Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its first quarter ended December 31, 2019.
First Quarter Highlights
- Earnings per diluted share of $1.47
- Consolidated net income of $178.7 million
- Capital expenditures were $529.2 million, an increase of 27 percent
- Approximately 86 percent of capital spending related to system safety and reliability investments
Outlook
- Earnings per share is expected to be in the range of $4.58 to $4.73 per diluted share for fiscal 2020.
- Capital expenditures is expected to be in the range of $1.85 billion to $1.95 billion in fiscal 2020.
- The company's Board of Directors has declared a quarterly dividend of $0.575 per common share. The indicated annual dividend for fiscal 2020 is $2.30, which represents a 9.5% increase over fiscal 2019.
“Our first quarter results reflect the continued dedication of our employees to execute our strategy of investing in safety and reliability,” said Kevin Akers, President and Chief Executive Officer of Atmos Energy Corporation. “We remain on track to deliver annual earnings per share growth between 6% and 8% for fiscal 2020."
Results for the Three Months Ended December 31, 2019
Consolidated operating income increased $16.3 million to $252.8 million for the three months ended December 31, 2019, compared to $236.5 million in the prior year, which primarily reflects positive rate outcomes and customer growth in our distribution business, partially offset by higher operation and maintenance, depreciation and property tax expenses.
Distribution operating income increased $10.9 million to $180.3 million for the three months ended December 31, 2019, compared with $169.4 million in the prior year. The increase reflects a net $27.0 million increase in rates, primarily in our Mid-Tex, Mississippi, Louisiana and West Texas divisions. In addition, customer growth increased $4.0 million, primarily in our Mid-Tex division. These increases were partially offset by a decrease in consumption of $1.4 million, primarily in our Mid-Tex division, an $8.6 million increase in operation and maintenance expense due primarily to pipeline and maintenance activities and higher employee costs, as well as a $9.2 million increase in depreciation and property tax expenses associated with increased capital investments.
Pipeline and storage operating income increased $5.5 million to $72.5 million for the three months ended December 31, 2019, compared with $67.0 million in the prior year. This increase is primarily attributable to a $13.7 million increase in revenue from our GRIP filing approved in fiscal 2019, partially offset by a $5.1 million increase in operation and maintenance expense primarily due to well integrity costs and a $2.6 million increase in depreciation expense due to increased capital investments.
Capital expenditures increased $112.8 million to $529.2 million for the three months ended December 31, 2019, compared with $416.4 million in the prior year, due to continued spending for infrastructure replacements and enhancements.
For the three months ended December 31, 2019, the company generated operating cash flow of $172.4 million, a $7.8 million increase compared with the three months ended December 31, 2018. The year-over-year increase is primarily attributable to working capital changes, particularly in our distribution segment resulting from the timing of payments for natural gas purchases and deferred gas cost recoveries.
Our equity capitalization ratio at December 31, 2019 was 58.6%, compared with 59.0% at September 30, 2019. The decrease primarily reflects the effects of long-term debt issuances in October 2019.
Conference Call to be Webcast February 5, 2020
Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2020 first quarter financial results on Wednesday, February 5, 2020, at 9:00 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 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 credit and 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 Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and in subsequent filings with the Securities and Exchange Commission.
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 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 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 December 31 | |||||||
(000s except per share) | 2019 | 2018 | ||||||
Operating revenues | ||||||||
Distribution segment | $ | 828,504 | $ | 838,835 | ||||
Pipeline and storage segment | 148,176 | 134,470 | ||||||
Intersegment eliminations | (101,117 | ) | (95,523 | ) | ||||
875,563 | 877,782 | |||||||
Purchased gas cost | ||||||||
Distribution segment | 397,558 | 437,732 | ||||||
Pipeline and storage segment | 99 | (358 | ) | |||||
Intersegment eliminations | (100,789 | ) | (95,209 | ) | ||||
296,868 | 342,165 | |||||||
Operation and maintenance expense | 152,245 | 138,600 | ||||||
Depreciation and amortization | 105,062 | 96,065 | ||||||
Taxes, other than income | 68,607 | 64,488 | ||||||
Operating income | 252,781 | 236,464 | ||||||
Other non-operating income (expense) | 4,887 | (7,723 | ) | |||||
Interest charges | 27,229 | 27,849 | ||||||
Income before income taxes | 230,439 | 200,892 | ||||||
Income tax expense | 51,766 | 43,246 | ||||||
Net income | $ | 178,673 | $ | 157,646 | ||||
Basic net income per share | $ | 1.47 | $ | 1.38 | ||||
Diluted net income per share | $ | 1.47 | $ | 1.38 | ||||
Cash dividends per share | $ | 0.575 | $ | 0.525 | ||||
Basic weighted average shares outstanding | 121,113 | 113,800 | ||||||
Diluted weighted average shares outstanding | 121,359 | 113,832 | ||||||
Three Months Ended December 31 | ||||||||
Summary Net Income by Segment (000s) | 2019 | 2018 | ||||||
Distribution | $ | 129,757 | $ | 114,385 | ||||
Pipeline and storage | 48,916 | 43,261 | ||||||
Net income | $ | 178,673 | $ | 157,646 | ||||
Atmos Energy Corporation Financial Highlights, continued (Unaudited) | ||||||||
Condensed Balance Sheets | December 31, | September 30, | ||||||
(000s) | 2019 | 2019 | ||||||
Net property, plant and equipment | $ | 12,250,423 | $ | 11,787,669 | ||||
Cash and cash equivalents | 189,272 | 24,550 | ||||||
Accounts receivable, net | 435,616 | 230,571 | ||||||
Gas stored underground | 115,259 | 130,138 | ||||||
Other current assets | 71,982 | 72,772 | ||||||
Total current assets | 812,129 | 458,031 | ||||||
Goodwill | 730,706 | 730,706 | ||||||
Deferred charges and other assets | 594,867 | 391,213 | ||||||
$ | 14,388,125 | $ | 13,367,619 | |||||
Shareholders' equity | $ | 6,127,775 | $ | 5,750,223 | ||||
Long-term debt | 4,324,285 | 3,529,452 | ||||||
Total capitalization | 10,452,060 | 9,279,675 | ||||||
Accounts payable and accrued liabilities | 308,113 | 265,024 | ||||||
Other current liabilities | 537,009 | 479,501 | ||||||
Short-term debt | — | 464,915 | ||||||
Current maturities of long-term debt | 50 | — | ||||||
Total current liabilities | 845,172 | 1,209,440 | ||||||
Deferred income taxes | 1,352,333 | 1,300,015 | ||||||
Regulatory excess deferred taxes | 699,375 | 705,101 | ||||||
Deferred credits and other liabilities | 1,039,185 | 873,388 | ||||||
$ | 14,388,125 | $ | 13,367,619 | |||||
Atmos Energy Corporation Financial Highlights, continued (Unaudited) | ||||||||
Condensed Statements of Cash Flows | Three Months Ended December 31 | |||||||
(000s) | 2019 | 2018 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 178,673 | $ | 157,646 | ||||
Depreciation and amortization | 105,062 | 96,065 | ||||||
Deferred income taxes | 46,726 | 40,339 | ||||||
Other | (616 | ) | 6,231 | |||||
Changes in assets and liabilities | (157,400 | ) | (135,597 | ) | ||||
Net cash provided by operating activities | 172,445 | 164,684 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures | (529,186 | ) | (416,404 | ) | ||||
Debt and equity securities activities, net | (1,602 | ) | (963 | ) | ||||
Other, net | 2,553 | 2,074 | ||||||
Net cash used in investing activities | (528,235 | ) | (415,293 | ) | ||||
Cash flows from financing activities | ||||||||
Net decrease in short-term debt | (464,915 | ) | (575,780 | ) | ||||
Proceeds from issuance of long-term debt, net of premium/discount | 799,450 | 596,994 | ||||||
Net proceeds from equity offering | 259,005 | 494,734 | ||||||
Issuance of common stock through stock purchase and employee retirement plans | 4,267 | 4,241 | ||||||
Cash dividends paid | (69,557 | ) | (58,722 | ) | ||||
Debt issuance costs | (7,738 | ) | (6,432 | ) | ||||
Net cash provided by financing activities | 520,512 | 455,035 | ||||||
Net increase in cash and cash equivalents | 164,722 | 204,426 | ||||||
Cash and cash equivalents at beginning of period | 24,550 | 13,771 | ||||||
Cash and cash equivalents at end of period | $ | 189,272 | $ | 218,197 | ||||
Three Months Ended December 31 | ||||||||
Statistics | 2019 | 2018 | ||||||
Consolidated distribution throughput (MMcf as metered) | 139,558 | 142,746 | ||||||
Consolidated pipeline and storage transportation volumes (MMcf) | 156,529 | 170,527 | ||||||
Distribution meters in service | 3,307,663 | 3,272,020 | ||||||
Distribution average cost of gas | $ | 4.01 | $ | 4.30 | ||||
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Contacts:
Jennifer Hills (972) 855-3729
