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Atmos Energy Corporation Reports Earnings for Fiscal 2022; Initiates Fiscal 2023 Guidance; Raises Dividend

Business Wire - Wed Nov 9, 2022

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fourth fiscal quarter and year ended September 30, 2022.

Highlights

  • Earnings per diluted share was $5.60 for the year ended September 30, 2022; $0.51 per diluted share for the fourth fiscal quarter.
  • Consolidated net income was $774.4 million for the year ended September 30, 2022; $71.6 million for the fourth fiscal quarter.
  • Capital expenditures totaled $2.4 billion for the year ended September 30, 2022, with approximately 88 percent of capital spending related to system safety and reliability investments.

Outlook

  • Earnings per diluted share for fiscal 2023 is expected to be in the range of $5.90 to $6.10.
  • Capital expenditures are expected to approximate $2.7 billion in fiscal 2023.
  • The company's Board of Directors has declared a quarterly dividend of $0.74 per common share. The indicated annual dividend for fiscal 2023 is $2.96, which represents an 8.8% increase over fiscal 2022.

“Fiscal 2022 marked the 11th year of executing our proven strategy of operating safely and reliably while we modernize our natural gas distribution, transmission, and storage systems," said Kevin Akers, President and CEO of Atmos Energy. “Fiscal 2022 also marked the 20th consecutive year of earnings per share growth. Our consistent financial performance is a testament to our employees' continued commitment and focus on executing our strategy while providing exceptional customer service," Akers concluded.

Results for the Year Ended September 30, 2022

Consolidated operating income increased $16.0 million to $921.0 million for the year ended September 30, 2022, compared to $905.0 million in the prior year. Refunds of excess deferred income taxes reduced operating income by $111.8 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 $127.8 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, increased operations and maintenance and higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income decreased $14.0 million to $604.5 million for the year ended September 30, 2022, compared with $618.5 million in the prior-year period. Refunds of excess deferred taxes reduced operating income by $98.5 million year over year. Key operating drivers for this segment include a $149.9 million increase in rates and customer growth of $15.2 million, partially offset by a $17.3 million decrease in consumption, net of weather normalization adjustments (WNA), a $17.2 million increase in operation and maintenance expense driven primarily by higher employee-related costs, insurance premiums and pipeline system maintenance, partially offset by lower bad debt expense and a $50.4 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $29.9 million to $316.4 million for the year ended September 30, 2022, compared with $286.5 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 $70.4 million increase from our GRIP filings approved in fiscal 2021 and 2022, partially offset by an $8.4 million increase in system maintenance spending, and a $15.4 million increase in depreciation and property tax expenses.

Capital expenditures increased $474.9 million to $2.4 billion for the year ended September 30, 2022, compared with $2.0 billion in the prior year, due to increased system modernization and expansion spending.

For the year ended September 30, 2022, the company generated operating cash flow of $977.6 million, compared to $996.1 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, increased purchases of gas stored underground and the timing of gas cost recoveries, partially offset by increased customer collections and the positive effects of successful rate case outcomes achieved in fiscal years 2021 and 2022.

Our equity capitalization ratio at September 30, 2022 increased to 53.6%, from 51.9% at September 30, 2021, due to $776.8 million in equity issuances under our forward equity agreements, partially offset by the issuance of $600 million of 2.85% senior notes in October 2021 and $200 million of 2.625% senior notes in January 2022. 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 61.3% and 60.6% at September 30, 2022 and 2021.

Results for the Three Months Ended September 30, 2022

Consolidated operating income increased $14.4 million to $105.4 million for the three months ended September 30, 2022, from $91.0 million in the prior-year quarter. Refunds of excess deferred income taxes reduced operating income by $9.1 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 $23.5 million due to rate outcomes in both segments, continued customer growth in our distribution segment and through system revenues in our pipeline and storage segment, partially offset by higher operations and maintenance expense and increased depreciation and property tax expenses due to increased capital investments.

Distribution operating income decreased $0.9 million to $36.7 million for the three months ended September 30, 2022, compared with $37.6 million in the prior-year quarter. Refunds of excess deferred taxes reduced operating income by $9.1 million quarter over quarter. Key operating drivers for this segment include a net $27.3 million increase in rates, a $1.9 million increase due to net customer growth partially offset by a $4.2 million decrease in consumption, net of WNA, a $2.0 million increase in operation and maintenance expense primarily due to higher employee-related costs offset by lower bad debt expense and a $15.6 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $15.3 million to $68.7 million for the three months ended September 30, 2022, compared with $53.4 million in the prior-year quarter. Key operating drivers for this segment include a $21.1 million increase in rates due to the GRIP filing approved in fiscal 2022 and a $2.4 million increase in through system revenues, partially offset by a $3.8 million increase in operations and maintenance expense primarily due to higher employee-related and pipeline maintenance costs and a $4.3 million increase in depreciation and property tax expenses.

Conference Call to be Webcast November 10, 2022

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2022 fourth quarter financial results on Thursday, November 10, 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; 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; failure to attract and retain a qualified workforce; 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; 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; the impact of new cybersecurity compliance requirements; adverse weather conditions; the impact of climate change; 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; and increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements.

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

 

Year Ended September 30

(000s except per share)

 

 

2022

 

 

 

2021

 

Operating revenues

 

 

 

 

Distribution segment

 

$

4,035,194

 

 

$

3,241,973

 

Pipeline and storage segment

 

 

693,660

 

 

 

637,347

 

Intersegment eliminations

 

 

(527,192

)

 

 

(471,830

)

 

 

 

4,201,662

 

 

 

3,407,490

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

2,210,302

 

 

 

1,501,695

 

Pipeline and storage segment

 

 

(1,583

)

 

 

1,582

 

Intersegment eliminations

 

 

(526,063

)

 

 

(470,560

)

 

 

 

1,682,656

 

 

 

1,032,717

 

Operation and maintenance expense

 

 

710,161

 

 

 

679,019

 

Depreciation and amortization

 

 

535,655

 

 

 

477,977

 

Taxes, other than income

 

 

352,208

 

 

 

312,779

 

Operating income

 

 

920,982

 

 

 

904,998

 

Other non-operating income (expense)

 

 

33,737

 

 

 

(2,145

)

Interest charges

 

 

102,811

 

 

 

83,554

 

Income before income taxes

 

 

851,908

 

 

 

819,299

 

Income tax expense

 

 

77,510

 

 

 

153,736

 

Net income

 

$

774,398

 

 

$

665,563

 

 

 

 

 

 

Basic net income per share

 

$

5.61

 

 

$

5.12

 

Diluted net income per share

 

$

5.60

 

 

$

5.12

 

Cash dividends per share

 

$

2.72

 

 

$

2.50

 

Basic weighted average shares outstanding

 

 

137,830

 

 

 

129,779

 

Diluted weighted average shares outstanding

 

 

138,096

 

 

 

129,834

 

 

 

Year Ended September 30

Summary Net Income by Segment (000s)

 

 

2022

 

 

 

2021

 

Distribution

 

$

521,977

 

$

445,862

Pipeline and storage

 

 

252,421

 

 

 

219,701

 

Net income

 

$

774,398

 

 

$

665,563

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Statements of Income

 

Three Months Ended September 30

(000s except per share)

 

 

2022

 

 

 

2021

 

Operating revenues

 

 

 

 

Distribution segment

 

$

678,915

 

 

$

523,899

 

Pipeline and storage segment

 

 

183,583

 

 

 

160,479

 

Intersegment eliminations

 

 

(139,870

)

 

 

(115,994

)

 

 

 

722,628

 

 

 

568,384

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

329,090

 

 

 

197,426

 

Pipeline and storage segment

 

 

1,492

 

 

 

2,022

 

Intersegment eliminations

 

 

(139,626

)

 

 

(115,670

)

 

 

 

190,956

 

 

 

83,778

 

Operation and maintenance expense

 

 

205,374

 

 

 

199,531

 

Depreciation and amortization

 

 

140,194

 

 

 

124,708

 

Taxes, other than income

 

 

80,702

 

 

 

69,403

 

Operating income

 

 

105,402

 

 

 

90,964

 

Other non-operating income (expense)

 

 

6,559

 

 

 

(16,938

)

Interest charges

 

 

27,842

 

 

 

14,486

 

Income before income taxes

 

 

84,119

 

 

 

59,540

 

Income tax expense

 

 

12,476

 

 

 

10,820

 

Net income

 

$

71,643

 

 

$

48,720

 

 

 

 

 

 

Basic net income per share

 

$

0.51

 

 

$

0.37

 

Diluted net income per share

 

$

0.51

 

 

$

0.37

 

Cash dividends per share

 

$

0.680

 

 

$

0.625

 

Basic weighted average shares outstanding

 

 

140,924

 

 

 

131,564

 

Diluted weighted average shares outstanding

 

 

141,220

 

 

 

131,653

 

 

 

Three Months Ended September 30

Summary Net Income by Segment (000s)

 

 

2022

 

 

 

2021

 

Distribution

 

$

16,154

 

$

6,545

Pipeline and storage

 

 

55,489

 

 

 

42,175

 

Net income

 

$

71,643

 

 

$

48,720

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

 

September 30,

 

September 30,

(000s)

 

 

2022

 

 

 

2021

 

Net property, plant and equipment

 

$

17,240,239

 

$

15,063,970

Cash and cash equivalents

 

 

51,554

 

 

 

116,723

 

Accounts receivable, net

 

 

363,708

 

 

 

342,967

 

Gas stored underground

 

 

357,941

 

 

 

178,116

 

Other current assets

 

 

2,274,490

 

 

 

2,200,909

 

Total current assets

 

 

3,047,693

 

 

 

2,838,715

 

Goodwill

 

 

731,257

 

 

 

731,257

 

Deferred charges and other assets

 

 

1,173,800

 

 

 

974,720

 

 

 

$

22,192,989

 

 

$

19,608,662

 

 

 

 

 

 

Shareholders' equity

 

$

9,419,091

 

 

$

7,906,889

 

Long-term debt

 

 

5,760,647

 

 

 

4,930,205

 

Total capitalization

 

 

15,179,738

 

 

 

12,837,094

 

Accounts payable and accrued liabilities

 

 

496,019

 

 

 

423,222

 

Other current liabilities

 

 

720,157

 

 

 

686,681

 

Short-term debt

 

 

184,967

 

 

 

 

Current maturities of long-term debt

 

 

2,201,457

 

 

 

2,400,452

 

Total current liabilities

 

 

3,602,600

 

 

 

3,510,355

 

Deferred income taxes

 

 

1,999,505

 

 

 

1,705,809

 

Regulatory excess deferred taxes

 

 

385,213

 

 

 

549,227

 

Deferred credits and other liabilities

 

 

1,025,933

 

 

 

1,006,177

 

 

 

$

22,192,989

 

 

$

19,608,662

 

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

 

Year Ended September 30

(000s)

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

774,398

 

 

$

665,563

 

Depreciation and amortization

 

 

535,655

 

 

 

477,977

 

Deferred income taxes

 

 

53,651

 

 

 

155,355

 

Other

 

 

(22,356

)

 

 

(3,733

)

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

 

 

(363,764

)

 

 

(299,102

)

Net cash provided by (used in) operating activities

 

 

977,584

 

 

 

(1,084,251

)

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(2,444,420

)

 

 

(1,969,540

)

Debt and equity securities activities, net

 

 

4,173

 

 

 

(6,072

)

Other, net

 

 

10,289

 

 

 

11,957

 

Net cash used in investing activities

 

 

(2,429,958

)

 

 

(1,963,655

)

Cash flows from financing activities

 

 

 

 

Net increase in short-term debt

 

 

184,967

 

 

 

 

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

 

 

798,802

 

 

 

2,797,346

 

Net proceeds from equity issuances

 

 

776,805

 

 

 

606,667

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

15,403

 

 

 

15,841

 

Settlement of interest rate swaps

 

 

197,073

 

 

 

62,159

 

Repayment of long-term debt

 

 

(200,000

)

 

 

 

Cash dividends paid

 

 

(375,914

)

 

 

(323,904

)

Debt issuance costs

 

 

(8,196

)

 

 

(14,288

)

Other

 

 

(1,735

)

 

 

 

Net cash provided by financing activities

 

 

1,387,205

 

 

 

3,143,821

 

Net increase (decrease) in cash and cash equivalents

 

 

(65,169

)

 

 

95,915

 

Cash and cash equivalents at beginning of period

 

 

116,723

 

 

 

20,808

 

Cash and cash equivalents at end of period

 

$

51,554

 

 

$

116,723

 

 

 

Three Months Ended September 30

 

Year Ended September 30

Statistics

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Consolidated distribution throughput (MMcf as metered)

 

 

68,221

 

 

65,505

 

 

444,975

 

 

461,346

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

168,604

 

 

 

157,526

 

 

 

580,488

 

 

 

585,857

 

Distribution meters in service

 

 

3,442,224

 

 

 

3,397,249

 

 

 

3,442,224

 

 

 

3,397,249

 

Distribution average cost of gas

 

$

9.26

 

 

$

5.96

 

 

$

7.56

 

 

$

4.86

 

 

Provided Content: Content provided by Business Wire. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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