Atmos Energy Corporation Reports Earnings for Fiscal 2023; Initiates Fiscal 2024 Guidance; Raises Dividend

November 8, 2023

Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fourth fiscal quarter and year ended September 30, 2023.

Highlights

  • Earnings per diluted share was $6.10 for the year ended September 30, 2023; $0.80 per diluted share for the fourth fiscal quarter.
  • Consolidated net income was $885.9 million for the year ended September 30, 2023; $118.5 million for the fourth fiscal quarter.
  • Capital expenditures totaled $2.8 billion for the year ended September 30, 2023, with approximately 85 percent of capital spending related to system safety and reliability investments.

Outlook

  • Earnings per diluted share for fiscal 2024 is expected to be in the range of $6.45 to $6.65 per diluted share.
  • Capital expenditures are expected to approximate $2.9 billion in fiscal 2024.
  • The company's Board of Directors has declared a quarterly dividend of $0.805 per common share. The indicated annual dividend for fiscal 2024 is $3.22, which represents an 8.8% increase over fiscal 2023.

"Fiscal 2023 marks the 40th anniversary of Atmos Energy as well as the 12th year of executing our proven strategy of operating safely and reliably while we modernize our natural gas distribution, transmission, and storage systems," said Kevin Akers, president and chief executive officer of Atmos Energy Corporation. "This strategy, along with our employees' continued focus on our vision to be the safest provider of natural gas service continues to benefit our customers, our communities, and position us to continue delivering annual earnings per share growth in the six to eight percent range,” Akers concluded.

Results for the Fiscal Year Ended September 30, 2023

Consolidated operating income increased $146.1 million to $1.1 billion for the year ended September 30, 2023, compared to $921.0 million in the prior year, primarily due to rate outcomes in both segments, increased weather and consumption and customer growth in our distribution segment and increased through system revenues in our pipeline and storage segment that were partially offset by increased operation and maintenance expense and higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income increased $88.1 million to $692.6 million for the year ended September 30, 2023, compared with $604.5 million in the prior year, primarily due to a net $166.4 million increase in rates, an $18.4 million increase in customer growth, including industrial load, and an $11.7 million increase in consumption, partially offset by a $65.4 million increase in depreciation and property tax expenses and a $46.7 million increase in operation and maintenance expense driven primarily by line locates and other pipeline system maintenance activities and increased administrative costs.

Pipeline and storage operating income increased $58.1 million to $374.5 million for the year ended September 30, 2023, compared with $316.4 million in the prior year. Key operating drivers for this segment include an $87.3 million increase from our GRIP filings approved in fiscal 2022 and 2023 and a $5.2 million increase in through system revenues, partially offset by a $24.5 million increase in depreciation and property tax expenses and a $7.9 million increase in operation and maintenance expense driven primarily by pipeline inspection activities and employee-related costs.

Capital expenditures increased $361.6 million to $2.8 billion for the year ended September 30, 2023, compared with $2.4 billion in the prior year, due to increased system modernization and expansion spending.

For the year ended September 30, 2023, the company generated operating cash flow of $3.5 billion, compared to $977.6 million in the prior year. The year-over-year increase primarily reflects the receipt of $2.02 billion from the Texas Natural Gas Securitization Finance Corporation in March 2023 related to gas costs incurred during Winter Storm Uri.

Our equity capitalization ratio at September 30, 2023 increased to 61.5%, from 53.6% at September 30, 2022, due to the repayment at maturity of $2.2 billion of Winter Storm Uri financing and $806.9 million in equity issuances under our forward equity agreements, partially offset by the issuance of $500 million of 5.75% senior notes and $300 million of 5.45% senior notes in October 2022. Excluding the $2.2 billion of incremental financing issued to pay for the purchased gas costs incurred during Winter Storm Uri, our equity capitalization ratio was 61.3% at September 30, 2022.

Results for the Three Months Ended September 30, 2023

Consolidated operating income increased $48.7 million to $154.1 million for the three months ended September 30, 2023, from $105.4 million in the prior-year quarter. Rate case outcomes in both segments and customer growth in our distribution segment and timing of pipeline maintenance activities were partially offset by higher depreciation and property tax expenses due to increased capital investments.

Distribution operating income increased $17.2 million to $53.9 million for the three months ended September 30, 2023, compared with $36.7 million in the prior-year quarter. The main drivers for the current quarter include a net $27.6 million increase in rates and a $3.8 million increase due to net customer growth, partially offset by a $14.8 million increase in depreciation and property tax expenses.

Pipeline and storage operating income increased $31.5 million to $100.2 million for the three months ended September 30, 2023, compared with $68.7 million in the prior-year quarter. The current quarter activity is primarily attributable to a $22.7 million increase in rates, due to the GRIP filings approved in May 2022 and May 2023 and a $14.3 million decrease in operations and maintenance expense due to timing of pipeline maintenance activities, which were partially offset by a $7.5 million increase in depreciation and property tax expenses.

Conference Call to be Webcast November 9, 2023

Atmos Energy will host a conference call with financial analysts to discuss the fiscal 2023 fourth quarter financial results on Thursday, November 9, 2023, at 10:00 a.m. Eastern Time. The domestic telephone number is 888-350-3846 and the international telephone number is 646-960-0251. The conference ID is 9958104. Kevin Akers, President and Chief Executive 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.

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 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 release, including the risks relating to regulatory trends and decisions, the company’s ability to continue to access the credit and capital markets, and the other factors discussed in the company’s reports filed with the Securities and Exchange Commission. These risks and uncertainties include the following: federal, state and local regulatory and political trends and decisions, including the impact of rate proceedings before various state regulatory commissions; increased federal regulatory oversight and potential penalties; possible increased federal, state and local regulation of the safety of our operations; possible significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs; the inherent hazards and risks involved in distributing, transporting and storing natural gas; the availability and accessibility of contracted gas supplies, interstate pipeline and/or storage services; increased competition from energy suppliers and alternative forms of energy; failure to attract and retain a qualified workforce; natural disasters, terrorist activities or other events and other risks and uncertainties discussed herein, all of which are difficult to predict and many of which are beyond our control; increased dependence on technology that may hinder the Company's business if such technologies fail; the threat of cyber-attacks or acts of cyber-terrorism that could disrupt our business operations and information technology systems or result in the loss or exposure of confidential or sensitive customer, employee or Company information; the impact of new cybersecurity compliance requirements; adverse weather conditions; the impact of greenhouse gas emissions or other legislation or regulations intended to address climate change; the impact of climate change; the capital-intensive nature of our business; our ability to continue to access the credit and capital markets to execute our business strategy; market risks beyond our control affecting our risk management activities, including commodity price volatility, counterparty performance or creditworthiness and interest rate risk; the concentration of our operations in Texas; the impact of adverse economic conditions on our customers; changes in the availability and price of natural gas; and increased costs of providing health care benefits, along with pension and postretirement health care benefits and increased funding requirements.

Accordingly, while we believe 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. Further, the company undertakes no obligation to update or revise any of our forward-looking statements whether as a result of new information, future events or otherwise.

About Atmos Energy

Atmos Energy Corporation, an S&P 500 company headquartered in Dallas, is the country’s largest natural gas-only distributor. We safely deliver reliable, efficient and abundant natural gas to over 3.3 million distribution customers in over 1,400 communities across eight states located primarily in the South. As part of our vision to be the safest provider of natural gas services, we are modernizing our business and infrastructure while continuing to invest in safety, innovation, environmental sustainability and our communities. Atmos Energy manages proprietary pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas. Find us online at http://www.atmosenergy.com, Facebook, Twitter, Instagram and YouTube.

This news release should be read in conjunction with the attached unaudited financial information.

 
 
 

Atmos Energy Corporation
Financial Highlights
(Unaudited) 

 

Statements of Income

 

Year Ended September 30

(000s except per share)

 

 

2023

 

 

 

2022

 

Operating revenues

 

 

 

 

Distribution segment

 

$

4,099,690

 

 

$

4,035,194

 

Pipeline and storage segment

 

 

785,174

 

 

 

693,660

 

Intersegment eliminations

 

 

(609,507

)

 

 

(527,192

)

 

 

 

4,275,357

 

 

 

4,201,662

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

2,061,920

 

 

 

2,210,302

 

Pipeline and storage segment

 

 

(1,220

)

 

 

(1,583

)

Intersegment eliminations

 

 

(608,527

)

 

 

(526,063

)

 

 

 

1,452,173

 

 

 

1,682,656

 

Operation and maintenance expense

 

 

764,906

 

 

 

710,161

 

Depreciation and amortization

 

 

604,327

 

 

 

535,655

 

Taxes, other than income

 

 

386,804

 

 

 

352,208

 

Operating income

 

 

1,067,147

 

 

 

920,982

 

Other non-operating income

 

 

69,775

 

 

 

33,737

 

Interest charges

 

 

137,281

 

 

 

102,811

 

Income before income taxes

 

 

999,641

 

 

 

851,908

 

Income tax expense

 

 

113,779

 

 

 

77,510

 

Net income

 

$

885,862

 

 

$

774,398

 

 

 

 

 

 

Basic net income per share

 

$

6.10

 

 

$

5.61

 

Diluted net income per share

 

$

6.10

 

 

$

5.60

 

Cash dividends per share

 

$

2.96

 

 

$

2.72

 

Basic weighted average shares outstanding

 

 

145,121

 

 

 

137,830

 

Diluted weighted average shares outstanding

 

 

145,166

 

 

 

138,096

 

   

 

 

Year Ended September 30

Summary Net Income by Segment (000s)

 

2023

 

2022

Distribution

 

$

580,397

 

 

$

521,977

 

Pipeline and storage

 

 

305,465

 

 

 

252,421

 

Net income

 

$

885,862

 

 

$

774,398

 
 
 
 
 

Atmos Energy Corporation
Financial Highlights, continued
(Unaudited) 

 

Statements of Income

 

Three Months Ended September 30

(000s except per share)

 

 

2023

 

 

 

2022

 

Operating revenues

 

 

 

 

Distribution segment

 

$

542,987

 

 

$

678,915

 

Pipeline and storage segment

 

 

205,896

 

 

 

183,583

 

Intersegment eliminations

 

 

(161,241

)

 

 

(139,870

)

 

 

 

587,642

 

 

 

722,628

 

Purchased gas cost

 

 

 

 

Distribution segment

 

 

164,934

 

 

 

329,090

 

Pipeline and storage segment

 

 

(789

)

 

 

1,492

 

Intersegment eliminations

 

 

(160,982

)

 

 

(139,626

)

 

 

 

3,163

 

 

 

190,956

 

Operation and maintenance expense

 

 

190,125

 

 

 

205,374

 

Depreciation and amortization

 

 

159,264

 

 

 

140,194

 

Taxes, other than income

 

 

81,020

 

 

 

80,702

 

Operating income

 

 

154,070

 

 

 

105,402

 

Other non-operating income

 

 

15,008

 

 

 

6,559

 

Interest charges

 

 

31,817

 

 

 

27,842

 

Income before income taxes

 

 

137,261

 

 

 

84,119

 

Income tax expense

 

 

18,737

 

 

 

12,476

 

Net income

 

$

118,524

 

 

$

71,643

 

 

 

 

 

 

Basic net income per share

 

$

0.80

 

 

$

0.51

 

Diluted net income per share

 

$

0.80

 

 

$

0.51

 

Cash dividends per share

 

$

0.74

 

 

$

0.68

 

Basic weighted average shares outstanding

 

 

148,671

 

 

 

140,924

 

Diluted weighted average shares outstanding

 

 

148,672

 

 

 

141,220

 

 

 

 

Three Months Ended September 30

Summary Net Income by Segment (000s)

 

2023

 

2022

Distribution

 

$

37,816

 

 

$

16,154

 

Pipeline and storage

 

 

80,708

 

 

 

55,489

 

Net income

 

$

118,524

 

 

$

71,643

 
 
 
 
 

Atmos Energy Corporation
Financial Highlights, continued
(Unaudited) 

 

Condensed Balance Sheets

 

September 30,

 

September 30,

(000s)

 

2023

 

2022

Net property, plant and equipment

 

$

19,606,583

 

$

17,240,239

Cash and cash equivalents

 

 

15,404

 

 

51,554

Restricted cash and cash equivalents

 

 

3,844

 

 

Cash and cash equivalents and restricted cash and cash equivalents

 

 

19,248

 

 

51,554

Accounts receivable, net

 

 

328,654

 

 

363,708

Gas stored underground

 

 

245,830

 

 

357,941

Other current assets

 

 

292,036

 

 

2,274,490

Total current assets

 

 

885,768

 

 

3,047,693

Securitized intangible asset, net

 

 

92,202

 

 

Goodwill

 

 

731,257

 

 

731,257

Deferred charges and other assets

 

 

1,201,158

 

 

1,173,800

 

 

$

22,516,968

 

$

22,192,989

 

 

 

 

 

Shareholders' equity

 

$

10,870,064

 

$

9,419,091

Long-term debt, net

 

 

6,554,133

 

 

5,760,647

Securitized long-term debt

 

 

85,078

 

 

Total capitalization

 

 

17,509,275

 

 

15,179,738

Accounts payable and accrued liabilities

 

 

336,083

 

 

496,019

Other current liabilities

 

 

763,086

 

 

720,157

Short-term debt

 

 

241,933

 

 

184,967

Current maturities of long-term debt

 

 

1,568

 

 

2,201,457

Current maturities of securitized long-term debt

 

 

9,922

 

 

Total current liabilities

 

 

1,352,592

 

 

3,602,600

Deferred income taxes

 

 

2,304,974

 

 

1,999,505

Regulatory excess deferred taxes

 

 

253,212

 

 

385,213

Deferred credits and other liabilities

 

 

1,096,915

 

 

1,025,933

 

 

$

22,516,968

 

$

22,192,989

 
 
 
 

Atmos Energy Corporation
Financial Highlights, continued
(Unaudited) 

 

Condensed Statements of Cash Flows

 

Year Ended September 30

(000s)

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

Net income

 

$

885,862

 

 

$

774,398

 

Depreciation and amortization

 

 

604,327

 

 

 

535,655

 

Deferred income taxes

 

 

108,215

 

 

 

53,651

 

Other

 

 

(50,793

)

 

 

(22,356

)

Change in Winter Storm Uri current regulatory asset

 

 

2,021,889

 

 

 

 

Changes in other assets and liabilities

 

 

(109,757

)

 

 

(363,764

)

Net cash provided by operating activities

 

 

3,459,743

 

 

 

977,584

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

 

(2,805,973

)

 

 

(2,444,420

)

Debt and equity securities activities, net

 

 

(8,315

)

 

 

4,173

 

Other, net

 

 

19,008

 

 

 

10,289

 

Net cash used in investing activities

 

 

(2,795,280

)

 

 

(2,429,958

)

Cash flows from financing activities

 

 

 

 

Net increase in short-term debt

 

 

56,966

 

 

 

184,967

 

Proceeds from issuance of long-term debt, net of premium/discount

 

 

797,258

 

 

 

798,802

 

Proceeds from issuance of securitized debt by AEK

 

 

95,000

 

 

 

 

Net proceeds from equity issuances

 

 

806,949

 

 

 

776,805

 

Issuance of common stock through stock purchase and employee retirement plans

 

 

15,395

 

 

 

15,403

 

Settlement of interest rate swaps

 

 

171,145

 

 

 

197,073

 

Proceeds from term loan

 

 

2,020,000

 

 

 

 

Repayment of term loan

 

 

(2,020,000

)

 

 

 

Repayment of long-term debt

 

 

(2,200,000

)

 

 

(200,000

)

Cash dividends paid

 

 

(430,345

)

 

 

(375,914

)

Debt issuance costs

 

 

(7,864

)

 

 

(8,196

)

Securitized debt issuance costs

 

 

(1,273

)

 

 

 

Other

 

 

 

 

 

(1,735

)

Net cash provided by (used in) financing activities

 

 

(696,769

)

 

 

1,387,205

 

Net decrease in cash and cash equivalents and restricted cash and cash equivalents

 

 

(32,306

)

 

 

(65,169

)

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period

 

 

51,554

 

 

 

116,723

 

Cash and cash equivalents and restricted cash and cash equivalents at end of period

 

$

19,248

 

 

$

51,554

 

     

 

 

Three Months Ended September 30

 

Year Ended September 30

Statistics

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Consolidated distribution throughput (MMcf as metered)

 

 

65,853

 

 

 

68,221

 

 

 

442,911

 

 

 

444,975

 

Consolidated pipeline and storage transportation volumes (MMcf)

 

 

195,493

 

 

 

168,604

 

 

 

635,508

 

 

 

580,488

 

Distribution meters in service

 

 

3,486,384

 

 

 

3,442,224

 

 

 

3,486,384

 

 

 

3,442,224

 

Distribution average cost of gas

 

$

5.39

 

 

$

9.26

 

 

$

7.11

 

 

$

7.56

 
         
         

 

Analysts and Media Contact:
Dan Meziere (972) 855-3729

Source: Atmos Energy Corporation