ATO Atmos Energy Corp

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2016 first quarter ended December 31, 2015.

• Fiscal 2016 first quarter consolidated net income, excluding net unrealized margins, was $95.6 million, or $0.93 per diluted share, compared with consolidated net income, excluding net unrealized margins of $92.8 million, or $0.91 per diluted share in the prior-year quarter.
• Fiscal 2016 first quarter consolidated net income was $102.9 million, or $1.00 per diluted share, after including unrealized net gains of $7.3 million, or $0.07 per diluted share. Net income was $97.6 million, or $0.96 per diluted share in the prior-year quarter, after including unrealized net gains of $4.8 million or $0.05 per diluted share.
• The company's Board of Directors has declared a quarterly dividend of $0.42 per common share. The indicated annual dividend for fiscal 2016 is $1.68, which represents a 7.7 percent increase over fiscal 2015.

“We are pleased to deliver solid first quarter financial results,” said Kim Cocklin, chief executive officer of Atmos Energy Corporation. “WNA mechanisms, which cover about 97 percent of our utility margins, have largely mitigated the effects of the mild start to this winter. In addition, our results reflect the capital investments made in our infrastructure to meet the growing energy needs of our customers, while striving to become the nation's safest natural gas utility. For fiscal 2016, we remain on track to meet our earnings guidance of between $3.20 and $3.40 per diluted share,” Cocklin concluded.

Results for the Three Months Ended December 31, 2015

Regulated distribution gross profit increased $9.7 million to $333.5 million for the three months ended December 31, 2015, compared with $323.8 million in the prior-year quarter. Gross profit reflects a net $13.5 million increase in rates, primarily in the Mid-Tex, Mississippi and West Texas Divisions. This increase was partially offset by a $1.3 million decrease in revenue-related taxes and a $1.1 million decrease in consumption. Weather was 29 percent warmer than the prior-year quarter.

Regulated pipeline gross profit increased $11.1 million to $94.7 million for the quarter ended December 31, 2015, compared with $83.6 million in the prior-year quarter. This increase primarily reflects a $10.1 million increase in revenue from the Gas Reliability Infrastructure Program (GRIP) filing approved in fiscal 2015.

Nonregulated gross profit was essentially flat at $15.8 million for the fiscal 2016 first quarter, compared with $16.0 million for the prior-year quarter.

Consolidated operation and maintenance expense for the three months ended December 31, 2015 was $124.8 million, compared with $118.6 million for the prior-year quarter. The increase was primarily driven by increased pipeline maintenance spending and higher administrative expenses.

Capital expenditures increased to $291.7 million for the quarter ended December 31, 2015, compared with $261.3 million in the prior-year quarter driven by a planned increase in spending in the company's regulated operations.

For the quarter ended December 31, 2015, the company generated operating cash flow of $70.5 million, a $43.1 million increase compared with the three months ended December 31, 2014. The quarter-over-quarter increase primarily reflects the timing of customer collections and vendor payments.

The debt capitalization ratio at December 31, 2015 was 49.6 percent, compared with 47.7 percent at September 30, 2015 and 49.5 percent at December 31, 2014. At December 31, 2015, there was $763.2 million of short-term debt outstanding, compared with $457.9 million at September 30, 2015 and $550.9 million at December 31, 2014.

Outlook

The leadership of Atmos Energy remains focused on enhancing system safety and reliability through infrastructure investment while delivering shareholder value and consistent earnings growth. Atmos Energy continues to expect fiscal 2016 earnings to be in the range of $3.20 to $3.40 per diluted share, excluding unrealized margins. Capital expenditures for fiscal 2016 are still expected to range between $1.0 billion and $1.1 billion.

Conference Call to be Webcast February 3, 2016

Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2016 first quarter on Wednesday, February 3, 2016, at 8:00 a.m. Eastern. The domestic telephone number is 877-485-3107 and the international telephone number is 201-689-8427. Kim Cocklin, chief executive officer, Mike Haefner, president and chief operating officer, and Bret Eckert, senior vice president and chief financial officer, along with other members of the leadership team, 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.

This news release should be read in conjunction with the attached unaudited financial information.

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 in 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 news release, including the risks and uncertainties relating to regulatory trends and decisions, the company's ability to continue to access the capital markets and the other factors discussed in the company's reports filed with the Securities and Exchange Commission. These factors include the risks and uncertainties discussed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2015 and in the company's Quarterly Report on Form 10-Q for the three months ended December 31, 2015. Although the company believes 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. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

About Atmos Energy

Atmos Energy Corporation, headquartered in Dallas, is one of the country's largest natural-gas-only distributors, serving over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast. For more information, visit www.atmosenergy.com.

      Atmos Energy Corporation

Financial Highlights (Unaudited)

 

Statements of Income

Three Months EndedDecember 31, (000s except per share) 2015     2014 Gross Profit: Regulated distribution segment $ 333,461 $ 323,812 Regulated pipeline segment 94,677 83,567 Nonregulated segment 15,758 16,039 Intersegment eliminations   (133 )   (133 ) Gross profit 443,763 423,285 Operation and maintenance expense 124,848 118,582 Depreciation and amortization 71,239 67,593 Taxes, other than income   51,471     49,385   Total operating expenses 247,558 235,560 Operating income 196,205 187,725 Miscellaneous expense (1,209 ) (1,707 ) Interest charges   30,483     29,764   Income before income taxes 164,513 156,254 Income tax expense   61,652     58,659   Net income $ 102,861   $ 97,595   Basic and diluted earnings per share $ 1.00 $ 0.96 Cash dividends per share $ 0.42 $ 0.39 Basic and diluted weighted average shares outstanding 102,713 101,581         Three Months EndedDecember 31,

Summary Net Income (Loss) by Segment (000s)

2015     2014 Regulated distribution $ 73,255 $ 71,387 Regulated pipeline 25,586 22,035 Nonregulated (3,241 ) (584 ) Unrealized margins, net of tax   7,261     4,757   Consolidated net income $ 102,861   $ 97,595               Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Balance Sheets

December 31, September 30, (000s) 2015 2015 Net property, plant and equipment $ 7,653,287 $ 7,430,580 Cash and cash equivalents 78,903 28,653 Accounts receivable, net 456,904 295,160 Gas stored underground 236,017 236,603 Other current assets   91,446   70,569 Total current assets 863,270 630,985 Goodwill 742,702 742,702 Deferred charges and other assets   295,394   288,678 $ 9,554,653 $ 9,092,945   Shareholders' equity $ 3,272,109 $ 3,194,797 Long-term debt   2,455,474   2,455,388 Total capitalization 5,727,583 5,650,185 Accounts payable and accrued liabilities 280,487 238,942 Other current liabilities 471,333 457,954 Short-term debt   763,236   457,927 Total current liabilities 1,515,056 1,154,823 Deferred income taxes 1,441,325 1,411,315 Deferred credits and other liabilities   870,689   876,622 $ 9,554,653 $ 9,092,945         Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

Three Months EndedDecember 31,

(000s) 2015     2014 Cash flows from operating activities Net income $ 102,861 $ 97,595 Depreciation and amortization 71,239 67,593 Deferred income taxes 59,299 55,418 Other 4,733 5,164 Changes in assets and liabilities   (167,639 )   (198,355 ) Net cash provided by operating activities 70,493 27,415 Cash flows from investing activities Capital expenditures (291,674 ) (261,313 ) Other, net   1,029     (739 ) Net cash used in investing activities (290,645 ) (262,052 ) Cash flows from financing activities Net increase in short-term debt 305,309 350,574 Net proceeds from issuance of long-term debt — 493,538 Settlement of Treasury lock agreements — 13,364 Repayment of long-term debt — (500,000 ) Cash dividends paid (43,636 ) (39,592 ) Repurchase of equity awards — (7,985 ) Issuance of common stock   8,729     6,312   Net cash provided by financing activities   270,402     316,211   Net increase in cash and cash equivalents 50,250 81,574 Cash and cash equivalents at beginning of period   28,653     42,258   Cash and cash equivalents at end of period $ 78,903   $ 123,832           Three Months EndedDecember 31,

Statistics

2015     2014 Consolidated distribution throughput (MMcf as metered) 100,928 123,434 Consolidated pipeline transportation volumes (MMcf) 129,159 120,634 Consolidated nonregulated delivered gas sales volumes (MMcf) 85,131 90,930 Regulated distribution meters in service 3,167,352 3,133,951 Regulated distribution average cost of gas $ 4.44 $ 6.02 Nonregulated net physical position (Bcf) 23.5 17.1

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Atmos Energy CorporationSusan Giles, 972-855-3729