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Atmos Energy Corporation Reports Earnings for Fiscal 2022 Third Quarter; Reaffirms Fiscal 2022 Guidance

Business Wire - Wed Aug 3, 2022

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its third fiscal quarter ended June 30, 2022.

Highlights

  • Earnings per diluted share was $5.12 for the nine months ended June 30, 2022; $0.92 per diluted share for the third fiscal quarter.
  • Consolidated net income was $702.8 million for the nine months ended June 30, 2022; $128.5 million for the third fiscal quarter.
  • Capital expenditures totaled $1.7 billion for the nine months ended June 30, 2022, with approximately 87 percent of capital spending related to system safety and reliability investments.

Outlook

  • Earnings per diluted share for fiscal 2022 is expected to be in the range of $5.50 to $5.60.
  • Capital expenditures are expected to be in the range of $2.4 billion to $2.5 billion in fiscal 2022.
  • The company's Board of Directors has declared a quarterly dividend of $0.68 per common share. The indicated annual dividend for fiscal 2022 is $2.72, which represents an 8.8% increase over fiscal 2021.

"Third quarter results were in line with our expectations and reflect the continued dedication, focus and effort of all 4,700 employees to execute our strategy and safely provide natural gas service to over three million customers in 1,400 communities," said Kevin Akers, President and Chief Executive Officer of Atmos Energy, "Based on our year-to-date performance, we continue to believe fiscal 2022 earnings will be within our earnings guidance range of $5.50 to $5.60 per diluted share."

Results for the Three Months Ended June 30, 2022

Consolidated operating income increased $21.2 million to $154.6 million for the three months ended June 30, 2022, from $133.4 million in the prior-year quarter. Refunds of excess deferred income taxes reduced operating income by $20.8 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 $42.0 million due to rate outcomes in both segments, continued customer growth, increased consumption in our distribution segment and lower operations and maintenance expense, partially offset by increased depreciation and property tax expenses.

Distribution operating income decreased $2.0 million to $66.1 million for the three months ended June 30, 2022, compared with $68.1 million in the prior-year quarter. Refunds of excess deferred taxes reduced operating income by $20.8 million quarter over quarter. Key operating drivers for this segment include a net $30.5 million increase in rates, a $2.6 million increase due to net customer growth, a $3.3 million increase in consumption, net of our weather normalization adjustments (WNA) and a $1.8 million decrease in other operation and maintenance expense primarily due to lower bad debt expense in the current-year quarter, partially offset by a $13.7 million increase in depreciation and property tax expenses and a $5.0 million increase in system maintenance expense.

Pipeline and storage operating income increased $23.3 million to $88.5 million for the three months ended June 30, 2022, compared with $65.3 million in the prior-year quarter. Key operating drivers for this segment include a $21.0 million increase in rates due to the GRIP filings approved in fiscal 2021 and 2022 and a $6.1 million decrease in system maintenance expense, partially offset by a $4.5 million increase in depreciation and property tax expenses due to increased capital investments.

Results for the Nine Months Ended June 30, 2022

Consolidated operating income increased $1.6 million to $815.6 million for the nine months ended June 30, 2022, compared to $814.0 million in the prior year. Refunds of excess deferred income taxes reduced operating income by $102.8 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 $104.4 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, lower thru-system revenue in our pipeline and storage segment and increased operations and maintenance, depreciation and property tax expenses.

Distribution operating income decreased $13.0 million to $567.9 million for the nine months ended June 30, 2022, compared with $580.9 million in the prior-year period. Refunds of excess deferred taxes reduced operating income by $89.5 million year over year. Key operating drivers for this segment include a $122.6 million increase in rates, and customer growth of $13.2 million partially offset by a $13.1 million decrease in consumption, net of WNA, a $15.2 million increase in operation and maintenance expense driven primarily by higher pipeline maintenance costs and other administrative costs, partially offset by lower bad debt expense in the current-year quarter and a $34.8 million increase in depreciation and property tax expenses associated with increased capital investments.

Pipeline and storage operating income increased $14.6 million to $247.7 million for the nine months ended June 30, 2022, compared with $233.1 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 $49.4 million increase from our GRIP filings approved in fiscal 2021 and 2022, partially offset by a $7.3 million increase in system maintenance, an $11.1 million increase in depreciation and property tax expenses due to increased capital investments and a $2.4 million decrease in through system revenues.

Capital expenditures increased $368.0 million to $1.7 billion for the nine months ended June 30, 2022, compared with $1.4 billion in the prior year, due to increased system modernization and expansion spending.

For the nine months ended June 30, 2022, the company generated operating cash flow of $929.3 million, compared to $930.1 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 and working capital changes, mostly offset by the timing of gas cost recoveries and the positive effects of successful rate case outcomes achieved in fiscal 2021.

Our equity capitalization ratio at June 30, 2022 was 53.8%, compared with 51.9% at September 30, 2021, due to the issuance of $600 million of 2.85% senior notes in October 2021 and $200 million of 2.625% senior notes in January 2022, partially offset by $675.3 million in equity issuances under our forward equity agreements. 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 61.7% at June 30, 2022.

Conference Call to be Webcast August 4, 2022

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2022 third quarter financial results on Thursday, August 4, 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; 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, 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 June 30

(000s except per share)

 

2022

 

2021

Operating revenues

 

 

 

 

Distribution segment

 

$

773,311

 

 

$

558,750

 

Pipeline and storage segment

 

 

183,412

 

 

 

162,987

 

Intersegment eliminations

 

 

(140,294

)

 

 

(116,184

)

 

 

 

816,429

 

 

 

605,553

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

390,559

 

 

 

202,050

 

Pipeline and storage segment

 

 

(1,347

)

 

 

691

 

Intersegment eliminations

 

 

(140,053

)

 

 

(115,871

)

 

 

 

249,159

 

 

 

86,870

 

Operation and maintenance expense

 

 

182,325

 

 

 

184,470

 

Depreciation and amortization

 

 

134,231

 

 

 

119,348

 

Taxes, other than income

 

 

96,127

 

 

 

81,475

 

Operating income

 

 

154,587

 

 

 

133,390

 

Other non-operating income

 

 

13,263

 

 

 

5,887

 

Interest charges

 

 

26,190

 

 

 

20,962

 

Income before income taxes

 

 

141,660

 

 

 

118,315

 

Income tax expense

 

 

13,113

 

 

 

15,904

 

Net income

 

$

128,547

 

 

$

102,411

 

 

 

 

 

 

Basic net income per share

 

$

0.92

 

 

$

0.78

 

Diluted net income per share

 

$

0.92

 

 

$

0.78

 

Cash dividends per share

 

$

0.680

 

 

$

0.625

 

Basic weighted average shares outstanding

 

 

139,881

 

 

 

131,358

 

Diluted weighted average shares outstanding

 

 

140,227

 

 

 

131,486

 

 

 

Three Months Ended June 30

Summary Net Income by Segment (000s)

 

2022

 

2021

Distribution

 

$

57,401

 

$

53,289

Pipeline and storage

 

 

71,146

 

 

 

49,122

 

Net income

 

$

128,547

 

 

$

102,411

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Statements of Income

 

Nine Months Ended June 30

(000s except per share)

 

2022

 

2021

Operating revenues

 

 

 

 

Distribution segment

 

$

3,356,279

 

 

$

2,718,074

 

Pipeline and storage segment

 

 

510,077

 

 

 

476,868

 

Intersegment eliminations

 

 

(387,322

)

 

 

(355,836

)

 

 

 

3,479,034

 

 

 

2,839,106

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

1,881,212

 

 

 

1,304,269

 

Pipeline and storage segment

 

 

(3,075

)

 

 

(440

)

Intersegment eliminations

 

 

(386,437

)

 

 

(354,890

)

 

 

 

1,491,700

 

 

 

948,939

 

Operation and maintenance expense

 

 

504,787

 

 

 

479,488

 

Depreciation and amortization

 

 

395,461

 

 

 

353,269

 

Taxes, other than income

 

 

271,506

 

 

 

243,376

 

Operating income

 

 

815,580

 

 

 

814,034

 

Other non-operating income

 

 

27,178

 

 

 

14,793

 

Interest charges

 

 

74,969

 

 

 

69,068

 

Income before income taxes

 

 

767,789

 

 

 

759,759

 

Income tax expense

 

 

65,034

 

 

 

142,916

 

Net income

 

$

702,755

 

 

$

616,843

 

 

 

 

 

 

Basic net income per share

 

$

5.13

 

 

$

4.77

 

Diluted net income per share

 

$

5.12

 

 

$

4.77

 

Cash dividends per share

 

$

2.04

 

 

$

1.875

 

Basic weighted average shares outstanding

 

 

136,799

 

 

 

129,185

 

Diluted weighted average shares outstanding

 

 

137,055

 

 

 

129,229

 

 

 

Nine Months Ended June 30

Summary Net Income by Segment (000s)

 

2022

 

2021

Distribution

 

$

505,823

 

$

439,317

Pipeline and storage

 

 

196,932

 

 

 

177,526

 

Net income

 

$

702,755

 

 

$

616,843

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

 

June 30,

 

September 30,

(000s)

 

2022

 

2021

Net property, plant and equipment

 

$

16,556,603

 

$

15,063,970

Cash and cash equivalents

 

 

328,075

 

 

 

116,723

 

Accounts receivable, net

 

 

375,257

 

 

 

342,967

 

Gas stored underground

 

 

223,993

 

 

 

178,116

 

Other current assets

 

 

2,354,526

 

 

 

2,200,909

 

Total current assets

 

 

3,281,851

 

 

 

2,838,715

 

Goodwill

 

 

731,257

 

 

 

731,257

 

Deferred charges and other assets

 

 

1,085,773

 

 

 

974,720

 

 

 

$

21,655,484

 

 

$

19,608,662

 

 

 

 

 

 

Shareholders' equity

 

$

9,268,171

 

 

$

7,906,889

 

Long-term debt

 

 

5,759,164

 

 

 

4,930,205

 

Total capitalization

 

 

15,027,335

 

 

 

12,837,094

 

Accounts payable and accrued liabilities

 

 

397,058

 

 

 

423,222

 

Other current liabilities

 

 

660,629

 

 

 

686,681

 

Current maturities of long-term debt

 

 

2,201,430

 

 

 

2,400,452

 

Total current liabilities

 

 

3,259,117

 

 

 

3,510,355

 

Deferred income taxes

 

 

1,936,658

 

 

 

1,705,809

 

Regulatory excess deferred taxes

 

 

425,960

 

 

 

549,227

 

Deferred credits and other liabilities

 

 

1,006,414

 

 

 

1,006,177

 

 

 

$

21,655,484

 

 

$

19,608,662

 

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

 

Nine Months Ended June 30

(000s)

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

Net income

 

$

702,755

 

 

$

616,843

 

Depreciation and amortization

 

 

395,461

 

 

 

353,269

 

Deferred income taxes

 

 

40,899

 

 

 

144,195

 

Other

 

 

(15,941

)

 

 

378

 

Change in Winter Storm Uri long-term regulatory asset

 

 

 

 

 

(2,088,536

)

Changes in other assets and liabilities

 

 

(193,858

)

 

 

(184,616

)

Net cash provided by (used in) operating activities

 

 

929,316

 

 

 

(1,158,467

)

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(1,726,039

)

 

 

(1,357,960

)

Debt and equity securities activities, net

 

 

3,594

 

 

 

(2,363

)

Other, net

 

 

7,876

 

 

 

8,006

 

Net cash used in investing activities

 

 

(1,714,569

)

 

 

(1,352,317

)

Cash flows from financing activities

 

 

 

 

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

 

 

798,802

 

 

 

2,797,346

 

Net proceeds from equity issuances

 

 

675,320

 

 

 

460,678

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

11,670

 

 

 

12,121

 

Repayment of long-term debt

 

 

(200,000

)

 

 

 

Cash dividends paid

 

 

(279,256

)

 

 

(241,260

)

Debt issuance costs

 

 

(8,196

)

 

 

(14,288

)

Other

 

 

(1,735

)

 

 

 

Net cash provided by financing activities

 

 

996,605

 

 

 

3,014,597

 

Net increase in cash and cash equivalents

 

 

211,352

 

 

 

503,813

 

Cash and cash equivalents at beginning of period

 

 

116,723

 

 

 

20,808

 

Cash and cash equivalents at end of period

 

$

328,075

 

 

$

524,621

 

 

 

Three Months Ended June 30

 

Nine Months Ended June 30

Statistics

 

2022

 

2021

 

2022

 

2021

Consolidated distribution throughput (MMcf as metered)

 

 

79,314

 

 

76,128

 

 

376,754

 

 

395,841

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

146,422

 

 

 

153,166

 

 

 

411,884

 

 

 

428,331

 

Distribution meters in service

 

 

3,430,476

 

 

 

3,387,451

 

 

 

3,430,476

 

 

 

3,387,451

 

Distribution average cost of gas

 

$

8.69

 

 

$

4.89

 

 

$

7.33

 

 

$

4.73

 

 

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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