DALLAS--(BUSINESS WIRE)--Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its 2015 fiscal year and fourth quarter ended September 30, 2015.
- Fiscal 2015 consolidated net income, excluding net unrealized margins, was $316.5 million, or $3.10 per diluted share, compared with consolidated net income of $284.0 million, or $2.90 per diluted share in the prior year, excluding net unrealized margins.
- Fiscal 2015 net income was $315.1 million, or $3.09 per diluted share, after including noncash, unrealized net losses of $1.5 million, or $(0.01) per diluted share. Net income was $289.8 million, or $2.96 per diluted share in the prior year, after including unrealized net gains of $5.8 million or $0.06 per diluted share.
- Natural gas distribution customers benefited from weather-normalized rates, which returned approximately $19.5 million in savings on customer bills, as a result of weather that was eight percent colder than normal in fiscal 2015.
- Capital expenditures were $975.1 million for the year ended September 30, 2015, with over 80 percent of that spending related to system safety and reliability investments.
- Atmos Energy expects fiscal 2016 earnings to be in the range of $3.20 to $3.40 per diluted share, excluding net unrealized margins. Capital expenditures are expected to be in the range of $1.0 billion to $1.1 billion in fiscal 2016.
- 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.
For the quarter ended September 30, 2015, consolidated net income, excluding unrealized margins was $30.1 million, or $0.29 per diluted share, compared with net income of $24.9 million, or $0.24 per diluted share for the same quarter last year. Noncash, unrealized net losses from nonregulated operations were $6.6 million, or $(0.06) per diluted share for the three months ended September 30, 2015, and $1.2 million, or $(0.01) per diluted share for the prior-year quarter.
“Our business strategy continues to yield solid results,” said Kim Cocklin, chief executive officer of Atmos Energy Corporation. “Our 2015 financial performance reflects the continued capital investments we have made in our infrastructure to provide safe and reliable gas service to our customers. These investments, along with timely recovery, will position us well for fiscal 2016 and beyond. We remain confident in the fundamental strength of our business to continue delivering annual earnings per share growth in the six to eight percent range,” Cocklin concluded.
Results for the Fiscal Year Ended September 30, 2015
Regulated distribution gross profit increased $61.1 million to $1,237.6 million for the year ended September 30, 2015, compared with $1,176.5 million in the prior-year period. Gross profit reflects a net $70.6 million increase in rates, primarily in the Mid-Tex, West Texas and Kentucky/Mid-States Divisions. Additionally, gross profit increased $4.5 million from higher transportation revenue, while it decreased $10.5 million due to warmer weather. Although weather was eight percent colder than normal during fiscal 2015, it was 10 percent warmer than the prior year, before adjusting for weather normalization mechanisms.
Regulated pipeline gross profit increased $51.6 million to $370.1 million for the year ended September 30, 2015, compared with $318.5 million in the prior fiscal year. This increase primarily reflects a $47.0 million increase in revenue from the Gas Reliability Infrastructure Program (GRIP) filings approved in fiscal 2014 and 2015.
Nonregulated gross profit decreased $15.1 million to $72.9 million for the year ended September 30, 2015, compared with $88.0 million for the prior-year period. Realized margins for gas delivery, storage and transportation services increased $8.3 million year over year, primarily due to a $0.03/Mcf increase in per-unit margins, partially offset by a seven percent decrease in consolidated sales volumes. This increase was more than offset by an $11.4 million decrease in other realized margins primarily related to lower natural gas price volatility in the current year. Finally, unrealized margins decreased $12.0 million.
Consolidated operation and maintenance expense for the year ended September 30, 2015 was $541.9 million, compared with $505.2 million for the prior year. The $36.7 million increase resulted primarily from increased pipeline maintenance spending and higher employee-related expenses.
Depreciation and amortization increased $20.8 million to $274.8 million during the year ended September 30, 2015, compared with $254.0 million for the prior year primarily due to incremental capital investments made in fiscal 2014.
Capital expenditures increased to $975.1 million for the year ended September 30, 2015, compared with $835.3 million in the prior year. The $139.8 million increase is largely due to a $96.9 million increase in spending in the regulated distribution segment, primarily due to a planned increase in safety and reliability investment in fiscal 2015. Additionally, capital spending in the regulated pipeline segment increased $43.4 million in the current year to further ensure the reliability of gas service to the Mid-Tex Division and other regulated distribution customers.
For the year ended September 30, 2015, the company generated operating cash flow of $836.5 million, a $96.5 million increase compared with the year ended September 30, 2014. The year-over-year increase primarily reflects constructive rate adjustments achieved in the prior and current years and lower gas prices during the current-year storage injection season.
The debt capitalization ratio at September 30, 2015 was 47.7 percent, compared with 46.2 percent at September 30, 2014. At September 30, 2015, there was $457.9 million of short-term debt outstanding, compared with $196.7 million at September 30, 2014. Short-term debt levels in the prior year were lower as a result of higher cash balances following the completion of the February 2014 equity offering.
Results for the 2015 Fiscal Fourth Quarter Ended September 30, 2015
Regulated distribution gross profit increased $6.0 million to $240.5 million for the fiscal 2015 fourth quarter, compared with $234.5 million in the prior-year quarter. Gross profit reflects a net $9.1 million increase in rates, primarily in the Mid-Tex and West Texas Divisions.
Regulated pipeline gross profit increased $11.5 million to $97.8 million for the quarter ended September 30, 2015, compared with $86.3 million for the same quarter last year. This increase is primarily the result of a $9.5 million increase to rates under the GRIP filing that became effective in fiscal 2015.
Nonregulated gross profit decreased $0.9 million to $16.1 million for the fourth quarter of fiscal 2015, compared with $17.0 million for the prior-year quarter. Realized margins for gas delivery, storage and transportation services increased $2.3 million quarter over quarter, primarily due to a $0.04/Mcf increase in per-unit margins, partially offset by a four percent decrease in consolidated sales volumes. Additionally, other realized margins increased $5.7 million, primarily related to more favorable financial settlements in the current-year quarter compared to the prior-year quarter. Unrealized margins were $8.9 million lower than the prior-year quarter.
Consolidated operation and maintenance expense for the three months ended September 30, 2015 was $157.4 million, compared with $139.2 million for the prior-year quarter. The $18.2 million quarter-over-quarter increase resulted primarily from increased pipeline maintenance spending and higher employee-related expenses.
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 expects fiscal 2016 earnings to be in the range of $3.20 to $3.40 per diluted share, excluding unrealized margins. Net income from regulated operations is expected to be in the range of $315 million to $335 million, while net income from nonregulated operations is expected to be in the range of $14 million to $19 million. Capital expenditures for fiscal 2016 are expected to range between $1.0 billion and $1.1 billion.
Conference Call to be Webcast November 5, 2015
Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2015 financial results and outline the assumptions supporting the fiscal 2016 guidance on Thursday, November 5, 2015, at 10 a.m. Eastern Time. The domestic telephone number is 877-485-3107 and the international telephone number is 201-689-8427. Kim Cocklin, chief executive officer and Bret Eckert, 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.
Highlights and Recent Developments
Election of Director
Effective November 4, 2015, Michael E. Haefner, president and chief operating officer, was elected to the board of directors of the company, with his term expiring at the 2016 annual meeting of shareholders on February 3, 2016.
Senior Management Promotions
On September 28, 2015, Atmos Energy announced the promotion of Michael E. Haefner, from executive vice president to president and chief operating officer, effective October 1, 2015. Additionally, Marvin L. Sweetin, senior vice president of utility operations, was promoted to the newly-created position of senior vice president of safety and enterprise services, effective October 1, 2015.
Credit Facility Replaced
On September 25, 2015, Atmos Energy replaced its existing $1.25 billion revolving credit agreement, which was set to expire on August 22, 2019, with a new $1.25 billion revolving credit agreement (Credit Facility) with substantially the same terms. The Credit Facility also retains a $250 million accordion feature that would allow an increase in commitments up to $1.5 billion. The Credit Facility has an expiration date of September 25, 2020, with the company having the option to twice extend the five-year term for one additional year.
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, 2014 and in the company's Quarterly Report on Form 10-Q for the three and nine months ended June 30, 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 | |||||||||||
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Financial Highlights (Unaudited) |
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Statements of Income |
Year Ended |
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| (000s except per share) | 2015 | 2014 | |||||||||
| Gross Profit: | |||||||||||
| Regulated distribution segment | $ | 1,237,577 | $ | 1,176,515 | |||||||
| Regulated pipeline segment | 370,112 | 318,459 | |||||||||
| Nonregulated segment | 72,860 | 87,955 | |||||||||
| Intersegment eliminations | (532 | ) | (503 | ) | |||||||
| Gross profit | 1,680,017 | 1,582,426 | |||||||||
| Operation and maintenance expense | 541,868 | 505,154 | |||||||||
| Depreciation and amortization | 274,796 | 253,987 | |||||||||
| Taxes, other than income | 231,958 | 211,936 | |||||||||
| Total operating expenses | 1,048,622 | 971,077 | |||||||||
| Operating income | 631,395 | 611,349 | |||||||||
| Miscellaneous expense | (4,389 | ) | (5,235 | ) | |||||||
| Interest charges | 116,241 | 129,295 | |||||||||
| Income before income taxes | 510,765 | 476,819 | |||||||||
| Income tax expense | 195,690 | 187,002 | |||||||||
| Net income | $ | 315,075 | $ | 289,817 | |||||||
| Basic earnings per share | $ | 3.09 | $ | 2.96 | |||||||
| Diluted earnings per share | $ | 3.09 | $ | 2.96 | |||||||
| Cash dividends per share | $ | 1.56 | $ | 1.48 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 101,892 | 97,606 | |||||||||
| Diluted | 101,892 | 97,608 | |||||||||
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Year Ended |
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Summary Net Income (Loss) by Segment (000s) |
2015 | 2014 | ||||||||
| Regulated distribution | $ | 204,813 | $ | 171,585 | ||||||
| Regulated pipeline | 94,662 | 86,191 | ||||||||
| Nonregulated | 17,064 | 26,209 | ||||||||
| Unrealized margins, net of tax | (1,464 | ) | 5,832 | |||||||
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Consolidated net income |
$ | 315,075 | $ | 289,817 | ||||||
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Financial Highlights, continued (Unaudited) |
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Statements of Income |
Three Months Ended |
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| (000s except per share) | 2015 | 2014 | |||||||||
| Gross Profit: | |||||||||||
| Regulated distribution segment | $ | 240,511 | $ | 234,491 | |||||||
| Regulated pipeline segment | 97,807 | 86,314 | |||||||||
| Nonregulated segment | 16,136 | 16,987 | |||||||||
| Intersegment eliminations | (133 | ) | (133 | ) | |||||||
| Gross profit | 354,321 | 337,659 | |||||||||
| Operation and maintenance expense | 157,379 | 139,163 | |||||||||
| Depreciation and amortization | 70,737 | 68,256 | |||||||||
| Taxes, other than income | 50,352 | 46,296 | |||||||||
| Total operating expenses | 278,468 | 253,715 | |||||||||
| Operating income | 75,853 | 83,944 | |||||||||
| Miscellaneous expense | (1,755 | ) | (1,213 | ) | |||||||
| Interest charges | 31,075 | 33,739 | |||||||||
| Income before income taxes | 43,023 | 48,992 | |||||||||
| Income tax expense | 19,508 | 25,279 | |||||||||
| Net income | $ | 23,515 | $ | 23,713 | |||||||
| Basic earnings per share | $ | 0.23 | $ | 0.23 | |||||||
| Diluted earnings per share | $ | 0.23 | $ | 0.23 | |||||||
| Cash dividends per share | $ | 0.390 | $ | 0.370 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 102,234 | 101,247 | |||||||||
| Diluted | 102,234 | 101,247 | |||||||||
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Three Months Ended |
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| Summary Net Income (Loss) by Segment (000s) | 2015 | 2014 | |||||||||
| Regulated distribution | $ | 9,109 | $ | 1,556 | |||||||
| Regulated pipeline | 16,377 | 17,698 | |||||||||
| Nonregulated | 4,674 | 5,666 | |||||||||
| Unrealized margins, net of tax | (6,645 | ) | (1,207 | ) | |||||||
| Consolidated net income | $ | 23,515 | $ | 23,713 | |||||||
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Financial Highlights, continued (Unaudited) |
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Condensed Balance Sheets |
September 30, | September 30, | |||||||
| (000s) | 2015 | 2014 | |||||||
| Net property, plant and equipment | $ | 7,430,580 | $ | 6,725,906 | |||||
| Cash and cash equivalents | 28,653 | 42,258 | |||||||
| Accounts receivable, net | 295,160 | 343,400 | |||||||
| Gas stored underground | 236,603 | 278,917 | |||||||
| Other current assets | 70,569 | 111,265 | |||||||
| Total current assets | 630,985 | 775,840 | |||||||
| Goodwill | 742,702 | 742,029 | |||||||
| Deferred charges and other assets | 288,678 | 350,929 | |||||||
| $ | 9,092,945 | $ | 8,594,704 | ||||||
| Shareholders' equity | $ | 3,194,797 | $ | 3,086,232 | |||||
| Long-term debt | 2,455,388 | 2,455,986 | |||||||
| Total capitalization | 5,650,185 | 5,542,218 | |||||||
| Accounts payable and accrued liabilities | 238,942 | 308,086 | |||||||
| Other current liabilities | 457,954 | 405,869 | |||||||
| Short-term debt | 457,927 | 196,695 | |||||||
| Current maturities of long-term debt | — | — | |||||||
| Total current liabilities | 1,154,823 | 910,650 | |||||||
| Deferred income taxes | 1,411,315 | 1,286,616 | |||||||
| Deferred credits and other liabilities | 876,622 | 855,220 | |||||||
| $ | 9,092,945 | $ | 8,594,704 | ||||||
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Financial Highlights, continued (Unaudited) |
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Condensed Statements of Cash Flows |
Year Ended |
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| (000s) | 2015 | 2014 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 315,075 | $ | 289,817 | |||||||
| Depreciation and amortization | 274,796 | 253,987 | |||||||||
| Deferred income taxes | 192,886 | 189,952 | |||||||||
| Other | 33,772 | 35,481 | |||||||||
| Changes in assets and liabilities | 19,990 | (29,251 | ) | ||||||||
| Net cash provided by operating activities | 836,519 | 739,986 | |||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | (975,132 | ) | (835,251 | ) | |||||||
| Other, net | 377 | (2,325 | ) | ||||||||
| Net cash used in investing activities | (974,755 | ) | (837,576 | ) | |||||||
| Cash flows from financing activities | |||||||||||
| Net increase (decrease) in short-term debt | 254,780 | (165,865 | ) | ||||||||
| Net proceeds from issuance of long-term debt | 493,538 | — | |||||||||
| Net proceeds from equity offering | — | 390,205 | |||||||||
| Settlement of Treasury lock agreements | 13,364 | — | |||||||||
| Repayment of long-term debt | (500,000 | ) | — | ||||||||
| Cash dividends paid | (160,018 | ) | (146,248 | ) | |||||||
| Repurchase of equity awards | (7,985 | ) | (8,717 | ) | |||||||
| Issuance of common stock | 30,952 | 4,274 | |||||||||
| Net cash provided by financing activities | 124,631 | 73,649 | |||||||||
| Net decrease in cash and cash equivalents | (13,605 | ) | (23,941 | ) | |||||||
| Cash and cash equivalents at beginning of period | 42,258 | 66,199 | |||||||||
| Cash and cash equivalents at end of period | $ | 28,653 | $ | 42,258 | |||||||
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Three Months Ended
September 30 |
Year Ended
September 30 |
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Statistics |
2015 | 2014 | 2015 | 2014 | |||||||||||||
| Consolidated distribution throughput (MMcf as metered) | 56,614 | 57,493 | 429,322 | 451,803 | |||||||||||||
| Consolidated pipeline transportation volumes (MMcf) | 146,240 | 130,777 | 528,068 | 493,360 | |||||||||||||
| Consolidated nonregulated delivered gas sales volumes (MMcf) | 79,167 | 82,763 | 351,427 | 377,441 | |||||||||||||
| Regulated distribution meters in service | 3,151,312 | 3,115,069 | 3,151,312 | 3,115,069 | |||||||||||||
| Regulated distribution average cost of gas | $ | 4.64 | $ | 6.10 | $ | 5.20 | $ | 5.94 | |||||||||
| Nonregulated net physical position (Bcf) | 14.6 | 9.3 | 14.6 | 9.3 | |||||||||||||
