Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its second fiscal quarter ended March 31, 2022.
Highlights
- Earnings per diluted share was $4.24 for the six months ended
March 31, 2022; $2.37 per diluted share for the second fiscal
quarter.
- Consolidated net income was $574.2 million for the six months
ended March 31, 2022; $325.0 million for the second fiscal
quarter.
- Capital expenditures totaled $1,190.0 million for the six
months ended March 31, 2022, with approximately 87 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 adjusted range of $5.50 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.
"At every level, our employees remain focused on executing our
strategy of modernizing our systems as we invest in safety and
reliability," said Kevin Akers, President, and Chief Executive
Officer of Atmos Energy. "I'm so proud of them and their hard work
as we remain well positioned to deliver annual earnings per share
growth between 6% and 8% for fiscal 2022."
Results for the Three Months Ended March 31,
2022
Consolidated operating income increased $3.3 million to $385.1
million for the three months ended March 31, 2022, from $381.8
million in the prior-year quarter. The refund of excess deferred
income taxes reduced operating income by $43.3 million quarter over
quarter, which was substantially offset by a corresponding decrease
in income tax expense. Excluding the impact of these refunds,
operating income increased $46.6 million due to rate outcomes in
both segments and customer growth in our distribution segment,
partially offset by lower weather and consumption in our
distribution segment and increased system maintenance and
depreciation expenses.
Distribution operating income increased $8.0 million to $311.3
million for the three months ended March 31, 2022, compared with
$303.3 million in the prior-year quarter. Refunds of excess
deferred taxes reduced operating income by $39.9 million quarter
over quarter. Key operating drivers for this segment include a net
$60.0 million increase in rates, a $6.3 million increase due to net
customer growth and a $6.6 million decrease in other operation and
maintenance expense primarily due to lower bad debt expense in the
current-year quarter, partially offset by a $15.5 million decrease
in consumption, net of our weather normalization adjustments (WNA),
an $11.0 million increase in depreciation and property tax expenses
and a $4.1 million increase in system maintenance expense.
Pipeline and storage operating income decreased $4.7 million to
$73.8 million for the three months ended March 31, 2022, compared
with $78.5 million in the prior-year quarter. Refunds of excess
deferred taxes reduced operating income by $3.4 million quarter
over quarter. Key operating drivers for this segment include a
$13.9 million increase in rates due to the GRIP filing approved in
fiscal 2021, partially offset by a $7.6 million increase in system
maintenance expense and a $3.8 million increase in depreciation
expense due to increased capital investments.
Results for the Six Months Ended March 31,
2022
Consolidated operating income decreased $19.6 million to $661.0
million for the six months ended March 31, 2022, compared to $680.6
million in the prior year. The refund of excess deferred income
taxes reduced operating income by $81.9 million year over year,
which was substantially offset by a corresponding decrease in
income tax expense. Excluding the impact of these refunds,
operating income increased $62.3 million due to rate outcomes in
both segments and customer growth in our distribution segment,
partially offset by lower weather and consumption in our
distribution segment, lower thru-system revenue in our pipeline and
storage segment and increased system maintenance, depreciation and
property tax expenses.
Distribution operating income decreased $11.0 million to $501.8
million for the six months ended March 31, 2022, compared with
$512.8 million in the prior-year period. Refunds of excess deferred
taxes reduced operating income by $68.6 million year over year. Key
operating drivers for this segment include a $92.1 million increase
in rates, and customer growth of $10.6 million partially offset by
a $16.5 million decrease in consumption, net of WNA, a $12.0
million increase in operation and maintenance expense driven
primarily by higher pipeline maintenance costs and other
administrative costs and a $21.1 million increase in depreciation
and property tax expenses associated with increased capital
investments.
Pipeline and storage operating income decreased $8.6 million to
$159.2 million for the six months ended March 31, 2022, compared
with $167.8 million in the prior year. Refunds of excess deferred
income taxes decreased operating income by $13.3 million year over
year. Key operating drivers for this segment include a $28.3
million increase from our GRIP filings approved in fiscal 2021
partially offset by a $13.4 million increase in system maintenance,
a $6.7 million increase in depreciation and property tax expenses
due to increased capital investments and a $2.4 million decrease in
through system revenues.
Capital expenditures increased $344.3 million to $1,190.0
million for the six months ended March 31, 2022, compared with
$845.7 million in the prior year, due to increased system
modernization and expansion spending.
For the six months ended March 31, 2022, the company generated
operating cash flow of $640.5 million, compared to $691.3 million
excluding the $2.1 billion incurred in the prior-year period for
gas costs incurred during Winter Storm Uri. The year-over-year
decrease primarily reflects the refund of excess deferred tax
liabilities of $81.9 million and the timing of gas cost recoveries,
partially offset by the positive effects of successful rate case
outcomes achieved in fiscal 2021.
Our equity capitalization ratio at March 31, 2022 was 53.0%,
compared with 51.9% at September 30, 2021, due to the issuance of
$600 million of 2.85% senior notes in October 2021 and $200 million
of 2.625% senior notes in January 2022, partially offset by $594.3
million in equity issuances under our forward equity agreements.
Excluding the $2.2 billion of incremental financing issued to pay
for the purchased gas costs incurred during Winter Storm Uri, our
equity capitalization ratio was 60.9% at March 31, 2022.
Conference Call to be Webcast May 5,
2022
Atmos Energy will host a conference call with financial analysts
to discuss the fiscal 2022 second quarter financial results on
Thursday, May 5, 2022, 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.
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 March 31
(000s except per share)
2022
2021
Operating revenues
Distribution segment
$
1,610,546
$
1,282,674
Pipeline and storage segment
163,747
154,168
Intersegment eliminations
(124,474
)
(117,769
)
1,649,819
1,319,073
Purchased gas cost
Distribution segment
993,854
691,147
Pipeline and storage segment
1,683
113
Intersegment eliminations
(124,159
)
(117,451
)
871,378
573,809
Operation and maintenance expense
163,352
156,375
Depreciation and amortization
133,374
118,636
Taxes, other than income
96,583
88,449
Operating income
385,132
381,804
Other non-operating income
5,213
2,834
Interest charges
28,928
26,096
Income before income taxes
361,417
358,542
Income tax expense
36,418
61,788
Net income
$
324,999
$
296,754
Basic net income per share
$
2.37
$
2.30
Diluted net income per share
$
2.37
$
2.30
Cash dividends per share
$
0.680
$
0.625
Basic weighted average shares
outstanding
136,834
129,161
Diluted weighted average shares
outstanding
137,250
129,164
Three Months Ended March 31
Summary Net Income
by Segment (000s)
2022
2021
Distribution
$
268,851
$
232,336
Pipeline and storage
56,148
64,418
Net income
$
324,999
$
296,754
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Statements of
Income
Six Months Ended March 31
(000s except per share)
2022
2021
Operating revenues
Distribution segment
$
2,582,968
$
2,159,324
Pipeline and storage segment
326,665
313,881
Intersegment eliminations
(247,028
)
(239,652
)
2,662,605
2,233,553
Purchased gas cost
Distribution segment
1,490,653
1,102,219
Pipeline and storage segment
(1,728
)
(1,131
)
Intersegment eliminations
(246,384
)
(239,019
)
1,242,541
862,069
Operation and maintenance expense
322,462
295,018
Depreciation and amortization
261,230
233,921
Taxes, other than income
175,379
161,901
Operating income
660,993
680,644
Other non-operating income
13,915
8,906
Interest charges
48,779
48,106
Income before income taxes
626,129
641,444
Income tax expense
51,921
127,012
Net income
$
574,208
$
514,432
Basic net income per share
$
4.24
$
4.01
Diluted net income per share
$
4.24
$
4.01
Cash dividends per share
$
1.36
$
1.25
Basic weighted average shares
outstanding
135,259
128,098
Diluted weighted average shares
outstanding
135,470
128,100
Six Months Ended March 31
Summary Net Income
by Segment (000s)
2022
2021
Distribution
$
448,422
$
386,028
Pipeline and storage
125,786
128,404
Net income
$
574,208
$
514,432
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
March 31,
September 30,
(000s)
2022
2021
Net property, plant and equipment
$
16,084,973
$
15,063,970
Cash and cash equivalents
582,495
116,723
Accounts receivable, net
565,184
342,967
Gas stored underground
96,295
178,116
Other current assets
2,285,022
2,200,909
Total current assets
3,528,996
2,838,715
Goodwill
731,257
731,257
Deferred charges and other assets
925,917
974,720
$
21,271,143
$
19,608,662
Shareholders' equity
$
8,983,231
$
7,906,889
Long-term debt
5,757,595
4,930,205
Total capitalization
14,740,826
12,837,094
Accounts payable and accrued
liabilities
354,003
423,222
Other current liabilities
653,009
686,681
Current maturities of long-term debt
2,201,404
2,400,452
Total current liabilities
3,208,416
3,510,355
Deferred income taxes
1,848,626
1,705,809
Regulatory excess deferred taxes
470,918
549,227
Deferred credits and other liabilities
1,002,357
1,006,177
$
21,271,143
$
19,608,662
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Six Months Ended March 31
(000s)
2022
2021
Cash flows from operating
activities
Net income
$
574,208
$
514,432
Depreciation and amortization
261,230
233,921
Deferred income taxes
40,122
128,725
Other
(12,812
)
(938
)
Change in Winter Storm Uri long-term
regulatory asset
—
(2,093,534
)
Changes in other assets and
liabilities
(222,264
)
(184,852
)
Net cash provided by (used in) operating
activities
640,484
(1,402,246
)
Cash flows from investing
activities
Capital expenditures
(1,190,029
)
(845,728
)
Debt and equity securities activities,
net
3,758
(5,506
)
Other, net
4,302
5,171
Net cash used in investing activities
(1,181,969
)
(846,063
)
Cash flows from financing
activities
Proceeds from issuance of long-term debt,
net of premium/discount
798,802
2,797,346
Net proceeds from equity issuances
594,320
460,678
Issuance of common stock through stock
purchase and employee retirement plans
8,010
8,291
Repayment of long-term debt
(200,000
)
—
Cash dividends paid
(183,944
)
(159,348
)
Debt issuance costs
(8,196
)
(14,155
)
Other
(1,735
)
—
Net cash provided by financing
activities
1,007,257
3,092,812
Net increase in cash and cash
equivalents
465,772
844,503
Cash and cash equivalents at beginning of
period
116,723
20,808
Cash and cash equivalents at end of
period
$
582,495
$
865,311
Three Months Ended March 31
Six Months Ended March 31
Statistics
2022
2021
2022
2021
Consolidated distribution throughput (MMcf
as metered)
189,298
191,243
297,440
319,713
Consolidated pipeline and storage
transportation volumes (MMcf)
129,395
130,578
265,462
275,165
Distribution meters in service
3,422,900
3,380,153
3,422,900
3,380,153
Distribution average cost of gas
$
6.99
$
4.75
$
7.04
$
4.70
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version on businesswire.com: https://www.businesswire.com/news/home/20220504005934/en/
Analysts and Media Contact: Dan Meziere (972)
855-3729
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