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Atmos Energy Corporation Reports Earnings for Fiscal 2023 Third Quarter; Reaffirms Fiscal 2023 Guidance

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its third fiscal quarter ended June 30, 2023.

Highlights

  • Earnings per diluted share was $5.33 for the nine months ended June 30, 2023; $0.94 per diluted share for the third fiscal quarter.
  • Consolidated net income was $767.3 million for the nine months ended June 30, 2023; $137.8 million for the third fiscal quarter.
  • Capital expenditures totaled $2.08 billion for the nine months ended June 30, 2023, with approximately 86 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 $6.00 to $6.10 per diluted share.
  • Capital expenditures are expected to approximate $2.8 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.

"The dedication of our employees coupled with the exceptional customer service they provide to our more than 3 million customers continues to position us to achieve fiscal 2023 earnings in the range of $6.00 to $6.10 per diluted share," said Kevin Akers, President and Chief Executive Officer of Atmos Energy.

Results for the Three Months Ended June 30, 2023

Consolidated operating income increased $14.7 million to $169.3 million for the three months ended June 30, 2023, from $154.6 million in the prior-year quarter. Rate case outcomes in both segments 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 $5.6 million to $71.7 million for the three months ended June 30, 2023, compared with $66.1 million in the prior-year quarter. The increase primarily reflects a net $29.1 million increase in rates, a $3.5 million increase due to net customer growth, partially offset by a $4.7 million increase in operation and maintenance expense driven primarily by line locates and other pipeline system maintenance activities and a $16.8 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $9.0 million to $97.6 million for the three months ended June 30, 2023, compared with $88.5 million in the prior-year quarter. This increase is primarily attributable to a $22.6 million increase in rates, due to the GRIP filings approved in May 2022 and May 2023, partially offset by an $8.0 million increase in operation and maintenance expense driven primarily by system maintenance spending and a $6.4 million increase in depreciation and property tax expenses.

Results for the Nine Months Ended June 30, 2023

Consolidated operating income increased $97.5 million to $913.1 million for the nine months ended June 30, 2023, compared to $815.6 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 $70.9 million to $638.8 million for the nine months ended June 30, 2023, compared with $567.9 million in the prior year, primarily due to a net $139.0 million increase in rates, a $12.5 million increase in consumption, a $14.6 million increase in customer growth, including increased industrial load, and a $10.0 million decrease in refunds of excess deferred taxes to customers, which is substantially offset in income tax expense, partially offset by a $47.7 million increase in operation and maintenance expense driven primarily by line locates and other pipeline system maintenance activities and increased administrative costs and a $50.5 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $26.6 million to $274.3 million for the nine months ended June 30, 2023, compared with $247.7 million in the prior year. Key operating drivers for this segment include a $64.6 million increase from our GRIP filings approved in fiscal 2022 and 2023 and an $8.0 million increase in through system revenues, partially offset by a $22.1 million increase in operation and maintenance expense driven primarily by timing of system maintenance spending and a $17.0 million increase in depreciation and property tax expenses.

Capital expenditures increased $357.5 million to $2.08 billion for the nine months ended June 30, 2023, compared with $1.73 billion in the prior year, due to increased system modernization and expansion spending.

For the nine months ended June 30, 2023, the company generated operating cash flow of $3.22 billion, compared to $929.3 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 June 30, 2023 increased to 61.8%, from 53.6% at September 30, 2022, due to the repayment at maturity of $2.2 billion of Winter Storm Uri financing and $671.6 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 August 3, 2023

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2023 third quarter financial results on Thursday, August 3, 2023, at 10:00 a.m. Eastern Time. The domestic telephone number is 888-350-3846 and the international telephone number is 646-960-0251. The conference ID is 9958104. 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 June 30

(000s except per share)

 

 

2023

 

 

 

2022

 

Operating revenues

 

 

 

 

Distribution segment

 

$

616,067

 

 

$

773,311

 

Pipeline and storage segment

 

 

208,225

 

 

 

183,412

 

Intersegment eliminations

 

 

(161,559

)

 

 

(140,294

)

 

 

 

662,733

 

 

 

816,429

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

206,048

 

 

 

390,559

 

Pipeline and storage segment

 

 

(194

)

 

 

(1,347

)

Intersegment eliminations

 

 

(161,304

)

 

 

(140,053

)

 

 

 

44,550

 

 

 

249,159

 

Operation and maintenance expense

 

 

195,049

 

 

 

182,325

 

Depreciation and amortization

 

 

150,726

 

 

 

134,231

 

Taxes, other than income

 

 

103,155

 

 

 

96,127

 

Operating income

 

 

169,253

 

 

 

154,587

 

Other non-operating income

 

 

16,170

 

 

 

13,263

 

Interest charges

 

 

31,334

 

 

 

26,190

 

Income before income taxes

 

 

154,089

 

 

 

141,660

 

Income tax expense

 

 

16,282

 

 

 

13,113

 

Net income

 

$

137,807

 

 

$

128,547

 

 

 

 

 

 

Basic net income per share

 

$

0.94

 

 

$

0.92

 

Diluted net income per share

 

$

0.94

 

 

$

0.92

 

Cash dividends per share

 

$

0.74

 

 

$

0.68

 

Basic weighted average shares outstanding

 

 

146,051

 

 

 

139,881

 

Diluted weighted average shares outstanding

 

 

146,067

 

 

 

140,227

 

 

 

Three Months Ended June 30

Summary Net Income by Segment (000s)

 

 

2023

 

 

 

2022

Distribution

 

$

59,639

 

$

57,401

Pipeline and storage

 

 

78,168

 

 

71,146

Net income

 

$

137,807

 

$

128,547

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Statements of Income

 

Nine Months Ended June 30

(000s except per share)

 

 

2023

 

 

 

2022

 

Operating revenues

 

 

 

 

Distribution segment

 

$

3,556,703

 

 

$

3,356,279

 

Pipeline and storage segment

 

 

579,278

 

 

 

510,077

 

Intersegment eliminations

 

 

(448,266

)

 

 

(387,322

)

 

 

 

3,687,715

 

 

 

3,479,034

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

1,896,986

 

 

 

1,881,212

 

Pipeline and storage segment

 

 

(431

)

 

 

(3,075

)

Intersegment eliminations

 

 

(447,545

)

 

 

(386,437

)

 

 

 

1,449,010

 

 

 

1,491,700

 

Operation and maintenance expense

 

 

574,781

 

 

 

504,787

 

Depreciation and amortization

 

 

445,063

 

 

 

395,461

 

Taxes, other than income

 

 

305,784

 

 

 

271,506

 

Operating income

 

 

913,077

 

 

 

815,580

 

Other non-operating income

 

 

54,767

 

 

 

27,178

 

Interest charges

 

 

105,464

 

 

 

74,969

 

Income before income taxes

 

 

862,380

 

 

 

767,789

 

Income tax expense

 

 

95,042

 

 

 

65,034

 

Net income

 

$

767,338

 

 

$

702,755

 

 

 

 

 

 

Basic net income per share

 

$

5.33

 

 

$

5.13

 

Diluted net income per share

 

$

5.33

 

 

$

5.12

 

Cash dividends per share

 

$

2.22

 

 

$

2.04

 

Basic weighted average shares outstanding

 

 

143,938

 

 

 

136,799

 

Diluted weighted average shares outstanding

 

 

143,998

 

 

 

137,055

 

 

 

Nine Months Ended June 30

Summary Net Income by Segment (000s)

 

 

2023

 

 

 

2022

Distribution

 

$

542,581

 

$

505,823

Pipeline and storage

 

 

224,757

 

 

196,932

Net income

 

$

767,338

 

$

702,755

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

 

June 30,

 

 

September 30,

(000s)

 

 

2023

 

 

 

2022

Net property, plant and equipment

 

$

19,018,341

 

$

17,240,239

Cash and cash equivalents

 

 

56,237

 

 

51,554

Restricted cash and cash equivalents

 

 

1,876

 

 

Cash and cash equivalents and restricted cash and cash equivalents

 

 

58,113

 

 

51,554

Accounts receivable, net

 

 

330,827

 

 

363,708

Gas stored underground

 

 

211,041

 

 

357,941

Other current assets

 

 

288,945

 

 

2,274,490

Total current assets

 

 

888,926

 

 

3,047,693

Securitized intangible asset, net

 

 

93,600

 

 

Goodwill

 

 

731,257

 

 

731,257

Deferred charges and other assets

 

 

1,039,405

 

 

1,173,800

 

 

$

21,771,529

 

$

22,192,989

 

 

 

 

 

Shareholders' equity

 

$

10,602,381

 

$

9,419,091

Long-term debt, net

 

 

6,553,618

 

 

5,760,647

Securitized long-term debt

 

 

89,027

 

 

Total capitalization

 

 

17,245,026

 

 

15,179,738

Accounts payable and accrued liabilities

 

 

327,890

 

 

496,019

Other current liabilities

 

 

698,918

 

 

720,157

Short-term debt

 

 

 

 

184,967

Current maturities of long-term debt

 

 

1,540

 

 

2,201,457

Current maturities of securitized long-term debt

 

 

5,973

 

 

Total current liabilities

 

 

1,034,321

 

 

3,602,600

Deferred income taxes

 

 

2,205,291

 

 

1,999,505

Regulatory excess deferred taxes

 

 

277,506

 

 

385,213

Deferred credits and other liabilities

 

 

1,009,385

 

 

1,025,933

 

 

$

21,771,529

 

$

22,192,989

Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

 

Nine Months Ended June 30

(000s)

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

767,338

 

 

$

702,755

 

Depreciation and amortization

 

 

445,063

 

 

 

395,461

 

Deferred income taxes

 

 

75,407

 

 

 

40,899

 

Other

 

 

(38,360

)

 

 

(15,941

)

Change in Winter Storm Uri current regulatory asset

 

 

2,021,889

 

 

 

 

Changes in other assets and liabilities

 

 

(49,829

)

 

 

(193,858

)

Net cash provided by operating activities

 

 

3,221,508

 

 

 

929,316

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(2,083,486

)

 

 

(1,726,039

)

Debt and equity securities activities, net

 

 

(7,302

)

 

 

3,594

 

Other, net

 

 

13,469

 

 

 

7,876

 

Net cash used in investing activities

 

 

(2,077,319

)

 

 

(1,714,569

)

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

 

Proceeds from issuance of securitized debt by AEK

 

 

95,000

 

 

 

 

Net proceeds from equity issuances

 

 

671,630

 

 

 

675,320

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

11,660

 

 

 

11,670

 

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

 

 

(319,074

)

 

 

(279,256

)

Debt issuance costs

 

 

(7,864

)

 

 

(8,196

)

Securitized debt issuance costs

 

 

(1,273

)

 

 

 

Other

 

 

 

 

 

(1,735

)

Net cash provided by (used in) financing activities

 

 

(1,137,630

)

 

 

996,605

 

Net increase in cash and cash equivalents and restricted cash and cash equivalents

 

 

6,559

 

 

 

211,352

 

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period

 

 

51,554

 

 

 

116,723

 

Cash and cash equivalents and restricted cash and cash equivalents at end of period

 

$

58,113

 

 

$

328,075

 

 

 

Three Months Ended June 30

 

Nine Months Ended June 30

Statistics

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Consolidated distribution throughput (MMcf as metered)

 

 

75,272

 

 

79,314

 

 

377,058

 

 

376,754

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

172,266

 

 

146,422

 

 

440,015

 

 

411,884

Distribution meters in service

 

 

3,478,231

 

 

3,430,476

 

 

3,478,231

 

 

3,430,476

Distribution average cost of gas

 

$

4.96

 

$

8.69

 

$

7.31

 

$

7.33

 

Contacts

Analysts and Media Contact:

Dan Meziere (972) 855-3729

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