Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its fourth fiscal quarter ended September 30, 2020.
Highlights
- Earnings per diluted share:
- $4.89 for the year ended September 30, 2020
- $0.53 for the quarter ended September 30, 2020
- Consolidated net income:
- $601.4 million for the year ended September 30, 2020
- $65.3 million for the quarter ended September 30, 2020
- 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 was $580.5 million
and $4.72 for the year ended September 30, 2020.
- Capital expenditures rose 14 percent to $1,935.7 million for
the year ended September 30, 2020, with approximately 88 percent of
capital spending related to system safety and reliability
investments.
Outlook
- Earnings per diluted share for fiscal 2021 is expected to be in
the range of $4.90 to $5.10.
- Capital expenditures are expected to be in the range of $2.0
billion to $2.2 billion in fiscal 2021.
- The company's Board of Directors has declared a quarterly
dividend of $0.625 per common share. The indicated annual dividend
for fiscal 2021 is $2.50, which represents an 8.7% increase over
fiscal 2020.
“I am extremely proud of every employee for their commitment to
deliver safe and reliable natural gas service paired with
exceptional customer service. The preparation and dedication of our
employees and leadership has served us and our customers well as we
have continued to perform at the highest levels on every facet of
our business during this pandemic,” said Kevin Akers, president and
chief executive officer of Atmos Energy Corporation. “As we
continue to execute our strategy of modernizing our natural gas
distribution, transmission and storage systems to improve safety,
reliability and environmental performance along with providing
exceptional customer service at an affordable price, we remain well
positioned to continue delivering annual earnings per share growth
in the six to eight percent range,” Akers concluded.
Results for the Fiscal Year Ended September
30, 2020
Consolidated operating income increased $78.0 million to $824.1
million for the year ended September 30, 2020, compared to $746.1
million in the prior year, which primarily reflects rate outcomes
in both segments and customer growth and lower operation and
maintenance expense in our distribution business, partially offset
by lower through system revenue and higher operation and
maintenance expense in our pipeline and storage segment and
increased depreciation and property tax expense.
Distribution operating income increased $57.4 million to $528.2
million for the year ended September 30, 2020, compared with $470.8
million in the prior year. The increase reflects a net $86.8
million increase in rates and customer growth of $13.7 million,
partially offset by a $30.6 million increase in depreciation and
property tax expenses associated with increased capital
investments. Due to the timing of our fiscal year, the economic
impacts from COVID-19 had a limited impact on our operating
income.
Pipeline and storage operating income increased $20.6 million to
$295.9 million for the year ended September 30, 2020, compared with
$275.3 million in the prior year. This increase is primarily
attributable to a $53.2 million increase from our GRIP filings
approved in fiscal 2019 and 2020, partially offset by a $13.6
million decrease in through system revenues, a $6.8 million
increase in operation and maintenance expense primarily due to well
integrity costs and spending on hydro testing and in-line
inspections and a $12.5 million increase in depreciation expense
due to increased capital investments.
Capital expenditures increased $242.2 million to $1,935.7
million for the year ended September 30, 2020, compared with
$1,693.5 million in the prior year, due to continued spending for
infrastructure replacements and enhancements.
For the year ended September 30, 2020, the company generated
operating cash flow of $1,038.0 million, a $69.2 million increase
compared with the year ended September 30, 2019. The year-over-year
increase reflects the positive cash effects of rate case outcomes
achieved in fiscal 2020 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 September 30, 2020 was 60.0%,
compared with 59.0% at September 30, 2019. The increase primarily
reflects the absence of short-term debt balances at September 30,
2020.
Results for the Three Months Ended September
30, 2020
Consolidated operating income increased $11.1 million to $100.8
million for the three months ended September 30, 2020, from $89.7
million in the prior-year quarter. Rate case outcomes in both
segments and customer growth in our distribution segment were
partially offset by lower through system revenue in our pipeline
and storage segment, decreased service order revenue in our
distribution segment and higher depreciation expense.
Distribution operating income increased $8.2 million to $31.9
million for the three months ended September 30, 2020, compared
with $23.7 million in the prior-year quarter. The increase
primarily reflects a net $16.0 million increase in rates and a $3.4
million increase due to net customer growth, partially offset by a
$10.5 million increase in operating expenses primarily related to
increased bad debt expense and a $3.1 million decrease in service
order revenues.
Pipeline and storage operating income increased $2.9 million to
$68.9 million for the three months ended September 30, 2020,
compared with $66.0 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 $5.0 million decrease in through system revenues and a
$4.2 million increase in depreciation expense due to increased
capital investments.
Conference Call to be Webcast November 12,
2020
Atmos Energy will host a conference call with financial analysts
to discuss the fiscal 2020 fourth quarter financial results on
Thursday, November 12, 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 risks and uncertainties include the following:
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; the
impact of greenhouse gas emissions or other legislation or
regulations intended to address climate change; 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 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; the impact
of climate change; the inability to continue to hire, train and
retain operational, technical and managerial personnel; 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; natural disasters, terrorist activities or other
events and other risks and uncertainties discussed herein, all of
which are difficult to predict and many of which are beyond our
control; 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; increased costs of providing
health care benefits, along with pension and postretirement health
care benefits and increased funding requirements; the outbreak of
COVID-19 and its impact on business and economic conditions.
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 year ended
September 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:
Year Ended September
30
2020
2019
Change
(In thousands, except per
share data)
Net income
$
601,443
$
511,406
$
90,037
Non-cash income tax benefit
(20,962
)
—
(20,962
)
Adjusted net income
$
580,481
$
511,406
$
69,075
Diluted net income per share
$
4.89
$
4.35
$
0.54
Diluted EPS from non-cash income tax
benefit
(0.17
)
—
(0.17
)
Adjusted diluted net income per share
$
4.72
$
4.35
$
0.37
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
Year Ended September 30
(000s except per share)
2020
2019
Operating revenues
Distribution segment
$
2,626,993
$
2,745,461
Pipeline and storage segment
609,339
567,024
Intersegment eliminations
(415,195
)
(410,637
)
2,821,137
2,901,848
Purchased gas cost
Distribution segment
1,071,227
1,268,591
Pipeline and storage segment
1,548
(360
)
Intersegment eliminations
(413,921
)
(409,394
)
658,854
858,837
Operation and maintenance expense
629,601
630,308
Depreciation and amortization
429,828
391,456
Taxes, other than income
278,755
275,189
Operating income
824,099
746,058
Other non-operating income
7,171
7,404
Interest charges
84,474
103,153
Income before income taxes
746,796
650,309
Income tax expense
145,353
138,903
Net income
$
601,443
$
511,406
Basic net income per share
$
4.89
$
4.36
Diluted net income per share
$
4.89
$
4.35
Cash dividends per share
$
2.30
$
2.10
Basic weighted average shares
outstanding
122,788
117,200
Diluted weighted average shares
outstanding
122,872
117,461
Year Ended September 30
Summary Net Income by Segment (000s)
2020
2019
Distribution
$
395,664
$
328,814
Pipeline and storage
205,779
182,592
Net income
$
601,443
$
511,406
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Statements of
Income
Three Months Ended September
30
(000s except per share)
2020
2019
Operating revenues
Distribution segment
$
430,176
$
403,793
Pipeline and storage segment
156,918
147,706
Intersegment eliminations
(112,180
)
(107,816
)
474,914
443,683
Purchased gas cost
Distribution segment
128,641
120,993
Pipeline and storage segment
1,258
184
Intersegment eliminations
(111,868
)
(107,507
)
18,031
13,670
Operation and maintenance expense
180,072
177,736
Depreciation and amortization
111,746
100,919
Taxes, other than income
64,220
61,643
Operating income
100,845
89,715
Other non-operating income (expense)
(1,962
)
9,250
Interest charges
15,494
28,763
Income before income taxes
83,389
70,202
Income tax expense
18,056
11,796
Net income
$
65,333
$
58,406
Basic net income per share
$
0.53
$
0.49
Diluted net income per share
$
0.53
$
0.49
Cash dividends per share
$
0.575
$
0.525
Basic weighted average shares
outstanding
124,096
119,345
Diluted weighted average shares
outstanding
124,100
119,824
Three Months Ended September
30
Summary Net Income by Segment (000s)
2020
2019
Distribution
$
19,944
$
9,838
Pipeline and storage
45,389
48,568
Net income
$
65,333
$
58,406
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
September 30,
September 30,
(000s)
2020
2019
Net property, plant and equipment
$
13,355,347
$
11,787,669
Cash and cash equivalents
20,808
24,550
Accounts receivable, net
230,595
230,571
Gas stored underground
111,950
130,138
Other current assets
107,905
72,772
Total current assets
471,258
458,031
Goodwill
731,257
730,706
Deferred charges and other assets
801,170
391,213
$
15,359,032
$
13,367,619
Shareholders' equity
$
6,791,203
$
5,750,223
Long-term debt
4,531,779
3,529,452
Total capitalization
11,322,982
9,279,675
Accounts payable and accrued
liabilities
235,775
265,024
Other current liabilities
546,461
479,501
Short-term debt
—
464,915
Current maturities of long-term debt
165
—
Total current liabilities
782,401
1,209,440
Deferred income taxes
1,456,569
1,300,015
Regulatory excess deferred taxes
697,764
705,101
Deferred credits and other liabilities
1,099,316
873,388
$
15,359,032
$
13,367,619
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Year Ended September 30
(000s)
2020
2019
Cash flows from operating
activities
Net income
$
601,443
$
511,406
Depreciation and amortization
429,828
391,456
Deferred income taxes
155,322
132,004
One-time income tax benefit
(20,962
)
—
Other
6,044
10,589
Changes in assets and liabilities
(133,676
)
(76,686
)
Net cash provided by operating
activities
1,037,999
968,769
Cash flows from investing
activities
Capital expenditures
(1,935,676
)
(1,693,477
)
Proceeds from the sale of discontinued
operations
—
4,000
Debt and equity securities activities,
net
491
(2,784
)
Other, net
9,667
8,601
Net cash used in investing activities
(1,925,518
)
(1,683,660
)
Cash flows from financing
activities
Net decrease in short-term debt
(464,915
)
(110,865
)
Proceeds from issuance of long-term debt,
net of premium/discount
999,450
1,045,221
Net proceeds from equity offering
624,302
694,103
Issuance of common stock through stock
purchase and employee retirement plans
19,548
19,323
Settlement of interest rate swaps
(4,426
)
(90,141
)
Repayment of long-term debt
—
(575,000
)
Cash dividends paid
(282,444
)
(245,717
)
Debt issuance costs
(7,738
)
(11,254
)
Net cash provided by financing
activities
883,777
725,670
Net increase (decrease) in cash and cash
equivalents
(3,742
)
10,779
Cash and cash equivalents at beginning of
period
24,550
13,771
Cash and cash equivalents at end of
period
$
20,808
$
24,550
Three Months Ended September
30
Year Ended September 30
Statistics
2020
2019
2020
2019
Consolidated distribution throughput (MMcf
as metered)
66,447
66,184
439,037
470,554
Consolidated pipeline and storage
transportation volumes (MMcf)
167,725
204,810
621,371
721,998
Distribution meters in service
3,333,181
3,291,835
3,333,181
3,291,835
Distribution average cost of gas
$
3.75
$
3.68
$
3.67
$
4.02
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201111005706/en/
Analysts and Media Contact: Dan Meziere (972)
855-3729
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