Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its fourth fiscal quarter ended September 30, 2021.
Highlights
- Earnings per diluted share was $5.12 for the year ended
September 30, 2021; $0.37 per diluted share for the fourth fiscal
quarter.
- Fiscal 2021 diluted earnings per share increased 8.5% compared
to fiscal 2020 adjusted diluted earnings per share of $4.72.
- Consolidated net income was $665.6 million for the year ended
September 30, 2021; $48.7 million for the fourth fiscal
quarter.
- Capital expenditures totaled $1.97 billion for the year ended
September 30, 2021, with approximately 88 percent of capital
spending related to system safety and reliability investments.
Outlook
- Earnings per diluted share for fiscal 2022 is expected to be in
the range of $5.40 to $5.60.
- Capital expenditures are expected to be in the range of $2.4
billion to $2.5 billion in fiscal 2022.
- The company's Board of Directors has declared a quarterly
dividend of $0.68 per common share. The indicated annual dividend
for fiscal 2022 is $2.72, which represents an 8.8% increase over
fiscal 2021.
"Fiscal 2021 was our 10th year executing our proven investment
strategy of operating safely and reliably while we modernize our
natural gas distribution, transmission, and storage systems," said
Kevin Akers, President and Chief Executive Officer of Atmos Energy.
"Our success in Fiscal 2021 once again reflects our employees'
commitment and ongoing effort to keep our 3.2 million customers in
our 1,400 communities, themselves and their families healthy and
safe."
Results for the Fiscal Year Ended September
30, 2021
Consolidated operating income increased $80.9 million to $905.0
million for the year ended September 30, 2021, compared to $824.1
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 system
maintenance, depreciation and property tax expenses. Additionally,
operating income decreased due to the refund of excess deferred
income taxes, which was substantially offset by a corresponding
decrease in income tax expense.
Distribution operating income increased $90.3 million to $618.5
million for the year ended September 30, 2021, compared with $528.2
million in the prior year. The increase reflects a $150.6 million
increase in rates and customer growth of $19.2 million, partially
offset by a $43.6 million increase in depreciation and property tax
expenses associated with increased capital investments, increased
bad debt expense of $18.2 million, a $12.8 million increase in
pipeline maintenance and other activities and an $8.4 million
decrease in service order revenues.
Pipeline and storage operating income decreased $9.4 million to
$286.5 million for the year ended September 30, 2021, compared with
$295.9 million in the prior year. This decrease is primarily
attributable to a $56.2 million increase from our GRIP filings
approved in fiscal 2020 and 2021 which was more than offset by a
$17.1 million increase in system maintenance, a $17.0 million
increase in depreciation and property tax expenses due to increased
capital investments, and an $8.2 million decrease in through system
revenues.
Additionally, our fiscal year results reflect a reduction in our
annual effective tax rate related to the refund of $55.9 million of
excess deferred taxes. As a result, our consolidated effective tax
rate declined from 19.5% in the prior year to 18.8% for the year
ended September 30, 2021.
Capital expenditures increased $33.8 million to $1.97 billion
for the year ended September 30, 2021, compared with $1.94 billion
in the prior year, due to continued spending for infrastructure
replacements and enhancements.
For the year ended September 30, 2021, the company had negative
operating cash flow of $1.08 billion, a $2.12 billion decrease
compared with the year ended September 30, 2020. The year-over-year
decrease is primarily the result of approximately $2.3 billion
incurred for gas costs during Winter Storm Uri.
Our equity capitalization ratio at September 30, 2021 was 51.9%,
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 to finance gas costs incurred
during Winter Storm Uri, partially offset by $606.7 million in
equity issuances under our forward equity agreements. Excluding the
$2.2 billion of incremental financing, our equity capitalization
ratio would have been 60.6% at September 30, 2021.
Results for the Three Months Ended September
30, 2021
Consolidated operating income decreased $9.8 million to $91.0
million for the three months ended September 30, 2021, from $100.8
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 and increased
employee costs. Additionally, operating income decreased due to the
refund of excess deferred income taxes, which was substantially
offset by a corresponding decrease in income tax expense.
Distribution operating income increased $5.7 million to $37.6
million for the three months ended September 30, 2021, compared
with $31.9 million in the prior-year quarter. The increase
primarily reflects a net $22.9 million increase in rates and a $4.2
million increase in customer growth, which was partially offset by
a $12.2 million increase in depreciation and property tax expenses
associated with increased capital investments, a $7.0 million
increase in pipeline maintenance and other activities and a $6.6
million increase in employee related costs.
Pipeline and storage operating income decreased $15.5 million to
$53.4 million for the three months ended September 30, 2021,
compared with $68.9 million in the prior-year quarter. This
decrease is primarily attributable to a $16.4 million increase in
system maintenance expenses primarily due to timing, a $2.2 million
increase in depreciation and property tax expenses due to increased
capital investments and a $1.7 million decrease in through system
revenues, which were partially offset by a $14.4 million increase
in rates.
Conference Call to be Webcast November 11,
2021
Atmos Energy will host a conference call with financial analysts
to discuss the fiscal 2021 financial results and the outlook for
fiscal 2022 through fiscal 2026 on Thursday, November 11, 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 in June 2020 we
remeasured our deferred tax liability and updated our 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
2021
2020
Change
(In thousands, except per
share data)
Net income
$
665,563
$
601,443
$
64,120
Non-cash income tax benefits
—
(20,962
)
20,962
Adjusted net income
$
665,563
$
580,481
$
85,082
Diluted net income per share
$
5.12
$
4.89
$
0.23
Diluted EPS from non-cash income tax
benefits
—
(0.17
)
0.17
Adjusted diluted net income per share
$
5.12
$
4.72
$
0.40
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
Year Ended September 30
(000s except per share)
2021
2020
Operating revenues
Distribution segment
$
3,241,973
$
2,626,993
Pipeline and storage segment
637,347
609,339
Intersegment eliminations
(471,830
)
(415,195
)
3,407,490
2,821,137
Purchased gas cost
Distribution segment
1,501,695
1,071,227
Pipeline and storage segment
1,582
1,548
Intersegment eliminations
(470,560
)
(413,921
)
1,032,717
658,854
Operation and maintenance expense
679,019
629,601
Depreciation and amortization
477,977
429,828
Taxes, other than income
312,779
278,755
Operating income
904,998
824,099
Other non-operating income (expense)
(2,145
)
7,171
Interest charges
83,554
84,474
Income before income taxes
819,299
746,796
Income tax expense
153,736
145,353
Net income
$
665,563
$
601,443
Basic net income per share
$
5.12
$
4.89
Diluted net income per share
$
5.12
$
4.89
Cash dividends per share
$
2.50
$
2.30
Basic weighted average shares
outstanding
129,779
122,788
Diluted weighted average shares
outstanding
129,834
122,872
Year Ended September 30
Summary Net Income by Segment (000s)
2021
2020
Distribution
$
445,862
$
395,664
Pipeline and storage
219,701
205,779
Net income
$
665,563
$
601,443
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Statements of
Income
Three Months Ended September
30
(000s except per share)
2021
2020
Operating revenues
Distribution segment
$
523,899
$
430,176
Pipeline and storage segment
160,479
156,918
Intersegment eliminations
(115,994
)
(112,180
)
568,384
474,914
Purchased gas cost
Distribution segment
197,426
128,641
Pipeline and storage segment
2,022
1,258
Intersegment eliminations
(115,670
)
(111,868
)
83,778
18,031
Operation and maintenance expense
199,531
180,072
Depreciation and amortization
124,708
111,746
Taxes, other than income
69,403
64,220
Operating income
90,964
100,845
Other non-operating expense
(16,938
)
(1,962
)
Interest charges
14,486
15,494
Income before income taxes
59,540
83,389
Income tax expense
10,820
18,056
Net income
$
48,720
$
65,333
Basic net income per share
$
0.37
$
0.53
Diluted net income per share
$
0.37
$
0.53
Cash dividends per share
$
0.625
$
0.575
Basic weighted average shares
outstanding
131,564
124,096
Diluted weighted average shares
outstanding
131,653
124,100
Three Months Ended September
30
Summary Net Income
by Segment (000s)
2021
2020
Distribution
$
6,545
$
19,944
Pipeline and storage
42,175
45,389
Net income
$
48,720
$
65,333
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
September 30,
September 30,
(000s)
2021
2020
Net property, plant and equipment
$
15,063,970
$
13,355,347
Cash and cash equivalents
116,723
20,808
Accounts receivable, net
342,967
230,595
Gas stored underground
178,116
111,950
Other current assets
2,200,909
107,905
Total current assets
2,838,715
471,258
Goodwill
731,257
731,257
Deferred charges and other assets
974,720
801,170
$
19,608,662
$
15,359,032
Shareholders' equity
$
7,906,889
$
6,791,203
Long-term debt
4,930,205
4,531,779
Total capitalization
12,837,094
11,322,982
Accounts payable and accrued
liabilities
423,222
235,775
Other current liabilities
686,681
546,461
Current maturities of long-term debt
2,400,452
165
Total current liabilities
3,510,355
782,401
Deferred income taxes
1,705,809
1,456,569
Regulatory excess deferred taxes
549,227
697,764
Deferred credits and other liabilities
1,006,177
1,099,316
$
19,608,662
$
15,359,032
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Year Ended September 30
(000s)
2021
2020
Cash flows from operating
activities
Net income
$
665,563
$
601,443
Depreciation and amortization
477,977
429,828
Deferred income taxes
155,355
155,322
One-time income tax benefit
—
(20,962)
Other
(3,733)
6,044
Change in Winter Storm Uri current
regulatory asset
(2,003,659)
—
Change in Winter Storm Uri long-term
regulatory asset
(76,652)
—
Changes in other assets and
liabilities
(299,102)
(133,676)
Net cash provided by (used in) operating
activities
(1,084,251)
1,037,999
Cash flows from investing
activities
Capital expenditures
(1,969,540)
(1,935,676)
Debt and equity securities activities,
net
(6,072)
491
Other, net
11,957
9,667
Net cash used in investing activities
(1,963,655)
(1,925,518)
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
606,667
624,302
Issuance of common stock through stock
purchase and employee retirement plans
15,841
19,548
Settlement of interest rate swaps
62,159
(4,426)
Cash dividends paid
(323,904)
(282,444)
Debt issuance costs
(14,288)
(7,738)
Net cash provided by financing
activities
3,143,821
883,777
Net increase (decrease) in cash and cash
equivalents
95,915
(3,742)
Cash and cash equivalents at beginning of
period
20,808
24,550
Cash and cash equivalents at end of
period
$
116,723
$
20,808
Three Months Ended September
30
Year Ended September 30
Statistics
2021
2020
2021
2020
Consolidated distribution throughput (MMcf
as metered)
65,505
66,447
461,346
439,037
Consolidated pipeline and storage
transportation volumes (MMcf)
157,526
167,725
585,857
621,371
Distribution meters in service
3,397,249
3,333,181
3,397,249
3,333,181
Distribution average cost of gas
$
5.96
$
3.75
$
4.86
$
3.67
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211110006212/en/
Dan Meziere (972) 855-3729
Atmos Energy (NYSE:ATO)
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