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Atmos Energy Corporation Reports Earnings for Fiscal 2023 First Quarter; Affirms Fiscal 2023 Guidance

Business Wire - Tue Feb 7, 2023

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its first fiscal quarter ended December 31, 2022.

Highlights

  • Earnings per diluted share was $1.91 for the three months ended December 31, 2022.
  • Consolidated net income was $271.9 million for the three months ended December 31, 2022.
  • Capital expenditures totaled $795.7 million for the three months ended December 31, 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.

“Our first quarter results, reflect the dedication, focus and effort of all 4,800 Atmos Energy employees as we continued modernizing our natural gas distribution, transmission, and storage systems on our journey to be the safest provider of natural gas services," said Kevin Akers, President and CEO of Atmos Energy. "We remain well positioned to achieve our fiscal 2023 earnings per share guidance," Akers concluded.

Results for the Three Months Ended December 31, 2022

Consolidated operating income increased $45.3 million to $321.2 million for the three months ended December 31, 2022, compared to $275.9 million in the prior year, primarily due to rate outcomes in both segments and customer growth in our distribution segment, partially offset by increased operation and maintenance and higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income increased $41.3 million to $231.8 million for the three months ended December 31, 2022, compared with $190.5 million in the prior-year quarter, primarily due to a $57.5 million increase in rates, a $5.7 million decrease in refunds of excess deferred taxes to customers and customer growth of $2.4 million, partially offset by a $13.2 million increase in operation and maintenance expense driven primarily by pipeline system maintenance and increased administrative costs and a $16.0 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $4.0 million to $89.4 million for the three months ended December 31, 2022, compared with $85.4 million in the prior year. Key operating drivers for this segment include a $21.0 million increase from our GRIP filing approved in fiscal 2022, partially offset by a $12.6 million increase in operation and maintenance expense driven primarily by system maintenance spending and a $4.4 million increase in depreciation and property tax expenses.

Capital expenditures increased $111.5 million to $795.7 million for the three months ended December 31, 2022, compared with $684.2 million in the prior year, due to increased system modernization and expansion spending.

For the three months ended December 31, 2022, the company generated operating cash flow of $188.9 million, compared to $61.8 million in the prior-year quarter. The year-over-year increase primarily reflects working capital changes, including the timing of payments for natural gas purchases and deferred gas cost recoveries and the positive effects of successful rate case outcomes achieved in the prior year.

Our equity capitalization ratio at December 31, 2022 decreased to 52.9%, from 53.6% at September 30, 2022, due to $220.0 million in equity issuances under our forward equity agreements, partially offset by the issuance of $500 million of 5.75% senior notes and $300 million of 5.45% senior notes in October 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 60.0% and 61.3% at December 31, 2022 and September 30, 2022.

Conference Call to be Webcast February 8, 2023

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2023 first quarter financial results on Wednesday, February 8, 2023, 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; 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 greenhouse gas emissions or other legislation or regulations intended to address climate change; 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

 

Three Months Ended December 31

(000s except per share)

 

 

2022

 

 

 

2021

 

Operating revenues

 

 

 

 

Distribution segment

 

$

1,440,426

 

 

$

972,422

 

Pipeline and storage segment

 

 

186,629

 

 

 

162,918

 

Intersegment eliminations

 

 

(143,046

)

 

 

(122,554

)

 

 

 

1,484,009

 

 

 

1,012,786

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

881,915

 

 

 

496,799

 

Pipeline and storage segment

 

 

(858

)

 

 

(3,411

)

Intersegment eliminations

 

 

(142,808

)

 

 

(122,225

)

 

 

 

738,249

 

 

 

371,163

 

Operation and maintenance expense

 

 

185,016

 

 

 

159,110

 

Depreciation and amortization

 

 

146,020

 

 

 

127,856

 

Taxes, other than income

 

 

93,538

 

 

 

78,796

 

Operating income

 

 

321,186

 

 

 

275,861

 

Other non-operating income

 

 

21,191

 

 

 

8,702

 

Interest charges

 

 

36,760

 

 

 

19,851

 

Income before income taxes

 

 

305,617

 

 

 

264,712

 

Income tax expense

 

 

33,757

 

 

 

15,503

 

Net income

 

$

271,860

 

 

$

249,209

 

 

 

 

 

 

Basic net income per share

 

$

1.92

 

 

$

1.86

 

Diluted net income per share

 

$

1.91

 

 

$

1.86

 

Cash dividends per share

 

$

0.74

 

 

$

0.68

 

Basic weighted average shares outstanding

 

 

141,820

 

 

 

133,682

 

Diluted weighted average shares outstanding

 

 

141,937

 

 

 

133,689

 

 

 

Three Months Ended December 31

Summary Net Income by Segment (000s)

 

2022

 

2021

Distribution

 

$

194,468

 

$

179,571

Pipeline and storage

 

 

77,392

 

 

69,638

Net income

 

$

271,860

 

$

249,209

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

 

December 31,

 

September 30,

(000s)

 

2022

 

2022

Net property, plant and equipment

 

$

17,971,668

 

$

17,240,239

Cash and cash equivalents

 

 

171,597

 

 

51,554

Accounts receivable, net

 

 

826,416

 

 

363,708

Gas stored underground

 

 

323,678

 

 

357,941

Other current assets

 

 

2,306,072

 

 

2,274,490

Total current assets

 

 

3,627,763

 

 

3,047,693

Goodwill

 

 

731,257

 

 

731,257

Deferred charges and other assets

 

 

1,035,473

 

 

1,173,800

 

 

$

23,366,161

 

$

22,192,989

 

 

 

 

 

Shareholders' equity

 

$

9,836,274

 

$

9,419,091

Long-term debt

 

 

6,551,795

 

 

5,760,647

Total capitalization

 

 

16,388,069

 

 

15,179,738

Accounts payable and accrued liabilities

 

 

574,723

 

 

496,019

Other current liabilities

 

 

755,687

 

 

720,157

Short-term debt

 

 

 

 

184,967

Current maturities of long-term debt

 

 

2,201,484

 

 

2,201,457

Total current liabilities

 

 

3,531,894

 

 

3,602,600

Deferred income taxes

 

 

2,075,596

 

 

1,999,505

Regulatory excess deferred taxes

 

 

345,799

 

 

385,213

Deferred credits and other liabilities

 

 

1,024,803

 

 

1,025,933

 

 

$

23,366,161

 

$

22,192,989

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

 

Three Months Ended December 31

(000s)

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

271,860

 

 

$

249,209

 

Depreciation and amortization

 

 

146,020

 

 

 

127,856

 

Deferred income taxes

 

 

29,693

 

 

 

11,813

 

Other

 

 

(17,508

)

 

 

(12,689

)

Changes in other assets and liabilities

 

 

(241,165

)

 

 

(314,365

)

Net cash provided by operating activities

 

 

188,900

 

 

 

61,824

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(795,660

)

 

 

(684,180

)

Debt and equity securities activities, net

 

 

(2,472

)

 

 

2,374

 

Other, net

 

 

5,621

 

 

 

2,058

 

Net cash used in investing activities

 

 

(792,511

)

 

 

(679,748

)

Cash flows from financing activities

 

 

 

 

Net decrease in short-term debt

 

 

(184,967

)

 

 

 

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

 

 

797,258

 

 

 

596,142

 

Net proceeds from equity issuances

 

 

220,000

 

 

 

261,943

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

3,779

 

 

 

3,918

 

Cash dividends paid

 

 

(104,552

)

 

 

(90,411

)

Debt issuance costs

 

 

(7,864

)

 

 

(6,386

)

Net cash provided by financing activities

 

 

723,654

 

 

 

765,206

 

Net increase in cash and cash equivalents

 

 

120,043

 

 

 

147,282

 

Cash and cash equivalents at beginning of period

 

 

51,554

 

 

 

116,723

 

Cash and cash equivalents at end of period

 

$

171,597

 

 

$

264,005

 

 

 

Three Months Ended December 31

Statistics

 

2022

 

2021

Consolidated distribution throughput (MMcf as metered)

 

 

140,678

 

 

108,142

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

142,076

 

 

136,067

Distribution meters in service

 

 

3,460,006

 

 

3,412,929

Distribution average cost of gas

 

$

8.81

 

$

7.14

 

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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