Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its fiscal 2012 first quarter ended December 31,
2011.
- Fiscal 2012 first quarter consolidated
results, excluding net unrealized margins were $55.5 million, or
$0.61 per diluted share, compared with results, excluding net
unrealized margins of $73.7 million, or $0.81 per diluted share in
the prior-year quarter.
- After including noncash, unrealized net
gains of $13.0 million, or $0.14 per diluted share, fiscal 2012
first quarter net income was $68.5 million, or $0.75 per diluted
share. Net income was $74.0 million, or $0.81 per diluted share in
the prior-year quarter, after including unrealized net gains of
$0.3 million or $0.00 per diluted share.
- For the three months ended December 31,
2011, regulated operations contributed $64.0 million, or $0.70 per
diluted share, compared with $67.4 million of net income, or $0.74
per diluted share in the prior-year quarter.
- Nonregulated operations contributed
$4.5 million of net income, or $0.05 per diluted share, compared
with $6.6 million of net income, or $0.07 per diluted share for the
same three months last year.
“Positive rate outcomes in a number of our jurisdictions
continue to support stable and predictable earnings that were in
line with our first quarter expectations in the regulated
businesses,” said Kim Cocklin, president and chief executive
officer of Atmos Energy Corporation. “Our nonregulated results
negatively affected us in the current quarter; however, we expect
this business to generate more positive results the second half of
our fiscal year.
“For fiscal 2012, we remain on track to meet our guidance of
earning between $2.30 and $2.40 per diluted share,” Cocklin
concluded.
Results for the Quarter Ended December 31,
2011
Natural gas distribution gross profit, excluding discontinued
operations, was flat quarter-over-quarter. The positive impact from
rate increases was largely offset by the quarter-over-quarter
negative effect of the weather normalization adjustment in the
Mid-Tex Division, which required utilizing updated weather data in
the calculation of the adjustment in the current quarter.
Regulated transmission and storage gross profit increased $7.8
million to $56.8 million for the quarter ended December 31, 2011,
compared with $49.0 million in the prior-year quarter. This
increase is primarily a result of rate design changes approved in
the Atmos Pipeline – Texas rate case that became effective in May
2011.
Nonregulated gross profit decreased $9.8 million to $15.4
million for the first quarter of fiscal 2012, compared with $25.2
million for the prior-year quarter. The decrease primarily reflects
a $25.6 million quarter-over-quarter decrease in realized asset
optimization margins. During the first quarter of fiscal 2011, more
frequent trading opportunities existed to earn intramonth trading
gains in the daily cash market. In contrast, during the current
quarter, as a result of falling natural gas prices, Atmos Energy
Holdings injected a net 15.7 Bcf into storage to capture
incremental physical to forward spread values and purchased flowing
gas to meet customer deliveries. As a result, losses were realized
on the settlement of financial instruments used to hedge natural
gas purchases without the corresponding physical natural gas
storage withdrawal gains. A substantial portion of the incremental
margins captured during the quarter is currently anticipated to be
realized during the third and fourth quarters of fiscal 2012.
Additionally, realized margins from gas delivery decreased $4.9
million, primarily due to a four percent decrease in consolidated
sales volumes combined with a $0.05/Mcf decrease in per-unit
margins. Partially offsetting these decreases was a $21.2 million
increase in unrealized margins.
Consolidated operation and maintenance expense, excluding
discontinued operations, for the first quarter of fiscal 2012, was
$116.1 million, compared with $114.5 million for the prior-year
quarter. Excluding the provision for doubtful accounts, operation
and maintenance expense for the current quarter was $113.8 million,
compared with $113.0 million for the same period last year. The
$0.8 million increase resulted primarily from a $3.0 million
increase in legal and administrative costs and a $1.6 million
increase in contract labor. These increases were partially offset
by a $2.3 million decrease in employee-related costs.
Depreciation and amortization increased $4.4 million to $59.2
million for the first quarter of fiscal 2012, compared with $54.8
million for the prior-year quarter. Quarter-over-quarter, taxes,
other than income increased $3.0 million to $43.2 million, compared
with $40.2 million for the prior-year quarter. Both increases are
primarily the result of incremental capital investments made in
fiscal 2011 that resulted in increased depreciation expense and
increased ad valorem taxes in the current quarter.
Interest charges for the first quarter of fiscal 2012 were $35.4
million, compared with $38.9 million for the prior-year quarter.
The $3.5 million quarter-over-quarter decrease resulted primarily
from refinancing long-term debt at reduced interest rates and
reducing commitment fees from reducing the number of credit
facilities and extending the length of their terms in fiscal
2011.
The debt capitalization ratio at December 31, 2011, was 53.4
percent, compared with 51.7 percent at September 30, 2011 and 51.4
percent at December 31, 2010. At December 31, 2011, there was
$390.0 million of short-term debt outstanding, compared with $206.4
million at September 30, 2011 and $248.0 million at December 31,
2010.
For the quarter ended December 31, 2011, the company used $15.3
million in operating cash flow, a $61.1 million reduction in
operating cash flow compared with the first quarter of fiscal 2011.
The quarter-over-quarter decrease primarily reflects an increase in
purchased gas stored underground in the nonregulated segment with
the corresponding gas sales expected to occur later in the current
fiscal year.
Capital expenditures increased to $154.4 million for the quarter
ended December 31, 2011, compared with $123.2 million in the
prior-year quarter. The $31.2 million increase primarily reflects
spending related to the Mid-Tex Division steel service line
replacement program and the development of a new customer service
system for the natural gas distribution segment.
Outlook
Atmos Energy still expects fiscal 2012 earnings to be in the
range of $2.30 to $2.40 per diluted share, excluding unrealized
margins. Net income from regulated operations is expected to be in
the range of $190 million to $197 million, while net income from
nonregulated operations is expected to be in the range of $20
million to $23 million. Capital expenditures for fiscal 2012 are
expected to range between $680 million to $700 million.
Conference Call to be Webcast February 8,
2012
Atmos Energy will host a conference call with financial analysts
to discuss the financial results for the fiscal 2012 first quarter
on Wednesday, February 8, 2012, at 8 a.m. Eastern Time. The
telephone number is 877-485-3107. 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. Kim Cocklin, president and chief executive officer and Fred
Meisenheimer, senior vice president and chief financial officer
will participate in the conference call.
Highlights and Recent Developments
Atmos Energy Concludes FERC Investigation
On December 9, 2011, Atmos Energy Corporation and its
affiliates, Atmos Energy Marketing, LLC and Trans Louisiana Gas
Pipeline, Inc. entered into an agreement to resolve the
investigation initiated in December 2007, which focused on possible
violations of FERC’s posting and competitive bidding regulations.
FERC’s findings of violations were limited to the nonregulated
operations of the company. Under the terms of the agreement, the
company paid a civil penalty of approximately $6.4 million and $5.6
million in disgorgement of unjust profits plus accrued
interest.
Atmos Energy Promotes Marvin Sweetin to Senior Vice President
of Utility Operations
On November 15, 2011, Atmos Energy announced Marvin L. Sweetin’s
promotion to senior vice president of utility operations, effective
November 9th. In this new role, Sweetin is responsible for the
operations of Atmos Energy’s six utility divisions in 12 states,
along with continued responsibility for customer service, safety
and training. He also serves on the company’s Management
Committee.
This news release should be read in conjunction with the
attached unaudited financial information.
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 in 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
news release, including the risks and uncertainties relating to
regulatory trends and decisions, the company’s ability to continue
to access the capital markets and the other factors discussed in
the company’s reports filed with the Securities and Exchange
Commission. These factors include the risks and uncertainties
discussed in the company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2011. Although the company believes
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. The company
undertakes no obligation to update or revise forward-looking
statements, whether as a result of new information, future events
or otherwise.
About Atmos Energy
Atmos Energy Corporation, headquartered in Dallas, is one of the
country's largest natural-gas-only distributors, serving over three
million natural gas distribution customers in more than 1,600
communities in 12 states from the Blue Ridge Mountains in the East
to the Rocky Mountains in the West. Atmos Energy also provides
natural gas marketing and procurement services to industrial,
commercial and municipal customers primarily in the Midwest and
Southeast and manages company-owned natural gas pipeline and
storage assets, including one of the largest intrastate natural gas
pipeline systems in Texas. Atmos Energy is a Fortune 500 company.
For more information, visit www.atmosenergy.com.
Atmos Energy Corporation
Financial Highlights (Unaudited)
Statements of
Income
Three Months EndedDecember 31
Percentage
(000s except per share) 2011 2010
Change Gross Profit: Natural gas
distribution segment $ 291,085 $ 290,936 — % Regulated transmission
and storage segment 56,759 49,007 16 % Nonregulated segment 15,405
25,178 (39 )% Intersegment eliminations
(367 )
(397 ) 8 % Gross profit 362,882 364,724 (1 )%
Operation and maintenance expense 116,062 114,490 1 %
Depreciation and amortization 59,215 54,777 8 % Taxes, other than
income
43,198 40,168
8 % Total operating expenses 218,475 209,435 4 %
Operating income 144,407 155,289 (7 )% Miscellaneous expense
(1,875 ) (726 ) 158 % Interest charges
35,442
38,895 (9 )% Income from
continuing operations before income taxes 107,090 115,668 (7 )%
Income tax expense
41,302
44,568 (7 )% Income from continuing operations
65,788 71,100 (7 )% Income from discontinued operations, net
of tax
2,719 2,897
(6 )% Net income
$ 68,507
$ 73,997 (7 )% Basic
earnings per share Income per share from continuing operations $
0.72 $ 0.78 Income per share from discontinued operations
0.03 0.03 Net income
per share – basic
$ 0.75
$ 0.81 Diluted earnings per
share Income per share from continuing operations $ 0.72 $ 0.78
Income per share from discontinued operations
0.03 0.03 Net income
per share – diluted
$ 0.75
$ 0.81 Cash dividends per
share $ 0.345 $ 0.340 Weighted average shares outstanding:
Basic 90,254 90,082 Diluted 90,546 90,408
Three Months EndedDecember 31
Percentage
Summary Net Income
(Loss) by Segment (000s)
2011 2010 Change
Natural gas distribution – continuing operations $ 47,905 $ 54,421
(12 )% Natural gas distribution – discontinued operations 2,719
2,897 (6 )% Regulated transmission and storage 13,414 10,102 33 %
Nonregulated (8,501 ) 6,275 (235 )% Unrealized margins, net of tax
12,970 302 4,195 %
Consolidated net income
$ 68,507
$ 73,997 (7 )%
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Discontinued
Operations
(000s)
Three Months EndedDecember 31 2011
2010 Operating revenues $
23,451 $ 23,733 Purchased gas cost
14,951
14,897 Gross profit 8,500 8,836
Operating expenses
4,174
4,016 Operating income 4,326 4,820 Other
nonoperating expense
(48 )
(33 ) Income from discontinued operations before
income taxes 4,278 4,787 Income tax expense
1,559 1,890
Net income
$ 2,719 $
2,897
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
December 31, September 30, (000s) 2011
2011 Net property, plant and equipment $ 5,246,213 $
5,147,918 Cash and cash equivalents 85,160 131,419 Accounts
receivable, net 489,797 273,303 Gas stored underground 325,669
289,760 Other current assets
360,615
316,471 Total current assets 1,261,241
1,010,953 Goodwill and intangible assets 740,196 740,207
Deferred charges and other assets
387,982
383,793 $
7,635,632 $ 7,282,871
Shareholders’ equity $ 2,267,762 $ 2,255,421 Long-term debt
2,206,193 2,206,117
Total capitalization 4,473,955 4,461,538 Accounts payable
and accrued liabilities 432,332 291,205 Other current liabilities
357,353 367,563 Short-term debt 389,985 206,396 Current maturities
of long-term debt
131 2,434
Total current liabilities 1,179,801 867,598 Deferred
income taxes 981,559 960,093 Deferred credits and other liabilities
1,000,317 993,642
$ 7,635,632 $
7,282,871
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Three Months EndedDecember 31 (000s) 2011
2010
Cash flows from
operating activities Net income $ 68,507 $ 73,997
Depreciation and amortization 60,811 56,207 Deferred income taxes
40,042 43,423 Other 4,692 4,712 Changes in assets and liabilities
(189,343 ) (132,515 ) Net cash
provided (used) by operating activities (15,291 ) 45,824
Cash flows from investing activities Capital
expenditures (154,394 ) (123,162 ) Other, net
(1,080 )
(370 ) Net cash used in
investing activities (155,474 ) (123,532 )
Cash flows
from financing activities Net increase in short-term
debt 173,905 112,628 Repayment of long-term debt (2,303 ) (10,000 )
Cash dividends paid (31,517 ) (31,002 ) Repurchase of common stock
(12,535 ) — Repurchase of equity awards (3,120 ) (3,231 ) Issuance
of common stock
76
7,253 Net cash provided by financing activities
124,506 75,648
Net decrease in cash and cash equivalents (46,259 )
(2,060 ) Cash and cash equivalents at beginning of period
131,419 131,952 Cash
and cash equivalents at end of period
$
85,160 $ 129,892
Three Months EndedDecember 31
Consolidated Statistics, including discontinued
operations 2011 2010
Consolidated natural gas distribution throughput
(MMcf as metered) 121,748 120,544 Consolidated regulated
transmission and storage transportation volumes (MMcf) 105,037
99,841 Consolidated nonregulated delivered gas sales volumes (MMcf)
90,870 94,538 Natural gas distribution meters in service 3,203,008
3,206,286 Natural gas distribution average cost of gas $ 4.78 $
4.92 Nonregulated net physical position (Bcf) 35.6 19.6
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