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Atmos Energy Corporation Reports Earnings for Fiscal 2023 Second Quarter; Tightens Fiscal 2023 Guidance

Business Wire - Wed May 3, 2023

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its second fiscal quarter ended March 31, 2023.

Highlights

  • Earnings per diluted share was $4.40 for the six months ended March 31, 2023; $2.48 per diluted share for the second fiscal quarter.
  • Consolidated net income was $629.5 million for the six months ended March 31, 2023; $357.7 million for the second fiscal quarter.
  • Capital expenditures totaled $1,415.3 million for the six months ended March 31, 2023, with approximately 86 percent of capital spending related to system safety and reliability investments.

Outlook

  • Fiscal 2023 earnings guidance was tightened to $6.00 to $6.10 per diluted share from $5.90 to $6.10 per diluted share.
  • 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 operating and financial performance for the first six months of the fiscal year reflects our employees’ continued dedication and focus to provide safe and reliable natural gas service,” said Kevin Akers, President and Chief Executive Officer of Atmos Energy. ”With our fiscal year financing plans complete, better clarity on the regulatory front, and strong execution of our strategy in the first half of the year, we now expect fiscal 2023 earnings per share will range from $6.00 to $6.10."

Results for the Three Months Ended March 31, 2023

Consolidated operating income increased $37.5 million to $422.6 million for the three months ended March 31, 2023, from $385.1 million in the prior-year quarter. Rate case outcomes in both segments, increased weather and consumption and customer growth in our distribution segment were partially offset by higher operation and maintenance expense and higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income increased $24.0 million to $335.3 million for the three months ended March 31, 2023, compared with $311.3 million in the prior-year quarter. The increase primarily reflects a net $52.5 million increase in rates, a $14.9 million increase in weather and consumption and a $5.8 million increase due to net customer growth, partially offset by a $29.8 million increase in operation and maintenance expense driven primarily by pipeline system maintenance, increased bad debt expense and administrative costs and a $17.7 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $13.5 million to $87.3 million for the three months ended March 31, 2023, compared with $73.8 million in the prior-year quarter. This increase is primarily attributable to a $21.0 million increase in rates, due to the GRIP filing approved in fiscal 2022, partially offset by a $6.3 million increase in depreciation and property tax expenses.

Results for the Six Months Ended March 31, 2023

Consolidated operating income increased $82.8 million to $743.8 million for the six months ended March 31, 2023, compared to $661.0 million in the prior year, primarily due to rate outcomes in both segments, increased weather and consumption and customer growth in our distribution segment and increased through system revenues in our pipeline and storage segment that were partially offset by increased operation and maintenance expense and higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income increased $65.3 million to $567.1 million for the six months ended March 31, 2023, compared with $501.8 million in the prior year, primarily due to a net $109.8 million increase in rates, a $14.1 million increase in weather and consumption, an $11.5 million increase in customer growth, including increased industrial load and a $10.5 million decrease in refunds of excess deferred taxes to customers, which is substantially offset in income tax expense, partially offset by a $43.0 million increase in operation and maintenance expense driven primarily by pipeline system maintenance, increased bad debt expense and increased administrative costs and a $33.7 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $17.5 million to $176.7 million for the six months ended March 31, 2023, compared with $159.2 million in the prior year. Key operating drivers for this segment include a $42.0 million increase from our GRIP filing approved in fiscal 2022 and a $7.1 million increase in through system revenues, partially offset by a $14.1 million increase in operation and maintenance expense driven primarily by system maintenance spending and a $10.6 million increase in depreciation and property tax expenses.

Capital expenditures increased $225.3 million to $1,415.3 million for the six months ended March 31, 2023, compared with $1,190.0 million in the prior year, due to increased system modernization and expansion spending.

For the six months ended March 31, 2023, the company generated operating cash flow of $2.89 billion, compared to $640.5 million in the prior year. The year-over-year increase primarily reflects the receipt of $2.02 billion from the Texas Natural Gas Securitization Finance Corporation in March 2023 related to gas costs incurred during Winter Storm Uri.

Our equity capitalization ratio at March 31, 2023 increased to 60.9%, from 53.6% at September 30, 2022, due to the repayment at maturity of $2.2 billion of Winter Storm Uri financing and $359.7 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 61.3% at September 30, 2022.

Conference Call to be Webcast May 4, 2023

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2023 second quarter financial results on Thursday, May 4, 2023, 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 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 March 31

(000s except per share)

 

2023

 

2022

Operating revenues

 

 

 

 

Distribution segment

 

$

1,500,210

 

 

$

1,610,546

 

Pipeline and storage segment

 

 

184,424

 

 

 

163,747

 

Intersegment eliminations

 

 

(143,661

)

 

 

(124,474

)

 

 

 

1,540,973

 

 

 

1,649,819

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

809,023

 

 

 

993,854

 

Pipeline and storage segment

 

 

621

 

 

 

1,683

 

Intersegment eliminations

 

 

(143,433

)

 

 

(124,159

)

 

 

 

666,211

 

 

 

871,378

 

Operation and maintenance expense

 

 

194,716

 

 

 

163,352

 

Depreciation and amortization

 

 

148,317

 

 

 

133,374

 

Taxes, other than income

 

 

109,091

 

 

 

96,583

 

Operating income

 

 

422,638

 

 

 

385,132

 

Other non-operating income

 

 

17,406

 

 

 

5,213

 

Interest charges

 

 

37,370

 

 

 

28,928

 

Income before income taxes

 

 

402,674

 

 

 

361,417

 

Income tax expense

 

 

45,003

 

 

 

36,418

 

Net income

 

$

357,671

 

 

$

324,999

 

 

 

 

 

 

Basic net income per share

 

$

2.48

 

 

$

2.37

 

Diluted net income per share

 

$

2.48

 

 

$

2.37

 

Cash dividends per share

 

$

0.74

 

 

$

0.68

 

Basic weighted average shares outstanding

 

 

143,941

 

 

 

136,834

 

Diluted weighted average shares outstanding

 

 

143,987

 

 

 

137,250

 

 

 

Three Months Ended March 31

Summary Net Income by Segment (000s)

 

2023

 

2022

Distribution

 

$

288,474

 

$

268,851

Pipeline and storage

 

 

69,197

 

 

56,148

Net income

 

$

357,671

 

$

324,999

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Statements of Income

 

Six Months Ended March 31

(000s except per share)

 

2023

 

2022

Operating revenues

 

 

 

 

Distribution segment

 

$

2,940,636

 

 

$

2,582,968

 

Pipeline and storage segment

 

 

371,053

 

 

 

326,665

 

Intersegment eliminations

 

 

(286,707

)

 

 

(247,028

)

 

 

 

3,024,982

 

 

 

2,662,605

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

1,690,938

 

 

 

1,490,653

 

Pipeline and storage segment

 

 

(237

)

 

 

(1,728

)

Intersegment eliminations

 

 

(286,241

)

 

 

(246,384

)

 

 

 

1,404,460

 

 

 

1,242,541

 

Operation and maintenance expense

 

 

379,732

 

 

 

322,462

 

Depreciation and amortization

 

 

294,337

 

 

 

261,230

 

Taxes, other than income

 

 

202,629

 

 

 

175,379

 

Operating income

 

 

743,824

 

 

 

660,993

 

Other non-operating income

 

 

38,597

 

 

 

13,915

 

Interest charges

 

 

74,130

 

 

 

48,779

 

Income before income taxes

 

 

708,291

 

 

 

626,129

 

Income tax expense

 

 

78,760

 

 

 

51,921

 

Net income

 

$

629,531

 

 

$

574,208

 

 

 

 

 

 

Basic net income per share

 

$

4.40

 

 

$

4.24

 

Diluted net income per share

 

$

4.40

 

 

$

4.24

 

Cash dividends per share

 

$

1.48

 

 

$

1.36

 

Basic weighted average shares outstanding

 

 

142,881

 

 

 

135,259

 

Diluted weighted average shares outstanding

 

 

142,963

 

 

 

135,470

 

 

 

Six Months Ended March 31

Summary Net Income by Segment (000s)

 

2023

 

2022

Distribution

 

$

482,942

 

$

448,422

Pipeline and storage

 

 

146,589

 

 

125,786

Net income

 

$

629,531

 

$

574,208

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

 

March 31,

 

September 30,

(000s)

 

2023

 

2022

Net property, plant and equipment

 

$

18,445,886

 

$

17,240,239

Cash and cash equivalents

 

 

95,175

 

 

51,554

Accounts receivable, net

 

 

523,741

 

 

363,708

Gas stored underground

 

 

183,467

 

 

357,941

Other current assets

 

 

270,723

 

 

2,274,490

Total current assets

 

 

1,073,106

 

 

3,047,693

Goodwill

 

 

731,257

 

 

731,257

Deferred charges and other assets

 

 

1,061,612

 

 

1,173,800

 

 

$

21,311,861

 

$

22,192,989

 

 

 

 

 

Shareholders' equity

 

$

10,205,205

 

$

9,419,091

Long-term debt

 

 

6,553,097

 

 

5,760,647

Total capitalization

 

 

16,758,302

 

 

15,179,738

Accounts payable and accrued liabilities

 

 

364,973

 

 

496,019

Other current liabilities

 

 

746,512

 

 

720,157

Short-term debt

 

 

 

 

184,967

Current maturities of long-term debt

 

 

1,512

 

 

2,201,457

Total current liabilities

 

 

1,112,997

 

 

3,602,600

Deferred income taxes

 

 

2,135,738

 

 

1,999,505

Regulatory excess deferred taxes

 

 

315,071

 

 

385,213

Deferred credits and other liabilities

 

 

989,753

 

 

1,025,933

 

 

$

21,311,861

 

$

22,192,989

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

 

Six Months Ended March 31

(000s)

 

2023

 

2022

Cash flows from operating activities

 

 

 

 

Net income

 

$

629,531

 

 

$

574,208

 

Depreciation and amortization

 

 

294,337

 

 

 

261,230

 

Deferred income taxes

 

 

59,060

 

 

 

40,122

 

Other

 

 

(27,496

)

 

 

(12,812

)

Change in Winter Storm Uri current regulatory asset

 

 

2,021,889

 

 

 

 

Changes in other assets and liabilities

 

 

(84,605

)

 

 

(222,264

)

Net cash provided by operating activities

 

 

2,892,716

 

 

 

640,484

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(1,415,349

)

 

 

(1,190,029

)

Debt and equity securities activities, net

 

 

(4,560

)

 

 

3,758

 

Other, net

 

 

9,519

 

 

 

4,302

 

Net cash used in investing activities

 

 

(1,410,390

)

 

 

(1,181,969

)

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

 

 

 

798,802

 

Net proceeds from equity issuances

 

 

359,683

 

 

 

594,320

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

7,910

 

 

 

8,010

 

Proceeds from term loan

 

 

2,020,000

 

 

 

 

Repayment of term loan

 

 

(2,020,000

)

 

 

 

Repayment of long-term debt

 

 

(2,200,000

)

 

 

(200,000

)

Cash dividends paid

 

 

(210,725

)

 

 

(183,944

)

Debt issuance costs

 

 

(7,864

)

 

 

(8,196

)

Other

 

 

 

 

 

(1,735

)

Net cash provided by (used in) financing activities

 

 

(1,438,705

)

 

 

1,007,257

 

Net increase in cash and cash equivalents

 

 

43,621

 

 

 

465,772

 

Cash and cash equivalents at beginning of period

 

 

51,554

 

 

 

116,723

 

Cash and cash equivalents at end of period

 

$

95,175

 

 

$

582,495

 

 

 

Three Months Ended March 31

 

Six Months Ended March 31

Statistics

 

2023

 

2022

 

2023

 

2022

Consolidated distribution throughput (MMcf as metered)

 

 

161,108

 

 

189,298

 

 

301,786

 

 

297,440

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

125,673

 

 

129,395

 

 

267,749

 

 

265,462

Distribution meters in service

 

 

3,471,049

 

 

3,422,900

 

 

3,471,049

 

 

3,422,900

Distribution average cost of gas

 

$

6.87

 

$

6.99

 

$

7.76

 

$

7.04

 

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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