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Atmos Energy (ATO) Q2 Earnings Beat Estimates, Guidance Up

Zacks Equity Research

Atmos Energy Corporation ATO posted second-quarter fiscal 2019 earnings of $1.82 per share, which surpassed the Zacks Consensus Estimate of $1.68 by 8.3%. The reported earnings also improved 15.9% from the prior-year figure. The year-over-year improvement in earnings is driven by the implementation of new rates and customer growth.

Total Revenues

Total revenues of $1,094.7 million lagged the Zacks Consensus Estimate of $1,279 million by 14.4%. Moreover, the figure was 10.2% lower than the year-ago total revenues of $1,219.4 million. The year-over-year decline in revenues was due to lower contribution from its distribution segment.

Segment Revenues

Distribution: Revenues from the segment decreased 11.8% to $1,057.9 million from $1,199.3 million in the prior-year quarter. Distribution contribution margin increased to $487.5 million from $472.2 million in the year-ago quarter, driven by increase in customer growth in Mid-TexDivision.

Pipeline and Storage: Revenues from the segment increased 12.3% to $135.7 million from $120.9 million in the year-ago quarter.

Atmos Energy Corporation Price, Consensus and EPS Surprise

Atmos Energy Corporation Price, Consensus and EPS Surprise | Atmos Energy Corporation Quote

Quarterly Highlights

Total operating expenses in the reported quarter increased 1.1% from the year-ago level to $325.3 million due to higher tax, and depreciation and amortization costs.

Operating income in the reported quarter was up 9.9% year over year to $297.7 million. The increase reflects positive rate case outcomes, customer growth, strong transportation activity in the distribution segment, along with higher volumes and margins in the pipeline and storage segment.

The company incurred interest expenses of $26.9 million, down 1.5% from the year-ago period.

It invested $777.6 million in the six months ended Mar 31, 2019. Of the total spending, nearly 84% was assigned for improving system safety and reliability investments.

Financial Highlights

As of Mar 31, 2019, Atmos Energy had cash and cash equivalents of $108.4 million compared with $13.8 million on Sep 30, 2018.

Long-term debt was $3.58 billion as of Mar 31, 2019, up from $2.49 billion on Sep 30, 2018.

The company’s cash flow from operating activities over the six months ended Mar 31, 2019 was $560.9 million, down from $751.4 million recorded in the prior-year comparable period.

Guidance

Atmos Energy now expects its fiscal 2019 earnings guidance in the range of $4.25-$4.35, up from prior expectation of $4.20-$4.35. The midpoint of the revised guided range is $4.30, which is in line with the current Zacks Consensus Estimate for fiscal 2019.

Capital expenditure for fiscal 2019 is expected in the range of $1.65-$1.75 billion.

Zacks Rank

Atmos Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Other Utility Releases

NextEra Energy, Inc. NEE reported first-quarter 2019 adjusted earnings of $2.20 per share, beating the Zacks Consensus Estimate of $2.01 by 9.4%.

FirstEnergy Corp. FE reported first-quarter 2019 operating earnings of 67 cents per share, which beat the Zacks Consensus Estimate of 66 cents by 1.52%.

Dominion Energy Inc. D reported first-quarter 2019 operating earnings of $1.10 per share, lagging the Zacks Consensus Estimate of $1.12 by 1.8%.

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