Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its third fiscal quarter ended June 30, 2021.
Highlights
- Earnings per diluted share was $4.77 for the nine months ended
June 30, 2021; $0.78 per diluted share for the third fiscal
quarter.
- Consolidated net income was $616.8 million for the nine months
ended June 30, 2021; $102.4 million for the third fiscal
quarter.
- Capital expenditures totaled $1,358.0 million for the nine
months ended June 30, 2021, with approximately 87 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 higher end of the previously announced 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.
“With strong visibility into the remainder of the year, we
continue to believe fiscal 2021 earnings will be at the higher end
of our earnings guidance range of $4.90 to $5.10 per diluted
share,” said Kevin Akers, President and Chief Executive Officer of
Atmos Energy, “and our capital expenditures are expected to be in
the range of $2.0 billion to $2.2 billion for this fiscal
year.”
Results for the Three Months Ended June 30,
2021
Consolidated operating income decreased $5.6 million to $133.4
million for the three months ended June 30, 2021, from $139.0
million in the prior-year quarter. Rate case outcomes in both
segments were more than offset by increased depreciation and
property tax expenses, timing of system maintenance, the refund of
excess deferred income taxes to customers and increased bad debt
expense in our distribution segment.
Distribution operating income increased $5.6 million to $68.1
million for the three months ended June 30, 2021, compared with
$62.5 million in the prior-year quarter. The increase primarily
reflects a net $25.4 million increase in rates, an $8.9 million
increase in weather and consumption, partially offset by a $12.7
million increase in bad debt expense, a $9.3 million increase in
depreciation and property tax expenses associated with increased
capital investments, a $3.2 million increase in pipeline
maintenance and other activities and a $2.6 million increase in
employee related costs.
Pipeline and storage operating income decreased $11.3 million to
$65.3 million for the three months ended June 30, 2021, compared
with $76.5 million in the prior-year quarter. This decrease is
primarily attributable to a $14.4 million increase in rates that
was more than offset by a $10.0 million decrease due to the refund
of excess deferred income taxes to customers, an $8.4 million
increase in system maintenance expenses primarily due to timing, a
$3.4 million increase in depreciation and property tax expenses due
to increased capital investments, and a $1.7 million decrease in
through system revenues.
Results for the Nine Months Ended June 30,
2021
Consolidated operating income increased $90.7 million to $814.0
million for the nine months ended June 30, 2021, compared to $723.3
million in the prior year, which primarily reflects rate outcomes
in both segments and customer growth in our distribution segment,
partially offset by higher bad debt expense and lower service order
revenue in our distribution segment, lower through system revenue
in our pipeline and storage segment and increased depreciation and
property tax expenses.
Distribution operating income increased $84.6 million to $580.9
million for the nine months ended June 30, 2021, compared with
$496.3 million in the prior year. The increase reflects a net
$128.1 million increase in rates and customer growth of $15.0
million, partially offset by a $31.3 million increase in
depreciation and property tax expenses associated with increased
capital investments, increased bad debt expense of $21.5 million
and an $8.6 million decrease in service order revenues.
Pipeline and storage operating income increased $6.2 million to
$233.1 million for the nine months ended June 30, 2021, compared
with $226.9 million in the prior year. This increase is primarily
attributable to a $41.9 million increase from our GRIP filings
approved in fiscal 2020 and 2021, partially offset by a $14.9
million increase in depreciation and property tax expenses due to
increased capital investments, a $16.6 million decrease due to the
refund of excess deferred income taxes to customers and a $6.5
million decrease in through system revenues.
Capital expenditures decreased $47.7 million to $1,358.0 million
for the nine months ended June 30, 2021, compared with $1,405.7
million in the prior year, primarily as a result of timing of
spending.
For the nine months ended June 30, 2021, the company generated
negative operating cash flow of $1,158.5 million, a $2,054.0
million decrease compared with the nine months ended June 30, 2020.
The year-over-year decrease is primarily the result of gas costs
incurred during Winter Storm Uri.
Our equity capitalization ratio at June 30, 2021 was 51.5%,
compared with 60.0% at September 30, 2020, due to the issuance of
$600 million of 1.50% senior notes in October 2020 and a $2.2
billion debt issuance in March 2021 in order to finance gas costs
incurred during Winter Storm Uri. Excluding the $2.2 billion of
incremental financing, our equity capitalization ratio would have
been 60.2% at June 30, 2021.
Conference Call to be Webcast August 5,
2021
Atmos Energy will host a conference call with financial analysts
to discuss the fiscal 2021 third quarter financial results on
Thursday, August 5, 2021, 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; and 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
Due to the passage of Kansas House Bill 2585 on June 1, 2020, we
remeasured our deferred tax liability and updated our state
deferred tax rate in the third quarter of fiscal 2020. 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
2021
2020
Change
(In thousands, except per
share data)
Net income
$
102,411
$
117,791
$
(15,380
)
Non-cash income tax benefit
—
(20,962
)
20,962
Adjusted net income
$
102,411
$
96,829
$
5,582
Diluted net income per share
$
0.78
$
0.96
$
(0.18
)
Diluted EPS from non-cash income tax
benefit
—
(0.17
)
0.17
Adjusted diluted net income per share
$
0.78
$
0.79
$
(0.01
)
Nine Months Ended June
30
2021
2020
Change
(In thousands, except per
share data)
Net income
$
616,843
$
536,110
$
80,733
Non-cash income tax benefit
—
(20,962
)
20,962
Adjusted net income
$
616,843
$
515,148
$
101,695
Diluted net income per share
$
4.77
$
4.37
$
0.40
Diluted EPS from non-cash income tax
benefit
—
(0.17
)
0.17
Adjusted diluted net income per share
$
4.77
$
4.20
$
0.57
About Atmos Energy
Atmos Energy Corporation, an S&P 500 company headquartered
in Dallas, is the country’s largest natural gas-only distributor.
We safely deliver reliable, affordable, efficient and abundant
natural gas to more than 3 million distribution customers in over
1,400 communities across eight states located primarily in the
South. As part of our vision to be the safest provider of natural
gas services, we are modernizing our business and infrastructure
while continuing to invest in safety, innovation, environmental
sustainability and our communities. Atmos Energy 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)
2021
2020
Operating revenues
Distribution segment
$
558,750
$
435,308
Pipeline and storage segment
162,987
158,008
Intersegment eliminations
(116,184
)
(100,321
)
605,553
492,995
Purchased gas cost
Distribution segment
202,050
126,093
Pipeline and storage segment
691
(11
)
Intersegment eliminations
(115,871
)
(100,010
)
86,870
26,072
Operation and maintenance expense
184,470
149,460
Depreciation and amortization
119,348
107,104
Taxes, other than income
81,475
71,324
Operating income
133,390
139,035
Other non-operating income
5,887
7,235
Interest charges
20,962
19,580
Income before income taxes
118,315
126,690
Income tax expense
15,904
8,899
Net income
$
102,411
$
117,791
Basic net income per share
$
0.78
$
0.96
Diluted net income per share
$
0.78
$
0.96
Cash dividends per share
$
0.625
$
0.575
Basic weighted average shares
outstanding
131,358
123,026
Diluted weighted average shares
outstanding
131,486
123,032
Three Months Ended June 30
Summary Net Income
by Segment (000s)
2021
2020
Distribution
$
53,289
$
58,899
Pipeline and storage
49,122
58,892
Net income
$
102,411
$
117,791
Atmos Energy Corporation Financial Highlights, continued
(Unaudited)
Statements of Income
Nine Months Ended June 30
(000s except per share)
2021
2020
Operating revenues
Distribution segment
$
2,718,074
$
2,196,817
Pipeline and storage segment
476,868
452,421
Intersegment eliminations
(355,836
)
(303,015
)
2,839,106
2,346,223
Purchased gas cost
Distribution segment
1,304,269
942,586
Pipeline and storage segment
(440
)
290
Intersegment eliminations
(354,890
)
(302,053
)
948,939
640,823
Operation and maintenance expense
479,488
449,529
Depreciation and amortization
353,269
318,082
Taxes, other than income
243,376
214,535
Operating income
814,034
723,254
Other non-operating income
14,793
9,133
Interest charges
69,068
68,980
Income before income taxes
759,759
663,407
Income tax expense
142,916
127,297
Net income
$
616,843
$
536,110
Basic net income per share
$
4.77
$
4.38
Diluted net income per share
$
4.77
$
4.37
Cash dividends per share
$
1.875
$
1.725
Basic weighted average shares
outstanding
129,185
122,352
Diluted weighted average shares
outstanding
129,229
122,463
Nine Months Ended June 30
Summary Net Income by Segment (000s)
2021
2020
Distribution
$
439,317
$
375,720
Pipeline and storage
177,526
160,390
Net income
$
616,843
$
536,110
Atmos Energy Corporation Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
June 30,
September 30,
(000s)
2021
2020
Net property, plant and equipment
$
14,477,749
$
13,355,347
Cash and cash equivalents
524,621
20,808
Accounts receivable, net
291,122
230,595
Gas stored underground
99,469
111,950
Other current assets
200,154
107,905
Total current assets
1,115,366
471,258
Goodwill
731,257
731,257
Deferred charges and other assets
2,991,063
801,170
$
19,315,435
$
15,359,032
Shareholders' equity
$
7,773,758
$
6,791,203
Long-term debt
7,128,505
4,531,779
Total capitalization
14,902,263
11,322,982
Accounts payable and accrued
liabilities
280,352
235,775
Other current liabilities
581,722
546,461
Current maturities of long-term debt
200,442
165
Total current liabilities
1,062,516
782,401
Deferred income taxes
1,667,784
1,456,569
Regulatory excess deferred taxes
587,680
697,764
Deferred credits and other liabilities
1,095,192
1,099,316
$
19,315,435
$
15,359,032
Atmos Energy Corporation Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Nine Months Ended June 30
(000s)
2021
2020
Cash flows from operating
activities
Net income
$
616,843
$
536,110
Depreciation and amortization
353,269
318,082
Deferred income taxes
144,195
137,996
One-time income tax benefit
—
(20,962
)
Other
378
5,935
Changes in Winter Storm Uri regulatory
asset
(2,088,536
)
—
Changes in other assets and
liabilities
(184,616
)
(81,675
)
Net cash provided by (used in) operating
activities
(1,158,467
)
895,486
Cash flows from investing
activities
Capital expenditures
(1,357,960
)
(1,405,673
)
Debt and equity securities activities,
net
(2,363
)
(692
)
Other, net
8,006
6,098
Net cash used in investing activities
(1,352,317
)
(1,400,267
)
Cash flows from financing
activities
Net decrease in short-term debt
—
(464,915
)
Proceeds from issuance of long-term debt,
net of premium/discount
2,797,346
999,450
Net proceeds from equity offering
460,678
358,047
Issuance of common stock through stock
purchase and employee retirement plans
12,121
14,125
Cash dividends paid
(241,260
)
(210,674
)
Debt issuance costs
(14,288
)
(7,738
)
Net cash provided by financing
activities
3,014,597
688,295
Net increase in cash and cash
equivalents
503,813
183,514
Cash and cash equivalents at beginning of
period
20,808
24,550
Cash and cash equivalents at end of
period
$
524,621
$
208,064
Three Months Ended June 30
Nine Months Ended June 30
Statistics
2021
2020
2021
2020
Consolidated distribution throughput (MMcf
as metered)
76,128
69,162
395,841
372,590
Consolidated pipeline and storage
transportation volumes (MMcf)
153,166
153,652
428,331
453,646
Distribution meters in service
3,387,451
3,322,332
3,387,451
3,322,332
Distribution average cost of gas
$
4.89
$
3.24
$
4.73
$
3.66
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804005967/en/
Dan Meziere, (972) 855-3729
Atmos Energy (NYSE:ATO)
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