DALLAS--(BUSINESS WIRE)--Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2013 second quarter and six months ended March 31, 2013.
- Fiscal 2013 second quarter consolidated net income, excluding net unrealized margins, was $114.8 million, or $1.25 per diluted share, compared with net income, excluding net unrealized margins of $116.8 million, or $1.28 per diluted share in the prior-year quarter.
- After including noncash, unrealized net gains of $1.6 million, or $0.02 per diluted share, fiscal 2013 second quarter net income was $116.4 million, or $1.27 per diluted share. Net income was $109.1 million, or $1.20 per diluted share in the prior-year quarter, after including unrealized net losses of $7.7 million or ($0.08) per diluted share.
- As anticipated, net income for the quarter decreased due to rate design changes recently implemented in the Texas service areas, which shifts margins from the first and second fiscal quarters into the third and fourth fiscal quarters.
- Fiscal 2013 earnings guidance was increased to $2.45 to $2.55 per diluted share from $2.40 and $2.50 per diluted share, excluding unrealized margins and the gain on the sale of the company’s Georgia operations.
For the six months ended March 31, 2013, consolidated net income was $196.9 million, or $2.15 per diluted share, compared with net income of $177.6 million, or $1.94 per diluted share for the same period last year. Results from nonregulated operations include noncash, unrealized net gains of $15.0 million, or $0.16 per diluted share for the six months ended March 31, 2013, compared with net gains of $5.3 million, or $0.06 per diluted share for the prior-year period. For the current six-month period, regulated operations contributed $179.1 million of net income, or $1.95 per diluted share, and nonregulated operations contributed net income of $17.8 million, or $0.20 per diluted share. For the current six-month period, net income from regulated operations includes $7.2 million, or $0.08 per diluted share from discontinued operations, compared with $13.2 million, or $0.14 per diluted share for the same period last year.
“Regulated operations have continued to deliver stable and predictable earnings, driven by revenue growth from increased capital investment and well executed regulatory strategy,” said Kim Cocklin, president and chief executive officer of Atmos Energy Corporation. “We will continue investing in our infrastructure to provide safe and reliable energy service to our customers while delivering an attractive shareholder return to our investors.”
“With half of our fiscal year now complete and earlier than expected revenue growth from our rate base investment, we are raising our earnings guidance to $2.45 to $2.55 per diluted share,” Cocklin concluded.
Results for the 2013 Second Quarter Ended March 31, 2013
Natural gas distribution gross profit, excluding discontinued operations, decreased $25.3 million to $347.0 million for the fiscal 2013 second quarter, compared with $372.3 million in the prior-year quarter. As expected, this decrease primarily reflects a decrease in margins due to the rate design changes implemented in the recent Mid-Tex and West Texas Divisions’ rate cases, which resulted in an increase to the customer’s base charge and decrease to the consumption charge. These rate design changes result in a shift in margins from the first and second fiscal quarters to the third and fourth fiscal quarters.
Regulated transmission and storage gross profit increased $3.8 million to $61.8 million for the quarter ended March 31, 2013, compared with $58.0 million for the same quarter last year. This increase is primarily the result of increased revenue from the Gas Reliability Infrastructure Program (GRIP) filing that became effective in April 2012.
Nonregulated gross profit increased $28.5 million to $24.3 million for the fiscal 2013 second quarter, compared with ($4.2) million for the prior-year quarter. Asset optimization margins increased $12.1 million from the prior-year quarter, primarily due to gains realized on the settlement of financial positions compared with losses incurred in the prior-year quarter, coupled with lower storage demand fees. Realized margins for gas delivery, storage and transportation services and other services increased $0.9 million quarter-over-quarter, primarily due to a $0.01/Mcf increase in per-unit margins, partially offset by a two percent decrease in consolidated sales volumes.
Interest charges for the second quarter of fiscal 2013 were $33.3 million, compared with $36.6 million for the prior-year quarter. The $3.3 million quarter-over-quarter decrease resulted primarily from interest deferrals related to Texas infrastructure spending in the current quarter.
Results for the Six Months Ended March 31, 2013
Natural gas distribution gross profit, excluding discontinued operations, decreased $29.3 million to $626.6 million for the six months ended March 31, 2013, compared with $655.9 million in the prior-year period. This decrease primarily reflects the aforementioned rate design changes implemented in the Texas service areas. Additionally, revenue-related taxes decreased $2.6 million, primarily due to the reduced revenues in both the Mid-Tex and West Texas Divisions.
Regulated transmission and storage gross profit increased $7.7 million to $122.5 million for the six months ended March 31, 2013, compared with $114.8 million last year. This increase is primarily the result of increased revenue from the GRIP filing that became effective in April 2012.
Nonregulated gross profit increased $35.6 million to $46.8 million for the six months ended March 31, 2013, compared with $11.2 million for the prior-year period. Asset optimization margins increased $18.5 million period-over-period, primarily due to smaller losses incurred from asset optimization activities. Significantly larger losses were experienced in the prior-year period as Atmos Energy Holdings realized losses in a falling price market when it rolled positions to capture incremental physical to forward spread values that were subsequently realized during the fiscal third and fourth quarters of fiscal 2012. Additionally, realized asset optimization margins for the prior-year period included a $1.7 million charge to write down to market certain natural gas inventory that no longer qualified for fair value hedge accounting. Realized margins for gas delivery, storage and transportation services and other services remained essentially flat period over period, despite a four percent decrease in consolidated sales volumes.
Consolidated operation and maintenance expense, excluding discontinued operations, for the six months ended March 31, 2013, was $217.6 million, compared with $223.9 million for the prior-year period. The $6.3 million decrease resulted primarily from lower legal and other administrative costs, partially offset by an increase in contract labor.
Interest charges for the six months ended March 31, 2013 were $63.9 million, compared with $72.4 million for the same period last year. The $8.5 million period-over-period decrease resulted primarily from interest deferrals related to Texas infrastructure spending in the current period and lower long-term interest expense resulting from refinancing activities that occurred during the fourth quarter of fiscal 2012.
The debt capitalization ratio at March 31, 2013 was 51.4 percent, compared with 51.7 percent at September 30, 2012 and 50.2 percent at March 31, 2012. At March 31, 2013, there was $233.0 million of short-term debt outstanding, compared with $570.9 million at September 30, 2012 and $174.0 million at March 31, 2012.
For the six months ended March 31, 2013, the company generated operating cash flow of $376.3 million, a $15.6 million increase compared with the six months ended March 31, 2012. The increase primarily reflects a $17.5 million period-over-period decrease in pension and postretirement contributions, combined with the timing of customer collections and vendor payments, as well as the effect of a decrease in the amount of cash used to inject gas into storage, primarily in the company’s nonregulated segment.
Capital expenditures increased to $389.1 million for the six months ended March 31, 2013, compared with $311.1 million in the prior-year period. The $78.0 million increase primarily reflects infrastructure spending in the Mid-Tex Division of the natural gas distribution segment and for the Line W and Line WX pipeline expansion projects in the regulated transmission and storage segment.
Outlook
The leadership of Atmos Energy remains focused on enhancing shareholder value by delivering consistent earnings growth. Atmos Energy now expects fiscal 2013 earnings to increase to a new range of $2.45 to $2.55 per diluted share, excluding unrealized margins and the gain on the sale of the company’s Georgia operations. The increase is based on continued strong earnings through the second fiscal quarter of 2013 from constructive rate outcomes in several jurisdictions, offset in part by the acceleration of the closing of the sale of the company’s Georgia assets. Net income from regulated operations is now expected to be in the range of $215 million to $223 million, while net income from nonregulated operations remains in the range of $9 million to $11 million. Total capital expenditures for fiscal 2013 are still expected to range between $770 million and $790 million.
Conference Call to be Webcast May 2, 2013
Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2013 second quarter and first six months on Thursday, May 2, 2013, at 9 a.m. Eastern Time. The telephone number is 877-485-3107, and the international telephone number is 201-689-8427. 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. Kim Cocklin, president and chief executive officer, and Bret Eckert, senior vice president and chief financial officer, will participate in the conference call.
Highlights and Recent Developments
Robert W. Best Retires as Executive Chairman
On April 2, 2013, Atmos Energy announced that Robert W. Best had retired from the company, effective April 1, 2013. Subsequent to his retirement, the board appointed Mr. Best as chairman of the board.
Atmos Energy Completes Sale of Georgia Distribution Assets
On April 1, 2013, Atmos Energy completed the sale of substantially all of its natural gas distribution assets and related nonregulated assets located in Georgia to Liberty Energy (Georgia) Corp., an affiliate of Algonquin Power & Utilities Corp. Net cash proceeds for rate base and related working capital were approximately $155 million, subject to final purchase price adjustments. The company expects to record a net of tax gain on the sale of approximately $6 million, or $0.07 per diluted share in the third quarter of fiscal 2013.
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, 2012 and in the company’s Quarterly Report on Form 10-Q for the three months ended December 31, 2012. 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.
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Financial Highlights (Unaudited) |
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| Three Months Ended | ||||||||||||||
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Consolidated Statements of Income |
March 31 | Percentage | ||||||||||||
| (000s except per share) | 2013 | 2012 | Change | |||||||||||
| Gross Profit: | ||||||||||||||
| Natural gas distribution segment | $ | 347,006 | $ | 372,328 | (7 | )% | ||||||||
| Regulated transmission and storage segment | 61,848 | 58,037 | 7 | % | ||||||||||
| Nonregulated segment | 24,307 | (4,229 | ) | 675 | % | |||||||||
| Intersegment eliminations | (410 | ) | (349 | ) | (17 | )% | ||||||||
| Gross profit | 432,751 | 425,787 | 2 | % | ||||||||||
| Operation and maintenance expense | 111,086 | 109,300 | 2 | % | ||||||||||
| Depreciation and amortization | 57,180 | 59,420 | (4 | )% | ||||||||||
| Taxes, other than income | 54,307 | 54,635 | (1 | )% | ||||||||||
| Total operating expenses | 222,573 | 223,355 | — | % | ||||||||||
| Operating income | 210,178 | 202,432 | 4 | % | ||||||||||
| Miscellaneous income | 1,712 | 506 | 238 | % | ||||||||||
| Interest charges | 33,331 | 36,643 | (9 | )% | ||||||||||
| Income from continuing operations | ||||||||||||||
| before income taxes | 178,559 | 166,295 | 7 | % | ||||||||||
| Income tax expense | 66,219 | 64,211 | 3 | % | ||||||||||
| Income from continuing operations | 112,340 | 102,084 | 10 | % | ||||||||||
| Income from discontinued operations, net of tax | 4,085 | 7,027 | (42 | )% | ||||||||||
| Net income | $ | 116,425 | $ | 109,111 | 7 | % | ||||||||
| Basic earnings per share | ||||||||||||||
| Income per share from continuing operations | $ | 1.24 | $ | 1.12 | ||||||||||
| Income per share from discontinued operations | 0.04 | 0.08 | ||||||||||||
| Net income per share – basic | $ | 1.28 | $ | 1.20 | ||||||||||
| Diluted earnings per share | ||||||||||||||
| Income per share from continuing operations | $ | 1.23 | $ | 1.12 | ||||||||||
| Income per share from discontinued operations | 0.04 | 0.08 | ||||||||||||
| Net income per share – diluted | $ | 1.27 | $ | 1.20 | ||||||||||
| Cash dividends per share | $ | 0.350 | $ | 0.345 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 90,530 | 90,020 | ||||||||||||
| Diluted | 91,492 | 90,322 | ||||||||||||
| Three Months Ended | ||||||||||||||
| March 31 | Percentage | |||||||||||||
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Summary Net Income (Loss) by Segment (000s) |
2013 | 2012 | Change | |||||||||||
| Natural gas distribution – continuing operations | $ | 86,190 | $ | 94,475 | (9 | )% | ||||||||
| Natural gas distribution – discontinued operations | 4,085 | 7,027 | (42 | )% | ||||||||||
| Regulated transmission and storage | 16,530 | 14,620 | 13 | % | ||||||||||
| Nonregulated | 7,997 | 730 | 995 | % | ||||||||||
| Unrealized margins, net of tax | 1,623 | (7,741 | ) | 121 | % | |||||||||
| Consolidated net income | $ | 116,425 | $ | 109,111 | 7 | % | ||||||||
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Financial Highlights, continued (Unaudited) |
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| Six Months Ended | ||||||||||||||
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Consolidated Statements of Income |
March 31 | Percentage | ||||||||||||
| (000s except per share) | 2013 | 2012 | Change | |||||||||||
| Gross Profit: | ||||||||||||||
| Natural gas distribution segment | $ | 626,637 | $ | 655,923 | (4 | )% | ||||||||
| Regulated transmission and storage segment | 122,529 | 114,796 | 7 | % | ||||||||||
| Nonregulated segment | 46,766 | 11,176 | 318 | % | ||||||||||
| Intersegment eliminations | (819 | ) | (716 | ) | (14 | )% | ||||||||
| Gross profit | 795,113 | 781,179 | 2 | % | ||||||||||
| Operation and maintenance expense | 217,613 | 223,944 | (3 | )% | ||||||||||
| Depreciation and amortization | 116,759 | 117,786 | (1 | )% | ||||||||||
| Taxes, other than income | 95,641 | 97,546 | (2 | )% | ||||||||||
| Total operating expenses | 430,013 | 439,276 | (2 | )% | ||||||||||
| Operating income | 365,100 | 341,903 | 7 | % | ||||||||||
| Miscellaneous income (expense) | 2,410 | (1,510 | ) | 260 | % | |||||||||
| Interest charges | 63,853 | 72,369 | (12 | )% | ||||||||||
| Income from continuing operations before | ||||||||||||||
| income taxes | 303,657 | 268,024 | 13 | % | ||||||||||
| Income tax expense | 113,969 | 103,556 | 10 | % | ||||||||||
| Income from continuing operations | 189,688 | 164,468 | 15 | % | ||||||||||
| Income from discontinued operations, net of tax | 7,202 | 13,150 | (45 | )% | ||||||||||
| Net income | $ | 196,890 | $ | 177,618 | 11 | % | ||||||||
| Basic earnings per share | ||||||||||||||
| Income per share from continuing operations | $ | 2.09 | $ | 1.81 | ||||||||||
| Income per share from discontinued operations | 0.08 | 0.14 | ||||||||||||
| Net income per share – basic | $ | 2.17 | $ | 1.95 | ||||||||||
| Diluted earnings per share | ||||||||||||||
| Income per share from continuing operations | $ | 2.07 | $ | 1.80 | ||||||||||
| Income per share from discontinued operations | 0.08 | 0.14 | ||||||||||||
| Net income per share – diluted | $ | 2.15 | $ | 1.94 | ||||||||||
| Cash dividends per share | $ | 0.70 | $ | 0.69 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 90,445 | 90,137 | ||||||||||||
| Diluted | 91,406 | 90,440 | ||||||||||||
| Six Months Ended | ||||||||||||||
| March 31 | Percentage | |||||||||||||
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Summary Net Income (Loss) by Segment (000s) |
2013 | 2012 | Change | |||||||||||
| Natural gas distribution – continuing operations | $ | 139,283 | $ | 138,976 | — | % | ||||||||
| Natural gas distribution – discontinued operations | 7,202 | 13,150 | (45 | )% | ||||||||||
| Regulated transmission and storage | 32,635 | 28,034 | 16 | % | ||||||||||
| Nonregulated | 2,766 | (7,835 | ) | 135 | % | |||||||||
| Unrealized margins, net of tax | 15,004 | 5,293 | 183 | % | ||||||||||
| Consolidated net income | $ | 196,890 | $ | 177,618 | 11 | % | ||||||||
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Financial Highlights, continued (Unaudited) |
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Discontinued Operations |
Three Months Ended | Six Months Ended | ||||||||||||||
| (000s) | March 31 | March 31 | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Operating revenues | $ | 21,678 | $ | 44,315 | $ | 37,962 | $ | 84,945 | ||||||||
| Purchased gas cost | 12,497 | 26,493 | 21,464 | 51,133 | ||||||||||||
| Gross profit | 9,181 | 17,822 | 16,498 | 33,812 | ||||||||||||
| Operating expenses | 3,038 | 6,819 | 5,858 | 13,547 | ||||||||||||
| Operating income | 6,143 | 11,003 | 10,640 | 20,265 | ||||||||||||
| Other nonoperating income | 200 | 55 | 548 | 432 | ||||||||||||
| Income from discontinued operations | ||||||||||||||||
| before income taxes | 6,343 | 11,058 | 11,188 | 20,697 | ||||||||||||
| Income tax expense | 2,258 | 4,031 | 3,986 | 7,547 | ||||||||||||
| Net income from discontinued operations | $ | 4,085 | $ | 7,027 | $ | 7,202 | $ | 13,150 | ||||||||
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Financial Highlights, continued (Unaudited) |
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Condensed Consolidated Balance Sheets |
March 31, | September 30, | ||||||
| (000s) | 2013 | 2012 | ||||||
| Net property, plant and equipment | $ | 5,710,273 | $ | 5,475,604 | ||||
| Cash and cash equivalents | 65,547 | 64,239 | ||||||
| Accounts receivable, net | 485,601 | 234,526 | ||||||
| Gas stored underground | 197,356 | 256,415 | ||||||
| Other current assets | 253,916 | 272,782 | ||||||
| Total current assets | 1,002,420 | 827,962 | ||||||
| Goodwill and intangible assets | 740,825 | 740,847 | ||||||
| Deferred charges and other assets | 500,212 | 451,262 | ||||||
| $ | 7,953,730 | $ | 7,495,675 | |||||
| Shareholders’ equity | $ | 2,543,470 | $ | 2,359,243 | ||||
| Long-term debt | 2,455,514 | 1,956,305 | ||||||
| Total capitalization | 4,998,984 | 4,315,548 | ||||||
| Accounts payable and accrued liabilities | 316,411 | 215,229 | ||||||
| Other current liabilities | 377,357 | 489,665 | ||||||
| Short-term debt | 232,998 | 570,929 | ||||||
| Current maturities of long-term debt | — | 131 | ||||||
| Total current liabilities | 926,766 | 1,275,954 | ||||||
| Deferred income taxes | 1,168,140 | 1,015,083 | ||||||
| Deferred credits and other liabilities | 859,840 | 889,090 | ||||||
| $ | 7,953,730 | $ | 7,495,675 | |||||
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Financial Highlights, continued (Unaudited) |
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| Six Months Ended | ||||||||||
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Condensed Consolidated Statements of Cash Flows |
March 31 | |||||||||
| (000s) | 2013 | 2012 | ||||||||
| Cash flows from operating activities | ||||||||||
| Net income | $ | 196,890 | $ | 177,618 | ||||||
| Depreciation and amortization | 118,873 | 122,735 | ||||||||
| Deferred income taxes | 106,891 | 102,052 | ||||||||
| Other | 5,519 | 9,874 | ||||||||
| Changes in assets and liabilities | (51,832 | ) | (51,556 | ) | ||||||
| Net cash provided by operating activities | 376,341 | 360,723 | ||||||||
| Cash flows from investing activities | ||||||||||
| Capital expenditures | (389,117 | ) | (311,123 | ) | ||||||
| Other, net | (3,700 | ) | (3,878 | ) | ||||||
| Net cash used in investing activities | (392,817 | ) | (315,001 | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Net decrease in short-term debt | (342,141 | ) | (48,945 | ) | ||||||
| Net proceeds from issuance of long-term debt | 493,793 | — | ||||||||
| Settlement of Treasury lock agreements | (66,626 | ) | — | |||||||
| Repayment of long-term debt | (131 | ) | (2,369 | ) | ||||||
| Cash dividends paid | (64,008 | ) | (62,907 | ) | ||||||
| Repurchase of common stock | — | (12,535 | ) | |||||||
| Repurchase of equity awards | (3,124 | ) | (3,509 | ) | ||||||
| Issuance of common stock | 21 | 164 | ||||||||
| Net cash provided by (used in) financing activities | 17,784 | (130,101 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 1,308 | (84,379 | ) | |||||||
| Cash and cash equivalents at beginning of period | 64,239 | 131,419 | ||||||||
| Cash and cash equivalents at end of period | $ | 65,547 | $ | 47,040 | ||||||
| Three Months Ended | Six Months Ended | |||||||||||
| March 31 | March 31 | |||||||||||
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Statistics, including discontinued operations |
2013 | 2012 | 2013 | 2012 | ||||||||
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Consolidated natural gas distribution throughput (MMcf as metered) |
159,337 |
144,894 |
273,036 |
266,642 |
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Consolidated regulated transmission and storage transportation volumes (MMcf) |
105,099 |
109,626 |
213,842 |
214,663 |
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Consolidated nonregulated delivered gas sales volumes (MMcf) |
97,732 |
99,844 |
182,450 |
190,714 |
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| Natural gas distribution meters in service | 3,150,173 | 3,220,045 | 3,150,173 | 3,220,045 | ||||||||
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Natural gas distribution average cost of gas |
$4.67 | $4.94 | $4.77 | $4.87 | ||||||||
| Nonregulated net physical position (Bcf) | 20.8 | 38.0 | 20.8 | 38.0 | ||||||||
