10-KPeriod: FY2009

ATMOS ENERGY CORP Annual Report, Year Ended Sep 30, 2009

Filed November 16, 2009For Securities:ATO

Summary

Atmos Energy Corporation, in its 2009 10-K filing, highlights its established position as a major natural gas distributor, serving over 3 million customers across 12 states, with a strong emphasis on regulated distribution and transmission, complemented by non-regulated marketing and storage services. The company's strategy focuses on delivering shareholder value through consistent earnings growth, operational efficiency, and a culture built on core values. Atmos Energy points to a history of over 25 consecutive years of increasing dividends and earnings, achieved through a combination of strategic acquisitions and operational improvements, including rate design enhancements to reduce regulatory lag and better recovery of costs. The report details the company's four operating segments: Natural Gas Distribution, Regulated Transmission and Storage, Natural Gas Marketing, and Pipeline, Storage and Other, providing a breakdown of their respective operations and regulatory frameworks. Financially, the company navigated the challenging economic climate of 2009, which impacted customer demand and credit markets. Despite these headwinds, Atmos Energy benefited from improved rate designs in its distribution segment and efficiencies in its transmission and storage operations. The company's liquidity was managed through credit facilities and debt offerings, and it received credit rating upgrades from S&P and Moody's, reflecting improved financial performance. The report also addresses the company's approach to risk management, particularly regarding commodity price volatility and interest rate fluctuations, and outlines its commitment to regulatory compliance and environmental stewardship.

Financial Highlights

45 data points
Beta

Net Income

$190.98M

EPS (Diluted)

$2.07

Total Assets

$6.37B

Cash & Equivalents

$111.20M

Free Cash Flow

$919.23M

Financial Statements
Beta
Cost of Revenue$3.62B
Gross Profit$1.32B
Operating Expenses$883.31M
Operating Income$436.37M
Interest Expense$152.64M
Net Income$190.98M
EPS (Basic)$2.08
EPS (Diluted)$2.07
Shares Outstanding (Basic)91.12M
Shares Outstanding (Diluted)91.62M

Key Highlights

  • 1Atmos Energy serves over 3 million natural gas customers across 12 states, primarily through its regulated distribution and transmission businesses.
  • 2The company has a strategy focused on superior shareholder value, consistent earnings growth, and operational excellence across its four segments: Natural Gas Distribution, Regulated Transmission and Storage, Natural Gas Marketing, and Pipeline, Storage and Other.
  • 3Atmos Energy highlights over 25 consecutive years of increasing dividends and earnings growth, driven by acquisitions and operational efficiencies, including rate design improvements.
  • 4The company implemented various ratemaking mechanisms, such as annual rate reviews and weather normalization adjustments (WNA), to reduce regulatory lag and stabilize margins.
  • 5Despite a challenging economic environment impacting customer demand, Atmos Energy demonstrated financial resilience, securing credit rating upgrades from S&P and Moody's.
  • 6The company is actively managing its exposure to commodity price and interest rate risks through financial instruments and robust risk management policies.
  • 7Atmos Energy emphasizes its commitment to regulatory compliance, safety, and environmental responsibility, noting compliance with relevant statutes and regulations.

Frequently Asked Questions

Atmos Energy primarily manages natural gas price volatility in its distribution segment through purchased gas cost adjustment mechanisms, which allow for dollar-for-dollar recovery of purchased gas costs, thus generally not impacting gross profit. For its non-regulated segments (marketing and pipeline/storage), the company uses a combination of physical storage and financial instruments, such as futures, options, and swaps, to manage price risk and lock in margins.

The company's strategy focuses on delivering superior shareholder value and improving the quality and consistency of earnings growth. This is achieved through efficient operations, strategic acquisitions, and implementing rate designs that reduce regulatory lag and allow for better recovery of invested capital. Additionally, Atmos Energy strengthens its non-regulated businesses by increasing sales volumes and improving per-unit margins.

Atmos Energy's regulated operations are significantly influenced by state and local regulatory authorities that approve rates, service standards, and accounting practices. The company actively engages in ratemaking activities, including rate cases and GRIP filings, to ensure it can recover its costs and earn a reasonable return on its invested capital. It also utilizes mechanisms like annual rate filings and weather normalization adjustments to mitigate regulatory lag and stabilize earnings.

In 2009, Atmos Energy faced risks related to disruptions in credit markets, which increased the cost and limited the availability of capital. It also contended with the adverse effects of a general economic recession on its customers, leading to potential increases in bad debt expense and financing requirements. The company addressed these by refinancing debt, enhancing liquidity through committed credit facilities, and receiving credit rating upgrades, which improved its access to capital markets. Management also focused on cost control and collection efforts to mitigate customer-related financial impacts.