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| 8-K - 8-K - ATMOS ENERGY CORP | d528915d8k.htm |
Exhibit 99.1
News Release
Analysts and Media Contact:
Susan Giles (972) 855-3729
Atmos Energy Corporation Reports Earnings for the
Fiscal 2013 Third Quarter and Nine Months; Reaffirms Fiscal 2013 Guidance
DALLAS (August 6, 2013)—Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2013 third quarter and nine months ended June 30, 2013.
• | Fiscal 2013 third quarter consolidated net income, excluding net unrealized margins and a gain on sale, was $39.4 million, or $0.42 per diluted share, compared with net income, excluding net unrealized margins of $29.3 million, or $0.32 per diluted share in the prior-year quarter. |
• | Fiscal 2013 third quarter net income includes a net gain on the sale of the Georgia assets of $5.3 million, or $0.06 per diluted share. |
• | After including noncash, unrealized net losses of $5.9 million, or $(0.06) per diluted share and the gain on sale, fiscal 2013 third quarter net income was $38.8 million, or $0.42 per diluted share. Prior-year quarter net income was $31.1 million, or $0.34 per diluted share, after including unrealized net gains of $1.8 million or $0.02 per diluted share. |
• | As anticipated, net income for the quarter increased due to rate design changes recently implemented in the Texas service areas, which shift margins from the first half of the fiscal year into the third and fourth quarters. |
For the nine months ended June 30, 2013, consolidated net income was $235.7 million, or $2.57 per diluted share, compared with net income of $208.8 million, or $2.28 per diluted share for the same period last year. Excluding the net gain on the sale of the Georgia assets of $5.3 million, or $0.06 per diluted share and the noncash unrealized net gains of $9.7 million, or $0.11 per diluted share, consolidated net income was $220.7 million, or $2.40 per diluted share for the nine months ended June 30, 2013. Prior-year net income, excluding noncash unrealized net gains of $7.1 million, or $0.08 per diluted share, was $201.7 million, or $2.20 per diluted share. For the current nine-month period, regulated operations contributed $223.7 million of net income, or $2.44 per diluted share, and nonregulated operations contributed net income of $12.0 million, or $0.13 per diluted share.
“Executing our strategic capital investment plan has strengthened our natural gas infrastructure and has grown rate base and earnings. The predictable and stable results from our core regulated operations continue as the primary driver of our earnings,” said Kim Cocklin, president and chief executive officer of Atmos Energy Corporation. “For fiscal 2013, we remain on track to meet our previously announced earnings guidance of between $2.45 and $2.55 per diluted share,” Cocklin concluded.
Results for the 2013 Third Quarter Ended June 30, 2013
Natural gas distribution gross profit, excluding discontinued operations, increased $44.4 million to $239.5 million for the fiscal 2013 third quarter, compared with $195.1 million in the prior-year quarter. As expected, this increase primarily reflects an increase in margins due to the rate design changes
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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 shift margins from the first and second fiscal quarters into the third and fourth fiscal quarters. Additionally, gross profit increased $10.5 million from colder weather experienced outside the weather normalization adjustment period.
Regulated transmission and storage gross profit increased $6.9 million to $74.0 million for the quarter ended June 30, 2013, compared with $67.1 million for the same quarter last year. This increase is primarily the result of a $5.6 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filing that became effective in May 2013.
Nonregulated gross profit decreased $28.1 million to $3.3 million for the fiscal 2013 third quarter, compared with $31.4 million for the prior-year quarter, primarily as a result of a $15.4 million decrease in realized margins and a $12.8 million decrease in unrealized margins. Asset optimization margins decreased $12.1 million from the prior-year quarter, primarily due to the timing and magnitude of gains realized on the settlement of financial positions in the prior-year quarter. During the first six months of fiscal 2012, Atmos Energy Holdings took advantage of falling natural gas prices by injecting gas into storage and rolling financial positions forward for settlement in the third and fourth quarters of fiscal 2012. Realized margins for gas delivery, storage and transportation services and other services decreased $3.3 million quarter over quarter, primarily due to a $0.05/Mcf decrease in per-unit margins, partially offset by a five percent increase in consolidated sales volumes.
Consolidated operation and maintenance expense, excluding discontinued operations, for the quarter ended June 30, 2013, was $121.3 million, compared with $106.0 million for the prior-year period. The $15.3 million increase resulted primarily from higher employee-related costs, legal and other administrative costs, bad debt expense, line locate activity and pipeline right-of-way and maintenance activity.
Interest charges for the third quarter of fiscal 2013 were $32.7 million, compared with $34.9 million for the prior-year quarter. The $2.2 million quarter-over-quarter decrease resulted primarily from interest deferrals related to Texas infrastructure spending in the current quarter.
Results for the Nine Months Ended June 30, 2013
Natural gas distribution gross profit, excluding discontinued operations, increased $15.1 million to $866.1 million for the nine months ended June 30, 2013, compared with $851.0 million in the prior-year period. This increase is due to a $12.5 million increase in rates. Additionally, gross profit increased $7.4 million due to increased consumption associated with colder weather. These increases were partially offset by a $9.0 million decrease in the Mid-Tex and West Texas Divisions, primarily reflecting the aforementioned rate design changes implemented in these service areas, which shift margins out of the first half of the fiscal year into the third and fourth quarters.
Regulated transmission and storage gross profit increased $14.7 million to $196.6 million for the nine months ended June 30, 2013, compared with $181.9 million last year. This increase is primarily the result of increased revenue from the GRIP filings that became effective in May 2013 and April 2012.
Nonregulated gross profit increased $7.4 million to $50.0 million for the nine months ended June 30, 2013, compared with $42.6 million for the prior-year period. Asset optimization margins increased $6.4 million period-over-period, primarily due to smaller losses incurred from asset optimization activities. 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
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accounting. Realized margins for gas delivery, storage and transportation services and other services decreased $3.1 million period over period, primarily due to a $0.01/Mcf decrease in per-unit margins, combined with a two percent decrease in consolidated sales volumes.
Consolidated operation and maintenance expense, excluding discontinued operations, for the nine months ended June 30, 2013, was $338.9 million, compared with $330.0 million for the prior-year period. The $8.9 million increase resulted primarily from an increase in line locate activity and pipeline right-of-way and maintenance activity.
Interest charges for the nine months ended June 30, 2013 were $96.6 million, compared with $107.3 million for the same period last year. The $10.7 million period-over-period decrease resulted primarily from interest deferrals related to Texas infrastructure spending in the current period.
The debt capitalization ratio at June 30, 2013 was 50.1 percent, compared with 51.7 percent at September 30, 2012 and 50.7 percent at June 30, 2012. At June 30, 2013, there was $142.0 million of short-term debt outstanding, compared with $570.9 million at September 30, 2012 and $213.5 million at June 30, 2012.
For the nine months ended June 30, 2013, the company generated operating cash flow of $509.6 million, a $9.2 million decrease compared with the nine months ended June 30, 2012. The decrease primarily reflects the timing of customer collections and vendor payments, due to the aforementioned rate design changes implemented in the Texas natural gas distribution service areas, partially offset by a $16.2 million period-over-period decrease in pension and postretirement contributions.
Capital expenditures increased to $582.5 million for the nine months ended June 30, 2013, compared with $497.4 million in the prior-year period. The $85.1 million increase primarily reflects the Line W and Line WX pipeline expansion projects and increased cathodic protection spending 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 continues to expect fiscal 2013 earnings to be in the 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. Net income from regulated operations is expected to be in the range of $215 million to $223 million, while net income from nonregulated operations is expected to be in the range of $9 million to $11 million. Total capital expenditures for fiscal 2013 are expected to range between $790 million and $810 million.
Conference Call to be Webcast August 7, 2013
Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2013 third quarter and first nine months on Wednesday, August 7, 2013, at 8 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.
This news release should be read in conjunction with the attached unaudited financial information.
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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 and six months ended March 31, 2013. 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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Atmos Energy Corporation
Financial Highlights (Unaudited)
Consolidated Statements of Income | Three Months Ended June 30 | Percentage | |||||||||
(000s except per share) | 2013 | 2012 | Change | ||||||||
Gross Profit: | |||||||||||
Natural gas distribution segment | $ | 239,495 | $ | 195,059 | 23 | % | |||||
Regulated transmission and storage segment | 74,041 | 67,073 | 10 | % | |||||||
Nonregulated segment | 3,260 | 31,421 | (90 | )% | |||||||
Intersegment eliminations | (299 | ) | (382 | ) | 22 | % | |||||
Gross profit | 316,497 | 293,171 | 8 | % | |||||||
Operation and maintenance expense | 121,258 | 106,045 | 14 | % | |||||||
Depreciation and amortization | 58,129 | 58,956 | (1 | )% | |||||||
Taxes, other than income | 50,714 | 46,624 | 9 | % | |||||||
Total operating expenses | 230,101 | 211,625 | 9 | % | |||||||
Operating income | 86,396 | 81,546 | 6 | % | |||||||
Miscellaneous expense | (467 | ) | (2,075 | ) | 77 | % | |||||
Interest charges | 32,741 | 34,909 | (6 | )% | |||||||
Income from continuing operations before income taxes | 53,188 | 44,562 | 19 | % | |||||||
Income tax expense | 19,714 | 16,548 | 19 | % | |||||||
Income from continuing operations | 33,474 | 28,014 | 19 | % | |||||||
Income from discontinued operations, net of tax | — | 3,118 | (100 | )% | |||||||
Gain on sale of discontinued operations, net of tax | 5,294 | — | 100 | % | |||||||
Net income | $ | 38,768 | $ | 31,132 | 25 | % | |||||
Basic earnings per share | |||||||||||
Income per share from continuing operations | $ | 0.37 | $ | 0.31 | |||||||
Income per share from discontinued operations | 0.06 | 0.03 | |||||||||
Net income per share – basic | $ | 0.43 | $ | 0.34 | |||||||
Diluted earnings per share | |||||||||||
Income per share from continuing operations | $ | 0.36 | $ | 0.31 | |||||||
Income per share from discontinued operations | 0.06 | 0.03 | |||||||||
Net income per share – diluted | $ | 0.42 | $ | 0.34 | |||||||
Cash dividends per share | $ | 0.350 | $ | 0.345 | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 90,603 | 90,118 | |||||||||
Diluted | 91,550 | 90,993 | |||||||||
Three Months Ended June 30 | Percentage | ||||||||||
Summary Net Income (Loss) by Segment (000s) | 2013 | 2012 | Change | ||||||||
Natural gas distribution – continuing operations | $ | 15,817 | $ | (4,907 | ) | 422 | % | ||||
Natural gas distribution – discontinued operations | 5,649 | 3,118 | 81 | % | |||||||
Regulated transmission and storage | 23,097 | 20,144 | 15 | % | |||||||
Nonregulated – continuing operations | 475 | 10,939 | (96 | )% | |||||||
Nonregulated – discontinued operations | (355 | ) | — | (100 | )% | ||||||
Unrealized margins, net of tax | (5,915 | ) | 1,838 | (422 | )% | ||||||
Consolidated net income | $ | 38,768 | $ | 31,132 | 25 | % | |||||
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Consolidated Statements of Income | Nine Months Ended June 30 | Percentage | |||||||||
(000s except per share) | 2013 | 2012 | Change | ||||||||
Gross Profit: | |||||||||||
Natural gas distribution segment | $ | 866,132 | $ | 850,982 | 2 | % | |||||
Regulated transmission and storage segment | 196,570 | 181,869 | 8 | % | |||||||
Nonregulated segment | 50,026 | 42,597 | 17 | % | |||||||
Intersegment eliminations | (1,118 | ) | (1,098 | ) | (2 | )% | |||||
Gross profit | 1,111,610 | 1,074,350 | 3 | % | |||||||
Operation and maintenance expense | 338,871 | 329,989 | 3 | % | |||||||
Depreciation and amortization | 174,888 | 176,742 | (1 | )% | |||||||
Taxes, other than income | 146,355 | 144,170 | 2 | % | |||||||
Total operating expenses | 660,114 | 650,901 | 1 | % | |||||||
Operating income | 451,496 | 423,449 | 7 | % | |||||||
Miscellaneous income (expense) | 1,943 | (3,585 | ) | 154 | % | ||||||
Interest charges | 96,594 | 107,278 | (10 | )% | |||||||
Income from continuing operations before income taxes | 356,845 | 312,586 | 14 | % | |||||||
Income tax expense | 133,683 | 120,104 | 11 | % | |||||||
Income from continuing operations | 223,162 | 192,482 | 16 | % | |||||||
Income from discontinued operations, net of tax | 7,202 | 16,268 | (56 | )% | |||||||
Gain on sale of discontinued operations, net of tax | 5,294 | — | 100 | % | |||||||
Net income | $ | 235,658 | $ | 208,750 | 13 | % | |||||
Basic earnings per share | |||||||||||
Income per share from continuing operations | $ | 2.46 | $ | 2.13 | |||||||
Income per share from discontinued operations | 0.14 | 0.18 | |||||||||
Net income per share – basic | $ | 2.60 | $ | 2.31 | |||||||
Diluted earnings per share | |||||||||||
Income per share from continuing operations | $ | 2.43 | $ | 2.10 | |||||||
Income per share from discontinued operations | 0.14 | 0.18 | |||||||||
Net income per share – diluted | $ | 2.57 | $ | 2.28 | |||||||
Cash dividends per share | $ | 1.050 | $ | 1.035 | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 90,497 | 90,131 | |||||||||
Diluted | 91,445 | 91,006 | |||||||||
Nine Months Ended June 30 | Percentage | ||||||||||
Summary Net Income (Loss) by Segment (000s) | 2013 | 2012 | Change | ||||||||
Natural gas distribution – continuing operations | $ | 155,100 | $ | 134,069 | 16 | % | |||||
Natural gas distribution – discontinued operations | 12,851 | 16,268 | (21 | )% | |||||||
Regulated transmission and storage | 55,732 | 48,178 | 16 | % | |||||||
Nonregulated – continuing operations | 2,617 | 3,176 | (18 | )% | |||||||
Nonregulated – discontinued operations | (355 | ) | — | (100 | )% | ||||||
Unrealized margins, net of tax | 9,713 | 7,059 | 38 | % | |||||||
Consolidated net income | $ | 235,658 | $ | 208,750 | 13 | % | |||||
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Discontinued Operations | Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
(000s) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating revenues | $ | — | $ | 18,162 | $ | 37,962 | $ | 103,107 | ||||||||
Purchased gas cost | — | 6,803 | 21,464 | 57,936 | ||||||||||||
Gross profit | — | 11,359 | 16,498 | 45,171 | ||||||||||||
Operating expenses | — | 6,522 | 5,858 | 20,069 | ||||||||||||
Operating income | — | 4,837 | 10,640 | 25,102 | ||||||||||||
Other nonoperating income | — | 73 | 548 | 505 | ||||||||||||
Income from discontinued operations before income taxes | — | 4,910 | 11,188 | 25,607 | ||||||||||||
Income tax expense | — | 1,792 | 3,986 | 9,339 | ||||||||||||
Income from discontinued operations | — | 3,118 | 7,202 | 16,268 | ||||||||||||
Gain on sale of discontinued operations, net of tax | 5,294 | — | 5,294 | — | ||||||||||||
Net income from discontinued operations | $ | 5,294 | $ | 3,118 | $ | 12,496 | $ | 16,268 | ||||||||
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Condensed Consolidated Balance Sheets | June 30, | September 30, | ||||||
(000s) | 2013 | 2012 | ||||||
Net property, plant and equipment | $ | 5,841,215 | $ | 5,475,604 | ||||
Cash and cash equivalents | 31,979 | 64,239 | ||||||
Accounts receivable, net | 350,237 | 234,526 | ||||||
Gas stored underground | 209,101 | 256,415 | ||||||
Other current assets | 90,936 | 272,782 | ||||||
Total current assets | 682,253 | 827,962 | ||||||
Goodwill and intangible assets | 740,814 | 740,847 | ||||||
Deferred charges and other assets | 538,516 | 451,262 | ||||||
$ | 7,802,798 | $ | 7,495,675 | |||||
Shareholders’ equity | $ | 2,581,444 | $ | 2,359,243 | ||||
Long-term debt | 2,455,593 | 1,956,305 | ||||||
Total capitalization | 5,037,037 | 4,315,548 | ||||||
Accounts payable and accrued liabilities | 229,876 | 215,229 | ||||||
Other current liabilities | 348,706 | 489,665 | ||||||
Short-term debt | 141,998 | 570,929 | ||||||
Current maturities of long-term debt | — | 131 | ||||||
Total current liabilities | 720,580 | 1,275,954 | ||||||
Deferred income taxes | 1,197,274 | 1,015,083 | ||||||
Deferred credits and other liabilities | 847,907 | 889,090 | ||||||
$ | 7,802,798 | $ | 7,495,675 | |||||
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Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
Condensed Consolidated Statements of Cash Flows | Nine Months Ended June 30 | |||||||
(000s) | 2013 | 2012 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 235,658 | $ | 208,750 | ||||
Gain on sale of discontinued operations | (8,203 | ) | — | |||||
Depreciation and amortization | 177,183 | 184,194 | ||||||
Deferred income taxes | 130,365 | 120,713 | ||||||
Other | 14,460 | 22,386 | ||||||
Changes in assets and liabilities | (39,888 | ) | (17,237 | ) | ||||
Net cash provided by operating activities | 509,575 | 518,806 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures | (582,473 | ) | (497,374 | ) | ||||
Proceeds from the sale of discontinued operations | 153,023 | — | ||||||
Other, net | (3,139 | ) | (4,247 | ) | ||||
Net cash used in investing activities | (432,589 | ) | (501,621 | ) | ||||
Cash flows from financing activities | ||||||||
Net decrease in short-term debt | (435,084 | ) | (6,688 | ) | ||||
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 | (96,060 | ) | (94,338 | ) | ||||
Repurchase of common stock | — | (12,535 | ) | |||||
Repurchase of equity awards | (5,146 | ) | (5,219 | ) | ||||
Issuance of common stock | 8 | 251 | ||||||
Net cash used in financing activities | (109,246 | ) | (120,898 | ) | ||||
Net decrease in cash and cash equivalents | (32,260 | ) | (103,713 | ) | ||||
Cash and cash equivalents at beginning of period | 64,239 | 131,419 | ||||||
Cash and cash equivalents at end of period | $ | 31,979 | $ | 27,706 | ||||
Three Months Ended June 30 | Nine Months Ended June 30 | |||||||||||||||
Statistics, including discontinued operations | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Consolidated natural gas distribution throughput (MMcf as metered) | 72,369 | 65,700 | 345,405 | 332,342 | ||||||||||||
Consolidated regulated transmission and storage transportation volumes (MMcf) | 121,194 | 118,678 | 335,036 | 333,341 | ||||||||||||
Consolidated nonregulated delivered gas sales volumes (MMcf) | 83,341 | 79,658 | 265,791 | 270,372 | ||||||||||||
Natural gas distribution meters in service | 3,009,377 | 3,206,280 | 3,009,377 | 3,206,280 | ||||||||||||
Natural gas distribution average cost of gas | $ | 5.27 | $ | 3.73 | $ | 4.86 | $ | 4.70 | ||||||||
Nonregulated net physical position (Bcf) | 19.2 | 30.3 | 19.2 | 30.3 | ||||||||||||
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