Atmos Energy Corporation (NYSE: ATO) today reported consolidated
results for its fiscal 2016 third quarter and nine months ended
June 30, 2016.
- Fiscal 2016 third quarter consolidated
net income was $71.2 million, or $0.69 per diluted share, compared
with consolidated net income of $56.3 million, or $0.55 per diluted
share in the prior-year quarter.
- Fiscal 2016 third quarter consolidated
net income, excluding net unrealized margins, was $68.6 million, or
$0.67 per diluted share, compared with consolidated net income,
excluding net unrealized margins of $55.1 million, or $0.54 per
diluted share in the prior-year quarter.
- 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.
- Fiscal 2016 earnings guidance remains
in the range of $3.25 to $3.35 per diluted share, excluding net
unrealized margins.
For the nine months ended June 30, 2016, consolidated net
income was $315.9 million, or $3.06 per diluted share, compared
with net income of $291.6 million, or $2.86 per diluted share for
the same period last year. Consolidated net income includes net
unrealized gains of $7.8 million, or $0.08 per diluted share for
the nine months ended June 30, 2016, compared with net
unrealized gains of $5.2 million, or $0.05 per diluted share for
the prior-year period.
“Our financial and operational performance in the quarter puts
us on track for another year of achieving our commitments,” said
Kim Cocklin, chief executive officer of Atmos Energy Corporation.
“We continue to make investments to enhance the safety and
reliability for our customers, while delivering consistent results
for our shareholders. As we enter the final quarter of fiscal 2016,
we are poised to deliver earnings per diluted share in the range of
$3.25 to $3.35,” Cocklin concluded.
Results for the Quarter Ended June 30,
2016
Regulated distribution gross profit increased $8.4 million to
$275.4 million for the fiscal 2016 third quarter, compared with
$267.0 million in the prior-year quarter. Gross profit reflects a
net $6.5 million increase in rates, primarily in the Mississippi,
Louisiana and West Texas Divisions. Additionally, higher customer
counts primarily in our Mid-Tex and Louisiana Divisions increased
gross profit $1.5 million.
Regulated pipeline gross profit increased $12.2 million to
$109.2 million for the quarter ended June 30, 2016, compared
with $97.0 million for the same quarter last year. This increase is
primarily the result of an $11.3 million increase in revenues from
the Gas Reliability Infrastructure Program (GRIP) filings approved
in 2016 and 2015.
Nonregulated gross profit increased $5.0 million to $22.8
million for the fiscal 2016 third quarter, compared with $17.8
million for the prior-year quarter, as a result of a $2.8 million
increase in realized margins, combined with a $2.2 million increase
in unrealized margins. The quarter-over-quarter increase in
realized margins reflects the timing and magnitude of settlement
gains on financial positions.
Consolidated operation and maintenance expense for the quarter
June 30, 2016, was $137.4 million, compared with $132.4
million for the prior-year period. This increase was primarily
driven by increased pipeline maintenance spending and legal
expenses, partially offset by lower employee-related costs.
Results for the Nine Months Ended
June 30, 2016
Regulated distribution gross profit increased $20.9 million to
$1,018.0 million for the nine months ended June 30, 2016,
compared with $997.1 million in the prior-year period. Gross profit
reflects a net $37.2 million increase in rates, primarily in the
Mid-Tex, Mississippi and West Texas Divisions. This increase was
partially offset by a $14.5 million decrease in revenue-related
taxes and a $3.6 million decrease in consumption. Weather was 25
percent warmer than the prior-year period, before adjusting for
weather normalization mechanisms, which resulted in a 19 percent
decrease in sales volumes.
Regulated pipeline gross profit increased $27.3 million to
$299.6 million for the nine months ended June 30, 2016,
compared with $272.3 million in the prior-year period. This
increase primarily reflects a $28.4 million increase in revenue
from the GRIP filings approved in 2016 and 2015. This increase was
partially offset by decreased through-system volumes and lower
storage and blending fees due to warmer weather in the current-year
period.
Nonregulated gross profit decreased $5.0 million to $51.7
million for the nine months ended June 30, 2016, compared with
$56.7 million for the prior-year period, as a result of a $9.4
million decrease in realized margins, partially offset by a $4.3
million increase in unrealized margins. The year-over-year decrease
in realized margins reflects larger settlement losses incurred
during the second quarter during a period of falling natural gas
prices, partially offset by the aforementioned settlement gains
realized during the third quarter.
Consolidated operation and maintenance expense for the nine
months ended June 30, 2016, was $396.0 million, compared with
$384.5 million for the prior-year period. This increase was
primarily driven by increased pipeline maintenance spending and
legal expenses partially offset by lower employee-related
costs.
Capital expenditures increased to $796.0 million for the nine
months ended June 30, 2016, compared with $667.5 million in
the prior-year period driven by a planned increase in spending in
the company's regulated operations.
For the nine months ended June 30, 2016, the company
generated operating cash flow of $624.6 million, a $93.0 million
decrease compared with the nine months ended June 30, 2015.
The year-over-year decrease primarily reflects the timing of
deferred gas cost recoveries.
The debt capitalization ratio at June 30, 2016 was 47.4
percent, compared with 47.7 percent at September 30, 2015 and
45.5 percent at June 30, 2015. At June 30, 2016, there
was $670.5 million of short-term debt outstanding, compared with
$457.9 million at September 30, 2015 and $252.0 million at
June 30, 2015.
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 $3.25 to $3.35 per diluted share, excluding net unrealized
margins. Net income from regulated operations is expected to be in
the range of $320 million to $335 million. Net income from
nonregulated operations is expected to be in the range of $14
million to $19 million, excluding net unrealized margins. Capital
expenditures for fiscal 2016 are now expected to be at the top end
of the previously announced range, approximating $1.1 billion.
Conference Call to be Webcast August 4,
2016
Atmos Energy will host a conference call with financial analysts
to discuss the financial results for the fiscal 2016 third quarter
on Thursday, August 4, 2016, at 10:00 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, 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.
Highlights and Recent Developments
S&P Upgrades Atmos Energy's Senior Unsecured Debt
On May 13, 2016, S&P Global Ratings upgraded Atmos Energy's
senior unsecured debt rating to A from A- with a ratings outlook of
stable, citing the company's robust financial performance, largely
due to the timely recovery of invested capital.
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 and nine months ended
June 30, 2016. 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.
Non-GAAP Financial Measures
The information in this news release utilizes certain financial
measures that are not presented in accordance with generally
accepted accounting principles (GAAP). Specifically, in addition to
presenting the traditional U.S. GAAP measures, historical net
income and diluted earnings per share for the quarter and
year-to-date periods are presented after excluding net unrealized
margins on financial positions utilized in the Company's
nonregulated operations. These non-GAAP financial measures are
included because the Company believes they more accurately reflect
the Company's financial performance since the net unrealized
margins relate to positions that will settle in the future and are
not necessarily indicative of the value of those positions when
they are ultimately settled. In addition, the Company's fiscal year
guidance for expected diluted earnings per share and net income
from nonregulated operations excludes net unrealized margins
because these amounts are not determinable until after the end of
the fiscal year.
About Atmos Energy
Atmos Energy Corporation, headquartered in Dallas, is the
country's largest natural-gas-only distributor, 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 EndedJune 30, (000s except per share) 2016 2015 Gross
Profit: Regulated distribution segment $ 275,381 $ 267,019
Regulated pipeline segment 109,249 97,008 Nonregulated segment
22,814 17,779 Intersegment eliminations (133 ) (133 )
Gross profit 407,311 381,673 Operation and maintenance expense
137,444 132,447 Depreciation and amortization 73,459 68,444 Taxes,
other than income 59,244 63,175 Total
operating expenses 270,147 264,066 Operating income 137,164 117,607
Miscellaneous income 833 634 Interest charges 27,698
27,955 Income before income taxes 110,299 90,286
Income tax expense 39,106 34,005 Net
income $ 71,193 $ 56,281 Basic and diluted earnings
per share $ 0.69 $ 0.55 Cash dividends per share $ 0.42 $ 0.39
Basic and diluted weighted average shares outstanding 103,750
102,000 Three Months EndedJune 30,
Summary Net Income
by Segment (000s)
2016 2015 Regulated distribution $ 29,856 $ 22,464 Regulated
pipeline 33,130 28,568 Nonregulated 5,613 4,019 Unrealized margins,
net of tax 2,594 1,230 Consolidated net
income $ 71,193 $ 56,281
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Statements of
Income
Nine Months EndedJune 30, (000s except per share) 2016
2015 Gross Profit: Regulated distribution segment $
1,017,984 $ 997,066 Regulated pipeline segment 299,629 272,305
Nonregulated segment 51,671 56,724 Intersegment eliminations
(399 ) (399 ) Gross profit 1,368,885 1,325,696 Operation and
maintenance expense 395,958 384,489 Depreciation and amortization
216,670 204,059 Taxes, other than income 172,872
181,606 Total operating expenses 785,500 770,154
Operating income 583,385 555,542 Miscellaneous expense (1,061 )
(2,634 ) Interest charges 85,741 85,166
Income before income taxes 496,583 467,742 Income tax expense
180,719 176,182 Net income $ 315,864
$ 291,560 Basic and diluted earnings per share $ 3.06
$ 2.86 Cash dividends per share $ 1.26 $ 1.17 Basic and diluted
weighted average shares outstanding 103,137 101,776
Nine Months EndedJune 30,
Summary Net Income
by Segment (000s)
2016 2015 Regulated distribution $ 217,423 $ 195,704 Regulated
pipeline 83,901 78,285 Nonregulated 6,737 12,390 Unrealized
margins, net of tax 7,803 5,181
Consolidated net income $ 315,864 $ 291,560
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Balance
Sheets
June 30, September 30, (000s) 2016 2015 Net property, plant and
equipment $ 8,053,547 $ 7,430,580 Cash and cash equivalents 66,206
28,653 Accounts receivable, net 277,362 295,160 Gas stored
underground 244,841 236,603 Other current assets 60,504
65,890 Total current assets 648,913 626,306 Goodwill 742,702
742,702 Deferred charges and other assets 282,206
293,357 $ 9,727,368 $ 9,092,945 Shareholders' equity $
3,466,724 $ 3,194,797 Long-term debt 2,205,645
2,455,388 Total capitalization 5,672,369 5,650,185 Accounts payable
and accrued liabilities 198,882 238,942 Other current liabilities
410,452 457,954 Short-term debt 670,466 457,927 Current maturities
of long-term debt 250,000 — Total current liabilities
1,529,800 1,154,823 Deferred income taxes 1,585,500 1,411,315
Deferred credits and other liabilities 939,699
876,622 $ 9,727,368 $ 9,092,945
Atmos Energy Corporation
Financial Highlights, continued
(Unaudited)
Condensed Statements
of Cash Flows
Nine Months EndedJune 30, (000s) 2016 2015
Cash
flows from operating activities Net income $ 315,864 $ 291,560
Depreciation and amortization 216,670 204,059 Deferred income taxes
171,042 164,627 Other 20,750 18,999 Changes in assets and
liabilities (99,728 ) 38,337 Net cash provided
by operating activities 624,598 717,582
Cash flows from
investing activities Capital expenditures (796,008 ) (667,483 )
Other, net 1,627 (1,119 ) Net cash used in
investing activities (794,381 ) (668,602 )
Cash flows from
financing activities Net increase in short-term debt 212,539
48,830 Net proceeds from issuance of long-term debt — 493,538 Net
proceeds from equity offering 98,660 — Settlement of interest rate
agreements — 13,364 Repayment of long-term debt — (500,000 ) Cash
dividends paid (130,363 ) (116,645 ) Repurchase of equity awards —
(7,985 ) Issuance of common stock through stock purchase and
employee retirement plans 26,500 20,813
Net cash provided by (used in) financing activities 207,336
(48,085 ) Net increase in cash and cash equivalents
37,553 895 Cash and cash equivalents at beginning of period
28,653 42,258 Cash and cash equivalents at end
of period $ 66,206 $ 43,153
Three Months EndedJune 30, Nine Months EndedJune 30,
Statistics
2016 2015 2016 2015 Consolidated distribution
throughput (MMcf as metered) 65,399 66,260 318,936 372,708
Consolidated pipeline transportation volumes (MMcf) 128,801 134,823
373,000 381,828 Consolidated nonregulated delivered gas sales
volumes (MMcf) 76,798 75,929 257,733 272,260 Regulated distribution
meters in service 3,179,374 3,144,874 3,179,374 3,144,874 Regulated
distribution average cost of gas $ 3.97 $ 4.15 $ 4.10 $ 5.26
Nonregulated net physical position (Bcf) 30.6 22.1 30.6 22.1
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version on businesswire.com: http://www.businesswire.com/news/home/20160803006401/en/
Atmos Energy CorporationSusan Giles,
972-855-3729
Atmos Energy (NYSE:ATO)
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