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Atmos Energy Corporation Reports Earnings for Fiscal 2020 Third Quarter; Affirms Fiscal 2020 Guidance


Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its third fiscal quarter ended June 30, 2020.



Highlights




  • Earnings per diluted share


    • $4.37 for the nine months




Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its third fiscal quarter ended June 30, 2020.

Highlights

  • Earnings per diluted share:
    • $4.37 for the nine months ended June 30, 2020
    • $0.96 per diluted share for the third fiscal quarter
  • Consolidated net income:
    • $536.1 million for the nine months ended June 30, 2020
    • $117.8 million for the third fiscal quarter
  • Adjusted net income and adjusted diluted earnings per share, which excludes a $21.0 million one-time tax benefit related to the remeasurement of net deferred tax liabilities:
    • $515.1 million and $4.20 for the nine months ended June 30, 2020
    • $96.8 million and $0.79 for the third fiscal quarter
  • Capital expenditures were $1,405.7 million for the nine months ended June 30, 2020, an increase of 17 percent
  • Approximately 88 percent of capital spending related to system safety and reliability investments

Outlook

  • Adjusted earnings per diluted share for fiscal 2020 is expected to be in the previously announced range of $4.58 to $4.73.
  • Capital expenditures are expected to be in the range of $1.85 billion to $1.95 billion in fiscal 2020.
  • The company's Board of Directors has declared a quarterly dividend of $0.575 per common share. The indicated annual dividend for fiscal 2020 is $2.30, which represents a 9.5% increase over fiscal 2019.

“I am extremely proud of our employees as they continue demonstrating their dedication to delivering safe and reliable natural gas service, providing exceptional customer service and continuing to make a positive difference in the 1,400 communities we proudly serve,” said Kevin Akers, President and Chief Executive Officer of Atmos Energy Corporation. He concluded that “Atmos Energy’s commitment to safety, paired with our culture, continue to guide our operational and financial performance during these unique times.”

Results for the Three Months Ended June 30, 2020

Consolidated operating income increased $16.8 million to $139.0 million for the three months ended June 30, 2020, from $122.2 million in the prior-year quarter. Rate case outcomes in both segments and lower operations and maintenance expense in our distribution segment were partially offset by a decrease in nonresidential revenue in our distribution segment and higher depreciation and property tax expenses.

Distribution operating income increased $13.8 million to $62.5 million for the three months ended June 30, 2020, compared with $48.7 million in the prior-year quarter. The increase primarily reflects a net $14.8 million increase in rates and a $1.8 million increase due to net customer growth, which was partially offset by a $9.2 million increase in depreciation and property tax expense due to increased capital investments. Current quarter operating income also reflects the impact of COVID-19. We experienced a 14 percent decline in nonresidential volumes quarter over quarter, which resulted in a $6.8 million decrease in net consumption and transportation. We also experienced a $3.3 million decrease in service order revenues. This decline was offset by a $12.5 million decrease in operations and maintenance expense.

Pipeline and storage operating income increased $3.0 million to $76.5 million for the three months ended June 30, 2020, compared with $73.5 million in the prior-year quarter. This increase is primarily attributable to a $13.3 million increase in rates, due to the GRIP filing approved in fiscal 2020, partially offset by a $5.1 million decrease in through system revenues as a result of declining volumes and prices due to decreased oil production and a $2.8 million increase in depreciation expense due to increased capital investments.

Results for the Nine Months Ended June 30, 2020

Consolidated operating income increased $67.0 million to $723.3 million for the nine months ended June 30, 2020, compared to $656.3 million in the prior year, which primarily reflects rate outcomes in both segments and customer growth and lower operations and maintenance expense in our distribution business, partially offset by lower through system revenue and higher operations and maintenance expense in our pipeline and storage segment and increased depreciation and property tax expense.

Distribution operating income increased $49.2 million to $496.3 million for the nine months ended June 30, 2020, compared with $447.1 million in the prior year. The increase reflects a net $70.8 million increase in rates and customer growth of $10.3 million, partially offset by a $3.9 million increase in software maintenance expense and a $24.8 million increase in depreciation and property tax expenses associated with increased capital investments. Year-to-date operating income also includes the impacts of COVID-19 described above.

Pipeline and storage operating income increased $17.6 million to $226.9 million for the nine months ended June 30, 2020, compared with $209.3 million in the prior year. This increase is primarily attributable to a $40.0 million increase from our GRIP filings approved in fiscal 2019 and 2020, partially offset by an $8.7 million decrease in through system revenues, a $6.6 million increase in operation and maintenance expense primarily due to well integrity costs and spending on hydro testing and in-line inspections and an $8.2 million increase in depreciation expense due to increased capital investments.

Capital expenditures increased $206.5 million to $1,405.7 million for the nine months ended June 30, 2020, compared with $1,199.2 million in the prior year, due to continued spending for infrastructure replacements and enhancements.

For the nine months ended June 30, 2020, the company generated operating cash flow of $895.5 million, an $86.6 million increase compared with the nine months ended June 30, 2019. The year-over-year increase reflects the positive cash effects of rate case outcomes achieved in fiscal 2019 and working capital changes, primarily as a result of the timing of gas cost recoveries under our purchase gas cost mechanisms.

Our equity capitalization ratio at June 30, 2020 was 58.8%, compared with 59.0% at September 30, 2019. The decrease primarily reflects long-term debt issuances over the last twelve months which resulted in a higher long-term debt balance as of June 30, 2020.

Conference Call to be Webcast August 6, 2020

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2020 third quarter financial results on Thursday, August 6, 2020, at 10:00 a.m. Eastern Time. The domestic telephone number is 877-407-3088 and the international telephone number is 201-389-0927. Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer, will participate in the conference call. The conference call will be webcast live on the Atmos Energy website at www.atmosenergy.com. A playback of the call will be available on the website later that day.

Forward-Looking Statements

The matters discussed in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or any of the company’s other documents or oral presentations, the words “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “objective”, “plan”, “projection”, “seek”, “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this presentation, including the risks relating to regulatory trends and decisions, the company’s ability to continue to access the credit and capital markets, and the other factors discussed in the company’s reports filed with the Securities and Exchange Commission. These factors include the following: the outbreak of COVID-19 and its impact on business and economic conditions; federal, state and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state and local regulation of the safety of our operations; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting and storing natural gas; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline and/or storage services; increased competition from energy suppliers and alternative forms of energy; adverse weather conditions; increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements; the inability to continue to hire, train and retain operational, technical and managerial personnel; the impact of climate change; the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change; increased dependence on technology that may hinder the Company's business if such technologies fail; the threat of cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information; and natural disasters, terrorist activities or other significant events, all of which are difficult to predict and many of which are beyond our control.

Accordingly, while we believe these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. Further, the company undertakes no obligation to update or revise any of our forward-looking statements whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

During our fiscal third quarter we remeasured our deferred income tax balance as a result of Kansas House Bill 2585 and an update to the state deferred tax rate. As a result, we recorded a non-cash income tax benefit of $21.0 million for the three and nine months ended June 30, 2020. Due to the non-recurring nature of this benefit, we believe that net income and diluted net income per share before the non-cash income tax benefit provide a more relevant measure to analyze our financial performance than net income and diluted net income per share in order to allow investors to better analyze our core results and allow the information to be presented on a comparative basis to the prior year. Accordingly, the discussion and analysis of our financial performance herein will reference adjusted net income and adjusted diluted net income per share, non-GAAP measures, which are calculated as follows:

 

 

Three Months Ended June 30

 

2020

 

2019

 

Change

 

(In thousands, except per share data)

Net income

$

117,791

 

 

$

80,466

 

 

$

37,325

 

Non-cash income tax benefit

(20,962

)

 

 

 

(20,962

)

Adjusted net income

$

96,829

 

 

$

80,466

 

 

$

16,363

 

 

 

 

 

 

 

Diluted net income per share

$

0.96

 

 

$

0.68

 

 

$

0.28

 

Diluted EPS from non-cash income tax benefit

(0.17

)

 

 

 

(0.17

)

Adjusted diluted net income per share

$

0.79

 

 

$

0.68

 

 

$

0.11

 

 

 

Nine Months Ended June 30

 

2020

 

2019

 

Change

 

(In thousands, except per share data)

Net income

$

536,110

 

 

$

453,000

 

 

$

83,110

 

Non-cash income tax benefit

(20,962

)

 

 

 

(20,962

)

Adjusted net income

$

515,148

 

 

$

453,000

 

 

$

62,148

 

 

 

 

 

 

 

Diluted net income per share

$

4.37

 

 

$

3.88

 

 

$

0.49

 

Diluted EPS from non-cash income tax benefit

(0.17

)

 

 

 

(0.17

)

Adjusted diluted net income per share

$

4.20

 

 

$

3.88

 

 

$

0.32

 

 

About Atmos Energy

Atmos Energy Corporation is the nation’s largest fully regulated, natural gas-only distributor of safe, clean, efficient and affordable energy. As part of our vision to be the safest provider of natural gas services, we are modernizing our business and our infrastructure while continuing to invest in safety, innovation, environmental sustainability and our communities. An S&P 500 company headquartered in Dallas, Atmos Energy serves more than 3 million distribution customers in over 1,400 communities across eight states and manages proprietary pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. Find us online at http://www.atmosenergy.com, Facebook, Twitter, Instagram and YouTube.

This news release should be read in conjunction with the attached unaudited financial information.

 

Atmos Energy Corporation

Financial Highlights (Unaudited)

 

 

 

Statements of Income

Three Months Ended June 30

(000s except per share)

2020

2019

Operating revenues

 

 

Distribution segment

$

435,308

 

$

444,944

 

Pipeline and storage segment

158,008

 

149,198

 

Intersegment eliminations

(100,321

)

(108,404

)

 

492,995

 

485,738

 

Purchased gas cost

 

 

Distribution segment

126,093

 

139,518

 

Pipeline and storage segment

(11

)

(96

)

Intersegment eliminations

(100,010

)

(108,096

)

 

26,072

 

31,326

 

Operation and maintenance expense

149,460

 

164,545

 

Depreciation and amortization

107,104

 

97,700

 

Taxes, other than income

71,324

 

69,965

 

Operating income

139,035

 

122,202

 

Other non-operating income

7,235

 

1,645

 

Interest charges

19,580

 

19,592

 

Income before income taxes

126,690

 

104,255

 

Income tax expense

8,899

 

23,789

 

Net income

$

117,791

 

$

80,466

 

 

 

 

Basic net income per share

$

0.96

 

$

0.68

 

Diluted net income per share

$

0.96

 

$

0.68

 

Cash dividends per share

$

0.575

 

$

0.525

 

Basic weighted average shares outstanding

123,026

 

118,075

 

Diluted weighted average shares outstanding

123,032

 

118,430

 

 

 

 

 

 

Three Months Ended June 30

Summary Net Income by Segment (000s)

2020

 

2019

Distribution

$

58,899

 

$

32,398

 

Pipeline and storage

58,892

 

48,068

 

Net income

$

117,791

 

$

80,466

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

 

 

Statements of Income

Nine Months Ended June 30

(000s except per share)

2020

2019

Operating revenues

 

 

Distribution segment

$

2,196,817

 

$

2,341,668

 

Pipeline and storage segment

452,421

 

419,318

 

Intersegment eliminations

(303,015

)

(302,821

)

 

2,346,223

 

2,458,165

 

Purchased gas cost

 

 

Distribution segment

942,586

 

1,147,598

 

Pipeline and storage segment

290

 

(544

)

Intersegment eliminations

(302,053

)

(301,887

)

 

640,823

 

845,167

 

Operation and maintenance expense

449,529

 

452,572

 

Depreciation and amortization

318,082

 

290,537

 

Taxes, other than income

214,535

 

213,546

 

Operating income

723,254

 

656,343

 

Other non-operating income (expense)

9,133

 

(1,846

)

Interest charges

68,980

 

74,390

 

Income before income taxes

663,407

 

580,107

 

Income tax expense

127,297

 

127,107

 

Net income

$

536,110

 

$

453,000

 

 

 

 

Basic net income per share

$

4.38

 

$

3.89

 

Diluted net income per share

$

4.37

 

$

3.88

 

Cash dividends per share

$

1.725

 

$

1.575

 

Basic weighted average shares outstanding

122,352

 

116,485

 

Diluted weighted average shares outstanding

122,463

 

116,673

 

 

 

 

 

Nine Months Ended June 30

Summary Net Income by Segment (000s)

2020

2019

Distribution

$

375,720

 

$

318,976

 

Pipeline and storage

160,390

 

134,024

 

Net income

$

536,110

 

$

453,000

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

Condensed Balance Sheets

 

June 30,

 

September 30,

(000s)

 

2020

 

2019

Net property, plant and equipment

 

$

12,880,850

 

 

$

11,787,669

 

Cash and cash equivalents

 

208,064

 

 

24,550

 

Accounts receivable, net

 

236,466

 

 

230,571

 

Gas stored underground

 

84,886

 

 

130,138

 

Other current assets

 

72,743

 

 

72,772

 

Total current assets

 

602,159

 

 

458,031

 

Goodwill

 

730,706

 

 

730,706

 

Deferred charges and other assets

 

657,267

 

 

391,213

 

 

 

$

14,870,982

 

 

$

13,367,619

 

 

 

 

 

 

Shareholders' equity

 

$

6,461,471

 

 

$

5,750,223

 

Long-term debt

 

4,531,341

 

 

3,529,452

 

Total capitalization

 

10,992,812

 

 

9,279,675

 

Accounts payable and accrued liabilities

 

200,116

 

 

265,024

 

Other current liabilities

 

502,413

 

 

479,501

 

Short-term debt

 

 

 

464,915

 

Current maturities of long-term debt

 

157

 

 

 

Total current liabilities

 

702,686

 

 

1,209,440

 

Deferred income taxes

 

1,420,065

 

 

1,300,015

 

Regulatory excess deferred taxes

 

702,493

 

 

705,101

 

Deferred credits and other liabilities

 

1,052,926

 

 

873,388

 

 

 

$

14,870,982

 

 

$

13,367,619

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

Condensed Statements of Cash Flows

 

Nine Months Ended June 30

(000s)

 

2020

 

2019

Cash flows from operating activities

 

 

 

 

Net income

 

$

536,110

 

 

$

453,000

 

Depreciation and amortization

 

318,082

 

 

290,537

 

Deferred income taxes

 

137,996

 

 

120,220

 

One-time income tax benefit

 

(20,962

)

 

 

Other

 

5,935

 

 

9,649

 

Changes in assets and liabilities

 

(81,675

)

 

(64,478

)

Net cash provided by operating activities

 

895,486

 

 

808,928

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

(1,405,673

)

 

(1,199,199

)

Proceeds from the sale of discontinued operations

 

 

 

4,000

 

Debt and equity securities activities, net

 

(692

)

 

(4,041

)

Other, net

 

6,098

 

 

3,839

 

Net cash used in investing activities

 

(1,400,267

)

 

(1,195,401

)

Cash flows from financing activities

 

 

 

 

Net decrease in short-term debt

 

(464,915

)

 

(500,838

)

Proceeds from issuance of long-term debt, net of premium/discount

 

999,450

 

 

1,045,221

 

Net proceeds from equity offering

 

358,047

 

 

593,731

 

Issuance of common stock through stock purchase and employee retirement plans

 

14,125

 

 

14,128

 

Settlement of interest rate swaps

 

 

 

(90,141

)

Repayment of long-term debt

 

 

 

(450,000

)

Cash dividends paid

 

(210,674

)

 

(181,982

)

Debt issuance costs

 

(7,738

)

 

(11,254

)

Net cash provided by financing activities

 

688,295

 

 

418,865

 

Net increase in cash and cash equivalents

 

183,514

 

 

32,392

 

Cash and cash equivalents at beginning of period

 

24,550

 

 

13,771

 

Cash and cash equivalents at end of period

 

$

208,064

 

 

$

46,163

 

 

 

 

Three Months Ended June 30

 

Nine Months Ended June 30

Statistics

 

2020

 

2019

 

2020

 

2019

Consolidated distribution throughput (MMcf as metered)

 

69,162

 

 

76,192

 

 

372,590

 

 

404,370

 

Consolidated pipeline and storage transportation volumes (MMcf)

 

153,652

 

 

181,292

 

 

453,646

 

 

517,188

 

Distribution meters in service

 

3,322,332

 

 

3,284,722

 

 

3,322,332

 

 

3,284,722

 

Distribution average cost of gas

 

$

3.24

 

 

$

3.35

 

 

$

3.66

 

 

$

4.06

 

 

 

Atmos Energy Corp. Stock

€82.00
-0.620%
Atmos Energy Corp. shows a slight decrease today, losing -€0.500 (-0.620%) compared to yesterday.
The community is currently still undecided about Atmos Energy Corp. with 1 Buy predictions and 0 Sell predictions.
With a target price of €108.00 there is a positive potential of 31.707% for Atmos Energy Corp. compared to the current price of €82.00.
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