ATO
$79.83
Atmos Energy
($.09)
(.11%)
Earnings Details
1st Quarter December 2016
Tuesday, February 07, 2017 5:02:00 PM
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Summary

Atmos Energy Reaffirms

Atmos Energy (ATO) reported 1st Quarter December 2016 earnings of $1.08 per share on revenue of $0.0 million. The consensus earnings estimate was $1.03 per share on revenue of $984.5 million.

The company said it continues to expect fiscal 2017 earnings of $3.45 to $3.65 per share. The current consensus earnings estimate is $3.54 per share for the year ending September 30, 2017.

Atmos Energy Corp is engaged in the regulated natural gas distribution, transmission & storage businesses & other nonregulated natural gas businesses. It distributes natural gas to residential, commercial, public authority & industrial customer.

Results
Reported Earnings
$1.08
Earnings Whisper
-
Consensus Estimate
$1.03
Reported Revenue
Revenue Estimate
$984.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Atmos Energy Corporation Reports Earnings for Fiscal 2017 First Quarter; Reaffirms Fiscal 2017 Guidance

Atmos Energy Corporation (ATO) today reported consolidated results for its fiscal 2017 first quarter ended December 31, 2016.

Fiscal 2017 first quarter consolidated net income was $125.0 million, or $1.19 per diluted share, compared with consolidated net income of $102.9 million, or $1.00 per diluted share in the prior-year quarter.

Fiscal 2017 first quarter net income from continuing operations was $114.0 million, or $1.08 per diluted share, and income from discontinued operations was $11.0 million, or $0.11 per diluted share. In the prior-year quarter, net income from continuing operations was $101.5 million, or $0.99 per diluted share, and income from discontinued operations was $1.3 million, or $0.01 per diluted share.

The company’s Board of Directors has declared a quarterly dividend of $0.45 per common share. The indicated annual dividend for fiscal 2017 is $1.80, which represents a 7.1 percent increase over fiscal 2016.

"Our first quarter results reflect the positive execution of our growth strategy," said Kim Cocklin, Chief Executive Officer of Atmos Energy Corporation. "Ongoing capital investments made to our infrastructure have enhanced the safe and reliable delivery of natural gas to our customers and provided a steady return to shareholders. In addition, we are pleased that Atmos Energy has become a fully regulated, pure-play natural gas utility after closing on the sale of our nonregulated natural gas marketing business in January. Fiscal 2017 earnings from continuing operations are still expected to range from between $3.45 and $3.65 per diluted share," Cocklin concluded.

Results for the Three Months Ended December 31, 2016

Distribution gross profit increased $23.8 million to $359.3 million for the three months ended December 31, 2016, compared with $335.5 million in the prior-year period. Gross profit reflects a net $15.9 million increase in rates, primarily in the Mid-Tex, Louisiana and West Texas Divisions. In addition, transportation gross profit primarily in the Kentucky/Mid-States and West Texas Divisions increased $2.0 million. Finally, customer growth primarily in the Mid-Tex Division contributed an incremental $1.7 million in gross profit.

Pipeline and storage gross profit increased $10.6 million to $109.6 million for the three months ended December 31, 2016, compared with $99.0 million in the prior-year period. This increase primarily is attributable to a $10.8 million increase in revenue from the Gas Reliability Infrastructure Program (GRIP) filings approved in fiscal 2016.

Continuing operation and maintenance expense for the three months ended December 31, 2016, was $124.9 million, compared with $119.8 million for the prior-year period. This increase was primarily driven by increased pipeline maintenance spending.

In January 2017, the company completed the sale of its natural gas marketing business. Accordingly, the results of operations for the divested business have been presented as discontinued operations. Net income from discontinued operations increased $9.7 million to $11.0 million for the three months ended December 31, 2016, compared with $1.3 million in the prior-year period. The increase largely reflects the recognition of a net $6.6 million noncash gain from unwinding hedge accounting for certain of the natural gas marketing business’s financial positions as a result of the sale.

Capital expenditures increased to $298.0 million for the three months ended December 31, 2016, compared with $290.4 million in the prior-year quarter driven by a planned increase in spending for infrastructure replacements and enhancements.

For the three months ended December 31, 2016, the company generated operating cash flow of $117.0 million, a $46.8 million increase compared with the three months ended December 31, 2015. The year-over-year increase primarily reflects favorable deferred gas cost recoveries attributable to higher sales volumes than in the prior-year quarter.

The debt capitalization ratio at December 31, 2016 was 48.7 percent, compared with 48.5 percent at September 30, 2016 and 49.5 percent at December 31, 2015. At December 31, 2016, there was $940.7 million of short-term debt outstanding, compared with $829.8 million at September 30, 2016 and $763.2 million at December 31, 2015. Short-term debt balances fluctuate due to the seasonal nature of the natural gas business and the timing of spending year over year.

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 2017 earnings from continuing operations to be in the range of $3.45 to $3.65 per diluted share. Net income from continuing operations is expected to be in the range of $365 million to $390 million. Capital expenditures for fiscal 2017 are expected to range between $1.1 billion and $1.25 billion.

Conference Call to be Webcast February 8, 2017

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2017 first quarter financial results on Wednesday, February 8, 2017, at 8:00 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, Mike Haefner, President and Chief Operating Officer and Chris Forsythe, 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

Senior Management Changes

On January 19, 2017, Atmos Energy announced the departure of Bret J. Eckert, Senior Vice President and Chief Financial Officer, effective February 1, 2017 and the appointment of Christopher T. Forsythe, Vice President and Controller, to succeed him, also effective February 1, 2017.

On January 19, 2017, Atmos Energy also announced the retirement of Louis P. Gregory, Senior Vice President, General Counsel and Corporate Secretary, effective February 1, 2017. Gregory’s successor will be named at a later date.

On November 30, 2016, Atmos Energy announced two promotions to its senior management team, effective January 1, 2017. Kevin Akers, President of the Kentucky/Mid-States Division was promoted to Senior Vice President, Safety and Enterprise Services and Matt Robbins was promoted from Vice President, Human Resources to Senior Vice President, Human Resources.

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, 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.

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. For more information, visit www.atmosenergy.com.

Atmos Energy Corporation
Financial Highlights (Unaudited)
Statements of Income
Three Months Ended
December 31
(000s except per share)
2016
2015
Gross Profit:
Distribution segment
$ 359,310
$
335,452
Pipeline and storage segment
109,597
98,975
Intersegment eliminations
(44 )
--
Gross profit
468,863
434,427
Operation and maintenance expense
124,938
119,828
Depreciation and amortization
76,958
70,656
Taxes, other than income
57,049
51,214
Total operating expenses
258,945
241,698
Operating income
209,918
192,729
Miscellaneous expense
(994 )
(879 )
Interest charges
31,030
29,537
Income from continuing operations before income taxes
177,894
162,313
Income tax expense
63,856
60,767
Income from continuing operations
114,038
101,546
Income from discontinued operations, net of tax
10,994
1,315
Net Income
$ 125,032
$
102,861
Basic and diluted net income per share
Income per share from continuing operations
$
1.08
$
0.99
Income per share from discontinued operations
0.11
0.01
Net income per share - basic and diluted
$
1.19
$
1.00
Cash dividends per share
$
0.45
$
0.42
Basic and diluted weighted average shares outstanding
105,284
102,713
Three Months Ended
December 31
Summary Net Income by Segment (000s)
2016
2015
Distribution
$
85,364
$
73,936
Pipeline and storage
28,674
27,610
Income from continuing operations
114,038
101,546
Income from discontinued operations, net of tax
10,994
1,315
Consolidated net income
$ 125,032
$
102,861
Atmos Energy Corporation
Financial Highlights,
continued (Unaudited)
Condensed Balance Sheets
December 31,
September 30,
(000s)
2016
2016
Net property, plant and equipment
$
8,552,962
$
8,268,606
Cash and cash equivalents
44,624
47,534
Accounts receivable, net
458,813
215,880
Gas stored underground
163,763
179,070
Current assets of disposal group classified as held for sale
235,482
151,117
Other current assets
76,750
88,085
Total current assets
979,432
681,686
Goodwill
729,673
726,962
Noncurrent assets of disposal group classified as held for sale
--
28,616
Deferred charges and other assets
317,088
305,019
$
10,579,155
$
10,010,889
Shareholders’ equity
$
3,698,975
$
3,463,059
Long-term debt
2,314,199
2,188,779
Total capitalization
6,013,174
5,651,838
Accounts payable and accrued liabilities
268,647
196,485
Current liabilities of disposal group classified as held for sale
109,298
72,900
Other current liabilities
381,123
439,085
Short-term debt
940,747
829,811
Current maturities of long-term debt
250,000
250,000
Total current liabilities
1,949,815
1,788,281
Deferred income taxes
1,725,433
1,603,056
Noncurrent liabilities of disposal group classified as held for sale
--
316
Deferred credits and other liabilities
890,733
967,398
$
10,579,155
$
10,010,889
Atmos Energy Corporation
Financial Highlights,
continued (Unaudited)
Condensed Statements of Cash Flows
Three Months Ended
December 31
(000s)
2016
2015
Cash flows from operating activities
Net income
$
125,032
$
102,861
Depreciation and amortization
77,143
71,239
Deferred income taxes
67,241
59,299
Discontinued cash flow hedging for natural gas marketing commodity
(10,579 )
--
contracts
Other
4,842
3,471
Changes in assets and liabilities
(146,716 )
(166,729 )
Net cash provided by operating activities
116,963
70,141
Cash flows from investing activities
Capital expenditures
(297,962 )
(290,412 )
Acquisition
(85,714 )
--
Available-for-sale securities activities, net
(10,263 )
(2,263 )
Other, net
1,802
2,382
Net cash used in investing activities
(392,137 )
(290,293 )
Cash flows from financing activities
Net increase in short-term debt
110,936
305,309
Proceeds from issuance of long-term debt, net of discount
125,000
--
Net proceeds from equity offering
49,400
--
Issuance of common stock through stock purchase and employee
8,998
8,729
retirement plans
Interest rate agreements cash collateral
25,670
--
Cash dividends paid
(47,740 )
(43,636 )
Net cash provided by financing activities
272,264
270,402
Net increase (decrease) in cash and cash equivalents
(2,910 )
50,250
Cash and cash equivalents at beginning of period
47,534
28,653
Cash and cash equivalents at end of period
$
44,624
$
78,903
Three Months Ended
December 31
Statistics
2016
2015
Consolidated distribution throughput (MMcf as metered)
110,605
104,465
Consolidated pipeline and storage transportation volumes (MMcf)
134,976
129,159
Distribution meters in service
3,202,106
3,167,702
Distribution average cost of gas
$
5.31
$
4.35

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SOURCE: Atmos Energy Corporation

Atmos Energy Corporation
Susan Giles, 972-855-3729