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 November 4, 2015 - 5:02 PM EST
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Atmos Energy Corporation Reports Earnings for Fiscal 2015 and Initiates Fiscal 2016 Guidance; Raises Dividend 7.7 Percent

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

Financial Highlights (Unaudited)

 

Statements of Income

Year Ended
September 30

(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
 
     

Year Ended
September 30

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

Consolidated net income

$ 315,075   $ 289,817
 
     
Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Statements of Income

Three Months Ended
September 30

(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
 
     

Three Months Ended
September 30

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  
 
         
Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

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
     
Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

 

Condensed Statements of Cash Flows

Year Ended
September 30

(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  
 
         
Three Months Ended

September 30

Year Ended

September 30

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
 

Atmos Energy Corporation
Susan Giles, 972-855-3729


Source: Business Wire (November 4, 2015 - 5:02 PM EST)

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