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Atmos Energy Corporation Reports Earnings for Fiscal 2021 First Quarter; Affirms Fiscal 2021 Guidance

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Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its first fiscal quarter ended December 31, 2020.

Highlights

  • Earnings per diluted share was $1.71 for the three months ended December 31, 2020.

  • Consolidated net income was $217.7 million for the three months ended December 31, 2020.

  • Capital expenditures totaled $456.8 million for the three months ended December 31, 2020, 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 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.

"I am so proud of our employees and their continued dedication to execute our strategy of investing in safety and reliability," said Kevin Akers, President and Chief Executive Officer of Atmos Energy. "Their resilience and hard work positions us for continued success in fiscal 2021."

Results for the Three Months Ended December 31, 2020

Consolidated operating income increased $46.0 million to $298.8 million for the three months ended December 31, 2020, compared to $252.8 million in the prior year, which primarily reflects rate outcomes combined with lower operating and maintenance expenses in both segments, partially offset by 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 $29.3 million to $209.6 million for the three months ended December 31, 2020, compared with $180.3 million in the prior year. The increase reflects a net $37.0 million increase in rates and customer growth in most of our jurisdictions of $5.7 million combined with $2.9 million decrease in travel and entertainment expense, partially offset by a $9.8 million increase in depreciation and property tax expenses associated with increased capital investments and a $4.5 million decrease in service order revenues.

Pipeline and storage operating income increased $16.8 million to $89.3 million for the three months ended December 31, 2020, compared with $72.5 million in the prior year. This increase is primarily attributable to a $13.3 million increase from our GRIP filings approved in fiscal 2020 and an $8.1 million decrease in operating and maintenance expense due primarily to nonrecurring well integrity costs in the prior-year quarter. These increases were partially offset by a $1.2 million decrease in through system revenues, and a $4.6 million increase in depreciation and property tax expenses due to increased capital investments.

Capital expenditures decreased $72.4 million to $456.8 million for the three months ended December 31, 2020, compared with $529.2 million in the prior year, primarily as a result of timing of spending in our distribution segment.

For the three months ended December 31, 2020, the company generated operating cash flow of $157.1 million, a $15.4 million decrease compared with the three months ended December 31, 2019. The year-over-year decrease is primarily the result of the increase in the price of natural gas, the timing of gas cost recoveries under our purchase gas cost mechanisms and the timing of customer collections partially offset by the positive effects of rate case outcomes completed in fiscal 2020.

Our equity capitalization ratio at December 31, 2020 was 58.5%, compared with 60.0% at September 30, 2020, due to the issuance of $600 million of 1.50% senior notes in October 2020.

Conference Call to be Webcast February 3, 2021

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2021 first quarter financial results on Wednesday, February 3, 2021, 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 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 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 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 December 31

(000s except per share)

2020

2019

Operating revenues

Distribution segment

$

876,650

$

828,504

Pipeline and storage segment

159,713

148,176

Intersegment eliminations

(121,883

)

(101,117

)

914,480

875,563

Purchased gas cost

Distribution segment

411,072

397,558

Pipeline and storage segment

(1,244

)

99

Intersegment eliminations

(121,568

)

(100,789

)

288,260

296,868

Operation and maintenance expense

138,643

152,245

Depreciation and amortization

115,285

105,062

Taxes, other than income

73,452

68,607

Operating income

298,840

252,781

Other non-operating income

6,072

4,887

Interest charges

22,010

27,229

Income before income taxes

282,902

230,439

Income tax expense

65,224

51,766

Net income

$

217,678

$

178,673

Basic net income per share

$

1.71

$

1.47

Diluted net income per share

$

1.71

$

1.47

Cash dividends per share

$

0.625

$

0.575

Basic weighted average shares outstanding

127,034

121,113

Diluted weighted average shares outstanding

127,034

121,359

Three Months Ended December 31

Summary Net Income by Segment (000s)

2020

2019

Distribution

$

153,692

$

129,757

Pipeline and storage

63,986

48,916

Net income

$

217,678

$

178,673

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

Condensed Balance Sheets

December 31,

September 30,

(000s)

2020

2020

Net property, plant and equipment

$

13,762,143

$

13,355,347

Cash and cash equivalents

457,599

20,808

Accounts receivable, net

492,526

230,595

Gas stored underground

99,569

111,950

Other current assets

142,594

107,905

Total current assets

1,192,288

471,258

Goodwill

731,257

731,257

Deferred charges and other assets

790,191

801,170

$

16,475,879

$

15,359,032

Shareholders' equity

$

7,213,156

$

6,791,203

Long-term debt

5,124,862

4,531,779

Total capitalization

12,338,018

11,322,982

Accounts payable and accrued liabilities

284,995

235,775

Other current liabilities

512,673

546,461

Current maturities of long-term debt

171

165

Total current liabilities

797,839

782,401

Deferred income taxes

1,542,394

1,456,569

Regulatory excess deferred taxes

695,191

697,764

Deferred credits and other liabilities

1,102,437

1,099,316

$

16,475,879

$

15,359,032

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

Condensed Statements of Cash Flows

Three Months Ended December 31

(000s)

2020

2019

Cash flows from operating activities

Net income

$

217,678

$

178,673

Depreciation and amortization

115,285

105,062

Deferred income taxes

64,587

46,726

Other

(2,976

)

(616

)

Changes in assets and liabilities

(237,505

)

(157,400

)

Net cash provided by operating activities

157,069

172,445

Cash flows from investing activities

Capital expenditures

(456,809

)

(529,186

)

Debt and equity securities activities, net

511

(1,602

)

Other, net

2,706

2,553

Net cash used in investing activities

(453,592

)

(528,235

)

Cash flows from financing activities

Net decrease in short-term debt

(464,915

)

Proceeds from issuance of long-term debt, net of premium/discount

597,390

799,450

Net proceeds from equity offering

216,002

259,005

Issuance of common stock through stock purchase and employee retirement plans

4,007

4,267

Cash dividends paid

(79,023

)

(69,557

)

Debt issuance costs

(5,062

)

(7,738

)

Net cash provided by financing activities

733,314

520,512

Net increase in cash and cash equivalents

436,791

164,722

Cash and cash equivalents at beginning of period

20,808

24,550

Cash and cash equivalents at end of period

$

457,599

$

189,272

Three Months Ended December 31

Statistics

2020

2019

Consolidated distribution throughput (MMcf as metered)

128,470

139,558

Consolidated pipeline and storage transportation volumes (MMcf)

144,587

156,529

Distribution meters in service

3,369,622

3,307,663

Distribution average cost of gas

$

4.63

$

4.01

View source version on businesswire.com: https://www.businesswire.com/news/home/20210202005904/en/

Contacts

Dan Meziere (972) 855-3729