higher employee costs.
As we discussed last quarter and fiscal 2019, we increased service related headcount in our Mid-Tex division to support the growth in our DFW market. Additionally, we continue to roll-out -- our roll-out of advanced leak survey technology. All of this roll-out has modestly increased our O&M. It plays an important role in our ability to identify and mitigate risk.
Finally, we continue to increase the training [Indecipherable] employees to further enable them to operate our system safely and reliably. Consolidated capital